Form 20-F

Date of Acquisition

Principal Activities

Method of Establishment

January 2021

Shinhan Asset Management⁽⁹⁾

Asset management services

Acquisition of remaining interests from BNP Paribas Asset Management Holding

Shinhan EZ General Insurance⁽¹⁰⁾

General insurance services

Acquisition of BNP Paribas

Cardif General Insurance

As filed with the Securities and Exchange Commission on April

, 2025

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

20-F

(Mark One)

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended

December 31

2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission File Number:

001-31798

Shinhan Financial Group Co., Ltd.

(Exact name of registrant as specified in its charter)


N/A		The Republic of Korea
(Translation of registrant’s name into English)		(Jurisdiction of incorporation or organization)

20, Sejong-daero

9-gil,

Jung-gu

Seoul 04513,

Korea

(Address of principal executive offices)

Park Cheolwoo, +822 6360 3129 (T), cheol.park@shinhan.com, +822 6360 3098 (F), 20, Sejong-daero

9-gil,

Jung-gu, Seoul 04513,

Korea

(Name, Telephone,

E-mail

and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of Each Class:	Trading Symbol(s)	Name of Each Exchange on Which Registered:
Common stock, par value Won 5,000 per share	SHG	New York Stock Exchange*
American depositary shares	SHG	New York Stock Exchange

*	Not for trading, but only in connection with the listing of American depositary shares on the New York Stock Exchange, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of Shinhan Financial Group’s classes of capital or common stock as of the close of the last full fiscal year covered by this Annual Report: 503,445,325 shares of common stock, par value of Won 5,000 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:

Yes ☐ No ☒

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Yes ☒ No ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Yes ☐ No ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b).

Yes ☐ No ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


U.S. GAAP ☐		International Financial Reporting Standards as issued by the International Accounting Standards Board ☒		Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17

☐

Item 18

☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act):

Yes ☐ No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court:

Yes ☐ No ☐

CERTAIN DEFINED TERMS, CONVENTIONS AND CURRENCY OF PRESENTATION

Unless otherwise specified or the context otherwise requires:

•

the terms “we,” “us,” “our,” “Shinhan Financial Group,” “SFG” and the “Group” mean Shinhan Financial Group Co., Ltd. and its consolidated subsidiaries;

•

the terms “Shinhan Financial Group Co., Ltd.,” “our company” and “our holding company” mean Shinhan Financial Group Co., Ltd.; and

•

“Shinhan Card” refers to Shinhan Card Co., Ltd., “Shinhan Life Insurance” refers to Shinhan Life Insurance Co., Ltd., “Shinhan Securities” refers to Shinhan Securities Co., Ltd. and “Orange Life Insurance” refers to Orange Life Insurance, Ltd.

All references to “Korea” or the “Republic” contained in this annual report are to the Republic of Korea. All references to the “Government” are to the government of the Republic of Korea. References to the “Financial Services Commission” are to the Financial Services Commission of Korea, and references to the “Financial Supervisory Service” are to the Financial Supervisory Service of Korea, the executive body of the Financial Services Commission.

The fiscal year for us and our subsidiaries ends on December 31 of each year. Unless otherwise specified or the context otherwise requires, all references to a particular year are to the year ended December 31 of that year.

The currency of the primary economic environment in which we operate is Korean Won.

In this annual report, unless otherwise indicated, all references to “Korean Won”, “Won” or “ W ” are to the currency of the Republic of Korea, and all references to “U.S. Dollars,” “Dollars,” “$” or “US$” are to the currency of the United States of America. Unless otherwise indicated, all translations from Won to Dollars were made at W1,477.9 to US$1.00, which was the noon buying rate in the City of New York on December 31, 2024 for cable transfers according to the H.10 statistical release of the Federal Reserve Board (the “Noon Buying Rate”). On April 4, 2025, the Noon Buying Rate was W1,457.7 to US$1.00. The Noon Buying Rate has been volatile recently and the U.S. Dollar amounts referred to in this report should not be relied upon as an accurate reflection of our results of operations. We expect this volatility to continue in the near future. No representation is made that the Won or U.S. Dollar amounts referred to in this report could have been or could be converted into Dollars or Won, as the case may be, at any particular rate or at all.

Unless otherwise indicated, the financial information presented in this annual report has been prepared on a consolidated basis in accordance with International Financial Reporting Standards (“IFRS”) Accounting Standards, which are the accounting standards and related interpretations issued by the International Accounting Standards Board (“IASB”).

Any discrepancies in the tables included herein between totals and sums of the amounts listed are due to rounding.

FORWARD LOOKING STATEMENTS

This annual report includes “forward-looking statements,” as defined in Section 27A of the U.S. Securities Act, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding our expectations and projections for future operating performance and business prospects. The words “believe,” “expect,” “anticipate,” “estimate,” “project” and similar words used in connection with any discussion of our future operating or financial performance identify forward-looking statements. In addition, all statements other than statements of historical facts included in this annual report are forward-looking statements.

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

ITEM 3.A.

[Reserved]

ITEM 3.B.

Capitalization and Indebtedness

Not applicable.

ITEM 3.C.

Reasons for the Offer and Use of Proceeds

Not applicable.

ITEM 3.D.

Risk Factors

An investment in the American depositary shares representing our common shares involves a number of risks. You should carefully consider the following information about the risks we face, together with the other information contained in this annual report, in evaluating us and our business.

Summary

The following summarizes some, but not all, of the risks provided below. Please carefully consider all of the information discussed in this Item 3.D. “Risk Factors” in this annual report for a more thorough description of these and other risks:

•

Risks Relating to Our Overall Business

•

Difficult conditions and turbulence in the Korean and global economy and financial markets may adversely affect our business, asset quality, capital adequacy and earnings.

•

High rates of global inflation and the occurrence of a recession could have a material and adverse impact on our business, results of operations and financial condition.

•

Competition in the Korean financial services industry is intense, and may further intensify.

•

We and our subsidiaries need to maintain our capital ratios above minimum required levels, and the failure to so maintain could result in the suspension of some or all of our operations.

•

Liquidity, funding management and credit ratings are critical to our ongoing performance.

•

Our business may be materially and adversely affected by legal claims and regulatory actions against us, including with respect to financial products sold by us or our subsidiaries.

•

Changes in interest rates, foreign exchange rates, bond and equity prices, and other market factors have affected and will continue to affect our business, results of operations and financial condition.

•

We may incur losses associated with our counterparty exposures.

•

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, could adversely affect our results of operations and financial condition.

•

Risks Relating to Our Banking Business

•

We have significant exposure to small- and medium-sized enterprises, and financial difficulties experienced by such enterprises may result in a deterioration of our asset quality.

•

A decline in the value of the collateral securing our loans or our inability to fully realize the collateral value may adversely affect our credit portfolio.

•

Real estate project financing exposure poses significant risk, and guarantees received in connection with our real estate financing may not provide sufficient coverage.

•

A limited portion of our credit exposure is concentrated in a relatively small number of large corporate borrowers, and future financial difficulties experienced by them may have an adverse impact on us.

•

The asset quality of our retail loan portfolio may deteriorate.

•

Any deterioration in the asset quality of our guarantees and acceptances will likely have a material adverse effect on our financial condition and results of operations.

•

Risks Relating to Our Credit Card Business

•

Future changes in market conditions as well as other factors, such as stricter regulation, may lead to reduced revenues and deterioration in the asset quality of credit card receivables.

•

Risks Relating to Our Other Businesses

•

We may experience significant losses from our investments and, to a lesser extent, trading activities due to market fluctuations.

•

We may generate losses from our brokerage and other commission- and fee-based business.

•

Prolonged periods of declining or low interest rates or changes in related accounting standards may reduce or turn negative our investment margin on savings insurance products and result in an increase in the valuation of our liabilities associated with these products.

•

We may fail to realize the anticipated benefits of and encounter significant risks in connection with mergers and acquisitions.

•

Other Risks Relating to Us as the Holding Company

•

Our ability to continue to pay dividends and service debt will depend on the level of profits and cash flows of our subsidiaries.

•

Damage to our reputation could harm our business.

•

Our risk management policies and procedures may not be fully effective at all times.

•

Labor unrest may adversely affect our operations.

•

We may experience disruptions, delays and other difficulties relating to our information technology systems.

•

Our activities are subject to cyber security risk.

•

Our customers may become victims to “voice phishing” or other financial scams, for which we may be required to make monetary compensation and suffer damage to our business and reputation.

•

Risks Relating to Law, Regulation and Government Policy

•

We are a heavily regulated entity and operate in a legal and regulatory environment that is subject to change, and violations could result in penalties and other regulatory actions.

•

The Government may encourage targeted lending to certain sectors in furtherance of policy objectives, and we may take this factor into account.

•

The Government may also encourage investments in certain institutions in furtherance of policy objectives, and we may not recoup our investments therein in a timely or otherwise commercially reasonable manner.

•

The level and scope of government oversight of our retail lending business, particularly regarding mortgage and home equity loans, may change depending on the economic or political climate.

•

We have engaged in limited settlement transactions involving Iran and also in limited business in and related to Russia which may subject us to legal or reputational risks.

•

Evolving regulatory framework for artificial intelligence and machine learning technology, may have an adverse impact on our business, financial condition and results of operations.

•

Risks Relating to Korea

•

Unfavorable financial and economic conditions in Korea and globally may have a material adverse impact on our asset quality, liquidity and financial performance.

•

Tensions with North Korea could have an adverse effect on us, the price of our common shares and our American depositary shares.

•

Risks Relating to Our American Depositary Shares

•

There are restrictions on withdrawal and deposit of common shares under the depositary facility.

•

Ownership of our shares is restricted under Korean law.

•

Holders of our ADSs will not have preemptive rights in certain circumstances.

•

Holders of our ADSs will not be able to exercise dissent and appraisal rights unless they have withdrawn the underlying shares of our common stock and become our direct stockholders.

•

The market value of your investment in our ADSs may fluctuate due to the volatility of the Korean securities market.

•

Your dividend payments and the amount you may realize upon a sale of your ADSs will be affected by fluctuations in the exchange rate between the U.S. Dollar and the Won.

•

If the Government deems that certain emergency circumstances are likely to occur, it may restrict the depositary bank from converting and remitting dividends in Dollars.

•

Other Risks

•

We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries.

•

You may not be able to enforce a judgment of a foreign court against us.

•

We may become a passive foreign investment company (“PFIC”), which could result in adverse U.S. tax consequences to U.S. investors.

Risks Relating to Our Overall Business

Difficult conditions and turbulence in the Korean and global economy and financial markets may adversely affect our business, asset quality, capital adequacy and earnings.

business products and services, debt service burden of households and businesses, the general availability of credit, the asset value of real estate and securities and other factors affecting the financial well-being of our corporate and retail customers.

The Korean economy is closely integrated with, and is significantly affected by, developments in the global economy. In light of global inflation caused by rising energy prices and global supply chain disruptions, escalation of hostilities including the Russia-Ukraine conflict and Israel-Hamas war, rapidly changing monetary policies (including higher interest rates and quantitative tightening) led by developed countries in reaction to such inflation, instability in the financial industries (including potential for bank runs) and capital flight risks in emerging economies caused by such changes in monetary policy, credit risks of Chinese real estate developers, ongoing trade conflicts between countries including the introduction of tariffs on goods traded with others, signs of economic slowdown in China and other major economies, continuing geopolitical and social instability in various parts of the Middle East, including Iraq, Syria and Yemen, and risk of global pandemic such as the COVID-19 outbreak, among others, significant uncertainty remains as to the global economic prospects in general and has adversely affected, and may continue to adversely affect, the Korean economy. In addition, as the Korean economy matures, it is increasingly exposed to the risk of a “scissor effect,” namely being pursued by competitors in less advanced economies while not having fully caught up with competitors in advanced economies, which risk is amplified by the fact that Korean economy is heavily dependent on exports. The Korean economy also continues to face other difficulties, including sluggishness in domestic consumption and investment, risk of corporate debt liquidity issues, volatility in the real estate market, rising delinquencies on project financing loans, rising household debt, potential declines in productivity due to aging demographics and low birth rates, and a rise in youth unemployment. Any future deterioration of the global and Korean economies could adversely affect our business, financial condition and results of operations.

In particular, difficulties in financial and economic conditions could result in significant deterioration in the quality of our assets and accumulation of higher provisioning, allowance for credit losses on loans and charge-offs as an increasing number of our corporate and retail customers declare bankruptcy or insolvency or otherwise face increasing difficulties in meeting their debt obligations. For example, from time to time, difficulties in certain industries such as real estate and shipbuilding have led to increased delinquency among our corporate borrowers, including some Korean commercial conglomerates known as “chaebols,” and in certain cases, even insolvency, workouts, recovery proceedings and/or voluntary arrangements with creditors. Sustained slumps in the real estate market have also led to increased delinquency among our retail borrowers, and in particular, borrowers with collective loans for pre-sale of newly constructed apartment units. Various Government-led financial support programs for small- and medium-sized enterprises and small business owners introduced since April 1, 2020 in response to the COVID-19 pandemic, such as loan rescheduling and principal and interest payment deferral programs, which have helped financial institutions, including Shinhan Bank, manage their asset quality at a stable level, generally expired in September 2022. However, the Government decided, based on discussions with financial institutions, to provide further financial support to debtors using financial support programs such as (i) the extension of loan maturity dates up to three years, (ii) the postponement of repaying loans up to one year until September 2023, or (iii) the rescheduling of loans under the New Start Fund set up by the Government on October 4, 2022 or loan rescheduling programs led by the financial institutions. In addition, additional policies for small business owners were announced in December 2024, including the introduction of customized debt restructuring, mutual prosperity guarantee and loan programs, consulting programs, and low-interest and long-term installment repayment programs for small business owners who have recently closed their businesses. Shinhan Bank’s delinquency ratio was 0.21% as of December 31, 2022, 0.26% as of December 31, 2023 and 0.27% as of December 31, 2024. Despite such financial support programs, there is no assurance that Shinhan Bank will not experience increased level of credit losses on loans from borrowers, particularly those in troubled industries, since the quality of loans to such borrowers may further deteriorate due to a continued slump in volatile industries amidst sluggish economic situation or for other reasons. Further, Government-led financial support programs or other countermeasures may not achieve their intended results and could also result in unintended consequences or otherwise adversely affect our business, financial condition and results of operations.

Moreover, as was the case during the global financial crisis of 2008-2009, depending on the nature of the difficulties in the financial markets and general economy, we may be forced to scale back certain of our core lending activities and other operations and/or borrow money at a higher funding cost or face a tightening in the net interest spread, any of which may have a negative impact on our earnings and profitability. Furthermore, while we and our principal subsidiaries currently maintain a capital adequacy ratio at a level higher than the required regulatory minimum, there is no guarantee that an even higher capital requirement will not be imposed by the Government in case of a renewed economic crisis.

In addition, given the highly integrated nature of financial systems and economic relationships worldwide, there may be other unanticipated systemic or other risks that may not be presently predictable. Any of these risks, if materialized, may have a material adverse effect on our business, liquidity, financial condition and results of operations.

High rates of global inflation and the occurrence of a recession could have a material and adverse impact on our business, results of operations and financial condition.

Recently, the global markets have experienced, and continue to experience, higher rates of inflation as a result of several market factors, including in the form of increased costs pertaining to labor, materials, shipping and overhead. As a result of these inflationary pressures, governments in many countries have generally implemented tighter monetary policies, which could slow the growth rate of local economies and restrict the availability of credit. However, to the extent the current rates of inflation and shifts in fiscal and monetary policy result in slower growth or a recession, it could have a material and adverse effect on the demand for our products and services and, in the process, our business, results of operations and financial condition as a whole, including with respect to general and administrative expenses as a percentage of total revenue. Moreover, in the event that a global recession was to occur, it could adversely impact the critical counterparties that we engage, including in the form of a decrease in the products and services they seek to obtain from us.

Competition in the Korean financial services industry is intense, and may further intensify.

Competition in the Korean financial services industry is, and is likely to remain, intense, including as a result of the continuing sluggishness in the general economy, the growing maturation and saturation of the industry as a whole, the entry of new market participants and deregulation, among others.

In the banking sector, Shinhan Bank competes principally with other national commercial banks in Korea, but also faces competition from a number of additional banking institutions, including branches and subsidiaries of foreign banks operating in Korea, regional banks, Internet-only banks, government-owned development banks and Korea’s specialized banks, such as Korea Development Bank, the Industrial Bank of Korea and the National Federation of Fisheries Cooperatives, as well as various other types of financial service providers, including savings institutions (such as mutual savings and finance companies, credit unions and credit cooperatives), investment companies (such as securities brokerage firms, merchant banking corporations and asset management companies) and life insurance companies. As of December 31, 2024, Korea had seven major nationwide domestic commercial banks (including Citibank Korea Inc. and Standard Chartered Bank Korea Limited, both of which are domestic commercial banks acquired by global financial institutions), five regional banks, three Internet-only banks and thirty-nine branches and subsidiaries of foreign banks. Foreign financial institutions, many of which have greater experiences and resources than we do, may continue to enter the Korean market and compete with us in providing financial products and services either by themselves or in partnership with existing Korean financial institutions.

equity loans within the limits of the prescribed loan-to-value ratios and debt-to-income ratios. This common shift in focus toward stable growth based on less risky assets has intensified competition as banks compete for the same limited pool of quality credit by engaging in price competition or by other means. In addition, such competition may result in lower net interest margin and reduced overall profitability. Even if interest rates were to increase, the effect on Shinhan Bank’s results of operations may not be as beneficial as expected, or at all, due to factors such as increased volatility of market interest rates and tighter regulations regarding SOHO loans, including the implementation of additional credit review guidelines for individual businesses. For additional details on the impact changes in interest rates have on our business, see “Changes in interest rates, foreign exchange rates, bond and equity prices, and other market factors have affected and will continue to affect our business, results of operations and financial condition.” Further, if competing financial institutions seek to expand market share by lowering their lending rates, Shinhan Bank may suffer customer loss, especially among customers who select their lenders principally on the basis of lending rates. In response thereto or for other strategic reasons, Shinhan Bank may subsequently lower its lending rates to stay competitive, which could lead to a further decrease in its net interest margins and outweigh any potential positive impact on the net interest margin from a general rise in market interest rates. Shinhan Bank’s net interest margin (on a separate basis) decreased to 1.58% in 2024 from 1.62% in 2023 primarily due to the Bank of Korea lowering the base interest rate during the second half of 2024. Any future decline in Shinhan Bank’s customer base or its net interest margins could have an adverse effect on our results of operations and financial condition.

In the credit card sector, Shinhan Card competes principally with existing “monoline” credit card companies, credit card divisions of commercial banks, consumer finance companies, other financial institutions and, recently, credit card service providers allied with mobile telecommunications service providers in Korea. Competition has been historically intense in this sector, and the market has shown signs of saturation as existing and new credit card service providers make significant investments and engage in aggressive marketing campaigns and promotions to acquire new customers and target customers with high credit quality. Despite stricter government regulations such as curbs on excessive marketing expenses, competition remains intense, and credit card issuers may continue to compete with Shinhan Card for customers by offering lower interest rates and fees, higher credit limits, more attractive promotions and incentives and alternative products such as credit card reward points, gift cards and low-interest consumer loan products. As a result, Shinhan Card may lose customers or service opportunities to competing credit card issuers and/or incur higher marketing expenses. Also, over the years, the Government has implemented regulations lowering certain merchant fees chargeable by credit card companies. In 2012, the Government adopted regulations mandating lower merchant fees chargeable to small- and medium-sized enterprises, and beginning January 31, 2016, a further reduction in the merchant fees chargeable to small- and medium-sized enterprises went into effect. The Enforcement Decree of the Specialized Credit Finance Business Act was amended in July 2017 and January 2019 to further expand the range of small- and medium-sized enterprises subject to lower merchant fees. Pursuant to the Specialized Credit Financial Business Act, the rates of fees chargeable to merchants are subject to review and revision every three years, and beginning January 2022, the fees chargeable to small- and medium-sized enterprises with respect to credit cards were further reduced as a result of this periodic review and revision. Additional amendments to regulations requiring further downward adjustments to merchant fees may come into force in the future. For further details on the Government’s regulations on merchant fees chargeable by credit card companies, see “Risks Relating to Our Credit Card Business — Future changes in market conditions as well as other factors, such as stricter regulation, may lead to reduced revenues and deterioration in the asset quality of credit card receivables.” In March 2023, the Financial Services Commission set up a task force consisting of members of the Financial Services Commission, the Financial Supervisory Service, credit card companies, and consumer groups, to discuss how to improve the merchant commission rate adjustment system in order to address disagreements among the stakeholders involved in the periodic review of the rates of fees charged to merchants.

24% to 20% came into effect in July 2021. These developments have put further downward pressure on the results of operations for credit card companies, including Shinhan Card. Also, with the implementation of the Debtor Rehabilitation and Bankruptcy Act on October 17, 2024, creditors’ collection attempts are limited to seven times within any seven-day period per claim. In response to the new limits, Shinhan Card plans to establish specialized teams and dedicate personnel to improve its collection efforts. However, the credit card industry has experienced delays and challenges in collection, which may lead to an increase in delinquencies and higher operational costs, including for Shinhan Card. Furthermore, the Government’s recent guidelines to bolster consumer protection and protect customers’ personal data in the aftermath of data leaks at certain credit companies (not including Shinhan Card) may result in additional compliance costs for Shinhan Card. Customer attrition, together with any further lowering of fees or reduction in base and market interest rates and/or additional expenses from more extensive marketing and promotional campaigns that Shinhan Card might implement to acquire and retain customers, could reduce its revenues and earnings. Furthermore, the average credit quality of Shinhan Card’s customers may deteriorate if customers with higher credit quality borrow from our competitors rather than Shinhan Card and it may become more difficult for Shinhan Card to attract and maintain quality customers. In general, the growth, market share and profitability of Shinhan Card’s operations may decline or become negative as a result of market saturation in this sector, interest rate competition, pressure to lower fee rates and incur higher marketing expenses, as well as Government regulation and social and economic developments in Korea that are beyond our control, such as changes in consumer confidence levels, spending patterns or public perception of credit card usage and consumer debt. If Shinhan Card fails to maintain or attract new cardholders or increase the card usage by existing customers or experiences deterioration in its asset quality and a rise in delinquency, our business, financial condition and results of operations may be adversely affected. In other financial services sectors, our other subsidiaries also compete in a highly fragmented market. Some of our competitors, particularly major global financial institutions, have greater experience and resources than we do.

Consolidation among our rival institutions and the Government’s privatization efforts may also add competition in the markets in which we and our subsidiaries conduct business. A number of significant mergers and acquisitions in the industry have taken place in Korea recently. In January 2019, Woori Financial Group was established pursuant to a comprehensive stock transfer under the Korean Commercial Code whereby holders of the common stock of Woori Bank and certain of its subsidiaries transferred all of their shares to Woori Financial Group (the new financial holding company) and in return received shares of Woori Financial Group. As a result, Woori Bank and certain of its former wholly-owned subsidiaries became direct and wholly-owned subsidiaries of Woori Financial Group. The Korea Deposit Insurance Corp., which as of April 9, 2021 owned 17.25% of the outstanding common stock of Woori Financial Group, has sold 13.63% of the outstanding common stock of Woori Financial Group in multiple transactions in accordance with its plan that was approved by the Financial Services Commission in June 2019. The Korea Deposit Insurance Corp. sold additional 2.33% of the outstanding common stock of Woori Financial Group in May 2022 and currently owns only 1.29% of the outstanding common stock of Woori Financial Group. In the asset management business sector, Woori Financial Group acquired two asset management companies, Tongyang Asset Management and ABL Global Asset Management (former Allianz Global Investors) in 2019. In August 2021, KB Financial Group completed the acquisition of Prudential Life Insurance, the former Korean unit of Prudential Financial Inc. In May 2024, DGB Financial Group transitioned from a regional bank holding company to a bank holding company after the Financial Services Commission approved its subsidiary, iM Bank (formerly DGB Daegu Bank), to transition from a regional bank to a commercial bank. Any of these developments may place us at a competitive disadvantage and outweigh any potential benefit to us in the form of opportunities to acquire new customers who are displeased with the level of services at the newly reorganized entities or to provide credit facilities to corporate customers who wish to maintain relationships with a wide range of banks in order to diversify their sources of funding.

Insurance’s common stock transferred all of their shares to us and in return receive shares of our common stock, and hence Orange Life Insurance became our wholly owned subsidiary as of such date. In May 2021, the Financial Services Commission approved the merger of Shinhan Life Insurance and Orange Life Insurance, with Shinhan Life Insurance being the surviving entity upon completion of the merger. Orange Life Insurance was subsequently merged with and into Shinhan Life Insurance in July 2021. On September 29, 2020, we acquired a 96.8% interest in Neoplux Co., Ltd. (“Neoplux”), a venture capital company formerly under the Doosan Group. On December 30, 2020, we acquired the remaining interest in Neoplux by effecting a small-scale stock exchange under Article 360-10 of the Korean Commercial Code, and hence Neoplux became our wholly owned subsidiary as of such date. On January 11, 2021, Neoplux changed its legal name to Shinhan Venture Investment. In addition, on January 15, 2021, we acquired the remaining 35% interest in Shinhan BNP Paribas Asset Management Co., Ltd. (“Shinhan BNP Paribas Asset Management”) and changed its legal name to Shinhan Asset Management, and hence Shinhan Asset Management became our wholly-owned subsidiary as of such date. On June 30, 2022 we acquired 94.54% interest in BNP Paribas Cardif General Insurance, which then changed its name to Shinhan EZ General Insurance, Ltd. Subsequently in November 2022, Shinhan EZ General Insurance, Ltd. conducted a paid-in capital increase and our shares decreased to 85.1%. We expect that such consolidation and other structural changes in the financial industry will continue. Other financial institutions may seek to acquire or merge with other entities, and the financial institutions resulting from such consolidation may, by virtue of their increased size and business scope, provide greater competition for us. Increased competition and continuing consolidation may lead to decreased margins, resulting in a material adverse impact on our future profitability.

Regulatory reforms and the general modernization of business practices in Korea have also led to increased competition among financial institutions in Korea. Since their introduction, the integrated automatic payment transfer management service, integrated account management service and “my account at a glance” system (which enables consumers to view their key financial account information online, including information on banks, insurances, mutual finance, loan and card issuances on a single page) have gained widespread acceptance. As the reform of the financial sector continues, competition may become more intense among existing banks, insurance companies, securities companies and other financial organizations, and may lead to significant changes in the current Korean financial market. Moreover, since January 1, 2020, in calculating loan to deposit ratio, retail loans and corporate loans are weighed differently, with retail loans subject to a multiple of 115% and corporate loans (excluding loans to SOHOs) subject to a multiple of 85%, thereby increasing the impact of retail loans and reducing the impact of corporate loans in calculating such ratio. This has particularly restricted retail loans, intensifying competition for corporate loans and deposits among commercial banks. As a result, Shinhan Bank may experience an increase in its cost of funding or otherwise face challenges in increasing or retaining its corporate loans and deposits.

Furthermore, as the Korean economy further develops and new business opportunities arise, more competitors may enter the financial services industry. For example, as online service providers and technology companies with large-scale user networks, such as Kakao Corp., NAVER and Samsung Electronics, recently make significant inroads in providing virtual payment services through a system based on a growing convergence of financial services and technology commonly referred to as “fintech,” competition for online customers is growing not just among commercial banks, but also from online and mobile payment service providers. KT consortium’s K-Bank, Kakao consortium’s Kakao Bank and Viva Republica consortium’s Toss Bank have been operating Internet-only banks since April 2017, July 2017 and October 2021, respectively. Internet-only banks have certain advantages over traditional banks as the former can pass savings in labor and overhead costs to their customers by offering higher interest rates on deposit accounts, lower loan costs and reduced service fees. Accordingly, commercial banks are facing increasing pressure to upgrade their service platforms to attract and maintain online users, which represents a growing customer base compared to traditional customers who have primarily conducted banking in-person at physical banking branches.

banking services, such as checking balances and making withdrawals and transfers, with regards to customers’ accounts at other banks. Using open banking service, customers can easily access accounts, products and services across multiple banks, instead of being limited to the accounts, products and services available at the particular bank that they deal with. In addition, the MyData service was launched in 2020, allowing and requiring (upon the customer’s request and subject to compliance requirements) financial institutions that have been approved by the Financial Service Commission as a MyData service provider access and sharing of customers’ personal information, credit information and transaction data. Shinhan Card and Shinhan Bank have each obtained a license from the Financial Services Commission as a MyData service provider. Shinhan Card launched its MyData business in December 2021, followed by Shinhan Bank in January 2023. As of December 31, 2024, the Financial Services Commission has granted licenses to 66 companies to operate as MyData service providers, 23 of which are fintech or IT firms, and 65 companies are currently providing MyData services. This has resulted in competition between traditional financial institutions like us and fintech firms intensifying, particularly with respect to asset management services. If additional fintech companies operate as MyData service providers, we expect competition for customers among banks and fintech firms to further intensify. In addition, in May 2023 the Government launched a platform where consumers can compare loan products from various financial institutions and apply for debt consolidation on a single platform. In January 2024, the platform was expanded to include mortgage loans and long-term deposit-based rental loans. Additional loan types, such as business loans and credit card loans, are also expected to be included in the platform, which may further intensify competition among commercial banks in Korea.

Since the global financial crisis, the Government has subjected Korean financial institutions to stricter regulatory requirements and guidelines in areas of asset quality, capital adequacy, liquidity and residential and other lending practices. For further details of such capital adequacy requirements, see “— We and our subsidiaries need to maintain our capital ratios above minimum required levels, and the failure to so maintain could result in the suspension of some or all of our operations.” There is no assurance that these measures will have the effect of curbing competition or that the Government will not reverse or reduce such measures or introduce other measures, which may further intensify competition in the Korean financial services industry. For further details on the capital requirements applicable to us, see “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Capital Adequacy.”

If, despite our efforts to adapt to the changing macroeconomic environment and comply with new regulations, we are unable to compete effectively in the changing business and regulatory environment, our profit margin and market share may erode and our future growth opportunities may become limited, which could adversely affect our business, financial condition and results of operations.

We and our subsidiaries need to maintain our capital ratios above minimum required levels, and the failure to so maintain could result in the suspension of some or all of our operations.

We and our subsidiaries in Korea are required to maintain specified capital adequacy ratios. For example, since May 2024, we and our banking subsidiaries in Korea are required to maintain a minimum common equity Tier I capital adequacy ratio of 9.0%, a Tier I capital adequacy ratio of 10.5% and a total capital (BIS) ratio of 12.5%. These ratios measure the respective regulatory capital as a percentage of risk-weighted assets on a consolidated basis and are determined based on guidelines of the Financial Services Commission. In addition, as further described below, Shinhan Bank is also required to maintain a capital conservation buffer and additional capital as a domestic systemically important bank and may be required to maintain a countercyclical capital buffer. Also, our subsidiaries Shinhan Card, Shinhan Life Insurance and Shinhan Securities are each required to maintain a consolidated adjusted equity capital ratio of 8.0%, a Korean-Insurance Capital Standard (“K-ICS”) ratio of 100% and a net capital ratio of 100%, respectively.

The current capital adequacy requirements of the Financial Services Commission are derived from bank capital rules issued by the Basel Committee on Banking Supervision (the “Basel Committee”) in December 2010 in respect of (i) a global regulatory framework for more resilient banks and banking systems and (ii) an

international framework for liquidity risk measurement, standards and monitoring, which together are commonly referred to as “Basel III.” Beginning in July 2013, the Financial Services Commission implemented the capital requirements of Basel III though a series of amendments to the Regulation on the Supervision of the Banking Business and the Detailed Regulation on the Supervision of the Banking Business. Pursuant to these regulations, commercial banks in Korea are required to maintain a minimum common equity Tier I ratio of 4.5%, a minimum Tier I capital ratio of 6.0% and a minimum total capital (BIS) ratio of 8.0% from January 1, 2015. The Regulation on the Supervision of the Banking Business was further amended in December 2014 to implement the liquidity coverage ratio requirements under Basel III in increments of 5% annually, from 80% as of January 1, 2015 to 100% as of January 1, 2019, and although the liquidity coverage ratio requirement was temporarily lowered during the COVID-19 pandemic, the liquidity coverage ratio requirement has been restored to 100% since January 1, 2025. Capital conservation buffer requirements have also been phased in from January 1, 2016, and accordingly, since January 1, 2019, commercial banks in Korea have been required to maintain a capital conservation buffer of 2.5%. Pursuant to the Regulation on the Supervision of the Banking Business and the Detailed Regulation on the Supervision of the Banking Business, the Financial Services Commission may designate banks with significant influence (based on size and connectivity with other financial institutions) on the domestic financial system as a domestic systemically important bank and require the accumulation of additional capital in accordance with the highest of: (i) ratio of common equity capital to risk-weighted assets, ranging from 0.0% to 2.0%, depending on the systematic importance evaluation score, (ii) if the bank’s holding company is a domestic systemically important bank holding company, the capital ratio corresponding to the additional capital required for the bank holding company under the Financial Holding Company Supervision Regulations, or (iii) if the bank is also a global systemically important bank, as defined by the Basel Committee, the capital ratio as required by the Basel Committee. Since January 1, 2019, the Financial Services Commission has required domestic systemically important banks to maintain an additional capital buffer of 1.00%, and we and Shinhan Bank have each been designated by the Financial Services Commission since July 2021 as a domestic systemically important bank holding company and domestic systemically important bank, respectively. Accordingly, we and Shinhan Bank are subject to this additional capital buffer of 1.00%. The Financial Services Commission may also, upon quarterly review, determine and require banks to accumulate a level of countercyclical capital buffer within the range of 0% to 2.5% of risk-weighted assets, taking into account factors such as the degree of increase in credit relative to the gross domestic product. As announced by the Financial Services Commission in May 2023, banks and their holding companies, including us and Shinhan Bank, have been required to accumulate a counter-cyclical capital buffer of 1.00% since May 1, 2024. The Financial Services Commission also announced in September 2024 the introduction of a stress buffer capital regulation, which may require banks and their holding companies to accumulate up to 2.5% of additional capital (in addition to, and separate from, the aforementioned minimum capital ratios) depending on the results of stress testing and evaluation of risk management status by the Financial Supervisory Service. On December 19, 2024, the Financial Services Commission announced that the introduction of the stress buffer capital regulation will be delayed until at least the second half of 2025 and that the timing and other details of implementing the stress buffer capital regulation will be determined during 2025.

We and our banking subsidiaries are currently, and have been, in full compliance with Basel III requirements as implemented in Korea since its introduction in December 2013. Although we and our subsidiaries currently maintain capital adequacy ratios in excess of the respective required regulatory minimum levels, we or our subsidiaries may not be able to continue to satisfy the capital adequacy requirements for a number of reasons, including an increase in risky assets and provisioning expenses, substitution costs related to the disposal of problem loans, declines in the value of securities portfolios, adverse changes in foreign currency exchange rates, changes in the capital ratio requirements, the guidelines regarding the computation of capital ratios, or the framework set by the Basel Committee upon which the guidelines of the Financial Services Commission are based, or other adverse developments affecting our asset quality or equity capital. If the capital adequacy ratios of us or our subsidiaries were to fall below the required levels, the Financial Services Commission might impose penalties which may range from a warning to suspension or revocation of our or our subsidiaries’ business licenses. In addition, additional capital requirements may increase our or our subsidiaries’ credit risk and require us or our subsidiaries to either improve asset quality or raise additional capital. In order to

maintain the capital adequacy ratios above the required levels, we or our subsidiaries may be required to raise additional capital through equity financing, and there is no assurance that we or our subsidiaries will be able to do so on commercially favorable terms or at all and, even if successful, any such capital raising may have a dilutive effect on our shareholders with respect to their interest in us or on us with respect to our interest in our subsidiaries.

Liquidity, funding management and credit ratings are critical to our ongoing performance.

Liquidity is essential to our business as a financial intermediary, and we may seek additional funding in the near future to satisfy liquidity needs, meet regulatory requirements, enhance our capital levels or fund the growth of our operations as opportunities arise.

For example, Basel III includes an international framework for liquidity risk measurement, standards and monitoring, as noted above, including a new minimum liquidity standard, known as the liquidity coverage ratio, which is designed to ensure that banks have an adequate stock of unencumbered high quality liquid assets (“HQLA”) that can be easily and speedily converted into cash in the private marketplace to survive a significant stress scenario lasting 30 calendar days. The liquidity coverage ratio is computed as (a) the value of a banking organization’s HQLA, divided by (b) its total expected net cash outflows over the next 30 calendar days under stress scenarios. In January 2013, the Basel Committee released a revised formulation of the liquidity coverage ratio. The Basel Committee extended the timetable for full phase-in of the liquidity coverage ratio to the effect that the minimum liquidity coverage ratio was set at 60% as of January 1, 2015 and thereafter was increased in annual increments of 10% so that the minimum liquidity coverage ratio would reach 100% as of January 1, 2019. The Regulation on the Supervision of the Banking Business was further amended in December 2014 to implement the liquidity coverage ratio requirements under Basel III in increments of 5% annually, from 80% as of January 1, 2015 to 100% as of January 1, 2019, and although the liquidity coverage ratio requirement was temporarily lowered during the COVID-19 pandemic, the liquidity coverage ratio requirement has been restored to 100% since January 1, 2025.

A substantial part of the liquidity and funding requirements for our banking subsidiaries is met through short-term customer deposits, which typically roll over upon maturity. While the volume of our customer deposits has generally been stable over time, customer deposits have from time to time declined substantially due to the popularity of other, higher-yielding investment opportunities, primarily stocks and mutual funds, for example, during times of bullish stock markets. During such times, our banking subsidiaries were required to obtain alternative funding at higher costs. There is no assurance that a similar development will not occur in the future. In addition, in recent years, we have faced increasing pricing competition from our competitors with respect to our deposit products. If we do not continue to offer competitive interest rates to our deposit customers, we may lose their business, which has traditionally provided a stable and low-cost source of funding. In addition, even if we are able to match our competitors’ pricing, doing so may result in an increase in our funding costs, which may have an adverse impact on our results of operations.

We and our subsidiaries also raise funds in capital markets and borrow from other financial institutions, the cost of which depends on market rates and the general availability of credit and the terms of which may limit our ability to pay dividends, make acquisitions or subject us to other restrictive covenants. While we and our subsidiaries are not currently facing liquidity difficulties in any material respect, if we or our subsidiaries are unable to obtain the funding we need on terms commercially acceptable to us for an extended period of time for whatever reason, we may not be able to ensure our financial viability, meet regulatory requirements, implement our strategies or compete effectively.

Credit ratings affect the cost and other terms upon which we and our subsidiaries are able to obtain funding. Domestic and international rating agencies regularly evaluate us and our subsidiaries, and their ratings of our and our subsidiaries’ long-term debt are based on a number of factors, including our financial strength as well as

conditions affecting the financial services industry and the Korean economy in general. There can be no assurance that the rating agencies will maintain our current ratings or outlooks. There is no assurance that Shinhan Bank, Shinhan Card, any of our other major subsidiaries or our holding company will not experience a downgrade in their respective credit ratings and outlooks for reasons related to the general Korean economy or reasons specific to such entity. Any downgrades in the credit ratings and outlooks of us and our subsidiaries will likely increase our cost of funding, limit our access to capital markets and other borrowings, or require us to provide additional credit enhancement in financial transactions, any of which could adversely affect our liquidity, net interest margins and profitability, and in turn, our business, financial condition and results of operations.

Our business may be materially and adversely affected by legal claims and regulatory actions against us, including with respect to financial products sold by us or our subsidiaries.

In the ordinary course of our business, we are subject to risk of legal claims and regulatory actions. We are also subject to a variety of other lawsuits, claims, disputes, legal proceedings and government investigations in Korea and other jurisdictions where we are active, including with respect to financial products sold by us or our subsidiaries. For example, in the past there have been incidents of alleged improper sales of financial products, such as those involving Lime Asset Management Co., Ltd. products, Discovery Asset Management Co., Ltd. products and certain German Heritage derivative-linked securities. Although we have taken measures and strive to improve our risk management systems and internal controls to prevent similar incidents, including updating the internal controls and performance evaluation systems for Shinhan Bank and Shinhan Securities, no assurance can be given that similar incidents have not occurred or will not occur in the future or that such incidents will always be detected, deterred or prevented. We may be required to compensate purchasers of such financial products sold by us or suffer losses and record provisions for credit loss allowance for expected losses in connection with such financial products, and we may also suffer harm to our and our subsidiaries’ reputation, any of which may increase our operational and compliance costs and subject us to greater scrutiny by regulators and other parties. These types of claims, disputes, proceedings or investigations may expose us to substantial monetary and/or reputational damages, legal defense costs, injunctive relief, criminal and civil penalties and the potential for regulatory restrictions on our businesses or sanctions against our management and employees. See “Item 8.A. Consolidated Statements and Other Financial Information — Legal Proceedings” and Note 47 of the notes to our consolidated financial statements included in this annual report.

While we plan to rigorously defend our positions in such disputes, lawsuits or other regulatory proceedings against us, the outcome of these matters are highly uncertain and difficult to predict, and they could adversely affect our results of operation and future business. The total amount in dispute or subject to regulatory action may increase during the course of these legal claims and regulatory actions, and other lawsuits may be brought against us based on similar allegations. Accordingly, these legal claims and regulatory actions may have material adverse effect on our business, financial condition, results of operations and reputation.

The most significant market risks we face are interest rate, foreign exchange and bond and equity price risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate margin realized between lending and borrowing costs. Changes in foreign currency exchange rates, particularly in the Korean Won to U.S. Dollar exchange rates, affect the value of our assets and liabilities denominated in foreign currencies, the reported earnings of our non-Korean subsidiaries and income from foreign exchange dealings, and substantial and rapid fluctuations in exchange rates may cause difficulty in obtaining foreign currency-denominated financing in the international financial markets on commercial terms acceptable to us or at all. The performance of financial markets may affect bond and equity prices and, therefore, cause changes in the value of our investment and trading portfolios. While we have implemented risk management systems and risk thresholds to mitigate and control these and other market risks to which we are exposed, it is difficult to predict with accuracy changes in economic or market conditions and to anticipate the effects that such changes could have on our business, financial condition and results of operations.

Historically, Korea, like many other countries, has experienced interest rate fluctuations, in part due to the Government’s policy to stabilize the economy through active rate-controlling measures. The Bank of Korea reduced the base interest rate from 1.75% to 1.50% in July 2019, from 1.50% to 1.25% in October 2019, from 1.25% to 0.75% in March 2020 and from 0.75% to 0.50% in May 2020. The Bank of Korea raised the base interest rate from 0.50% to 0.75% in August 2021, from 0.75% to 1.00% in November 2021, from 1.00% to 1.25% in January 2022, from 1.25% to 1.50% in April 2022, from 1.50% to 1.75% in May 2022, from 1.75% to 2.25% in July 2022, from 2.25% to 2.50% in August 2022, from 2.50% to 3.00% in October 2022, from 3.00% to 3.25% in November 2022 and from 3.25% to 3.50% in January 2023. The Bank of Korea reduced the base interest rate from 3.50% to 3.25% in October 2024, from 3.25% to 3.00% in November 2024 and from 3.00% to 2.75% in February 2025. Interest rate movements, in terms of magnitude and timing as well as their relative impact on our assets and liabilities, have a significant impact on our net interest margin and profitability, particularly with respect to our financial products that are sensitive to such movements. For example, if the interest rates applicable to our loans (which are recorded as assets) increase at a slower pace or by a thinner margin than the interest rates applicable to our deposits (which are recorded as liabilities), our net interest margin will shrink and our profitability will be negatively affected. In addition, the relative size and composition of our variable rate loans and deposits (as compared to our fixed rate loans and deposits) may also impact our net interest margin. Furthermore, the difference in the average repricing frequency of our interest-earning assets (primarily loans) compared to our interest-bearing liabilities (primarily deposits) may also impact our net interest margin. For example, since our deposits tend to have longer terms, on average, than those of our loans, our deposits are on average less sensitive to movements in the base interest rates on which our deposits and loans tend to be pegged, and therefore, a decrease in the base interest rates tends to decrease our net interest margin while an increase in the base interest rates tends to have the opposite effect. While we continually manage our assets and liabilities to minimize our exposure to interest rate volatility, such efforts by us may not mitigate the impact of interest rate volatility in a timely or effective manner, and our net interest margin, and in turn our financial condition and results of operations, could suffer significantly.

The following table sets forth, for the periods and dates indicated, certain information concerning the Noon Buying Rate in Won per US$1.00.


Year Ended December 31,	At End of Period		Average⁽¹⁾		High		Low

	(Won per US$1.00)
2020		1,086.1		1,180.6		1,267.3		1,081.9
2021		1,188.6		1,144.9		1,198.7		1,081.6
2022		1,260.2		1,291.8		1,440.5		1,187.0
2023		1,291.0		1,306.8		1,362.9		1,220.3
2024		1,477.9		1,363.4		1,477.9		1,300.5
October		1,377.6		1,362.4		1,389.2		1,321.5
November		1,397.0		1,395.0		1,408.3		1,375.2
December		1,477.9		1,440.0		1,477.9		1,406.1
2025 (through April 4)		1,457.8		1,452.5		1,474.4		1,429.2
January		1,453.9		1,452.2		1,473.4		1,429.2
February		1,459.0		1,444.8		1,461.2		1,429.8
March		1,474.4		1,458.3		1,474.4		1,444.7
April (through April 4)		1,457.7		1,460.3		1,471.0		1,450.6

Source: Federal Reserve Board

Note:

(1)

The average rate for annual and interim periods were calculated by taking the simple average of the Noon Buying Rates on the last day of each month during the relevant period. The average rates for the monthly periods (or portion thereof) were calculated by taking the simple average of the daily Noon Buying Rates during the relevant month (or portion thereof).

We have translated certain amounts in Korean Won, which appear in this annual report, into U.S. Dollars for convenience. This does not mean that the Won amounts referred to could have been, or could be, converted into U.S. Dollars at any particular rate, the rates stated above, or at all. Unless otherwise stated, translations of Won amounts to U.S. Dollars are based on the Noon Buying Rate in effect on December 31, 2024, which was W1,477.9 to US$1.00. On April 4, 2025, the Noon Buying Rate in effect was W1,457.7 to US$1.00.

We cannot assure you when and to what extent the Bank of Korea will in the future adjust the base interest rate, to which the market interest rate correlates. A decision to adjust the base interest rate is subject to many policy considerations as well as market factors, including the general economic cycle, inflationary levels, interest rates in other economies and foreign currency exchange rates, among others. In general, a decrease in interest rates adversely affects our interest income due to the different maturity structure for our assets and liabilities as discussed above. In contrast, if there were to be a significant or sustained increase in interest rates, all else being equal, such movement would lead to a decline in the value of traded debt securities and could also raise our funding costs, while reducing loan demand, especially among retail customers. Rising interest rates may therefore require us to re-balance our assets and liabilities in order to minimize the risk of potential mismatches in our asset liability management and to maintain our profitability. In addition, rising interest rates may adversely affect the Korean economy and the financial condition of our corporate and retail borrowers, including holders of our credit cards, which in turn may lead to deterioration of asset quality for our credit portfolio. Since most of our retail and corporate loans bear interest at rates that adjust periodically based on prevailing market rates, a sustained increase in interest rates will increase the funding costs of our borrowers and may adversely affect their ability to make payments on their outstanding loans. See “Item 5.A. Operating Results — Interest Rates.”

We may incur losses associated with our counterparty exposures.

We face the risk that counterparties will be unable to honor contractual obligations to us or our subsidiaries. These parties may default on their obligations to us or our subsidiaries due to bankruptcy, lack of liquidity, operational failure or other reasons. This risk may arise, for example, from entering into swaps or other derivative contracts under which counterparties have obligations to make payments to us or our subsidiaries or in executing currency or other trades that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries. Any realization of counterparty risk may adversely affect our business, operations and financial condition.

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, could adversely affect our results of operations and financial condition.

In early 2023, financial troubles at several banks in the United States and Europe caused uncertainty and fear of instability in the global financial system generally, particularly in the banking sector. Such difficulties were caused, among others, by rising levels of inflation and rapid increase in base interest rates by the governments globally. Many financial institutions have experienced volatile stock prices and significant losses in their equity value, and many have faced heightened risk of bank runs. Any negative perceptions resulting from such developments concerning the soundness of savings banks, Internet-only banks or the banking system generally in Korea could affect customers’ decision on where to maintain their deposits, which may result in financial distress and closure for certain banks in Korea. Also in cases where such distress could pose a systemic risk, the Government may require us or Shinhan Bank, as one of the largest bank holding companies and commercial banks, respectively, in Korea, to actively participate in the Government’s initiative to mitigate such difficulties, which could strain our resources, divert our management’s attention and have an adverse impact on our results of operations and financial condition.

Events involving limited liquidity, defaults, non-performance or other adverse developments that affect the financial services industry generally or financial institutions, transactional counterparties or other companies in the financial services industry, may in the future lead to market-wide liquidity problems or increase our risk in various dealings with its counterparties, among others. If, as a result of such developments, any parties with

whom we conduct business are unable to access their deposits with a distressed financial institution or any of their other funds loaned to such distressed financial institution, including through financial instruments or lending arrangements, such parties’ credit quality, ability to pay their obligations to us, or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. In addition, our ability to access funding sources and other arrangements in amounts adequate to finance or capitalize our current and future business operations or to fulfill our financial obligations could also be affected by such disruptions or instability in the financial services industry or financial markets. Furthermore, we could be impacted by current or future negative perceptions, expectations or rumors about the prospects for the financial services industry, which could worsen over time and result in downward pressure on, and continued or accelerated volatility of, bank securities. Any of these developments resulting from the general instability of the financial services industry could materially adversely impact our results of operations and financial condition.

Risks Relating to Our Banking Business

We have significant exposure to small- and medium-sized enterprises, and financial difficulties experienced by such enterprises may result in a deterioration of our asset quality.

Our banking activities are conducted primarily through our wholly-owned subsidiary, Shinhan Bank. One of our core banking businesses has historically been and continues to be lending to small- and medium-sized enterprises (as defined in “Item 4.B. Business Overview — Our Principal Activities — Corporate Banking Services — Small- and Medium-sized Enterprises Banking”). Shinhan Bank’s loans (before allowance for credit losses and deferred loan origination costs and fees) to such enterprises amounted to W131,304 billion as of December 31, 2022, W134,271 billion as of December 31, 2023 and W145,327 billion as of December 31, 2024, representing 31.8%, 32.2% and 31.9% respectively, of our total loan portfolio as of such dates.

Compared to loans to large corporations, which tend to be better capitalized and better able to weather business downturns, or loans to individuals and households, which tend to be secured with homes and with respect to which the borrowers are therefore less willing to default, loans to small- and medium-sized enterprises have historically had a relatively higher delinquency ratio. Many small- and medium-sized enterprises represent sole proprietorships or small businesses dependent on a relatively limited number of suppliers or customers and tend to be affected to a greater extent than large corporate borrowers by fluctuations in the Korean and global economy. In addition, small- and medium-sized enterprises often maintain less sophisticated financial records than large corporate borrowers. Therefore, it is generally more difficult for banks to judge the level of risk inherent in lending to such enterprises, as compared to large corporations. In addition, many small- and medium-sized enterprises are dependent on business relationships with large corporations in Korea, primarily as suppliers. Any difficulties encountered by those large corporations would likely hurt the liquidity and financial condition of related small- and medium-sized enterprises, including those to which we have exposure, also resulting in an impairment of their ability to repay loans. As large Korean corporations continue to expand into China, Southeast Asia and other countries with lower labor costs and other expenses by relocating their production plants and facilities to such countries, such development may have a material adverse impact on such small- and medium-sized enterprises.

Financial difficulties experienced by small- and medium-sized enterprises as a result of, among other things, recent economic difficulties in Korea and globally and aggressive marketing and intense competition among banks to lend to this segment in recent years, coupled with our efforts to counter asset quality deterioration through conservative lending policy, have led to a fluctuation in the asset quality of our loans to this segment. As of December 31, 2022, 2023 and 2024, Shinhan Bank’s delinquent loans to small- and medium-sized enterprises were W385 billion, W542 billion and W645 billion, respectively, representing delinquency ratios (net of charge-offs and loan sales) of 0.29%, 0.40% and 0.44%, respectively. If the ongoing difficulties in the Korean or global economy were to continue or aggravate, the delinquency ratio for our loans to small- and medium-sized enterprises may rise.

Of particular concern is our exposure to enterprises in the real estate and leasing, and construction industries. As of December 31, 2024, Shinhan Bank had outstanding loans (before allowance for credit losses on loans and deferred loan origination costs and fees) to enterprises in the real estate and leasing, and construction industries (many of which are small- and medium-sized enterprises) of W52,229 billion and W4,922 billion, respectively, representing 13.4% and 1.3%, respectively, of its total loan portfolio as of such date. We also have other exposure to borrowers in these sectors of the Korean economy, including extending guarantees for the benefit of such companies and holding debt and equity securities issued by such companies. In addition, Shinhan Bank has exposure to borrowers in the shipbuilding and shipping industries, which have yet to stage a meaningful turnaround.

The enterprises in the real estate development and construction industries in Korea, which are heavily concentrated in the housing market, may in turn face difficulties if the housing market were to face difficulties, for example, due to Government policy measures to stabilize the real estate market, oversupply of residential property, ongoing economic sluggishness in Korea and globally or demographic changes in the Korean population. We also have limited exposure to real estate project financing, particularly by construction companies that have built residential units in provinces outside the metropolitan Seoul area, which have recently been experiencing increasing level of delinquencies primarily due to a relatively low rate of pre-sales, the proceeds from which the construction companies primarily rely on as a key source for liquidity and cash flow.

Any of the foregoing developments may result in deterioration in the asset quality of our banking subsidiaries. See “Item 4.B. Business Overview — Description of Assets and Liabilities — Credit Exposures to Companies in Workout and Recovery Proceedings.” We have been taking active steps to curtail delinquency among our small- and medium-sized enterprise customers, including by way of strengthening loan application review processes and closely monitoring borrowers in troubled sectors. Despite such efforts, there is no assurance that the delinquency ratio for our loans to small- and medium-sized enterprises will not rise in the future, especially if the Korean economy were to face renewed difficulties and, as a result, the liquidity and cash flow of these borrowers deteriorate. A significant rise in the delinquency ratios among these borrowers would lead to increased charge-offs and higher provisioning and reduced interest and fee income, which would have a material adverse effect on our business, financial condition and results of operations.

A decline in the value of the collateral securing our loans or our inability to fully realize the collateral value may adversely affect our credit portfolio.

Most of our mortgage and home equity loans are secured by borrowers’ homes, other real estate, other securities and guarantees (which are principally provided by the Government and other financial institutions), and a substantial portion of our corporate loans are also secured, including by real estate. As of December 31, 2024, the secured portion of Shinhan Bank’s loans amounted to W258,721 billion, representing 66.3% of its total loans. No assurance can be given that the collateral value will not materially decline in the future. Shinhan Bank’s general policy for mortgage and home equity loans is to lend up to 40% to 85% of the appraised value of the collateral, but subject to the maximum loan-to-value ratio, debt-to-income ratio and debt service ratio requirements for mortgage loans implemented by the Government, and to periodically re-appraise such collateral. In order to mitigate our loss in the event of a decrease in the value of collateral, we have made effort to increase the proportion of installment principal repayment-based loans and manage the loan-to-value ratio of loans. As of December 31, 2024, installment principal repayment-based housing loans accounted for 61.4% of the housing loans extended by Shinhan Bank, and the loan-to-value ratio of mortgage and home equity loans of Shinhan Bank was 49.5%. Despite these efforts however, if the real estate market in Korea experiences a downturn, the value of the collateral may fall below the outstanding principal balance of the underlying mortgage loans. Borrowers of such under-collateralized mortgages or loans may be forced to pay back all or a portion of such mortgage loans or, if unable to meet the collateral requirement through such repayment, sell the underlying collateral, which sales may lead to a further decline in the price of real estate in general and set off a chain reaction for other borrowers due to the further decline in the value of collateral. Declines in real estate prices reduce the value of the collateral securing our mortgage and home equity loans, and such reduction in the value

of collateral may result in our inability to cover the uncollectible portion of our secured loans. A decline in the value of the real estate or other collateral securing our loans, or our inability to obtain additional collateral in the event of such decline, may result in the deterioration of our asset quality and require us to make additional loan loss provisions. In Korea, foreclosure on collateral generally requires a written petition to a Korean court. Foreclosure procedures in Korea generally take 7 to 12 months from initiation to collection depending on the nature of the collateral, and foreclosure applications may be subject to delays and administrative requirements, which may result in a decrease in the recovery value of such collateral. No assurance can be given that we will be able to realize the full value of collateral as a result of, among others, delays in foreclosure proceedings, defects in the perfection of collateral and general declines in collateral value. Our failure to recover the expected value of collateral could expose us to significant losses.

Real estate project financing exposure poses significant risk, and guarantees received in connection with our real estate financing may not provide sufficient coverage.

Primarily through Shinhan Bank, we, alone or together with other financial institutions, provide financing to real estate development projects, which are concentrated largely in the construction of residential complexes as developers in Korea commonly use project financing to acquire land and pay for related project development costs. Exposure to such real estate project financing poses significant risk for banks and other financial institutions, including us and Shinhan Bank, particularly amidst the recent slowdown in market demand, demonstrated by an increase in unsold properties, and elevated interest rates. We have designated real estate project financing exposure as a key risk management area and take a unified approach across relevant subsidiaries by setting an annual Group-wide aggregate limit and subsequently allocating the limit applicable to each relevant subsidiary.

We evaluate the soundness of the underlying real estate development projects in accordance with the enhanced business feasibility evaluation criteria announced by the Financial Supervisory Service in 2024. According to such criteria, real estate development projects are classified into four classes of soundness – normal, average, caution, and warning. We pay particular attention to project financing provided to real estate development projects classified at caution or warning levels and, where necessary, set aside provisions for credit loss and charge-offs. As of December 31, 2024, real estate project financing provided to real estate development projects classified at caution or warning levels represented 5.37% of our total real estate project financing loans. Shinhan Bank has also actively managed and reduced its real estate project financing-related exposure, particularly during sustained downturns in the Korean real estate market, and as of December 31, 2024, the total outstanding amount of Shinhan Bank’s real estate project financing-related exposure was W9.6 trillion.

Lenders in project financing, including us and Shinhan Bank, generally receive from general contractors a performance guarantee for the completion of projects by the developers as well as a payment guarantee for the loans raised by a special purpose financing vehicle established by the developers in order to procure the construction orders, as the developers tend to be small and highly leveraged. Although we will continue our Group-wide efforts to, and Shinhan Bank will also continue its efforts to, effective manage real estate project financing exposure, if defaults were to significantly increase under our existing loans to real estate development projects or the quality of such loans were to deteriorate, and particularly if general contractors fail to pay the guaranteed amount necessary to cover the amount of such financings, it may have an adverse effect on our and Shinhan Bank’s business, financial condition and results of operations.

Of Shinhan Bank’s 10 largest corporate exposures as of December 31, 2024, two were companies for which Shinhan Bank was a main creditor bank. All of the 10 companies are members of the main debtor groups as identified by the Governor of the Financial Supervisory Service, which are largely comprised of the largest Korean commercial conglomerates known as “chaebols.” As of such date, the total amount of Shinhan Bank’s

exposures to the 10 companies was W41,959 billion, or 15.6%, of its total exposures. As of that date, Shinhan Bank’s single largest outstanding exposure to a main debtor group amounted to W6,566 billion, or 2.4%, of its total exposures. If the credit quality of Shinhan Bank’s exposure to large corporations, including those in the main debtor groups, declines, Shinhan Bank may be required to record additional loan loss provisions in respect of loans and impairment losses in respect of securities, which would adversely affect its financial condition, results of operations and capital adequacy. No assurance can be given that the allowances established by Shinhan Bank against these exposures will be sufficient to cover all future losses arising from such exposures, especially in the case of a prolonged or renewed economic downturn.

A limited number of the main debtor groups to which Shinhan Bank has credit exposure are subject to restructuring programs or are otherwise making significant efforts to improve their financial conditions, such as by obtaining intragroup loans and entering into agreements to further improve their capital structures. No assurance can be given that there will not be future restructuring with Shinhan Bank’s major corporate customers or that such restructuring will not result in significant losses to Shinhan Bank with less than full recovery. In addition, if the Government decides to pursue an aggressive restructuring policy with respect to distressed companies, Korean commercial banks, including Shinhan Bank, may face a temporary rise in delinquencies and intensified pressure for additional provisioning. Furthermore, bankruptcies or financial difficulties of large corporations, including chaebol groups, may have an adverse ripple effect of triggering delinquencies and impairment of Shinhan Bank’s loans to small- and medium-sized enterprises that supply parts or labor to such corporations. If Shinhan Bank experiences future losses from its exposure to large corporations, including chaebol groups, it may have a material adverse effect on Shinhan Bank’s business, financial condition and results of operations. See “Item 4.B. Business Overview — Description of Assets and Liabilities — Loans — Loan Portfolio — Exposure to Main Debtor Groups.”

The asset quality of our retail loan portfolio may deteriorate.

In recent years, consumer debt, including lending to households and small unincorporated businesses, has continued to increase in Korea. Shinhan Bank’s portfolio of retail loans is comprised of two principal product types, namely secured retail loans (which are primarily comprised of mortgage and home equity loans secured by real estate) and general purpose loans (which are unsecured loans and tend to carry a higher credit risk). As of December 31, 2024, Shinhan Bank’s retail loan portfolio (before allowance for credit losses and deferred loan origination costs and fees and excluding credit card loans) was W153,255 billion, representing 39.3% of its total loans outstanding. As of December 31, 2022, 2023 and 2024, Shinhan Bank’s non-performing retail loans (excluding credit card loans) were W289 billion, W377 billion and W446 billion, respectively, representing non-performing loan ratios (net of charge-offs and loan sales) of 0.20%, 0.27% and 0.29%, respectively.

Our large exposure to consumer debt means that we are exposed to changes in economic conditions affecting Korean consumers. For example, a rise in unemployment, an increase in interest rates or a decline in housing prices in Korea could adversely affect the ability of consumers to make payments and increase the likelihood of potential defaults. Economic difficulties in Korea that hurt consumers could result in increasing delinquencies and a decline in the asset quality of our household loan portfolio, which may in turn require us to record higher provisions for credit loss and charge-offs and may materially and adversely affect our financial condition and results of operations.

Any deterioration in the asset quality of our guarantees and acceptances will likely have a material adverse effect on our financial condition and results of operations.

In the normal course of banking activities, we make various commitments and incur certain contingent liabilities in the form of guarantees and acceptances. Financial guarantees, which are contracts that require us to make specified payments to reimburse the beneficiary of the guarantee for a loss such beneficiary incurs because the debtor in respect of which the guarantee is given fails to make payments when due in accordance with the terms of the relevant debt instrument, are recognized initially at fair value, and such initial fair value is amortized

over the life of the financial guarantee. Other guarantees are recorded as off-balance sheet items in the notes to our financial statements and those guarantees that we have confirmed to make payments are recorded on the statements of financial position. As of December 31, 2024, Shinhan Bank had aggregate guarantees and acceptances of W22,376 billion, for which it provided allowances for losses of W103.1 billion. If there is significant deterioration in the quality of assets underlying our guarantees and acceptances, our allowances may be insufficient to cover actual losses resulting in respect of these liabilities.

Risks Relating to Our Credit Card Business

Future changes in market conditions as well as other factors, such as stricter regulation, may lead to reduced revenues and deterioration in the asset quality of credit card receivables.

As of December 31, 2022, 2023 and 2024, Shinhan Card’s interest-earning assets (credit card, installment financing, lease, etc.) amounted to W39,034 billion, W40,457 billion and W40,199 billion, respectively. Our large exposure to credit card and other consumer debt means that we are exposed to changes in economic conditions affecting Korean consumers in general. For example, a rise in unemployment, an increase in interest rates, a downturn in the real estate market, or a general contraction or other difficulties affecting the Korean economy may lead Korean consumers to reduce spending (a substantial portion of which is conducted through credit card transactions), which in turn leads to reduced earnings for our credit card business, as well as to higher default rates on credit card loans, deterioration in the quality of our credit card assets and increased difficulties in recovering written-off assets from which a significant portion of Shinhan Card’s revenues is derived. Any of these developments could have a material adverse effect on our business, financial condition and results of operations.

Increasing consumer and corporate spending and borrowing on our card products and growth in card lending balances depend in part on Shinhan Card’s ability to develop and issue new or enhanced card and prepaid products and increase revenue from such products and services, as well as the level of discretionary income among our cardholders, which is largely affected by macroeconomic factors beyond our control. In addition, credit card companies in Korea, including Shinhan Card, may not be able to enjoy any rapid growth in revenue over the long term due to the maturing nature of the credit card industry, in part due to oversaturation of credit card service providers. Shinhan Card’s future earnings and profitability also depend on its ability to attract new cardholders, reduce cardholder attrition, increase merchant coverage and capture a greater share of customers’ total credit card spending in Korea and overseas. Shinhan Card may not be able to manage and expand cardholder benefits in a cost-effective manner or contain the growth of marketing, promotion and reward expenses to a commercially reasonable level. If Shinhan Card is not successful in increasing customer spending, maintaining or expanding its market position and asset growth, or containing costs or cardholder benefits, its financial condition, results of operations and cash flow could be negatively affected.

Non-financial companies, such as e-commerce and retail business, as well as fintech companies have become major competitors in various business areas. Fast-growing online service providers and tech companies joined the financial payment service market, changing the landscape of the payment service industry. Convenient payment service providers such as Kakao Pay, Naver Pay, and Coupang Pay are competing against the payment services of Shinhan Card. As a response to such market changes, Shinhan Card developed the “Shinhan SOL Pay”, which is a platform for mobile application-credit card payment model that can be used for both online and offline payments. Shinhan Card pioneered “touch payment” using magnetic secure transmission technology and commercialized biometric “Face Pay,” which allows for payment without the need for card plates or smartphone. Competition is expected to intensify as additional MyData service providers enter the market and the sharing of customer personal information, credit information, and transaction data across a variety of digital platforms is expanded.

In addition, Government policies and regulations aimed at protecting small- and medium-sized enterprises, such as the reduction of fees chargeable to small- and medium-sized merchants, may have a material adverse

effect on our revenues from Shinhan Card. In January 2012, the Government expanded the definition of a small- and medium-sized merchant to include those with annual sales of up to W200 million and, effective September 2012, lowered fees chargeable to such merchants from 1.8% to 1.5% with respect to credit cards. In January 2015, the Government further expanded the definition of a small- and medium-sized merchant to include those with annual sales of more than W200 million and up to W300 million, and imposed a cap on fees chargeable to such merchants at 2.0% with respect to credit cards. In November 2015, the Government announced a further reduction in the merchant fees chargeable to small- and medium-sized enterprises with respect to credit cards, effective January 31, 2016, from 2.0% to 1.3% for merchants with annual sales of more than W200 million and up to W300 million, and from 1.5% to 0.8% for merchants with annual sales of up to W200 million. In July 2017, the Enforcement Decree of the Specialized Credit Finance Business Act was amended to expand the range of small- and medium-sized enterprises subject to lower merchant fees. Upon the amendment, merchants with annual sales of more than W300 million and up to W500 million are subject to merchant fees chargeable with respect to credit cards of 1.3%, and merchants with annual sales of up to W300 million are subject to merchant fees chargeable with respect to credit cards of 0.8%. In January 2019, the government further expanded the definition of a small- and medium-sized merchant to include those with annual sales of more than W500 million and up to W3 billion. Upon the amendment, merchants with annual sales of less than W500 million are subject to merchant fees chargeable with respect to credit cards of 0.8%, merchants with annual sales of more than W500 million and up to W1 billion are subject to merchant fees chargeable with respect to credit cards of 1.4%, and merchants with annual sales of more than W1 billion and up to W3 billion are subject to merchant fees chargeable with respect to credit cards of 1.6%. Effective January 2022, the fees chargeable to small- and medium-sized enterprises with respect to credit cards were further reduced. Upon the amendment, merchants with annual sales of less than W300 million are subject to merchant fees chargeable with respect to credit cards of 0.5%, merchants with annual sales of more than W300 million and up to W500 million are subject to merchant fees chargeable with respect to credit cards of 1.1%, merchants with annual sales of more than W500 million and up to W1 billion are subject to merchant fees chargeable with respect to credit cards of 1.25%, and merchants with annual sales of more than W1 billion and up to W3 billion are subject to merchant fees chargeable with respect to credit cards of 1.5%. Pursuant to the Specialized Credit Financial Business Act, the rates of fees chargeable to merchants are subject to review and revision every six years. Most recently, the merchant commission rate was adjusted in February 2025. Effective January 2025, the fees chargeable to small- and medium-sized enterprises with respect to credit cards were further reduced. Upon the amendment, merchants with annual sales of less than W300 million are subject to merchant fees chargeable with respect to credit cards of 0.4%, merchants with annual sales of more than W300 million and up to W500 million are subject to merchant fees chargeable with respect to credit cards of 1.0%, merchants with annual sales of more than W500 million and up to W1 billion are subject to merchant fees chargeable with respect to credit cards of 1.15%, and merchants with annual sales of more than W1 billion and up to W3 billion are subject to merchant fees chargeable with respect to credit cards of 1.45%. Additionally, in 2018, the Seoul metropolitan and other regional governments launched “Zero Pay”, a government sponsored QR code-based mobile payment platform charging little to no transaction fees (up to 0.5% depending on volume of sales) and aimed at reducing transaction fees small businesses pay to credit card companies. The Financial Services Commission also announced its plans to establish an open banking system that would provide fintech firms access to banks’ payment systems at lower costs. Additional amendments to regulations requiring further downward adjustments to merchant fees or Government policies aimed at reducing transaction fees paid to credit card companies may be implemented in the future, placing further downward pressure on the results of operations for credit card companies, including Shinhan Card.

In 2013, the Government also implemented measures regulating marketing costs in order to control excessive marketing campaigns and curtail undue marketing expenses, which had the effect of impeding revenue growth for credit card companies but also reduced or slowed the growth in their marketing expenses. The Government also introduced guidelines to curb the interest rates that credit card companies, including Shinhan Card, may charge on card loans and cash advances. Furthermore, the Government also provides tax incentives, among others, for the use of check cards (where the amounts paid with check cards are instantly debited from the customer’s bank accounts) to encourage the use of check cards in lieu of credit cards in an attempt to preempt a

potential rise in delinquency among credit card users, and if check cards are widely used in lieu of credit cards, this would reduce interest income from credit cards, which generally have a longer repayment period than that of check cards, and may have an adverse impact on Shinhan Card’s revenues and results of operations. In 2018, the Financial Services Commission introduced additional guidelines aimed at curtailing excessive marketing expenses for credit card companies, for example by limiting the benefits credit card companies may offer to large corporate credit card clients or merchants as well as requiring a reasonable level of annual service fees for credit card holders. Although these and similar Government initiatives and measures may result in a reduction in marketing expenses, which in turn may help reduce the overall expenses of our credit card business, there is no assurance that Government measures will achieve their intended results, and such measures may result in a decline in the volume of credit card transactions or otherwise adversely affect our business, financial condition and results of operations.

Risks Relating to Our Other Businesses

We may experience significant losses from our investments and, to a lesser extent, trading activities due to market fluctuations.

We enter into and maintain large investment positions in fixed income products, primarily through our treasury and investment operations. These activities are described in “Item 4.B. Business Overview — Our Principal Activities — Other Banking Services.” We also maintain smaller trading positions, including equity and equity-linked securities and derivative financial instruments as part of our operations. Taking these positions entails making assessments about financial market conditions and trends. The revenues and profits we derive from many of these positions and related transactions are dependent on market prices, which are beyond our control. When we own assets such as debt or equity securities, a decline in market prices, for example, as a result of fluctuating market interest rates or stock market indices, can expose us to trading and valuation losses. If market prices move in a way that we have not anticipated, we may experience losses. In addition, when markets are volatile and subject to rapid changes in price directions, actual market prices may be contrary to our assessments and lead to lower than anticipated revenues or profits, or even result in losses, with respect to the related transactions and positions.

We may generate losses from our brokerage and other commission- and fee-based business.

We, through our investment and other subsidiaries, currently provide, and seek to expand the offerings of, brokerage and other commission- and fee-based services. Downturns in stock markets typically lead to a decline in the volume of transactions that we execute for our customers and, therefore, a decline in our non-interest revenues. In addition, because the fees that we charge for managing our clients’ portfolios are often based on the size of the assets under management, a downturn in the stock market, which has the effect of reducing the value of our clients’ portfolios or increasing the amount of withdrawals, also generally reduces the fees we receive from our securities brokerage, trust account management and other asset management services. Even in the absence of a market downturn, below-market performance by our securities, trust account or asset management subsidiaries may result in increased withdrawals and reduced cash inflows, which would reduce the revenue we receive from these businesses. In addition, protracted declines in asset prices can reduce liquidity for assets held by us and lead to material losses if we cannot close out or otherwise dispose of deteriorating positions in a timely way or at commercially reasonable prices. In July 2019, we made a capital contribution of W660 billion by subscribing for new shares of common stock of Shinhan Securities, enabling Shinhan Securities to satisfy the W4 trillion capitalization requirement required to apply to the Financial Services Commission for designation as a mega-investment bank (“mega-IB”). Upon designation as a mega-IB, Shinhan Securities will be able to issue issued notes up to 200% of its capitalization amount and would be able to utilize such proceeds for corporate lending and other businesses. This capital contribution was made in line with our strategic initiative to strengthen our non-banking businesses and capital market activities. However, we cannot assure you that this capital contribution, any designation of Shinhan Securities as a mega-IB or any resulting developments will not have a negative effect on our business, financial condition and results of operations that outweigh any potential benefits, and we may not be successful in furthering our strategic initiative.

We, principally through Shinhan Life Insurance, offer fixed rate insurance policies such as savings insurance products that include guaranteed benefits. These products expose us to the risk that changes in interest rates will reduce our investment margin, which is the difference between the amounts that we are required to pay under the contracts and the rate of return we earn on investments intended to support obligations under such contracts. During periods of declining or low interest rates, we may have to invest insurance cash flows and reinvest the cash flows we received as interest or return of principal on our investments in lower yielding instruments. In addition, during periods of declining or low interest rates, fixed rate policies may become relatively more attractive investments to consumers. This could result in an increase in payments we are required to pay on such products and higher percentage of such products remaining in-force from year to year, during a period when our new investments carry lower returns. During periods of sustained lower interest rates, our reserves for policy liabilities may not be sufficient to meet future policy obligations and may need to be strengthened.

Significantly lower or negative investment margins may cause us to accelerate amortization, thereby reducing net income in the affected reporting period and potentially negatively affecting our credit instrument covenants or rating agency assessment of our financial condition. In addition, under IFRS 17, which became effective beginning 2023, insurance contract liabilities are calculated in terms of market value (as the present value of future insurance cash flows with a provision for risk) instead of book value. As the discount rate reflects current interest rates rather than book yields. We may have a significantly higher debt balance under IFRS 17 due to higher insurance liabilities, thereby resulting in a decrease in our risk-based capital.

We may fail to realize the anticipated benefits of and encounter significant risks in connection with mergers and acquisitions.

We continue to seek and evaluate opportunities for diversification and growth of our business, including through strategic acquisitions, and have experienced substantial growth through several mergers and acquisitions. On February 1, 2019, we acquired a 59.15% interest in Orange Life Insurance, the former Korean unit of ING Life Insurance, as part of our efforts to diversify and enhance our non-banking businesses. On January 28, 2020, we acquired the remaining interests in Orange Life Insurance by effecting a comprehensive stock exchange under Articles 360-2 of the Korean Commercial Code whereby holders (other than us) of Orange Life Insurance’s common stock transferred all of their shares to us and in return receive shares of our common stock, and hence Orange Life Insurance became our wholly owned subsidiary as of such date. Orange Life Insurance was subsequently merged with and into Shinhan Life Insurance in July 2021. On October 31, 2018, we agreed to acquire Asia Trust Co., Ltd. in order to expand our real estate business capacity and have also acquired certain small-sized overseas financial service companies and asset management companies. On September 29, 2020, we acquired a 96.8% interest in Neoplux, a venture capital company formerly under the Doosan Group. On December 30, 2020, we acquired the remaining interest in Neoplux by effecting a small-scale stock exchange under Article 360-10 of the Korean Commercial Code, and hence Neoplux became our wholly owned subsidiary as of such date. On January 11, 2021, Neoplux changed its legal name to Shinhan Venture Investment. In addition, on January 15, 2021, we acquired the remaining 35% interest in Shinhan BNP Paribas Asset Management and changed its legal name to Shinhan Asset Management, and hence Shinhan Asset Management became our wholly-owned subsidiary as of such date. On June 30, 2022 we acquired 94.54% interest in BNP Paribas Cardif General Insurance, which then changed its name to Shinhan EZ General Insurance, Ltd. Subsequently in November 2022, Shinhan EZ General Insurance, Ltd. conducted a paid-in capital increase and our shares decreased to 85.1%. We expect to integrate these and any future acquisitions with our existing businesses and generate synergies and expand our business capabilities. However, we may encounter significant risks, including difficulty in successfully integrating acquired businesses, increased expenses such as working capital requirements or capital expenditures, regulatory risks and financial risks such as potential liabilities of the

businesses we acquire. In addition, evaluating potential acquisitions may require us to incur significant expenses or divert management’s attention away from other business issues. As such, no assurance can be given that any completed or contemplated acquisitions will not have a negative effect on our business, financial condition and results of operations that outweigh any potential benefits.

Other Risks Relating to Us as the Holding Company

Our ability to continue to pay dividends and service debt will depend on the level of profits and cash flows of our subsidiaries.

We are a financial holding company with minimal operating assets other than the shares of our subsidiaries. Our primary source of funding and cash flow is dividends from, or disposition of our interests in, our subsidiaries or our cash resources, most of which are currently the result of borrowings. Since our principal assets are the outstanding capital stock of our subsidiaries, our ability to pay dividends on our common and preferred shares and service debt will mainly depend on the dividend payments from our subsidiaries.

Companies in Korea are subject to certain legal and regulatory restrictions with respect to payment of dividends. For example, under the Korean Commercial Code, dividends may only be paid out of distributable income, which is calculated by subtracting the aggregate amount of a company’s paid-in capital and certain mandatory legal reserves from its net assets, in each case as of the end of the prior fiscal year. In addition, financial companies in Korea, including banks, credit card companies, securities companies and life insurers, such as our subsidiaries, must meet minimum capital requirements and capital adequacy ratios applicable to their respective industries before dividends can be paid. For example, under the Banking Act of 1950, as amended (the “Banking Act”), a bank is required to credit at least 10% of its net profit to a legal reserve each time it pays dividends on distributable income until such time when this reserve equals the amount of its total paid-in capital, and under the Banking Act, the Specialized Credit Financial Business Act and the regulations promulgated by the Financial Services Commission, if a bank or a credit card company fails to meet its required capital adequacy ratio or is otherwise subject to the management improvement measures imposed by the Financial Services Commission, then the Financial Services Commission may restrict the declaration and payment of dividend by such a bank or credit card company. In addition, if our or our subsidiaries’ capital adequacy ratios fall below the required levels, our ability to pay dividends may be restricted by the Financial Services Commission.

Damage to our reputation could harm our business.

We are one of the largest and most influential financial institutions in Korea by virtue of our financial track records, market share and the size of our operations and customer base. Our reputation is critical to maintaining our relationships with clients, investors, regulators and the general public. Our reputation can be damaged in numerous ways, including, among others, employee misconduct (including embezzlement), cyber or other security breaches, litigation, compliance failures, corporate governance issues, failure to properly address potential conflicts of interest, the activities of customers and counterparties over which we have limited or no control, prolonged or exacting scrutiny from regulatory authorities and customers regarding our trade practices, or uncertainty about our financial soundness and our reliability. If we are unable to prevent or properly address these concerns, we could lose our existing or prospective customers and investors, which could adversely affect our business, financial condition and results of operations. For details of the claims, disputes, legal proceedings and government investigations we are subject to, see “Item 8.A. Consolidated Statements and Other Financial Information — Legal Proceedings.”

Our risk management policies and procedures may not be fully effective at all times.

In the course of our operations, we must manage a number of risks, such as credit risks, market risks and operational risks. We seek to monitor and manage our risk exposures through a comprehensive risk management platform, encompassing centralized risk management organization and credit evaluation systems, reporting and

monitoring systems, early warning systems and other risk management infrastructure, using a variety of risk management strategies and techniques. See “Item 4.B. Business Overview — Risk Management.” Although we devote significant resources to developing and improving our risk management policies and procedures and expect to continue to do so in the future, our risk management practices may not be fully effective at all times in eliminating or mitigating risk exposures in all market environments or against all types of risk, including risks that are unidentified or unanticipated. For example, in the past, a limited number of our and our subsidiaries’ personnel engaged in embezzlement of substantial amounts for an extended period of time before such activities were detected by our risk management systems. In response to these incidents, we have strengthened our internal control procedures by, among others, implementing a real-time monitoring system, but there is no assurance that such measures will be sufficient to prevent similar employee misconducts in the future. Management of credit, market and operational risk requires, among others, policies and procedures to record properly and verify a large number of transactions and events, and we cannot assure you that these policies and procedures will prove to be fully effective at all times against all the risks we face.

Labor unrest may adversely affect our operations.

Any significant labor unrest in the Korean financial industry or other sectors of the Korean economy could adversely affect our operations, as well as the operations of many of Shinhan Bank’s customers and their ability to repay their loans, and could affect the financial conditions of Korean companies in general. Such developments would likely have an adverse effect on our business, financial condition, results of operations and capital adequacy. See “Item 6.D. Employees.”

In 2018, the National Assembly passed a bill to amend the Labor Standards Act, pursuant to which the maximum working hours of employees was reduced from 68 hours per week to 52 hours per week. This new maximum working hours restriction under the amended Labor Standards Act has applied to workplaces with 300 or more workers since July 1, 2018, workplaces with 50 or more workers since January 1, 2020, and workplaces with five or more workers since July 1, 2021. Accordingly, we have reformed our workforce structure, including rearranging staffing where necessary, in order to improve efficiency and comply with the amended Labor Standards Act and believe, as of the date of this annual report, that the amended Labor Standards Act has not had a material adverse impact on our operations. However, there can be no assurance that any further changes to Labor Standards Act will not have a material adverse effect on our results of operations and financial condition.

We may experience disruptions, delays and other difficulties relating to our information technology systems.

We rely on our information technology systems to seamlessly provide our wide-ranging financial services as well as for our daily operations, including billing, online and offline financial transactions settlement and record keeping. We continually upgrade, and make substantial expenditures to upgrade, our group-wide information technology system, including in relation to customer data-sharing and other customer relations management systems, particularly in light of the heightened cyber security risks from advances in technology. Despite our best efforts, however, we may experience disruptions, delays, cyber or other security breaches or other difficulties relating to our information technology systems, and may not timely upgrade our systems as currently planned. Any of these developments may have an adverse effect on our business, particularly if our customers perceive us to not be providing the best-in-class cyber security systems and failing to timely and fully rectify any glitches in our information technology systems.

Our activities are subject to cyber security risk.

Our activities have been, and will continue to be, subject to an increasing risk of cyber-attacks, the nature of which is continually evolving. Cyber security risks include unauthorized access, through system-wide “hacking” or other means, to privileged and sensitive customer information, including passwords and account information, and illegal use thereof. Cyber security risk is generally on the rise as a growing number of our customers increasingly rely on our Internet- and mobile phone-based banking services for various types of financial

transactions. While we vigilantly protect customer data through encryption and other security programs and have made substantial investments to build and upgrade our systems and defenses to address the growing threats from cyber-attacks, there is no assurance that such data will not be subject to future security breaches. In addition, there can be no assurance that we will not experience a leakage of customer information or other security breaches as a result of illegal activities by our employees, outside consultants or hackers, or otherwise.

In order to minimize the risk of security breaches related to customer and our other proprietary information, we have taken a series of group-wide preventive measures, such as the adoption and implementation of a best-in-class information security system and reinforcement of internal control measures. We are fully committed to maintaining the highest standards of cyber security and consumer protection measures and upgrading them continually. We have established and are operating an information security management system for our company and our subsidiaries. We have implemented the ISO 27701 or ISO 27001-certified security management system and obtained the Information Security Management System certification and for most of our subsidiaries. We believe such certifications represent third-party validations that we are in compliance with best-in-class international standards on matters of information security. Our Integrated Cyber Security Monitoring Center’s security management system enables us to continuously monitor for signs of potential cyber-attacks and provides us with advance warnings that will allow us to promptly respond to such attacks. Our security management system continuously monitors for signs of potential cyber-attacks and is designed to provide early warning alerts to enable prompt action by us. In order to prevent intentional and accidental security issues by our employees, we have created a violation monitoring system, reinforcing our security measures by preemptively identifying various scenarios of threats and by collecting and analyzing different types of data that allows us to quickly identify any potential security violations. Moreover, we established a new information security lab within Shinhan DS, our IT services subsidiary that specializes in IT system development and management as well as cyber security and information protection, to build a continuous security research and development system aimed at responding to the latest hacking and other cyber threats. Through these measures, we are developing technical capabilities necessary to respond to the latest security threats. We also provide intensive employee training to our information technology staff and other employees on cyber security and have adopted advanced security infrastructure (including through hiring a highly competent team of information security experts) for online financial services such as mandatory website certification and keyboard security functions. In addition, reviews of our system are conducted, across all of our subsidiaries, through periodic audits and simulation reviews by external experts. In addition, in compliance with applicable regulations we currently carry insurance to cover cyber security breaches up to W10 billion in relation to our banking business and up to W3 billion in the aggregate and up to W1 billion per incident for our securities investment business and have set aside a reserve of W1 billion for our credit card business. In addition, in light of the growing use of mobile devices to access financial services, we have implemented security measures (including encryptions and service terminal monitoring) to provide a secure mobile banking service as well as to prevent illegal leakage or sharing of customer data and otherwise enhance customer privacy. We are also keenly aware of the litigation and regulatory sanctions risks that may arise from security breaches and are aggressively reinforcing a group-wide culture that stresses safety and good custodianship as among our highest priorities. Furthermore, we are actively taking steps to implement preventive and other steps recommended or required by the regulatory authorities in relation to actual and potential financial scams. Although we have not experienced any material security breaches or any similar large scale leakage of customer information recently, given the unpredictable and continually evolving nature of cyber security threats due to advances in technology or other reasons, there is no assurance that, notwithstanding our best efforts at maintaining the best-in-class cyber security systems, we will not be vulnerable to major cyber security attacks in the future.

The public is developing heightened awareness about the importance of keeping their personal data private, and the financial regulators are placing greater emphasis on data protection by financial service providers. For example, under the Personal Information Protection Act, as amended in March 2023, financial institutions, as personal information manager, may not collect, store, maintain, utilize or provide resident registration numbers of their customers, unless other laws or regulations specifically request or permit the management of resident registration numbers. Further, under the Use and Protection of Credit Information Act, as last amended in

February 2024, a financial institution has a higher duty to protect credit information, meaning information necessary to assess the creditworthiness of the counterparty to financial transactions and other commercial transactions. Such regulations have considerably restricted a financial institution’s ability to transfer or provide the information to its affiliate or holding company, and quintuple damages can be imposed on a financial institution for a leakage of such information. In addition, under the Electronic Financial Transaction Act, as last amended in September 2023 with effect from September 2024, a financial institution is primarily responsible for compensating its customers harmed by the financial institution’s cyber security breach, even if the breach is not directly attributable to the financial institution. Amendments to three major data privacy laws (the Personal Information Protection Act, the Act on the Promotion of Information and Communications Network Utilization and Information Protection and the Act on the Use and Protection of Credit Information) were passed in 2020, expanding the scope of personal information that may be shared among financial institutions, and cyber security and ensuring confidentiality of customers’ information have become more important than ever for financial institutions. We maintain an integrated system that closely monitors customer information to ensure compliance with data protection laws and regulations as well as our internal policies.

If a cyber or other security breach were to happen with respect to us or any of our subsidiaries, it may result in litigation by affected customers or other third parties (including class actions), compensation for any losses suffered by victims of cyber security attacks, reputational damage, loss of customers, heightened regulatory scrutiny and related sanctions, more stringent compliance with the present and future regulatory restrictions, and other costs related to damage control, reparation and reinforcement of information security systems, any of which may have a material adverse effect on our business, results of operations and financial condition.

Our customers may become victims to “voice phishing” or other financial scams, for which we may be required to make monetary compensation and suffer damage to our business and reputation.

In recent years, financial scams known as voice phishing have been on the rise in Korea. While voice phishing takes many forms and has evolved over time in terms of sophistication, it typically involves the scammer making a phone call to a victim under false pretenses (for example, the scammer pretending to be a member of law enforcement, an employee of a financial institution or even an abductor of the victim’s child) and luring the victim to transfer money to an untraceable account controlled by the scammer. More recently, voice phishing has increasingly taken the form of the scammer “hacking” or otherwise wrongfully obtaining personal financial information of the victim (such as credit card numbers or Internet banking login information) over the telephone or other means and illegally using such information to obtain credit card loans or cash advances through automated telephone banking or Internet banking. Reportedly, a substantial number of such scammers belong to international criminal syndicates with bases overseas, such as China, with operatives in Korea.

In response to the growing incidents of voice phishing, regulatory authorities have undertaken a number of steps to protect consumers against voice phishing and other financial scams. Also in response to the heightened risk, Shinhan Card and our other subsidiaries have established fraud detection systems that identify questionable transactions based on deviations from a customer’s conventional transaction patterns. There is no assurance, however, that these regulatory activities and fraud detection systems will have the desired effect of substantially eradicating or even containing the incidents of voice phishing or other financial scams. Also given continual advances in technology and the increasing sophistication of the financial scammers, there is no assurance that we will be able to prevent future financial scams or that the frequency and scope of financial scams will not increase. If financial scams involving us and our subsidiaries were to continue or to become more prevalent, it may result in compensation for any losses suffered by victims thereof, reputational damage, loss of customers, heightened regulatory scrutiny and related sanctions, compliance with the present and future regulatory restrictions, and other costs related to damage control, reparation and reinforcement of our preventive measures, any of which may have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to Law, Regulation and Government Policy

We are a heavily regulated entity and operate in a legal and regulatory environment that is subject to change, and violations could result in penalties and other regulatory actions.

As a financial services provider, we are subject to a number of regulations that are designed to maintain the safety and soundness of Korea’s financial system, to ensure our compliance with economic and other obligations and to limit our risk exposure. These regulations may limit our activities, and changes in these regulations may increase our costs of doing business. Regulatory agencies frequently review regulations relating to our business and implement new regulatory measures, including increasing the minimum required provisioning levels or capital adequacy ratios applicable to us and our subsidiaries from time to time. We expect the regulatory environment in which we operate to continue to change. Changes in regulations applicable to us, our subsidiaries and our or their business or changes in the implementation or interpretation of such regulations could affect us and our subsidiaries in unpredictable ways and could adversely affect our business, results of operations and financial condition.

The Financial Consumer Protection Act (the “FCPA”) was enacted on March 24, 2020 and took effect beginning March 25, 2021. The FCPA unifies the systems for the protection of consumers of financial products, which had been dispersed in various laws, while tightening the existing consumer protection systems to strengthen the rights afforded to consumers of financial products. Banks under the Banking Act are financial instrument distributors subject to the FCPA, and deposit and loan products under the Banking Act are financial instruments subject to the FCPA.

Under the FCPA, a financial instrument distributor who intends to sell financial instruments shall comply with the following requirements: (i) confirmation of suitability and adequacy of financial instruments, (ii) compliance with the duty to explain, (iii) prohibition of unfair sales activities, (iv) prohibition of undue solicitation, (v) prohibition of false or exaggerated advertising, etc., and (vi) provision of contract documents (collectively, the “Sales Principles”). If a financial instrument distributor breaches any of the Sales Principles, consumers may request the termination of such financial instrument within a period to be prescribed by a Presidential Decree and are entitled to unilaterally terminate the contract if the financial instrument distributor fails to present a justifiable reason for not accepting the consumer’s request. Consumers who purchased a loan product, in particular, shall be entitled to withdraw from the contract within 14 days from the later of (i) the date of receipt of the proceeds pursuant to the contract and (ii) the execution date of the contract (or the date of receipt of the documents necessary for execution of the contract (if required under the FCPA), regardless of whether the financial instrument distributor breached any of the Sales Principles. When a consumer files a lawsuit for damages against a financial instrument distributor for breach of the duty to explain, the financial instrument distributor (and not the consumer) shall bear the burden of proof to prove that no willful conduct or negligence was involved in such breach of the duty to explain. In the event of a dispute with a financial instrument distributor, consumers may apply for mediation to the Dispute Mediation Committee of the Financial Services Commission. If a financial instrument distributor files a lawsuit with a court while such mediation is in progress, the court may suspend the litigation proceedings. For certain small-sum cases, a financial instrument distributor may not file a lawsuit with a court until the completion of such mediation. Financial instrument distributors must accept requests from its consumers to access information for purposes of litigation or mediation. In the event the Financial Services Commission determines that there is a clear risk that a financial product may cause significant damage to the properties of customers, the Financial Services Commission may prohibit or restrict the solicitation of, and execution of a contract for, such financial product.)

We and our subsidiaries have been proactively taking actions necessary to comply with the FCPA, including the examination of our financial products and training of our officers and employees. However, no assurance can be given that the implementation of the FCPA will not adversely affect us our subsidiaries’ businesses or lead to a material adverse effect on their reputation, business, results of operations or financial condition. We may also become subject to other restrictions on our operations as a result of future changes in laws and regulations, including more stringent liquidity and capital requirements under Basel III, which are being adopted in phases in

Korea in consideration of, among others, the pace and scope of international adoption of such requirements. Any of these regulatory developments may have a material adverse effect on our ability to expand operations or adequately manage our risks and liabilities. For further details on the principal laws and regulations applicable to us as a holding company and our principal subsidiaries, see “Item 4.B. Business Overview — Supervision and Regulation.”

In addition, violations of law and regulations could expose us to significant liabilities and sanctions. For example, the Financial Supervisory Service conducts periodic audits on us and, from time to time, we have received institutional warnings from the Financial Supervisory Service. If the Financial Supervisory Service determines as part of such audit or otherwise that our financial condition, including the financial conditions of our operating subsidiaries, is unsound or that we have violated applicable law or regulations, including Financial Services Commission orders, or if we or our operating subsidiaries fail to meet the applicable requisite capital ratio or the capital adequacy ratio, as the case may be, set forth under Korean law, the Financial Supervisory Service may ask the Financial Services Commission to order, among other things, cancellations of authorization, permission or registration of the business, suspensions of a part or all of the business, closures of branch offices, recommendations for dismissal of officers or suspensions of officers from performing their duties, or may order, among other things, institutional warnings, institutional cautions, reprimanding warnings on officers, cautionary warnings on officers or cautions on officers. From time to time, our subsidiaries, including Shinhan Bank and Shinhan Card, have been subject to investigations and/or sanctions from the Financial Supervisory Service. See “Item 8.A. Consolidated Statements and Other Financial Information — Legal Proceedings.” If any such measures are imposed on us or our subsidiaries as a result of unsound financial condition or failure to comply with minimum capital adequacy requirements or for other reasons, it will have a material adverse effect on us and our subsidiaries’ business, financial condition and results of operations.

The Government may encourage targeted lending to certain sectors in furtherance of policy objectives, and we may take this factor into account.

The Government has encouraged and may in the future encourage targeted lending to certain types of enterprises and individuals in furtherance of government initiatives. The Government, through its regulatory bodies such as the Financial Services Commission, from time to time announces lending policies to encourage Korean banks and financial institutions, including us and our subsidiaries, to lend to particular industries, business groups or customer segments, and, in certain cases, has provided lower cost funding through loans made by the Bank of Korea for further lending to specific customer segments.

For example, the Government has taken and is taking various initiatives to support small- and medium-sized enterprises and low-income individuals, who were disproportionately affected by the downturn in the Korean and global economy in the late 2000s and have yet to fully recover. As part of these initiatives, the Financial Supervisory Service encouraged banks to increase lending to small- and medium-sized enterprises in order to ease the financial burden on such enterprises amidst sluggish economic recovery. The financial regulators have also adopted several measures designed to improve certain lending practices of the commercial banks which practices were perceived as having an unduly prohibitive effect on extending loans to small- to medium-sized enterprises. Our participation in such Government initiatives may lead us to extend credit to small- and medium-sized enterprises that we would not otherwise extend, or offer terms on such credit that we would not otherwise offer, in the absence of such initiatives. There is no guarantee that the financial condition and liquidity of the small- and medium-sized enterprises benefiting from such initiatives will improve sufficiently for them to service their debt on a timely basis or at all. Accordingly, an increase in our exposure to small- and medium-sized enterprise borrowers resulting from such Government initiatives may have a material adverse effect on our financial condition and results of operations.

In addition, as a way of supporting the Government’s initiative to assist promising startups, in February 2015, the financial regulators announced that they would encourage the banks in Korea to increase lending to technology companies in the small- to medium-sized enterprise segment and to enhance technology-related credit

review capabilities. According to the Korea Federation of Banks, the aggregate balance of loans to technology companies in the small- to medium-sized enterprise segment reached W 325.9 trillion, W304.5 trillion and W302.7 trillion, as of December 31, 2022, 2023 and 2024, respectively. Shinhan Bank’s total balance of outstanding loans to technology companies as of December 31, 2022, 2023 and 2024 was W44.8 trillion and W42.9 trillion and W42.7 trillion, respectively.

Furthermore, amidst concerns about increasing household debt, in 2020 the Financial Services Commission increased target proportions for fixed interest rate loans and installment principal repayment-based housing loans to 52.5% and 60.0%, respectively, which have remained the same through 2024. Fixed interest rate and installment principal repayment-based housing loans accounted for 60.6% and 61.4%, respectively, of the housing loans extended by Shinhan Bank as of December 31, 2024.

We, on a voluntary basis, may factor the existence of the Government’s policies and encouragements into consideration in making loans although the ultimate decision whether to make loans remains with us and is made based on our internal credit approval procedures and risk management systems independently of Government policies. In addition, in tandem with providing additional loans to small- and medium-sized enterprises and low-income individuals, Shinhan Bank takes active steps to mitigate the potential adverse impacts from making bad loans to enterprises or individuals with high risk profiles as a result of such arrangement, such as by strengthening its loan review and post-lending monitoring processes. However, we cannot assure you that such arrangement did not or will not, or similar or other government-led initiatives in the future will not, result in a suboptimal allocation of our loan portfolio from a risk-reward perspective compared to what we would have allocated based on purely commercial decisions in the absence of such initiatives. The Government may implement similar or other initiatives in the future to spur the overall economy or encourage the growth of targeted industries or relief to certain segments of the population. Specifically, the Government may introduce lending-related initiatives or enforce existing ones in a heightened fashion during times when small- and medium-sized enterprises or low-income households on average are facing an increased level of financial distress or vulnerability due to an economic downturn, which makes lending to them in the volume and the manner suggested by the Government even riskier and less commercially desirable. Accordingly, such policy-driven lending may create enhanced difficulties for us in terms of risk management, deterioration of our asset quality and reduced earnings, compared to what would have been in the absence of such initiatives, which may have an adverse effect on our business, financial condition and results of operations.

In addition to targeted lending, the Government may from time to time encourage or request the financial institutions in Korea, including us and our subsidiaries, to make investments in, or provide other forms of financial support to, certain institutions in furtherance of the Government’s policy objectives. In response thereto, we have made and will continue to make the ultimate decision on whether, how and to what extent we will comply with such encouragements or requests based on our internal risk assessment and in accordance with our risk management systems and policies. At the same time, as a leading member of the financial service industry in Korea and as a responsible corporate citizen we will also fully give due consideration to such encouragements or requests from the Government, especially in relation to the long-term benefit arising from furthering the policy objective of maintaining a sound financial system, even if complying with such requests may involve additional short-term costs and risks to a limited extent.

The Government may request or otherwise encourage us or our subsidiaries to provide investments or other financial support for which we are not duly compensated or otherwise take up additional risk that we would not normally have undertaken. Any such Government request, and any investments or financial support made in response thereto or otherwise, may have an adverse effect on our business, financial condition and results of operations.

The level and scope of government oversight of our retail lending business, particularly regarding mortgage and home equity loans, may change depending on the economic or political climate.

Real estate comprises the most significant asset for a substantial number of households in Korea, and movements of housing prices have generally had a significant impact on the domestic economy. Accordingly, regulating housing prices, either in terms of attempting to stem actual or anticipated excessive speculation during times of a suspected housing price bubble and spur the pricing and/or volume of real estate transactions during times of a depressed real estate market by way of tax subsidy, guidelines to lending institutions or otherwise, has been a key policy initiative for the Government.

The regulations on mortgage and home equity loans are susceptible to the changes of housing market cycles and have been revised from time to time. From 2017 to 2022, the Government led by President Moon Jae-in announced and implemented a series of robust polices aimed at taming speculation and deterring the rise of housing prices. However, since the second half of 2022, the Government led by President Yoon Suk Yeol announced and implemented a series of policies to ease the demand-side regulations in the real estate market in order to prevent housing prices from crashing due to the recent hike in interest rates. For example, the Government has released most areas from “speculative areas”, “overheated speculative areas” and “adjustment targeted areas” (collectively, the “regulated areas”) where tighter loan-to-value ratios and debt-to-income ratios are applicable to mortgage or home equity loans, with only Gangnam-Gu, Seocho-Gu, Songpa-Gu and Yongsan-Gu in the greater Seoul metropolitan area currently remaining as the regulated areas, removed the application of stricter loan-to-value ratio to new loans secured by high-price houses located in the regulated areas and allowed the extension of new loans secured by houses located in the regulated areas to households that already own one or more houses.

The Government also increased the loan-to-value ratio applicable to the regulated areas (i) up to 50% of the appraised value of the houses, except that such maximum loan-to-value ratio is 70% for low-income households that (1) have a combined (in case of married couple) annual income of no more than W90 million, (2) do not currently own any housing and (3) are using the loan to purchase low-price housing valued at W900 million or less (W800 million or less in case of houses located in “adjustment targeted areas”) and (ii) up to 80% of the appraised value of the houses, for new loans to a first-time home buyer with a maximum residential mortgage loan amount of W600 million or less. The regulations on the debt-to-income ratio remained largely unchanged, with the debt-to-income ratio applicable to houses being (i) 60% for those that are located in the greater Seoul metropolitan area but excluding the regulated areas, (ii) 50% for those that are located in “adjustment targeted areas” and (iii) 40% for those that are located in “speculative areas” or “overheated speculative areas”. However, such debt-to-income ratios for houses located in regulated areas are adjusted to 60% for (i) low-income households that (1) have a combined (in case of married couple) annual income of no more than W90 million, (2) do not currently own any housing and (3) are using the loan to purchase low-price housing valued at W900 million or less (W800 million or less in case of houses located in “adjustment targeted areas”) and (ii) first-time homebuyers.

The Financial Services Commission also introduced a debt service ratio and a modified debt-to-income ratio in order to modernize credit review methods and stabilize the management of household debt. The modified debt-to-income ratio, which has been implemented beginning January 31, 2018 reflects (i) both principal and interest payments on the applicable mortgage and home equity loan and existing mortgage and home equity loans and (ii) interest payments on other loans. Previously, debt-to-income ratio had only reflected (i) both principal and interest payments on the applicable mortgage and home equity loan and (ii) interest payments on existing mortgage and home equity loans. Debt service ratios reflect principal and interest payments on both the applicable loan and other loans and have been fully implemented since October 2018. The modified debt-to-income ratios are used as the primary reference index in the evaluation and approval process for mortgage and home equity loans, and debt service ratios are generally used as a supplementary reference index providing additional limits on mortgage and home equity loans. For example, debt service ratios applicable to a loan applicant with a total aggregate loan amount exceeding W100 million (including the applied but not yet extended loan amount) should not exceed 40% unless otherwise specified by the applicable regulations.

In August 2023, the Government enacted a special law aimed at protecting victims of lease fraud and ensuring housing stability. In connection with this, the Financial Services Commission has decided to provide special treatment for victims of lease fraud, notwithstanding existing regulations on loan-to-value ratio, debt-to-income ratio, and debt service ratios. Victims of lease fraud are eligible to receive an loan-to-value ratio of up to 80%, and in the case of mortgage loans obtained through auction winnings, the loan may be granted regardless of the regulatory status of the area, provided that the loan amount does not exceed W400 million. Furthermore, such victims may be exempt from the application of debt-to-income ratio and debt service ratios regulations.

Furthermore, in July 2024, special provisions were introduced to support homeowners who need to return lease deposits. Homeowners who completed the ownership transfer registration and signed lease contracts before July 3, 2023 and are required to return the lease deposit pursuant to a lease contract expiring prior to December 31, 2025 will be eligible for a housing mortgage loan, including loans secured by office-tels (mixed purpose units serving simultaneously as office and residential apartments), provided they meet certain eligibility criteria. In such cases, the loan may be extended within a debt-to-income ratio (“DTI”) limit of 60%.

Meanwhile, in December 2023, as a measure to help prevent excessive household debt, the Financial Services Commission introduced the “stress debt service ratio” system for floating rate loans, mixed rate loans (loans where a fixed interest rate shifts to a floating interest rate after a certain period of time), and periodic loans (loans where a fixed interest rate is adjusted periodically). The “stress debt service ratio” system imposes a certain level of interest rate spread (a stress rate) when calculating the debt service ratio, taking into consideration the possibility that a borrower of a floating rate loan may be subject to an increased burden when repaying principal and interest if the interest rate were to increase during the loan period. The “stress debt service ratio” system was initially applied beginning February 26, 2024 to mortgage loans in the banking sector. Since September 1, 2024, the application of the “stress debt service ratio” system was expanded to mortgage loans across all financial institutions as well as credit facilities in the banking sector. The application of the “stress debt service ratio” system is expected to further expand to mortgage loans, credit facilities and other loans across all financial institutions beginning July 2025.

In addition, the supervising authorities in Korea from time to time issue administrative instructions to Korean banks, which have the effect of regulating the access of borrowers to housing loans and, as such, demand for real estate properties. For example, the Financial Supervisory Service issued administrative instructions to financial institutions to (except in limited circumstances) verify the borrower’s ability to repay based on proof of income prior to making a mortgage and home equity loan regardless of the type or value of the collateral or the location of the property, which has had the effect of practically barring the grant of any new mortgage and home equity loans to borrowers without verifiable income.

Pursuant to the Regulation on the Supervision of the Banking Business, Shinhan Bank must maintain a loan to deposit ratio of no more than 100%. Since January 1, 2020, in calculating such loan to deposit ratio, retail loans and corporate loans are weighed differently, with retail loans subject to a multiple of 115% and corporate loans (excluding loans to SOHOs) subject to a multiple of 85%, thereby increasing the impact of retail loans and reducing the impact of corporate loans in calculating such ratio. In response to the COVID-19 pandemic, on April 20, 2020, the Financial Services Commission announced a series of measures to temporarily ease the regulations on loan-to-deposit ratio. This temporary measure ended in June 2023, and a loan-to-deposit ratio requirement of 100% has applied since July 2023.

There is no assurance that Government measures will achieve their intended results. While any Government measure that is designed to stimulate growth in the real estate sector may result in growth of, and improved profitability for, our retail lending business (particularly with respect to mortgage and home equity loans) at least for the short term, such measure could also result in unintended consequences, including potentially excessive speculation resulting in a “bubble” for the Korean real estate market and a subsequent market crash. In contrast, any Government measure changing the direction of its stimulus measures (for example, in order to preemptively

curtail an actual or anticipated bubble in the real estate market) may result in a contraction of the real estate market, a decline in real estate prices and consequently, a reduction in the growth of, and profitability for, our retail and/or other lending businesses, as well as otherwise have an adverse effect on our business, financial condition and results of operations or profitability. See “— Risks Relating to Our Banking Business — A decline in the value of the collateral securing our loans or our inability to fully realize the collateral value may adversely affect our credit portfolio.”

We have engaged in limited settlement transactions involving Iran and also in limited business in and related to Russia which may subject us to legal or reputational risks.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) administers and enforces certain laws and regulations (“OFAC Sanctions”) that impose restrictions upon dealings with or related to certain countries, governments, entities and individuals that are the subject of OFAC Sanctions, including Iran and Russia, and maintains a list of specially designated nationals (the “SDN List”), whose assets are blocked and with whom U.S. persons are generally prohibited from dealing. OFAC Sanctions may apply to non-U.S. persons when there is a U.S. nexus. Non-U.S. persons can be held liable for violations of OFAC Sanctions on various legal grounds, such as causing U.S. persons to violate sanctions by routing transactions through the United States or the U.S. financial system. Even in the absence of a U.S. nexus, non-U.S. persons may be imposed of sanctions by OFAC if it engages in certain dealings with or related to Iran, North Korea, Russia or other sanctioned countries, persons or individuals (“Secondary Sanctions”). The European Union also enforces certain laws and regulations that impose restrictions upon nationals and entities of, and business conducted in, member states with respect to activities or transactions with certain countries, governments, entities and individuals that are the subject of such laws and regulations. The United Nations Security Council and other governmental authorities also impose similar sanctions.

In August 2016, the Government authorized Shinhan Bank to act as a settlement bank for Euro-denominated transactions between Korean and Iranian businesses. Prior to the granting of this permission, payments for business activities were settled only in Korean Won and we did not participate in such settlements. From August 2016 through August 2017, Shinhan Bank processed ten such transactions that resulted in a minimal amount of revenue. Since August 2017, Shinhan Bank has ceased processing any such transactions and has no intention to process any such transactions in the future. We are committed to engaging only in lawful activities and in obeying all relevant OFAC Sanctions and European Union sanctions but cannot guarantee that actions taken by our employees will not violate such sanctions. On May 8, 2018, U.S. President Donald Trump announced his decision to terminate the participation of the United States in the Joint Comprehensive Plan of Action (the “JCPOA”), pursuant to which certain relief of OFAC Sanctions relating to Iran had been provided. Following two wind down periods, one that ended on August 6, 2018 and one that ended on November 4, 2018, all Iran-related Secondary Sanctions that had been waived pursuant to the JCPOA were re-imposed and non-U.S. persons now face risk of Secondary Sanctions for dealing with certain key sectors of the Iranian economy or for providing associated services related to the targeted activities. As such, any Iran-related activities may subject us to OFAC Sanctions and to potential legal or reputational risks.

Shinhan Bank engages in certain limited lending activities in or related to Russia. In response to the Russia-Ukraine conflict, the U.S., E.U., U.K., Korean and other governments have imposed economic sanctions on Russia, Belarus, and certain regions of Ukraine. Such sanctions target, among other persons, a wide range of Russian financial institutions as sanctioned parties as well as the Russian Central Bank and certain other state entities. They also target specific sectors of the Russian economy, including the technology, defense and related materiel, construction, aerospace, energy and manufacturing and other sectors. In December 2023, OFAC was authorized to impose Secondary Sanctions on foreign financial institutions when they conduct or facilitate significant Russia-related transactions or provide certain Russia-related services, in particular involving Russia’s military-industrial base, including all persons blocked pursuant to OFAC Sanctions against Russia, such as sanctioned Russian banks, as well as persons operating in targeted sectors or supporting the sale, supply, or transfer of critical items to Russia. Russia-related activities may subject us to sanctions and potential legal or reputational risk.

Evolving regulatory framework for artificial intelligence and machine learning technology, may have an adverse impact on our business, financial condition and results of operations.

We utilize artificial intelligence (“AI”) technology in various ways to enhance efficiency, security and customer experience, such as by providing customer support and personalized financial advice based on user behavior, as well as aiding our employees in routine tasks. The regulatory framework for AI and machine learning technology is evolving and remains uncertain. It is possible that new laws and regulations will be adopted, or existing regulations, notably those relating to data and copyright protection, may be interpreted in new ways that would affect our operations and the way in which we use AI and machine learning technology, including with respect to our digital platforms provided to our customers. Further, the cost of complying with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations.

Risks Relating to Korea

Unfavorable financial and economic conditions in Korea and globally may have a material adverse impact on our asset quality, liquidity and financial performance.

We are incorporated in Korea, where most of our assets are located and most of our income is generated. As a result, we are subject to political, economic, legal and regulatory risks specific to Korea, and our business, results of operations and financial condition are substantially dependent on developments relating to the Korean economy. As Korea’s economy is highly dependent on the health and direction of the global economy, and investors’ reactions to developments in one country can have adverse effects on the securities price of companies in other countries, we are also subject to the fluctuations of the global economy and financial markets.

Following the declaration of martial law by President Yoon Suk Yeol on December 3, 2024, the National Assembly voted on December 14, 2024 to impeach President Yoon Suk Yeol. On April 4, 2025, the Constitutional Court upheld the impeachment, and accordingly President Yoon Suk Yeol was removed from office. A snap presidential election will be held on June 3, 2025, in which the president-elect will take office immediately, without the usual two-month transition period. These events have the potential to disrupt the nation’s political and economic landscape, including leading to widespread protests, market volatility and temporary setbacks in various sectors of the economy, increasing uncertainty and potentially affecting businesses across the country. These events, as well as any events that may follow in the aftermath, may create a challenging environment for and could have an adverse effect on the our business, results of operations and financial condition businesses operating in Korea, including us, and could have an adverse effect on our business, results of operations and financial condition.

As part of its reciprocal tariffs policy, on April 2, 2025, the U.S. announced a 10% baseline tariff on all imports to the U.S., effective from April 5, 2025, and country specific reciprocal tariffs on certain countries with which the U.S. has the largest trade deficits, effective from April 9, 2025. On April 9, 2025, the U.S. announced a 90-day pause in the implementation of the country specific reciprocal tariffs, with the exception of China. Since April 3, 2025, a 25% tariff has been imposed on automobile imports to the U.S., including fully assembled vehicles and key automobile components, and a 25% tariff on steel and aluminum imports to the U.S. has been imposed since March 12, 2025. These measures have broad ramifications for the global economy, and in particular pose significant challenges for the Korean economy which heavily relies on exports. The imposition of tariffs (or additional tariffs), resulting trade or other conflicts or other related developments are inherently beyond our control and difficult to predict. Accordingly, no assurance can be given as to whether these tariffs, the imposition of additional tariffs or any related developments may severely and adversely impact the global and Korean economies, which in turn would result in significant deterioration in the quality of our assets and accumulation of higher provisioning, allowance for credit losses on loans and charge-offs, or otherwise negatively affect our business, results of operations and financial condition.

Factors that determine economic and business cycles in the Korean or global economy are for the most part beyond our control and inherently uncertain. In addition to discussions of recent developments regarding the

global economic and market uncertainties and the risks relating to us as provided elsewhere in this section, factors that could have an adverse impact on Korea’s economy in the future include, among others:

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continued volatility or deterioration in Korea’s credit and capital markets;

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difficulties in the financial sectors in Europe, China and elsewhere and increased sovereign default risks in select countries and the resulting adverse effects on the global financial markets, including possibility of global inflation and the spread of economic downturn to Europe as a result of geopolitical risks arising from Russia-Ukraine conflict;

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declines in consumer confidence and a slowdown in consumer spending and corporate investments;

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adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the U.S. Dollar, the Euro or the Japanese Yen exchange rates or revaluation of the Chinese Renminbi), increased exchange rate volatility as a result of government interventions, interest rates, inflation rates or stock markets;

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increasing levels of household debt;

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increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers;

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continuing adverse conditions in the economies of countries and regions that are important export markets for Korea, such as the United States, Europe, Japan and China, or in emerging market economies in Asia or elsewhere;

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the economic impact of any pending or future free trade agreements;

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tariffs introduced by countries, including the U.S., on goods imported and resulting volatility and uncertainty in the global economy, including the potential escalation of ongoing trade wars between the U.S., China and other countries;

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social and labor unrest;

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significant fluctuations or decreases in the market prices of Korean real estate;

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a decrease in tax revenue and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs that, together, would lead to an increased government budget deficit;

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financial problems or lack of progress in the restructuring of Korean business groups, other large troubled companies, their suppliers or the financial sector;

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loss of investor confidence arising from corporate accounting irregularities and corporate governance issues concerning certain Korean business groups;

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increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea;

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geopolitical uncertainty and risk of further attacks by terrorist groups around the world, including the actions of the so-called “Islamic State”;

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the occurrence of severe health epidemics in Korea and other parts of the world, including COVID-19, Ebola, Middle East Respiratory Syndrome (MERS) and Zika virus outbreaks;

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deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy such as the recent diplomatic tension between Korea and China with respect to the deployment of the Terminal High Altitude Area Defense (THAAD) system in Korea and trade disputes between Korea and the United States with respect to the imposition of anti-dumping duties on Korean steel, washing machines, transformers and solar panels;

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political uncertainty, or increasing strife among or within political parties in Korea, and political gridlock within the government or in the legislature, which prevents or disrupts timely and effective policy making;

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hostilities or political or social tensions involving oil-producing countries in the Middle East and North Africa and any material disruption in the global supply of oil or sudden increase in the price of oil;

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political or social tensions involving Russia and any resulting adverse effects on the global supply of oil or the global financial markets;

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the occurrence of natural or man-made disasters in Korea (such as the sinking of the Sewol ferry in April 2014, which significantly dampened consumer sentiment in Korea for months) and other parts of the world, particularly in trading partners of Korea; and

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an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States.

Any future deterioration of the Korean economy could have an adverse effect on our business, financial condition and results of operations.

Tensions with North Korea could have an adverse effect on us, the price of our common shares and our American depositary shares.

Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between Korea and North Korea has fluctuated and may increase abruptly as a result of current and future events. In particular, there continues to be heightened security tension in the region stemming from North Korea’s hostile military and diplomatic actions, including in respect of its nuclear weapons and long-range missile programs. Some examples from recent years include the following:

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North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs, which are more powerful than plutonium bombs, and warheads that can be mounted on ballistic missiles. Over the years, North Korea has also conducted a series of ballistic missile tests, including missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. In response, the Government has repeatedly condemned the provocations and flagrant violations of relevant United Nations Security Council resolutions. Internationally, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea, most recently in November 2022 in response to North Korea’s intercontinental ballistic missile test in November 2022. Over the years, the United States and the European Union have also expanded their sanctions applicable to North Korea.

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In February 2016, in retaliation of North Korea’s launch of a long-range rocket, Korea announced that it would halt its operations of the Kaesong Industrial Complex, an industrial complex in the border city of Kaesong, to impede North Korea’s utilization of funds from the industrial complex to finance its nuclear and missile programs. In response, North Korea announced that it would expel all Korean employees from the industrial complex and freeze all Korean assets in the complex. All 280 Korean workers present at Kaesong left hours after the announcement by North Korea, and the complex remains closed as of the date hereof.

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In March 2013, North Korea stated that it had entered “a state of war” with Korea, declaring the 1953 armistice invalid, and put its artillery at the highest level of combat readiness to protest the Korea-United States allies’ military drills and additional sanctions imposed on North Korea for its missile and nuclear tests.

North Korea’s economy also faces severe challenges, including severe inflation and food shortages, which may further aggravate social and political tensions within North Korea. In addition, reunification of Korea and

North Korea could occur in the future, which would entail significant economic commitment and expenditure by Korea that may outweigh any resulting economic benefits of reunification.

In April, May and September 2018, President Moon Jae-in met Kim Jong-un in a series of summit meetings to discuss, among other matters, denuclearization of the Korean peninsula. In June 2018, U.S. President Donald Trump and Kim Jong-un in turn had an official summit in Singapore, the first ever meeting between leaders of the United States and North Korea. Subsequent to the Singapore summit, they signed a joint statement, which stated, among others, new peaceful relations and the denuclearization of the Korean peninsula. A second official summit between U.S. President Donald Trump and Kim Jong-un was held in Vietnam in February 2019 but ended abruptly and without an agreement. In June 2019, U.S. President Donald Trump and Kim Jong-un had another summit at the Korean Demilitarized Zone, following which both sides announced a resumption of denuclearization talks. However, in December 2019, North Korea announced its intention to resume missile testing, heightening tensions. On June 16, 2020, North Korea destroyed the joint liaison office in Kaesong, citing anti-regime propaganda allegedly disseminated using balloons across the border by Korean activists, and cut all other communication channels with Korea. In September 2023, North Korea amended constitution declaring itself to be a nuclear weapons state.

In March 2024, UN sanctions to monitor the North Korean nuclear weapons program were vetoed by Russia. In May 2024, North Korea deployed 260 balloons carrying garbage into South Korea, leading to the suspension in June 2024 by Korea of the 2018 Panmunjom Declaration, which was adopted between President Moon Jae-in and Kim Jong-un during the 2018 summit meetings. In October 2024, North Korea amended its constitution to officially designate Korea as a “hostile state” and destroyed sections of the roads and rail links leading to Korea near the Korea-North Korea border.

In the aftermath of these developments, there remains significant uncertainty regarding peace talks and the denuclearization of the Korean peninsula. As such, there can be no assurance that the level of tension on the Korean peninsula will not escalate in the future or that the political regime in North Korea may not suddenly collapse. Any further increase in tension or uncertainty relating to the military, political or economic stability in the Korean peninsula, including a breakdown of diplomatic negotiations over the North Korean nuclear program, occurrence of military hostilities, heightened concerns about the stability of North Korea’s political leadership or its actual collapse, a leadership crisis, a breakdown of high-level contacts or accelerated reunification could have a material adverse effect on our business, financial condition and results of operations, as well as the price of our common shares and our American depositary shares.

Risks Relating to Our American Depositary Shares

There are restrictions on withdrawal and deposit of common shares under the depositary facility.

Under the deposit agreement, holders of shares of our common stock may deposit those shares with the depositary bank’s custodian in Korea and obtain American depositary shares, and holders of American depositary shares may surrender American depositary shares to the depositary bank and receive shares of our common stock. However, under current Korean laws and regulations, the depositary bank is required to obtain our prior consent for the number of shares to be deposited in any given proposed deposit which exceeds the difference between (1) the aggregate number of shares deposited by us for the issuance of American depositary shares (including deposits in connection with the initial and all subsequent offerings of American depositary shares and stock dividends or other distributions related to these American depositary shares) and (2) the number of shares on deposit with the depositary bank at the time of such proposed deposit. We have consented to the deposit of outstanding shares of common stock as long as the number of American depositary shares outstanding at any time does not exceed 40,432,628. As a result, if you surrender American depositary shares and withdraw shares of common stock, you may not be able to deposit the shares again to obtain American depositary shares.

Ownership of our shares is restricted under Korean law.

Under the Financial Holding Companies Act, any single shareholder (together with certain persons in a special relationship with such shareholder) may acquire beneficial ownership of up to 10% of the total issued and outstanding shares with voting rights of a bank holding company controlling national banks such as us. In addition, any person, except for a “non-financial business group company” (as defined below), may acquire in excess of 10% of the total voting shares issued and outstanding of a financial holding company which controls a national bank, provided that a prior approval from the Financial Services Commission is obtained each time such person’s aggregate holdings exceed 10% (or 15% in the case of a financial holding company controlling regional banks only), 25% or 33% of the total voting shares issued and outstanding of such financial holding company. The Government and the Korea Deposit Insurance Corporation are exempt from this limit. Furthermore, certain non-financial business group companies (i.e., (i) any same shareholder group with aggregate net assets of all non-financial business companies belonging to such group of not less than 25% of the aggregate net assets of all members of such group; (ii) any same shareholder group with aggregate assets of all non-financial business companies belonging to such group of not less than W2 trillion; (iii) any mutual fund in which the same shareholder group identified in (i) or (ii) above owns more than 4% of the total shares issued and outstanding of such mutual fund; (iv) any private equity fund (a) where a person falling under any of items (i) through (ii) above is a limited partner holding not less than 10% of the total amount of contributions to the private equity fund, or (b) where a person falling under any of items (i) through (iii) above is a general partner, or (c) where the total equity of the private equity fund acquired by each affiliate belonging to several enterprise groups subject to the limitation on mutual investment is 30% or more of the total amount of contributions to the private equity fund; or (v) the investment purpose company concerned, where a private equity fund falling under item (iv) above acquires or holds stocks in excess of 4% of the shares or equity of such company or exercises de facto control over significant managerial matters of such company through appointment or dismissal of executives or in any other manner)) may not acquire beneficial ownership in us in excess of 4% of our outstanding voting shares, provided that such non-financial business group companies may acquire beneficial ownership of up to 10% of our outstanding voting shares with the approval of the Financial Services Commission under the condition that such non-financial business group companies will not exercise voting rights in respect of such shares in excess of the 4% limit. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Restrictions on Financial Holding Company Ownership.” To the extent that the total number of shares of our common stock that you and your affiliates own together exceeds these limits, you will not be entitled to exercise the voting rights for the excess shares, and the Financial Services Commission may order you to dispose of the excess shares within a period of up to six months. Failure to comply with such an order would result in a fine of up to W100 million, plus an additional charge of up to 0.03% of the book value of such shares per day until the date of disposal.

Holders of our ADSs will not have preemptive rights in certain circumstances.

The Korean Commercial Code and our articles of incorporation require us, with some exceptions, to offer shareholders the right to subscribe for new shares in proportion to their existing ownership percentage whenever new shares are issued. If we offer any rights to subscribe for additional shares of our common stock or any rights of any other nature, the depositary bank, after consultation with us, may make the rights available to you or use reasonable efforts to dispose of the rights on your behalf and make the net proceeds available to you. The depositary bank, however, is not required to make available to you any rights to purchase any additional shares unless it deems that doing so is lawful and feasible and:

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a registration statement filed by us under the U.S. Securities Act of 1933, as amended, is in effect with respect to those shares; or

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the offering and sale of those shares is exempt from or is not subject to the registration requirements of the U.S. Securities Act.

We are under no obligation to file any registration statement with the U.S. Securities and Exchange Commission. If a registration statement is required for you to exercise preemptive rights but is not filed by us, you will not be able to exercise your preemptive rights for additional shares and you will suffer dilution of your equity interest in us.

Holders of our ADSs will not be able to exercise dissent and appraisal rights unless they have withdrawn the underlying shares of our common stock and become our direct stockholders.

Under Korean law, in some limited circumstances, including the transfer of the whole or any significant part of our business and the merger or consolidation of us with another company, dissenting stockholders have the right to require us to purchase their shares under Korean law. However, under our deposit agreement, holders of our American depositary shares do not have, and may not instruct the depositary as to the exercise of, any dissenter’s rights provided to the holders of our common shares under Korean law. Therefore, if holders of our American depositary shares wish to exercise dissenting rights, they must withdraw the underlying common stock from the American depositary shares facility (and incur charges relating to that withdrawal) and become our direct stockholders prior to the record date of the shareholders’ meeting at which the relevant transaction is to be approved, in order to exercise dissent and appraisal rights.

The market value of your investment in our ADSs may fluctuate due to the volatility of the Korean securities market.

Our common stock is listed on the KRX KOSPI Division of the Korea Exchange, which has a smaller market capitalization and is more volatile than the securities markets in the United States and many European countries. The market value of ADSs may fluctuate in response to the fluctuation of the trading price of shares of our common stock on the Stock Market Division of the Korea Exchange. The Stock Market Division of the Korea Exchange has experienced substantial fluctuations in the prices and volumes of sales of listed securities and the Stock Market Division of the Korea Exchange has prescribed a fixed range in which share prices are permitted to move on a daily basis. Like other securities markets, including those in developed markets, the Korean securities market has experienced problems including market manipulation, insider trading and settlement failures. The recurrence of these or similar problems could have a material adverse effect on the market price and liquidity of the securities of Korean companies, including our common stock and ADSs, in both the domestic and the international markets.

The Government has the potential ability to exert substantial influence over many aspects of the private sector business community, and in the past has exerted that influence from time to time. For example, the Government has promoted mergers to reduce what it considers excess capacity in a particular industry and has also encouraged private companies to publicly offer their securities. Similar actions in the future could have the effect of depressing or boosting the Korean securities market, whether or not intended to do so. Accordingly, actions by the government, or the perception that such actions are taking place, may take place or has ceased, may cause sudden movements in the market prices of the securities of Korean companies in the future, which may affect the market price and liquidity of our common stock and ADSs.

Your dividend payments and the amount you may realize upon a sale of your ADSs will be affected by fluctuations in the exchange rate between the U.S. Dollar and the Won.

Investors who purchase the American depositary shares will be required to pay for them in U.S. Dollars. Our outstanding shares are listed on the Korea Exchange and are quoted and traded in Won. Cash dividends, if any, in respect of the shares represented by the American depositary shares will be paid to the depositary bank in Won and then converted by the depositary bank into U.S. Dollars, subject to certain conditions. Accordingly, fluctuations in the exchange rate between the Won and the U.S. Dollar will affect, among other things, the amounts a registered holder or beneficial owner of the American depositary shares will receive from the depositary bank in respect of dividends, the U.S. Dollar value of the proceeds which a holder or owner would receive upon sale in Korea of the shares obtained upon surrender of American depositary shares and the secondary market price of the American depositary shares.

If the Government deems that certain emergency circumstances are likely to occur, it may restrict the depositary bank from converting and remitting dividends in Dollars.

If the Government deems that certain emergency circumstances are likely to occur, it may impose restrictions such as requiring foreign investors to obtain prior Government approval for the acquisition of Korean securities or for the repatriation of interest or dividends arising from Korean securities or sales proceeds from disposition of such securities. These emergency circumstances include any or all of the following:

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sudden fluctuations in interest rates or exchange rates;

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extreme difficulty in stabilizing the balance of payments; and

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a substantial disturbance in the Korean financial and capital markets.

The depositary bank may not be able to secure such prior approval from the government for the payment of dividends to foreign investors when the Government deems that there are emergency circumstances in the Korean financial markets.

Other Risks

We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries.

Companies in Korea, including us, are subject to corporate governance standards applicable to Korean public companies which differ in many respects from standards applicable in other countries, including the United States. As a reporting company registered with the Securities and Exchange Commission and listed on the New York Stock Exchange, we are, and in the future will be, subject to certain corporate governance standards as mandated by the Sarbanes-Oxley Act of 2002. However, foreign private issuers, including us, are exempt from certain corporate governance requirements under the Sarbanes-Oxley Act or under the rules of the New York Stock Exchange. For significant differences, see “Item 16G. Corporate Governance.” There may also be less publicly available information about Korean companies, such as us, than is regularly made available by public or non-public companies in other countries. Such differences in corporate governance standards and less public information could result in less than satisfactory corporate governance practices or disclosure to investors in certain countries.

You may not be able to enforce a judgment of a foreign court against us.

We are a corporation with limited liability organized under the laws of Korea. All or substantially all of our directors and officers and other persons named in this annual report reside in Korea, and all or a substantial portion of the assets of our directors and officers and other persons named in this annual report and substantially all of our assets are located in Korea. As a result, it may not be possible for holders of the American depository shares to effect service of process within the United States, or to enforce against them or us in the United States judgments obtained in United States courts based on the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Korea, either in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated on the United States federal securities laws.

We may become a passive foreign investment company (“PFIC”), which could result in adverse U.S. tax consequences to U.S. investors.

Based upon the past and projected composition of our income and assets and valuation of our assets, we do not believe that we were a PFIC for 2024, and we do not expect to be a PFIC in 2025 or to become one in the foreseeable future, although there can be no assurance in this regard. If, however, we become a PFIC, such characterization could result in adverse U.S. tax consequences to you if you are a U.S. investor. For example, if we become a PFIC, our U.S. investors may become subject to increased tax liabilities under U.S. tax laws and

regulations and will become subject to burdensome reporting requirements. Our PFIC status is determined on an annual basis and depends on the composition of our income and assets. Specifically, we will be classified as a PFIC for U.S. tax purposes if either: (i) 75% or more of our gross income in a taxable year is passive income, or (ii) the average percentage of our assets by value in a taxable year which produce or are held for the production of passive income (which generally includes cash) is at least 50%. Special rules treat certain income earned by a non-U.S. corporation engaged in the active conduct of a banking business as non-passive income. See “Item 10.E. Taxation — Certain United States Federal Income Tax Consequences — Passive Foreign Investment Company Rules.” We cannot assure you that we will not be a PFIC for 2025 or any future taxable year.

ITEM 4.

INFORMATION ON THE COMPANY

ITEM 4.A.

History and Development of the Company

Introduction

We are one of the leading financial institutions in Korea in terms of total assets, revenues, profitability and capital adequacy, among others. Incorporated on September 1, 2001, we are the first privately-held financial holding company to be established in Korea. Since inception, we have developed and introduced a wide range of financial products and services in Korea and aimed to deliver comprehensive financial solutions to clients through a convenient one-portal network.

We have experienced substantial growth through several mergers and acquisitions. On February 1, 2019, we acquired a 59.15% interest in Orange Life Insurance, the former Korean unit of ING Life Insurance, as part of our efforts to diversify and enhance our non-banking businesses. On January 28, 2020, we acquired the remaining interests in Orange Life Insurance by effecting a comprehensive stock exchange under Articles 360-2 of the Korean Commercial Code whereby holders (other than us) of Orange Life Insurance’s common stock transferred all of their shares to us and in return receive shares of our common stock, and hence Orange Life Insurance became our wholly owned subsidiary as of such date. Orange Life Insurance was subsequently merged with and into Shinhan Life Insurance in July 2021. On June 30, 2022 we acquired 94.54% interest in BNP Paribas Cardif General Insurance, which then changed its name to Shinhan EZ General Insurance, Ltd. Subsequently in November 2022, Shinhan EZ General Insurance, Ltd. conducted a paid-in capital increase and our shares decreased to 85.1%.

As of December 31, 2024, we have 15 direct and 33 indirect subsidiaries offering a wide range of financial products and services, including commercial banking, corporate banking, private banking, credit card, asset management, brokerage and insurance services. We believe that such breadth of services will help us to meet the diversified needs of our present and potential clients. We currently serve approximately 19 million active customers, which we believe is the largest customer base in Korea, through approximately 30,147 employees at approximately 1,371 network branches group-wide. While over 80% of our revenues have been historically derived from Korea, we aim to serve the needs of our customers through a global network of 248 offices in the United States, Canada, the United Kingdom, Japan, the People’s Republic of China, Germany, India, Australia, Hong Kong, Vietnam, Cambodia, Kazakhstan, Singapore, Mexico, Uzbekistan, Myanmar, Poland, Indonesia, the Philippines and the United Arab Emirates.

Our registered office and corporate headquarters are located at 20, Sejong-daero 9-gil, Jung-gu, Seoul, Korea 04513 and our telephone number is +822 6360 3000.

Our Strategy

We have maintained a vision of becoming a “customer-centered, top-tier Shinhan” recognized by our clients as well as the broader community. In line with this vision, we have identified three core agendas as foundational principles to guide our overall strategic direction: (i) “Scandal Zero,” (ii) enhanced customer experience and convenience, and (iii) sustainable revenue generation. We are committed to maintaining and enhancing our

position as a leading financial institution in Korea and globally. To this end, we have identified four key strategic initiatives for 2025 as outlined below.

Establishing Effective Internal Controls

We aim to elevate our robust internal control systems into a core differentiating competitive advantage, establishing and strengthening the trust we have gained from our clients and other participants in the industry. To this end, we have introduced responsibility maps delineating roles and responsibilities with appropriate checks and balances at the holding company as well as subsidiary levels, and we plan to further strengthen our infrastructure with respect to internal controls. We will also refine our evaluation system to align incentives and utilize advanced technologies, such as AI, to strengthen our fraud detection and internal controls monitoring systems. We will also expand and strengthen ethics training programs for our officers and employees to further our professional responsibility and ethics initiatives.

Creating Differentiated Customer Value

We will continue our pursuit of unique value propositions for customers through three specific initiatives: (i) enhancing customer experience and convenience, (ii) expanding the adoption of digital and AI-driven innovations, and (iii) strengthening our presence in the senior and wealth management markets. We plan to evaluate customer touchpoints to refine our products and services, with a particular emphasis on streamlining processes and improving the speed and efficiency of customer transactions in order to enhance customers’ overall user experience. We are also seeking to provide more customized and tailored financial services to our customers by integrating AI technology into key interfaces. In light of evolving demographic trends, particularly the growing senior segment, we plan to devote more resources and increase our expertise in wealth management, aiming to provide comprehensive solutions that adapt to our customers’ diverse financial needs.

Enhancing Corporate Citizenship

As a responsible corporate citizen, we are committed to proactively addressing social and environmental challenges. Our efforts include expanding green and transition financing to support climate change mitigation initiatives and reducing our carbon footprint. We also plan to continue support programs to address social issues such as low birth rate and support challenged families in need of financial assistance. We also focus on our human resources capabilities to ensure fairness within our organization and promote “self-leadership” among our employees, thereby strengthening our workforce and long-term competitiveness.

Enhancing Corporate Value

We plan to continue our efforts to deliver enhanced value to our customers as well as shareholders through prudent management of our capital ratios and strengthening our financials and credibility in the market. Given the uncertainties in the global macroeconomic environment, we also plan to refine our risk management capabilities with the aim of balancing near-term resilience with long-term growth and allowing us to navigate swiftly evolving market conditions while remaining well-positioned for future growth opportunities.

Our History and Development

On September 1, 2001, we were formed as a financial holding company under the Financial Holding Companies Act, as a result of acquiring all of the issued shares of the following four entities from their former shareholders in exchange for shares of our common stock: (i) Shinhan Bank, a nationwide commercial bank listed on the Korea Exchange, (ii) Shinhan Securities Co., Ltd., a securities brokerage company listed on the Korea Exchange, (iii) Shinhan Capital Co., Ltd., a leasing company listed on the Korea Exchange Korean Securities Dealers Automated Quotations (“KRX KOSDAQ”), and (iv) Shinhan Investment Trust Management Co., Ltd., a privately held investment trust management company. On September 10, 2001, the common stock of our holding company was listed on what is currently the KRX KOSPI Market.

Since our inception, we have expanded our operations, in large part, through strategic acquisitions, establishing subsidiaries or formation of joint ventures. Our key acquisitions, capital contributions and joint venture formations are described as below:


Date of Acquisition	Entity	Principal Activities	Method of Establishment
April 2002	Jeju Bank	Regional banking	Acquisition from Korea Deposit Insurance Corporation

July 2002	Shinhan Securities Co., Ltd.⁽¹⁾	Securities and investment	Acquisition from the SsangYong Group

August 2002	Shinhan BNP Paribas Investment Trust Management Co., Ltd.⁽²⁾	Investment advisory	50:50 joint venture with BNP Paribas

August 2003	Chohung Bank	Commercial banking	Acquisition from creditors

December 2005	Shinhan Life Insurance	Life insurance services	Acquisition from shareholders

March 2007	LG Card	Credit card services	Acquisition from creditors

January 2012	Tomato Mutual Savings Bank⁽³⁾	Savings bank	Purchase and assumption of assets and liabilities from creditors

January 2013	Yehanbyoul Savings Bank⁽⁴⁾	Savings bank	Acquisition from Korea Deposit Insurance Corporation

October 2017	Shinhan REITs Management	Real estate asset management	Newly established

February 2019, January 2020	Orange Life Insurance⁽⁵⁾	Life insurance services	Acquisition from majority shareholders and subsequent comprehensive stock exchange

May 2019	Asia Trust Co. Ltd.⁽⁶⁾	Real estate trust business	Acquisition from majority shareholders

August 2019	Shinhan AI. Co., Ltd.⁽⁷⁾	Investment advisory	Incorporated and joined as a wholly-owned subsidiary
September 2020, December 2020	Shinhan Venture Investment⁽⁸⁾	Venture capital	Acquisition from majority shareholders and subsequent comprehensive stock exchange

Notes:

(1)	Renamed as Shinhan Investment Corp. from Goodmorning Shinhan Securities Co., Ltd. effective August 2009 and renamed again as Shinhan Securities Co., Ltd. from Shinhan Investment Corp. effective October 2022.

(2)	In January 2009, SH Asset Management Co., Ltd. and Shinhan BNP Paribas Investment Trust Management merged to form Shinhan BNP Paribas Asset Management.

(3)	Shinhan Hope Co., Ltd. was established on December 12, 2011, to purchase and assume certain assets and liabilities of Tomato Mutual Savings Bank. On December 28, 2011, Shinhan Hope Co., Ltd. obtained a savings bank license, changed its name to Shinhan Savings Bank and became our direct subsidiary.

(4)

In January 2013, we entered into a share purchase agreement with Korea Deposit Insurance Corporation for the acquisition of Yehanbyoul Savings Bank, a savings bank located in Korea, for W45.3 billion, and received regulatory approval to merge Yehanbyoul Savings Bank into our existing subsidiary Shinhan Saving Bank. On April 1, 2013, Shinhan Savings Bank and Yehanbyoul Savings Bank merged into a single entity, with Yehanbyoul Savings Bank being the surviving entity and the newly merged bank being named Shinhan Savings Bank.

(5)

(6)

In October 2018, we announced the acquisition of a 60.0% interest in Asia Trust Co. Ltd. According to the transaction agreement, we seek to complete the acquisition by acquiring the remaining 40.0% shares in Asia Trust Co. Ltd. by 2022. The acquisition was approved by the Financial Services Commission on February 17, 2019 and closed on May 2, 2019. Upon closing, Asia Trust Co. Ltd. became our direct subsidiary. In May 2022, Asia Trust Co. Ltd. changed its name to Shinhan Asset Trust Co., Ltd.

(7)	On July 15, 2024, we announced the liquidation and dissolution of Shinhan AI. Co., Ltd., and accordingly Shinhan AI. Co., Ltd. is no longer a subsidiary of SFG.

(8)

(9)	On January 15, 2021, we acquired the remaining 35% interest in Shinhan BNP Paribas Asset Management from BNP Paribas Asset Management Holding and changed its legal name to Shinhan Asset Management, and hence Shinhan Asset Management became our wholly-owned subsidiary as of such date.

(10)	On June 30, 2022 we acquired 94.54% interest in BNP Paribas Cardif General Insurance, which then changed its name to Shinhan EZ General Insurance, Ltd. Subsequently in November 2022, Shinhan EZ General Insurance, Ltd. conducted a paid-in capital increase and our shares decreased to 85.1%.

ITEM 4.B.

Business Overview

Unless otherwise specifically mentioned, the following business overview is presented on a consolidated basis under IFRS.

Our Principal Activities

We provide comprehensive financial services, principally consisting of the following:

•

commercial banking services provided through the following four business sub-segments:

•

channel, primarily focused on retail banking services and corporate banking services, which includes providing loans to and receiving deposits from individuals, corporations (other than large corporations) and wealth management (“WM”) customers;

•

capital market, primarily focused on corporate banking services for large corporations as well as securities investing and trading, derivatives trading and investment banking services within other banking services;

•

international group, primarily focused on international business including management of overseas subsidiaries and branch operations and other international businesses; and

•

others, consists of treasury business within other banking services, including internal asset and liability management activities, as well as various other business supports functions.

•

credit card services;

•

securities services;

•

insurance services;

•

credit services;

•

asset management services, including securities investment trust management, investment advisory, call transaction, domestic and foreign private equity fund business as an executive officer, alternative investments through formation of private equity funds on a private placement basis and other management services; and

•

other services - savings banking services, collective investment administrative services, financial system development services, real estate trust services, real estate investment services, investment advisory services, and venture capital services.

Until the end of 2022, Shinhan Financial Group disclosed related information on life insurance services as a reporting segment. However, with the change in the internal reporting method for chief executive officers in accordance with insurance industry standards, starting from 2023, life insurance services and non-life insurance services have been integrated and redefined as insurance services segment for disclosure. Accordingly, the information for the reporting segments of 2022 has been rewritten.

In addition to the above-mentioned business activities, we, at the holding company level, have the following business departments and planning offices, the primary functions of which are to support cross-divisional management with respect to these specific functional areas: group & global investment banking business department, global market & securities planning office, global business planning office, wealth management planning office and retirement pension planning office.

Our principal business activities are not subject to any material seasonal trends. Although we have a number of overseas branches and subsidiaries, substantially all of our assets are located, and substantially all of our revenues are generated, in Korea.

Deposit-Taking Activities

Principally through Shinhan Bank, we offer many deposit products that target different customer segments with features tailored to each segment’s financial and other profiles. Our deposit products consist principally of the following:

•

Demand deposits. Demand deposits do not accrue interest or accrue interest at a lower rate than time or savings deposits and allow the customer to deposit and withdraw funds at any time. Interest on interest-bearing demand deposits is accrued at a fixed or variable rate depending on the period and the amount of deposit. Demand deposits constituted 18.5%, 17.0% and 16.1% of our total deposits as of December 31, 2022, 2023 and 2024, respectively. Demand deposits paid average interest of 0.47%, 1.00% and 1.04% in 2022, 2023 and 2024, respectively.

•

Time and savings deposits. Time deposits generally require the customer to maintain a deposit for a fixed term during which the deposit accrues interest at a fixed rate or a variable rate based on certain financial indexes, including the “cost of funds index,” or COFIX, published by the Korean Federation of Banks. If the deposit is withdrawn prior to the end of the fixed term, the customer is paid a lower interest rate than that originally offered. The term typically ranges from one month to five years. Time deposits constituted 51.4%, 53.8% and 56.7% of our total deposits as of December 31, 2022, 2023 and 2024, respectively, and paid average interest of 2.04%, 3.83% and 3.66% in 2022, 2023 and 2024, respectively. Savings deposits allow the customer to deposit and withdraw funds at any time and accrue interest at an adjustable interest rate, which is typically lower than the rate applicable to time or installment deposits. Savings deposits constituted 26.2%, 26.0% and 24.7% of our total deposits as of December 31, 2022, 2023 and 2024, respectively, and paid average interest of 0.39%, 0.85% and 0.84% in 2022, 2023 and 2024, respectively.

•

Other deposits. Other deposits consist mainly of certificates of deposit. Certificates of deposit typically have maturities from 30 days to two years. Interest rates on certificates of deposit are determined based on the length of the deposit and prevailing market interest rates. Certificates of deposit are sold at a discount to their face value, reflecting the interest payable on the certificates of deposit. Certificates of deposit constituted 3.9%, 3.2% and 2.5% of our total deposits as of December 31, 2022, 2023 and 2024, respectively and paid average interest of 1.98%, 3.80% and 4.02% in 2022, 2023 and 2024, respectively.

We also offer deposits which provide the customer with preferential rights to housing subscriptions under the Housing Law and Rules on Housing Supply (the “Housing Act”) and eligibility for mortgage and home equity loans. As a result of an amendment to the Housing Act in June 2015, new subscriptions to housing subscription savings accounts, housing subscription time deposits accounts and housing subscription installment savings accounts became no longer available after September 1, 2015. Instead, general housing subscription savings accounts (which combine all of the functions of the aforementioned three accounts) presently remain available to all. The contribution period is from the subscription date to the date on which the account holder is selected as the purchaser of a house, and the required monthly contribution amount is from a minimum of W20,000 to a maximum of W500,000. Notwithstanding these limits however, customers who meet certain conditions as determined and announced by the Minister of Land, Transport and Maritime Affairs, for example criteria on age and income, may subscribe for a housing subscription savings account with a monthly contribution amount of W20,000 to a maximum of W1 million. The interests accrued on general housing subscription savings accounts are paid in lump sum upon termination of the account, and such interests shall be calculated at the interest rate determined and announced by the Ministry of Land, Infrastructure and Transport. Those who have a general housing subscription savings account and meet certain other criteria are granted a preferential subscription right for the purchase of a house. In the case of privately funded houses, the aggregate amount of contributions made to the account must be at least the applicable deposit threshold amount for the location and area of the relevant house (from W2 million up to W15 million). It is impossible to change the account holder name of a general housing subscription savings account except in the case of inheritance by the

death of the original account holder. For information on our deposits in Korean Won based on the principal types of deposit products we offer, see “— Description of Assets and Liabilities — Funding — Deposits.”

The rate of interest payable on our deposit products may vary significantly, depending on average funding costs, the rate of return on our interest-earning assets, prevailing market interest rates among financial institutions and other major financial indicators.

We also offer court deposit services for litigants in Korean courts, which involve providing effectively an escrow service for litigants involved in certain types of legal or other proceedings. Chohung Bank historically was a dominant provider of such services since 1958, and following the acquisition of Chohung Bank, we continue to hold a dominant market share in these services. Such deposits typically carry interest rates lower than the market rates (by approximately 0.35% per annum) and amounted to W7,308 billion, W6,421 billion and W6,975 billion as of December 31, 2022, 2023 and 2024, respectively.

The Monetary Policy Committee of the Bank of Korea imposes a reserve requirement on Won currency deposits at commercial banks at rates ranging from 0% to 7%, based generally on maturity and the type of deposit instrument. See “— Supervision and Regulation — Principal Regulations Applicable to Banks — Liquidity.”

The Depositor Protection Act provides for a deposit insurance system under which the Korea Deposit Insurance Corporation guarantees repayment of eligible bank deposits to depositors up to W50 million per depositor and W50 million per insured under the defined contribution retirement pension per bank. See “— Supervision and Regulation — Principal Regulations Applicable to Banks — Deposit Insurance System.”

Retail Banking Services

Overview

We provide retail banking services primarily through Shinhan Bank, and, to a significantly lesser extent, through Jeju Bank, a regional bank. Our retail loans, before allowance for credit losses on loans and deferred loan origination costs and fees and excluding credit card receivables, amounted to W166,140 billion as of December 31, 2024.

Retail banking services include mortgage and home equity lending and retail lending as well as demand, savings and fixed deposit-taking, checking account services, electronic banking and automatic teller machines (“ATM”) services, bill paying services, payroll and check-cashing services, currency exchange and wire fund transfer. We believe that providing modern and efficient retail banking services is important to maintaining our public profile and as a source of fee-based income. Accordingly, we believe that our retail banking services and products will become increasingly important in the coming years as the domestic banking sector further develops and becomes more complex.

Retail banking has been and will continue to remain one of our core businesses. Our strategy in retail banking is to provide prompt and comprehensive services to retail customers through increased automation and improved customer service, as well as a streamlined branch network focused on sales. The retail segment places an emphasis on targeting high net-worth individuals.

Retail Lending Activities

We offer various retail loan products, consisting principally of loans to individuals and households. Our retail loan products target different segments of the population with features tailored to each segment’s financial profile and other characteristics, including customer’s occupation, age, loan purpose, collateral requirements and

the duration of the customer’s relationship with Shinhan Bank. Our retail loans consist principally of the following:

•

Mortgage and home equity loans, which are mostly comprised of mortgage loans that are used to finance home purchases and are generally secured by the housing unit being purchased; and

•

Other retail loans, which are loans made to customers for any purpose other than mortgage and home equity loans and the terms of which vary based primarily upon the characteristics of the borrower and which are either unsecured or secured, or guaranteed by deposits or by a third party. Other retail loans also include advance loans extended on an unsecured basis to retail borrowers the use of proceeds for which is restricted to financing of home purchases prior to the completion of the construction.

As of December 31, 2024, our mortgage and home equity loans and other retail loans accounted for 60.8% and 39.2% of our total retail loans, respectively.

For secured loans, our policy is to lend up to 40% to 100% of the appraisal value of the collateral, after taking into account the value of any lien or other security interest that has priority over our security interest (other than petty claims). For mortgage and home equity loans, our general policy is to lend up to 40% to 85% of the appraisal value of the collateral, but subject to the maximum loan-to-value ratio, debt-to-income ratio and debt service ratio requirements for mortgage loans implemented by the Government. The loan-to-value ratio of secured loans, including mortgage and home equity loans, is updated on a monthly basis using the most recent appraisal value of the collateral, and maximum loan-to-value ratios are further adjusted based on factors such as the location of the secured property, nature and purpose of the loans and level of competition in the market. Since January 11, 2019, maximum loan-to-value ratios are determined and may be adjusted in increments of 1% (as opposed to increments of 5%, which was the case prior to January 11, 2019), allowing us to set more precise and tailored maximum loan-to-value ratios for secured loans. As of December 31, 2024, the loan-to-value ratio of mortgage and home equity loans of Shinhan Bank was 49.5%. As of December 31, 2024, substantially all of its mortgage and home equity loans were secured by residential property.

Under the Regulation on the Supervision of the Banking Business and the Detailed Regulation on the Supervision of the Banking Business, our banking subsidiaries were subject to, when extending mortgage and home equity loans, the maximum loan-to-value ratio of 70% (subject to certain exceptions, including the regulated areas described below) and the maximum debt-to-income ratio of 60% (only in respect of housing units located in the greater Seoul metropolitan area, subject to certain exceptions).

less (W800 million or less in case of houses located in “adjustment targeted areas”) and (ii) up to 80% of the appraised value of the houses, for new loans to a first-time home buyer with a maximum residential mortgage loan amount of W600 million or less. The regulations on the debt-to-income ratio remained largely unchanged, with the debt-to-income ratio applicable to houses being (i) 60% for those that are located in the greater Seoul metropolitan area but excluding the regulated areas, (ii) 50% for those that are located in “adjustment targeted areas” and (iii) 40% for those that are located in “speculative areas” or “overheated speculative areas”. However, such debt-to-income ratios for houses located in regulated areas are adjusted to 60% for (i) low-income households that (1) have a combined (in case of married couple) annual income of no more than W90 million, (2) do not currently own any housing and (3) are using the loan to purchase low-price housing valued at W900 million or less (W800 million or less in case of houses located in “adjustment targeted areas”) and (ii) first-time homebuyers.

service ratio” system is expected to further expand to mortgage loans, credit facilities and other loans across all financial institutions beginning July 2025.

Our banking subsidiaries extend mortgage and home equity loans in compliance with the applicable regulations and administrative instructions by the relevant supervising authorities.

The following table sets forth a breakdown of our retail loans.


	As of December 31,
	2022			2023			2024

	(In billions of Won, except percentages)
Retail loans⁽¹⁾
Mortgage and home equity loans	W	81,724		W	87,305		W	101,078
Other retail loans		73,641			67,799			65,062
Percentage of retail loans to total gross loans		37.6	%		37.2	%		36.5	%

Note:

(1)	Before allowance for credit losses on loans and deferred loan origination costs and fees and excludes credit card receivables.

The total mortgage and home equity loans amounted to W101,078 billion as of December 31, 2024, and as of such date, consisted of amortizing loans (whose principal is repaid by part of the installment payments) in the amount of W68,385 billion and non-amortizing loans in the amount of W32,693 billion. In addition, as of December 31, 2024, we also provided lines of credit in the aggregate outstanding amount of W177 billion for non-amortizing loans.

Pricing

The interest rates payable on Shinhan Bank’s retail loans are either periodically adjusted floating rates (based on a base rate determined for three-month, six-month or twelve-month periods derived using an internal transfer price system, which reflects the market cost of funding, as adjusted to account for expenses related to lending and the profit margin of the relevant loan products) or fixed rates that reflect the market cost of funding, as adjusted to account for expenses related to lending and the profit margin. Fixed rate loans are offered only on a limited basis and at a premium to floating rate loans. For unsecured loans, which Shinhan Bank provides on a floating or fixed rate basis, interest rates thereon reflect a margin based on, among other things, the borrower’s credit score as determined during its loan approval process. For secured loans, the credit limit is based on the type of collateral, priority with respect to the collateral and the loan-to-value ratio. Shinhan Bank may adjust the pricing of these loans to reflect the borrower’s current and/or expected future contribution to Shinhan Bank’s profitability. The interest rate on Shinhan Bank’s loan products may become adjusted at the time the loan is extended. If a loan is repaid within three years following the date of the loan, the borrower is required to pay an early repayment fee, which is typically 0.7% to 1.4%, depending on types of loans and applicable interest rates, of the outstanding principal amount of and accrued and unpaid interest on the loan, multiplied by a fraction the numerator of which is the number of the remaining days on the loan until maturity and the denominator of which is the number of days comprising the term of the loan or three years, whichever is greater.

As of December 31, 2024, Shinhan Bank’s three-month, six-month and twelve-month base rates were 3.43%, 3.33% and 3.04%, respectively. As of December 31, 2024, Shinhan Bank’s fixed rates for mortgage and home equity loans with a maturity of five years ranged from 4.06% to 4.21%. Shinhan Bank’s fixed rates for other retail loans with a maturity of one year ranged from 3.60% to 14.00%, depending on the credit scores of its customers. As of December 31, 2024, 90.8% of Shinhan Bank’s total retail loans were floating rate loans and 9.2% were fixed rate loans. As of the same date, 90.8% of Shinhan Bank’s retail loans with maturity of more than one year were floating rate loans and 9.2% were fixed rate loan.

The interest rate charged to customers by our banking subsidiaries is based, in part, on the “cost of funds index”, or COFIX, which is published by the Korean Federation of Banks. COFIX is computed based on the weighted average interest of select funding products (including time deposits, housing and other installment savings deposits, repos, discounted bills and senior non-convertible financial debentures) of eight major Korean banks (comprised of Shinhan Bank, Kookmin Bank, Woori Bank, KEB Hana Bank, Nonghyup Bank, Industrial Bank of Korea, Citibank Korea Inc. and Standard Chartered Bank Korea Limited). Each bank then independently determines the interest rate applicable to its respective customers by adding a spread to the COFIX based on the difference between the COFIX and such bank’s general funding costs, administration fees, the customer’s credit score, the maturity of the loan and other customer-specific premiums and discounts based on the customer relationship with such bank. These interest rates are typically adjusted on a monthly basis. In January 2019, the Financial Services Commission announced plans to reflect rates for short term deposits such as demand deposits when computing the “cost of funds index,” or COFIX, which is expected to result in lower interest rates for household loans compared to the previous COFIX rate.

Private Banking

We have historically focused on customers with high net worth. Our retail banking services include providing private banking services to high net-worth customers who seek personal advice in complex financial matters. Our aim in private banking is to help enhance wealth accumulation by, and increase the financial sophistication of, our high net-worth clients by offering them customized wealth management solutions and comprehensive financial services including asset portfolio and fund management, tax consulting, real estate management and family office services, among others. Since the end of 2011, in order to preemptively respond to evolving customer needs and promote asset growth by inducing greater synergy between commercial banking and investment advisory services offered by Shinhan Securities, Shinhan Bank launched private wealth management centers which combine certain branches of Shinhan Bank with those of Shinhan Securities located in the same area. Shinhan Bank’s strength in private banking has been widely recognized by a number of significant industry awards in recent years, including the grand prize at the Premium Brand Index by Korean Standards Association, Chosun Ilbo and Ministry of Trade, Industry and Energy (awarded 17 consecutive years), the Korea Prestige Brand Award by the Korea Economic Daily (awarded nine consecutive years), the Star Brand Award by Maekyung Media Group (awarded eight consecutive years) and National Brand Award by Chosun Ilbo (awarded seven consecutive years) in 2024.

We provide premier private banking services to meet the increasing demand from ultra-high-net-worth individuals. In December 2019, we launched the PIB Center, which integrates investment banking and private banking services. In 2022, we established a family office center aimed at managing family assets to ensure continuity across generations. Our offerings include exclusive membership services tailored for a select clientele, along with advisory services provided by specialized teams from Shinhan Bank and Shinhan Securities.

As of December 31, 2024, Shinhan Bank operated 25 private wealth management service centers nationwide, including 17 in Seoul, four in the Gyeonggi province and four in cities located in other regions in Korea. As of December 31, 2024, Shinhan Bank had approximately 22,010 private banking customers, who typically are required to have W500 million or more in deposits with Shinhan Bank to qualify for its private banking services.

Corporate Banking Services

Overview

We provide corporate banking services, primarily through Shinhan Bank, to small- and medium-sized enterprises, including enterprises known as SOHO (standing for “small office, home office”), which are small enterprises operated by individuals or households, and, to a lesser extent, to large corporations, including corporations that are affiliated with chaebols. We also lend to government-controlled enterprises.

The following table sets forth the balances and percentage of our total loans (before allowance for credit losses on loans and deferred loan origination costs and fees) attributable to each category of our corporate lending business as of the dates indicated.


	As of December 31,
	2022				2023				2024

	(In billions of Won, except percentages)
Small- and medium-sized enterprises loans⁽¹⁾	W	131,304	31.8	%	W	134,271	32.2	%	W	145,327	31.9	%
Large corporate loans		49,503	12.0			54,765	13.1			68,461	15.0
Others⁽²⁾		48,804	11.8			45,115	10.8			46,303	10.2

Total corporate loans	W	229,611	55.6	%	W	234,151	56.1	%	W	260,091	57.1	%

Notes:

(1)	Represents the principal amount of loans extended to corporations meeting the definition of small- and medium-sized enterprises under the Basic Act on Small- and Medium-sized Enterprises and its Presidential Decree.

(2)	Includes loans to governmental agencies, loans to banks and other corporate loans, including loans originated by subsidiaries other than Shinhan Bank which are classified as corporate loans for purposes of financial reporting.

Small- and Medium-sized Enterprises Banking

Under the Framework Act on Small and Medium Enterprises (the “SME Framework Act”), and the related Presidential Decree, in order to qualify as a small- and medium-sized enterprise, (i) the enterprise’s total assets at the end of the immediately preceding fiscal year must be less than W500 billion, (ii) the enterprise must meet the standards prescribed by the Presidential Decree in relation to the average and total annual sales revenues applicable to the type of its main business, and (iii) the enterprise must meet the standards of management independence from ownership as prescribed by the Presidential Decree, including non-membership in a conglomerate as defined in the Monopoly Regulation and Fair Trade Act. An enterprise shall not qualify as a small- or medium-sized enterprise if it is incorporated into, or is deemed to be incorporated into a business group subject to disclosure under the Monopoly Regulation and Fair Trade Act. Non-profit enterprises that satisfy certain requirements prescribed in the SME Framework Act and its Presidential Decree may qualify as a small- and medium-sized enterprise. Furthermore, cooperatives and federations of cooperatives as prescribed by the Presidential Decree are deemed as small- and medium-sized enterprises, effective from April 15, 2014. As of December 31, 2024, we had loans to 454,833 small- and medium-sized enterprises for an aggregate amount of W145,327 billion (before allowance for credit losses on loans and deferred loan origination costs and fees).

We believe that Shinhan Bank, whose traditional focus has been on small- and medium-sized enterprises lending, is well-positioned to succeed in the small- and medium-sized enterprises market in light of its marketing capabilities (which we believe have provided Shinhan Bank with significant customer loyalty) and its prudent

risk management practices, including conservative credit rating systems for credit approval. To maintain or increase its market share of small- and medium-sized enterprises lending, Shinhan Bank:

•

has accumulated a market-leading expertise and familiarity as to customers and products. We believe Shinhan Bank has an in-depth understanding of the credit risks embedded in this market segment, allowing Shinhan Bank to develop loan and other products specifically tailored to the needs of this market segment;

•

operates a relationship management system to provide customer services that are tailored to small- and medium-sized enterprises. Shinhan Bank currently has relationship management teams in 190 banking branches, of which 40 are corporate banking branches and 150 are hybrid banking branches designed to serve both retail customers and, to a limited extent, corporate customers. These relationship management teams market products, and review and approve smaller loans with less credit risks; and

•

continues to focus on cross-selling loan products with other products. For example, when Shinhan Bank lends to small- and medium-sized enterprises, it also explores opportunities to cross-sell retail loans or deposit products to the employees of these enterprises or to provide financial advisory services.

Large Corporate Banking

Large corporate customers consist primarily of member companies of chaebols and financial institutions. Our large corporate loans amounted to W68,461 billion (before allowance for credit losses on loans and deferred loan origination costs and fees) as of December 31, 2024. Large corporate customers tend to have better credit profiles than small- and medium-sized enterprises, and accordingly, Shinhan Bank has expanded its focus on these customers as part of its risk management policy.

Shinhan Bank aims to be a one-stop financial solution provider that also partners with its corporate clients in their corporate expansion and growth endeavors. To that end, Shinhan Bank provides a wide range of corporate banking services, including investment banking, real estate financing, overseas real estate project financing, large development project financing, infrastructure financing, structured financing, equity investments/venture investments, mergers and acquisitions consulting, securitization and derivatives services, including securities and derivative products and foreign exchange trading. Shinhan Bank, through its Hong Kong branch, also arranges financing for, and offers consulting services to, Korean companies expanding their business overseas, particularly in Asia.

Digital Corporate Banking

Shinhan Bank offers corporate customers a web-based total cash management service known as “Shinhan Bizbank.” Shinhan Bizbank supports substantially all types of banking transactions ranging from basic transaction history inquiries and fund transfers to opening letters of credit, trade finance, payment management, collection management, sales settlement service, acquisition settlement service, business-to-business settlement service, sweeping, pooling, ERP interface service, host-to-host banking solutions, SWIFT SCORE service and global cash and liquidity management service. In addition, Shinhan Bank provides customers with integrated and advanced access to its financial services through its “Inside Bank” program, which combines Internet banking, capital management services and enterprise resource planning to better serve corporate customers. The Inside Bank program also seeks to provide customized financial services to meet the comprehensive needs of target corporate customers ranging from conglomerates to small enterprises in various industries, with the goal of enhancing convenience to our corporate customers in accessing our financial services as well as assisting them to strategically manage their funds. In line with Shinhan Bank’s efforts to facilitate non-face-to-face online transactions for corporate transactions, in 2018, Shinhan Bank upgraded its virtual account-based corporate fund management service, known as “Shinhan Damoa Service”, making it available on mobile channels. In addition, Shinhan Bank has made the fund transfers via phone number service (allowing customers to make fund transfers

without the recipients’ account number), which was previously only available for personal banking customers, available for corporate banking customers as well. As part of Shinhan Bank’s effort to lower settlement fees for small business owners, in May 2019, Shinhan Bank launched “ZeroPay Biz Shinhan”, an account-based mobile payment service enabling vendors to easily receive payments from customers’ accounts by scanning the vendor’s QR code with a smartphone. In October 2020, Shinhan Bank upgraded the “Shinhan S Corporate Bank” platform to launch “Shinhan SOL Biz”, a non-face-to-face application for corporate clients, with the goal of improving the platform so that Shinhan Bank can offer non-face-to-face channels to corporate clients that are as convenient and user-friendly as Shinhan Bank’s online retail banking platforms. In August 2021, Shinhan Bank launched a non-face-to-face name verification for corporate banking customers via smartphone using Shinhan SOL Biz, enabling corporate customers to open new bank accounts without visiting a branch. In 2024, Shinhan Bank expanded its open banking services to corporate clients, enabling the access and management of multiple corporate bank accounts through a single internet platform.

Corporate Lending Activities

Our principal loan products for corporate customers are working capital loans and facilities loans. Working capital loans, which include discounted notes and trade financing, are generally loans used for general working capital purposes. Facilities loans are provided to finance the purchase of equipment and construction of manufacturing plants. As of December 31, 2024, Shinhan Bank’s working capital loans and facilities loans amounted to W80,709 billion and W105,028 billion, respectively, representing 42.3 % and 55.0 % of Shinhan Bank’s total Won-denominated corporate loans. Working capital loans generally have a maturity of one year, but may be extended on an annual basis for an aggregate term of three years in the case of unsecured loans and five or ten years in the case of secured loans. Facilities loans have a maximum maturity of 15 years, are typically repaid in semiannual installments per annum and may be entitled to a grace period not exceeding one-third of the loan term with respect to the first repayment; facilities loans with a term of three years or less may be paid in full at maturity.

Loans to corporations may be unsecured or secured by real estate, deposits or guaranty certificates. As of December 31, 2024, Shinhan Bank’s secured loans and guaranteed loans (including loans secured by guaranty certificates issued by credit guarantee insurance funds) accounted for 73.9% and 10.8%, respectively, of Shinhan Bank’s Won-denominated loans to small- and medium-sized enterprises. As of December 31, 2024, 49.8% of the corporate loans of Shinhan Bank were secured by real estate.

When evaluating whether to extend loans to corporate customers, Shinhan Bank reviews their creditworthiness, credit score, value of any collateral and/or third party guarantee. The value of collateral is computed using a formula that takes into account the appraised value of the collateral, any prior liens or other claims against the collateral and an adjustment factor based on a number of considerations including, with respect to property, the average value of any nearby property sold in a court-supervised auction during the previous year. Shinhan Bank revalues collateral when a secured loan is renewed or if a trigger event occurs with respect to the loan in question.

Pricing

Shinhan Bank determines the price for its corporate loan products based principally on their respective cost of funding and the expected loss rate based on the borrower’s credit risk. As of December 31, 2024, 70.4% of Shinhan Bank’s corporate loans with outstanding maturities of one year or more had variable interest rates as determined by the applicable market rates.

More specifically, interest rates on Shinhan Bank’s corporate loans are generally determined as follows:

Interest rate = (Shinhan Bank’s periodic market floating rate or reference rate) plus transaction cost plus credit spread plus risk premium plus or minus discretionary adjustment.

Depending on the market condition and the agreement with the borrower, Shinhan Bank may use either its periodic market floating rate or the reference rate as the base rate in determining the interest rate for the borrower. As of December 31, 2024, Shinhan Bank’s periodic market floating rates (which are based on a base rate determined for a three-month, six-month, one-year, two-year, three-year or five-year period, as applicable, as derived using Shinhan Bank’s market rate system) were 3.43% for three months, 3.33% for six months, 3.04% for one year, 2.99% for two years, 2.98% for three years and 3.12% for five years. As of the same date, Shinhan Bank’s reference rate was 4.00%. The reference rate refers to the base lending rate used by Shinhan Bank and is determined annually by Shinhan Bank’s Asset & Liability Management Committee based on, among others, Shinhan Bank’s funding costs, cost efficiency ratio and discretionary margin.

Transaction cost reflects the standardized transaction cost assigned to each loan product and other miscellaneous costs, including contributions to the Credit Guarantee Fund, and education taxes. The Credit Guarantee Fund is a statutorily created entity that provides credit guarantees to loans made by commercial banks and is funded by mandatory contributions from commercial banks in the amount of approximately 0.42% of all loans (excluding certain loans such as facilities loans) made by them.

The credit spread is added to the periodic floating rate to reflect the expected loss based on the borrower’s credit rating and the value of any collateral or payment guarantee. In addition, Shinhan Bank adds a risk premium which takes into account the potential of unexpected loss that may exceed the expected loss from the credit rating assigned to a particular borrower.

A discretionary adjustment rate is added or subtracted to reflect the borrower’s current and/or future contribution to Shinhan Bank’s profitability. If additional credit is provided by way of a guarantee, the adjustment rate is subtracted to reflect such change in the credit spread. In addition, depending on the price and other terms set by competing banks for similar borrowers, Shinhan Bank may reduce the interest rate to compete more effectively with other banks.

International Business

Shinhan Bank also engages in treasury and investment activities in international capital markets, principally including foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services and foreign banking operations through its overseas branches and subsidiaries. Shinhan Bank aims to become a leading bank in Asia and expand its international business by focusing on further bolstering its overseas network, localizing its overseas operations and diversifying its product offerings, particularly in terms of asset management, in order to meet the various financing needs of its current and potential customers overseas.

Other Banking Services

Other banking businesses carried on by Shinhan Bank include treasury business (including internal asset and liability management and other non-deposit funding activities), trading of, and investment in, debt securities and, to a lesser extent, equity securities for its own accounts, derivative trading activities, as well as managing back-office functions.

Treasury

Shinhan Bank’s treasury division provides funds to all of Shinhan Bank’s business operations and ensures the liquidity of its operation. To secure stable long-term funds, Shinhan Bank uses fixed and floating rate notes, debentures, structured financing and other advanced funding methods. As for overseas funding, Shinhan Bank closely monitors the feasibility of raising funds in currencies other than the U.S. Dollar, such as the Japanese Yen, Euro and Australian dollar. In addition, Shinhan Bank makes call loans and borrows call money in the short-term money market. Call loans are short-term lending among banks and financial institutions in either Korean Won or foreign currencies with a minimum transaction amount of W100 million and maturities of typically one day.

Securities Investment and Trading

Shinhan Bank invests in and trades securities for its own accounts in order to maintain adequate sources of liquidity and to generate interest income, dividend income and capital gains. Shinhan Bank’s trading and investment portfolio consists primarily of Korean and international treasury securities and debt securities issued by Government agencies, local governments or certain government-invested enterprises, debt securities issued by financial institutions and equity securities listed on the KRX KOSPI Market and KRX KOSDAQ Market of the Korea Exchange. For a detailed description of our securities investment portfolio, see “— Description of Assets and Liabilities — Investment Portfolio.”

Derivatives Trading

Shinhan Bank provides to its customers, and to a limited extent, trades for its proprietary accounts, a broad range of derivatives products, which include:

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interest rate swaps, options, and futures relating to interest rate risks;

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cross-currency swaps, largely for Korean Won against U.S. Dollars, Japanese Yen and Euros;

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equity and equity-linked options;

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foreign currency forwards, options and swaps;

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commodity forwards, swaps and options;

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credit derivatives; and

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KOSPI 200 indexed equity options.

Shinhan Bank’s outstanding derivatives commitments in terms of notional amount were W239,620 billion, W251,507 billion and W321,240 billion in 2022, 2023 and 2024, respectively. Such derivative operations generally focus on addressing the needs of Shinhan Bank’s corporate clients to enter into derivatives contracts to hedge their risk exposure and entering into back-to-back derivatives to hedge Shinhan Bank’s risk exposure that results from such client contracts.

Shinhan Bank also enters into derivative contracts to hedge the interest rate and foreign currency risk exposures that arise from its own assets and liabilities. In addition, to a limited extent, Shinhan Bank engages in the proprietary trading of derivatives within its regulated open position limits. See “— Description of Assets and Liabilities — Derivatives.”

Trust Account Management Services

Overview

Shinhan Bank’s trust account management services involve management of trust accounts, primarily in the form of money trusts. Trust account customers are typically individuals seeking higher rates of return than those offered by bank account deposits. Because deposit reserve requirements do not apply to deposits held in trust accounts as opposed to deposits held in bank accounts, and regulations governing trust accounts tend to be less strict, Shinhan Bank is generally able to offer higher rates of return on trust account products than on bank deposit products.

Trust account products generally require higher minimum deposit amounts than those required by comparable bank account deposit products. Unlike bank deposit products, deposits in trust accounts are invested primarily in securities (consisting principally of debt securities and beneficiary certificate for real estate financing) and, to a lesser extent, in loans, as the relative shortage of funding sources require that trust accounts be invested in a higher percentage of liquid assets.

Under the Banking Act, the Financial Investment Services and Capital Markets Act and the Trust Act, assets in trust accounts are required to be segregated from other assets of the trustee bank and are unavailable to satisfy the claims of the depositors or other creditors of such bank. Accordingly, trust accounts that are not guaranteed as to principal (or as to both principal and interest) are accounted for and reported separately from the bank accounts. See “— Supervision and Regulation.” Trust accounts are regulated by the Trust Act and the Financial Investment Services and Capital Markets Act, and most national commercial banks offer similar trust account products. Shinhan Bank earns income from trust account management services, which is recorded as net trust management fees.

As of December 31, 2022, 2023 and 2024, Shinhan Bank had total trust assets of W95,855 billion, W125,906 billion and W123,704 billion, respectively, comprised principally of securities investments of W22,316 billion, W21,913 billion and W20,521 billion, respectively; real property investments of W9,767 billion, W9,022 billion and W8,327 billion, respectively; and loans with an aggregate principal amount of W461 billion and W409 billion and W355 billion, respectively. Securities investments consisted of corporate bonds, government-related bonds and other securities, primarily commercial paper. As of December 31, 2022, 2023 and 2024, debt securities accounted for 22.8%, 17.0% and 16.3%, respectively, and equity securities constituted 0.5%, 0.4% and 0.3%, respectively, of Shinhan Bank’s total trust assets. Loans made by trust accounts are similar in type to those made by bank accounts, except that they are made only in Korean Won. As of December 31, 2022, 2023 and 2024, 83.4%, 83.6% and 83.2%, respectively, of the amount of loans from the trust accounts were collateralized or guaranteed. In making investment from funds received for each trust account, each trust product maintains investment guidelines applicable to each such product which set forth, among other things, company-, industry- and security-specific limitations.

Trust Products

In Korea, trust products typically take the form of money trusts, which are discretionary trusts over which (except in the case of a specified money trust) the trustees have investment discretion subject to applicable law and is commingled and managed jointly for each type of trust account. The specified money trusts are established on behalf of customers who give specific directions as to how their trust assets should be invested.

Money trusts managed by Shinhan Bank’s trust account business amounted to W61,110 billion and W69,292 billion and W72,181 billion as of December 31, 2022, 2023 and 2024, respectively.

Shinhan Bank offers variable rate trust products through its retail branch network. As of December 31, 2022, 2023 and 2024, Shinhan Bank’s variable rate trust accounts amounted to W57,590 billion, W66,083 billion and W69,242 billion, respectively, of which principal guaranteed variable rate trust accounts amounted to W3,519 billion, W3,208 billion and W2,938 billion, respectively. Variable rate trust accounts offer their holders variable rates of return on the principal amount of the deposits in the trust accounts and do not offer a guaranteed return on the principal of deposits, except in the limited cases of principal guaranteed variable rate trust accounts, for which payment of the principal amount is guaranteed. Shinhan Bank charges a lump sum or a fixed percentage of the assets held in such trusts as a management fee, and, depending on the trust products, is also entitled to additional fees in the event of early termination of the trusts by the customer. Korean banks, including Shinhan Bank, are currently allowed to guarantee the principal of the following types of variable rate trust account products: (i) existing individual pension trusts, (ii) new individual pension trusts, (iii) existing retirement pension trusts, (iv) new retirement pension trusts, (v) pension trusts and (vi) employee retirement benefit trusts. Shinhan Bank also offers an insignificant amount of guaranteed fixed rate trust products (amounting to W1.0 billion, W1.0 billion and W1.0 billion as of December 31, 2022, 2023 and 2024, respectively), which provide to its holders a guaranteed return of the principal as well as a guaranteed fixed rate of return. These products are carry-overs from past offerings, and Shinhan Bank no longer offers guaranteed fixed rate trust products.

Credit Card Services

Products and Services

We currently provide our credit card services principally through our credit card subsidiary, Shinhan Card, and to a limited extent, Jeju Bank.

Shinhan Card offers a wide range of credit card and other services, principally consisting of the following:

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credit card services, which involve providing cardholders with credit up to a preset limit to purchase products and services. Repayment for credit card purchases may be made either (i) on a lump-sum basis, namely, in full at the end of a monthly billing cycle or (ii) on a revolving basis subject to a minimum monthly payment. The minimum monthly payment for holders of credit cards issued before December 30, 2014 is the greater of (x) 5% to 20% of the amount outstanding (depending on the cardholder’s credit) or (y) W30,000. The minimum monthly payment for holders of credit cards issued on or after December 30, 2014 is the greater of (x) 10% to 25% of the amount outstanding (depending on the cardholder’s credit) or (y) W50,000. Currently, the outstanding credit card balance subject to the revolving basis payments generally accrues interest at the effective annual rates of approximately 5.4% to 19.9%.

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cash advances, which enable the cardholders to withdraw cash subject to a preset limit from an ATM or a bank branch. Repayments for cash advances may be made either on a lump-sum basis or, in the case of credit cards issued before December 30, 2014, on a revolving basis. Currently, the lump-sum cash advances generally accrue interest at the effective annual rates of approximately 6.4% to 19.9% and the revolving cash advances generally accrue interest at a minimum rate of 6.4% to 19.9% of the outstanding balance (depending on the cardholder’s credit).

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installment purchases, which provide customers with an option to purchase products and services from select merchants on an installment basis for which repayments must be made in equal amounts over a fixed term generally ranging from two to 36 months, and for certain limited types of cards, up to 36 months. Currently, the outstanding installment purchase balances generally accrue interest at the effective annual rates of approximately 9.5% to 19.9%.

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card loans, which enable cardholders to receive, up to a preset limit, a loan which is generally unsecured. Repayment of card loans is made generally by (i) repaying principal and interest in equal amounts on an installment basis over a fixed term of two to 48 months, (ii) repaying the principal and interest amounts in full at maturity, or (iii) making interest-only payments during the initial grace period of six months and repaying the principal and interest amounts on a monthly installment basis over the remaining period of typically two to 30 months. Currently, the outstanding card loan balances generally accrue interest at the effective annual rates of approximately 5.2% to 19.9%. Delinquent credit card receivables can also be restructured into loans, which we classify as card loans, and these loans generally accrue interest at the effective annual rates of approximately 11.9% to 19.5% over a fixed term whose maximum is 72 months.

Shinhan Card derives revenues from annual membership fees paid by credit cardholders, interest charged on credit card balances, fees and interest charged on cash advances and card loans, interest charged on late and deferred payments and merchant fees paid by retail and service establishments. Merchant fees and interest on cash advances constitute the largest source of revenue.

The annual membership fees for credit cards vary depending on the type of credit card and the benefits offered thereunder. For standard credit cards and most of the affinity and co-branded cards, Shinhan Card charges an annual membership fee ranging from W1,000 to W2,000,000 per credit card, depending on the type of the card and the cardholder profile. Certain government affinity cards have no annual membership fee. If Shinhan Card’s customers make cash advances using ATMs of a financial institution other than Shinhan Card, Shinhan Card also charges a usage fee for such cash advances in an amount equivalent to the fees charged by such financial institution for the use of its ATM plus costs to cover Shinhan Card’s related administration expenses.

Any accounts that are unpaid when due are deemed to be delinquent accounts, for which Shinhan Card levies a late charge in lieu of the interest rates applicable prior to default. The late charge rate currently ranges from 8.2% to 20.0% per annum. Since the first half of 2021, instead of levying a late charge in lieu of interest rates prior to default, Shinhan Card maintained the interest rates prior to default but added a late charge rate of 3% in addition to the interest rates prior to default.

Merchant discount fees, which are processing fees Shinhan Card charges to merchants, can be up to the regulatory limit of 2.3% of the purchased amount depending on the merchant used, with the average charge for credit cards being 1.41% in 2024. For small- and medium-sized merchants, the applicable regulations impose reduced fee rates of 0.8% (in the case of merchants with annual sales of W300 million or less) and 1.3% (in the case of merchants with annual sales of more than W300 million and up to W500 million), respectively, of the purchased amount.

Although making payments on a revolving basis is more common in many other countries, this payment method is still in its early stages of development in Korea. Cardholders in Korea are generally required to repay their purchases within approximately 14 to 44 days of purchase depending on their payment cycle, except in the case of installment purchases where the repayment term is typically three to six months. Accounts that remain unpaid after this period are deemed to be delinquent, and Shinhan Card levies late charges on and closely monitors such accounts. For purchases made on an installment basis, Shinhan Card charges interest on unpaid amounts at rates that vary according to the terms of repayment.

Cardholders are required to settle their outstanding balances in accordance with the terms of the credit cards they hold. Cardholders are required to select the monthly settlement date when they open the credit card account and may subsequently change the settlement date but no more than once every 60 days. Settlement dates at or around the end of each month are the most popular since salaries are typically paid at the end of the month.

In addition to credit card services, Shinhan Card also offers check cards, which are similar to debit cards in the United States and many other countries, to retail and corporate customers. A check card can be used at any of the merchants that accept credit cards issued by Shinhan Card and the amount charged to a check card is directly debited from the cardholder’s designated bank account. Check cards have a low risk of default and involve minimal funding costs. Although Shinhan Card does not charge annual membership fees on the majority of check cards, merchants are charged fees on the amount purchased using check cards at a rate between 0.50% and 2.50%, depending on the type of business, which is lower than the corresponding fee charged for credit card use.

Recently, the Financial Services Commission has allowed certain financial institutions, including Shinhan Card, to test innovative financial services. Shinhan Card obtained approval from the Financial Services Commission to test nine business: (i) peer-to-peer credit card remittance services whereby individuals can send money to others directly using credit cards, (ii) a credit scoring system that evaluates individual business owners’ credit standing based on their revenue records and history of credit card use, (iii) small-scale investment using credit cards, (iv) face recognition payments, (v) house rent payments using credit cards, (vi) rental brokerage platforms, (vii) overseas remittance using credit cards, (viii) quick payment to small merchants using credit card reward points and (ix) family cards for underage children. As of December 31, 2024, six of these businesses have been successfully launched, and we aim to launch the remaining three services in the foreseeable future.

The payments market in Korea has experienced intensified competition as internet-only banks and technology companies steadily expand their presence. The broader use of data and integrated financial platform services, supported by initiatives such as open banking and MyData, has contributed to this trend. As customers gain access to multiple financial services through a single channel, traditional financial institutions and emerging technology players are focusing on digital platforms to broaden their user bases and distribution channels. Shinhan Card has actively worked to increase the number of users on its group-wide financial platforms, including “Shinhan Super SOL,” “Shinhan SOL Pay,” “Shinhan MyCar,” “Shinhan Card All That,” and “Shinhan MyShop.” Shinhan Card continues its efforts to improve the user experience on these platforms for its customers.

Credit Card Products

Shinhan Card offers a wide range of credit card products tailored for credit cardholders’ lives and to satisfy their preferences and needs. Credit card products offered by Shinhan Card include:

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cards that provide additional benefits such as frequent flyer miles and reward program points that can be redeemed by the customer for complementary services, prices or cash;

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platinum cards and other preferred membership cards, which have higher credit limits and provide additional services in return for higher annual membership fees;

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cards with additional features to preferred customers, such as revolving credit cards, travel services and insurance;

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cards with fraud detection and security systems to prevent the misuse of credit cards and to encourage the use of credit cards over the Internet;

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corporate and affinity cards that are issued to employees or members of particular companies or organizations; and

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mobile phone cards allowing customers to conduct wireless credit card transactions through their mobile phones.

Customers and Merchants

In 2019, utilizing an innovative platform based on big data analysis, Shinhan Card launched a “Super Personalization Service”, aimed at providing our individual customers with tailored and personalized services that meet their individual needs. As Shinhan Card has obtained a license from the Financial Services Commission as a MyData service provider, Shinhan Card has been able to utilize additional external data to enhance its ability to further refine and tailor personalized services for its customers. In 2022, Shinhan Card further leveraged its existing big data capabilities by diversifying and accelerating revenue-generating businesses such as MyData-based loan brokerage, big data sales, credit bureau for small businesses, and commercial real estate analysis. In August 2024, Shinhan Card launched DataBada, the industry’s first data marketplace providing data such as market trends and consumer consumption patterns. In 2025, Shinhan Card plans to focus on enhancing profitability across all areas of the data business while securing future growth opportunities based on its big data capabilities. Shinhan Card seeks to strengthen data competitiveness by integrating various types of data, introducing new services in advertising technology businesses, and expanding MyData-based solutions to support core operations, including loan brokerage. Additionally, Shinhan Card’s strategy includes increasing revenue generation in the data sales business by seeking affiliation with other businesses and discovering new markets, developing alternative credit bureau services, and incorporating AI-driven innovations. Furthermore, Shinhan Card promotes both internal and external data exchange and integration, such as Shinhan One Data and Grandata, with the goal of strengthening the group-wide integrated digital ecosystem.

The following table sets forth the number of customers of Shinhan Card and the number of merchants at which Shinhan Card can be used for purchases as of the dates indicated.


	As of December 31,
	2022			2023			2024

	(In thousands, except percentages)
Shinhan Card:
Number of credit card holders⁽¹⁾		13,316			13,211			13,035
Personal accounts		13,140			13,047			12,873
Corporate accounts		176			164			162
Active ratio⁽²⁾		96.61	%		97.46	%		97.54	%
Number of merchants		3,032			3,121			3,182

Notes:

(1)	Represents the number of cardholders whose card use is not subject to suspension or termination as of the relevant date.

(2)	Represents the ratio of accounts used at least once within the last six months to the total accounts as of year-end.

Installment Finance

Shinhan Card provides installment finance services to customers to facilitate purchases of durable consumer goods such as new and used cars, appliances, computers and other home electronics products. Revenues from installment finance operations accounted for 3.99% of Shinhan Card’s total operating revenue in 2024. Shinhan Card pays the merchants when Shinhan Card’s customers purchase such goods, and the customers remit monthly installment payments to Shinhan Card over a number of months, generally up to 36 months (and, in the case of installment financings for automobile purchases, up to 72 months), as agreed with the customers. For installment finance products for new cars, Shinhan Card historically charged, in addition to interest, an initial financing fee of up to 9.9% of the purchase price, depending on the customer’s credit score, the installment period and installment amount. Initial financing fees charged in connection with installment finance products for new cars, however, were abolished effective March 2, 2013 pursuant to the Financial Consumer Report (Automobile Financings) issued by the Financial Supervisory Service on January 29, 2013. Shinhan Card has installment financing arrangements with over 13,000 merchants in Korea, including major car dealers, manufacturers and large retailers with nationwide networks, such as electronics goods stores.

Shinhan Card promptly processes installment financing applications and, based on the extensive credit information it possesses or can access, it is able to offer flexible installment payment terms tailored to individual needs of the customers. Shinhan Card also devotes significant efforts to developing and maintaining its relationships with merchants, which are the most important source of referrals for installment finance customers. Shinhan Card makes prompt payments to merchants for goods purchased by the installment finance customers.

Auto Lease

Shinhan Card provides auto leasing financing to retail customers and corporations. Revenues from auto lease operations accounted for 10.83%, 12.77% and 12.06% of Shinhan Card’s total operating revenue in 2022, 2023 and 2024, respectively.

Securities Services

Overview

Through Shinhan Securities, we provide a wide range of financial investment services to our diversified customer base including corporations, institutional investors, governments and individuals. Financial investment services offered by Shinhan Securities range from securities services, investment advice and financial planning services, and investment banking services such as underwriting and mergers and acquisitions advisory services. Subject to market conditions, Shinhan Securities also engages in equity- and stock index-linked derivatives sales and brokerage, proprietary trading and brokerage services for futures involving interest rates, currency and commodities as well as foreign exchange margin trading.

As of December 31, 2024, according to internal data, Shinhan Securities’ annual market share of Korean equity brokerage market was 8.01% (consisting of 2.56% in the retail segment, 0.39% in the institutional segment and 5.07% in the international segment) in terms of total brokerage volume, ranking seventh among securities firms in Korea. As of the same date, according to internal data, Shinhan Securities’ annual market share of Korean options and futures brokerage market were 14.35% and 17.82%, respectively, in terms of total brokerage volume with respect to these products.

Products and Services

Shinhan Securities provides principally the following services:

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retail client services. These services include equity and bond brokerage, investment advisory and financial planning services to retail customers, with a focus on high net-worth individuals. The fees generated include brokerage commissions for the purchase and sale of securities, asset management fees, interest income from credit extensions (including in the form of stock subscription loans), margin transaction loans and loans secured by deposited securities.

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institutional client services:

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brokerage services. These services include brokerage of stocks, corporate bonds, futures and options provided to Shinhan Securities’ institutional and international customers and sale of institutional financial products. These services are currently supported by a team of approximately 52 research analysts that specialize in equity, bonds and derivatives research.

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investment banking services. These services include a wide array of investment banking services to Shinhan Securities’ corporate customers, such as domestic and international initial public offerings, mergers and acquisitions advisory services, bond issuances, underwriting, capital increase, asset-backed securitizations, issuance of convertible bonds and bonds with warrants, structured financing, issuance of asset-backed commercial papers and project financings involving infrastructure, real estate and shipbuilding.

Shinhan Securities also engages, to a limited extent, in proprietary trading in equity and debt securities, derivative products and over-the-counter market products.

With respect to brokerage services, in the face of intense competition in the domestic brokerage industry, Shinhan Securities primarily focuses on strengthening profitability through service differentiation and efficient management of its distribution network rather than enlarging its market share indiscriminately through lowering fees and commissions. Shinhan Securities’ service differentiation efforts include offering its customers opportunities to purchase stocks in a wide range of countries (currently more than 27 countries), leveraging synergy opportunities afforded by affiliation with other Shinhan entities such as offering brokerage accounts maintained at Shinhan Bank and Shinhan Capital.

With respect to investment banking services, Shinhan Securities concentrates on equity capital markets, debt capital markets, project finance and mergers and acquisitions. To a limited extent, Shinhan Securities also engages in private equity investments through formation of private equity funds by soliciting investors on a private placement basis. To better serve its international customers, Shinhan Securities has established four overseas service centers in Hong Kong, New York, Vietnam and Indonesia. In July 2015, we acquired a 100% stake in Nam An Securities (subsequently launched as Shinhan Securities Vietnam Co., Ltd.), a Vietnamese securities services firm that provides investment banking and asset management services. In addition, in order to capitalize on the rapid growth opportunity and as part of its expansion efforts in Indonesia, Shinhan Securities acquired a 99% stake in PT Makinta Securities, an Indonesian investment banking firm in July 2016 and subsequently launched it as an overseas subsidiary offering investment banking and brokerage services under the name PT Shinhan Sekuritas Indonesia in December 2016. To further expand and stabilize our global businesses, we made further capital investments totaling US$62 million in December 2017 in our subsidiaries located in Hong Kong, New York, Vietnam and Indonesia. In 2018, we acquired PT Archipelago Asset Management, the first acquisition of an Indonesian asset management firm by a Korean financial group, which we believe will strengthen our business portfolio in Indonesia and enhance our competitiveness in the Asian financial markets.

Life Insurance Services

Overview

We provide life insurance products and services primarily through Shinhan Life Insurance. Shinhan Life Insurance provides services through diversified distribution channels consisting of financial planners,

telemarketers, agency marketers and bancassurance specialists. Shinhan Life Insurance had total assets of W56,501 billion, W58,641 billion and W59,843 billion as of December 31, 2022, 2023 and 2024, respectively, and net profits of W449 billion, W472 billion and W528 billion for the years ended December 31, 2022, 2023 and 2024, respectively.

Since the merger, Shinhan Life Insurance has strived to establish itself as a top-tier insurance company, focusing on its core insurance business, sustainable growth drivers, and excellent financial soundness, based on the vision of “NewLife, adding new values to life.”

Products and Services

Shinhan Life Insurance provides principally the following services:

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Life insurance. Shinhan Life Insurance develops products that are marketed to customer bases in various age groups through tailored marketing strategies and in-depth analysis of customer databases. For example, Shinhan Life Insurance provides optimized products to meet the diverse needs of customers, including whole life and term insurance, health insurance, pension insurance, and variable life insurance.

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Sales channels. Shinhan Life Insurance has a variety of online and offline sales channels, including industry-leading financial consultants, telemarketers, general agents, bancassurance, and digital insurance.

To better serve its international customers, Shinhan Life Insurance established Shinhan Life Insurance Vietnam Co., Ltd. in Vietnam which began its business operations in January 2021 and also launched the financial consultant sales channel in February 2024.

In response to the implementation of IFRS 17, Shinhan Life Insurance has updated its management strategies, financial closing and reporting processes and internal control systems. In addition, Shinhan Life Insurance upgraded its insurance risk measurement system in anticipation of the K-ICS, a new regulatory solvency regime for insurance companies. See “Item 3.D. Risk Factors — Risks Related to Our Other Businesses — Prolonged periods of declining or low interest rates or changes in related accounting standards may reduce or turn negative our investment margin on savings insurance products and result in an increase in the valuation of our liabilities associated with these products.”

Non-Life Insurance Services

We provide a wide range of general insurance products through Shinhan EZ General Insurance. Shinhan EZ Insurance was established in 2003 as Daum Direct Car Insurance. On June 30, 2022, we acquired BNP Paribas Cardif General Insurance and changed its name to Shinhan EZ General Insurance. General insurance products offered by Shinhan EZ General Insurance include collateral protection insurance, motor insurance, SMART repair and extend warranty. Shinhan EZ General Insurance also intends to switch to a digital insurance business model. Shinhan EZ General Insurance aims to offer innovative insurance products suitable for collaboration with startups based on advanced digital channels, in addition to traditional insurance products, such as health, injury, travel and leisure insurance. Shinhan EZ General Insurance is seeking to pursue sustainable growth by creating new business opportunities and collaborating with various startups and our affiliates and is also planning to expand coverage within the automotive insurance market.

Credit Services

We provide leasing and equipment financing services to our corporate customers mainly through Shinhan Capital. Shinhan Capital provides customers with leasing, installment financing and new technology financing, equipment leasing, and corporate credit financing. Shinhan Capital’s strength has traditionally been in leasing of

ships, printing machines, automobiles and other specialty items, but it also offers other leasing and financing services, such as corporate restructuring services for financially troubled companies, project financing for real estate and infrastructure development, corporate leasing and equipment financing.

Other Services

Through our other subsidiaries, we also provide asset management, savings banking, loan collection and credit reporting, collective investment administration and financial system development services. Through Shinhan Asset Management, which merged with Shinhan Alternative Investment Management in January 2022 (in addition to Shinhan Securities), we are also engaged in alternative investments through formation of private equity funds by soliciting investors on a private placement basis.

Asset Management Services

In addition to personalized wealth management services provided as part of our private banking and securities services, we also provide asset management services through Shinhan BNP Paribas Asset Management, formerly a joint venture with BNP Paribas Asset Management Holding, of which we and BNP Paribas Asset Management Holding held 65:35 interests, respectively. On January 15, 2021, we acquired the remaining 35% interest in Shinhan BNP Paribas Asset Management and changed its legal name to Shinhan Asset Management, and hence Shinhan Asset Management became our wholly-owned subsidiary as of such date. Shinhan Asset Management ranked fourth among asset managers in Korea in terms of assets under management. As of December 31, 2024, and provides a wide range of investment products, including traditional equity/fixed income funds as well as alternative investment products, to retail and institutional clients. As a former joint venture with BNP Paribas Asset Management Holding, we believe Shinhan Asset Management derives significant benefits from BNP Paribas’s global network of investment professionals and expertise in the asset management industry. As of December 31, 2024, Shinhan Asset Management had assets under management amounting to W120,998 billion. To a limited extent, Shinhan Securities also provides asset management services for discretionary accounts, see “— Securities Services.”

Savings Banking

Through Shinhan Savings Bank, we provide savings banking services in accordance with the Mutual Savings Bank Act to customers that generally would not, due to their credit profile, qualify for our commercial banking services or who seek higher returns on their deposits than those offered by our commercial banking subsidiaries. Established in December 2011, Shinhan Savings Bank offers savings and other deposit products with relatively higher interest rates and loans (usually in relatively small amounts and on customer-tailored terms and including loans for which we receive credit support from the Government) primarily to small- to medium-sized enterprises and low income households who would not generally qualify for our commercial banking services. Shinhan Savings Bank has assumed the assets and liabilities of Tomato Savings Bank, which we acquired in January 2012, and has merged into Yehanbyoul Savings Bank, which we acquired in March 2013, with Yehanbyoul Savings Bank as the surviving entity with its name changed to Shinhan Savings Bank. Both Tomato Savings Bank and Yehanbyoul Savings Bank were facing liquidity troubles due to difficulties in the real estate project financing business as a result of the prolonged slump in the Korean real estate market at the time we acquired them. We closely monitor the business activities and product offerings of Shinhan Savings Bank to ensure its financial soundness.

Loan Collection and Credit Reporting

We centralize credit collection and credit reporting operations for our subsidiaries through Shinhan Credit Information Co. Ltd. (“Shinhan Credit Information”), which also provides similar services to third party customers. Shinhan Credit Information’s services include debt collection, credit inquiries, credit reporting, civil application/petition services and process agent services, among others. Shinhan Credit Information also manages

Our Distribution Network

We offer a wide range of financial services to retail and corporate customers through a variety of distribution networks and channels established by our subsidiaries. The following table presents the geographical distribution of our distribution network based on the branch offices and other distribution channels of our principal subsidiaries, as of December 31, 2024.


	Shinhan Bank		Jeju Bank		Shinhan Card		Shinhan Securities		Shinhan Life Insurance		Total
Distribution Channels in Korea⁽¹⁾	Shinhan Bank		Jeju Bank		Shinhan Card		Shinhan Securities		Shinhan Life Insurance		Total
Seoul metropolitan		285		1		12		33		116		447
Gyeonggi province		149		—		6		11		26		192
Six major cities:		132		1		14		12		41		202
Incheon		50		—		1		2		5		58
Busan		29		1		3		3		13		49
Gwangju		11		—		3		2		6		22
Daegu		18		—		3		2		8		31
Ulsan		11		—		1		1		3		16
Daejeon		13		—		3		2		6		24

Sub-total		566		2		32		56		183		839

Others		127		30		12		10		21		200

Total		693		32		44		66		204		1,039

Note:

(1)	Includes our main office and those of our subsidiaries.

Banking Service Channels

Our banking services are primarily provided through an extensive branch network, specializing in retail and corporate banking services, as complemented by self-service terminals and electronic banking, as well as an overseas services network.

As of December 31, 2024, Shinhan Bank’s branch network in Korea comprised of 693 service centers, consisting of 490 retail banking service centers (including 25 private wealth management service centers and 109 retail offices), 13 large corporate banking service centers, 40 corporate banking services centers and 150 hybrid banking branches. Shinhan Bank’s banking branches are designed to provide one-stop banking services tailored to their respective target customers. Recently, Shinhan Bank has been actively adopting digital technology to improve operational efficiency of its banking service channels. For example, Shinhan Bank introduced digital kiosks to banking branches, established ‘Paperless Banking’ by replacing paper applications with electronic documents, implemented a “robotic process automation system” for the automation of certain tasks and processes and increased the volume of client communications through non-face-to-face platforms.

Retail Banking Channels

In Korea, many retail transactions are conducted in cash or with credit cards, and conventional checking accounts are generally not offered or used as widely as in other countries such as the United States. An extensive retail branch network has traditionally played an important role as the main platform for a wide range of banking transactions. However, a growing number of customers are turning to other service channels to meet their banking needs, such as Internet banking, mobile banking and other forms of non-face-to-face platforms. In response to such changes, Shinhan Bank has recently focused on reorganizing its retail branch network, including shifting, merger or closure of certain branches that are considered redundant.

Recently, one of the key initiatives at Shinhan Bank has been to target high net-worth individuals through private banking. Our private banking services are provided principally through private banking relationship managers who, within target customer groups, assist clients in developing individual investment strategies. We believe that such relationship managers help us foster enduring relationships with our clients. Private banking customers also have access to Shinhan Bank’s retail branch network and other general banking products Shinhan Bank offers through its retail banking operations.

Corporate Banking Channels

Shinhan Bank currently provides corporate banking services through corporate banking service centers primarily designed to serve large corporate customers and hybrid banking branches designed to serve retail as well as small-business corporate customers. Small- and medium-sized enterprises have traditionally been Shinhan Bank’s core corporate customers and we plan to continue to maintain Shinhan Bank’s strength vis-à-vis these customers.

Self-Service Terminals

In order to complement its banking branch network, Shinhan Bank maintains an extensive network of automated banking machines, which are located in branches and in unmanned outlets. These automated banking machines consist of ATMs, cash dispensers and passbook printers. In December 2015, Shinhan Bank introduced digital kiosks, a new generation of automated self-service machines featuring biometric authentication technology and the ability to perform a wide range of services that were not available through traditional ATMs, such as opening new accounts, issuance of debit and check cards, foreign currency exchange and overseas remittance of foreign currency. As of December 31, 2024, Shinhan Bank had 4,375 ATMs, 232 digital desks, 290 smart kiosks, and 35 card kiosks. Shinhan Bank has actively promoted the use of these distribution outlets in order to provide convenient service to customers, as well as to maximize the marketing and sales functions at the branch level, reduce employee costs and improve profitability. In 2024, automated banking machine transactions accounted for a substantial portion of total deposit and withdrawal transactions of Shinhan Bank in terms of the number of transactions and fee revenue generated, respectively.

Digital Banking

Shinhan Bank’s digital banking services are more comprehensive than those available at the counter, including services such as 24-hour account balance posting, real-time account transfer, overseas remittance, and loan requests. As of December 31, 2024, Shinhan Bank had 26,521,527 subscribers to its Internet banking services and 21,700,819 users of its smart banking apps, representing an increase of 11.9% and 31.6%, respectively, compared to December 31, 2023. Shinhan Bank continues to experience a rise in the number of online and mobile banking users. Shinhan Bank began offering online and mobile banking initially to save costs rather than to increase revenues, but it is exploring ways to increase revenues through online and mobile banking. These services offer customers more straightforward and convenient access to banking services without limitations of time and space and offer tailored and customized service to each customer. In February 2018, Shinhan Bank launched “SOL,” a mobile banking application integrating Shinhan Bank’s six previously existing mobile applications. Shinhan Bank began offering an open banking service in October 2019, allowing customers to access accounts, products, and services across multiple banks using only SOL. In November 2019, Shinhan Bank also launched “SOL Global,” a mobile banking application for foreigners, allowing foreign customers to use open banking and other financial services. In 2020, Shinhan Bank expanded the network of financial institutions accessible through SOL’s open banking service. It implemented upgrades that allowed users to customize the user interface to reflect personal asset management preferences. In addition, Shinhan Bank launched the “MoneyVerse” service in December 2021, which utilizes the financial MyData service and enables customers to transfer assets held in other institutions, such as banks, securities, insurance, pension, real estate, and automobiles, to Shinhan SOL. The service made it possible to conduct an integrated inquiry and management of assets. Shinhan Bank is promoting various efforts to transform SOL into a digital platform that goes beyond a

financial service platform and becomes closely connected to customers’ lives. In 2020 and 2021, Shinhan Bank launched the COVID-19 Government relief application service through SOL, allowing users to apply for Government emergency funds through the mobile application. In addition, in February 2020, Shinhan Bank launched a medical insurance claim service on SOL, allowing users to easily submit medical insurance claims by sending photos of supporting documents through the SOL mobile application. In line with the recent trends of “live commerce,” in October 2020, Shinhan Bank launched “SOL Live,” a live broadcast marketing stream channel for financial products. Shinhan Bank also promoted digital innovation at its existing offline branches in 2021. For example, customers are greeted by an AI concierge and they can choose to use smart kiosk that enables self-service banking and digital service including remote video consulting. By taking part in the Consumer Electronics Show 2021, Shinhan Bank was able to introduce its innovative branch services and digital service devices such as digital desks that offer AI-powered customer service assistance and live video chat with service representatives to the world. Additionally, in 2022, Shinhan Bank launched “New SOL”, an upgraded version of SOL that offers enhanced user experience and improved usability. New SOL has been transformed into a banking platform that is specifically designed based on customer feedback gathered during the application’s planning phase. Due to improvements in software framework, the speed of the mobile application has improved substantially, along with the user experience. Chatbots have also been upgraded, and they now have improved multi-tasking capabilities in addressing user requests and inquiries. Shinhan Bank intends to continue introducing a range of innovative technologies that will enhance customer experience and open up new business opportunities, such as face recognition technology for user identity verification and voice banking services powered by AI. Also in 2022, Shinhan Bank launched a customer communication channel where customers are invited to submit their ideas on financial and banking services in general and also to post their feedback on our products and services. Shinhan Bank’s mobile banking application was rebranded to SOL Bank as a result of the launch of Super SOL in December 2023, an integrated Group-wide mobile application. In 2024, Shinhan Bank introduced the “AI Branch,” an innovative branch model that applies AI technology by integrating AI technologies such as chatbots, voice recognition and automated decision-making systems into digital financial services. This includes digital desks and kiosks designed to provide non-face-to-face services, offering 24/7 financial consultations and facilitating core banking tasks. The AI Branch offers a wide range of financial services, allowing customers to open deposit accounts, subscribe to savings and installment deposit products, issue check cards, exchange foreign currencies, and request official documents through an AI clerk. Additionally, in 2024, Shinhan Bank enhanced its SOL Bank platform by integrating AI-based product recommendation features, which deliver personalized financial solutions tailored to individual customer lifestyles and investment preferences through automated analysis of digital customer data. Shinhan Bank launched an AI-based virtual assistant and “R-Secretary,” an AI-driven robotic process automation assistant that Shinhan Bank’s employees can utilize to streamline internal processes and enhance internal controls and risk management.

Overseas Distribution Network

The table below sets forth Shinhan Bank’s overseas banking subsidiaries and branches as of December 31, 2024.


Business Unit	Location	Year Established or Acquired
Subsidiaries⁽¹⁾

Shinhan Bank Europe GmbH⁽²⁾	Frankfurt, Germany		1994
Shinhan Bank America	New York, U.S.A.		1990
Shinhan Bank (China) Limited	Beijing, China		2008
Shinhan Bank (Cambodia) PLC	Phnom Penh, Cambodia		2007
Shinhan Bank Kazakhstan Limited	Almaty, Kazakhstan		2008
Shinhan Bank Canada	Toronto, Canada		2009
Shinhan Bank Japan⁽³⁾	Tokyo, Japan		2009
Shinhan Bank Vietnam Ltd.⁽⁴⁾	Ho Chi Minh City, Vietnam		2011
Banco Shinhan de Mexico⁽⁵⁾	Mexico City, Mexico		2015
PT Bank Shinhan Indonesia⁽⁶⁾	Jakarta, Indonesia		2016
Branches
New York	U.S.A.		1989
Singapore	Singapore		1990
London	United Kingdom		1991
Mumbai	India		1996
Hong Kong	China		2006
New Delhi	India		2006
Poonamallee	India		2010
Pune	India		2014
Manila	Philippines		2015
Dubai	United Arab Emirates		2015
Sydney	Australia		2016
Yangon	Myanmar		2016
Ahmedabad	India		2016
Ranga Reddy	India		2016

Representative Offices⁽⁷⁾
Uzbekistan	Tashkent, Uzbekistan		2009
Poland⁽²⁾	Wroclaw, Poland		2014
Hungary⁽⁸⁾	Budapest, Hungary		2021
Georgia⁽⁹⁾	Georgia, USA		2024

Notes:

(1)	Shinhan Bank’s subsidiary in Hong Kong SAR, China, Shinhan Asia Ltd., was liquidated as of July 14, 2020.

(2)	Shinhan Bank Europe GmbH established a representative office in Poland in 2014.

(3)	While Shinhan Bank established the subsidiary in Japan in 2009, Shinhan Bank has provided banking services in Japan through a branch structure since 1986.

(4)	Prior to the establishment of this subsidiary in 2011, Shinhan Bank provided banking services in Vietnam through a branch since 1995.

(5)	Banco Shinhan de Mexico commenced operations in March 2018.

(6)	Shinhan Bank acquired a 98.01% stake in Bank Metro Express and a 100% stake in Centratama Nasional Bank, two banks in Indonesia, in November 2015 and December 2016, respectively. On March 3, 2016,

Bank Metro Express obtained a license to conduct business activities in the name of PT Shinhan Bank Indonesia. Centratama Nasional Bank was merged with PT Bank Shinhan Indonesia on December 6, 2016.

(7)	Shinhan Bank’s representative office in Myanmar was closed as of June 8, 2018. Shinhan Bank’s representative office in Mexico City was closed as of July 8, 2024.

(8)	Shinhan Bank’s representative office in Hungary commenced operations on October 19, 2021.

(9)	Shinhan Bank’s representative office in Georgia commenced operations on November 1, 2024.

Our overseas subsidiaries and branches primarily engage in trade financing and local currency funding for Korean companies and Korean nationals in the overseas markets, as well as providing foreign exchange services in conjunction with Shinhan Bank’s headquarters. These overseas branches and subsidiaries also engage in investment and trading of securities of foreign issuers. As part of our globalization efforts, we are expanding our coverage of local customers in the overseas markets by providing a wider range of services in retail and corporate banking, and to that end, we have increasingly established subsidiaries in lieu of branches in select markets and in 2011 merged two of our Vietnam banking subsidiaries in order to enhance our presence and enable greater flexibility in its service offerings in these markets. We plan to maintain our focus on organic growth, although we may selectively pursue acquisitions in markets where it is difficult to obtain local banking licenses through greenfield entry. In furtherance of this objective, Shinhan Bank acquired a 98.01% stake in Bank Metro Express and a 100% stake in Centratama Nasional Bank, two banks in Indonesia, in November 2015 and December 2016, respectively. Shinhan Bank completed the merger of the two banks in December 2016. Shinhan Bank also opened additional branches in Australia, Myanmar and India in the second half of 2016. In April 2017, Shinhan Bank Vietnam Co., Ltd. acquired ANZ Bank (Vietnam) Limited’s retail division. In 2017, Shinhan Bank became the first Korean Bank to obtain a license to set up a local subsidiary in Mexico and started local business in Mexico in March 2018. In October 2021, Shinhan Bank opened an office in Hungary, expanding Shinhan Bank’s operations in Eastern Europe. In November 2024, Shinhan Bank opened an office in Georgia, USA, further expanding Shinhan Bank’s operations in the United States to the Southern part of the nation. We plan to continue our efforts to expand our overseas banking service network and global operations.

Credit Card Distribution Channels

Shinhan Card primarily uses four distribution channels to attract new credit card customers: (i) the banking and credit card branch network, (ii) sales agents, (iii) business partnerships and affiliations with vendors and (iv) digital platforms such as Shinhan SOL Pay.

As of December 31, 2024, the branch network for our credit card operations consisted of 693 branches of Shinhan Bank and 44 card sales branches of Shinhan Card. The use of the established distribution network of Shinhan Bank is part of the group-wide cross-selling efforts of selling credit card products to existing banking customers. In 2024, the number of new cardholders acquired through our banking distribution network accounted for approximately 20.5% of the total number of new cardholders. We believe that the banking distribution network will continue to provide a stable and low-cost venue for acquiring high-quality credit cardholders.

The sales agents represented the most significant source of Shinhan Card’s new cardholders in 2024, and the number of new cardholders acquired through sales agents accounted for approximately 27.1% of the total number of Shinhan Card’s new cardholders in 2024. As of December 31, 2024, Shinhan Card had 885 sales agents, who were independent contractors. These sales agents assist prospective customers with the application process and customer service. Compensation of these sales agents is generally tied to the transaction volume of the customers introduced by them, and we believe this system helps to enhance profitability.

As a way of acquiring new cardholders, Shinhan Card also has business partnership and affiliation arrangements with a number of vendors, including gas stations, major retailers, airlines and telecommunication and Internet service providers. Shinhan Card plans to continue to leverage its alliances with such vendors to attract new cardholders.

As part of a group-wide initiative to streamline our operations and create a digital-friendly business platform, Shinhan Card has strategically expanded its digital platforms. In October 2021, Shinhan Card launched “Shinhan SOL Pay”, a mobile platform providing consolidated financial and non-financial services. In addition to providing traditional financial services such as payment, open banking and asset management as well as services provided through traditional customer service means such as call centers and website applications, Shinhan SOL Pay also offers a variety of non-financial content including entertainment, shopping, personal certificates and memberships in order to better provide customized financial services aimed at meeting the comprehensive needs of customers. In addition to providing traditional payment services, Shinhan SOL Pay utilizes digital technology such as AI and big data to provide personalized services tailored to individual users and integrated access across services provided by various merchants and affiliates.

In November 2014, Shinhan Card established its first overseas subsidiary in Kazakhstan, LLP MFO Shinhan Finance. Kazakhstan had relatively low entry barriers to foreign financial institutions, high growth potential for retail operations and possibility of leveraging Shinhan Bank’s network. LLP MFO Shinhan Finance obtained its business license in the first half of 2015 and commenced operations in July 2015, including installment financing and credit loans. In 2018, LLP MFO Shinhan Finance expanded its sales channels and introduced new credit loan products, while in 2019, the company further expanded its sales coverage while enhancing its risk management capabilities. In 2021, LLP MFO Shinhan Finance established a foundation for its automobile finance business through a captive partnership with a local dealership in Kazakhstan. In 2023, LLP MFO Shinhan Finance entered into a partnership with a major local automobile dealer. In 2024, LLP MFO Shinhan Finance established a joint venture with an automobile dealing partner.

In December 2015, Shinhan Card acquired a majority stake in PT Swadharma Indotama Finance, a multi finance company in Indonesia, and changed its legal name to PT Shinhan Indo Finance. PT Shinhan Indo Finance engages in corporate and retail operations, including installment financing and financial leases, and began offering credit card services in January 2017 after obtaining its credit card business license in December 2016. In 2018, PT Shinhan Indo Finance began to expand its retail business across Indonesia. In 2019, PT Shinhan Indo Finance launched its joint finance product with Shinhan Bank, maintaining a conservative approach to its retail business while steadily increasing its corporate leasing assets, particularly corporate fleet vehicle finance products. Since 2020, PT Shinhan Indo Finance has been focusing on stable growth by expanding its fleet business and improving its financial performance.

In March 2016, we established Shinhan Microfinance, a local subsidiary in Myanmar. Shinhan Microfinance obtained its microfinance business license in July 2016 and launched operations in September 2016. In 2017, it expanded its business operations from Yangon to nearby Bago. In 2018, Shinhan Microfinance increased its assets and profit volume by diversifying the range of microfinance products it offers. In 2019, Shinhan Microfinance actively expanded its sales network and sought long term growth opportunities. In 2020, Shinhan Microfinance has grown significantly despite the spread of COVID-19 by expanding its branch network and launching new products.

In January 2018, Shinhan Card acquired Prudential Vietnam Finance Company Limited in order to gain a stronger presence in Vietnam and increase synergy with Shinhan Bank and Shinhan Securities’ Vietnam operations. In July 2019, Shinhan Card changed its legal name into Shinhan Vietnam Finance Company Ltd. (“Shinhan Vietnam Finance Company”). Utilizing its relatively lower funding cost resulting from cooperation with other affiliates in Vietnam such as Shinhan Bank and Shinhan Securities, Shinhan Vietnam Finance was able to expand its asset base, reaching total assets of US$428 million as of December 31, 2024. As part of its diversification efforts, new products such as automobile loans, niche loans, and easy loans were launched in 2021, resulting in increased sales. The State Bank of Vietnam recently introduced Circular 18, which amends the regulation on consumer lending activities in Circular 43 and is aimed at improving soundness of Vietnam’s consumer finance industry and facilitating a transition towards a cashless society by regulating the proportion of direct disbursements (for example, cash loans) to the total outstanding loans. According to the amendment, the rate of total consumer loans with direct disbursements to total consumer credit balance should gradually be

decreased to 30% by 2024. In 2020, in concurrence with the State Bank of Vietnam’s policies promoting consumer finance and movement towards a cashless society, Shinhan Vietnam Finance Company further diversified its offerings to include installment financing for automobiles and durable goods. Shinhan Vietnam Finance Company also launched iShinhan 5.0, a non-face-to-face loan platform. Shinhan Vietnam Finance Company plans to grow into a leading consumer finance company in Vietnam by accelerating digital transformation to increase business efficiency and create customer value. In response to the new regulatory changes, Shinhan Vietnam Finance plans to further diversify its business offerings and continue to leverage Shinhan Card’s digitalization capabilities to increase efficiency and provide customers with innovative services.

Securities Brokerage Distribution Channels

Our securities services are conducted principally through Shinhan Securities. As of December 31, 2024, Shinhan Securities had 67 service centers nationwide, and four overseas subsidiaries based in Hong Kong, New York, Vietnam and Indonesia to service our corporate customers.

Approximately 69% of our brokerage branches are located in the Seoul metropolitan area with a focus on attracting high net-worth individual customers as well as enhancing synergy with our retail and corporate banking branch network. We plan to continue to explore new business opportunities, particularly in the corporate customer segment, through further cooperation between Shinhan Securities and Shinhan Bank.

Insurance Sales and Distribution Channels

We sell and provide our insurance services primarily through Shinhan Life Insurance. In addition to distributing bancassurance products through our bank branches, also distribute a wide range of life insurance products through their own branch network, agency network of financial planners and telemarketers, as well as through the Internet. As of December 31, 2024, Shinhan Life Insurance had 204 branches and 9 customer support centers. These branches are staffed by financial planners, telemarketers, agent marketers and bancassurance to meet the various needs of our insurance and lending customers. Our group-wide customer support centers arrange for policy loans (namely loans secured by the cash surrender value of the underlying insurance policy) for our insurance customers and, to a limited extent, other loans to other customers, and also handle insurance payments.

Information Technology

We dedicate substantial resources to maintaining a sophisticated information technology system to support our operations management and provide high quality customer service. Our information and technology system is operated at a group-wide level based on comprehensive group-wide information collection and processing. We also operate a single group-wide enterprise information technology system known as “enterprise data warehouse” for customer relations management capabilities, risk management systems and data processing. We continually upgrade our group-wide information technology system in order to apply the best-in-class technology to our risk management systems to reflect the changes in our business environment as well as enhance differentiation from our competitors.

We have established two data centers which are responsible for the comprehensive management of information technology systems for our subsidiaries on a group-wide basis. The information technology systems and data of the subsidiaries are backed up on a real-time basis in both data centers, reducing the probability of losing data or experiencing material disruption of our financial services even if an issue were to occur in one of the locations. Since 2023, Shinhan Data Center has implemented an artificial intelligence-based cyber threat detection system that utilizes big data to identify abnormities and help us promptly respond to cyber attacks.

In order to enhance security and trustworthiness of our financial services, we are continuously working to improve our information security systems and our customers’ financial safety. Due to such improvements, we

believe our fraud detection system has been preventing a substantial volume of voice phishing and fraud attempts. For example, we launched a group-wide customer information consent management system in June 2022 and expanded its scope to include six subsidiaries, enabling our customers to easily monitor how their information is used and make a better informed decision in giving consent. See also, “Item 16K. Cybersecurity.”

At the subsidiary level, we also continue to increase investment in information and communication technologies (“ICT”) to improve the quality of customer service in line with changing market trends. As a result of this continued investment, our digital platforms were able to offer more services focused on the needs of the customer. In October 2022, Shinhan Bank revamped its “Shinhan SOLbank” mobile application, making it possible to operate at a substantially faster speed, offering unique features such as a customized home screen and transaction records editable by users, thereby improving overall usability. Shinhan Card’s “Shinhan SOLpay” improved in-app customer support and increased the range of payment options available to its users by launching the open pay service, which enables users to register and make payments with credit cards issued by other credit card companies. Shinhan Securities’ mobile application, called “Shinhan SOLsecurities” plans to implement a more customer-friendly user experience, and Shinhan Life also launched “Shinhan SOLlife,” an all-in-one insurance service platform.

In December 2023, in order to further improve customer experience and convenience, we launched Super SOL, an integrated Group-wide mobile application which provides a wide range of integrated services currently offered by members of Shinhan Financial Group. Additionally, as part of our ICT modernization strategy, we plan on continuing to strengthen our ICT capabilities based on utilization of public cloud and AI technology.

Competition

In the small- and medium-sized enterprise and retail banking segments, which have been Shinhan Bank’s traditional core businesses, competition is expected to increase further. In recent years, Korean banks, including Shinhan Bank, have increasingly focused on stable asset growth based on quality credit, such as corporate borrowers with high credit ratings, loans to SOHO with high levels of collateralization, and mortgage and home equity loans within the limits of the prescribed loan-to-value ratios and debt-to-income ratios. This common shift in focus toward stable growth based on less risky assets has intensified competition as banks compete for the same limited pool of quality credit by engaging in price competition or by other means. In addition, such competition may result in lower net interest margin and reduced overall profitability. Even if interest rates were to increase, the effect on Shinhan Bank’s results of operations may not be as beneficial as expected, or at all, due

to factors such as increased volatility of market interest rates and tighter regulations regarding SOHO loans, including the implementation of additional credit review guidelines for individual businesses. For additional details on the impact changes in interest rates have on our business, see “Changes in interest rates, foreign exchange rates, bond and equity prices, and other market factors have affected and will continue to affect our business, results of operations and financial condition.” Further, if competing financial institutions seek to expand market share by lowering their lending rates, Shinhan Bank may suffer customer loss, especially among customers who select their lenders principally on the basis of lending rates. In response thereto or for other strategic reasons, Shinhan Bank may subsequently lower its lending rates to stay competitive, which could lead to a further decrease in its net interest margins and outweigh any potential positive impact on the net interest margin from a general rise in market interest rates. Shinhan Bank’s net interest margin (on a separate basis) decreased to 1.58% in 2024 from 1.62% in 2023 primarily due to the Bank of Korea lowering the base interest rate during the second half of 2024. Any future decline in Shinhan Bank’s customer base or its net interest margins could have an adverse effect on our results of operations and financial condition.

In the credit card sector, Shinhan Card competes principally with existing “monoline” credit card companies, credit card divisions of commercial banks, consumer finance companies, other financial institutions and, recently, credit card service providers allied with mobile telecommunications service providers in Korea. Competition has been historically intense in this sector, and the market has shown signs of saturation as existing and new credit card service providers make significant investments and engage in aggressive marketing campaigns and promotions to acquire new customers and target customers with high credit quality. Despite stricter government regulations such as curbs on excessive marketing expenses, competition remains intense, and credit card issuers may continue to compete with Shinhan Card for customers by offering lower interest rates and fees, higher credit limits, more attractive promotions and incentives and alternative products such as credit card reward points, gift cards and low-interest consumer loan products. As a result, Shinhan Card may lose customers or service opportunities to competing credit card issuers and/or incur higher marketing expenses. Also, over the years, the Government has implemented regulations lowering certain merchant fees chargeable by credit card companies. In 2012, the Government adopted regulations mandating lower merchant fees chargeable to small- and medium-sized enterprises, and beginning January 31, 2016, a further reduction in the merchant fees chargeable to small- and medium-sized enterprises went into effect. The Enforcement Decree of the Specialized Credit Finance Business Act was amended in July 2017 and January 2019 to further expand the range of small- and medium-sized enterprises subject to lower merchant fees. Pursuant to the Specialized Credit Financial Business Act, the rates of fees chargeable to merchants are subject to review and revision every three years, and beginning January 2022, the fees chargeable to small- and medium-sized enterprises with respect to credit cards were further reduced as a result of this periodic review and revision. Additional amendments to regulations requiring further downward adjustments to merchant fees may come into force in the future. For further details on the Government’s regulations on merchant fees chargeable by credit card companies, see “Item 3.D. Risk Factors — Risks Relating to Our Credit Card Business — Future changes in market conditions as well as other factors, such as stricter regulation, may lead to reduced revenues and deterioration in the asset quality of credit card receivables.” In March 2023, the Financial Services Commission set up a task force consisting of members of the Financial Services Commission, the Financial Supervisory Service, credit card companies, and consumer groups, to discuss how to improve the merchant commission rate adjustment system in order to address disagreements among the stakeholders involved in the periodic review of the rates of fees charged to merchants.

In addition, since the implementation of the Improper Solicitation and Graft Act in September 2016, revenue growth for corporate cards and service related industries such as dining, floral and entertainment have shown signs of decline, and additional regulations on loans reducing maximum interest rates chargeable from 24% to 20% came into effect in July 2021. These developments have put further downward pressure on the results of operations for credit card companies, including Shinhan Card. Also, with the implementation of the Debtor Rehabilitation and Bankruptcy Act on October 17, 2024, creditors’ collection attempts are limited to seven times within any seven-day period per claim. In response to the new limits, Shinhan Card plans to establish specialized teams and dedicate personnel to improve its collection efforts. However, the credit card industry has experienced delays and challenges in collection, which may lead to an increase in delinquencies and higher

operational costs, including for Shinhan Card. Furthermore, the Government’s recent guidelines to bolster consumer protection and protect customers’ personal data in the aftermath of data leaks at certain credit companies (not including Shinhan Card) may result in additional compliance costs for Shinhan Card. Customer attrition, together with any further lowering of fees or reduction in base and market interest rates and/or additional expenses from more extensive marketing and promotional campaigns that Shinhan Card might implement to acquire and retain customers, could reduce its revenues and earnings. Furthermore, the average credit quality of Shinhan Card’s customers may deteriorate if customers with higher credit quality borrow from our competitors rather than Shinhan Card, and it may become more difficult for Shinhan Card to attract and maintain quality customers. In general, the growth, market share and profitability of Shinhan Card’s operations may decline or become negative as a result of market saturation in this sector, interest rate competition, pressure to lower fee rates and incur higher marketing expenses, as well as Government regulation and social and economic developments in Korea that are beyond our control, such as changes in consumer confidence levels, spending patterns or public perception of credit card usage and consumer debt. If Shinhan Card fails to maintain or attract new cardholders or increase the card usage by existing customers or experiences deterioration in its asset quality and a rise in delinquency, our business, financial condition and results of operations may be adversely affected. In other financial services sectors, our other subsidiaries also compete in a highly fragmented market. Some of our competitors, particularly major global financial institutions, have greater experience and resources than we do.

On February 1, 2019, we acquired a 59.15% interest in Orange Life Insurance, the former Korean unit of ING Life Insurance, as part of our efforts to diversify and enhance our non-banking businesses. On January 28, 2020, we acquired the remaining interests in Orange Life Insurance by effecting a comprehensive stock exchange under Articles 360-2 of the Korean Commercial Code whereby holders (other than us) of Orange Life Insurance’s common stock transferred all of their shares to us and in return receive shares of our common stock, and hence Orange Life Insurance became our wholly owned subsidiary as of such date. In May 2021, the Financial Services Commission approved the merger of Shinhan Life Insurance and Orange Life Insurance, with Shinhan Life Insurance being the surviving entity upon completion of the merger. Orange Life Insurance was subsequently merged with and into Shinhan Life Insurance in July 2021. On September 29, 2020, we acquired a 96.8% interest in Neoplux, a venture capital company formerly under the Doosan Group. On December 30, 2020,

we acquired the remaining interest in Neoplux by effecting a small-scale stock exchange under Article 360-10 of the Korean Commercial Code, and hence Neoplux became our wholly owned subsidiary as of such date. On January 11, 2021, Neoplux changed its legal name to Shinhan Venture Investment. In addition, on January 15, 2021, we acquired the remaining 35% interest in Shinhan BNP Paribas Asset Management and changed its legal name to Shinhan Asset Management, and hence Shinhan Asset Management became our wholly-owned subsidiary as of such date. On June 30, 2022 we acquired 94.54% interest in BNP Paribas Cardif General Insurance, which then changed its name to Shinhan EZ General Insurance, Ltd. Subsequently in November 2022, Shinhan EZ General Insurance, Ltd. conducted a paid-in capital increase and our shares decreased to 85.1%. We expect that such consolidation and other structural changes in the financial industry will continue. Other financial institutions may seek to acquire or merge with other entities, and the financial institutions resulting from such consolidation may, by virtue of their increased size and business scope, provide greater competition for us. Increased competition and continuing consolidation may lead to decreased margins, resulting in a material adverse impact on our future profitability.

Since 2019, commercial banks including Shinhan Bank and other local banks and fintech companies have been offering open banking service. Open banking service allows each fintech company and bank to provide banking services, such as checking balances and making withdrawals and transfers, with regards to customers’ accounts at other banks. Using open banking service, customers can easily access accounts, products and services across multiple banks, instead of being limited to the accounts, products and services available at the particular bank that they deal with. In addition, the MyData service was launched in 2020, allowing and requiring (upon the customer’s request and subject to compliance requirements) financial institutions that have been approved by the Financial Service Commission as a MyData service provider access and sharing of customers’ personal information, credit information and transaction data. Shinhan Card and Shinhan Bank have each obtained a

Description of Assets and Liabilities

Loans

As of December 31, 2024, our total gross loan portfolio was W455,125 billion, which represented an increase of 9.1% from W417,346 billion on December 31, 2023. The increase in our portfolio primarily reflects an 11.1% increase in corporate loans, a 7.1% increase in retail loans and a 2.9% increase in credit card loans.

Asset Quality Ratios


	As of December 31,
	2022			2023			2024

	(In billions of Won, except percentages)
Total gross loans	W	413,436		W	417,346		W	455,125
Total allowance for credit losses on loans	W	3,651		W	4,330		W	4,566
Allowance for credit losses on loans as a percentage of total loans		0.88	%		1.04	%		1.00	%
Impaired loans⁽¹⁾	W	2,079		W	3,013		W	3,722
Impaired loans as a percentage of total loans		0.50	%		0.72	%		0.82	%
Allowance as a percentage of impaired loans		175.64	%		143.73	%		122.66	%
Total non-performing loans⁽²⁾	W	1,756		W	2,216		W	2,641
Non-performing loans as a percentage of total loans		0.42	%		0.53	%		0.58	%
Allowance as a percentage of total assets		0.55	%		0.63	%		0.62	%

Notes:

(1)	Impaired loans include (i) loans for which the borrower has defaulted under Basel standards applicable during the relevant period and (ii) loans that qualify as “troubled debt restructurings” applicable during the relevant period.

(2)	Non-performing loans are defined as loans, whether corporate or retail, that are past due more than 90 days.

Loan Types

The following table presents our loans by type as of the dates indicated. Except where specified otherwise, all loan amounts stated below are before deduction of allowance for credit losses on loans and deferred loan origination costs and fees. Total loans reflect our loan portfolio, including past due amounts.


	As of December 31,
	2022⁽⁶⁾		2023⁽⁶⁾		2024⁽⁶⁾

	(In billions of Won)
Domestic:
Corporate
Corporate loans⁽¹⁾	W	195,410	W	202,153	W	220,956
Public and other⁽²⁾		3,897		4,635		5,352
Loans to banks⁽³⁾		1,205		961		885
Lease financing		682		196		371

Total — Corporate		201,194		207,945		227,564

Retail
Mortgages and home equity		80,937		86,532		100,332
Other retail⁽⁴⁾		62,519		55,607		50,805

Total — Retail		143,456		142,139		151,137

Credit cards		20,388		27,798		28,607

Total domestic		365,038		377,882		407,308


	As of December 31,
	2022⁽⁶⁾		2023⁽⁶⁾		2024⁽⁶⁾

	(In billions of Won)
Foreign:
Corporate
Corporate loans⁽¹⁾		22,080		24,033		31,241
Public and other⁽²⁾		—		—		—
Loans to banks⁽³⁾		6,224		2,088		1,062
Lease financing		113		85		224

Total — Corporate		28,417		26,206		32,527

Retail
Mortgages and home equity		787		774		746
Other retail⁽⁴⁾		11,122		12,191		14,257

Total — Retail		11,909		12,965		15,003

Credit cards		8,072		293		287

Total foreign		48,398		39,464		47,817

Total loans⁽⁵⁾	W	413,436	W	417,346	W	455,125

Notes:

(1)	Consists primarily of working capital loans, general purpose loans, bills purchased and trade-related notes and excludes loans to public institutions and commercial banks.

(2)	Consists of working capital loans and loan facilities to public institutions and non-profit organizations.

(3)	Consists of interbank loans and call loans.

(4)	Consists of general unsecured loans and loans secured by collateral other than housing to retail customers.

(5)	As of December 31, 2022, 2023 and 2024, 86.0%, 87.2% and 86.5% of our total gross loans, respectively, were Won-denominated.

(6)	Loan amounts include loans at amortized cost and loans at fair value classified in accordance with IFRS 9. Corporate loans include loans at fair value in the amount of W2,389 billion, W1,759 billion and W1,880 billion as of December 31, 2022, 2023 and 2024, respectively.

Loan Portfolio

The total exposure of us or our banking subsidiaries to any single borrower and exposure to any single group of companies belonging to the same conglomerate is limited by law to 25% of the Net Total Equity Capital (as defined in “— Supervision and Regulation”).

Twenty Largest Exposures by Individual Borrower

As of December 31, 2024, our 20 largest exposures, consisting of loans, securities and guarantees and acceptances, totaled W30,674.2 billion. The following table sets forth our total exposures to these top 20 borrowers as of December 31, 2024.


	As of December 31, 2024
	Loans in Won Currency		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposure

	(In billions of Won)
Woori Bank	W	1,460.1	W	—	W	921.8	W	—	W	—	W	2,381.9
Nong Hyup Bank		477.9		59.3		1,600.2		51.9		—		2,189.3
KB Bank		1,035.8		95.8		746.9		13.2		—		1,891.7
Korea Electric Power Corporation		0.3		—		1,683.8		84.0		—		1,768.0
Samsung Electronics		—		1,696.8		—		—		—		1,696.8
KEB Hana Bank		881.0		18.2		726.1		38.7		—		1,664.0
HD Hyundai Heavy Industries Co., Ltd		—		—		2.0		1,657.3		—		1,659.3
Lotte Hotel		90.7		515.5		413.8		613.8		—		1,633.7
S-Oil		525.9		918.1		116.9		14.4		—		1,575.2
Mirae Asset Securities		982.0		36.8		551.8		—		—		1,570.5
LG Display		613.9		794.1		144.3		—		—		1,552.4
SK on Co., Ltd		221.7		1,021.1		290.6		—		—		1,533.4
National Agriculture Cooperative Federation		72.7		—		1,376.4		—		—		1,449.1
NH Investment & Securities		1,219.4		—		125.0		—		—		1,344.4
Samsung Heavy Industries Co., Ltd		—		—		—		1,259.1		—		1,259.1
KT		114.8		—		1,030.7		49.6		—		1,195.0
LIG NEX1 Co., Ltd		3.1		—		99.5		1,032.6		—		1,135.1
SK Hynix		498.5		—		539.7		34.0		—		1,072.2
KB Securities		840.0		—		215.5		—		—		1,055.5
Korea Investment & Securities		795.3		34.4		188.2		29.4		—		1,047.3

Total	W	9,833.0	W	5,190.0	W	10,773.1	W	4,878.1	W	—	W	30,674.2

Exposure to Main Debtor Groups

As of December 31, 2024, our total exposure to the main debtor groups as identified by the Governor of the Financial Supervisory Service amounted to W42,614.4 billion. The main debtor groups are largely comprised of chaebols. The following table shows, as of December 31, 2024, our total exposures to the 10 main debtor groups to which we have the largest exposure.


	As of December 31, 2024
Main Debtor Groups	Loans in Won Currency		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposure

	(In billions of Won)
Samsung	W	447.4	W	2,596.7	W	1,584.4	W	2,079.6	W	0.0	W	6,708.2
SK		1,781.8		1,347.7		2,522.1		982.2		0.0		6,633.9
Hyundai Motor Company		1,440.0		2,142.2		1,963.4		603.2		2.0		6,150.8
Lotte		1,720.4		1,011.4		1,749.1		1,033.9		0.0		5,514.8
Hyundai Heavy Industries		486.8		47.4		234.0		3,129.6		—		3,897.8
Hanwha		1,324.0		491.0		1,268.0		691.3		0.0		3,774.3
LG		923.0		918.0		1,194.8		220.6		—		3,256.5
LS		235.4		1,321.7		192.1		1,248.2		0.4		2,997.9
Shinsegae		1,115.7		26.6		666.7		149.6		—		1,958.6
KT		217.6		95.6		1,262.7		145.9		—		1,721.7

Total	W	9,692.2	W	9,998.3	W	12,637.3	W	10,284.2	W	2.4	W	42,614.4

Loan Concentration by Industry

The following table shows the aggregate balance of our corporate loans by industry concentration as of December 31, 2024.


	As of December 31, 2024
Industry	Aggregate Loan Balance		Percentage of Total Corporate Loan Balance

	(In billions of Won)		(Percentages)
Manufacturing	W	66,628		25.6	%
Real estate, leasing and service		57,679		22.2
Retail and wholesale		31,082		12.0
Finance and insurance		26,088		10.0
Hotel and leisure		11,034		4.2
Transportation, storage and communication		6,259		2.4
Construction		6,114		2.4
Other service⁽¹⁾		30,647		11.8
Other⁽²⁾		24,560		9.4

Total	W	260,091		100.0	%

Notes:

(1)	Includes other service industries such as publication, media and education.

(2)	Includes other industries such as agriculture, forestry, mining, electricity and gas.

Maturity Analysis

The following table sets out the scheduled maturities (presented in terms of time remaining until maturity) of our loan portfolio as of December 31, 2024. The amounts below are before allowance for credit losses on loans and deferred loan origination costs and fees. In the case of installment payment loans, maturities have been adjusted to take into account the timing of installment payments.


	As of December 31, 2024
	1 Year or Less⁽¹⁾		Over 1 Year but Not More Than 5 Years		Over 5 Year but Not More Than 15 Years		Over 15 Years		Total

	(In billions of Won)
Corporate:
Corporate loans	W	167,490	W	76,715	W	7,293	W	699	W	252,197
Public and other		3,057		1,920		299		76		5,352
Loans to banks		1,409		481		57		—		1,947
Lease financing		164		430		1		—		595

Total corporate	W	172,120	W	79,546	W	7,650	W	775	W	260,091

Retail:
Mortgage and home equity	W	16,723	W	23,987	W	20,647	W	39,721	W	101,078
Other retail		36,003		17,997		5,555		5,507		65,062

Total retail	W	52,726	W	41,984	W	26,202	W	45,228	W	166,140

Credit cards	W	24,287	W	4,366	W	241	W	—	W	28,894

Total loans	W	249,133	W	125,896	W	34,093	W	46,003	W	455,125

Note:

(1)	Includes overdue loans.

We may roll over our corporate loans (primarily consisting of working capital loans and facilities loans) and retail loans (to the extent not payable in installments) after we conduct our standard loan reviews in accordance with our loan review procedures. Working capital loans may generally be extended on an annual basis for an aggregate term of up to five years. Facilities loans, which are generally secured, may generally be extended on an annual basis for a maximum of 15 years from the initial loan date. Retail loans may be extended for additional terms of up to 12 months for an aggregate term of 10 years from the initial loan date for both unsecured loans and secured loans other than mortgages and home equity loans which can be extended up to 30 years in aggregate.

Interest Rate Sensitivity

The following table presents a breakdown of our loans in terms of interest rate sensitivity as of December 31, 2024.


	As of December 31, 2024
	Due Within 1 Year⁽¹⁾		Due After 1 Year		Total

	(In billions of Won)
Fixed rate loans⁽²⁾
Corporate:
Corporate loans	W	63,689	W	29,679	W	93,368
Public and other		1,273		259		1,532
Loans to banks		1,370		538		1,908
Lease financing		15		1		16

Total corporate		66,347		30,477		96,824

Retail:
Mortgage and home equity		217		6,981		7,198
Other retail		6,662		5,126		11,788

Total retail		6,879		12,107		18,986

Credit cards		269		1		270

Total fixed rate loans		73,495		42,585		116,080


Variable rate loans⁽³⁾
Corporate:
Corporate loans		103,801		55,028		158,829
Public and other		1,784		2,036		3,820
Loans to banks		39		—		39
Lease financing		149		430		579

Total corporate		105,773		57,494		163,267

Retail:
Mortgage and home equity		16,506		77,374		93,880
Other retail		29,341		23,933		53,274

Total retail		45,847		101,307		147,154

Credit cards		24,018		4,606		28,624

Total variable rate loans		175,638		163,407		339,045

Total loans		249,133		205,992		455,125

Notes:

(1)	Includes overdue loans.

(2)	Fixed rate loans are loans for which the interest rate is fixed for the entire term of the loan.

(3)	Variable or adjustable rate loans are for which the interest rate is not fixed for the entire term of the loan.

For additional information regarding our management of interest rate risk, see “— Risk Management.”

Credit Exposures to Companies in Workout and Recovery Proceedings

Our credit exposures to restructuring are monitored and managed by our Corporate Credit Support Department. As of December 31, 2024, 0.03% of our total loans, or W114 billion (of which W66 billion was classified as nonaccrual and W48 billion was classified as accruing), was under restructuring. As of such date,

the total amount under restructuring consisted of W29 billion related to workouts, W38 billion related to recovery proceedings, and W47 billion related to others, principally consisting of the credit rehabilitation program subject to corporate turnaround or reorganization, which is based on voluntary agreements between the relevant parties excluding workout and recovery proceedings.

Loans in the process of workout, recovery proceedings or the like are reported as nonaccrual loans on Shinhan Bank’s statements of financial position since generally, they are past due by more than 90 days and interest does not accrue on such loans. Restructured loans are reported as either loans or securities on Shinhan Bank’s statements of financial position depending on the type of instrument it receives as a result of the restructuring.

Workout

The Corporate Restructuring Promotion Act was enacted on August 3, 2007 (expired on December 31, 2010), May 19, 2011 (expired on December 31, 2013), January 1, 2014 (expired on December 31, 2015), March 18, 2016 (expired on June 30, 2018), October 16, 2018 (expired on October 15, 2023) and December 26, 2023 (to be expired on December 25, 2026). The new Corporate Restructuring Promotion Act enacted and implemented on December 26, 2023 is hereinafter referred to as the “CRPA”.

If the ‘main Creditor Financial Institution’ of a Failing Company (defined below) provided notice of convening a Creditor Committee (defined below) on or before December 25, 2026, any proceedings commenced by such Creditor Committee will remain subject to the CRPA even after December 25, 2026 unless and until such proceedings are completed or discontinued.

The following is a summary of the key provisions of the CRPA. The CRPA applies to a financial creditor (the “Financial Creditor”) who has financial claims against a debtor company by ‘providing credit’ to such debtor company or other third parties. “Provision of Credit” is defined in the CRPA as any transaction determined by the Financial Supervisory Commission to fall under any of the following:

•

loans;

•

purchase of promissory notes and debentures or bonds;

•

equipment leasing;

•

payment guarantees;

•

providing advance payments on acceptances and guarantees under a payment guarantee;

•

any direct or indirect financial transaction which may cause a loss to a counterparty as a consequence of a payment failure by a debtor company; or

•

any transaction other than the transactions set out above which may have in substance the same effect as the transactions set out above.

The “debtor company” is defined under the CRPA as a company established under the Korean Commercial Code or other person performing profit-making activities. The “Failing Company” means a debtor company deemed, through a credit evaluation carried out in the manner set out in the CRPA, by its ‘main Creditor Financial Institution’ as having difficulty to repay debts to its financial creditor without external financial support or an additional loan (excluding loans obtained in the course of conducting normal financial transactions).

Once the debtor company is notified by the main Creditor Financial Institution to fall under the definition of Failing Company, such company may submit its business restructuring plan and the list of its Financial Creditors, and apply to such main Creditor Financial Institution for commencement of the management procedure to be assumed by a committee of Financial Creditors (the “Creditor Committee”) or such main Creditor Financial Institution.

Under the CRPA, the main Creditor Financial Institution of a Failing Company is required to take or arrange one of the following actions if it determines that there is a possibility that the financial condition of the Failing Company may be rehabilitated or brought back to normal in accordance with its business restructuring plan:

•

convocation of the first meeting of the Creditor Committee to decide whether to commence the management of the Failing Company by the Creditor Committee; or

•

assumption of management of the Failing Company by the main Creditor Financial Institution.

Under the CRPA, in order to call for the first meeting of the Creditor Committee, the main Creditor Financial Institution is required to notify the Financial Creditors, the Failing Company and the Financial Supervisory Service. However, the main Creditor Financial Institution may omit the notification to some extent of the Financial Creditors who are set out in the CRPA such as a Financial Creditor who does not perform the financial business or a Financial Creditor who has only small claims against the Failing Company. The Financial Creditors who do not receive the notification from the main Creditor Financial Institution will be excluded from the Creditor Committee; provided that if they nevertheless want to attend the meeting, the main Creditor Financial Institution may not exclude such Financial Creditors. When the main Creditor Financial Institution calls for the first meeting of the Creditor Committee, it may require the Financial Creditors to grant a moratorium on the enforcement of claims (including the enforcement of security interests) until the end of the first meeting of the Creditor Committee. In addition, at the first meeting of the Creditor Committee, the Financial Creditors may resolve to declare a moratorium for up to one month (or three months if an investigation of the Failing Company’s financial status is necessary) from the commencement date of the management procedure (which may be extended by one additional month by resolutions of the Creditor Committee).

The Financial Creditors who attend the first meeting of the Creditor Committee may resolve, among other things: (i) commencement of the management procedure, (ii) composition of the Financial Creditors who will participate in such management procedure and (iii) declaration of moratorium mentioned above.

Once the management procedure commences, the main Creditor Financial Institution is required to prepare the corporate restructuring plan of the Failing Company considering the investigation results of the Failing Company’s financial status and submit such plan to the Creditor Committee for approval thereof. The corporate restructuring plan may include, among other things, the matters regarding rescheduling of debt owed by the Failing Company, provision of new credit and the business restructuring plan of the Failing Company. If the corporate restructuring plan is not approved by the date the moratorium period ends, the Creditor Committee’s management of the Failing Company shall be deemed to have terminated.

The resolution at the Creditor Committee is generally passed by an approval of the Financial Creditors representing at least 75% of the outstanding credit to the Failing Company of the Financial Creditors who constitute the Creditor Committee; provided that if a single Financial Creditor holds at least 75% of the outstanding credit, the resolution shall be passed by an approval of not less than 40% of the total number of the Financial Creditors who constitute the Creditor Committee, including such single Financial Creditor. An additional approval of the Financial Creditors holding interests in 75% or more of the total amount of the secured claims owned by the Financial Creditors constituting the Creditor Committee against the Failing Company is required with respect to the debt rescheduling of the Failing Company.

A Financial Creditor which has opposed the resolutions of the Creditor Committee in respect of the commencement of management of the Failing Company by the Creditor Committee, establishment of or amendment to the corporate restructuring plan, extension of management procedure, the rescheduling of claims or provision of new credit (the “Opposing Financial Creditor”) may, within seven days of such resolutions, request the main Creditor Financial Institutions to purchase its outstanding claims against the Failing Company, stating the type and number of claims. The Financial Creditors that have approved such resolutions (the “Approving Financial Creditors”) shall jointly purchase such claims within six months of such request.

The purchase price and terms of such purchase shall be determined by mutual agreement of the Approving Financial Creditors and the Opposing Financial Creditor. Pending the agreement of such matters, the payments shall be made at a provisional price, and adjusting payments made once an agreement has been reached. If no such agreement is reached, then such matters shall be determined by the coordination committee established under the CRPA.

Recovery Proceedings

Under the Debtor Rehabilitation and Bankruptcy Act, which took effect on April 1, 2006, court receiverships have been replaced with recovery proceedings. In a recovery proceeding, unlike court receivership proceedings where the management of the debtor company was vested in a court appointed receiver, the existing chief executive officer of the debtor company may continue to manage the debtor company, provided, that (i) neither fraudulent conveyance nor concealment of assets existed, (ii) the financial failure of the debtor company was not due to gross negligence of such chief executive officer, and (iii) no creditors’ meeting was convened to request, based on reasonable cause, a court-appointed receiver to replace such chief executive officer. Recovery proceeding may be commenced by any insolvent debtor. Furthermore, in an effort to meet global standards, international bankruptcy procedures have been introduced in Korea under which a receiver of a foreign bankruptcy proceeding may, upon receiving Korean court approval of the ongoing foreign bankruptcy proceeding, apply for or participate in a Korean bankruptcy proceeding. Similarly, a receiver in a domestic recovery proceeding or a bankruptcy trustee is allowed to perform its duties in a foreign country where an asset of the debtor is located to the extent the applicable foreign law permits.

Credit Rehabilitation Programs for Delinquent Consumer and Small- and Medium-sized Enterprise Borrowers

In light of the gradual increase in delinquencies in credit card and other consumer credit, the Government has implemented a number of measures intended to support the rehabilitation of the credit of delinquent consumer borrowers. These measures may affect the amount and timing of our collections and recoveries on our delinquent consumer credits.

The Credit Counseling and Recovery Service offers two programs for individual debtors, the pre-workout program and the individual workout program, both of which are available to individuals with total debt amounts of W1.5 billion or less (secured debt amount of W1 billion or less and unsecured debt amount of W500 million or less). The pre-workout program is offered to individuals whose delinquency period is between 31 days and 89 days, and the individual workout program is offered to individuals whose delinquency period is 90 days or more. Furthermore, in April 2023, a temporary special debt adjustment scheme was implemented for individuals with an annual income of W45 million and total debt not exceeding W1.5 billion. This scheme, which has been extended until December 31, 2025, is designed for those who are at risk of default or have been delinquent for 30 days or less. When an individual debtor applies for the temporary special debt adjustment scheme, pre-workout or individual workout program, the Credit Counseling and Recovery Service will deliberate and resolve on a debt restructuring plan, and once the creditor financial institution that is in a credit recovery support agreement with the Credit Counseling and Recovery Service and holding the majority of each of the unsecured claims and secured claims to the relevant individual debtor agrees to such debt restructuring plan, the plan will be finalized and debt restructuring measures, such as extension of maturity, adjustment of interest rates or reduction of debt, will be taken according to the pre-workout program or individual workout program applied for.

Under the Debtor Rehabilitation and Bankruptcy Act, a qualified individual debtor with outstanding debts in an aggregate amount not exceeding threshold amounts of W1 billion of unsecured debt and/or W1.5 billion of secured debt may restructure his or her debts through a court-supervised debt restructuring that is binding on creditors.

Once a borrower is deemed to be eligible to participate in the pre-workout program, we promptly sell the collateral underlying such borrower’s secured loans to mitigate our losses, and we may restructure such borrower’s unsecured loans (regardless of their type) as follows:

•

Extension of maturity: Based on considerations of the type of loan, the total loan amount, the repayment amount and the probability of repayment, the maturity of unsecured loans may be extended by up to 10 years and maturity of secured loans may be extended by up to 20 years with a grace period not exceeding three years.

•

Interest rate adjustment: The interest rate of unsecured loans may be adjusted to 50% of the original interest rate within the range of the highest interest rate of 10% per annum and the lowest interest rate of 5% per annum; provided that if the original interest rate is less than 5% per annum, no adjustment applies. The adjusted interest rate applies to the principal amount following any adjustment thereto as part of the pre-workout program, and no interest accrues on the interest already accrued or fees payable.

•

Debt forgiveness: Debt forgiveness under the pre-workout program is limited to the default interest.

•

Deferral: If the foregoing three measures are deemed to be insufficient in terms of providing meaningful assistance to a qualifying borrower due to layoff, unemployment, business closure, disaster or earnings loss, loan repayment may be deferred for a maximum of three year, provided that the pre-workout committee may extend such deferral period every six months, for a period not to exceed six months, upon the borrower’s application. The deferral period is not counted toward the repayment period, and interest accrues at 2% per annum during the deferral period.

In 2024, the aggregate amount of our retail credit (including credit card receivables) which became subject to the pre-workout program was W440 billion. We believe that our participation in such pre-workout program has not had a material impact on the overall asset quality of our retail loans and credit card portfolio or on our results of operations and financial condition to date.

Provisioning Policy

Loans

We conduct periodic and systematic detailed reviews of our loan portfolios to identify credit risks and to establish the overall allowance for credit losses on loans. Our management believes the allowance for credit losses on loans reflects the best estimate of the expected credit losses as of the date of each statement of financial position.

At each reporting date, we assess whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, we use the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. Upon assessment, each asset is classified as in one of the following three stages, which is used as the basis of calculating the loss allowances at the 12-month expected credit losses (“ECL”) or the lifetime ECL, depending on the stage.


Category		Provision for credit loss allowance
Stage 1	When credit risk has not increased significantly since the initial recognition	12-months ECL: The ECL associated with the probability of default events occurring within the next 12 months
Stage 2	When credit risk has increased significantly since the initial recognition	Lifetime ECL: A lifetime ECL associated with the probability of default events occurring over the remaining lifetime
Stage 3	When assets are impaired

To make that assessment, we compare the risk of default of the financial instrument as at the reporting date with such risk of default as at the date of initial recognition, taking into account reasonable supporting

information that is available without undue cost or effort and is indicative of significant increases in credit risk since initial recognition. Supporting information also includes historical default data held by us and analysis conducted by internal credit risk rating specialists.

We assign an internal credit risk rating to each individual exposure based on observable data and historical experiences that have been found to have a reasonable correlation with the risk of default. The internal credit risk rating is determined by considering both qualitative and quantitative factors that indicate the risk of default, which may vary depending on the nature of the exposure and the type of borrower.

We accumulate information after analyzing the information regarding exposure to credit risk and default information by the type of product and borrower as well as results of internal credit risk assessment. For some portfolios, we use information obtained from external credit rating agencies when performing these analyses.

We apply statistical techniques to estimate (i) the probability of default for the remaining life of the exposure from the accumulated data and (ii) the changes in the estimated probability of default over time.

We use the indicators defined as per portfolio to determine the significant increase in credit risk. Such indicators generally consist of changes in the risk of default estimated from changes in the internal credit risk rating, qualitative factors, days of delinquency and others.

We consider a financial asset to be in default if it meets one or more of the following conditions:

•

if a borrower is overdue 90 days or more from the contractual payment date, or

•

if we determine that it is not possible to recover principal and interest without enforcing the collateral on a financial asset.

We use the following indicators when determining whether a borrower is in default:

•

qualitative factors (e.g., breach of contract terms),

•

quantitative factors (e.g., if the same borrower does not perform more than one payment obligations to us, the number of days past due per payment obligation. However, in the case of a specific portfolio, we use the number of days past due for each financial instrument), and

•

internal and external data.

The definition of default applied by us generally conforms to the definition of default defined for regulatory capital management purposes. However, depending on the situation, the information used to determine whether default has incurred and the extent thereof may vary.

We measure expected credit losses on a forward-looking basis, and expected credit losses reflects information presented by internal experts based on a variety of sources. For purposes of estimating such forward-looking information, we utilize economic outlook and projections published by domestic and overseas research institutes or government and public agencies.

We reflect future macroeconomic conditions anticipated from a bias-free, neutral standpoint in measuring expected credit losses. Expected credit losses in this respect reflect conditions that are most likely to occur and are based on the same assumptions that we use in our business plan and management strategy.

Key variables used in measuring expected credit losses are as follows:

•

Probability of default (PD)

•

Loss given default (LGD)

•

Exposure at default (EAD)

These variables have been estimated from historical experience data by using statistical techniques developed internally by Shinhan Bank and have been adjusted to reflect forward-looking information. When measuring expected credit losses on financial assets, Shinhan Bank reflects a period of expected credit loss measurement based on a contractual maturity. Shinhan Bank takes into consideration the extension rights held by a borrower when deciding the contractual maturity.

Risk factors such as PD, LGD and EAD are collectively estimated according to the following criteria:

•

Type of products,

•

Internal credit risk rating,

•

Type of collateral,

•

Loan-to-value ratio,

•

Industry that the borrower belongs to,

•

Location of the borrower or collateral, and

•

Days of delinquency.

The criteria for classification of groups are periodically reviewed to maintain homogeneity of the group and are adjusted if necessary. We use external benchmark information to supplement internal information for a particular portfolio that does not have sufficient internal data accumulated from the past experience.

Credit Cards

Prior to 2017, we established an allowance for the credit card portfolio using a roll-rate model. A roll-rate model is a statistical tool used to monitor the progression of loans based on aging of the balance and established loss rates. The actual loss rates derived from this model are used to project the percentage of losses within each aging category based on performance over a five-year look-back period. Basel II requires a minimum of nine years of data collection (consisting of a minimum five-year observation period for defaults and a minimum four-year observation period for post-default recoveries) as a necessary condition to using the internal model approach. After its merger with LG Card in 2007, Shinhan Card has worked to establish a risk management system and met the Basel II nine-year data collection requirement in October 2016. Through the operation of a credit review system and risk management system based on Basel II requirements, we have gained the necessary data to create internal models that can calculate PD/LGD and credit conversion factors for different groups of borrowers of financial assets.

At the end of December 2016, the Financial Supervisory Service granted Shinhan Card final approval to use the internal model approach. During the first quarter of 2017, Shinhan Card completed the establishment of the IFRS loan loss calculation system, for example, by replacing Basel II risk components with risk components for financial reporting in accordance with IFRS 9, and Shinhan Card revised the calculation methodology of loan losses from a roll-rate model to an internal model approach.

The internal model approach calculates separate default rates and loss given default for different groups of customers, differentiated based on the characteristics of both the customers and the products that they use. The internal model approach disaggregates customers into more than twice the number of groups than does the roll-rate model. Whereas the roll-rate model does not distinguish between customers with high and low risks of default when calculating roll rates, the internal model approach allows for a more sophisticated calculation of loan loss that reflects the customers’ credit ratings.

Our general policy is to be proactive in our collection procedures, and we therefore emphasize collections at an early stage of delinquency, although we increase the level of collection efforts as the delinquency period increases with respect to the relevant account. Efforts to collect from cardholders whose account balances are up to 30 days past due are generally made by our credit support centers at Shinhan Card.

Analysis of Non-Performing Loans

The following table sets forth, for the periods indicated, the total non-performing loans by the borrower type.


	As of December 31,
	2022							2023							2024
	Total Loans		Non- Performing Loans⁽¹⁾		Ratio of Non- Performing Loans			Total Loans		Non- Performing Loans⁽¹⁾		Ratio of Non- Performing Loans			Total Loans		Non- Performing Loans⁽¹⁾		Ratio of Non- Performing Loans

	(In billions of Won, except percentages)
Domestic:
Corporate
Corporate loans	W	195,410	W	511		0.26	%	W	202,153	W	564		0.28	%	W	220,956	W	1,136		0.51	%
Public and other⁽²⁾		3,897		10		0.26			4,635		9		0.19			5,352		13		0.24
Loans to banks		1,205		—		—			961		—		—			885		—		—
Lease financing		682		6		0.88			196		10		5.10			371		34		9.16

Total corporate		201,194		527		0.26			207,945		583		0.28			227,564		1,183		0.52

Retail
Mortgage and home equity		80,937		69		0.09			86,532		140		0.16			100,332		156		0.16
Other retail		62,519		287		0.46			55,607		388		0.70			50,805		461		0.91

Total retail		143,456		356		0.25			142,139		528		0.37			151,137		617		0.41

Credit cards		20,388		494		2.42			27,798		612		2.20			28,607		636		2.22

Total domestic		365,038		1,377		0.38			377,882		1,723		0.46			407,308		2,436		0.60

Foreign:		48,398		379		0.78			39,464		493		1.25			47,817		205		0.43

Total	W	413,436	W	1,756		0.42	%	W	417,346	W	2,216		0.53	%	W	455,125	W	2,641		0.58	%

Notes:

(1)	Includes loans past due by more than 90 days.

(2)	Includes debtors such as local and regional authorities, state-owned enterprises and non-profit organizations.

Non-Performing Loans by Industry

The following table sets forth a breakdown of our non-performing corporate loans by industry as of December 31, 2024.


Industry	Aggregate Non- Performing Corporate Loan Balance		Percentage of Total Non-Performing Corporate Loan Balance

	(In billions of Won)		(Percentages)
Construction	W	399		31.52	%
Manufacturing		87		6.87
Real estate, leasing and service		305		24.09
Retail and wholesale		84		6.64
Finance and insurance		6		0.47
Hotel and leisure		40		3.16
Transportation, storage and communication		8		0.63
Other service⁽¹⁾		102		8.06
Other⁽²⁾		235		18.56

Total	W	1,266		100.00	%

Notes:

(1)	Includes other service industries such as publication, media and education.

(2)	Includes other industries such as agriculture, forestry, mining, electricity and gas.

Top 20 Non-Performing Loans

As of December 31, 2024, our 20 largest non-performing loans accounted for 20.8% of our total non-performing loan portfolio. The following table shows, at the date indicated, certain information regarding our 20 largest non-performing loans.


		As of December 31, 2024
		Industry	Gross Principal Outstanding		Allowance for credit losses on loans
		(In billions of Won)
1	Borrower A	Finance and insurance	W	125	W	—
2	Borrower B	Finance and insurance		56		—
3	Borrower C	Real estate, leasing and service		36		9
4	Borrower D	Real estate, leasing and service		25		15
5	Borrower E	Real estate, leasing and service		24		—
6	Borrower F	Finance and insurance		24		—
7	Borrower G	Real estate, leasing and service		24		—
8	Borrower H	Real estate, leasing and service		23		11
9	Borrower I	Real estate, leasing and service		23		23
10	Borrower J	Real estate, leasing and service		21		14
11	Borrower K	Other service		20		12
12	Borrower L	Real estate, leasing and service		18		17
13	Borrower M	Finance and insurance		18		14
14	Borrower N	Real estate, leasing and service		18		13
15	Borrower O	Real estate, leasing and service		17		7
16	Borrower P	Real estate, leasing and service		16		16
17	Borrower Q	Real estate, leasing and service		16		—


		As of December 31, 2024
		Industry	Gross Principal Outstanding		Allowance for credit losses on loans
		(In billions of Won)
18	Borrower R	Real estate, leasing and service		15		2
19	Borrower S	Real estate, leasing and service		15		3
20	Borrower T	Real estate, leasing and service		15		—

			W	549	W	156

Non-Performing Loan Strategy

One of our primary objectives is to prevent our loans from becoming non-performing. Through our corporate credit rating system, which is designed to prevent our loan officers from extending new loans to borrowers with high credit risks based on the borrower’s credit rating, we seek to reduce credit risk related to future non-performing loans. Our early warning system is designed to bring any sudden increase in a borrower’s credit risk to the attention of our loan officers, who then closely monitor such loans.

If a loan becomes non-performing notwithstanding such preventive mechanism, an officer at the branch level responsible for monitoring non-performing loans will commence due diligence on the borrower’s assets, send a notice demanding payment or a notice that we will take or prepare for legal action.

At the same time, we also initiate our non-performing loan management process, which includes:

•

identifying loans subject to a proposed sale by assessing the estimated losses from such sale based on the estimated recovery value of collateral, if any, for such non-performing loans;

•

identifying loans subject to charge-off based on the estimated recovery value of collateral, if any, for such non-performing loans and the estimated rate of recovery of unsecured loans; and

•

to a limited extent, identifying commercial loans subject to normalization efforts based on the cash-flow situation of the borrower.

Once the details of a non-performing loan are identified, we pursue early solutions for recovery. Actual recovery efforts for non-performing loans are handled by the relevant department, depending on the nature of such loans and the borrower, among others. The officers or agents of the responsible departments and units use a variety of methods to resolve non-performing loans, including:

•

making phone calls and paying visits to the borrower to request payment;

•

continuing to assess and evaluate assets of our borrowers; and

•

if necessary, initiating legal action such as foreclosures, attachment and litigation.

In order to promote speedy recovery on loans subject to foreclosures and litigation, the branch responsible for handling these loans may transfer them to the relevant unit at headquarters.

Our policy is to commence legal action within one month after default on promissory notes and four months after delinquency of payment on other types of loans. For loans to insolvent or bankrupt borrowers or when we conclude that it is not possible to recover through normal procedures, we take prompt legal actions regardless of the grace period.

In addition to making efforts to collect on these non-performing loans, we take other measures to reduce the level of our non-performing loans, including:

•

selling non-performing loans to third parties including the Korea Asset Management Corporation;

•

entering into asset-backed securitization transactions with respect to non-performing loans;

•

managing retail loans that are three months or more past due through Shinhan Credit Information under an agency agreement; and

•

using third-party collection agencies including credit information companies.

In 2024, we sold non-performing loans in the amount of W164 billion to third parties, including W82 billion transferred to UAMCO, Ltd., an investment management company. Loans transferred to third parties meet the criteria of true sale and are derecognized accordingly.

The following table presents a roll-forward of our non-performing loans in 2024.


	(In billions of Won)
Non-performing loans as of December 31, 2023	W	2,216

Additional non-performing loans due to delinquency		2,226
Loans sold		(164	)
Loans charged off		(442	)
Loans modified and returned to performing		(859	)
Other adjustments⁽¹⁾		(336	)

Non-performing loans as of December 31, 2024	W	2,641

Note:

(1)

Represents loans paid down or paid off and loans returned to performing other than as a result of modification. We do not separately collect and analyze data relating to non-performing loans other than those that were sold, charged off, modified and returned to performing, or transferred to held-for-sale investment portfolio.

Loan Charge-offs

Our gross charge-offs, including amortization of discount and disposal, increased by 12.3% from W1,777 billion in 2023 to W1,996 billion in 2024, primarily due to an increase in the amount of charge-offs for corporate loans and credit card loans in 2024 compared to 2023. The increase in the amount of charge-offs for corporate loans in 2024 was primarily due to write-offs for real estate-related corporate loans resulting from the deterioration of project financing loans as a measure taken by Shinhan Capital to manage financial soundness. The increase in the amount of charge-offs for credit card loans in 2024 was mainly driven by the continued implementation of a proactive policy of writing off non-performing loans by Shinhan Card. Our gross charge-offs, including amortization of discount and disposal, increased by 54.3% from W1,152 billion in 2022 to W1,777 billion in 2023, primarily due to an overall increase in the amount of charge-offs for domestic loans in 2023 compared to 2022. The increase in the amount of charge-offs in 2023 was primarily due to write-offs for non-performing domestic loans to improve financial soundness by Shinhan Bank and Shinhan Card.

In 2024, the charge-off on restructured loans amounted to W6 billion. With respect to a loan that we consider to be uncollectible regardless of any modification of terms, we convert a portion of such loan into equity securities following negotiation with the borrower and charge off the remainder of such loan. The equity securities so converted are recorded at fair value, based on the market value of such securities if available or the appraisal value of such securities by an outside appraiser if a market value is unavailable. In 2024, our loans restructured into equity securities amounted to W25 billion.

We attempt to minimize loans to be charged off by practicing a sound credit approval process based on credit risk analysis prior to extending loans and a systematic management of outstanding loans.

Loans to be Charged-off

Loans are charged off if they are deemed to be uncollectible by falling under any of the following categories:

•

loans for which collection is not foreseeable due to insolvency or bankruptcy, dissolution or the termination of the debtor’s business;

•

loans for which collection is not foreseeable due to the death or disappearance of debtors;

•

loans for which collection expenses exceed the collectible amount;

•

loans for which collection is not possible through legal or any other means;

•

payments in arrears in respect of credit cards that are overdue for more than six months;

•

payments outstanding on unsecured retail loans that are overdue for more than 12 months;

•

payments in arrears in respect of leases that are overdue for more than 12 months;

•

the portion of loans classified as “estimated loss,” net of any recovery from collateral, which is deemed to be uncollectible; or

•

domestic loans that are required by the Financial Supervisory Service to be charged-off, or loans held by our foreign subsidiaries or branches for which a charge-off or special provisioning is required by the relevant regulatory authority.

Timeline for Charge-off

Shinhan Bank’s loans to be charged-off must be charged-off within one year of the month they are deemed to be uncollectible. If such loans are not charged-off within one year, the reason for the delay must be reported to Shinhan Bank’s Audit Department.

Procedure for Charge-off Approval

An application for Shinhan Bank’s loans to be charged-off is submitted by the relevant branch or department to the Credit Collection Department. The Credit Collection Department refers the application to the Audit Department for their review to ensure compliance with Shinhan Bank’s internal procedures for charge-offs. The Credit Collection Department, after reviewing the application to confirm that it meets relevant requirements, seeks approval from the Financial Supervisory Service for the charge-offs, which is typically granted. Once the Financial Supervisory Service approves (except for household loans with estimated losses of W10 million or less, whose charge-off is considered automatically approved by the Financial Supervisory Service), loans are charged-off upon approval by the President of Shinhan Bank. As for Shinhan Card, it generally charges off receivables that are 180 days past due following internal review.

Treatment of Loans Charged-off

Once loans are charged off, they are derecognized from our statements of financial position and are classified as charged-off loans. We continue collection efforts in respect of these loans through third-party collection agencies, including the Korea Asset Management Corporation, and Shinhan Credit Information, which is our subsidiary. The General Manager of the Credit Collection Department must report to the Financial Supervisory Service the amounts of loans permanently written off or recovered during each reporting period.

Treatment of Collateral

When we determine that a loan collateralized by real estate cannot be recovered through normal collection channels, we generally petition a court to foreclose and sell the collateral through a court-supervised auction

within one month after default and insolvency and within four months after delinquency. However, this procedure does not apply to companies under restructuring, recovery proceedings, workout or other court proceedings where there are restrictions on such auction procedures. Filing of such petition with the court generally encourages the debtor to repay the overdue loan. If a debtor ultimately fails to repay and the court grants its approval for foreclosure, we sell the collateral and recover the principal amount and interest accrued up to the sales price, net of expenses incurred from the auction. Foreclosure proceedings under the laws and regulations of Korea typically take seven months to one year from initiation to collection depending on the nature of the collateral.

Financial Statement Presentation

Our financial statements generally report as charge-offs all unsecured retail loans that are overdue for more than 12 months. Leases are charged off when past due for more than 12 months. For collateral dependent loans, we charge off the excess of the book value of the subject loan over the amount received or to be received from the sale of the underlying collateral when the collateral is sold as part of a foreclosure proceeding and its sale price becomes known through court publication as part of such proceeding.

Net Charge-offs

The following table sets forth, for the periods indicated, the net charge-offs.


	For the years ended December 31,
	2022							2023							2024
	Average Loans		Net Charge- Offs		Ratio			Average Loans		Net Charge- Offs		Ratio			Average Loans		Net Charge- Offs		Ratio

	(In billions of Won, except percentages)
Domestic:
Corporate
Corporate loans		183,765		197		0.11	%		192,757		327		0.17	%		211,753		490		0.23	%
Public and other		3,594		1		0.03			4,128		2		0.05			4,874		7		0.14
Loans to banks		2,581		—		—			4,322		—		—			1,957		—		—
Lease financing		523		8		1.53			363		21		5.79			167		22		13.17

Total corporate		190,463		206		0.11			201,570		350		0.17			218,751		519		0.24

Retail:
Mortgage and home equity		79,972		2		N/M			83,392		2		N/M			95,050		3		N/M
Other retail		66,626		109		0.16			58,904		408		0.69			52,553		224		0.43

Total retail		146,598		111		0.08			142,296		410		0.29			147,603		227		0.15

Credit cards		27,143		363		1.34			27,673		607		2.19			27,688		749		2.71

Total domestic		364,204		680		0.19			371,539		1,367		0.37			394,042		1,495		0.38

Foreign:		39,803		90		0.23			40,880		52		0.13			43,751		140		0.32

Total		404,007		770		0.19	%		412,419		1,419		0.34	%		437,793		1,635		0.37	%

N/M = not meaningful

Investment Portfolio

Investment Policy

We invest in and trade Won-denominated and, to a lesser extent, foreign currency-denominated securities for our own account in order to:

•

maintain the stability and diversification of our assets;

•

maintain adequate sources of back-up liquidity to match our funding requirements; and

•

supplement income from our core lending activities.

When making an investment decision with respect to particular securities, we consider macroeconomic trends, industry analysis and credit evaluation, among others.

Our securities investment activities are subject to a number of regulatory guidelines, including limitations prescribed under the Financial Holding Companies Act and the Banking Act. Generally, a financial holding company is prohibited from acquiring more than 5% of the total issued and outstanding shares of another finance-related company (other than its direct and indirect subsidiaries). Furthermore, under these regulations, Shinhan Bank must limit its investments in shares and securities with a maturity in excess of three years (other than monetary stabilization bonds issued by the Bank of Korea and national government bonds) to 100.0% of the sum of Tier I and Tier II capital (less any deductions) of Shinhan Bank. Generally, Shinhan Bank is also prohibited from acquiring more than 15.0% of the shares with voting rights issued by any other corporation (other than for the purpose of establishing or acquiring a subsidiary). Further information on the regulatory environment governing our investment activities is set out in “— Supervision and Regulation — Principal Regulations Applicable to Banks — Restrictions on Investments in Property,” “— Principal Regulations Applicable to Banks — Restrictions on Shareholdings in Other Companies,” “— Principal Regulations Applicable to Financial Holding Companies — Liquidity” and “— Principal Regulations Applicable to Financial Holding Companies — Restrictions on Shareholdings in Other Companies.”

Book Value and Fair Value

The following tables set out the book value and fair value of investments in our investment portfolio as of the dates indicated.


	As of December 31,
	2022				2023				2024
	Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value

	(In billions of Won)
Securities at fair value through other comprehensive income
Equity securities	W	1,673	W	1,673	W	1,675	W	1,675	W	1,789	W	1,789
Debt securities:
Korean treasury and governmental agencies		37,024		37,024		39,875		39,875		37,634		37,634
Debt securities issued by financial institutions		20,539		20,539		21,303		21,303		25,983		25,983
Corporate debt securities		18,005		18,005		18,761		18,761		19,296		19,296
Debt securities issued by foreign government		3,971		3,971		4,544		4,544		4,829		4,829
Mortgage-backed and asset-backed securities		4,257		4,257		4,154		4,154		4,274		4,274

Total — Securities at fair value through other comprehensive income	W	85,469	W	85,469	W	90,312	W	90,312	W	93,805	W	93,805


	As of December 31,
	2022				2023				2024
	Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value

	(In billions of Won)
Securities at amortized cost
Debt securities:
Korean treasury and governmental agencies	W	20,578	W	19,268	W	21,496	W	20,889	W	20,415	W	20,231
Debt securities issued by financial institutions		5,658		5,621		6,054		6,096		4,079		4,120
Corporate debt securities		1,993		1,861		2,096		2,052		2,574		2,567
Debt securities issued by foreign government		945		947		1,291		1,293		1,393		1,395
Mortgage-backed and asset-backed securities		4,197		3,876		4,749		4,639		4,855		4,836

Total — Securities at amortized cost	W	33,371	W	31,573	W	35,686	W	34,969	W	33,316	W	33,149

Financial assets at fair value through profit or loss
Equity securities	W	3,857	W	3,857	W	3,851	W	3,851	W	3,097	W	3,097
Debt securities:
Korean treasury and governmental agencies		5,489		5,489		6,036		6,036		8,554		8,554
Debt securities issued by financial institutions		11,808		11,808		12,861		12,861		11,153		11,153
Corporate debt securities		17,424		17,424		23,222		23,222		23,347		23,347
Debt securities issued by foreign governments		473		473		356		356		430		430
Mortgage-backed and asset-backed securities		368		368		737		737		1,018		1,018
Other debt securities⁽¹⁾		19,598		19,598		22,260		22,260		22,505		22,505

Sub-total — Securities at fair value through profit or loss		59,017		59,017		69,323		69,323		70,104		70,104

Others:
Loans at fair value		2,389		2,389		1,759		1,759		1,880		1,880
Due from banks at fair value		26		26		31		31		35		35
Gold/Silver deposits		76		76		104		104		128		128

Total — Financial assets at fair value through profit or loss	W	61,508	W	61,508	W	71,217	W	71,217	W	72,147	W	72,147

Note:

(1)	Other debt securities included puttable equity investment, beneficiary certificates and restricted reserve for claims of customers’ deposits (trusts) classified as debt instruments in accordance with IFRS 9.

Maturity Analysis

The following table categorizes our securities at amortized cost by maturity and weighted average yield as of December 31, 2024.


	As of December 31, 2024
	1 Year or Less					Over 1 but within 5 Years					Over 5 but within 10 Years					Over 10 Years					Total
	Carrying Amount		Weighted Average Yield⁽¹⁾			Carrying Amount		Weighted Average Yield⁽¹⁾			Carrying Amount		Weighted Average Yield⁽¹⁾			Carrying Amount		Weighted Average Yield⁽¹⁾			Carrying Amount		Weighted Average Yield⁽¹⁾

	(In billions of Won, except percentages)
Korean treasury securities and government agencies	W	2,557		2.34	%	W	14,499		3.41	%	W	1,453		2.56	%	W	1,906		1.91	%	W	20,415		3.08	%
Debt securities issued by financial institutions		2,462		4.31			1,566		4.23			45		6.34			6		6.50			4,079		4.30
Corporate debt securities		618		4.08			1,350		3.61			275		2.92			331		3.51			2,574		3.64
Debt securities issued by foreign governments		283		6.94			785		3.70			219		6.01			106		3.64			1,393		4.72
Mortgage-backed securities and asset-backed securities		1,162		1.96			2,233		3.12			1,356		3.49			104		2.73			4,855		2.94

Total	W	7,082		3.30	%	W	20,433		3.47	%	W	3,348		3.25	%	W	2,453		2.24	%	W	33,316		3.32	%

Note:

(1)	The weighted-average yield for the portfolio represents the yield to maturity for each individual security, weighted using its amortized cost.

Concentrations of Risk

The following table presents securities held by us whose aggregate book value exceeded 10% of our stockholders’ equity as of December 31, 2024. As of December 31, 2024, 10% of our stockholders’ equity was W5,882 billion.


	As of December 31, 2024
	Book Value		Fair Value

	(In billions of Won)
Name of issuer:
Ministry of Strategy and Finance	W	65,125	W	65,001
The Korea Development Bank		10,231		10,252
The Korea Housing Finance Corp		9,569		9,550
Industrial Bank of Korea		7,470		7,481

All of the above entities are either an agency of the Government or an entity controlled by the Government.

Credit-Related Commitments and Guarantees

In the normal course of our operations, we make various commitments and guarantees to meet the financing and other business needs of our customers. Commitments and guarantees are usually in the form of, among others, commitments to extend credit, commercial letters of credit, standby letters of credit and performance

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guarantees. The contractual amount of these financial instruments represents the maximum possible loss amount if the account party draws down the commitment or we should fulfill our obligation under the guarantee and the account party fails to perform under the contract.

The following table sets forth our credit-related commitments and guarantees as of the dates indicated.


	As of December 31,
	2022		2023		2024

	(In billions of Won)
Commitments to extend credit	W	108,504	W	115,884	W	121,678
Commercial letters of credit		3,138		2,934		3,353
Others⁽¹⁾		119,120		122,155		128,397

Total	W	230,762	W	240,973	W	253,428

Note:

(1)	Consists of financial guarantees, performance guarantees, liquidity facilities to special purpose entities, acceptances, endorsed bills and unused credit limits on credit cards, etc.

We have credit-related commitments that are not reflected in our statements of financial position, which primarily consist of commitments to extend credit and commercial letters of credit. Commitments to extend credit, including credit lines, represent unfunded portions of authorizations to extend credit in the form of loans. These commitments expire on fixed dates and a customer is required to comply with predetermined conditions to draw funds under the commitments. Commercial letters of credit are undertakings on behalf of customers authorizing third parties to make drawdowns up to a stipulated amount under specific terms and conditions. They are generally short-term and collateralized by the underlying shipments of goods to which they relate.

We also have guarantees that are recorded on our statements of financial position at their fair value at inception which are amortized over the life of the guarantees. Such guarantees generally include standby letters of credit, other financial and performance guarantees and liquidity facilities to special purpose entities. Standby letters of credit are irrevocable obligations to pay third-party beneficiaries when our customers fail to repay loans or debt instruments, which are generally in foreign currencies. A substantial portion of these standby letters of credit is secured by collateral, including trade-related documents. Other financial and performance guarantees are irrevocable assurances that we will pay beneficiaries if our customers fail to perform their obligations under certain contracts. Liquidity facilities to special purpose entities are irrevocable commitments to provide contingent liquidity credit lines to special purpose entities established by our customers in the event that a triggering event such as shortage of cash occurs.

The commitments and guarantees do not necessarily represent our exposure since they often expire unused.

Derivatives

As discussed under “— Our Principal Activities — Other Banking Services — Derivatives Trading” above, we engage in derivatives trading activities primarily on behalf of our customers so that they may hedge their risks and also enter into back-to-back derivatives with other financial institutions to cover exposures arising from such transactions. In addition, we enter into derivatives transactions to hedge against risk exposures arising from our own assets and liabilities, some of which are non-trading derivatives that do not qualify for hedge accounting treatment.

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The following table shows, as of December 31, 2024, the gross notional or contractual amounts of derivatives held or issued for (i) trading and (ii) non-trading that qualify for hedge accounting.


	As of December 31, 2024
	Underlying Notional Amount⁽¹⁾		Estimated Fair Value Assets		Estimated Fair Value Liabilities

	(In billions of Won)
Trading:
Foreign exchange derivatives:
Future and forward contracts	W	169,340	W	5,734	W	3,888
Swaps		59,642		2,299		3,823
Options		2,182		24		26

Sub-total		231,164		8,057		7,737

Interest rate derivatives:
Future contracts		4,876		3		1
Swaps and forward contracts		199,364		734		859
Options		825		1		29

Sub-total		205,065		738		889

Credit derivatives:
Swaps		5,041		508		10

Sub-total		5,041		508		10

Equity derivatives:
Swaps and forward contracts		5,976		97		137
Options		3,376		161		116
Future contracts		1,600		1		14

Sub-total		10,952		259		267

Commodity derivatives:
Swaps and forward contracts		2,122		1		130
Future contracts and options		173		14		4
Sub-total		2,295		15		134

Total	W	454,517	W	9,577	W	9,037

Non-trading:
Hedge accounting:
Foreign exchange derivatives:
Swaps	W	7,994	W	539	W	181
Forward contracts		4,345		12		213

Sub-total		12,339		551		394

Equity derivatives:
Options		19		—		4
Interest rate derivatives:
Swaps and forward contracts		13,219		151		624

Total	W	25,577	W	702	W	1,022

Note:

(1)	Notional amounts in foreign currencies were converted into Won at prevailing exchange rates as of December 31, 2024.

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Funding

We obtain funding from a variety of sources, both domestic and foreign. Our principal source of funding is customer deposits obtained from our banking operations, and we from time to time issue equity and debt securities, including preferred shares. In addition, our subsidiaries acquire funding through call money, borrowings from the Bank of Korea, other short-term borrowings, corporate debentures and other long-term debt, including debt and equity securities issuances, asset-backed securitizations and repurchase transactions, to complement, or if necessary, replace funding through customer deposits. For further details relating to funding by us and our subsidiaries, see “Item 5.B. Liquidity and Capital Resources.”

Deposits

Although the majority of our bank deposits are short-term, the majority of our depositors have historically rolled over their deposits at maturity, providing our banking operation with a stable source of funding.

The following table shows the average balances of our deposits and the average rates paid on our deposits for the periods indicated, and the outstanding balances of uninsured deposits as of the ends of periods indicated.


	2022					2023					2024
	Average Balance⁽¹⁾		Average Rate Paid			Average Balance⁽¹⁾		Average Rate Paid			Average Balance⁽¹⁾		Average Rate Paid
	(In billions of Won, except percentages)
Non-interest-bearing deposits:	W	5,495				W	4,557				W	4,250
Interest-bearing deposits:

Domestic
Demand deposits	W	60,473		0.50	%	W	54,072		1.08	%	W	54,926		1.10	%
Savings deposits		107,430		0.36			96,305		0.83			97,744		0.82
Time deposits		156,022		2.08			184,472		3.90			200,499		3.70
Other deposits		12,293		2.17			8,896		3.92			7,961		3.91

Sub-total	W	336,218		1.25	%	W	343,745		2.60	%	W	361,130		2.53	%

Foreign
Demand deposits	W	8,066		0.24	%	W	8,372		0.53	%	W	8,295		0.68	%
Savings deposits		1,749		2.31			877		3.10			875		3.14
Time deposits		18,340		1.70			20,271		3.16			25,087		3.35
Other deposits		4,766		1.49			4,347		3.57			3,873		4.25

Sub-total	W	32,921		1.34	%	W	33,867		2.56	%	W	38,130		2.86	%

Total interest-bearing deposits	W	369,139		1.26	%	W	377,612		2.59	%	W	399,260		2.56	%


	2022					2023					2024
	(In billions of Won)
Uninsured deposits		W288,754					W287,330					W324,782

Note:

(1)	Average balances are based on (a) monthly balances of Shinhan Bank and (b) quarterly balances for other subsidiaries.

For a breakdown of deposit products, see “— Our Principal Activities — Deposit-taking Activities,” except that cover bills sold are recorded on short-term borrowings and securities sold under repurchase agreements are recorded as secured borrowings.

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Short-term Borrowings

The following table presents information regarding our short-term borrowings (borrowings with a maturity of one year or less) for the periods indicated.


	2022												2023												2024
	Balance Outstanding		Average Balance Outstanding⁽¹⁾		Highest Balances at Any Month-end		Weighted Average Interest Rate⁽²⁾			Year-end Interest Rate			Balance Outstanding		Average Balance Outstanding⁽¹⁾		Highest Balances at Any Month-end		Weighted Average Interest Rate⁽²⁾			Year-end Interest Rate			Balance Outstanding		Average Balance Outstanding⁽¹⁾		Highest Balances at Any Month-end		Weighted Average Interest Rate⁽²⁾			Year-end Interest Rate

	(In billions of Won, except for percentages)
Borrowings from Bank of Korea⁽³⁾	W	5,100	W	5,096	W	5,157		0.62	%		0.25 – 1.75	%	W	2,562	W	4,096	W	5,055		1.44	%		2.00 – 2.00	%	W	3,106	W	3,004	W	3,882		1.94	%		1.50 – 1.50	%
Call money		1,276		2,037		3,750		2.99			0.05 – 6.30			2,196		2,599		4,202		6.07			0.02 – 5.88			1,198		2,186		3,565		6.19			0.29 – 4.97
Other short-term borrowings⁽⁴⁾		34,002		33,626		38,263		1.74			0.00 – 21.20			39,218		34,165		39,843		2.81			0.00 – 14.85			33,359		37,501		42,185		2.68			0.00 – 16.75

	W	40,378	W	40,759	W	47,170		1.66	%				W	43,976	W	40,860	W	49,100		2.88	%				W	37,663	W	42,691	W	49,632		2.81	%

Notes:

(1)	Average balances are based on (a) monthly balances of Shinhan Bank and (b) quarterly balances for other subsidiaries.

(2)	Weighted-average interest rates are calculated by dividing the total interest expenses by the average amount borrowed.

(3)	Borrowings from the Bank of Korea generally mature within one month for borrowings in Korean Won and six months for borrowings in foreign currencies.

(4)	Other short-term borrowings included bonds sold under repurchase agreements and borrowings in domestic and foreign currencies.

Our short-term borrowings have maturities of less than one year and are generally unsecured with the exception of borrowings from the Bank of Korea, which are generally secured with securities at fair value through other comprehensive income or at amortized cost held by us.

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Risk Management

Overview

As a financial services provider, we are exposed to various risks relating to our lending, credit card, insurance, securities investment, trading and leasing businesses, our deposit taking and borrowing activities and our operating environment. The principal risks to which we are exposed are credit risk, market risk, interest rate risk, liquidity risk and operational risk. These risks are recognized, measured and reported in accordance with risk management guidelines established at our holding company level and implemented at the subsidiary level through a carefully stratified checks-and-balances system.

We believe that our risk management system has been instrumental to building our reputation as a well-managed and prudent financial service provider and withstanding various external shocks. In particular, during the global financial crisis of 2008 and 2009, we believe our risk management provided effective early warning signals which helped us to proactively reconfigure our asset portfolio and substantially reduce our exposure to troubled debtors and thereby avoid what could have been a substantially greater credit loss during such crisis, and we are carefully upgrading and refining our risk management system in the face of current and potential economic difficulties at global, regional and domestic levels.

Our group-wide risk management philosophy is to instill a culture of effective risk management and awareness at all levels of our organization and pursue a proper balance between risk and return in our business activities in order to achieve a sustainable growth. In particular, our group-wide risk management is guided by the following core principles:

•

carrying out all business activities within prescribed risk tolerance levels and prudently balancing profitability and risk management;

•

standardizing the risk management process and monitoring compliance at a group-wide level;

•

operating a prudent risk management decision making system backed by active participation by management;

•

creating and operating a risk management organization independent of business activities;

•

operating a performance management system that enhances clear and prompt identification of risks when making business decisions;

•

aiming to achieve preemptive and practical risk management; and

•

prudent preparation for known and unknown contingencies.

We take the following steps to implement the foregoing risk management principles:

•

risk capital management — Risk capital refers to capital necessary to compensate for losses in case of a potential risk being realized, and risk capital management refers to the process of asset management based on considerations of risk exposure and risk appetite for our total assets so that we can maintain an appropriate level of risk capital. As part of our risk capital management, we and our subsidiaries have adopted and maintain various risk planning processes and reflect such risk planning in our business and financial planning. We also maintain a risk limit management system to ensure that risks in our business do not exceed prescribed limits.

•

risk monitoring — We proactively, preemptively and periodically review risks that may impact our overall operations, including through a multidimensional risk monitoring system. Currently, each of our subsidiaries is required to report to the holding company any factors that could have a material impact on group-wide risk management, and the holding company reports to our chief risk officer and other members of our senior management the results of risk monitoring weekly, monthly and on an ad hoc basis as needed. In addition, we perform preemptive risk management through a “risk dashboard

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system” under which we closely monitor any increase in asset size, risk levels and sensitivity to external factors with respect to the major asset portfolios of each of our subsidiaries, and to the extent such monitoring yields any warning signals, we promptly analyze the causes and, if necessary, formulate and implement actions in response thereto.

•

risk review — Prior to entering any new business, offering any new products or changing any major policies, we review any relevant risk factors based on a prescribed risk management checklist and, in the case of changes for which assessment of risk factors is difficult, perform reasonable decision-making in order to avoid taking any unduly risky action. The risk management departments of all our subsidiaries are required to review all new businesses, products and services prior to their launch and closely monitor the development of any related risks following their launch, and in the case of any action that involves more than one subsidiary, the relevant risk management departments are required to consult with the risk management team at the holding company level prior to making any independent risk reviews.

•

crisis management — We maintain a group-wide risk management system to detect the early warning signals of any crisis and, in the event of a crisis actually happening, to respond on a timely, efficient and flexible basis so as to ensure our survival as a going concern. Each of our subsidiaries maintains crisis planning for four levels of contingencies, namely, “warning,” “alert,” “imminent crisis” and “crisis,” determination of which is made based on quantitative and qualitative monitoring and consequence analysis, and upon the occurrence of any such contingency, is required to respond according to a prescribed contingency plan. At the holding company level, we maintain and install a crisis detection and response system which is applied consistently group-wide, and upon the occurrence of an “imminent crisis” or “crisis” event at a subsidiary level, we directly take charge of the situation at the holding company level so that we manage it on a concerted group-wide basis.

Organization

Our risk management system is organized along the following hierarchy (from top to bottom): at the holding company level, the Group Risk Management Committee, the Group Risk Management Council, the Group Chief Risk Officer and the Group Risk Management Team, and at the subsidiary level, the Risk Management Committee, the Chief Risk Officer and the Risk Management Team of the relevant subsidiary. The Group Risk Management Committee, which is under the supervision of our holding company’s board of directors, sets the basic group-wide risk management policies and strategies. Our Group Chief Risk Officer reports to the Group Risk Management Committee, and the Group Risk Management Council coordinates the risk management policies and strategies at the group level as well as at the subsidiary level among each of our subsidiaries. Each of our subsidiaries also has a separate Risk Management Committee, Risk Management Working Committee and Risk Management Team, whose tasks are to implement the group-wide risk management policies and strategies at the subsidiary level as well as to set risk management policies and strategies specific to such subsidiary in line with the group-wide guidelines. We also have the Group Risk Management Team, which supports our Chief Risk Officer in his or her risk management and supervisory role.

In order to maintain the group-wide risk at an appropriate level, we use a hierarchical risk limit system under which the Group Risk Management Committee assigns reasonable risk limits for the entire group and each of our subsidiaries, and the Risk Management Committee and the Risk Management Working Committee of each of our subsidiaries manage the subsidiary-specific risks by establishing and managing risk limits in more detail by type of risk and type of product for each department and division within such subsidiary. Further details follow.

At the holding company level:

•

Group Risk Management Committee — The Group Risk Management Committee consists of three outside directors of our holding company. The Group Risk Management Committee convenes at least

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Shinhan Bank complies with credit risk management procedures pursuant to internal guidelines and regulations and continually monitors and improves these guidelines and regulations. Its credit risk management procedures include:

•

credit evaluation and approval;

•

credit review and monitoring; and

•

credit risk assessment and control.

Credit Evaluation and Approval

All loan applicants and guarantors are subject to credit evaluation before approval of any loans. Credit evaluation of loan applicants is carried out by senior officers of Shinhan Bank specifically charged with granting loan approvals. Loan evaluation is carried out by a group rather than by an individual reviewer through an objective and deliberative process. Credit ratings of loan applicants and guarantors influence loan interest rates, the level of internal approval required, credit exposure limits, calculation of potential losses and estimated cost of capital, and therefore are determined objectively and independently by the relevant business unit. Shinhan Bank uses a credit scoring system for retail loans and a credit-risk rating system for corporate loans.

Each of Shinhan Bank’s borrowers is assigned a credit rating, which is based on a comprehensive internal credit evaluation system that considers a variety of criteria. For retail borrowers, the credit rating takes into account the borrower’s biographic details, past dealings with Shinhan Bank and external credit rating information, among other things. For corporate borrowers, the credit rating takes into account financial indicators as well as non-financial indicators such as industry risk, operational risk and management risk, among other things. The credit rating, once assigned, serves as the fundamental instrument for Shinhan Bank’s credit risk management, and is applied to a wide range of credit risk management processes, including credit approval, credit limit management, loan pricing and computation of allowance for credit losses on loans. Shinhan Bank has separate credit evaluation systems for retail customers, SOHO customers and corporate customers, which are further segmented and refined to meet Basel II requirements, which requirements have not changed under Basel III.

Retail Loans

Loan applications for retail loans are reviewed in accordance with Shinhan Bank’s credit scoring system and the objective statistics models for secured and unsecured loans maintained and operated by Shinhan Bank’s Retail Banking Division. Shinhan Bank’s credit scoring system is an automated credit approval system used to evaluate loan applications and determine the appropriate pricing for the loan, and takes into account factors such as a borrower’s personal information, transaction history with Shinhan Bank and other financial institutions and other relevant credit information. The applicant is assigned a score, which is used to determine (i) whether to approve the applicant’s loan, (ii) the amount of loan to be granted, and (iii) the interest rates thereon. The applicant’s score also determines whether the applicant is approved for credit, conditionally approved, subject to further assessment, or denied. If the applicant becomes subject to further assessment, the appropriate discretionary body, either at the branch level or at the headquarter level, makes a reassessment based on qualitative as well as quantitative factors, such as credit history, occupation and past relationship with Shinhan Bank.

For mortgage and home equity loans and loans secured by real estate, Shinhan Bank evaluates the value of the real estate offered as collateral using a proprietary database, which contains information about real estate values throughout Korea. In addition, Shinhan Bank uses up-to-date information provided by third parties regarding the real estate market and property values in Korea. While Shinhan Bank uses internal staff from the processing centers to appraise the value of the real estate collateral, Shinhan Bank also hires certified appraisers to review and co-sign the appraisal value of real estate collateral that have an appraisal value exceeding W3 billion, as initially determined by the processing centers. Shinhan Bank also reevaluates internally, on a summary basis, the appraisal value of collateral at least every year.

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For loans secured by securities, deposits or other assets other than real estate, Shinhan Bank requires borrowers to observe specified collateral ratios in respect of secured obligations.

Corporate Loans

Shinhan Bank rates all of its corporate borrowers using internally developed credit evaluation systems. These systems consider a variety of criteria (quantitative, qualitative, financial and non-financial) in order to standardize credit decisions and focus on the quality of borrowers rather than the size of loans. The quantitative considerations include the borrower’s financial and other data, while the qualitative considerations are based on the judgment of Shinhan Bank’s credit officers as to the borrower’s ability to repay. Financial considerations include financial variables and ratios based on customer’s financial statements, such as return on assets and cash flow to total debt ratios, and non-financial considerations include, among other things, the industry to which the borrower’s businesses belong, the borrower’s competitive position in its industry, its operating and funding capabilities, the quality of its management and controlling stockholders (based in part on interviews with its officers and employees), technological capabilities and labor relations.

In addition, in order to enhance the accuracy of its internal credit reviews, Shinhan Bank also considers reports prepared by external credit rating services, such as Nice Information Service and Korea Rating & Data (KoDATA), and monitors and improves the effectiveness of the credit risk-rating systems using a database that it updates continually with actual default records.

Based on the scores calculated under the credit rating system, which takes into account the evaluation criteria described above and the probability of default, Shinhan Bank assigns the borrower one of 23 grades (from the highest of AAA to the lowest of D3). Grades AA through B are further broken down into “+”, “0” or “-.” Grades AAA through B- are classified as normal, grade CCC precautionary, and grades CC through D3 non-performing. The credit risk-rating model is further differentiated by the size of the corporate borrower and the type of credit facilities.

Loan Approval Process

Loans are generally approved after evaluations and approvals by the relationship manager at the branch level as well as the committee of the applicable business unit at Shinhan Bank. The approval limit for retail loans is made based on Shinhan Bank’s automated credit scoring system. In the case of large corporate loans, approval limits are also reviewed and approved by a Credit Officer at the headquarter level. Depending on the size and importance of the loan, the approval process is further reviewed by the Credit Officer Committee, the Master Credit Officer Committee, or the Loan Management Committee. If the loan is considered significant or the amount exceeds the discretion limit of the Master Credit Officer Committee and the Loan Management Committee, further evaluation is made by the Credit Review Committee, which is Shinhan Bank’s highest decision-making body in relation to credit approval. The Credit Review Committee’s evaluation and approval of loan limits vary depending on the borrower’s credit ratings as determined by Shinhan Bank’s internal credit rating system and the borrower’s size of business. The Credit Review Committee holds at least two meetings a week to approve applications for large-sized loans whose principal amounts exceed prescribed levels set by it.

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The chart below summarizes the credit approval process of our banking operation. The Master Credit Officer and the Head of Business Division do not make individual decisions on loan approval, but are part of the decision-making process at the group level.

LOGO

The reviewer at each level of the review process may in its discretion approve loans up to a maximum amount per loan assigned to such level. The discretionary loan approval limit for each level of the loan approval process takes into account the total amount of loans extended to the borrower, the credit level of the applicant based on credit review, the existence and value of collateral, the size of business and the level of credit risk established by the credit rating system.

The discretionary loan amount approval limit ranges from W50 million for secured retail loans with a credit rating of B-, which are subject to approvals by the retail branch manager, to W120 billion for secured loans with a credit rating of AAA, which are subject to approvals by the Master Credit Officer Committee. Any loans exceeding the maximum discretionary loan amount approval limit must be approved by the Credit Review Committee or Loan Management Committee.

For example, loans that exceed the maximum discretionary approval limit set by the Master Credit Officer Committee are evaluated and approved by the Loan Management Committee, which is composed of department heads specializing in loans at Shinhan Bank and has the authority to approve loans of up to W 50 billion for large corporations and up to W30 billion for other enterprises. Any loans exceeding this approval limit must be approved by the Credit Review Committee. For SOHO borrowers with a credit rating of B-, the Credit Review Committee evaluates and approves unsecured loans in excess of W40 billion and secured loans in excess of W45 billion, whereas for large corporate borrowers with a credit rating of AAA, the Credit Review Committee evaluates and approves unsecured loans in excess of W110 billion and secured loans in excess of W170 billion.

Credit Review and Monitoring

Shinhan Bank continually reviews and monitors credit risks primarily with respect to borrowers. In particular, Shinhan Bank’s automated early warning system conducts daily examination for borrowers using financial and non-financial factors, and the branch manager and the credit officer must conduct periodic loan monitoring and report to an independent Credit Review Department which analyzes the results in detail and adjusts monitoring grades and credit ratings accordingly. Based on these reviews, Shinhan Bank adjusts a borrower’s credit rating, credit limit and credit policies. In addition, the group credit ratings of the main debtor groups, if applicable, may be adjusted followed by a periodic review of the main debtor groups, as identified by the Governor of the Financial Supervisory Service based on their outstanding credit exposures. Shinhan Bank also continually reviews other factors, such as industry-specific conditions for the borrower’s business and its domestic and overseas asset base and operations, in order to ensure that the assigned ratings are appropriate. The Credit Review Department provides credit review reports, independent of underwriting, to the Chief Risk Officer on a monthly basis.

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The early warning system performs automatic daily checks for borrowers to whom Shinhan Bank has credit exposure (which represents the total outstanding amount due from a borrower, net of collateral for deposit, installment savings, guarantees and import guarantee money). When the early warning systems detect warning signals, such signals and other findings from the loan monitoring are reviewed by the Credit Review Department. In addition, Shinhan Bank carries out credit review in a timely manner on each borrower in accordance with changes in credit risk factors based on changes in the economic environment. The results of such credit review are continually reported to the Chief Risk Officer of Shinhan Bank.

Depending on the nature of the signals detected by the early warning system, a borrower may be classified as “worsening credit” and become subject to evaluation for a possible downgrade in credit rating, or may be initially classified as “showing early warning signs” or become reinstated to the “normal borrower” status. For borrowers classified as “showing early warning signs,” the relevant branch manager gathers information and conducts a review of the borrower to determine whether the borrower should be classified as a worsening credit or whether to impose management improvement warnings or implement joint creditors’ management. If the borrower becomes non-performing, Shinhan Bank’s collection department directly manages such borrower’s account in order to maximize recovery rate, and conducts auctions, court proceedings, sale of assets or corporate restructuring as needed.

Pursuant to the foregoing credit review and monitoring procedures and in order to promptly prevent deterioration of loan qualities, Shinhan Bank classifies potentially problematic borrowers into (i) borrowers that show early warning signals, (ii) borrowers that require precaution, (iii) borrowers that require observation and (iv) normal borrowers, and treats them differentially accordingly.

In order to curtail delinquency among its corporate customers, Shinhan Bank primarily takes the following measures: (i) systematic monitoring of borrowers with outstanding loans, (ii) heightened monitoring of borrowers with bad credit history and/or borrowers that belong to troubled industries and (iii) assignment of industry-specific lending caps, as adjusted for whether specific industries are particularly sensitive to general business cycles and/or are troubled at a given time.

Systematic monitoring of borrowers with outstanding loans. Shinhan Bank currently applies a heightened monitoring system to corporate borrowers with outstanding loans (other than guaranteed loans and loans secured by specified types of collaterals such as deposits with us or letters of credit). Under this monitoring system, each borrower is assigned to one of the following ratings:

•

“Normal Company” — a borrower who is determined to have a low probability of insolvency with a credit rating above CCC (sub-borrower rating applicable);

•

“Observation Company” — a borrower that carries some risk of affecting the corporate insolvency in the future and is subject to consistent observation to detect any change of such risk with a credit rating above CCC (sub-borrower rating applicable);

•

“Precaution Company” — a borrower with a possibility of insolvency due to an increase in risk of default and therefore requires detailed inspection of the credit quality of such borrower and precaution in extending any further loans;

•

“Early Warning Company” — a borrower with a high possibility of insolvency; and

•

“Problematic Reorganized Company” — a borrower currently undergoing rehabilitation procedures, such as management improvement plans, workout or corporate recovery or showing no signs of recovery.

Shinhan Bank conducts systematic monitoring of the foregoing borrowers at intervals depending on the borrower’s monitoring grade determined by the early warning system (for example, every 3 or 6 months for an “Observation Company”, and 3 months for borrowers with a monitoring grade below “Precaution Company” or

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borrowers with a credit rating below CCC, and no regular monitoring for a “Normal Company”). In addition, the Review Credit Officer may request more frequent monitoring if the borrower is showing signs of deteriorated credit quality. For borrowers with outstanding loan amounts of W2 billion or more, Shinhan Bank also monitors the revenues and earnings of such borrower on a quarterly basis within five to seven weeks following the end of each quarter depending on the borrower’s credit profile.

Heightened monitoring of borrowers with bad credit history and/or borrowers that belong to troubled industries. In addition to the systematic monitoring discussed above, Shinhan Bank also carries out additional monitoring for borrowers that, among others, (i) are rated as “requiring observation,” “requiring precaution” or “with early warning signs” as noted above, (ii) have prior history of delinquency or restructuring or (iii) have borrowings that are classified as substandard or below. Based on the heightened monitoring of these borrowers, Shinhan Bank adjusts contingency planning as to how the overall asset quality of a specific industry should be managed for each phase of the business cycle, how Shinhan Bank should limit or reduce its credit exposure to such borrowers, and how our group-wide delinquency and non-performing ratio would be changed, among other things.

Credit Risk Assessment and Control

In order to assess credit risk in a systematic manner, Shinhan Bank has developed and upgraded systems designed to quantify credit risk based on selection and monitoring of various statistics, including delinquency rate, non-performing loan ratio, expected loan losses and weighted average risk rating.

Shinhan Bank controls loan concentration by monitoring and managing loans at two levels: portfolio level and individual loan account level. In order to maintain portfolio-level credit risk at an appropriate level, Shinhan Bank manages its loans using value-at-risk (“VaR”) limits for the entire bank as well as for each of its business units. In order to prevent concentration of risk in a particular borrower or borrower class, Shinhan Bank also manages credit risk by borrower, industry, country and other detailed categories.

Shinhan Bank measures credit risk using internally accumulated data. Shinhan Bank measures expected and unexpected losses with respect to total assets monthly, which Shinhan Bank refers to when setting risk limits for, and allocating capital to, its business groups. Expected loss is calculated based on the probability of default, the loss given default, the exposure at default and the past bankruptcy rate and recovery rate, and Shinhan Bank provides allowance for credit losses accordingly. Shinhan Bank makes provisioning at a level which is the higher of the Financial Supervisory Service requirement or Shinhan Bank’s internal calculation. Unexpected loss is predicted based on VaR, which is used to determine compliance with the aggregate credit risk limit for Shinhan Bank as well as the credit risk limit for the relevant department within Shinhan Bank. Shinhan Bank uses the AIRB method as proposed by the Basel Committee to compute VaR at the account-specific level as well as to measure risk adjusted performance.

Credit Risk Management of Shinhan Card

Major policies for Shinhan Card’s credit risk management are determined by Shinhan Card’s Risk Management Council, and Shinhan Card’s Risk Management Committee is responsible for approving them. Shinhan Card’s Risk Management Council is headed by the Chief Risk Officer, and also comprises of the heads of each business unit, supporting unit and relevant department at Shinhan Card. Shinhan Card’s Risk Management Council convenes at least once every month and may also convene on an ad hoc basis as needed. Shinhan Card’s Risk Management Committee is comprised of at least two directors, with the majority of the committee members being outside directors. Shinhan Card’s Risk Management Committee convenes at least once every quarter and may also convene on an ad hoc basis as needed.

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The risk of loss from default by the cardholders or credit card loan borrowers is Shinhan Card’s greatest credit risk. Shinhan Card manages its credit risk based on the following principles:

•

achieve profit at a level corresponding to the level of risks involved;

•

improve asset quality and achieve an optimal mix of asset portfolios; and

•

closely monitor borrower’s ability to repay the debt.

Credit Card Approval Process

Shinhan Card uses an automated credit scoring system to approve credit card applications or credit card authorizations. The credit scoring system is divided into two sub-systems: the behavior scoring system and the application scoring system. The behavior scoring system is based largely on the credit history of the cardholder or borrower, and the application scoring system is based largely on personal credit information of the applicant. For credit card applicants with whom we have an existing relationship, Shinhan Card’s credit scoring system considers internally gathered information such as the ability to repay, total assets, the length of the existing relationship and the applicant’s contribution to Shinhan Card’s profitability. The credit scoring system also automatically conducts credit checks on all credit card applicants. Shinhan Card gathers information about the applicant’s transaction history with financial institutions, including banks and credit card companies, from a number of third party credit reporting agencies including, among others, National Information & Credit Evaluation Inc. and Korea Credit Bureau. These credit checks reveal a list of the delinquent customers of all credit card issuers in Korea.

If a credit score assigned to an applicant is above the minimum threshold, the application is approved unless overridden based on other considerations such as delinquencies with other credit card companies. For a credit card application by a long-standing customer with a good credit history, Shinhan Card may, on a discretionary basis, approve the application notwithstanding the assigned credit score unless overridden by other considerations. All of these factors also serve as the basis for setting a credit limit for approved applications.

The following describes the process of how Shinhan Card sets credit limits for credit cards, cash advances and card loans:

•

Credit purchase and cash advance limits — These limits are set based on the applicant’s limit request and Shinhan Card’s credit screening criteria. Unless a cardholder requests a reduction in the credit purchase and/or cash advance limit, Shinhan Card is required to provide prior notice to the cardholder for any reduction in such cardholder’s limit. However, if the account holder defaults or the cardholder’s credit limit is reduced according to the terms of the card agreement, Shinhan Card may lower the credit limit before notifying the account holder.

•

Card loan limit — This limit is set monthly by Shinhan Card based on the cardholder’s credit rating and transaction history. The card loan limit can be adjusted monthly based on the cardholder’s credit standing without prior notification.

Monitoring

Shinhan Card continually monitors all cardholders and accounts using a behavior scoring system. The behavior scoring system predicts a cardholder’s payment pattern by evaluating the cardholder’s credit history, card usage and amounts, payment status and other relevant data. The behavior score is recalculated each month and is used to manage the accounts and approval of additional loans and other products to the cardholder. Shinhan Card also uses the scoring system to monitor its overall risk exposure and to modify its credit risk management strategy.

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Loan Application Review and On-going Credit Review

When reviewing new applications and conducting an ongoing credit review for retail loans, installment purchase loans and personal leases, Shinhan Card uses criteria substantially similar to those used in the credit underwriting system and the credit review system for cardholders. For retail loans, installment purchase loans and personal leases to existing cardholders, Shinhan Card reviews their card usage history in addition to other factors such as their income, occupation and assets.

Fraud Loss Prevention

Shinhan Card seeks to minimize losses from the fraudulent use of credit cards issued by it. Shinhan Card focuses on preventing fraudulent uses and, following the occurrence of a fraudulent use, makes investigations in order to make the responsible party bear the losses. Misuses of lost credit cards account for a substantial majority of Shinhan Card’s fraud-related losses. Through its fraud loss prevention system, Shinhan Card seeks to detect, on a real-time basis, transactions that are unusual or inconsistent with prior usage history and calls are made to the relevant cardholders to confirm their purchases. A team at Shinhan Card dedicated to investigating fraud losses also examines whether the cardholder was at fault by, for example, not reporting a lost card or failing to endorse the card, or whether the relevant merchant was negligent in checking the identity of the user. Fault may also lie with delivery companies that fail to deliver credit cards to the relevant applicant. In such instances, Shinhan Card attempts to recover fraud losses from the responsible party. To prevent misuse of a card as well as to manage credit risk, Shinhan Card’s information technology system will automatically suspend the use of a card (i) when, as a result of ongoing monitoring, fraudulent use or loss of the card is suspected based on the account holder’s credit score, or (ii) at the request of the account holder.

Approximately 94% of Shinhan Card’s cardholders consent to Shinhan Card’s accessing their travel records to detect any misuse of credit cards while they are traveling abroad. Shinhan Card also offers cardholders additional fraud protection through a fee-based texting service. At the cardholder’s option, Shinhan Card notifies the cardholder of any credit card activity in his or her account by sending a text message to his or her mobile phone. This notification service allows customers to quickly and easily identify any fraudulent use of their credit cards.

Credit Risk Management of Shinhan Securities

In accordance with the guidelines of the Financial Supervisory Service, Shinhan Securities assesses its credit risks (including through VaR analyses) and allocates the maximum limit for the credit amount at risk by department. Shinhan Securities also assesses the counterparty risks in all credit-related transactions, such as loans, acquisition financings and derivative transactions and takes corresponding risk management measures. In assessing the credit risk of a corporate counterparty, Shinhan Securities considers such counterparty’s corporate credit rating obtained from Shinhan Group Corporate Credit Rating System. Through its risk management system, Shinhan Securities also closely monitors credit risk exposures by counterparty, industry, conglomerates, credit ratings and country. Shinhan Securities conducts credit risk stress tests on a daily basis based on probability of default and also conducts more advanced stress tests from time to time, the results of which are then reported to its management as well as the Group Chief Risk Officer to support group-wide credit risk management.

Credit Risk Management of Shinhan Life Insurance

Shinhan Life Insurance also assesses credit risks for all of its credit-related transactions, including the provision of loans and acquisitions of financial instruments. Shinhan Life Insurance conducts additional risk reviews for new types of investments and financial instruments, such as those denominated in currencies it previously did not deal with. In assessing the credit risk of corporate customers, Shinhan Life Insurance considers factors such as the corporation’s credit rating obtained from Shinhan Group Corporate Credit Rating

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System. Through its risk management system Shinhan Life Insurance conducts credit risk monitoring based on the credit history of debtors. To closely monitor credit risk, Shinhan Life Insurance’s loan review department performs periodic loan review of its loan assets and plans on-site inspections where necessary. Furthermore, in the retail business, Shinhan Life Insurance operates its own credit-scoring system to assess credit risk and update customers’ behavior scores.

Market Risk Management

Market risk is the risk of loss generated by fluctuations in market prices such as interest rates, foreign exchange rates and equity prices. The principal market risks to which we are exposed are interest rate risk and, to a lesser extent, foreign exchange and equity price risk. These risks stem from our trading and non-trading activities relating to financial instruments such as loans, deposits, securities and financial derivatives. We divide market risk into risks arising from trading activities and risks arising from non-trading activities.

Our market risks arise primarily from Shinhan Bank, and to a lesser extent, Shinhan Securities, our securities trading and brokerage subsidiary, which faces market risk relating to its trading activities.

Shinhan Bank’s Risk Management Committee establishes overall market risk management principles for both the trading and non-trading activities of Shinhan Bank. Based on these principles, the Risk Policy Committee acts as the executive decision-making body in relation to Shinhan Bank’s market risks in terms of setting its risk management policies and risk limits in relation to market risks and assets and controlling market risks arising from trading and non-trading activities of Shinhan Bank. The Risk Policy Committee consists of deputy presidents in charge of Shinhan Bank’s seven business groups and Shinhan Bank’s Chief Risk Officer and the Chief Financial Officer. At least on a monthly basis, the Risk Policy Committee reviews and approves reports relating to, among others, the position and market risk capital requirement with respect to Shinhan Bank’s trading activities and the position and market value analysis and net interest income simulation with respect to its non-trading activities. In addition, Shinhan Bank’s Risk Engineering Department comprehensively manages market risks on an independent basis from Shinhan Bank’s operating departments, and functions as the middle office of Shinhan Bank. Shinhan Bank measures market risk with respect to all assets and liabilities in bank accounts and trust accounts in accordance with the regulations promulgated by the Financial Services Commission.

Shinhan Securities manages its market risk based on its overall risk limit established by its risk management committee as well as the risk limits and detailed risk management guidelines for each product and department established by its Risk Management Working Committee. Shinhan Securities’ Risk Management Working Committee is the executive decision-making body for managing market risks related to Shinhan Securities, and determines, among other things, Shinhan Securities’ overall market risk management policies and strategies, and assesses and approves trading activities and limits. In addition, Shinhan Securities’ Risk Management Department manages various market risk limits and monitors operating conditions on an independent basis from Shinhan Securities’ operating departments. Shinhan Securities assesses the adequacy of these limits at least annually. In addition, Shinhan Securities assesses the market risks of its trading assets. The assessment procedure is based on the standard procedures set by the Financial Supervisory Service as well as an internally developed model. Shinhan Securities assesses the risk amount and VaR, and manages the risk by setting a risk limit per sector as well as a VaR limit.

Shinhan Life Insurance manages its market risk based on its overall risk limit established by its risk management committee. Shinhan Life Insurance manages market risk in regard to assets that are subject to trading activities and foreign exchange positions. Shinhan Life Insurance assesses the market risk amount and the 10-day VaR, a procedure based on the delta-normal method, and manages market risk by setting a 10-day VaR limit. Shinhan Life Insurance assessed the adequacy of these limits at least annually.

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Shinhan Card does not have any assets with significant exposure to market risks and, therefore, does not maintain a risk management policy regarding market risks. Shinhan Card manages its market risk based on its internal risk management regulations.

We use financial information prepared on a separate basis according to IFRS for the market risk management of our subsidiaries and, unless otherwise specified herein, financial information in this annual report presented for quantitative market risk disclosure relating to our subsidiaries have been prepared in accordance with IFRS on a separate basis.

Market Risk Exposure from Trading Activities

Shinhan Bank’s trading activities principally consist of:

•

trading activities to realize short-term profits from trading in the equity and debt securities markets and the foreign currency exchange markets based on Shinhan Bank’s short-term forecast of changes in market situation and customer demand, for its own account as well as for the trust accounts of Shinhan Bank’s customers; and

•

trading activities primarily to realize profits from arbitrage transactions involving derivatives such as swaps, forwards, futures and options, and, to a lesser extent, to sell derivative products to Shinhan Bank’s customers and to cover market risk associated with those trading activities.

Shinhan Securities’ trading activities principally consist of trading for customers and for proprietary accounts equity and debt securities and derivatives based on stock prices, stock indexes, interest rates, foreign currency exchange rates and commodity prices.

As a result of these trading activities, Shinhan Bank is exposed principally to interest rate risk, foreign currency exchange rate risk and equity risk, and Shinhan Securities is exposed principally to equity risk and interest rate risk.

Interest Rate Risk

Shinhan Bank’s exposure to interest rate risk arises primarily from Won-denominated debt securities, directly held or indirectly held through beneficiary certificates, and, to a lesser extent, from interest rate derivatives. Shinhan Bank’s exposure to interest rate risk arising from foreign currency-denominated trading debt securities is minimal since its net position in those securities is not significant. As Shinhan Bank’s trading accounts are marked-to-market daily, it manages the interest rate risk related to its trading accounts using the standardised approach capital requirement.

Shinhan Securities’ interest rate risk arises primarily from management of its interest rate-sensitive asset portfolio, which mainly consists of debt securities, interest rate swaps and government bond futures, and the level of such risk exposure depends largely on the variance between the interest rate movement assumptions built into the asset portfolio and the actual interest rate movements and the spread between a derivative product and its underlying assets. Shinhan Securities quantifies and manages the interest rate-related exposure by daily conducting VaR and stress tests on a marked-to-market basis.

Foreign Currency Exchange Rate Risk

Shinhan Bank’s exposure to foreign currency exchange rate risk mainly relates to its assets and liabilities, including derivatives such as foreign currency forwards and futures and currency swaps, which are denominated in currencies other than the Won. Shinhan Bank manages foreign currency exchange rate risk, including the corresponding risks faced by its overseas branches, on a consolidated basis by covering all of its foreign exchange spot and forward positions in both trading and non-trading accounts.

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Shinhan Bank’s net foreign currency open position represents the difference between its foreign currency assets and liabilities as offset against forward foreign currency positions, and is Shinhan Bank’s principal exposure to foreign currency exchange rate risk. The Risk Policy Committee oversees Shinhan Bank’s foreign currency exposure for both trading and non-trading activities by establishing limits for the net foreign currency open position, loss limits and VaR limits. Shinhan Bank centrally monitors and manages its foreign exchange positions through its Sales & Trading Center (“S&T Center”). Dealers in the S&T Center manage Shinhan Bank’s consolidated position within preset limits through spot trading, forward contracts, currency options, futures and swaps and foreign currency swaps. Shinhan Bank sets a limit for net open positions by currency. The limits for currencies other than the U.S. Dollar, Japanese Yen, Euro and Chinese Yuan are set in a conservative manner in order to minimize trading in such currencies.

Shinhan Securities faces foreign currency exchange rate risk in relation to the following product offerings: currency forwards, currency swaps and currency futures. Shinhan Securities centrally monitors and manages transactions involving such products through its Fixed Income, Currency & Commodities Departments. Shinhan Securities’ Risk Management Working Committee, which is delegated with the authority to approve foreign currency-related transactions and limits on the related open positions, manages the related foreign exchange risk by setting nominal limits on the amounts of foreign exchange-related products and monitoring compliance with such limits on a daily basis. As of December 31, 2024, Shinhan Securities’ net open position related to foreign currency-related products was US$1,388 million, and its open positions related to the sale of Won-U.S. Dollar forwards and Won-U.S. Dollar futures were US$905 million and US$74 million, respectively.

Shinhan Capital manages its foreign exchange risk resulting from the difference in its foreign currency assets and liabilities through derivative transactions such as forwards or swaps and maintains its net exposure at US$0.3 million.

The net open foreign currency positions held by our other subsidiaries are insignificant.

The following table shows Shinhan Bank’s net foreign currency open positions As of December 31, 2022, 2023 and 2024. Positive amounts represent long exposures and negative amounts represent short exposures.


	As of December 31,
Currency	2022		2023		2024

	(In millions of US$)
U.S. Dollars	$	40.8	$	663.7	$	(21.4	)
Japanese Yen		467.7		494.7		73.2
Euro		5.3		7.8		55.4
Others		2,320.9		2,344.2		2,637.2

Total	$	2,834.6	$	3,510.3	$	2,744.4

Equity Risk

Shinhan Bank’s equity risk related to trading activities mainly involves trading equity portfolios of Korean companies and Korea Stock Price Index futures and options. The trading equity portfolio consists of stocks listed on the KRX KOSPI Market or the KRX KOSDAQ Market of the Korea Exchange and nearest-month or second nearest-month futures contracts under strict limits on diversification as well as limits on positions. Shinhan Bank maintains strict scrutiny of these activities in light of the volatility in the Korean stock market and closely monitors the loss limits and the observance thereof. Although Shinhan Bank holds a substantially smaller amount of equity securities than debt securities in its trading accounts, the VaR of trading account equity risk is generally higher than that of trading account interest rate risk due to high volatility in the value of equity securities. As of December 31, 2022, 2023 and 2024, Shinhan Bank held W74.0 billion, W30.8 billion and W28.6 billion, respectively, of equity securities in its trading accounts (including the trust accounts).

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Shinhan Securities’ equity risk related to trading activities also mainly involves the trading of equity portfolio of Korean companies and Korea Stock Price Index futures and options. As of December 31, 2022, 2023 and 2024, the total amount of equity securities at risk held by Shinhan Securities was W21.7 billion, W33.9 billion and W28.4 billion, respectively.

Equity positions held by our other subsidiaries are insignificant.

Management of Market Risk from Trading Activities

The following tables present an overview of market risk, measured by the standardised approach capital requirement, from trading activities of Shinhan Bank and Shinhan Securities, respectively, as of and for the year ended December 31, 2024. For market risk management purposes, Shinhan Bank includes in the computation of total regulatory capital requirement its trading portfolio in bank accounts and assets in trust accounts, in each case, for which it guarantees principal or fixed return in accordance with the Financial Services Commission regulations.


	Trading Portfolio Risk for the Year 2024⁽¹⁾
Shinhan Bank	Average		Minimum		Maximum		As of December 31, 2024

	(in billions of Won)
Sensitivities-based method risk
GIRR	W	114.64	W	139.67	W	89.66	W	116.50
CSR: non-securitisations		145.63		167.13		128.87		129.60
CSR: securitisations (non-CTP)		26.42		34.92		17.94		27.93
CSR: securitisations (CTP)		—		—		—		—
Equity		44.57		66.31		25.53		28.58
FX		495.58		565.66		369.00		369.00
Commodity		0.20		0.39		—		0.20

Total		825.50		880.84		671.81		671.81

Default risk
Non-securitisation		106.33		112.42		98.70		98.70
Securitisation(non-CTP)		57.32		66.46		50.18		60.87
Securitisation(CTP)		—		—		—		—
Total		163.65		177.35		152.30		159.57
The residual risk		2.20		3.17		1.72		2.98

Total ⁽¹⁾	W	991.35	W	1,056.74	W	928.26	W	834.36

Notes:

(1)	Includes trading portfolios in Shinhan Bank’s bank accounts and assets in trust accounts, in each case, for which it guarantees principal or fixed return.

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	Trading Portfolio VaR for the Year 2024
	Average			Minimum			Maximum			As of December 31, 2024
	(In billions of Won)
Shinhan Securities:⁽¹⁾
Interest rate	W	26.96		W	12.71		W	66.28		W	15.66
Equities		18.43			3.74			42.73			14.32
Foreign exchange		49.51			14.05			205.68			30.31
Option volatility⁽³⁾		34.94			4.41			82.21			42.70
Less: portfolio diversification⁽⁴⁾		(72.42	)		(7.63	)		(296.96	)		(41.55	)

Total VaR	W	57.42		W	27.27		W	99.93		W	61.45

Notes:

(1)	Shinhan Securities’ 10-day VaR is based on a 99.9% confidence level.

(2)	Includes both trading and non-trading accounts as Shinhan Securities manage foreign exchange risk on a total position basis.

(3)	Volatility implied from the option price using the Black-Scholes or a similar model.

(4)	Calculation of portfolio diversification effects is conducted on different days’ scenarios for different risk components. Total VaRs are less than the simple sum of the risk component VaRs due to offsets resulting from portfolio diversification.

Shinhan Bank generally manages its market risk from the trading activities of its portfolios on an aggregated basis. To control its trading portfolio market risk, Shinhan Bank uses position limits, market risk capital requirement limits, stop loss limits, Greek limits and stressed loss limits. In addition, it establishes separate limits for investment securities. Shinhan Bank maintains risk control and management guidelines for derivative trading based on the regulations and guidelines promulgated by the Financial Services Commission, and measures market risk from trading activities to monitor and control the risk of its operating divisions and teams that perform trading activities. Shinhan Bank manages capital requirement measurements and limits on a daily basis based on automatic interfacing of its trading positions into its market risk measurement system. In addition, Shinhan Bank presets limits on loss, sensitivity, investment and stress for its trading departments and desks and monitors such limits and observance thereof on a daily basis.

Basel III The Standardised Approach Capital Requirement. Shinhan Bank uses the standardised approach for market risk in calculating the Basel III capital requirements. The standardised approach capital requirement is the simple sum of three components: the capital requirement under the sensitivities-based method, the default risk capital (DRC) requirement and the residual risk add-on (RRAO). The capital requirement under the sensitivities-based method must be calculated by aggregating three risk measures – delta, vega and curvature. Delta is a risk measure based on sensitivities of an instrument to regulatory delta risk factors. Vega is a risk measure based on sensitivities to regulatory vega risk factors. Curvature is a risk measure which captures the incremental risk not captured by the delta risk measure for price changes in an option. Curvature risk is based on two stress scenarios involving an upward shock and a downward shock for each regulatory risk factor. The DRC requirement captures the jump-to-default risk for instruments subject to credit risk. However, since not all market risks can be captured in the standardised approach, an RRAO, the sum of gross notional amounts of the instruments bearing residual risks, multiplied by a risk weight is calculated in addition to other capital requirements within the standardised approach to ensure sufficient coverage of market risks.

Shinhan Securities currently uses the same 10-day 99.9% confidence level-based historical VaR for purposes of calculating its “economic” capital used for internal management purposes, although such model is not subject to regulatory review or reporting requirements. In addition, Shinhan Securities applies this VaR as a risk limit for the entire company as well as individual departments and products, and the adequacy of such VaR is reviewed by way of daily back-testing. When computing VaR, Shinhan Securities does not assume any particular probability distribution and calculates it through a simulation of the “full valuation” method based on

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changes of market variables such as stock prices, interest rates and foreign exchange rates in the past one year. For Shinhan Securities, the amount of losses (either actual or virtual) exceeded the one-day 99.9% confidence level-based VaR amount zero times in 2022, 2023 and 2024.

Value-at-risk is a commonly used market risk management technique. However, VaR models have the following shortcomings:

•

VaR estimates possible losses over a certain period at a particular confidence level using past market movement data. Past market movement, however, is not necessarily a reliable indicator of future events, particularly those that are extreme in nature;

•

VaR may underestimate the probability of extreme market movements;

•

The 99.9% confidence level does not take into account or provide indication of any losses that might occur beyond this confidence level; and

•

VaR does not capture all complex effects of various risk factors on the value of positions and portfolios and could underestimate potential losses.

Currently, Shinhan Securities conduct back-testing of VaR results against actual outcomes on a daily basis.

Shinhan Bank operates an integrated market risk management system which manages Shinhan Bank’s Won-denominated and foreign-denominated accounts. This system uses historical simulation to measure both linear risks arising from products such as equity and debt securities and nonlinear risks arising from other products including options. We believe that this system enables Shinhan Bank to generate elaborate and consistent VaR information and to perform sensitivity analysis and back testing in order to check the validity of the models on a daily basis. Shinhan Life Insurance also measures market risks based on a VaR analysis.

Stress test. In addition to the standardised approach capital requirement, Shinhan Bank performs stress tests to measure market risk. As the standardised approach capital requirement assumes normal market situations, Shinhan Bank assesses its market risk exposure to unlikely abnormal market fluctuations through the stress test. Stress test is a valuable supplement to regulatory capital requirement since capital requirement does not cover potential loss if the market moves in a manner which is outside Shinhan Bank’s normal expectations. Stress test projects the anticipated change in value of holding positions under certain scenarios assuming that no action is taken during a stress event to change the risk profile of a portfolio.

Shinhan Bank uses 16 relatively simple but fundamental scenarios for stress testing by taking into account four market risk components: foreign currency exchange rates, stock prices, Won-denominated and U.S. dollar-denominated interest rates, and volatility of each component. For the worst case scenario, Shinhan Bank assumes instantaneous and simultaneous movements in four market risk components: appreciation of the Won by 20%, a decrease in Korea Exchange Composite Index by 30%, an increase or a decrease in Won-denominated or U.S. dollar-denominated interest rates by 75 basis points each, respectively, and volatility rate of each component of 35%. Under this worst-case scenario, the market value of Shinhan Bank’s trading portfolio would have declined by W943 billion as of December 31, 2024. Shinhan Bank performs stress test on a daily basis and reports the results to its Risk Policy Committee on a monthly basis and its Risk Management Committee on a quarterly basis.

Shinhan Securities uses nine scenarios for stress tests by taking into account four market risk components: stock prices (both in terms of stock market indices and ß-based individual stock prices), interest rates for Won-denominated loans, foreign currency exchange rates and historical volatility. As of December 31, 2024, under the worst case scenario assuming a 1% point increase in the three-year government bond yield, the market value of Shinhan Securities’ trading portfolio would have fluctuated by W191 billion for one day.

Shinhan Bank sets limits on stress testing for its overall operations. Shinhan Securities sets limits on stress testing for its overall operations as well as at its department level. Although Shinhan Life Insurance does not set

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any limits on stress testing, it monitors the impact of market turmoil or other abnormalities. In the case of Shinhan Bank, Shinhan Securities and Shinhan Life Insurance, if the potential impact is large, their respective head of Risk Management will notify such impact and may request a portfolio restructuring or other proper action.

Hedging and Derivative Market Risk

The principal objective of our group-wide hedging strategy is to manage market risk within established limits. We use derivative instruments to hedge our market risk as well as to make profits by trading derivative products within preset risk limits. Our derivative trading includes interest rate and cross-currency swaps, foreign currency forwards and futures, stock index and interest rate futures, and stock index and currency options.

While we use derivatives for hedging purposes, derivative transactions by nature involve market risk since we take trading positions for the purpose of making profits. These activities consist primarily of the following:

•

arbitrage transactions to make profits from short-term discrepancies between the spot and derivative markets or within the derivative markets;

•

sales of tailor-made derivative products that meet various needs of our corporate customers, principally of Shinhan Bank and Shinhan Securities, and related transactions to reduce their exposure resulting from those sales;

•

taking positions in limited cases when we expect short-swing profits based on our market forecasts; and

•

trading to hedge our interest rate and foreign currency risk exposure as described above.

In accordance with accounting requirements under IFRS 9, “Financial Instruments”, which has replaced IAS 39, “Financial Instruments: Recognition and Measurement” since January 1, 2018, we have implemented internal processes which include a number of key controls designed to ensure that fair value is measured appropriately, particularly where a fair value model is internally developed and used to price a significant product.

Shinhan Bank assesses the adequacy of the fair market value of a new product derived from its internal model prior to the launch of such product. The assessment process involves the following:

•

computation of an internal dealing system market value (based on assessment by the quantitative analysis team of the adequacy of the formula and the model used to compute the market value as derived from the dealing system);

•

computation of the market value as obtained from an outside credit evaluation company; and

•

following comparison of the market value derived from an internal dealing system to that obtained from outside credit evaluation companies, determination as to whether to use the internally developed market value based on inter-departmental consensus.

The dealing system market value, which is used officially by Shinhan Bank after undergoing the assessment process above, does not undergo a sampling process that confirms the value based on review of individual transactions, but is subject to an additional assessment procedure of comparing such value against the profits derived from the dealing systems based on the deal portfolio sensitivity.

Shinhan Securities follows an internal policy as set by its Fair Value Evaluation Committee for computing and assessing the adequacy of fair value of all of its over-the-counter derivative products. Shinhan Securities computes the fair value based on an internal model and internal risk management systems and assesses the adequacy of the fair value through cross-departmental checks as well as comparison against fair values obtained from outside credit evaluation companies.

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Market risk from derivatives is not significant since derivative trading activities of Shinhan Bank and Shinhan Securities are primarily driven by arbitrage and customer deals with highly limited open trading positions. Market risk from derivatives is also not significant for Shinhan Life Insurance as its derivative trading activities are limited to those within preset risk limits and are subject to heavy regulations imposed on the insurance industry. Market risk from derivatives is not significant for our other subsidiaries since the amount of such positions by our other subsidiaries is insignificant.

Market Risk Management for Non-trading Activities

Interest Rate Risk

Interest rate risk represents Shinhan Bank’s principal market risk from non-trading activities. Interest rate risk is the risk of loss resulting from interest rate fluctuations that adversely affect the financial condition and results of operations of Shinhan Bank. Shinhan Bank’s interest rate risk primarily relates to the differences between the timing of rate changes for interest-earning assets and that for interest-bearing liabilities.

Interest rate risk affects Shinhan Bank’s earnings and the economic value of Shinhan Bank’s net assets as follows:

•

Earnings: interest rate fluctuations have an effect on Shinhan Bank’s net interest income by affecting its interest-sensitive operating income and expenses.

•

Economic value of net assets: interest rate fluctuations influence Shinhan Bank’s net worth by affecting the present value of cash flows from the assets, liabilities and other transactions of Shinhan Bank.

Accordingly, Shinhan Bank measures and manages interest rate risk for non-trading activities by taking into account the effects of interest rate changes on both its income and net asset value. Shinhan Bank measures and manages interest rate risk on a daily and monthly basis with respect to all interest-earning assets and interest-bearing liabilities in Shinhan Bank’s bank accounts (including derivatives denominated in Won which are principally interest rate swaps entered into for the purpose of hedging) and in trust accounts, except that Shinhan Bank measures VaRs on a monthly basis. Most of Shinhan Bank’s interest-earning assets and interest-bearing liabilities are denominated in Won.

Interest Rate Risk Management

The principal objectives of Shinhan Bank’s interest rate risk management are to generate stable net interest income and to protect Shinhan Bank’s net asset value against interest rate fluctuations. Through its asset and liability management system, Shinhan Bank monitors and manages its interest rate risk based on various analytical measures such as interest rate gap, duration gap and net present value and net interest income simulations, and monitors on a monthly basis its interest rate VaR limits, interest rate earnings at risk (“EaR”) limits and interest rate gap ratio limits. Shinhan Bank measures its interest rate VaR and interest rate EaR based on interest rate risk in the banking book standardized approach presented by the Bank for International Settlements (the “IRRBB standardized approach”). IRRBB, which is part of the Basel capital framework’s Pillar 2 and subject to the Committee’s guidance set out in the 2004 revised principles for the management and supervision of interest rate risk, refers to current or prospective risk to a bank’s capital and earnings arising from adverse movements in interest rates that affect the bank’s banking book position. Interest rate risk is managed by reflecting possible future interest rate environments and customer behavior based on the IRRBB standardized approach. Interest rate VaR is measured by the change in economic value of equity under six types of scenarios (parallel up, parallel down, stiffener, flattener, short-term interest rate-up and short-term interest rate-down). Interest rate EaR is measured by the largest loss amount based on two types of scenarios (parallel up and parallel down). The Risk Policy Committee sets the interest rate risk limits for Shinhan Bank’s Won-denominated and foreign currency-denominated non-trading accounts and trust accounts, and the Risk Management Committee sets Shinhan Bank’s overall interest rate risk limit, in both cases, at least annually. The Risk Management

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Department monitors Shinhan Bank’s compliance with these limits and reports the monitoring results to the Risk Policy Committee on a monthly basis and the Risk Management Committee on a quarterly basis. Shinhan Bank uses interest rate swaps to control its interest rate exposure limits.

Interest rate VaR represents the maximum anticipated loss in a net present value calculation (computed as the present value of interest-earning assets minus the present value of interest-bearing liabilities), whereas interest rate EaR represents the maximum anticipated loss in a net earnings calculation (computed as interest income minus interest expenses) for the immediately following one-year period, in each case, as a result of negative movements in interest rates. Therefore, interest rate VaR is a more expansive concept than interest rate EaR in that the former covers all interest-earning assets and all interest-bearing liabilities, whereas the latter covers only those interest-earning assets and interest-bearing liabilities that are exposed to interest rate volatility for a one-year period.

Hence, for interest rate VaRs, the duration gap (namely, the weighted average duration of all interest-earning assets minus the weighted average duration of all interest-bearing liabilities) can be a more critical factor than the relative sizes of the relevant assets and liabilities in influencing interest rate VaRs. In comparison, for interest rate EaRs, the relative sizes of the relevant assets and liabilities in the form of the “one year or less interest rate” gap (namely, the volume of interest-earning assets with maturities of less than one year minus the volume of interest-bearing liabilities with maturities of less than one year) are the most critical factor in influencing the interest rate EaRs.

On a monthly basis, we monitor whether the non-trading positions for interest rate VaR and EaR exceed their respective limits as described above.

Interest rate VaR cannot be meaningfully compared to the 10-day 99% confidence level based VaR (“market risk VaR”) for managing trading risk principally because (i) the underlying assets are different (namely, non-trading interest-bearing assets as well as liabilities in the case of the interest rate VaR, compared to trading assets only in the case of the market risk VaR), and (ii) interest rate VaR is sensitive to interest rate movements only while the market risk VaR is sensitive to interest rate movements as well as other factors such as foreign currency exchange rates, stock market prices and option volatility.

Even if comparison were to be made between the interest rate VaR and the interest rate portion only of the market risk VaR, we do not believe such comparison would be meaningful since the interest rate VaR examines the impact of interest rate movements on both assets and liabilities (which will likely have offsetting effects), whereas the interest rate portion of the market VaR examines the impact of interest rate movements on assets only.

Shinhan Bank uses various analytical methodologies to measure and manage its interest rate risk for non-trading activities on a daily and monthly basis, including the following analyses:

•

Interest rate gap analysis;

•

Duration gap analysis;

•

Market value analysis; and

•

Net interest income simulation analysis.

Interest Rate Gap Analysis

Shinhan Bank performs an interest gap analysis to measure the difference between the amount of interest-earning assets and that of interest-bearing liabilities at each maturity and re-pricing date for specific time intervals by preparing interest rate gap tables in which Shinhan Bank’s interest-earning assets and interest-bearing liabilities are allocated to the applicable time intervals based on the expected cash flows and re-pricing dates.

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On a daily basis, Shinhan Bank performs interest rate gap analysis for Won- and foreign currency-denominated assets and liabilities in its bank and trust accounts. Shinhan Bank’s gap analysis includes Won-denominated derivatives (which are interest rate swaps for the purpose of hedging) and foreign currency-denominated derivatives (which are currency swaps for the purpose of hedging), which are managed centrally at the S&T Center. Through the interest rate gap analysis that measures interest rate sensitivity gaps, cumulative gaps and gap ratios, Shinhan Bank assesses its exposure to future interest risk fluctuations. For interest rate gap analysis, Shinhan Bank assumes and uses the following maturities for different types of assets and liabilities:

•

With respect to the maturities and re-pricing dates of Shinhan Bank’s assets, Shinhan Bank assumes that the maturity of Shinhan Bank’s prime rate-linked loans is the same as that of its fixed-rate loans. Shinhan Bank excludes equity securities from interest-earning assets.

•

With respect to the maturities and re-pricing of Shinhan Bank’s liabilities, Shinhan Bank assumes that money market deposit accounts and “non-core” demand deposits under the Financial Services Commission guidelines have a maturity of one month or less for both Won-denominated accounts and foreign currency-denominated accounts.

•

With respect to “core” demand deposits under the Financial Services Commission guidelines, Shinhan Bank assumes that they have maturities of eight different intervals ranging from one month to five years.

The following tables show Shinhan Bank’s interest rate gaps as of December 31, 2024 for (i) Won-denominated non-trading bank accounts, including derivatives entered into for the purpose of hedging and (ii) foreign currency-denominated non-trading bank accounts, including derivatives entered into for the purpose of hedging.

Won-denominated non-trading bank accounts⁽¹⁾


	As of December 31, 2024
	0-3 Months			3-6 Months			6-12 Months			1-2 Years			2-3 Years			Over 3 Years			Total

	(in billions of Won, except percentages)
Interest-earning assets		171,240			75,194			44,124			37,454			23,415			49,363			400,790
Fixed rates		29,908			18,855			28,250			25,206			17,971			18,482			138,672
Floating rates		140,982			55,378			14,785			12,157			5,254			30,881			259,438
Interest rate swaps		350			960			1,090			90			190			0			2,680

Interest-bearing liabilities		169,798			64,242			88,586			29,319			26,358			30,821			409,125
Fixed liabilities		90,378			48,791			73,538			15,698			12,118			3,048			243,571
Floating liabilities		76,740			15,452			15,047			13,622			14,240			27,773			162,874
Interest rate swaps		2,680			0			0			0			0			0			2,680

Sensitivity gap		1,442			10,951			(44,461	)		8,134			(2,943	)		18,542			(8,334	)
Cumulative gap		1,442			12,393			(32,068	)		(23,934	)		(26,877	)		(8,334	)		(8,334	)
% of total assets		0.36	%		3.09	%		(8.00	)%		(5.97	)%		(6.71	)%		(2.08	)%		(2.08	)%

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Market Value as of December 31, 2024 (for non-trading Won-denominated bank accounts⁽¹⁾)


	Market Value as of December 31, 2024
	Actual		1% Point Increase		Changes

	(In billions of Won)
Interest-earning assets		433,231		418,272		(14,959	)
Interest-bearing liabilities		424,259		411,235		(13,024	)
Gap		8,973		7,037		(1,936	)

Note:

(1)	Includes merchant banking accounts and derivatives for the purpose of hedging.

Net Interest Income Simulation

Shinhan Bank performs net interest income simulation to measure the effects of the change in interest rate on its results of operations. Such simulation uses the deterministic analysis methodology to measure the estimated changes in Shinhan Bank’s annual net interest income (interest income less interest expenses) under the current maturity structure, using different scenarios for interest rates (assuming parallel shifts) and funding requirements. For simulations involving interest rate changes, based on the assumption that there is no change in funding requirements, Shinhan Bank applies three scenarios of parallel shifts in interest rate: (1) no change, (2) a 1% point increase in interest rates and (3) a 1% point decrease in interest rates.

The following table illustrates by way of an example the simulated changes in Shinhan Bank’s annual net interest income for 2024 with respect to Won-denominated interest-earning assets and interest-bearing liabilities, using Shinhan Bank’s net interest income simulation model, assuming (a) the maturity structure and funding requirement of Shinhan Bank as of December 31, 2024 and (b) the same interest rates as of December 31, 2024 and a 1% point increase or decrease in the interest rates.


	Simulated Net Interest Income for 2024
	(For Non-Trading Won-Denominated Bank Accounts⁽¹⁾)
	Assumed Interest Rates						Change in Net Interest Income					Change in Net Interest Income
	No Change		1% Point Increase		1% Point Decrease		Amount (1% Point Increase)		% Change (1% Point Increase)			Amount (1% Point Decrease)			% Change (1% Point Decrease)

	(In billions of Won, except percentages)
Simulated interest income		17,016		19,142		14,891		2,125		12.49	%		(2,125	)		(12.49	)%
Simulated interest expense		9,777		11,457		8,097		1,680		17.18	%		(1,680	)		(17.18	)%
Net interest income		7,239		7,684		6,795		445		6.15	%		(445	)		(6.15	)%

Note:

(1)	Includes merchant banking accounts and derivatives entered into for the purpose of hedging.

Shinhan Bank’s Won-denominated interest-earning assets and interest-bearing liabilities in non-trading accounts have a maturity structure that benefits from an increase in interest rates, because the re-pricing periods for interest-earning assets in Shinhan Bank’s non-trading accounts are, on average, shorter than those of the interest-bearing liabilities in these accounts. Shinhan Bank’s net interest income tends to decrease during times of a decrease in the market interest rates while the opposite is generally true during times of an increase in the market interest rates.

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Interest Rate VaRs for Non-trading Assets and Liabilities

Shinhan Bank measures VaRs for interest rate risk from non-trading activities on a monthly basis. The following table shows, as of and for the year ended December 31, 2024, the VaRs of interest rate mismatch risk for other assets and liabilities, which arises from mismatches between the re-pricing dates for Shinhan Bank’s non-trading interest-earning assets (including available-for-sale investment securities) and those for its interest-bearing liabilities. Under the regulations of the Financial Services Commission, Shinhan Bank includes in calculation of these VaRs interest-earning assets and interest-bearing liabilities in its bank accounts and its merchant banking accounts.

VaR for the Year 2024⁽¹⁾

Average

Minimum

Maximum

As of
December 31

(In billions of Won)

Interest rate mismatch — non-trading assets and
liabilities

1,331

611

1,770

1,286

Note:

(1)	One-year VaR results computed based on the interest rate risk in the banking book standardized approach presented by the Bank for International Settlements. See “— Interest Rate Risk Management.”

Interest Rate Risk for Other Subsidiaries

Shinhan Card monitors and manages its interest rate risk for all its interest-bearing assets and liabilities (including off-balance sheet items) in terms of the impact on its earnings and net asset value from changes in interest rates. Shinhan Card primarily uses interest rate VaR and EaR analyses to measure its interest rate risk.

The interest rate VaR analysis used by Shinhan Card principally focuses on the maximum impact on its net asset value from adverse movements in interest rates and consists of (i) historical interest rate VaR analysis and (ii) interest rate gap analysis. The historical interest rate VaR analysis is made through simulation of net asset value based on the interest rate volatility over a fixed past period to produce expected future interest rate scenarios and computes the maximum value at risk at a 99.9% confidence level by analyzing the net present value distribution under each such scenario. As for interest rate gap analysis, Shinhan Card computes the value at risk based on the duration proxies and interest rate shocks for each time interval as recommended under the Basel Accord.

The interest rate EaR analysis used by Shinhan Card computes the maximum loss in net interest income for a one-year period following adverse movements in interest rates, based on an interest rate gap analysis using the time intervals and the “middle of time band” as recommended under the Basel Accord.

Shinhan Securities measures its interest rate VaR and interest rate EaR based on the IRRBB standardized approach. Interest rate risk is managed by reflecting possible future interest rate environments and customer behavior based on the IRRBB standardized approach. Interest rate VaR is measured by the change in economic value of equity in six types of scenarios – parallel up, parallel down, stiffener, flattener, short-term interest rate-up and short-term interest rate-down. Interest rate EaR is measured by the largest loss amount in two types of scenarios – parallel up and parallel down.

Shinhan Securities uses historical interest rate VaR analysis based on its internal model to monitor and manage its interest rate risk. The historical interest rate VaR analysis is made through simulation of net asset value based on the interest rate volatility over the past three years to compute the maximum value at risk at a 99.9% confidence level. Shinhan Securities also measures its level of IRRBB exposure.

Shinhan Life Insurance monitors and manages its interest rate risk for its interest-bearing assets and liabilities based on simulations of its asset-liability management system. At the 99.5% confidence level, interest

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rate-setting liabilities and assets are evaluated under the deterministic interest rate scenario, and interest rate-linked liabilities are evaluated under 1,000 stochastic interest rate scenarios.

Interest rate risk for our other subsidiaries is insignificant.

Equity Risk

Substantially all of Shinhan Bank’s equity risk relates to its portfolio of common stock in Korean companies. As of December 31, 2024, Shinhan Bank held an aggregate amount of W764.9 billion of equity interest in unlisted foreign companies (including W3.65 billion invested in unlisted private equity funds).

The equity securities in Won held in Shinhan Bank’s investment portfolio consist of stocks listed on the KRX KOSPI Market or the KRX KOSDAQ Market of the Korea Exchange and certain non-listed stocks. Shinhan Bank sets exposure limits for most of these equity securities to manage their related risk. As of December 31, 2024, Shinhan Bank held equity securities in an aggregate amount of W1,691.9 billion in its non-trading accounts, including equity securities in the amount of W373.5 billion that it held, among other reasons, for management control purposes and as a result of debt-to-equity conversion as a part of reorganization proceedings of the companies to which it had extended loans.

As of December 31, 2024, Shinhan Bank did not hold any Won-denominated convertible bonds, Won-denominated exchangeable bonds or Won-denominated bonds with warrants, in each case, in its non-trading accounts. Shinhan Bank does not measure equity risk with respect to convertible bonds, exchangeable bonds or bonds with warrants, and the interest rate risk of these equity-linked securities are measured together with the other debt securities. As such, Shinhan Bank measures interest rate risk VaRs but not equity risk VaRs for these equity-linked securities.

Liquidity Risk Management

Liquidity risk is the risk of insolvency, default or loss due to disparity between inflow and outflow of funds, including the risk of having to obtain funds at a high price or to dispose of securities at an unfavorable price due to lack of available funds. Each of our subsidiaries seeks to minimize liquidity risk through early detection of risk factors related to the sourcing and managing of funds that may cause volatility in liquidity and by ensuring that it maintains an appropriate level of liquidity through systematic management. At the group-wide level, we manage our liquidity risk by conducting monthly stress tests that compare liquidity requirements under normal situations against those under three types of stress situations, namely, our group-specific internal crisis, crisis in the external market and a combination of internal and external crisis. In addition, in order to preemptively and comprehensively manage liquidity risk, we measure and monitor liquidity risk management using various indices, including the “limit management index,” “early warning index” and “monitoring index.”

Shinhan Bank applies the following basic principles for liquidity risk management:

•

raise funds in sufficient amounts, at the optimal time at reasonable costs;

•

maintain liquidity risk at appropriate levels and preemptively manage them through a prescribed risk limit system and an early warning signal detection system;

•

secure stable sources of revenue and minimize actual losses by implementing an effective asset-liability management based on diversified sources of funding with varying maturities;

•

monitor and manage daily and intra-daily liquidity positions and risk exposures for timely payment and settlement of financial obligations due under both normal and crisis situations;

•

conduct periodic liquidity stress test in anticipation of any potential liquidity crisis and establish and implement contingency funding plans in case of an actual crisis; and

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•

consider liquidity-related costs, benefits of and risks in determining the pricing of our products and services, performance evaluations and approval of launching of new products and services.

Each of our subsidiaries manages liquidity risk in accordance with the risk limits and guidelines established internally and by the relevant regulatory authorities. Pursuant to principal regulations applicable to financial holding companies and banks as promulgated by the Financial Services Commission, we, at the holding company level, are required to maintain a liquidity coverage ratio and a foreign currency liquidity coverage ratio. These ratios require us to maintain the relevant ratios above certain minimum levels.

Shinhan Bank manages its liquidity risk within the limits set on Won and foreign currency accounts in accordance with the regulations of the Financial Services Commission. The Financial Services Commission implemented a minimum liquidity coverage ratio requirement for Korean banks, including Shinhan Bank, of at least 90.0% as of January 1, 2017, 95.0% as of January 1, 2018 and 100.0% as of January 1, 2019. Financial Services Commission defines liquidity coverage ratio as high quality liquid assets that can be immediately converted into cash with little or no loss in value, as divided by the net amount of cash outflow for the next 30 day period, under the stress level established according to the liquidity coverage ratio, pursuant to the Regulation on the Supervision of the Banking Business, which was amended as of June 28, 2016 to implement the liquidity coverage ratio requirements under Basel III. In addition to the liquidity coverage ratio, the Financial Supervisory Commission introduced the net stable funding ratio into the Regulation on the Supervision of the Banking Business that came into effect in January 2018. Whereas liquidity coverage ratio is aimed at measuring liquidity for the next 30-day period, net stable funding ratio, calculated as the ratio of available stable funding to required stable funding, is aimed at measuring liquidity for the next one-year period. A bank’s available stable funding is the portion of its capital and liabilities that are safely expected to remain with the bank for more than one year. A bank’s required stable funding is the amount of stable funding that it is required to hold given the liquidity characteristics and residual maturities of its assets and the contingent liquidity risk arising from its off-balance sheet exposures. Shinhan Bank is required by the Financial Services Commission to maintain a net stable funding ratio of at least 100%.

With respect to foreign currency liquidity coverage ratio, the Regulation on the Supervision of the Banking Business requires that financial institutions dealing with foreign exchange affairs (i.e., banks) whose foreign-currency denominated liabilities are equal to or greater than US$500 million or 5% of its total liabilities, as of the end of the immediately preceding half-year period, maintain a foreign currency liquidity coverage ratio of 60% or higher beginning January 1, 2017, 70% or higher beginning January 1, 2018 and 80% or higher beginning January 1, 2019. The term “foreign currency liquidity coverage ratio” means the ratio of high quality liquidity assets to the net cash outflow in respect of foreign-currency denominated assets and liabilities for the next 30 days.

Although the liquidity coverage ratio requirement was temporarily lowered during the COVID-19 pandemic, the liquidity coverage ratio requirement has been restored to 100% since January 1, 2025.

Shinhan Bank’s Treasury Department is in charge of liquidity risk management with respect to Shinhan Bank’s Won and foreign currency funds. The Treasury Department submits Shinhan Bank’s monthly funding and asset management plans to Shinhan Bank’s Asset and Liability Committee for approval, based on the analysis of various factors, including macroeconomic indices, interest rate and foreign exchange movements and maturity structures of Shinhan Bank’s assets and liabilities. Shinhan Bank’s Risk Engineering Department measures Shinhan Bank’s liquidity coverage ratio on a daily basis and net stable funding ratio on a monthly basis and reports whether they are in compliance with the respective limits to Shinhan Bank’s Risk Policy Committee, which sets and monitors Shinhan Bank’s liquidity coverage ratio and net stable funding ratio on a monthly basis.

The following tables show Shinhan Bank’s (i) average liquidity coverage ratio, (ii) average foreign currency liquidity coverage ratio, and (iii) net stable funding ratio, each for the month of December 2024 in accordance with the regulations of the Financial Services Commission.

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Shinhan Bank’s Average Liquidity Coverage Ratio for the Month of December 2024


	For the Month of December 2024
	(in billions of Won, except percentages)
High quality liquid assets (A)	W	93,154
Net cash outflows over the next 30 days (B)		89,899
Cash outflow		122,187
Cash inflow		32,288
Liquidity coverage ratio (A/B)		103.62	%

Shinhan Bank’s Average Foreign Currency Liquidity Coverage Ratio for the Month of December 2024


	For the Month of December 2024
	(in millions of US$, except percentages)
High quality liquid assets (A)	$	7,373
Net cash outflows over the next 30 days (B)		4,850
Cash outflow		17,156
Cash inflow		12,306
Liquidity coverage ratio (A/B)		152.03	%

Shinhan Bank’s Net Stable Funding Ratio for the Month of December 2024


	For the Month of December 2024
	(in billions of Won, except percentages)
Available stable funding (A)	W	336,738
Required stable funding (B)		298,328
Net stable funding ratio (A/B)		112.87	%

Shinhan Bank maintains diverse sources of liquidity to facilitate flexibility in meeting its funding requirements. Shinhan Bank funds its operations principally by accepting deposits from retail and corporate depositors, accessing the call loan market (a short-term market for loans with maturities of less than one month), issuing debentures and borrowing from the Bank of Korea. Shinhan Bank uses the funds primarily to extend loans or purchase securities. Generally, deposits are of shorter average maturity than loans or investments.

Shinhan Card manages its liquidity risk according to the following principles: (i) provide a sufficient volume of necessary funding in a timely manner at a reasonable cost, (ii) establish an overall liquidity risk management strategy, including in respect of liquidity management targets, policy and internal control systems, and (iii) manage its liquidity risk in conjunction with other risks based on a comprehensive understanding of the interaction among the various risks. As for any potential liquidity shortage at or near the end of each month, Shinhan Card maintains liquidity at a level sufficient to withstand credit shortage for three months.

In addition, Shinhan Card manages liquidity risk by setting and complying with specific guidelines for various measures of liquidity, including the breakdown of contractual payment obligations by maturity, overseas funding, the ratio of asset-backed securitized borrowings to the total borrowing, the ratio of requisite liquidity to reserve liquidity, and the ratio of fixed interest rate borrowings to floating interest rate borrowings. Furthermore, Shinhan Card closely monitors various indicators of a potential liquidity crisis, such as the actual liquidity gap ratio (in relation to the different maturities for assets as compared to liabilities), the liquidity buffer ratio. Shinhan Card also has contingency plans in place in case of any emergency or crisis. In managing its liquidity risk, Shinhan Card focuses on a prompt response system based on periodic monitoring of the relevant early signals, stress testing and contingency plan formulations. Shinhan Card identifies its funding needs on a daily, monthly, quarterly and annual basis based on the maturity schedule of its liabilities as well as short-term liquidity needs, based upon which it formulates its funding plans using diverse sources such as corporate debentures, commercial papers, asset-backed securitizations and credit line facilities. When entering into asset-backed securitizations,

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Shinhan Card provides sufficient credit enhancements to avoid triggering early amortization events. In addition, prior to entering into any funding transaction and related derivative transaction, Shinhan Card conducts pre-transaction risk analyses, including in respect of counterparty credit risk and its total exposure limit by country and by financial institution.

Shinhan Card also manages its liquidity risk within the limits set on Won accounts in accordance with the regulations of the Financial Services Commission. Under the Specialized Credit Financial Business Act and the regulations thereunder, credit card companies in Korea are required to maintain a Won liquidity ratio of at least 100.0%.

The following tables show Shinhan Card’s liquidity status and limits for Won-denominated accounts as of December 31, 2024 in accordance with the regulations of the Financial Services Commission.

Shinhan Card’s Won-denominated accounts


	As of December 31, 2024
Won-Denominated Accounts	7 Days or Less		1 Month or Less		3 Months or Less		6 Months or Less		1 Year or Less		Over 1 Year		Over 2 Years		Total

	(In billions of Won, except percentages)
Assets	W	2,299	W	14,805	W	21,666	W	25,999	W	30,962	W	5,572	W	7,774	W	44,308
Liabilities		100		4,410		5,704		7,104		11,796		4,952		21,549		38,296
Liquidity ratio						354.5%

Shinhan Securities manages its liquidity risk for its Won-denominated accounts by setting a limit of W300 billion on each of its seven-day, one-month and three-month liquidity gap, a limit of 119% on its one-month and three-months liquidity ratios and a limit of W70 billion on its liquidity VaR. As for its foreign currency-denominated accounts, Shinhan Securities manages the liquidity risk on a monthly basis in compliance with the guidelines of the Financial Supervisory Service, which requires the seven-day and one-month maturity mismatch ratios to be 0% and -10% or higher, respectively, and the three months liquidity ratio to be 80% or higher.

Our other subsidiaries fund their operations primarily through call money, bank loans, commercial paper, corporate debentures and asset-backed securities. Our holding company acts as a funding vehicle for long-term financing of our subsidiaries whose credit ratings are lower than the holding company, including Shinhan Card and Shinhan Capital, to lower the overall funding costs within regulatory limitations. Under the Monopoly Regulation and Fair Trade Act, however, a financial holding company is prohibited from borrowing funds in excess of 200% of its total stockholders’ equity.

In addition to liquidity risk management under the normal market situations, we have contingency plans to effectively cope with possible liquidity crisis. Liquidity crisis arises when we would not be able to effectively manage the situations with our normal liquidity management measures due to, among other reasons, inability to access our normal sources of funds or epidemic withdrawals of deposits as a result of various external or internal factors, including a collapse in the financial markets or abrupt deterioration of our credit. We have contingency plans corresponding to different stages of liquidity crisis: namely, “alert stage,” “imminent-crisis stage” and “crisis stage,” based on the following liquidity indices:

•

indices that reflect the market movements such as interest rates and stock prices;

•

indices that reflect financial market sentiments, an example being the size of money market funds; and

•

indices that reflect our internal liquidity condition.

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Operational Risk Management

The Basel Committee defines operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems or from other external events. Similarly, we define operational risk as the risks related to our overall management other than credit risk, market risk, interest rate risk and liquidity risk. These include risks arising from system failure, human error, non-adherence to policy and procedures, fraud, inadequate internal controls and procedures or environmental changes and resulting in financial and non-financial loss. We monitor and assess operational risks related to our business operations, including administrative risk, information technology risk (including cyber security risk), managerial risk and legal risk, with a view to minimizing such losses.

To effectively manage operational risk, we have established group-wide operational risk management policies and standardized management criteria. Each of our subsidiaries develops and maintains an operational risk management system, taking into account the size and complexity of each subsidiary. To ensure an appropriate level of operational risk management, we set operational risk limits for each subsidiary and regularly report the status of limit utilization to our Risk Management Committee.

Additionally, we have established and are currently implementing the following procedures for identifying and reporting operational risks:

(a) Recognition and Measurement: We proactively identify and manage the operational risks inherent in our business, taking into account factors such as scale and complexity.

(b) Monitoring and Control: To effectively manage operational risks within appropriate levels, we conduct regular monitoring. Our management identifies, monitors and controls the operational risks associated with individual business units through the risk management meetings conducted by our holding company.

(c) Reporting: In accordance with regulations and guidelines pertaining to operational risks, we report our operational risk management activities periodically, as well as when any significant operational risk management activities arise, to the Group Risk Management Committee.

We have established a three-tier control system which we refer to as the three lines of defense:

(a) Business Units: Responsibilities are assigned to identify, evaluate and manage the operational risks inherent in products, sales activities, operations, and systems to ensure effective overall operational risk management.

(b) Operational Risk Management Division: This division is responsible for developing strategies to identify, assess, control and mitigate operational risks.

(c) Internal Audit: An independent review is conducted to ensure that the operational risk management activities of the business units and the operational risk management division are executed effectively.

In accordance with our operational risk management policy, our subsidiaries periodically report to our management and board of directors the status of operational risk management, including self-assessments of risk controls, key risk indicators, operational risk loss events, ICT risks and third-party outsourcing risks, reflecting the unique characteristics and risk levels of each subsidiary. Additionally, we have calculated operational risk-weighted assets using the Basel III standard method, based on operational risk loss data for incidents with net losses exceeding 25 million won that have occurred during the past ten years. An independent verification department conducts an annual review of the appropriateness of such loss data.

Every six months, based on our assessment of risk profile considering the scale and complexity of our subsidiaries, we designate significant operational risks identified as “Top Operational Risks”. In order to improve our risk management and mitigate these operational risks, we develop and implement measures including policies for the assessment of key risk indicators and risk control measures.

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Additionally, we have implemented strategies to mitigate certain operational risks by subscribing to various insurance policies, such as comprehensive financial institution insurance and electronic financial transaction liability insurance. We monitor the effectiveness of our operational risk mitigation efforts through regular reports to our management and board of directors. Furthermore, in the event of significant operational risk loss incidents, we identify improvement measures through Top Operational Risk assessments to enhance and strengthen our operational risk management system.

We set internal capital limits for operational risks taking into account our risk appetite and monitor to ensure that internal capital is being managed within appropriate limits. We also conduct periodic stress tests to ensure we maintain sufficient capital to withstand potential volatility in and changes to economic forecasts.

Upgrades to Risk Management Systems

Our recent material upgrades in relation to risk management systems are as follows.

Shinhan Financial Group

In May 2015, we developed and implemented a credit review system to unify our corporate credit review and risk measurements, allowing us and our subsidiaries to utilize a uniform and consistent credit review system with respect to each borrower. In addition, in preparation of full implementation of Basel III requirements relating to liquidity coverage ratios for bank holding companies and to enhance our liquidity risk management capabilities, we have implemented a Basel III liquidity coverage ratio risk management system by which we calculate our liquidity coverage ratio each month.

Shinhan Bank

In order to strengthen risk management of its overseas subsidiaries and effectively comply with local and domestic regulations, Shinhan Bank is in the process of laying out a global risk management system network, which records the risk data of its overseas subsidiaries. Shinhan Bank seeks to leverage the development of this system for further overseas expansion and stable growth of existing overseas subsidiaries. To date, Shinhan Bank has completed the development of this system for several of its overseas subsidiaries, including Japan, China, and Vietnam. Shinhan Bank plans to continue expanding this system to its other overseas subsidiaries.

Shinhan Bank has also developed a system to calculate market risk capital requirements for Basel III. The bank has received approval for such system from the Financial Supervisory Service and has been implemented since 2023.

In 2012, Shinhan Bank developed a system for improving collection and recovery of bad assets through enhanced LGD data processing. In addition, in 2012, Shinhan Bank received approvals from the Financial Supervisory Service for upgrades to its credit evaluation modeling for risk assessment of small- to medium-sized enterprises that are not required to be audited by outside accounting firms and for SOHOs, which upgrades related to factoring in the credit profile of the head of such enterprises and SOHOs. In 2014, Shinhan Bank further upgraded the credit evaluation modeling for risk assessment of small- and medium-size enterprises that are not required to be audited by outside accounting firms by entirely revamping the modeling for enterprises subject to outside audits, enterprises that are not subject to outside auditors and enterprise heads. Such upgraded modeling was approved by the Financial Supervisory Service, and Shinhan Bank began implementation of the upgraded system since 2014. In 2014, Shinhan Bank reclassified its credit evaluation models for risk assessment of enterprises into the following four categories: (i) IFRS (enterprises subject to external audits under IFRS as adopted by Korea), (ii) GAAP (enterprises subject to external audits under Generally Accepted Accounting Principles), (iii) small- and medium-size enterprises and (iv) SOHO. Such reclassification was approved by the Financial Supervisory Service, and Shinhan Bank began to implement the system in 2015.

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In addition, in 2013, Shinhan Bank obtained approval from the Financial Supervisory Service to use an internal evaluation model with respect to Basel II credit risks related to Shinhan Bank’s retail and SOHO exposures. In 2016, Shinhan Bank developed a new internal evaluation model and obtained approval from the Financial Supervisory Service to use the new model with respect to Basel II credit risks related to Shinhan Bank’s retail exposures. In addition, Shinhan Bank received another approval in 2016 for LGD data processing using the AIRB approach in order to reflect changes in economic conditions such as prolonged recovery periods and low interest rates, and the newly approved LGD data processing will replace existing LGD data processing for both retail and SOHO exposures. In 2023, Shinhan Bank further upgraded the internal evaluation model for Bank’s retail and SOHO exposures and obtained approval from the Financial Supervisory Service to replace the existing model.

Shinhan Bank also upgraded the asset and liability management system in 2012 in order to timely comply with Basel III, IFRS and other regulatory requirements as well as to upgrade the quality of risk-related data. In 2014, Shinhan Bank upgraded the liquidity coverage ratio and net stable funding ratio systems under Basel III in order to facilitate daily measurement and efficient management.

Following the introduction of the new standard approach for operational risk capital measurement and the Principles for the Sound Management of Operational Risk (PSMOR) in the Basel III framework, Shinhan Bank has re-established the operational risk management system in order to further enhance its operational risk management capabilities.

Shinhan Card

In 2012, Shinhan Card completed further upgrades to its credit risk measurement system in satisfaction of the Basel II standards, as well as other regulatory requirements and internal needs in order to address the ongoing volatility in the economic and regulatory environment. In December 2016, Shinhan Card obtained approval from the Financial Supervisory Service to use a new internal evaluation model with respect to Basel III credit risks related to its retail and SOHO exposures. In 2024, in response to the enhanced regulations on operational risk set forth by supervisory authorities, we reorganized the operational risk management system to clarify the roles of each organization. We also upgraded related management methods, including operational risk measurement, key risk indicators and risk and control self-assessments.

Shinhan Securities

In 2016, Shinhan Securities established a Risk Engineering Team and updated its market risk management system to increase its value assessment capabilities for over-the-counter derivatives, strengthen its VaR risk analysis capabilities and improve various simulation functions. Beginning in 2017, the Risk Engineering Team conducts value assessment and reviews over-the-counter derivatives directly using various enhanced simulation functions such as updated stress tests in order to stabilize financial accounting prices and enhance the risk management of over-the-counter derivatives. In January 2019, the Risk Engineering Team was elevated to a department, becoming the Risk Engineering Department, expanding the scope of products reviewed by the department and strengthening its simulation analysis capabilities.

Shinhan Life Insurance

In 2017, Shinhan Life Insurance updated its interest rate risk measurement system, called the ALM system, in anticipation of IFRS 17 and the K-ICS, a new insurance liability market valuation system designed to replace the existing risk based capital system. In 2018, the new asset liability management system implemented an interest rate risk management system based on the Europe Solvency II standard. The asset liability management system can measure both asset and liability based on marking to market valuation. Shinhan Life Insurance also updated its interest rate risk management system to control net income margin volatility resulting from market interest rate changes and has tailored its business scheme to this system in order to better manage risk and profits

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Supervision and Regulation

Principal Regulations Applicable to Financial Holding Companies

General

The Korean financial holding companies and their subsidiaries are regulated by the Financial Holding Companies Act (last amended on September 14, 2023, Law No. 19700). In addition, Korean financial holding companies and their subsidiaries are subject to the regulations and supervision of the Financial Services Commission and the Financial Supervisory Service.

Pursuant to the Financial Holding Companies Act, the Financial Services Commission regulates various activities of financial holding companies. For instance, it approves the application for setting up a new financial holding company and promulgates regulations on the capital adequacy of financial holding companies and their subsidiaries and other regulations relating to the supervision of financial holding companies.

The Financial Supervisory Service is subject to the instructions and directives of the Financial Services Commission and carries out supervision and examination of financial holding companies and their subsidiaries. In particular, the Financial Supervisory Service sets forth liquidity and capital adequacy requirements for financial holding companies and reporting requirements pursuant to the authority delegated to the Financial Supervisory Service under the Financial Services Commission regulations, pursuant to which financial holding companies are required to submit quarterly reports on business performance, financial status and other matters prescribed in the Presidential Decree of the Financial Holding Companies Act.

Under the Financial Holding Companies Act, the establishment of a financial holding company must be approved by the Financial Services Commission. A financial holding company is required to be mainly engaged in controlling its subsidiaries by holding the shares or equities of the subsidiaries in the amount of not less than 50% of aggregate amount of such financial holding company’s assets based on the latest balance sheet. A financial holding company is prohibited from engaging in any profit-making businesses other than controlling the management of its subsidiaries and certain ancillary businesses as prescribed in the Presidential Decree of the Financial Holding Companies Act which includes the following businesses:

•

financially supporting its subsidiaries and the subsidiaries of its subsidiaries (the “direct and indirect subsidiaries”), including lending properties with economic values such as monies and securities, guaranteeing obligation performance and other direct or indirect transactions involving transactional credit risk;

•

raising capital necessary for the investment in subsidiaries or providing financial support to its direct and indirect subsidiaries;

•

supporting the business of its direct and indirect subsidiaries for the joint development and marketing of new products;

•

supporting the operations of its direct and indirect subsidiaries by providing access to data processing, legal and accounting resources; and

•

pursuing any other activities exempted from authorization, permission or approval under the applicable laws and regulations.

The Financial Holding Companies Act requires every financial holding company (other than any financial holding company that is controlled by any other financial holding company) or its subsidiaries to obtain the prior approval from the Financial Services Commission before acquiring control of another company or to file with the Financial Services Commission a report within thirty days after acquiring such control. Permission to liquidate or to merge with any other company must be obtained in advance from the Financial Services Commission. A financial holding company must report to the Financial Services Commission regarding certain events including:

•

when there is a change of its largest shareholder;

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•

when there is a change of principal shareholders of a bank holding company;

•

when the shareholding of the largest shareholder or a principal shareholder as prescribed under the Financial Holding Companies Act or a person who is in a special relationship with such largest or principal shareholder (as defined under the Presidential Decree of the Financial Holding Companies Act) changes by 1% or more of the total issued and outstanding voting shares of the financial holding company;

•

when there is a change of its name;

•

when there is a cause for dissolution; and

•

when it or its subsidiary ceases to control any of its respective direct and indirect subsidiaries by disposing of the shares of such direct and indirect subsidiaries.

Capital Adequacy

The Financial Holding Companies Act does not provide for a minimum paid-in capital of financial holding companies. All financial holding companies, however, are required to maintain a specified level of solvency. In addition, in its allocation of the net profit earned in a fiscal term, a financial holding company is required to set aside in its legal reserve an amount equal to at least 10% of the net income after tax each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its paid-in capital.

A financial holding company controlling banks or other financial institutions conducting banking business as prescribed in the Financial Holding Company Act (hereinafter, the “bank holding company”) is required to maintain a minimum consolidated equity capital ratio of 12.5%. “Consolidated equity capital ratio” is defined as the ratio of equity capital as a percentage of risk-weighted assets on a consolidated basis, determined in accordance with the Financial Services Commission requirements that have been formulated based on the Bank of International Settlements standards. “Equity capital,” as applicable to bank holding companies, is defined as the sum of Tier I capital, Tier II capital, and Tier III capital less any deductible items, each as defined under the Regulation on the Supervision of Financial Holding Companies. “Risk-weighted assets” is defined as the sum of credit risk-weighted assets and market risk-weighted assets.

For regulatory reporting purposes, we maintain allowances for credit losses on the following loan classifications that classify corporate and retail loans as required by the Financial Services Commission. In making these classifications, we take into account a number of factors, including the financial position, profitability and transaction history of the borrower, the value of any collateral or guarantee taken as security for the extension of credit, probability of default and loss amount in the event of default. This classification method, and our related provisioning policy, is intended to reflect the borrower’s capacity to repay. To the extent there is any conflict between the Financial Services Commission guidelines and our internal analysis in such classifications, we adopt whichever is more conservative.

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The following table sets forth loan classifications according to the guidelines of the Financial Services Commission.


Loan Classification		Loan Characteristics

Normal		Loans extended to customers that, based on our consideration of their business, financial position and future cash flows, do not raise concerns regarding their ability to repay the loans.

Precautionary		Loans extended to customers that (i) based on our consideration of their business, financial position and future cash flows, show potential risks with respect to their ability to repay the loans, although showing no immediate default risk or (ii) are in arrears for one month or more but less than three months.

Substandard		(i) Loans extended to customers that, based on our consideration of their business, financial position and future cash flows, are judged to have incurred considerable default risks as their ability to repay has deteriorated; or (ii) the portion that we expect to collect of total loans (a) extended to customers that have been in arrears for three months or more, (b) extended to customers that have incurred serious default risks due to the occurrence of, among other things, final refusal to pay their debt instruments, entry into liquidation or bankruptcy proceedings or closure of their businesses, or (c) extended to customers who have outstanding loans that are classified as “doubtful” or “estimated loss.”

Doubtful		Loans exceeding the amount that we expect to collect of total loans to customers that: (i) based on our consideration of their business, financial position and future cash flows, have incurred serious default risks due to noticeable deterioration in their ability to repay; or (ii) have been in arrears for three months or more but less than 12 months.

Estimated loss		Loans exceeding the amount that we expect to collect of total loans to customers that: (i) based on our consideration of their business, financial position and future cash flows, are judged to be accounted as a loss because the inability to repay became certain due to serious deterioration in their ability to repay; (ii) have been in arrears for 12 months or more; or (iii) have incurred serious risks of default in repayment due to the occurrence of, among other things, final refusal to pay their debt instruments, liquidation or bankruptcy proceedings or closure of their business.

In accordance with the Regulations for the Supervision of Financial Institutions, we establish regulatory reserve for loan loss in the amount of the difference between allowance for credit losses as calculated pursuant to our provisioning policy in accordance with IFRS and allowance for credit losses based on the loan classifications set forth above as required by the Financial Services Commission. In determining consolidated equity capital ratio, we deduct regulatory reserve for loan loss from equity capital.

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Liquidity

All financial holding companies are required to match the maturities of their assets to those of liabilities in accordance with the Financial Holding Companies Act in order to ensure liquidity. Financial holding companies are required to submit quarterly reports regarding their liquidity to the Financial Supervisory Service and must:

•

maintain a Won liquidity ratio (defined as Won assets due within one month, including marketable securities, divided by Won liabilities due within one month) of not less than 100%;

•

maintain a foreign currency liquidity ratio (defined as foreign currency liquid assets due within three months divided by foreign currency liabilities due within three months) of not less than 80% except for financial holding companies with a foreign currency liability to total assets ratio of less than 1%;

•

maintain a ratio of foreign currency liquid assets due within seven days less foreign currency liabilities due within seven days divided by total foreign currency assets of not less than 0%, except for financial holding companies with a foreign currency liability to total assets ratio of less than 1%; and

•

maintain a ratio of foreign currency liquid assets due within a month less foreign currency liabilities due within a month divided by total foreign currency assets of not less than negative 10% except for financial holding companies with a foreign currency liability to total assets ratio of less than 1%.

Financial Exposure to Any Single Customer and Major Shareholders

Subject to certain exceptions, the total sum of credit (as defined in the Presidential Decree of the Financial Holding Companies Act, the Bank Act, the Presidential Decree of the Financial Investment Services and Capital Markets Act, the Insurance Act, the Mutual Savings Bank Act and the Specialized Credit Financial Business Act, respectively) of a financial holding company and its direct and indirect subsidiaries which are banks, merchant banks or securities companies (“Financial Holding Company Total Credit”) extended to a single group of companies that belong to the same conglomerate as defined in the Monopoly Regulation and Fair Trade Act will not be permitted to exceed 25% of the Net Total Equity Capital.

“Net Total Equity Capital” for the purpose of the calculation of financial exposure to any single customer and Major Shareholder (as defined below) as applicable to us and our subsidiaries is defined under the Presidential Decree of the Financial Holding Companies Act as

(a)

the sum of:

(i)

in the case of a financial holding company, the shareholders’ equity as defined under Article 24-3, Section 7(2) of the Presidential Decree of the Financial Holding Companies Act, which represents the difference between the total assets less total liabilities on the balance sheet as of the end of the most recent quarter;

(ii)

in the case of a bank, the shareholders’ equity as defined under Article 2, Section 1(5) of the Bank Act, which represents the sum of Tier I and Tier II capital amounts determined according to the standards set by the BIS;

(iii)

in the case of a merchant bank, the capital amount as defined in Article 342, Section (1) of the Financial Investment Services and Capital Markets Act;

(iv)

in the case of a financial investment company, the shareholders’ equity as defined under Article 37, Section 3 of the Presidential Decree of the Financial Investment Services and Capital Markets Act, which represents the total shareholders’ equity as adjusted as determined by the Financial Services Commission, such as the amount of increase or decrease in paid-in capital after the end of the most recent fiscal year;

(v)

in the case of an insurance company, the shareholders’ equity as defined under Article 2, Section 15 of the Insurance Act, which represents the sum of items designated by the Presidential Decree, such as paid-in-capital, capital surplus, earned surplus and any equivalent items, less the value of good will and other equivalent items;

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(vi)

in the case of a mutual savings bank, the shareholders’ equity as defined under Article 2, Section 4 of the Mutual Savings Bank Act, which represents the sum of Tier I and Tier II capital amounts determined in accordance with the standards set by the Bank for International Settlements; and

(vii)

in the case of a credit card company or a specialty credit provider, the shareholders’ equity as defined under Article 2, Section 19 of the Specialized Credit Financial Business Act, which represents the sum of the items designated by the Presidential Decree, such as paid-in-capital, capital surplus, earned surplus and any equivalent items;

(b)

less the sum of:

(i)

the amount of shares in direct and indirect subsidiaries held by the financial holding company;

(ii)

the amount of shares in the direct and indirect subsidiaries that are cross-held by such subsidiaries; and

(iii)

the amount of shares in the financial holding company held by its direct and indirect subsidiaries.

The Financial Holding Company Total Credit to a single individual or legal entity may not exceed 20% of the Net Total Equity Capital.

Furthermore, the total sum of credits (as defined under the Financial Holding Companies Act, the Banking Act and the Financial Investment Services and Capital Markets Act, respectively) of a bank holding company and its direct and indirect subsidiaries (“Bank Holding Company Total Credit”) extended to a “Major Shareholder” (together with the persons who have special relationship with such Major Shareholder) (as defined below) generally may not exceed the smaller of (x) 25% of the Net Total Equity Capital and (y) the amount of the equity capital of the financial holding company multiplied by the shareholding ratio of such Major Shareholder, subject to certain exceptions.

“Major Shareholder” is defined under the Financial Holding Companies Act as follows:

(a) a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Financial Holding Companies Act) in excess of 10% (or in the case of a financial holding company controlling regional banks only, 15%) in the aggregate of the financial holding company’s total issued and outstanding voting shares; or

(b) a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Financial Holding Companies Act) more than 4% in the aggregate of the total issued and outstanding voting shares of the financial holding company controlling national banks (other than a financial holding company controlling regional banks only), excluding shares related to the shareholding restrictions on non-financial business group companies as described below, where such shareholder is the largest shareholder or has actual control over the major business affairs of the financial holding company through, for example, appointment and dismissal of the officers pursuant to the Presidential Decree of the Financial Holding Companies Act.

In addition, the total sum of the Bank Holding Company Total Credit extended to all of a bank holding company’s Major Shareholder may not exceed 25% of the Net Total Equity Capital. Furthermore, the bank holding company and its direct and indirect subsidiaries that intend to extend the Bank Holding Company Total Credit to the bank holding company’s Major Shareholder not less than the lesser of (i) the amount equivalent to 0.1% of the Net Total Equity Capital or (ii) W5 billion, with respect to a single transaction, must obtain prior unanimous board resolutions and then, immediately after the completion of the transaction, must file a report with the Financial Services Commission and publicly disclose the filing of such report (for example, through a website).

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Restrictions on Transactions among Direct and Indirect Subsidiaries and Financial Holding Company

Generally, a direct or indirect subsidiary of a financial holding company may not extend credit to the financial holding company which directly or indirectly controls such subsidiary. In addition, a direct or indirect subsidiary of a financial holding company may not extend credit to any other single direct or indirect subsidiary of the financial holding company in excess of 10% of its stockholders’ equity and to any other direct and indirect subsidiaries of the financial holding company in excess of 20% of its stockholders’ equity in the aggregate. The direct or indirect subsidiaries of a financial holding company must obtain an appropriate level of collateral for the credits extended to the other direct and indirect subsidiaries unless otherwise approved by the Financial Services Commission. The appropriate level of collateral for each type of such collateral is as follows:

(i)

For deposits and installment savings, obligations of the Government or the Bank of Korea, obligations guaranteed by the Government or the Bank of Korea, obligations secured by securities issued or guaranteed by the Government or the Bank of Korea: 100% of the amount of the credit extended;

(ii)

(a) For obligations of local governments under the Local Autonomy Act, local public enterprises under the Local Public Enterprises Act, and investment institutions and other quasi-investment institutions under the Basic Act on the Management of Government-Invested Institution (hereinafter, the “public institutions and others”); (b) obligations guaranteed by the public institutions and others; and (c) obligations secured by the securities issued or guaranteed by public institutions and others: 110% of the amount of the credit extended; and

(iii)

For any property other than those set forth in the above (i) and (ii): 130% of the amount of the credit extended.

Subject to certain exceptions, a direct or indirect subsidiary of a financial holding company is prohibited from owning the shares of any other direct or indirect subsidiaries (other than those directly controlled by the direct and indirect subsidiaries in question) in common control by the financial holding company. However, a direct or indirect subsidiary of a financial holding company may invest as a limited partner in a private equity fund that is a direct or indirect subsidiary of the same financial holding company. The transfer of certain assets subject to or below the precautionary criteria between the financial holding company and its direct or indirect subsidiary or between the direct and indirect subsidiaries of a financial holding company is prohibited except for (i) the transfer to an asset-backed securitization company, typically a special purpose entity, or the entrustment with a trust company, under the Asset-Backed Securitization Act, (ii) the transfer to a mortgage-backed securitization company under the Mortgage-Backed Securitization Company Act, (iii) the transfer or in-kind contribution to a corporate restructuring vehicle under the Corporate Restructuring Investment Company Act or (iv) the acquisition by a corporate restructuring company under the Industrial Development Act.

Disclosure of Management Performance

For the purpose of protecting the depositors and investors in the direct or indirect subsidiaries of the financial holding companies, the Financial Services Commission requires financial holding companies to disclose certain material matters including (i) financial condition and profit and loss of the financial holding company and its direct and indirect subsidiaries, (ii) how capital was raised by the financial holding company and its direct and indirect subsidiaries and how such capital was used, (iii) any sanctions levied on the financial holding company and its direct and indirect subsidiaries under the Financial Holding Companies Act or any corrective measures or sanctions under the Law on Improvement of Structure of Financial Industry or (iv) occurrence of any non-performing assets or financial incident which may have a material adverse effect.

Restrictions on Shareholdings in Other Companies

Subject to certain exceptions, a bank holding company may not own more than 5% of the total issued and outstanding shares of another company (other than its direct and indirect subsidiaries). If the financial holding company owns shares of another company (other than its direct and indirect subsidiaries) which is not a finance-

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related company, the financial holding company is required to exercise its voting rights in the same manner and same proportion as the other shareholders of the company exercise their voting rights in favor of or against any resolutions under consideration at the shareholders’ meeting of the company.

Restrictions on Shareholdings by Direct and Indirect Subsidiaries

Generally, a direct subsidiary of a financial holding company is prohibited from controlling any other company; provided that a direct subsidiary of a financial holding company may control (as an indirect subsidiary of the financial holding company): (i) subsidiaries in foreign jurisdiction related to the business of the subsidiary that are engaged in a financial business, (ii) certain financial institutions related to the business of the subsidiary which are engaged in the business that the direct subsidiary may conduct without any licenses or permits, (iii) certain financial institutions whose business is related to the business of the direct subsidiary as prescribed under the Presidential Decree of the Financial Holding Companies Act (for example, the companies which a bank subsidiary may control are limited to credit information companies, credit card companies, trust business companies, securities investment management companies, investment advisory companies, futures business companies, and asset management companies), (iv) certain financial institutions whose business is related to financial business as prescribed by the Ordinance of the Prime Minister, and (v) certain companies which are not financial institutions but whose business is related to the financial business of the financial holding company as prescribed by the Presidential Decree of the Financial Holding Companies Act (e.g. finance-related research company, finance-related information technology company, etc.). Acquisition by the direct subsidiaries of such indirect subsidiaries requires a prior permission from the Financial Services Commission or a report to be submitted to the Financial Services Commission, depending on the types of the indirect subsidiaries and the amount of total assets of the indirect subsidiaries.

An indirect subsidiary of a financial holding company is prohibited from controlling any other company, provided, however, that in the case where a company held control over another company at the time such company initially became an indirect subsidiary of a financial holding company, such indirect subsidiary shall be required to dispose of its interest in such other company within two years after becoming an indirect subsidiary of a financial holding company.

A subsidiary of a financial holding company may invest in a special purpose company as its largest shareholder for purposes of making investments under the Act on Private Investment in Social Infrastructure without being deemed as controlling such special purpose company.

In addition, a private equity fund established in accordance with the Financial Investment Services and Capital Markets Act is not considered to be a subsidiary of a financial holding company even if the financial holding company is the largest investor in the private equity fund unless the financial holding company is the asset management company for the private equity fund.

Restrictions on Transactions Between a Financial Holding Company and its Major Shareholder

A bank holding company and its direct and indirect subsidiaries are prohibited from acquiring (including acquisition by a trust account of its subsidiary bank) shares issued by such bank holding company’s Major Shareholder in excess of 1% of the Net Total Equity Capital. In addition, the financial holding company and its direct and indirect subsidiaries which intend to acquire shares issued by such Major Shareholder not less than the lesser of (i) the amount equivalent to 0.1% of the Net Total Equity Capital or (ii) W5 billion, with respect to a single transaction, must obtain prior unanimous board resolutions and then, immediately after the acquisition, must file a report with the Financial Services Commission and publicly disclose the filing of such report (for example, through a website).

Restrictions on Financial Holding Company Ownership

Under the Financial Holding Companies Act, foreign financial institutions are permitted to establish financial holding companies in Korea. Pursuant to the Presidential Decree of the Financial Holding Companies

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Act, a foreign financial institution can control a financial holding company if, subject to satisfying certain other conditions, it, together with its specially-related persons, holds 100% of the total shares in the financial holding company.

In addition, any single shareholder and persons who stand in a special relationship with such shareholder (as defined under the Presidential Decree to the Financial Holding Companies Act) may acquire beneficial ownership of up to 10% of the total issued and outstanding shares with voting rights of a financial holding company controlling national banks (or 15% in the case of a financial holding company controlling regional banks only). The Government and the Korea Deposit Insurance Corporation are not subject to such a ceiling.

However, “non-financial business group companies” (as defined below) may not acquire beneficial ownership of shares of a bank holding company in excess of 4% of such financial holding company’s outstanding voting shares, provided that such non-financial business group companies may acquire beneficial ownership of up to 10% of such financial holding company’s outstanding voting shares with the approval of the Financial Services Commission under the condition that such non-financial business group companies will not exercise voting rights in respect of such shares in excess of the 4% limit. In addition, any person (whether a Korean national or a foreigner), with the exception of non-financial business group companies described above, may also acquire in excess of 10% of total voting shares issued and outstanding of a financial holding company which controls national bank, provided that an approval from the Financial Services Commission is obtained in instances where the total holding exceeds 10% (or 15% in the case of a financial holding company controlling regional banks only), 25% or 33% of the total voting shares issued and outstanding of such bank holding company.

“Non-financial business group companies” are defined under the Financial Holding Companies Act as companies, which include:

(i)

any same shareholder group with aggregate net assets of all non-financial business companies belonging to such group of not less than 25% of the aggregate net assets of all members of such group;

(ii)

any same shareholder group with aggregate assets of all non-financial business companies belonging to such group of not less than W2 trillion;

(iii)

any mutual fund in which the same shareholder group identified in item (i) or (ii) above holds more than 4% of the total shares issued and outstanding of such mutual fund;

(iv)

any private equity fund (x) which has a partner with limited liability that falls under item (i), (ii) or (iii) above and holds equity equivalent to 10% or greater of the total amount invested by the private equity fund, (y) which has a partner with unlimited liability that falls under item (i), (ii) or (iii) above or (z) whose affiliates belonging to an enterprise group subject to limitation on mutual investment hold in aggregate equity equivalent to 30% or greater of the total amount invested by such private equity fund; or

(v)

any investment purpose company in which a private equity fund that falls under item (iv) above acquires and holds no less than 4% of such company’s shares or equity or exercises de-facto influence on such company’s significant managerial matters.

Sharing of Customer Information among Financial Holding Companies and their Subsidiaries

Under the Act on Use and Protection of Credit Information, any individual customer’s credit information may only be disclosed or otherwise used by financial institutions to determine, establish or maintain existing commercial transactions with them and only after obtaining written consent to use information. In addition, under the Act on Real Name Financial Transactions and Confidentiality, an individual working at a financial institution may not provide or reveal information or data concerning the contents of financial transactions to other persons unless such individual receives a request or consent in writing from the holder of a title deed, except under

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certain exceptions stipulated in the Act. Under the Financial Holding Company Act, a financial holding company and its direct and indirect subsidiaries, however, may share certain credit information of individual customers among themselves for internal management purposes outlined in the Enforcement Decree of the Financial Holding Company Act (such as credit risk management, internal control and customer analysis) without the customers’ written consent, provided they adhere to the methods and procedures for provision of such information set forth therein. A financial investment company subsidiary of a financial holding company with a dealing and/or brokerage license may provide the financial holding company and its other direct and indirect subsidiaries information relating to the aggregate amount of cash or securities that a customer of the financial investment company has deposited for internal management purposes outlined in the Enforcement Decree of the Financial Holding Company Act, provided they adhere to the methods and procedures for provision of such information set forth therein. Certain amendments to the Financial Holding Company Act, which became effective on November 29, 2014, limit the scope of credit information that may be shared without the customers’ prior consent and require certain procedures for provision of customer information as prescribed by the Financial Services Commission. Beginning on November 29, 2014, notice must be given to customers at least once a year regarding (i) the provider of customer information, (ii) the recipient of customer information, (iii) the purpose of providing the information and (iv) the categories of the information provided.

The Act on Corporate Governance of Financial Companies

The Act on Corporate Governance of Financial Companies came into effect as of August 1, 2016. The Act was enacted to address calls for strengthened regulations on corporate governance of financial companies and to serve as a uniform regulation on corporate governance matters applicable to all financial companies in place of the separate regulations for each sector that existed. The Act contains several key measures, including, but not limited, to (i) condition of eligibility of officers of financial companies and standards for determining whether financial companies’ officers may hold concurrent positions in other companies, (ii) standards for composition and operation of board of directors, (iii) standards for establishment, composition and operation of committees of the board of directors, (iv) internal control, risk management and responsibilities map (v) requirements and procedures for the approval of a change of major shareholders and (vi) special regulations for rights of minority shareholders of financial companies.

Financial Investment Services and Capital Markets Act

General

The Financial Investment Services and Capital Markets Act categorizes capital markets-related business into six different functions, as follows:

•

dealing (trading and underwriting of “financial investment products” (as defined below));

•

brokerage (brokerage of financial investment products);

•

collective investment (establishment of collective investment schemes and the management thereof);

•

investment advice;

•

discretionary investment management; and

•

trusts (together with the five businesses set forth above, the “Financial Investment Businesses”).

Accordingly, all financial businesses relating to financial investment products are reclassified as one or more of the Financial Investment Businesses described above, and financial institutions are subject to the regulations applicable to their relevant Financial Investment Businesses, irrespective of the type of the financial institution it is. For example, under the Financial Investment Services and Capital Markets Act, derivative businesses conducted by securities companies and future companies will be subject to the same regulations under the Financial Investment Services and Capital Markets Act, at least in principle.

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The banking business and insurance business are not subject to the Financial Investment Services and Capital Markets Act and will continue to be regulated under separate laws; provided, however, that they may become subject to the Financial Investment Services and Capital Markets Act if their activities involve any financial investment businesses requiring a license based on the Financial Investment Services and Capital Markets Act.

Comprehensive Definition of Financial Investment Products

In an effort to encompass the various types of securities and derivative products available in the capital markets, the Financial Investment Services and Capital Markets Act sets forth a comprehensive term “financial investment products,” defined to mean all financial products with a risk of loss in the invested amount (in contrast to “deposits,” which are not financial investment products for which the invested amount is protected or preserved). Financial investment products are classified into two major categories: (i) “securities” (relating to financial investment products where the risk of loss is limited to the invested amount) and (ii) “derivatives” (relating to financial investment products where the risk of loss may exceed the invested amount). As a result of the general and open-ended manner in which financial investment products are defined, any future financial product could potentially fall under the definition of financial investment products, which would enable Financial Investment Companies (as defined below) to handle a broader range of financial products. Under the Financial Investment Services and Capital Markets Act, securities companies, asset management companies, futures companies and other entities engaging in any Financial Investment Business are classified as “Financial Investment Companies.”

License System

Financial Investment Companies are able to choose what Financial Investment Business to engage in (through the “check the box” method set forth in the relevant license application), by specifying the desired (i) Financial Investment Business, (ii) financial investment product and (iii) target customers to which financial investment products may be sold (namely, general investors or professional investors). Licenses will be issued under the specific business sub-categories described above. For example, it would be possible for a Financial Investment Company to obtain a license to engage in the Financial Investment Business of (i) dealing (ii) over-the-counter derivatives products (iii) only with professional investors.

Expanded Business Scope of Financial Investment Companies

Under the previous regulatory regime in Korea, it was difficult for a financial institution to explore a new line of business or expand upon its existing line of business. For example, a financial institution licensed as a securities company generally could not engage in the asset management business. In contrast, under the Financial Investment Services and Capital Markets Act, pursuant to the integration of its current business involving financial investment products into a single Financial Investment Business, a licensed Financial Investment Company is permitted to engage in all types of Financial Investment Businesses, subject to compliance with the relevant regulations, for example, maintaining an adequate “Ethical Screens,” to the extent required. As to incidental businesses (i.e., a financial related business which is not a Financial Investment Business), the Financial Investment Services and Capital Markets Act generally allows a Financial Investment Company to freely engage in such incidental businesses by shifting away from the previous system of permitting only the listed activities towards a more comprehensive system. In addition, a Financial Investment Company is permitted (i) to outsource marketing activities by contracting with “introducing brokers” that are individuals but not employees of the Financial Investment Company, (ii) to engage in foreign exchange business related to their Financial Investment Business and (iii) to participate in the settlement network, pursuant to an agreement among the settlement network participants.

Improvement in Investor Protection Mechanism

While the Financial Investment Services and Capital Markets Act broadens the scope of financial businesses in which financial institutions are permitted to engage, a more rigorous investor-protection mechanism is

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imposed upon Financial Investment Companies dealing in financial investment products. The Financial Investment Services and Capital Markets Act makes a distinction between general investors and sophisticated investors and provides new or enhanced protections to general investors. For instance, the Financial Investment Services and Capital Markets Act expressly provides for strict know-your-customer rules for general investors and imposes an obligation on Financial Investment Companies that they should market financial investment products suitable to each general investor considering his or her personal attributes, including investment objective, net worth, and investment experience. Under the Financial Investment Services and Capital Markets Act, a Financial Investment Company can be held liable if a general investor proves (i) damages or losses relating to such general investor’s investment in financial investment products solicited by such Financial Investment Company and (ii) absence of explanation, false explanation, or omission of material fact (without having to prove fault or causation). In case there are any conflicts of interest between the Financial Investment Companies and investors, the Financial Investment Services and Capital Markets Act expressly requires (i) disclosure of any conflict of interest to investors and (ii) mitigation of conflicts of interest to a comfortable level or abstention from the relevant transaction.

Other Regulatory Changes Related to Securities and Investments

The Financial Investment Services and Capital Markets Act brought changes to various rules in securities regulations including those relating to public disclosure, insider trading and proxy contests, which had previously been governed by the Securities and Exchange Act. For example, the 5% and 10% reporting obligations under the Securities and Exchange Act have become more stringent under the Financial Investment Services and Capital Markets Act. For instance, the number of events requiring an investor to update its 5% report have increased under the Financial Investment Services and Capital Markets Act. Previously, only a change in the shareholding of 1% or more or in the purpose of shareholding (such as an intention to influence management) could trigger the obligation to update the 5% report. The Government has issued detailed regulations stipulating additional events requiring updates to 5% reports, such as the change in the type of holding and change in any major aspect of the relevant contract. As for the 10% report filing obligation, the initial filing is expected to be required to be made within five business days of the date of the event triggering the 10% reporting obligation, compared to 10 calendar days under the previous law. The due date for reporting a subsequent change after the initial 10% report filing has been reduced from the 10th day of the first month immediately following the month in which such change took place to five business days of the date of such change. Under the previous law, there had been a limitation on the type of investment vehicles that could be used in a collective investment scheme (namely, to trusts and corporations), the type of funds that could be used for collective investments, and the types of assets and investment securities a fund could invest in. However, the Financial Investment Services and Capital Markets Act significantly liberalizes these restrictions, permitting all legal entities, including limited liability companies or partnerships, to be used for the purpose of collective investments, allowing the formation of fund complexes and permitting investment funds to invest in a wide variety of different assets and investment instruments.

Principal Regulations Applicable to Banks

General

The banking system in Korea is governed by the Banking Act and the Bank of Korea Act of 1950, as amended (the “Bank of Korea Act”). In addition, Korean banks are subject to the regulations and supervision of the Bank of Korea, the Bank of Korea’s Monetary Policy Committee, the Financial Services Commission and its executive body, the Financial Supervisory Service.

The Bank of Korea, established in June 1950 under the Bank of Korea Act, performs the customary functions of a central bank. It seeks to contribute to the sound development of the national economy by price stabilization through establishing and implementing efficient monetary and credit policies. The Bank of Korea acts under instructions of the Monetary Policy Committee, the supreme policy-making body of the Bank of Korea.

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Under the Bank of Korea Act, the Monetary Policy Committee’s primary responsibilities are to formulate monetary and credit policies and to determine the operations, management and administration of the Bank of Korea. The Financial Services Commission, established on April 1, 1998 as the Financial Supervisory Commission and later changed its name to the Financial Services Commission on March 3, 2008, regulates commercial banks pursuant to the Banking Act, including establishing guidelines on capital adequacy of commercial banks, and promulgates regulations relating to supervision of banks. Furthermore, pursuant to the Amendment to the Government Organization Act and the Banking Act on May 24, 1999, the Financial Services Commission, instead of the Ministry of Strategy and Finance, now regulates market entry into the banking business.

The Financial Supervisory Service is subject to the instructions and directives of the Financial Services Commission and carries out supervision and examination of commercial banks. In particular, the Financial Supervisory Service sets requirements both for the prudent control of liquidity and for capital adequacy and establishes reporting requirements pursuant to the authority delegated to it under the Financial Services Commission regulations, pursuant to which banks are required to submit annual reports on financial performance and shareholdings, regular reports on management strategy and non-performing loans, including write-offs, and management of problem companies and plans for the settlement of bad loans.

Under the Banking Act, approval to commence a commercial banking business or a long-term financing business must be obtained from the Financial Services Commission. Commercial banking business is defined as the lending of funds acquired predominantly from the acceptance of deposits for a period not exceeding one year or, subject to the limitation established by the Financial Services Commission, for a period between one year and three years. Long-term financing business is defined as the lending, for periods in excess of one year, of funds acquired predominantly from paid-in capital, reserves or other retained earnings, the acceptance of deposits with maturities of at least one year, or the issuance of bonds or other securities. A bank wishing to enter any business other than commercial banking and long-term financing businesses, such as the trust business, must obtain approval from the Financial Services Commission. Approval to merge with any other banking institution, to liquidate, to close a banking business or to transfer all or a part of a business must also be obtained from the Financial Services Commission.

If the Financial Services Commission deems a bank’s financial condition to be unsound or if a bank fails to meet the applicable capital adequacy ratio set forth under Korean law, the Financial Services Commission may order, among others:

•

capital increases or reductions;

•

suspension of officers’ performance of their duties and appointment of custodians;

•

stock cancellations or consolidations;

•

transfers of a part or all of business;

•

sale of assets and bar on acquisition of high-risk assets;

•

closures or downsizing of branch offices or workforce;

•

mergers or becoming a subsidiary under the Financial Holding Companies Act of a financial holding company;

•

acquisition of a bank by a third party;

•

suspensions of a part or all of business operation (not more than six months in the case of suspension of all business operations); or

•

assignments of contractual rights and obligations relating to financial transactions.

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Capital Adequacy

The Banking Act requires nationwide banks to maintain a minimum paid-in capital of W100 billion and regional banks to maintain a minimum paid-in capital of W25 billion.

In addition to minimum capital requirements, all banks including foreign bank branches in Korea are required to maintain a prescribed solvency position. A bank must also set aside as its legal reserve an amount equal to at least 10% of its net profits after tax each time it pays dividends on net profits earned until such time when the reserve equals the amount of its total paid-in capital.

Under the Banking Act, the capital of a bank is divided into two categories: Tier I and Tier II capital. Tier I capital (typically referred to as “Core Capital”) consists of (i) the capital that can absorb losses incurred by a bank such as capital, capital surplus and earned surplus generated from the issuance of common shares (collectively, “Common Stock Capital”), and (ii) the capital that can absorb the losses of a bank after depletion of the Common Stock Capital such as capital and capital surplus generated from the issuance of Tier I capital instruments satisfying the requirements designated by the Financial Supervisory Service (collectively, “Other Core Capital”). Tier II capital (typically referred to as “Supplementary Capital”) represents the capital which is equivalent to, but not included in, the Core Capital and can absorb losses incurred upon the liquidation of a bank such as capital and capital surplus generated from the issuance of Tier II capital instruments satisfying the requirements designated by the Financial Supervisory Service and allowance for bad debts set aside for loans classified as “normal” or “precautionary.”

Under the Detailed Regulations on the Supervision of the Banking Business, Tier I capital instruments must satisfy, among others, the following requirements in order to be recognized as Other Core Capital:

(i)

the price for such instruments shall have been fully paid through the procedure for issuance, and the instruments shall be in a perpetual form with no cause triggering a step-up or redemption;

(ii)

such instruments shall be bound by a special agreement on being subordinate to depositors, general creditors and subordinated debt of the bank (referring to a special agreement under which subordinated creditors’ right to claim payment shall take effect only after unsubordinated creditors’ claims are fully paid, when bankruptcy or any similar incident occurs; hereinafter the same shall apply) but shall not fall within liabilities exceeding assets at the time when bankruptcy is declared under the Debtor Rehabilitation and Bankruptcy Act;

(iii)

the payment of dividends or interests shall be suspended from the date when the bank is designated as a “insolvent financial institution” under the Act on Structural Improvement of the Financial Industry of Korea or under the Depositor Protection act of Korea as applicable, or the Financial Supervisory Service takes measures under the Regulations on the Supervision of the Banking Business such as the managerial improvement recommendation, the managerial improvement request, the managerial improvement order and the emergency measures against the bank to the date when the above-mentioned event is removed;

(iv)

the payment of dividends or interests shall not be determined in connection with the credit rating of the bank;

(v)

the dividends may only be paid out of distributable income;

(vi)

the bank shall be able to revoke in its sole discretion the payment of dividends or interests at any time;

(vii)

the cancellation of paying dividends must not impose restrictions on the bank except in relation to dividends to common stockholders;

(viii)

the revocation of the payment of dividends or interests shall not be deemed as the event of defaults, and the bank shall be able to use in its sole discretion the amount which was revoked to pay as dividends or interests to redeem any other debts of the bank then due and payable;

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(ix)

such instruments shall not be redeemed within five years from the issuance date and the bank shall be able to determine in its sole discretion whether it redeems such instruments even after five years from the issuance date, and the instruments shall not be subject to any condition that arouse investors’ expectation to have the instruments redeemed or any condition that imposes a burden of redemption upon the issuing bank in fact;

(x)

the requirements prescribed in Appendix 3-5 (Trigger Events for Contingent Capital Securities) of the Detailed Enforcement Rules of Regulation on Supervision of Banking Business shall be satisfied;

(xi)

the bank or the person who has de facto control over the bank shall not purchase capital instruments or provide a purchaser of such securities with funds for the purchase by providing a collateral or guarantee for payment or by lending a loan, shall not raise the priority of its claims, legally or economically, for the price paid for the securities, and shall not provide a collateral or guarantee to the purchasers of the securities directly or via a related company; and

(xii)

such capital instruments shall have no condition that hinders the issuing bank’s procurement or expansion of capital in the future.

Under the Detailed Regulations on the Supervision of the Banking Business, Tier II capital instruments must satisfy, among others, the following requirements in order to be recognized as Supplementary Capital:

(i)

the procedure for issuance shall have been completed, the price for such capital instruments shall have been fully paid, and the capital instruments shall be bound by a special agreement of subordination to deposits and ordinary debts;

(ii)

the maturity shall not be less than five years from the issuance date, and Tier II capital instruments shall not be redeemed within five years from the issuance date;

(iii)

there is no condition to promote the bank to redeem such capital instruments such as a step-up provision, and the bank shall be able to determine in its sole discretion whether to redeem such instruments prior to the maturity date, and the instruments shall not be subject to any condition that arouse investors’ expectation to have the instruments redeemed or any condition that imposes a burden of redemption upon the issuing bank in fact;

(iv)

other than the case where the bank is subject to the bankruptcy or liquidation, the holder of Tier II capital instruments shall not have the right to require bank to pay the principal or interests of such instruments earlier than the original due date thereof;

(v)

the payment of dividends or interests shall not be determined in connection with the credit rating of the bank;

(vi)

the requirements prescribed in Appendix 3-5 (Trigger Events for Contingent Capital Securities) of the Detailed Enforcement Rules of Regulation on Supervision of Banking Business shall be satisfied;

(vii)

the bank or any person or entity over which the bank exercises substantial control shall not purchase the capital instruments issued by such bank nor provide, directly or indirectly, the funds to acquire the capital instruments by providing any collateral or guaranty or loan in favor of the person or entity which tries to acquire such instruments; and

(viii)

the bank shall not enhance, legally or economically, the payment priority of the capital instruments, nor provide, directly or indirectly through its affiliated company, any collateral or guaranty in favor of the person or entity which acquires such instruments.

All banks must meet standards regarding minimum ratios of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets, determined in accordance with the Financial Services Commission requirements that have been formulated based on the BIS Standards. These standards were adopted and became effective in 1996. Under these regulations, all domestic banks and foreign bank branches are required to meet the minimum ratio of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets of 8%.

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Furthermore, as Basel III was adopted and is being implemented in stages in Korea since December 1, 2013, all banks in Korea are required to meet minimum ratios of common stock capital (less any capital deductions) and core capital (less any capital deductions) to risk-weighted assets as set out in the Regulation on the Supervision of the Banking Business. The required minimum ratio of common stock capital (less any capital deductions) to risk-weighted assets is 4.5%, and the required minimum ratio of core capital (less any capital deductions) to risk-weighted assets is 6.0%. Capital conservation buffer requirements have also been phased in from January 1, 2016, and accordingly, since January 1, 2019, commercial banks in Korea have been required to maintain a capital conservation buffer of 2.5%.

Under the Regulation on the Supervision of the Banking Business and the Detailed Regulations promulgated thereunder, Korean banks apply the following risk-weight ratios in respect of their home mortgage loans:

(i)

for those banks adopting a standardized approach for calculating credit risk-weighted assets, the risk-weight ratio of between 20% and 150% for home equity loans, depending on the loan-to-value ratio and risk profile of the loan; and

(ii)

for those banks adopting an internal ratings-based approach for calculating credit risk-weighted assets, a risk-weight ratio calculated with reference to the probability of default, loss given default and exposure at default, each as defined in the Detailed Regulations on the Supervision of the Banking Business.

In Korea, Basel II, a convention entered into by the Basel Committee in June 2004 for the purpose of improving risk management and increasing capital adequacy of banks, was implemented in January 2008. Pursuant to Basel II, operational risk, such as inadequate procedure, loss risk by employees, internal system, occurrence of unexpected event, as well as credit risk and market risk, is taken into account in calculating the risk-weighted assets, in addition to maintaining the capital adequacy ratio of 8% for banks. Under Basel II, the capital requirements for credit risk can be calculated by the internal rating based (IRB) approach or the standardized approach.

Under the Regulation on the Supervision of the Banking Business, banks shall set aside allowances for bad debts for each class of soundness in accordance with IFRS as adopted by Korea. If the amount for each class of soundness calculated in accordance with the following criteria exceeds the allowances for bad debts set aside, the excess amount shall, at the time of each settlement of accounts, be set aside as regulatory reserve for credit losses.

•

0.85% of normal credits (or 0.9% in the case of normal credits comprising loans to certain industries including construction, retail and wholesale sales, accommodations, restaurant, real estate and lease, 1.0% in the case of normal credits comprising loans to individuals and households, 2.5% in the case of normal credits comprising credit card loans and 1.1% in the case of normal credits comprising other credit card receivables);

•

7% of precautionary credits (or 10% in the case of precautionary credits comprising loans to individuals and households, 50% in the case of precautionary credits comprising credit card loans and 40% in the case of precautionary credits comprising other credit card receivables);

•

20% of substandard credits (or 10% in the case of substandard credits comprising assets for which the bank has the right to receive payment in priority pursuant to the Corporate Restructuring Promotion Act of Korea or Paragraph 180, Subparagraph 2 of the Debtor Rehabilitation and Bankruptcy Act of Korea (the “Priority Assets”), 20% in the case of normal credits comprising loans to individuals and households, 65% in the case of substandard credits comprising credit card loans and 60% in the case of substandard credits comprising other credit card receivables);

•

50% of doubtful credits (or 25% in the case of doubtful credits comprising Priority Assets, 55% in the case of doubtful credits comprising loans to individuals and households and 75% in the case of doubtful credits comprising credit card loans and other credit card receivables); and

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•

100% of estimated loss credits (or 50% in the case of estimated loss credits comprising of Priority Assets).

Furthermore, under the Regulation on the Supervision of the Banking Business, banks must maintain allowances for bad debts and regulatory reserve for credit losses in respect of their confirmed guarantees (including confirmed acceptances) and outstanding non-used credit lines in an aggregate amount calculated at the same rates applicable to normal, precautionary, substandard, doubtful and estimated loss credits comprising their outstanding loans and other credits as set forth above.

Pursuant to the Regulation on the Supervision of the Banking Business and the Detailed Regulation on the Supervision of the Banking Business, the Financial Services Commission may designate banks with significant influence (based on size and connectivity with other financial institutions) on the domestic financial system as a domestic systemically important bank and require the accumulation of additional capital in accordance with the highest of: (i) ratio of common equity capital to risk-weighted assets, ranging from 0.0% to 2.0%, depending on the systematic importance evaluation score, (ii) if the bank’s holding company is a domestic systemically important bank holding company, the capital ratio corresponding to the additional capital required for the bank holding company under the Financial Holding Company Supervision Regulations, or (iii) if the bank is also a global systemically important bank, as defined by the Basel Committee, the capital ratio as required by the Basel Committee. Since January 1, 2019, the Financial Services Commission has required domestic systemically important banks to maintain an additional capital buffer of 1.00%, and we and Shinhan Bank have each been designated by the Financial Services Commission since July 2021 as a domestic systemically important bank holding company and domestic systemically important bank, respectively. Accordingly, we and Shinhan Bank are subject to this additional capital buffer of 1.00%. The Financial Services Commission may also, upon quarterly review, determine and require banks to accumulate a level of countercyclical capital buffer within the range of 0% to 2.5% of risk-weighted assets, taking into account factors such as the degree of increase in credit relative to the gross domestic product. As announced by the Financial Services Commission in May 2023, banks and their holding companies, including us and Shinhan Bank, have been required to accumulate a counter-cyclical capital buffer of 1.00% since May 1, 2024. The Financial Services Commission also announced in September 2024 the introduction of a stress buffer capital regulation, which may require banks and their holding companies to accumulate up to 2.5% of additional capital (in addition to, and separate from, the aforementioned minimum capital ratios) depending on the results of stress testing and evaluation of risk management status by the Financial Supervisory Service. On December 19, 2024, the Financial Services Commission announced that the introduction of the stress buffer capital regulation will be delayed until at least the second half of 2025 and that the timing and other details of implementing the stress buffer capital regulation will be determined during 2025.

Liquidity

All banks are required to match the maturities of their assets and liabilities in accordance with the Banking Act in order to ensure adequate liquidity. Banks may not invest in excess of an amount exceeding 100% of their Tier I and Tier II capital (less any capital deductions) in stocks and other securities with a period remaining to maturity of over three years. However, this restriction does not apply to government bonds or to Monetary Stabilization Bonds issued by the Bank of Korea.

The Financial Services Commission requires Korean banks to maintain a liquidity coverage ratio of at least 90.0% as of January 1, 2017, 95.0% as of January 1, 2018 and 100.0% as of January 1, 2019. The Financial Services Commission defines liquidity coverage ratio as high quality liquid assets that can be immediately converted into cash with little or no loss in value, as divided by the net amount of cash outflow for the next 30 day period, under the stress level established according to the liquidity coverage ratio, pursuant to the Regulation on the Supervision of the Banking Business, which was amended as of June 28, 2016 to implement the liquidity coverage ratio requirements under Basel III.

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With respect to foreign currency liquidity coverage ratio, the Regulation on the Supervision of the Banking Business requires that financial institutions dealing with foreign exchange affairs (i.e., banks) whose foreign-currency denominated liabilities are equal to or greater than US$500 million or 5% of its total liabilities, as of the end of the immediately preceding half-year period, maintain a foreign currency liquidity coverage ratio of 60% or higher beginning January 1, 2017, 70% or higher beginning January 1, 2018 and 80% or higher beginning January 1, 2019. The term “foreign currency liquidity coverage ratio” means the ratio of high-liquidity assets to the net cash outflow in respect of foreign-currency denominated assets and liabilities for the next 30 days.

Although the liquidity coverage ratio requirement was temporarily lowered during the COVID-19 pandemic, the liquidity coverage ratio requirement has been restored to 100% since January 1, 2025.

The Monetary Policy Committee of the Bank of Korea is authorized to fix and alter minimum reserve requirements that banks must maintain against their deposit liabilities. The current minimum reserve ratio is 7.0% of average balances for Won-denominated demand deposits outstanding, 0.0% of average balances for Won-denominated long-term housing savings deposits and employee asset establishment savings deposits outstanding and 2.0% of average balances for Won-denominated time and savings deposits, mutual installments, housing installments and certificates of deposit outstanding. For foreign currency deposit liabilities, a 2.0% minimum reserve ratio is applied to time deposits with a maturity of one month or longer, certificates of deposit with a maturity of 30 days or longer, and savings deposits with a maturity of six months or longer and a 7.0% minimum reserve ratio is applied to other deposits, while a 1.0% minimum reserve ratio is applied for offshore accounts, immigrant accounts and resident accounts opened by financial institutions (excluding bank holding companies) and the Export-Import Bank of Korea as well as foreign currency certificates of deposit held by account holders of such offshore accounts, immigrant accounts and resident accounts opened by financial institutions (excluding bank holding companies) and the Export-Import Bank of Korea.

Loan-to-Deposit Ratio

In December 2009, the Financial Supervisory Service announced that it would introduce a new set of regulations on the loan-to-deposit ratio by amending the Regulation on the Supervision of the Banking Business upon its determination that the overall liquidity of banks in Korea had become unstable due to the ongoing increase in the loan-to-deposit ratio resulting from banks expanding their asset size too competitively by granting mortgages on houses and loans to small- and medium-sized enterprises over the last couple of years. The Regulation on the Supervision of the Banking Business requires banks with Won-denominated loans of not less than W4 trillion in value as of the last month of the immediately preceding quarter to maintain a ratio of Won-denominated loans (excluding certain types of loans using funds borrowed from Korea Development Bank or the Government or loans made under certain operational rules of Korea Federation of Banks) to Won-denominated deposits (excluding certificates of deposit) and the balance of the covered bonds under the Act on Issuance of Covered Bonds, the maturity of which is not less than five years (only in case when such financing from the issuance of covered bonds is used in Won currency and up to 1% of Won-denominated deposits) of no more than 100%. Since January 1, 2020, in calculating such loan to deposit ratio, retail loans and corporate loans are weighed differently, with retail loans subject to a multiple of 115% and corporate loans (excluding loans to SOHOs) subject to a multiple of 85%, thereby increasing the impact of retail loans and reducing the impact of corporate loans in calculating such ratio. In response to the COVID-19 pandemic, on April 20, 2020, the Financial Services Commission announced a series of measures to temporarily ease the regulations on loan-to-deposit ratio. This temporary measure ended in June 2023, and a loan-to-deposit ratio requirement of 100% has applied since July 2023. Shinhan Bank’s loan-to-deposit ratio as of December 31, 2024 was 95.8%, based on monthly average balances.

Financial Exposure to Any Single Customer and Major Shareholders

Under the Banking Act, the sum of material credit exposures by a bank, namely, the total sum of its credits to single individuals, legal entities or persons sharing credit risk with such individuals or legal entities such as

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companies belonging to the same enterprise groups as defined under the Monopoly Regulation and Fair Trade Act that exceed 10% of the sum of Tier I and Tier II capital (less any capital deductions), must not exceed five times the sum of Tier I and Tier II capital (less any capital deductions), subject to certain exceptions. Subject to certain exceptions, no bank is permitted to extend credit (including loans, guarantees, purchases of securities (only in the nature of a credit) and such other transactions which directly or indirectly create credit risk) in excess of 20% of the sum of Tier I and Tier II capital (less any capital deductions) to an individual or a legal entity, and no bank may grant credit in excess of 25% of the sum of Tier I and Tier II capital (less any capital deductions) to individuals, legal entities and companies that belong to the same enterprise group as defined in the Monopoly Regulation and Fair Trade Act.

Under the Banking Act, certain restrictions apply to extending credits to a major shareholder. The definition of a “major shareholder” is as follows:

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a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Banking Act) in excess of 10% (or in the case of regional banks, 15%) in the aggregate of the bank’s total issued and outstanding voting shares; or

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a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Banking Act) more than 4% in the aggregate of the total issued and outstanding voting shares of a bank (other than a regional bank), where such shareholder is the largest shareholder or is able to actually control the major business affairs of the bank, for example, through appointment and dismissal of the chief executive officer or of the majority of the executives.

Under the Banking Act, banks are prohibited from extending credits in the amount greater than the lesser of (1) 25% of the sum of such bank’s Tier I and Tier II capital (less any capital deductions) and (2) the relevant major shareholder’s shareholding ratio multiplied by the sum of the bank’s Tier I and Tier II capital (less any capital deductions) to a major shareholder (together with persons who have special relationship with such major shareholder as defined in the Presidential Decree of the Banking Act). Also, no bank is allowed to grant credit to its major shareholders in the aggregate in excess of 25% of its Tier I and Tier II capital (less any capital deductions).

When managing the credit risk of banks, among the methods for providing credit support by banks, a loan agreement, a purchase agreement for asset-backed commercial papers, purchase of subordinate beneficiary certificates, and assumption of liability by providing warranty against default under asset-backed securitization are examples of creating financial exposure to banks.

Interest Rates

Korean banks remain dependent on the acceptance of deposits as their primary source of funds. Currently, there are no legal controls on interest rates on bank loans in Korea, except for the cap of 20.0% per annum on interest rates on loans to individuals or small corporations, as defined under the Framework Act on Small and Medium Enterprises under the Act on Registration of Credit Business, Etc. and Protection of Finance Users.

Lending to Small- and Medium-sized Enterprises

When commercial banks (including Shinhan Bank) make Won-denominated loans to certain startup, venture, innovative and other strategic small- and medium-sized enterprises specially designated by the Bank of Korea as “priority borrowers,” the Bank of Korea generally provides the underlying funding to these banks at concessionary rates for up to 50% of all such loans made to the priority borrowers subject to a monthly-adjusted limit prescribed by the Bank of Korea provided that if such loans to priority borrowers made by all commercial banks exceed the prescribed limit for a given month, the concessionary funding for the following month will be allocated to each commercial bank in proportion to such bank’s lending to priority borrowers two months prior to the time of such allocation, which has the effect that, if a particular bank lags other banks in making loans to

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priority borrowers, the amount of funding such bank can receive from the Bank of Korea at concessionary rates will be proportionately reduced.

Disclosure of Management Performance

For the purpose of enforcing mandatory disclosure of management performance so that the general public, especially depositors and stockholders, will be in a better position to monitor banks, the Financial Services Commission requires commercial banks to disclose certain matters as follows:

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loans bearing no profit made to a single business group in an amount exceeding 10% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month (where the loan exposure to such borrower is calculated pursuant to the criteria under the Detailed Regulations promulgated under the Regulation on the Supervision of the Banking Business), except where the loan exposure to a single business group is not more than W4 billion; and

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any loss due to court judgments or similar decisions in civil proceedings in an amount exceeding 1% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month, except where the loss is not more than W1 billion.

Restrictions on Lending

According to the Banking Act, commercial banks are prohibited from making any of the following categories of loans:

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loans made directly or indirectly on the pledge of a bank’s own shares;

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loans made directly or indirectly to enable a natural or a legal person to buy the bank’s own shares;

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loans made to any of the bank’s officers or employees other than de minimis loans of up to (1) W20 million in the case of a general loan, (2) W50 million in the case of a general loan plus a housing loan, or (3) W60 million in the aggregate for general loans, housing loans and loans to pay damages arising from wrongful acts of employees in financial transactions;

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credit (including loans) secured by a pledge of shares of a subsidiary corporation of the bank or to enable a natural or juridical person to buy shares of a subsidiary corporation of the bank; and

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loans to any officers or employees of a subsidiary corporation of the bank, other than general loans of up to W20 million or general and housing loans of up to W50 million in the aggregate.

Recent Regulations Relating to Retail Household Loans

The Financial Services Commission has implemented a number of changes in recent years to the regulations relating to retail household lending by banks. Under the currently applicable regulations:

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as to any new loans secured by houses (including apartments) located nationwide, the loan-to-value ratio (the aggregate principal amount of loans secured by such collateral over the appraised value of the collateral) shall not exceed 70%;

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as to any new loans secured by houses (including apartments) located in “speculative areas”, “overheated speculative areas” or “adjustment targeted areas”, in each case, as designated by the Government, the loan-to-value ratio should not exceed 50%, except that such maximum loan-to-value ratio is (x) 70% for low-income households that (i) have a combined (in case of married couple) annual income of no more than W90 million, (ii) do not currently own any housing and (iii) are using the loan to purchase low-price housing valued at W900 million or less (W800 million or less in the case of houses located in “adjustment targeted areas”) and (y) 80% for first-time homebuyers with a maximum residential mortgage loan amount of W600 million or less;

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as to any new loans secured by houses (including apartments) located nationwide to be extended to a household that already owns one or more houses, the maximum loan-to-value ratio must be adjusted to 10% lower than the applicable loan-to-value ratio described above;

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as to any new loans secured by houses (including apartments) located in “speculative areas”, “overheated speculative areas” or “adjustment targeted areas”, in each case as designated by the Government, to be extended to a household that already owns one or more houses, the loan to value ratio should not exceed 30% subject to certain exceptions under the applicable regulations;

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as to any new loans secured by houses (including apartments) located in “speculative areas”, “overheated speculative areas” or “adjustment targeted areas”, in each case, as designated by the Government, the borrower’s debt-to-income ratio (calculated as (1) the aggregate annual total payment amount of (x) the principal of and interest on loans secured by such housing and existing mortgage and home equity loans and (y) the interest on other debts of the borrower over (2) the borrower’s annual income) should not exceed 40% (50% for those that are located in “adjustment targeted areas”), except that such maximum debt-to-income ratio is 60% for (a) low-income households that (i) have a combined (in case of married couple) annual income of less than W90 million, (ii) do not currently own any housing and (iii) are using the loan to purchase low-price housing valued at W900 million or less (W800 million or less in case of houses located in “adjustment targeted areas”) and (b) first-time homebuyers; and

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as to any new loans extended to a household that already has an aggregate loan amount exceeding W100 million (including the loan application amount and the revolving amount in case of a revolving loan), such household’s debt-service-ratio (calculated as (1) the aggregate annual total payment amount of the principal of and interest on financial liabilities divided by (2) the household’s annual income) should not exceed 40% unless otherwise specified by the applicable regulations.

In December 2023, as a measure to help prevent excessive household debt, the Financial Services Commission introduced the “stress debt service ratio” system for floating rate loans, mixed rate loans (loans where a fixed interest rate shifts to a floating interest rate after a certain period of time), and periodic loans (loans where a fixed interest rate is adjusted periodically). The “stress debt service ratio” system imposes a certain level of interest rate spread (a stress rate) when calculating the debt service ratio, taking into consideration the possibility that a borrower of a floating rate loan may be subject to an increased burden when repaying principal and interest if the interest rate were to increase during the loan period. The “stress debt service ratio” system was initially applied beginning February 26, 2024 to mortgage loans in the banking sector. Since September 1, 2024, the application of the “stress debt service ratio” system was expanded to mortgage loans across all financial institutions as well as credit facilities in the banking sector. The application of the “stress debt service ratio” system is expected to further expand to mortgage loans, credit facilities and other loans across all financial institutions beginning July 2025.

Restrictions on Investments in Property

A bank may possess real estate property only to the extent necessary for conducting its business; provided that the aggregate value of such real estate property must not exceed 60% of the sum of its Tier I and Tier II capital (less any capital deductions). Any property acquired by a bank (1) through the exercise of its rights as a secured party or (2) the acquisition of which is prohibited by the Banking Act must be disposed of within three years, unless otherwise provided by the regulations thereunder.

Restrictions on Shareholdings in Other Companies

Under the Banking Act, a bank may not own more than 15% of shares outstanding with voting rights of another company, except where, among other reasons:

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the company issuing such shares is engaged in a business that falls under the category of financial businesses set forth by the Financial Services Commission (including companies which business purpose is to own equity interests in private equity funds); or

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the acquisition of shares by the bank is necessary for corporate restructuring of such company and is approved by the Financial Services Commission.

In the above cases, a bank must satisfy either of the following requirements:

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the total investment in companies in which the bank owns more than 15% of the outstanding shares with voting rights does not exceed 20% of the sum of Tier I and Tier II capital (less any capital deductions); or

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the total investment in companies in which the bank owns more than 15% of the outstanding shares with voting rights does not exceed 30% of the sum of Tier I and Tier II capital (less any capital deductions) where the acquisition satisfies the requirements determined by the Financial Services Commission.

The Banking Act provides that a bank using its bank accounts and its trust accounts is not permitted to acquire the shares issued by the Major Shareholder of such bank in excess of an amount equal to 1% of the sum of Tier I and Tier II capital (less any capital deductions).

Restrictions on Bank Ownership

Under the Banking Act, subject to certain exceptions, a single shareholder and persons who stand in a special relationship with such shareholder (as described in the Presidential Decree to the Banking Act) may acquire beneficial ownership of up to 10% of a national bank’s total issued and outstanding shares with voting rights and up to 15% of a regional bank’s total issued and outstanding shares with voting rights. The government, the Korea Deposit Insurance Corporation and financial holding companies qualifying under the Financial Holding Companies Act are not subject to such ceilings. However, non-financial business group companies — namely, (1) any same shareholder group with an aggregate net assets of all non-financial companies belonging to such group of not less than 25% of the aggregate net assets of all corporations that are members of such group; (2) any group with aggregate assets of all non-financial companies belonging to such group of not less than W2 trillion; (3) any mutual fund in which the same shareholder group, as described in items (1) and (2) above, owns more than 4% of the total shares issued and outstanding; (4) a private equity fund (under the Financial Investment Services and Capital Markets Act) where (i) the general partner of such private equity fund, (ii) the limited partner whose equity holding ratio in such private equity fund is 10% or more, or (iii) the limited partners, being member companies of a single group of companies that belong to the same conglomerate as defined in the Monopoly Regulation and Fair Trade Act, whose aggregate equity holding ratio in such private equity fund is 30% or more falls under either of item (1) to (3) above; or (5) a special purpose company of a private equity fund where a private equity fund, as described in item (4) above, owns 4% or more of the special purpose company’s issued and outstanding shares or has actual control over the major business affairs of the special purpose company through, for example, appointment and dismissal of the officers – may not acquire beneficial ownership of shares of a national bank in excess of 4% of such bank’s outstanding voting shares, provided that such non-financial business group companies may acquire beneficial ownership of:

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up to 10% of a national bank’s outstanding voting shares with the approval of the Financial Services Commission under the condition that such non-financial group companies will not exercise voting rights in respect of such shares in excess of the 4% limit; and

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in the event that a foreigner, as defined in the Foreign Investment Promotion Act, owns not less than 10% of a national bank’s outstanding voting shares, up to 10% of such bank’s outstanding voting shares without the approval of the Financial Services Commission, and in excess of 10%, 25% or 33% of such bank’s outstanding voting shares, with the approval of the Financial Services Commission, up to the number of shares owned by such foreigner.

In addition, any person (whether a Korean national or a foreigner), with the exception of non-financial business group companies described above, may also acquire in excess of 10% of a national bank’s total voting

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shares issued and outstanding, provided that an approval from the Financial Services Commission is obtained in instances where the total holding exceeds 10% (or 15% in the case of regional banks), 25% or 33% of the bank’s total voting shares issued and outstanding.

Deposit Insurance System

The Depositor Protection Act provides, through a deposit insurance system, insurance for certain deposits of banks in Korea. Under the Depositor Protection Act, all banks governed by the Banking Act, including Shinhan Bank and Jeju Bank, are required to pay to the Korea Deposit Insurance Corporation an insurance premium on a quarterly basis at such rate as determined by the Presidential Decree to the Depositor Protection Act, which shall not exceed 0.5% of the bank’s insurable deposits in any given year. The current insurance premium is 0.02% of insurable deposits for each quarter. If the Korea Deposit Insurance Corporation pays the insured amount, it will acquire the claims of the depositors within the payment amount. Under current rules, the Korea Deposit Insurance Corporation insures only up to a total of W50 million per an individual for deposits and interest in a single financial institution, regardless of when the deposits were made and the size of the deposits, although such limit was increased to W100 million through an amendment to the Depositor Protection Act of Korea in December 2024 which is expected to become effective sometime during 2025.

The Financial Consumer Protection Act

Under the FCPA, a financial instrument distributor who intends to sell financial instruments shall comply with the following requirements: (i) confirmation of suitability and adequacy of financial instruments, (ii) compliance with the duty to explain, (iii) prohibition of unfair sales activities, (iv) prohibition of undue solicitation, and (v) prohibition of false or exaggerated advertising, etc. (collectively, the “Sales Principles”). If a financial instrument distributor breaches any of the Sales Principles, consumers may request the termination of such financial instrument within a period to be prescribed by a Presidential Decree and are entitled to unilaterally terminate the contract if the financial instrument distributor fails to present a justifiable reason for not accepting the consumer’s request. Consumers who purchased a loan product, in particular, shall be entitled to withdraw from the contract within 14 days from the later of (i) the date of receipt of the proceeds pursuant to the contract and (ii) the execution date of the contract (or the date of receipt of the documents necessary for execution of the contract (if required under the FCPA), regardless of whether the financial instrument distributor breached any of the Sales Principles. When a consumer files a lawsuit for damages against a financial instrument distributor for breach of the duty to explain, the financial instrument distributor (and not the consumer) shall bear the burden of proof to prove that no willful conduct or negligence was involved in the breach of such duty to explain. In the event of a dispute with a financial instrument distributor, consumers may apply for mediation to the Dispute Mediation Committee of the Financial Services Commission. If a financial instrument distributor files a lawsuit with a court while such mediation is in progress, the court may suspend the litigation proceedings. For certain small-sum cases, a financial instrument distributor may not file a lawsuit with a court until the completion of such mediation. Financial instrument distributors must accept requests from its consumers to access information for purposes of litigation or mediation. In the event the Financial Services Commission determines that there is a clear risk that a financial product may cause significant damage to the properties of customers, the Financial Services Commission may prohibit or restrict the solicitation of, and execution of a contract for, such financial product.

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Trust Business

A bank that intends to enter into the trust business must obtain the approval of the Financial Services Commission. Trust activities of banks are governed by the Financial Investment Services and Capital Markets Act. Banks engaged in the banking business and trust business are subject to certain legal and accounting procedures requirements, including the following:

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under the Banking Act, the Financial Investment Services and Capital Markets Act and the Trust Act, assets accepted in trust by a bank in Korea must be segregated from its other assets in the accounts of such bank; accordingly, banks engaged in the banking and trust businesses must maintain two separate accounts, the “banking accounts” and the “trust accounts,” and two separate sets of records which provide details of their banking and trust businesses, respectively; and

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assets comprising the trust accounts are not available to depositors or other general creditors of such bank in the event the trustee is liquidated or is wound up.

In the event that a bank qualifies and operates as a collective investment business entity, a trustee, a custodian or a general office administrator under the Financial Investment Services and Capital Markets Act, it is required to establish relevant operation and management systems to prevent potential conflicts of interest among the banking business, the collective investment business, the trustee or custodian business and general office administration. These measures include:

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prohibitions against officers, directors and employees of one particular business operation from serving as an officer, director and employee in another business operation, except where an officer or a director (1) serving in two or more business operations with no significant conflict of interest in accordance with the Presidential Decree on the Financial Investment Services and Capital Markets Act or (2) serving in a trustee business or a custodian business and simultaneously serving in a general office administrator business in accordance with the Financial Investment Services and Capital Markets Act;

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prohibitions against the joint use or sharing of computer equipment or office equipment; and

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prohibitions against the sharing of information by and among officers, directors and employees engaged in the different business operations.

A bank which qualifies and operates as a collective investment business entity may engage in the sale of beneficiary certificates of investment trusts which are managed by such bank. However, such bank is prohibited from engaging in the following activities:

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acting as trustee of an investment trust managed by such bank;

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purchasing with such bank’s own funds beneficiary certificates of an investment trust managed by such bank;

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using in its sales activities of other collective investment securities information relating to the trust property of an investment trust managed by such bank;

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selling through other banks established under the Banking Act beneficiary certificates of an investment trust managed by such bank;

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establishing a short-term financial collective investment vehicle; and

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establishing a mutual fund.

Laws and Regulations Governing Other Business Activities

To enter the foreign exchange business, a bank must register with the Minister of the Ministry of Strategy and Finance. The foreign exchange business is governed by the Foreign Exchange Transaction Law. To enter the securities business, a bank must obtain the approval of the Financial Services Commission. The securities

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business is governed by regulations under the Financial Investment Services and Capital Markets Act. Pursuant to the above-mentioned laws, banks are permitted to engage in the foreign exchange business and the underwriting business for government and other public bonds.

In 2018, regulatory authorities are encouraging financial institutions to lower the ATM usage fees in order to decrease the financial expense burden on consumers. Further, in light of the increasing household debt, regulatory authorities are encouraging financial institutions to gradually increase the proportion of the principal of retail loans that are subject to the fixed interest rates from 14% in 2012 to 45% by 2017.

Principal Regulations Applicable to Credit Card Companies

General

Any person, including a bank, wishing to engage in the credit card business must obtain a license from the Financial Services Commission. In addition, in order to enter the credit card business, a bank must obtain a license from the Financial Services Commission (hereinafter, a bank which obtains such license is defined as “licensed bank engaged in the credit card business”). The credit card business is regulated and governed by the Specialized Credit Financial Business Act. Under the Specialized Credit Financial Business Act and regulations thereunder, a company in the same conglomerate group (as defined in the Monopoly Regulation and Fair Trade Act) may engage in the credit card business even though another company in the same conglomerate group is already engaged in such business, which was previously not permitted.

The Specialized Credit Financial Business Act establishes guidelines on capital adequacy and provides for other regulations relating to the supervision of credit card companies. The Specialized Credit Financial Business Act delegates regulatory authority over credit card companies to the Financial Services Commission and its executive body, the Financial Supervisory Service.

A licensed bank engaging in the credit card business is regulated by the Financial Services Commission and the Financial Supervisory Service.

The Financial Services Commission regulates credit card companies and licensed banks engaged in the credit card business by establishing guidelines or regulations on management of such companies. Moreover if the Financial Services Commission deems the financial condition of a credit card company or a licensed bank engaged in the credit card business to be unsound or such companies fail to satisfy the guidelines or regulations, the Financial Services Commission may take certain measures to improve the financial condition of such companies.

Restrictions on Scope of Business

Under the Specialized Credit Financial Business Act, a credit card company may conduct only the following types of business: (i) credit card business as licensed or other specialized credit finance businesses as registered pursuant to the Specialized Credit Financial Business Act; (ii) the businesses ancillary to the credit card business, (for example, providing cash advance loans to existing credit card holders, issuing and settling of debit cards and issuing, selling and settling of pre-paid cards); (iii) provision of unsecured or secured loans; (iv) provision of discount on notes; (v) purchase, management and collection of account receivables originated by companies in the course of providing goods and services; (vi) provision of payment guarantee; (vii) asset management business under the Asset Backed Securitization Act; (viii) credit investigation; and (ix) other incidental businesses related to the foregoing. Under the Specialized Credit Financial Business Act, a credit card company’s scope of business includes “businesses that utilize existing manpower, assets or facilities in a credit card company, as designated by the Financial Services Commission.” Under the current regulation established by the Financial Services Commission, a credit card company may engage in various types of business including, but not limited to, e-commerce, operation of insurance agency, delegation of card issuance, supply of payment settlement system, loan brokerage and brokerage of collective investment securities.

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A credit card company’s average balance of claim amounts arising from the advance of loans to credit card holders (excluding such claims arising from the re-advance of loans to credit card holders following a change in the maturity or interest rate of such loans as part of a debt restructuring) as of the end of each quarter may not exceed the sum of the following amounts:

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Average balance of claims during a quarter arising from the purchase of goods or services by credit card holders with credit cards; and

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Amount of debit card usage during a quarter by debit card members.

Capital Adequacy

The Specialized Credit Financial Business Act provides for a minimum paid-in capital amount of: (i) W20 billion in the case of a specialized credit financial business company which wishes to engage in no more than two kinds of core businesses (i.e., credit card, installment finance, leasing and new technology business) and (ii) W40 billion in the case of an specialized credit financial business company, which wishes to engage in three or more kinds of core businesses.

Under the Specialized Credit Financial Business Act and regulations thereof, a credit card company must maintain a “capital adequacy ratio,” defined as the ratio of adjusted equity capital to adjusted total asset, of 8% or more and a “delinquent claim ratio,” defined as the ratio of delinquent claims to total claims as set forth under the regulations relating to the Specialized Credit Financial Business Act, of less than 10%.

Under the Specialized Credit Financial Business Act and regulations thereof, the minimum ratio of allowances for losses on loans, leased assets (except assets subject to an operating lease) and suspense receivables as of the date of accounting settlement (including semiannual preliminary accounts settlement) would be 0.5% of normal assets, 1% of precautionary assets and 20% of substandard assets, 75% of doubtful assets and 100% of estimated loss assets, and the minimum ratio of allowances for losses on card assets would be 1.1% (or 2.5%, in the case of card loan assets and revolving assets) of normal assets, 40% (or 50%, in the case of card loan assets and revolving assets) of precautionary assets, 60% (or 65%, in the case of card loan assets and revolving assets) of substandard assets, 75% of doubtful assets and 100% of estimated loss assets. In addition, a credit card company has to reserve a certain amount calculated according to relevant regulations as loss allowances for unused credit limits.

Liquidity

Under the Specialized Credit Financial Business Act and regulations thereunder, a credit card company must maintain a Won liquidity ratio (Won-denominated current assets/Won-denominated current liabilities) of 100% or more. In addition, once a credit card company is registered as a foreign exchange business institution with the Minister of the Ministry of Strategy and Finance, such credit card company is required to (1) maintain a foreign-currency liquidity ratio within three months (defined as foreign-currency liquid assets due within three months divided by foreign-currency liabilities due within three months) of not less than 80%, (2) maintain a ratio of foreign-currency liquid assets due within seven days (defined as foreign-currency liquid assets due within seven days less foreign-currency liabilities due within seven days, divided by total foreign-currency assets) of not less than 0% and (3) maintain a ratio of foreign-currency liquid assets due within a month (defined as foreign-currency liquid assets due within a month less foreign-currency liabilities due within a month, divided by total foreign-currency assets) of not less than negative 10%. The Financial Services Commission requires a credit card company to submit quarterly reports with respect to the maintenance of these ratios.

Restrictions on Funding

Under the Specialized Credit Financial Business Act, a credit card company may raise funds using only the following methods: (i) borrowing from financial institutions, (ii) issuing corporate debentures or notes,

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(iii) selling securities held by the credit card company, (iv) transferring claims held by the credit card company, (v) borrowing and issuing foreign currency securities after registering itself as a foreign exchange business institutions under the Foreign Exchange Transactions Law, (vi) transferring claims held by the credit card company in connection with its businesses, (vii) issuing securities backed by the claims held by the credit card company relating to its businesses, or (viii) issuing securities backed by the claims held by the credit card company relating to its ancillary businesses determined by the Financial Services Commission.

Furthermore, a credit card company may borrow funds from offshore or issue foreign currency denominated securities once it is registered as a foreign exchange business institution with the Minister of the Ministry of Strategy and Finance.

A credit card company must ensure that its total asset does not exceed eight times the amount of its equity capital. However, if the credit card company cannot comply with such limit due to the occurrence of unavoidable events such as drastic changes in the domestic and global financial markets, such limit of its total assets compared to the equity capital may be adjusted by a resolution of the Financial Services Commission. A non-credit card company must ensure that its total asset does not exceed eight times the amount of its equity capital, from January 1, 2025.

Restrictions on Loans to Affiliate Companies

Under the Specialized Credit Financial Business Act and regulations thereof, a credit card company may not provide loans exceeding 50% of its equity capital, in the aggregate, to its specially related persons (as defined under the relevant laws) including, but not limited to, its affiliates.

Restrictions on Assistance to Other Companies

Under the Specialized Credit Financial Business Act, a credit card company may not engage in any of the following acts in conjunction with other financial institutions or companies: (i) holding voting shares under cross shareholding or providing credit for the purpose of avoiding the restrictions on loans to affiliate companies; (ii) acquiring shares under cross shareholding for the purpose of avoiding the limitation on purchase of its treasury shares under the Korean Commercial Code or the Financial Investment Services and Capital Markets Act; or (iii) other acts which are likely to have a material adverse effect on the interests of transaction parties as stipulated by the Presidential Decree to the Specialized Credit Financial Business Act, which are not yet provided.

A credit card company also may not extend credit for enabling another person to purchase the shares of such credit card company or to arrange financing for the purpose of avoiding the restrictions on loans to affiliate companies.

Restrictions on Investment in Real Estate

Under the Specialized Credit Financial Business Act and the regulations thereof, a credit card company may possess real estate only to the extent that such business conduct is designated by such laws and regulations, with certain exceptions such as for the purposes of factoring or leasing or as a result of enforcing its security rights, provided that the Financial Services Commission may limit the maximum amount a credit card company may invest in real estate investments for business purposes up to a percentage equal to or in excess of 100% of its equity capital.

Restrictions on Shareholding in Other Companies

Under the Specialized Credit Financial Business Act and the Act on the Structural Improvement of the Financial Industry, a credit card company and its affiliate financial institutions (together a “group”) are required

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to obtain prior approval of the Financial Services Commission if such credit card company, together with its affiliate financial institutions, (i) owns 20% or more of outstanding voting shares of a target company or (ii) owns 5% or more of outstanding voting shares of a target company, and shall be deemed to have control of the target company, including being the largest shareholder of such target company or otherwise.

Disclosure and Reports

Pursuant to the Specialized Credit Financial Business Act and the regulations thereof, the ordinary disclosure requirement for a credit card company is to disclose any material matters relating to management performance, profits and losses, corporate governance, competence of the employees or risk management within three months from the end of each fiscal year and within two months from the end of the first half of the fiscal year. In addition, a credit card company is required to disclose on an on-going basis certain matters such as the occurrence of non-performing loans, a financial incident or losses exceeding certain amounts. In addition, under the regulations issued by the Financial Services Commission, a credit card company or a licensed bank engaging in the credit card business must submit such report as required by the Governor of the Financial Supervisory Service, with certain important matters being reported as frequently as each month. In addition, all companies engaged in the specialized credit financial business under the Specialized Credit Financial Business Act, including, without limitation, credit card companies, must file a report to the Financial Supervisory Service regarding the result of settlement of accounts within one month after the end of its fiscal year. Also, these companies are required to conduct a provisional settlement of accounts for each quarter and file a report to the Financial Supervisory Service within one month after the end of such quarter.

Risk of Loss Due to Lost, Stolen, Forged or Altered Credit Cards

Under the Specialized Credit Financial Business Act, upon notice from the holder of a credit card or a debit card of its loss or theft, a credit card company or a licensed bank engaged in the credit card business, as the case may be, is liable for any loss arising from the unauthorized use of credit cards or debit cards thereafter as well as any loss from unauthorized transactions made within 60 days prior to such notice. However, a credit card company or a licensed bank engaged in the credit card business, as the case may be, may transfer to the cardholder all or part of the risks of loss associated with unauthorized transactions made within 60 days prior to such notice, in accordance with the standard terms and conditions agreed between the credit card company or the licensed bank engaged in the credit card business, as the case may be, and the cardholder, provided that the loss or theft must be due to the cardholder’s willful misconduct or negligence. Disclosure of a cardholder’s password under duress or threat to the cardholder’s or his/her family’s life or health will not be deemed as the cardholder’s willful misconduct or negligence.

Moreover, a credit card company or a licensed bank engaged in the credit card business, as the case may be, is also responsible for any losses resulting from the use of forged or altered credit cards, debit cards and pre-paid cards. However, a credit card company or a licensed bank engaged in the credit card business, as the case may be, may transfer all or part of this risk of loss to holders of credit cards in the event of willful misconduct or gross negligence by holders of such cards if the terms and conditions of the written agreement entered between the credit card company or a licensed bank engaged in the credit card business, as the case may be, and holders of such cards specifically provide for such transfer. For these purposes, disclosure of a customer’s password that is made intentionally or through gross negligence, or the transfer of or giving as collateral of the credit card or debit card, is considered willful misconduct or gross negligence.

In addition, the Specialized Credit Financial Business Act prohibits a credit card company from transferring to merchants the risk of loss arising from lost, stolen, forged or altered credit cards, debit cards or pre-paid cards; provided, however, that a credit card company may enter into an agreement with a merchant under which the merchant agrees to be responsible for such loss if caused by the merchant’s gross negligence or willful misconduct.

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Each credit card company or a licensed bank engaged in the credit card business must institute appropriate measures such as establishing reserves, purchasing insurance or joining a cooperative association in order to fulfill its obligations related to the risk of loss arising from unauthorized use due to lost, stolen, forged or altered credit cards, debit cards or pre-paid cards.

Under the Specialized Credit Financial Business Act, the Financial Services Commission may take necessary measures to maintain credit order and protect consumers by establishing standards to be complied with by credit card companies relating to:

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maximum limits for cash advances on credit cards;

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restrictions on debit cards with respect to per day or per transaction usage;

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aggregate issuance limits and maximum limits on the amount per card on pre-paid cards;

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calculation and determination of credit limits;

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determination of the amount limit of credit cards;

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provisions included in credit card agreements;

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management of credit card merchants;

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collection on claims; or

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classification of credit card holders for purposes of determining the fees applicable to such holders.

Lending Ratio in Ancillary Business

Pursuant to the Presidential Decree of the Specialized Credit Financial Business Act, as amended in January 2020, a credit card company must maintain a quarterly average balance of receivables arising from cash advances to credit card holders (excluding cash advances incurred by re-lending to a credit card holder after modifying the terms and conditions, such as maturity or interest rate, of the original cash advance for debt rescheduling purposes) no greater than its aggregate quarterly average balance of receivables arising from credit card holders’ purchase of goods and services (excluding the amount of receivables arising from the purchase of goods and services using an exclusive use card for business purposes) plus its aggregate quarterly amount of payments made by members using their debit cards.

Issuance of New Cards and Solicitation of New Card Holders

The Presidential Decree of the Specialized Credit Financial Business Act establishes the conditions under which a credit card company or a licensed bank engaged in the credit card business may issue new cards and solicit new members. Specifically, new credit cards may be issued only to the following persons that meet all of the following criteria: (i) age of 19 years or more as defined in the Korean Civil Code, or age of 18 years or more with evidence of employment as of the date of the credit card application; (ii) satisfaction of a minimum credit score as publicly announced by the Financial Services Commission, provided that the minimum personal credit score requirement will not apply in the case where (a) the credit card company can confirm through objective evidence that an applicant is sufficiently capable of paying for his or her credit card use or such applicant can provide objective evidence therefor, or (b) a credit card function is added to an existing debit card for added convenience to the card holder and the credit card function is subject to limits determined by the Financial Services Commission; (iii) satisfaction of the application scoring system for the relevant credit; and (iv) verification of personal identity.

In addition, a credit card company or a licensed bank engaged in the credit card business, as the case may be, may not engage in the following methods of soliciting credit card holders: (i) providing economic benefits or conditioning such benefits in excess of 100% of the annual credit card fee (in the case of credit cards with annual

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fees that are less than the average amount of annual fees charged by major credit cards in Korea, the annual fee will be deemed to be equal to such average annual fee) in connection with issuance of credit cards; (ii) solicitation on streets and private roads as prescribed under the Road Act and Private Road Act, public place and corridors used by the general public; (iii) solicitation through visits, except those visits made upon prior consent and visits to a business area; (iv) solicitation through pyramid sales methods; and (v) solicitation through the Internet, as further discussed below.

In addition, a credit card company or a licensed bank engaged in the credit card business is required to check whether the credit card applicant has any delinquent debt owed to any other credit card company or other financial institutions which the applicant is unable to repay, and also require, in principle, with respect to solicitations made through the Internet, the certified electronic signature of the applicant. Moreover, persons who intend to engage in solicitation of credit card applicants must register with the Financial Services Commission, unless the solicitation is made by officers or employees of a credit card company or a company in business alliance with such credit card company.

Compliance Rules on Collection of Receivable Claims

Pursuant to the Specialized Credit Financial Business Act and its regulations, a credit card company or a licensed bank engaged in the credit card business are prohibited from collecting its claims by way of:

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exerting violence or threat of violence;

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informing a Related Party (a guarantor of the debtor, blood relative or fiancée of the debtor, a person living in the same household as the debtor or a person working in the same workplace as the debtor) of the debtor’s liability without just cause;

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providing false information relating to the debtor’s obligation to the debtor or his or her Related Party;

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threatening to sue or suing the debtor for fraud despite lack of affirmative evidence to establish that the debtor has submitted forged or false documentation with respect to his/her capacity to make payment;

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visiting or telephoning the debtor during late hours between 9:00 p.m. and 8:00 a.m.; and

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utilizing other uncustomary methods to collect the receivables thereby invading the privacy or the peacefulness in the workplace of the debtor or his or her Related Party.

Principal Regulations Applicable to Financial Investment Companies

General

The securities business is regulated and governed by the Financial Investment Services and Capital Markets Act. Financial investment companies are under the regulation and supervision of the Financial Services Commission, the Financial Supervisory Service and the Securities and Futures Commission.

Under the Financial Investment Services and Capital Markets Act, a financial investment company may engage in dealing, brokerage, collective investment, investment advice, discretionary investment management or trust businesses if it has obtained relevant licenses from the Financial Services Commission.

A financial investment company may also engage in certain businesses ancillary to the primary business or certain other additional businesses by submitting a report to the Financial Services Commission within two weeks from the commencement of the business without obtaining any separate license. Approval to merge with any other entity or to transfer all or substantially all of a business must also be obtained from the Financial Services Commission.

Under the Act on the Structural Improvement of the Financial Industry, if the Government deems a financial investment company’s financial condition to be unsound or if a financial investment company fails to meet the

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applicable Net Operating Equity Ratio (as defined below), the government may order certain sanctions, including among others, sanctions against a financial investment company or its officers or employees, capital increase or reduction and a suspension or assignment of a part or all of business operation.

Regulations on Financial Soundness — Capital Adequacy

The Financial Investment Services and Capital Markets Act sets forth various types of brokerage and/or dealing business licenses based on (i) the scope of products and services that may be provided by each type of the brokerage and/or dealing licensee and (ii) the type of customers to which such products and services may be provided. For example, a financial investment company engaged in the brokerage, dealing and underwriting businesses with retail investors as well as professional investors in connection with all types of securities is required to have a minimum paid-in capital of W53 billion in order to obtain a license for such brokerage, dealing and underwriting businesses.

Under the Financial Investment Service Regulations, as amended and effective as of January 31, 2019, the soundness requirement of financial investment companies changed from the previous net operating equity ratio requirement to a net equity ratio requirement. The net equity ratio is calculated according to the following formula:

Net Equity Ratio = (Net Operating Equity – Total Risk) / Equity Capital Maintenance Requirement for Each Service Unit

The terms “Net Operating Equity” and “Total Risk” for the purpose of the above-stated formula are defined and elaborated in the regulations of the Financial Services Commission. Generally, the Net Operating Equity, the Total Risk and the Equity Capital Maintenance Requirement for Each Service Unit are to be calculated according to the following formula:

Net Operating Equity = Net assets (total assets - total liabilities) - the total of items that may be deducted + the total of items that may be added;

Total Risk = market risk + counterparty risk + management risk; and

Equity Capital Maintenance Requirement for Each Service Unit = Mandatory Equity Capital to be Required for Each Licensed Service Unit × 70%

The regulations of the Financial Services Commission require, among other things, financial investment companies to maintain the net equity ratio at a level equal to or higher than 100% at the end of each quarter of the fiscal year.

In addition, all Korean companies, including financial investment companies, are required to set aside, as a legal reserve, 10% of the cash portion of the annual dividend or interim dividend in each fiscal year until the reserve reaches 50% of the stated capital.

Under the Financial Investment Services and Capital Markets Act and regulations thereunder, the minimum ratio of allowances for losses on loans and suspense receivables specified under such regulations is 0.5% of normal assets, 2% of precautionary assets, 20% of substandard assets, 75% of doubtful assets and 100% of estimated loss assets.

Other Provisions on Financial Soundness

The Financial Investment Services and Capital Markets Act, the Presidential Decree of the Financial Investment Services and Capital Markets Act and the regulations of the Financial Services Commission also

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include certain provisions which are designed to regulate certain types of activities relating to the management of the assets of a securities company, subject to certain exceptions. Such provisions include:

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restrictions on the holdings by a securities company of securities issued by another company which is the largest shareholder or the major shareholder (each as defined under the Financial Investment Services and Capital Markets Act) of such securities company; and

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restrictions on providing money or credit to the largest shareholder (including specially-related persons of such shareholder), major shareholders, officers and specially-related persons of the securities company.

Principal Regulations Applicable to Insurance Companies

General

Insurance companies are regulated and governed by the Insurance Business Act (the “Insurance Business Act”). In addition, insurance companies in Korea are under the regulation and supervision of the Financial Services Commission and its governing entity, the Financial Supervisory Service.

Under the Insurance Business Act, approval to commence an insurance business must be obtained from the Financial Services Commission based on the type of insurance businesses, which are classified as life insurance business, non-life insurance business and third type insurance business. Life insurance business means an insurance business which deals with life insurance policies or pension insurance policies (including retirement insurance policies). Non-life insurance business means an insurance business which deals with fire insurance policies, marine insurance policies, car insurance policies, guaranty insurance policies, reinsurance policies, liability insurance policies or other insurance policies prescribed under the Presidential Decree of the Insurance Business Act. Third type insurance business means an insurance business which deals with injury insurance policies, health insurance policies or nursing care insurance policies. Under the Insurance Business Act, insurance companies are not allowed to engage in both a life insurance business and a non-life insurance business, subject to certain exceptions.

If the Government deems an insurance company’s financial condition to be unsound or if an insurance company fails to properly manage the business as set forth under relevant Korean law, the government may order certain sanctions including, among others, sanctions against an insurance company or its officers or employees, capital increase or reduction and a suspension or assignment of a part or all of business operation.

Capital Adequacy

The Insurance Business Act requires a minimum paid-in capital of W30 billion for an insurance company; provided, that, the insurance company which intends to engage in only certain types of insurance policies may have a lower paid-in capital pursuant to the Presidential Decree of the Insurance Business Act.

In addition to the minimum capital requirement, an insurance company is required to maintain a Solvency Margin Ratio of 100% or more. “Solvency Margin Ratio” is the ratio of the Solvency Margin to the Standard Amount of the Solvency Margin. Solvency Margin is the aggregate amount of net assets and amounts that are liabilities in the balance sheet but are usable to cover loss risk (e.g., the amount of subordinated liabilities), less the amount that the Governor of the Financial Supervisory Service deems unusable to compensate for losses incurred by unexpected risks of an insurance company, among assets or capital in the balance sheet, such as stock discounts and treasury stocks. The Standard Amount of Solvency Margin for life insurance companies is defined under the regulation of the Financial Services Commission.

On January 1, 2023, the Financial Supervisory Service introduced the K-ICS, a new regulatory solvency regime for insurance companies, based on the International Capital Standard developed by the International

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Association of Insurance Supervisors, which is similar in substance to the Solvency II Directive of the European Union. Under the K-ICS, at the time of computation of the Solvency Margin, insurance contract liabilities are expected to be measured based on market value, rather than book value, and at the time of computation of the Standard Amount of the Solvency Margin, risks associated with termination, business expenses, longevity, catastrophes and asset concentration risks are added, which would require a number of insurance companies in Korea with a large portfolio of high guaranteed rate of return products to obtain additional capital to meet their capital adequacy requirements. However, the Financial Supervisory Service has allowed for deduction from available capital on a gradual basis and for gradual recognition of risks in relation to required capital for up to 10 years. Even if the Solvency Margin Ratio under the K-ICS is less than 100%, corrective measures will be withheld in case the Solvency Margin Ratio under the prior risk-based capital regime exceeds 100% for up to five years, to ease the burden on insurance companies.

Under the Insurance Business Act, the Presidential Decree and other regulations thereunder, for each accounting period, insurance companies are required to appropriate policy reserve that is earmarked for future payments of insurance money, refund and dividends to policyholders (hereinafter collectively referred to as “Insurance Money”) for each insurance contract. However, if an insurance company has reinsured a portion of its insurance contracts with a creditworthy reinsurance company in order to lower its overall risk, in principle, the insurance company is not required to appropriate policy reserve for the reinsured contracts. Instead, the reinsurance company is required to appropriate such policy reserve for the reinsured contracts. The Insurance Business Act was amended on January 24, 2011 to classify the insurance products into two categories: (i) reportable insurance products and (ii) voluntary insurance products. Under this amendment, only the changes to the terms and conditions of the reportable insurance products require a prior report and approval from the Financial Supervisory Service and the voluntary insurance products can be sold without prior approval from the Financial Supervisory Service. The policy reserve needs to be appropriated in accordance with the policy reserve calculation method for each insurance product as stipulated in amended Insurance Business Act.

The policy reserve amount consists of the following: (i) insurance contract liabilities (the sum of (a) the amount reserved by applying current estimates of future cash flow in order to pay the insurance proceeds, etc. for which an event of payment under the insurance policy has occurred as of the end of each fiscal year and (b) the amount reserved by applying current estimates of future cash flow in order to pay the insurance proceeds, etc. in the future although an event of payment under the insurance policy has not occurred as of the end of each fiscal year), (ii) investment contract liabilities (amounts reserved by insurance companies for the payment of insurance proceeds, etc. in the future for insurance contracts classified as investment contracts among insurance contracts) and (iii) amounts reserved by applying current estimates on future cash flows in the manner prescribed by the Financial Services Commission.

Pursuant to the regulations established by the Financial Services Commission, insurance companies are required to maintain allowances for outstanding loans, accounts receivables and other credits (including accrued income, payment on account, and bills receivables or dishonored) in an aggregate amount covering not less than 0.5% of normal credits, 2% of precautionary credits, 20% of substandard credits, 50% of doubtful credits and 100% of estimated loss credits, provided that the minimum ratio of allowances for certain type of outstanding loans by insurance companies to individuals and households (including, retail loans, housing loans, and other forms of retail loans extended to individuals not registered for business), is increased to 1% of normal credits, 10% of precautionary credits and 55% of doubtful credits. Furthermore, the regulations on insurance companies became more stringent in September 2010 by adding a requirement that insurance companies maintain allowance for bad debts in connection with real estate project financing loans in excess of 0.9% of normal credits and 7% of precautionary credits.

Variable Insurance and Bancassurance Agents

Variable insurance is regulated pursuant to the Insurance Business Act and the Financial Investment Services and Capital Markets Act. In order for an insurance company to sell variable insurance to a policyholder

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and operate such variable insurance, the insurance company must obtain a license with respect to collective investment business from the Financial Services Commission and register as a selling company with the Financial Services Commission. In this case, according to the Financial Investment Services and Capital Markets Act, an insurance company will be regulated as an investment trust and assets acquired in connection with variable insurance must be held by a trust company that is registered with the Financial Services Commission pursuant to the Financial Investment Services and Capital Markets Act.

According to the Financial Investment Services and Capital Markets Act, insurance companies may operate variable insurance through (i) mandating all of the management and the management instruction business to another asset management company, (ii) operating by way of discretionary investment all of the assets constituting the investment advisory assets out of the investment trust assets, or (iii) operating all of the investment trust assets into other collective investment securities, thereby allowing all of the particular variable insurance assets to be outsourced.

The Insurance Business Act permits banks, securities companies, credit card companies and other financial institutions to register as insurance agents or insurance brokers and engage in the insurance business (the “Bancassurance Agents”), who are currently permitted to sell all types of life and non-life insurance products, except for protection type insurance products, such as whole life insurance, critical illness insurance and automobile insurance.

Restrictions on Investment of Assets

According to the Insurance Business Act, insurance companies are prohibited from making any of the following investment of assets:

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owning any real estate (excluding any real estate owned as a result of enforcing their own security interest) other than real estate for conducting its business as designated by the Presidential Decree. In any case, the total amount of real estate owned by an insurance company must not exceed 25% of its Total Assets, provided that investment in real estate for a separate account is limited to 15% of the assets of such separate account;

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loans made for the purpose of speculation in commodities or securities;

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loans made directly or indirectly to enable a natural or legal person to buy their own shares;

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loans made directly or indirectly to finance political campaigns and other similar activities; and

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loans made to any of the insurance company’s officers or employees other than loans based on insurance policy or de minimis loans of up to (1) W20 million in the case of a general loan, (2) W50 million in the case of a general loan plus a housing loan, or (3) W60 million in the aggregate for general loans and housing loans.

In addition, insurance companies are not allowed to exceed 50% of its Total Assets with respect to holding foreign currency under the Foreign Exchange Transaction Act or owning offshore real estate.

Regulations on Class Actions Regarding Securities

The Law on Class Actions Regarding Securities was enacted as of January 20, 2004 and last amended on May 28, 2013. The Law on Class Actions Regarding Securities governs class actions suits instituted by one or more representative plaintiff(s) on behalf of 50 or more persons who claim to have been damaged in a capital markets transaction involving securities issued by a listed company in Korea.

Applicable causes of action with respect to such suits include:

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claims for damages caused by misleading information contained in a securities statement;

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claims for damages caused by the filing of a misleading business report, semi-annual report, or quarterly report;

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claims for damages caused by insider trading or market manipulation; and

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claims instituted against auditors for damages caused by accounting irregularities.

Any such class action may be instituted upon approval from the presiding court and the outcome of such class action will have a binding effect on all potential plaintiffs who have not joined the action, with the exception of those who have filed an opt out notice with such court.

U.S. Regulations

As a substantial majority of our and our subsidiaries’ operations are in Korea, we are primarily subject to the regulations and supervision of the Financial Services Commission and the Financial Supervisory Service. Our subsidiaries, however, have limited operations in the United States, and we own a bank in the United States. Therefore, we and our U.S. operations are subject to U.S. supervision, regulation and enforcement by relevant authorities in the United States with regard to our U.S. operations.

U.S. Banking Regulations

Our operations in the United States are subject to a variety of regulatory regimes. Shinhan Bank maintains an uninsured branch in New York, which is licensed by the New York State Department of Financial Services (the “Department”) and registered with the banking authority of Korea. Shinhan Bank’s New York branch is subject to regulation and examination by the Department under its licensing authority. In addition, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) exercises examination and regulatory authority over Shinhan Bank’s U.S. branch. We also own a non-member state chartered bank, Shinhan Bank America, which is regulated by the Department, as its chartering authority, and by the Federal Deposit Insurance Corporation (“FDIC”), as its primary federal banking regulator and as the insurer of its deposits. Our U.S. branch and U.S. bank subsidiary are subject to restrictions on their respective activities, as well as prudential restrictions, such as limits on extensions of credit to a single borrower, and restrictions on transactions with affiliates, among other things. We are also a financial holding company and a bank holding company under U.S. banking laws and our U.S. operations are subject to regulation, supervision and enforcement by the Federal Reserve Board.

Shinhan Bank’s U.S. operations are generally subject to numerous U.S. federal, state and local laws. Legislators and regulators regularly introduce measures or take actions that may modify the regulatory requirements applicable to the financial industry. It is not possible to determine the full extent of any impact on us of any such potential financial reform legislation, or whether any such proposal will become law. We may in the future be subject to enhanced governmental scrutiny and/or increased regulation, including resulting from changes in U.S. executive administration or Congressional leadership.

Shinhan Bank’s U.S. Branch

The Department, as the licensing authority of Shinhan Bank’s U.S. branch, has the authority, in certain circumstances, to take possession of the business and property of Shinhan Bank located in New York. Such circumstances generally include violations of law, unsafe business practices and insolvency. If the Department exercised this authority over the New York branch of Shinhan Bank, all assets of Shinhan Bank located in New York would generally be applied first to satisfy creditors of the New York branch. Any remaining assets would be applied to satisfy creditors of other U.S. offices of Shinhan Bank, after which any residual assets of the New York branch would be returned to the principal office of Shinhan Bank and made available for application pursuant to any Korean insolvency proceeding.

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Financial Holding Company

In addition to the direct regulation of Shinhan Bank’s U.S. branch by the Department and the Federal Reserve Board, because we operate a U.S. branch and have a subsidiary bank in the U.S., our nonbanking activities in the United States are subject to regulation by the Federal Reserve Board pursuant to the International Banking Act of 1978, the Bank Holding Company Act of 1956 (the “BHC Act”), and other laws. We have elected to be a “financial holding company” under the BHC Act. Financial holding companies may engage in a broader spectrum of activities than bank holding companies or foreign banking organizations that are not financial holding companies, including underwriting and dealing in securities. To maintain our financial holding company status and engage in activities permissible for a financial holding company, (i) we and our U.S. subsidiary bank located in New York are required to be “well capitalized” and “well managed,” (ii) our U.S. branch is required to meet certain examination ratings, and (iii) our subsidiary bank in New York is required to maintain a rating of at least “satisfactory” under the Community Reinvestment Act of 1977 (the “CRA”).

A major focus of U.S. governmental policy relating to financial institutions in recent years has been aimed at fighting money laundering and terrorist financing. Regulations applicable to us and our subsidiaries impose obligations to maintain effective policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identities of clients. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing could have serious consequences for the firm, both in legal terms and in terms of our reputation.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as amended, impacts the financial services industry by addressing, among other issues, systemic risk oversight, bank capital standards, the liquidation of failing systemically important institutions, over-the-counter and cleared derivatives, the ability of banking entities, including non-U.S. banks with branches in the U.S., such as us, to engage in proprietary trading activities and invest in hedge funds and private equity funds (the so-called Volcker Rule), consumer and investor protection, hedge fund registration, securitization, investment advisors, shareholder “say on pay,” the role of credit-rating agencies, and more. The Dodd-Frank Act requires various federal banking and financial regulatory authorities to adopt a broad range of implementing rules and regulations. Such authorities have significant discretion in drafting the implementing rules and regulations.

The Dodd-Frank Act provides regulators with tools to impose greater capital, leverage and liquidity requirements and other prudential standards, particularly for financial institutions that pose significant systemic risk. Pursuant to the Dodd-Frank Act, the Federal Reserve Board has implemented rules that establish enhanced prudential standards for the U.S. operations of foreign banking organizations (“FBOs”) such as us. In imposing such heightened prudential standards on non-U.S. banks such as us, the Federal Reserve Board is directed to take into account the principle of national treatment and equality of competitive opportunity, and the extent to which the foreign bank holding company is subject to comparable home country standards.

The Economic Growth, Regulatory Relief and Consumer Protection Act (the “Reform Act”), passed in 2018 raised the asset threshold for automatic application of enhanced prudential standards to FBOs under the Dodd-Frank Act from $50 billion in total global consolidated assets to $250 billion. The bill exempted FBOs with total global consolidated assets of less than $100 billion from these enhanced prudential standards effective immediately upon enactment of the bill. In October 2019, the Federal Reserve Board issued a final rule to implement the Reform Act’s changes to the application of enhanced prudential standards with respect to U.S. bank holding companies and FBOs (the “EPS Tailoring Rule”). The EPS Tailoring Rule delineates three categories of enhanced prudential standards (“EPS categories”) applicable to FBOs based on an FBO’s asset size and other factors such as the degree of the cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposures of an FBO’s U.S. operations. The EPS Tailoring Rule generally determines the stringency of enhanced prudential standards applicable to FBOs based on the risk profile of the FBO’s U.S. operations, rather than its global footprint, with most enhanced prudential standards applying only to FBOs with combined U.S. assets of at least $100 billion. FBOs with global assets of $100 billion or more and a

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relatively limited U.S. presence, such as us, are subject to certain minimum standards under the EPS Tailoring Rule, with the Federal Reserve Board relying primarily on compliance with comparable home-country prudential standards with respect to such FBOs.

If our size or risk profile were to increase, our combined U.S. operations may be subject to certain further enhanced prudential standards. In particular, enhanced prudential standards applicable to FBOs require an FBO with both significant total global consolidated assets and significant U.S. assets (excluding the total assets of each U.S. branch and agency) to establish a U.S. top-tier intermediate holding company (“IHC”) over all U.S. bank and nonbank subsidiaries, and generally subject such an FBO’s IHC to the same capital adequacy standards, including minimum risk based capital and leverage requirements, liquidity, liquidity risk management, stress testing and single counterparty credit limits as those applicable to U.S. bank holding companies in the same EPS category under the EPS Tailoring Rule. In addition, certain enhanced prudential standards will apply to the combined U.S. operations of an FBO whether or not the FBO is required to establish a U.S. IHC. We continue to assess the full impact of these enhanced prudential requirements and the EPS Tailoring Rule on our business.

In addition, as an FBO with more than $250 billion in total global consolidated assets that does not otherwise meet certain category thresholds identified in the EPS Tailoring Rule, we are currently required to submit periodically to the Federal Reserve Board and FDIC a resolution plan for the orderly resolution of our U.S. operations under the U.S. Bankruptcy Code or other applicable insolvency laws in a rapid and orderly fashion in the event of future material financial distress or failure. If the Federal Reserve Board and the FDIC jointly determine that the resolution plan is not credible and the deficiencies are not cured in a timely manner, they may jointly impose more stringent capital, leverage or liquidity requirements or restrictions on our growth, activities or operations. If we were to fail to address the deficiencies in the resolution plan when required, we could eventually be required to divest certain assets or operations.

Shinhan Bank America

Shinhan Bank America, a state chartered bank that is located in New York and is not a member of the Federal Reserve Board, is subject to extensive regulation and examination by the Department, as its chartering authority, and by the FDIC, as the insurer of its deposits and as its primary federal banking regulator. The federal and state laws and regulations which are applicable to banks regulate, among other things, the activities in which they may engage and the locations at which they may engage in them, their investments, their reserves against deposits, the timing of the availability of deposited funds and transactions with affiliates. Shinhan Bank America must file reports with the Department and the FDIC concerning its activities and financial condition, in addition to obtaining regulatory approvals prior to entering into certain transactions, such as establishing branches and mergers with, or acquisitions of, other depository institutions. The Department and the FDIC periodically examine the bank to test Shinhan Bank America’s safety and soundness and its compliance with various regulatory requirements. This comprehensive regulatory and supervisory framework restricts the activities in which a bank can engage and is intended primarily for the protection of the FDIC insurance fund and the bank’s depositors. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities and examination policies, which include setting policies with respect to the classification of assets and the establishment of adequate loan loss reserves. Any change in such regulations, whether by the Department, the FDIC or as a result of the enactment of legislation, could have a material adverse impact on Shinhan Bank America and its operations.

Capital Requirements. The FDIC imposes capital adequacy standards on state-chartered banks like Shinhan Bank America. The “prompt corrective action” framework under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), provides, among other things, for expanded regulation of insured depository institutions, including banks, and their parent holding companies. As required by FDICIA, the federal banking agencies have established five capital tiers ranging from “well capitalized” to “critically undercapitalized” for insured depository institutions. In order for our U.S. bank subsidiary to be classified as “well capitalized,” which is necessary in order for us to maintain our financial holding company status, it must

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maintain a minimum 5% Tier I leverage ratio, a 6.5% common equity Tier I capital ratio, a 8% Tier I risk-based capital ratio and a 10% total risk-based capital ratio.

In order for Shinhan Bank America to be classified as “adequately capitalized” under FDICIA’s prompt corrective action standards, which is necessary in order for Shinhan Bank America to avoid certain restrictions under FDICIA, it must maintain a minimum 4% Tier I leverage ratio, a 4.5% common equity Tier I capital ratio, a 6% Tier I risk-based capital ratio and an 8% total risk-based capital ratio.

As of December 31, 2024, Shinhan Bank America exceeded all of the capital ratio standards for a well-capitalized bank with a Tier I leverage ratio of 10.10%, a common equity Tier I risk-based capital ratio of 15.24%, a Tier I risk-based capital ratio of 15.24% and a total risk-based capital ratio of 16.18%.

Activities and Investments of New York-Chartered Banks. Shinhan Bank America derives its lending, investment and other authority primarily from the applicable provisions of New York State Banking Law and the regulations of the Department, as well as FDIC regulations and other federal laws and regulations. See “— Activities and Investments of FDIC-Insured State-Chartered Banks” below. These New York laws and regulations authorize Shinhan Bank America to invest in real estate mortgages, consumer and commercial loans, certain types of debt securities, including certain corporate debt securities and obligations of federal, State and local governments and agencies, and certain other assets. A bank’s aggregate lending powers are not subject to percentage of asset limitations, but, as discussed below, there are limits on the amount of credit exposure that a bank may have to a single borrower or group of related borrowers. A New York-chartered bank may also exercise trust powers upon approval of the Department. Shinhan Bank America does not currently have trust powers.

With certain limited exceptions, Shinhan Bank America may not make loans or extend credit for commercial, corporate or business purposes (including lease financing) to a single borrower, the aggregate amount of which would be in excess of 15% of Shinhan Bank America’s net worth, on an unsecured basis, and 25% of the net worth if the excess is collateralized by readily marketable collateral or collateral otherwise having a value equal to the amount by which the loan exceeds 15% of Shinhan Bank America’s net worth. In calculating the amount of outstanding loans or credit to a particular borrower for this purpose, Shinhan Bank America must include its credit exposure arising from derivative transactions with the borrower.

Activities and Investments of FDIC-Insured State-Chartered Banks. The activities and equity investments of FDIC-insured, state-chartered banks are generally limited to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank may, among other things, (i) acquire or retain a majority interest in a subsidiary that is engaged in activities that are permissible for the bank itself to engage in, (ii) invest as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank’s total assets, and (iii) acquire up to 10% of the voting stock of a company that solely provides or reinsures directors’, trustees’ and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions. In addition, an FDIC-insured state-chartered bank may not directly, or indirectly through a subsidiary, engage as “principal” in any activity that is not permissible for a national bank unless the FDIC has determined that such activities would pose no significant risk to the insurance fund of which it is a member and the bank is in compliance with applicable regulatory capital requirements.

Regulatory Enforcement Authority. Applicable banking laws include substantial enforcement powers available to federal banking regulators. This enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may

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provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities. On June 12, 2017, Shinhan Bank America entered into a consent order with the FDIC with respect to certain weaknesses relating to its anti-money laundering compliance program. On October 13, 2022, the FDIC issued an Amended and Restated Consent Order (the “2022 Consent Order”) requiring additional corrective action to address the remaining deficiencies and weaknesses identified in Shinhan Bank America’s AML program. Shinhan Bank America also entered into a Memorandum of Understanding with NYDFS in May 2020 (the “2020 NYDFS MOU”) to address deficiencies in Shinhan Bank America’s BSA/AML compliance program and its internal audit function, which required Shinhan Bank America to, among other things, submit written reports detailing its remediation of these deficiencies. On May 14, 2021, the NYDFS notified Shinhan Bank America that it was in material breach of the 2020 NYDFS MOU. On September 29, 2023, Shinhan Bank America entered into a Consent Order (the “2023 FinCEN Order”) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) under which FinCEN determined that Shinhan Bank America committed willful violations of the Bank Secrecy Act and its implementing regulations during the relevant time period (April 2016, through March 2021). Under the 2023 FinCEN Order, FinCEN assessed a civil money penalty of $15 million against Shinhan Bank America. Also on September 29, 2023, the FDIC assessed a civil money penalty of $5 million against Shinhan Bank America (payment of which was credited against the civil money penalty assessed under the 2023 FinCEN Order), and the NYDFS entered into a consent order (“NYDFS Consent Order”) and assessed a civil money penalty of $10 million against Shinhan Bank America (resulting in a total amount of $25 million of civil money penalties). As of December 31, 2024, Shinhan Bank America has paid all civil money penalties due to the respective regulatory agencies. In addition to the $10 million civil money penalty to New York State, Shinhan Bank America was required under the NYDFS Consent Order to create a written plan, acceptable to the NYDFS, detailing enhancements to compliance policies and procedures, suspicious activity monitoring and reporting, and customer due diligence requirements. Shinhan Bank America continues to take corrective measures to improve its anti-money laundering program and system, consistent with its written plan to NYDFS.

Under the New York State Banking Law, the Department may issue an order to a New York-chartered banking institution to appear and explain an apparent violation of law to discontinue unauthorized or unsafe practices and to keep prescribed books and accounts. Upon a finding by the Department that any director, trustee or officer of any banking organization has violated any law, or has continued unauthorized or unsafe practices in conducting the business of the banking organization after having been notified by the Department to discontinue such practices, such director, trustee or officer may be removed from office by the Department after notice and an opportunity to be heard. The Department also may take possession of a banking organization under specified statutory criteria.

Prompt Corrective Action. Section 38 of the Federal Deposit Insurance Act provides the federal banking regulators with broad power to take “prompt corrective action” to resolve the problems of undercapitalized institutions. The extent of the regulators’ powers depends on whether the institution in question is “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” A bank is deemed to be (i) “well capitalized” if it has total risk-based capital ratio of 10.0% or greater, has a Tier I risk-based capital ratio of 8.0% or greater, has a common equity Tier I capital ratio of 6.5% or greater, has a Tier I leverage capital ratio of 5.0% or greater, and is not subject to specified requirements to meet and maintain a specific capital level for any capital measure, (ii) “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, has a Tier I risk-based capital ratio of 6.0% or greater, has a common equity Tier I capital ratio of 4.5% or greater, has a Tier I leverage capital ratio of 4.0% or greater and does not meet the definition of “well capitalized,” (iii) “undercapitalized” if it has a total risk-based capital ratio that is less than 8.0%, has a Tier I risk-based capital ratio that is less than 6.0%, has a common equity Tier I capital ratio of less than 4.5%, or has a Tier I leverage capital ratio that is less than 4.0%, (iv) “significantly undercapitalized” if it has a total risk-based capital ratio that is less than 6.0%, has a Tier I risk-based capital ratio that is less than 4.0%, has a common equity Tier I capital ratio that is less than 3.0%, or has or a Tier I leverage capital ratio that is less than 3.0%, and (v) “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. The regulations also provide that a federal banking regulator may, after notice and an

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opportunity for a hearing, reclassify a “well capitalized” institution as “adequately capitalized” and may require an “adequately capitalized” institution or an “undercapitalized” institution to comply with supervisory actions as if it were in the next lower category if the institution is in an unsafe or unsound condition or engaging in an unsafe or unsound practice. The federal banking regulator may not, however, reclassify a “significantly undercapitalized” institution as “critically undercapitalized.”

An institution generally must file a written capital restoration plan which meets specified requirements, as well as a performance guaranty by each company that controls the institution, with an appropriate federal banking regulator within 45 days of the date that the institution receives notice or is deemed to have notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Immediately upon becoming undercapitalized, an institution becomes subject to statutory provisions, which, among other things, set forth various mandatory and discretionary restrictions on the operations of such an institution.

FDIC Insurance. Shinhan Bank America’s deposits are insured by the FDIC. As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the FDIC.

The Dodd-Frank Act requires the FDIC to maintain the ratio of the FDIC insurance fund to estimated total insured deposits (“Reserve Ratio”) at 1.35% and to adopt a restoration plan when the Reserve Ratio falls below such percentage.

Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the Reserve Ratio to decline below the statutory minimum of 1.35%, resulting in the FDIC establishing a restoration plan on September 15, 2020. The plan contemplates the Reserve Ratio returning to 1.35% within 8 years. In October 2022, the FDIC adopted a final rule, applicable to all insured depository institutions, to increase the initial base deposit insurance assessment rates uniformly by 2%, beginning in the first quarterly assessment period of 2023. The rate increase is intended to increase the likelihood that the Reserve Ratio reaches the statutory minimum of 1.35% by September 30, 2028. The new assessment rates will remain in effect unless and until the Reserve Ratio meets or exceeds the FIDC’s long-term goal of a 2% Reserve Ratio. Progressively lower assessment rate schedules will take effect when the Reserve Ratio reaches 2%, and again when it reaches 2.5%.

In connection with the FDIC’s resolution of Silicon Valley Bank and Signature Bank in March 2023, U.S. government agencies invoked the “systemic risk exception” which extended FDIC insurance to depositors of the failed banks with deposits above the US$250,000 insurance limit. In order to recover the cost associated with protecting such uninsured depositors, the FDIC adopted a final rule in November 2023 to implement a special assessment of approximately 13.4 basis points (0.134%) of a banking organization’s estimated uninsured deposits reported as of December 31, 2022, excluding the first $5 billion of the combined banking organization’s estimated uninsured deposits. The special assessment is due over an initial eight quarterly periods which may be extended by the FDIC based on changes to its projected loss estimates. Based on the terms of the FDIC’s final rule, Shinhan Bank America is not subject to a special assessment on its uninsured deposits based on its amount of uninsured deposits reported for the December 31, 2022 reporting period. If bank failures in the future are more costly than the FDIC currently anticipates, then the FDIC may be required to continue to impose higher insurance premiums or additional special assessments. Any such increase or special assessment would increase Shinhan Bank America’s non-interest expense.

The FDIC may terminate the deposit insurance of any insured depository institution, including Shinhan Bank America, if it determines, after a hearing, that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, order or any condition imposed by an agreement with the FDIC. It also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance, if the institution has no tangible capital. If insurance of accounts is terminated, the accounts at the institution at the time of the

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termination, less subsequent withdrawals, shall continue to be insured for a period of six months to two years, as determined by the FDIC. Management is aware of no existing circumstances that would result in termination of Shinhan Bank America’s deposit insurance.

Brokered Deposits. Under federal law and applicable regulations, (i) a well-capitalized bank may solicit and accept, renew or roll over any brokered deposit without restriction, (ii) an adequately capitalized bank may not accept, renew or roll over any brokered deposit unless it has applied for and been granted a waiver of this prohibition by the FDIC and (iii) an undercapitalized bank may not accept, renew or roll over any brokered deposit. A bank that is less than well capitalized may not solicit deposits by offering a rate of interest that exceeds by more than 75 basis points the “national rate” (as published by the FDIC) (or, if higher, certain other national reference rates), except that, subject to certain criteria, such a bank may offer deposit interest rates up to a “local market rate cap” (determined by reference to the prevailing interest rates on insured deposits of comparable maturity in such institution’s normal market area or in the market area in which such deposits are being solicited). The term “undercapitalized insured depository institution” is defined to mean any insured depository institution that fails to meet the minimum regulatory capital requirement prescribed by its appropriate federal banking agency. The FDIC may, on a case-by-case basis and upon application by an adequately capitalized insured depository institution, waive the restriction on brokered deposits upon a finding that the acceptance of brokered deposits does not constitute an unsafe or unsound practice with respect to such institution. In June 2024, the FDIC proposed rules that would amend aspects of the FDIC’s brokered deposit regulations. Among other things, the proposed changes eliminate certain exceptions to the FDIC’s definition of “deposit broker.” It is unclear if the proposed rules will be finalized and, if so, the extent to which the final rules will differ from the proposal. Accordingly, the impact of any amendments to the FDIC’s brokered deposit regulations on Shinhan Bank America’s operations is uncertain. Shinhan Bank America had an aggregate amount of US$10 million of brokered deposits outstanding as of December 31, 2024.

Community Reinvestment and Consumer Protection Laws. In connection with its lending activities, Shinhan Bank America is subject to a variety of federal laws designed to protect borrowers and promote lending to various sectors of the economy and population. Included among these are the Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act, Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act and CRA.

The CRA requires FDIC insured banks to define the assessment areas that they serve, identify the credit needs of those assessment areas and take actions that respond to the credit needs of the community. The FDIC must conduct regular CRA examinations of Shinhan Bank America and assign it a CRA rating of “outstanding,” “satisfactory,” “needs to improve” or “substantial noncompliance.” Shinhan Bank America is also subject to provisions of the New York State Banking Law which impose similar obligations to serve the credit needs of its assessment areas. The Department and the FDIC each periodically assess a bank’s compliance and make such assessments available to the public. Federal and New York State laws both require consideration of these ratings when regulatory agencies review a bank’s application to engage in certain transactions, including mergers, asset purchases and the establishment of branch offices. A negative assessment may serve as a basis for the denial of any such application. Shinhan Bank America has received “satisfactory” ratings from both the Department and the FDIC in its most recent CRA performance evaluation.

In October 2023, the FDIC and other federal regulatory agencies finalized comprehensive amendments to the CRA regulatory framework. The amendments will be effective as of January 1, 2026. Among other things, the amendments are intended to reflect changes in the banking industry, including the expanded role of mobile and online banking and to tailor performance standards to account for differences in bank size, business models and local conditions. The ultimate consequences of the CRA amendments remain uncertain. It also remains unclear whether any other particular legislative or regulatory proposals will be enacted or adopted concerning CRA requirements applicable to us. Such regulatory developments may impact the ability of Shinhan Bank America to achieve “satisfactory” CRA performance ratings.

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The Dodd-Frank Act created the Consumer Financial Protection Bureau (the “Bureau”) with broad authority to regulate and enforce consumer protection laws. The Bureau has the authority to adopt regulations under numerous existing federal consumer protection statutes. The Bureau may also decide that a particular consumer financial product or service, or the manner in which it is offered, is an unfair, deceptive, or abusive act or practice. If the Bureau so decides, it has the authority to outlaw such act or practice.

Limitations on Dividends. The payment of dividends by Shinhan Bank America is subject to various regulatory requirements. Under New York State Banking Law, a New York-chartered stock bank may declare and pay dividends out of its net profits, unless there is an impairment of capital, but approval of the Superintendent of Banks is required if the total of all dividends declared in a calendar year would exceed the total of its net profits for that year combined with its retained net profits of the preceding two years, subject to certain adjustments.

Assessments. Banking institutions are required to pay assessments to both the FDIC and the Department to fund the operations of those agencies. The assessments are based upon the amount of Shinhan Bank America’s total assets. Shinhan Bank America must also pay an examination fee to the Department when it conducts an examination.

Transactions with Related Parties. Shinhan Bank America’s authority to engage in transactions with related parties or “affiliates” (i.e., any entity that controls or is under common control with an institution) is limited by Sections 23A and 23B of the Federal Reserve Act. Section 23A limits the aggregate amount of transactions with any individual affiliate to 10% of the capital and surplus of the institution and also limits the aggregate amount of transactions with all affiliates to 20% of the institution’s capital and surplus. The term “affiliate” includes, for this purpose, us and any company that we control other than Shinhan Bank America and its subsidiaries.

Loans to affiliates must be secured by collateral with a value that depends on the nature of the collateral. The purchase of low-quality assets from affiliates is generally prohibited. Loans and asset purchases with affiliates must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the institution as those prevailing at the time for comparable transactions with nonaffiliated companies. In the absence of comparable transactions, such transactions may only occur under terms and circumstances, including credit standards that in good faith would be offered to or would apply to nonaffiliated companies. Shinhan Bank America’s authority to extend credit to executive officers, directors and 10% shareholders, as well as entities controlled by such persons, is governed by Regulation O of the Federal Reserve Board. Regulation O generally requires such loans to be made on terms substantially similar to those offered to unaffiliated individuals (except for preferential loans made in accordance with broad based employee benefit plans), places limits on the amount of loans Shinhan Bank America may make to such persons based, in part, on Shinhan Bank America’s capital position, and requires certain approval procedures to be followed.

Standards for Safety and Soundness. FDIC regulations require that Shinhan Bank America adopt procedures and systems designed to foster safe and sound operations in the areas of internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings and compensation, fees and benefits. Among other things, these regulations prohibit compensation and benefits and arrangements that are excessive or that could lead to a material financial loss. If Shinhan Bank America fails to meet any of these standards, it will be required to submit to the FDIC a plan specifying the steps that will be taken to cure the deficiency. If it fails to submit an acceptable plan or fails to implement the plan, the FDIC will require it to correct the deficiency and until corrected, may impose restrictions on it.

The FDIC has also adopted regulations that require Shinhan Bank America to adopt written loan policies and procedures that are consistent with safe and sound operation, are appropriate for its size, and must be reviewed by its board of directors annually. Shinhan Bank America has adopted such policies and procedures, the material provisions of which are discussed above as part of the discussion of our lending operations.

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All of our subsidiaries are incorporated in Korea, except for the following:

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Shinhan Bank America (incorporated in the United States);

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Shinhan Bank Canada (incorporated in Canada);

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Shinhan Bank (China) Limited (incorporated in the People’s Republic of China);

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Shinhan Bank Europe GmbH (incorporated in Germany);

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Shinhan Bank Kazakhstan Limited (incorporated in Kazakhstan);

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Shinhan Bank Japan (incorporated in Japan);

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Shinhan Bank (Cambodia) PLC (incorporated in Cambodia);

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Shinhan Bank Vietnam Ltd. (incorporated in Vietnam);

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PT Bank Shinhan Indonesia (incorporated in Indonesia);

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Banco Shinhan de Mexico (incorporated in Mexico);

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LLP MFO Shinhan Finance (incorporated in Kazakhstan);

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PT Shinhan Indo Finance (incorporated in Indonesia);

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Shinhan Microfinance Co., Ltd. (incorporated in Myanmar);

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Shinhan Vietnam Finance Company Ltd. (incorporated in Vietnam);

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Shinhan Investment America Inc. (incorporated in the United States);

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Shinhan Investment Asia Ltd. (incorporated in Hong Kong);

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Shinhan Securities Vietnam Co., Ltd. (incorporated in Vietnam);

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PT Shinhan Sekuritas Indonesia (incorporated in Indonesia);

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Shinhan Life Insurance Vietnam LLC (incorporated in Vietnam);

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Shinhan DS Vietnam Co. Limited (incorporated in Vietnam); and

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SBJ DNX (incorporated in Japan).

ITEM 4.D.

Properties

The following table provides information regarding certain of our properties in Korea.


		Area (In square meters)
Type of Facility	Location	Building		Site (If Different)
Registered office and corporate headquarters	20, Sejong-daero 9-gil, Jung-gu, Seoul, Korea 04513		59,519		5,418
Shinhan Card headquarters	100, Eulji-ro, Jung-gu, Seoul, Korea 04551		65,774		4,634
Shinhan Centennial Building	29, Namdaemun-ro 10-gil, Jung-gu, Seoul, Korea 04540		19,697		1,389
Shinhan Bank Gwanggyo Branch	54, Cheonggyecheon-ro, Jung-gu, Seoul, Korea 04540		16,727		6,783
Shinhan Myongdong Branch	43, Myeongdong-gil, Jung-gu, Seoul, Korea 04534		8,936		1,017

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		Area (In square meters)
Type of Facility	Location	Building		Site (If Different)
Shinhan Youngdungpo Branch	27, Yeongjung-ro, Yeoungdeungpo-gu, Seoul, Korea 07301		6,171		1,983
Shinhan Back Office Support Center	1311, Jungang-ro, Ilsandong-gu, Goyang-si, Gyeonggi-do, Korea 10401		25,238		5,856
Shinhan Bank Back Office and Call Center	251, Yeoksam-ro, Gangnam-gu, Seoul, Korea 06225		40,806		7,964
Shinhan Bank Back Office and Storage Center	1221, 1sunwhan-ro, Sangdang-gu, Cheongju-Si, Chungcheongbuk-do, Korea 28777		6,019		5,376
Shinhan Card Yoksam-Dong Building	176, Yeoksam-ro, Gangnam-gu, Seoul, Korea 06248		7,348		1,185
Shinhan Data Center	67, Digital Valley-ro, Suji-gu, Yongin-si, Gyeonggi-do, Korea 16878		45,277		9,114

Our subsidiaries own or lease various land and buildings for their branches and sales offices.

As of December 31, 2024, Shinhan Bank had a countrywide network of 693 branches. Approximately 20% of these facilities were housed in buildings owned by us, while the remaining branches were leased properties. Lease terms are generally between two to three years and generally do not exceed five years. As of December 31, 2024, Jeju Bank had 31 branches of which we own 13 of the buildings in which the facilities are located, representing 41.9% of its total branches. Lease terms are generally between one to two years and seldom exceed five years.

As of December 31, 2024, Shinhan Card had 44 branches, including its headquarters, all but two of which were leased. Lease terms are generally between one to two years. As of December 31, 2024, Shinhan Securities had a nationwide network of 66 branches of which we own four of the buildings. As of December 31, 2024, Shinhan Life Insurance had 204 branches, which we lease for a term of generally one to two years.

The net book value of all the properties owned by us on December 31, 2024 was W2,767 billion. We do not own any material properties outside of Korea.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

We do not have any unresolved comments from the staff of the U.S. Securities and Exchange Commission regarding our periodic reports under the Securities Exchange Act of 1934, as amended.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and notes thereto included in this annual report. The following discussion is based on our consolidated financial statements, which have been prepared in accordance with IFRS.

ITEM 5.A.

Operating Results

Overview

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holding company to be established in Korea. Since inception, we have developed and introduced a wide range of financial products and services in Korea and aimed to deliver comprehensive financial solutions to clients through a convenient one-portal network.

Most of our assets are located in, and we generate most of our income from, Korea. Accordingly, our business and profitability are largely dependent on the general economic and social conditions in Korea, including interest rates, inflation, exports, personal expenditures and consumption, unemployment, demand for business products and services, debt service burden of households and businesses, the general availability of credit, the asset value of real estate and securities and other factors affecting the financial well-being of our corporate and retail customers. The Korean economy is closely integrated with, and is significantly affected by, developments in the global economy and financial markets. In recent years, the global economy and financial markets experienced adverse conditions and volatility, which also had an adverse impact on the Korean economy and in turn on our business and profitability. See “Item 3.D. Risk Factors — Risks Relating to Our Overall Business — Difficult conditions and turbulence in the Korean and global economy and financial markets may adversely affect our business, asset quality, capital adequacy and earnings.”

We derive most of our income from interest earned on our corporate and retail loans, net of funding costs (which primarily consist of interest payable on customer deposits). Net interest income is largely a function of the average volume of loans and the net interest spread thereon.

In 2023, the average volume of retail loans decreased by 2.0% from 2022, primarily as a result of a decrease in household credit loans (particularly general fund lump-sum repayment loans) and collective loans. In 2023, the average volume of corporate loans increased by 4.5% from 2022, primarily as a result of an increase in corporate credit loans (particularly working capital loans and loans for equipment).

In 2024, the average volume of retail loans increased by 4.1% from 2023, primarily as a result of a decline in market interest rates and an increase in real estate prices, particularly in the Seoul metropolitan area, which resulted in an increase in mortgage loans. In 2024, the average volume of corporate loans increased by 9.3% from 2023, primarily as a result of an increase in demand for funds, including working capital.

From 2022 to 2023, both the average yield on interest-earning assets and the average rate on interest-bearing liabilities increased primarily as a result of an increase in the base interest rate by the Bank of Korea during 2022 and 2023. The average balance increased for both interest-earning assets and interest-bearing liabilities. Shinhan Bank’s net interest income increased by 2.4% from W8,205 billion in 2022 to W8,403 billion in 2023. Net interest income after provision for loan losses amounted to W7,626 billion and W7,575 billion in 2022 and 2023, respectively. Shinhan Bank’s operating income decreased by 0.4% from W4,163 billion in 2022 to W4,147 billion in 2023.

From 2023 to 2024, both the average yield on interest-earning assets and the average rate on interest-bearing liabilities decreased, primarily as a result of the impact of the two base interest rate reductions by the Bank of Korea in 2024. The average balance increased for both interest-earning assets and interest-bearing liabilities. Shinhan Bank’s net interest income increased by 5.2% from W8,403 billion in 2023 to W8,837 billion in 2024. Net interest income after provision for loan losses amounted to W7,575 billion and W8,430 billion in 2023 and 2024, respectively. Shinhan Bank’s operating income increased by 22.0% from W4,147 billion in 2023 to W5,059 billion in 2024.

As for Shinhan Card, its operating revenue is largely dependent on transaction volume and less sensitive to interest rate movements than our banking business, since merchant fees (representing a fixed percentage of a credit card purchase amount) provide a stable source of income and our credit card business enjoys more diversified sources of funding, including commercial paper, corporate debentures (which have maturities longer than most bank deposit products) and asset-backed securitizations. The credit card transaction volume is largely dependent on the overall trends of the general Korean economy, such as general consumer spending patterns in

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Korea. Shinhan Card’s operating revenues increased by 14.8% from W5,379 billion in 2023 to W6,173 billion in 2024, largely due to an increase in gains on hedging activities resulting from the strengthening of the U.S. Dollar against Korean Won, along with a rise in the volume of derivative transactions. In addition, interest income increased by 5.0% from W2,841 billion in 2023 to W2,984 billion in 2024, primarily as a result of an increase in interest income on loans at amortized cost, including credit card loans and installment finance loans, driven by higher interest rates applied to installment credit sales compared to 2023, as well as efforts to expand the credit card business of Shinhan Card, which resulted in an increase in the average balance of loans at amortized cost and related interest income.

The following provides a discussion of the major trends surrounding the general economy and the financial services sector in Korea in 2024 and our current outlook for 2025 as they relate to our core businesses. The following discussion represents the subjective view of our management and may significantly differ from the actual results for 2025.

Trends in the Korean Economy

In 2024, the global economy experienced moderate growth as the downturn in the manufacturing sector somewhat eased, while the service sector continued its solid performance. Additionally, a disinflationary trend persisted across major economies, and the rate-cutting stance of global central banks became increasingly pronounced. In the U.S., the economy demonstrated robust growth driven by consumer spending, significantly outpacing other regions, which contributed to a strong dollar and rising U.S. stock markets. However, as the year progressed, uncertainties regarding policies following the U.S. presidential election increased, leading to heightened volatility in financial markets. In 2025, the global economy may face downward pressure due to deteriorating global trade conditions amidst the reciprocal tariffs policy of the Trump administration, including tariffs and resulting trade conflicts, along with increased uncertainty in global financial markets.

Korea’s GDP increased by 2.0% in 2024, an increase from 1.4% in 2023, driven by a significant rise in exports, despite sluggish private consumption and construction investment. Exports, especially in IT-related sectors such as semiconductors and ships, reached record highs, demonstrating substantial growth. The Bank of Korea has lowered its GDP growth forecast for 2025 to 1.5%, and the Korean economy is expected to experience sluggishness in both exports and domestic demand, primarily due to deteriorating trade conditions stemming from the reciprocal tariffs policy of the Trump administration, including tariffs and resulting trade conflicts and ongoing political uncertainties, both domestically and internationally.

Korea’s consumer prices have shown some signs of stability in 2024, and the Bank of Korea has lowered interest rates two times in the fourth quarter of 2024, bringing the year-end base interest rate to 3%. The U.S. Federal Reserve is expected to adopt a cautious approach to base interest rate cuts due to concerns over persistent inflation in the U.S. The monetary policies of the Bank of Korea and the U.S. Federal Reserve remain uncertain and subject to change depending on shifts in the domestic and international political environment.

Recent Developments and Outlook for the Korean Financial Sector

Commercial Banking

Since the global financial crisis in 2008, the asset size of Korean commercial banks has consistently grown year over year, including in 2024. In 2024, commercial banks in Korea faced challenges due to rising loan delinquency rates, particularly in the small- and medium-sized enterprises and retail loans sectors, primarily as a result of increased uncertainty in the financial sectors.

With concerns over a domestic economic slowdown and a sluggish real estate market, the outlook for commercial banks in 2025 remains challenging. We expect demand for corporate loans to remain relatively strong as companies try to diversify their funding strategies amid financial market uncertainties, but demand for

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retail loans are expected to slow down due to a variety of factors, including continuation of relatively high levels of inflation, volatility in the base interest rate and the Government’s continuing policies to control growth of household debt by regulating household mortgage and credit loans. Net interest margin may gradually decline, particularly if the Bank of Korea continues its monetary easing policy and lowers the base interest rate more than expected during 2025. In response to market volatility and increased risk of defaults on loan payments, particularly for loans to small- and medium-sized enterprises and to real estate project financings, many Korean commercial banks have preemptively set aside loan loss provisions to improve their resilience. However, if the trend of increasing loan loss provisions continues, it may have adverse effects on Korean commercial banks’ asset quality and capacity to supply new loans. For further details, see “Item 3.D. Risk Factors — Risks Relating to Our Banking Business — We have significant exposure to small- and medium-sized enterprises, and financial difficulties experienced by such enterprises may result in a deterioration of our asset quality.” Competition among banks, shadow banking financial institutions and fintech firms is expected to further intensify due to the accelerated transition to digital platforms and contactless financial services. We believe that strengthening risk management capabilities has continued to be increasingly important and have a direct impact on the financial performance of commercial banks in Korea.

Credit Cards

In 2024, credit card companies continued to operate amid political uncertainties, prolonged high levels of inflation, high interest rates, and weakened household purchasing power. These factors contributed to sluggish domestic demand and a slowdown in economic growth. Amidst these challenges, Korean credit card businesses aimed to enhance their profitability by targeting key overseas payment segments and transportation markets, as well as rolling out new private label credit cards in partnership with various brands and implementing specialized marketing efforts aimed at senior and youth demographics.

In 2025, the Korean credit card industry is expected to encounter further challenges despite certain measures that may be implemented such as a reduction in benchmark interest rates. Uncertainties surrounding U.S. President Donald Trump’s second administration, fluctuating foreign exchange rates, and a continued slowdown in the Chinese economy may lead to slower growth or a decline in levels of domestic consumption. Furthermore, competition may intensify as new entrants from other industries seek to establish a presence in the payments market. In response, credit card companies will need to develop strategies to optimize their business portfolios, enhance capital efficiency, streamline resources across personnel and channels, and pursue higher returns from emerging areas such as global operations and fee-based services.

Securities

The Korean securities industry is currently undergoing a transformation, expanding its business model from a traditional capital intermediary to a capital provider. Unlike in the past, when revenue was primarily generated through commissions in the brokerage sector, there is now a concerted effort to minimize the impact of trading volumes on the stock market by diversifying revenue streams within the investment banking sector. In the case of corporate finance at securities firms, there is an increasing emphasis on structured finance operations, including acquisition financing and overseas real estate investments, in addition to the traditional corporate finance sector. With financial authorities implementing policies to revitalize corporate finance and the presence of abundant liquidity, the profitability of securities firms in corporate finance is expected to become even more pronounced.

In 2024, despite market volatility, the Korean securities industry showed resilience in profitability, supported by the capital securities firms have accumulated over time, including during the COVID-19 pandemic. The general increase in operating funds allowed the securities industry to increase operating profit and secure recurring profits. Additionally, recognizing less one-time provisions and evaluation losses related to domestic real estate project financing and overseas alternative assets compared to previous years contributed to the profitability of the industry in 2024.

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In 2025, a challenging business environment is expected to persist due to market uncertainties and intensified competition. Factors such as increased trading volume in overseas stock markets, or additional base interest rate cuts, if they were to occur, would likely create additional opportunities for profits for securities firms. Meanwhile, the implementation of the final Basel III guidelines may prompt bank-affiliated securities firms to exercise caution in increasing credit risk-weighted assets in order to comply with capital regulations, which may gradually transform the competitive landscape of the domestic securities industry.

Life Insurance

In 2024, the life insurance industry’s overall profitability experienced continued pressure, due to aging population and low birthrates, slowing growth of the Korean economy, competition against tech companies who have been expanding into the life insurance market and volatility in the financial markets. Risk management and underwriting (risk takeover) capability became increasingly important factors in life insurance companies’ ability to strategically reduce business expenses. In addition, the demand for health insurance products and retirement pension insurance increased steadily, and as a result sales channels, products, and digital-based competitiveness have become increasingly important.

In 2025, major changes due to the implementation of IFRS 17 and K-ICS (requiring insurance companies to apply market price valuation to their assets and liabilities in calculating capital requirement ratios in line with the new IFRS 17 accounting standards), which contributed to increased volatility in insurance companies’ profits and losses and capital ratios, are expected to intensify competition to expand offerings of protection insurance products. As the line between financial and non-financial sectors become blurry and the life insurance market matures, we expect overall growth potential for the industry to be limited and the importance of developing differentiated products and services tailored to customers’ individualized needs and expanding digital-based customer services to become increasingly important.

Credit

In 2024, the unfavorable business environment continued throughout the year, primarily due to a decline in interest income triggered by instability in the real estate market, as well as increased uncertainty following the beginning of U.S. President Trump’s second administration and political issues in Korea. This uncertainty is expected to continue in 2025, which has resulted in downward revisions of economic growth forecasts and increased concerns about potential recession risks in Korea and other advanced economies, and presents challenges in achieving sustainable growth.

Asset Management

In 2025, diversification of investment strategies is expected to continue due to increased difficulty in generating profits from traditional assets as a result of increased interest rate volatility and uncertainties in global financial markets. In particular, direct investment and demand for alternative investment opportunities, such as real estate and alternative assets, is expected grow as investors seek to offset increases in base interest rates with high-yield investment products. In addition, it is expected that interest in retirement pension-linked products will continue to grow, as will online sales. Such growth in alternative investments is expected to offer new opportunities; however, increasing market volatility due to governments’ monetary policies, stricter regulation on private equity activities and increased risk of class action suits from investors may pose additional risks.

The total amount of assets under management by Shinhan Asset Management increased by 11.9% to W121.0 trillion as of December 31, 2024 from W108.1 trillion as of December 31, 2023, due to overall growth in demand for stocks, bonds and alternative investments. The total amount of discretionary investment contracts increased by 1.3% to W60.4 trillion as of December 31, 2024 from W59.6 trillion as of December 31, 2023, primarily due to an increase in the volume of contracts with insurance companies. Operating profit increased by 27.7% to W45.6 billion in 2024 from W35.7 billion in 2023, and net profit increased by 298.9% to

186

W107.8 billion in 2024 from W27.0 billion in 2023, primarily due to an increase in fees and commission income as a result of an increase in assets under management and an increase in valuation gains on Shinhan Asset Management’s investments.

As estimated returns on investments in the Korean market are expected to remain low due to slowing growth of the Korean economy, demand for investments in overseas markets and non-financial assets is expected to increase. Demand for long-term investment products in the public fund market, such as individual annuity funds and retirement pension funds, is expected to continue to rise. Demand from investors looking to invest in ESG products is expected to continue to be strong as new ESG products are introduced into the market and gradually attract interest from retail investors.

Interest Rates

Interest rate movements, in terms of magnitude and timing as well as their relative impact on our assets and liabilities, have a significant impact on our net interest margins and profitability, particularly with respect to its financial products that are sensitive to such movements. For example, if the interest rates applicable to Shinhan Bank’s loans (which are recorded as our assets) decrease at a faster pace or by a wider margin, or increase at a slower pace or by a thinner margin, compared to the interest rates applicable to its deposits (which are recorded as our liabilities), Shinhan Bank’s net interest margin will shrink and its profitability will be negatively affected. In addition, the relative size and composition of Shinhan Bank’s variable rate loans and deposits (as compared to our fixed rate loans and deposits) may also impact Shinhan Bank’s net interest margin. Furthermore, the difference in the average repricing frequency of Shinhan Bank’s interest-earning assets (primarily loans) compared to its interest-bearing liabilities (primarily deposits) may also impact its net interest margin. For example, since Shinhan Bank’s deposits currently have a longer term, on average, than that of its loans, its deposits are on average less sensitive to movements in the base interest rates on which its deposits and loans tend to be pegged, and therefore, an increase in the base interest rates tends to increase its net interest margin while a decrease in the base interest rates tends to have the opposite effect. Since Shinhan Bank is one of our principal operating subsidiaries, its net interest margin and profitability have a substantial effect on our overall net interest margin and profitability. While we continually manage our assets and liabilities to minimize our exposure to the interest rate volatility, such efforts by us may not mitigate the impact of interest rate volatility in a timely or effective manner.

The interest rate charged to customers by our banking subsidiaries is based, in part, on the “cost of funds index,” or COFIX, which is published by the Korean Federation of Banks. COFIX is computed based on the weighted average interest of select funding products (including time deposits, housing and other installment savings deposits, repos, discounted bills and senior non-convertible financial debentures) of eight major Korean banks (comprised of Shinhan Bank, Kookmin Bank, Woori Bank, KEB Hana Bank, Nonghyup Bank, Industrial Bank of Korea, Citibank Korea and Standard Chartered Bank Korea). Each bank then independently determines the interest rate applicable to its respective customers by adding a spread to the COFIX based on the difference between the COFIX and such bank’s general funding costs, administration fees, the customer’s credit score, the maturity of the loan and other customer-specific premiums and discounts based on the customer relationship with such bank. These interest rates are typically adjusted on a monthly basis.

187

Average Balance Sheet and Volume and Rate Analysis

Average Balances and Related Interest

The following table shows our average balances and interest rates, as well as the net interest spread, net interest margin and average asset liability ratio, for the years ended December 31, 2022, 2023 and 2024.


	For the Years Ended December 31,
	2022							2023							2024
	Average Balance⁽¹⁾		Interest Income/ Expense		Yield /Rate			Average Balance⁽¹⁾		Interest Income/ Expense		Yield / Rate			Average Balance⁽¹⁾		Interest Income/ Expense		Yield /Rate

	(In billions of Won, except percentages)
Assets:
Interest-earning assets
Due from banks⁽²⁾
Domestic	W	8,888	W	179		2.01	%	W	8,297	W	337		4.06	%	W	8,172	W	327		4.00	%
Foreign		4,980		104		2.10			5,056		254		5.02			6,664		453		6.81

Total		13,868		283		2.04			13,353		591		4.42			14,836		780		5.26

Loans⁽³⁾
Domestic
Retail loans		146,598		5,435		3.71			142,295		6,990		4.91			147,603		6,995		4.74
Corporate loans		186,145		6,882		3.70			195,180		9,886		5.07			213,723		10,430		4.88
Securities purchased with agreements to resell		3,470		56		1.62			2,634		66		2.51			4,502		76		1.68
Other corporate loans		182,675		6,826		3.74			192,546		9,820		5.10			209,221		10,354		4.95
Public and other loans		3,655		133		3.63			4,245		219		5.17			4,986		255		5.11
Loans to banks		2,581		85		3.29			4,322		245		5.67			1,957		137		6.98
Credit card loans		27,143		1,952		7.19			27,673		2,127		7.69			27,688		2,219		8.02
Foreign
Retail loans		10,761		630		5.85			11,844		757		6.39			12,926		790		6.11
Corporate loans		25,747		920		3.57			26,161		1,407		5.38			28,188		1,518		5.38
Securities purchased with agreements to resell		391		17		4.31			32		1		2.39			11		1		11.49
Other corporate loans		25,356		903		3.56			26,129		1,406		5.38			28,177		1,517		5.38
Loans to banks		3,068		70		2.28			2,581		132		5.12			2,362		131		5.53
Credit card loans		227		27		5.85			294		35		12.04			295		36		12.46

Total loans		405,925		16,134		3.97			414,595		21,798		5.26			439,728		22,511		5.12

Securities⁽⁴⁾
Domestic		171,190		3,277		1.91			173,269		4,481		2.59			184,557		5,224		2.83
Foreign		5,477		186		3.40			6,103		335		5.48			7,005		315		4.50

Total		176,667		3,463		1.96			179,372		4,816		2.68			191,562		5,539		2.89

Reinsurance contract assets
Domestic		—		—		—			2		—		5.38			18		2		12.19
Foreign		—		—		—			—		—		—			—		—		—

Total		—		—		—			2		—		5.38			18		2		12.19

Other interest-earning assets
Domestic		—		86		—			—		133		—			—		153		—
Foreign		—		7		—			—		1		—			—		7		—

Total		—		93		—			—		134		—			—		160		—

Total interest-earning assets	W	596,460	W	19,973		3.35	%	W	607,322	W	27,339		4.50	%	W	646,144	W	28,992		4.49	%

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	For the Years Ended December 31,
	2022							2023							2024
	Average Balance⁽¹⁾		Interest Income/ Expense		Yield /Rate			Average Balance⁽¹⁾		Interest Income/ Expense		Yield / Rate			Average Balance⁽¹⁾		Interest Income/ Expense		Yield /Rate

	(In billions of Won, except percentages)
Non-interest-earning assets
Cash and due from banks	W	19,278						W	18,054						W	21,745
Derivative assets		6,443							5,679							6,063
Property and equipment and intangible assets		9,716							10,170							10,170
Other non-interest-earning assets		36,386							38,808							40,094

Total non-interest-earning assets	W	71,823						W	72,711						W	78,072

Total assets	W	668,283	W	19,973				W	680,033	W	27,339				W	724,216	W	28,992

Liabilities:
Interest-bearing liabilities
Deposits
Domestic
Demand deposits	W	60,473	W	302		0.50	%	W	54,072	W	582		1.08	%	W	54,926	W	603		1.10	%
Savings deposits		107,430		391		0.36			96,305		801		0.83			97,744		798		0.82
Time deposits		156,022		3,241		2.08			184,472		7,194		3.90			200,499		7,419		3.70
Other deposits		12,293		267		2.17			8,896		348		3.92			7,961		311		3.91
Foreign
Demand deposits		8,066		20		0.24			8,372		44		0.53			8,295		57		0.68
Savings deposits		1,749		40		2.31			877		27		3.10			875		27		3.14
Time deposits		18,340		311		1.70			20,271		640		3.16			25,087		841		3.35
Other deposits		4,766		71		1.49			4,347		155		3.57			3,873		165		4.25

Total interest-bearing deposits		369,139		4,643		1.26			377,612		9,791		2.59			399,260		10,221		2.56

Financial liabilities designated at FVTPL
Domestic		29		1		4.46			182		10		5.38			254		13		5.23
Foreign		—		—		—			—		—		—			—		—		—

Total		29		1		4.46			182		10		5.38			254		13		5.23

Borrowings
Domestic
Securities sold with agreements to repurchases		10,314		203		1.97			12,437		444		3.57			15,773		512		3.24
Other borrowings		28,574		518		1.81			30,675		922		3.01			29,865		849		2.84
Foreign
Securities sold with agreements to repurchases		100		6		5.53			36		3		6.72			3		—		4.07
Other borrowings		10,248		212		2.07			10,169		527		5.19			9,933		501		5.05

Total interest-bearing borrowings		49,236		939		1.91			53,317		1,896		3.56			55,574		1,862		3.35

Debt securities issued
Domestic		80,495		1,893		2.35			75,749		2,722		3.59			86,980		3,388		3.89
Foreign		155		8		5.58			250		13		5.30			425		21		4.91

Total		80,650		1,901		2.36			75,999		2,735		3.60			87,405		3,409		3.90

Insurance contract liabilities
Domestic		48,841		1,672		3.42			46,307		1,705		3.68			49,708		1,685		3.39
Foreign		—		—		—			3		—		—			6		—		1.14

Total		48,841		1,672		3.42			46,310		1,705		3.68			49,714		1,685		3.39

190


	For the Years Ended December 31,
	2022							2023							2024
	Average Balance⁽¹⁾		Interest Income/ Expense		Yield /Rate			Average Balance⁽¹⁾		Interest Income/ Expense		Yield / Rate			Average Balance⁽¹⁾		Interest Income/ Expense		Yield /Rate

	(In billions of Won, except percentages)
Reinsurance contract liabilities
Domestic		65		1		1.41			—		—		—			—		—		—
Foreign		—		—		—			—		—		—			—		—		—

Total		65		1		1.41			—		—		—			—		—		—

Other interest-bearing liabilities
Domestic		6,148		209		3.39			5,911		373		6.31			7,538		389		5.16
Foreign		157		10		6.56			153		11		7.25			189		11		5.85

Total		6,305		219		3.47			6,064		384		6.33			7,727		400		5.18

Total interest-bearing liabilities	W	554,265	W	9,376		1.69	%	W	559,484	W	16,521		2.95	%	W	599,934	W	17,590		2.93	%

Non-interest-bearing liabilities
Non-interest-bearing deposits	W	5,495						W	4,557						W	4,250
Derivatives liabilities		7,325							6,494							6,112
Other non-interest-bearing liabilities		49,202							53,809							56,208

Total non-interest-bearing liabilities	W	62,022						W	64,860						W	66,570

Total liabilities	W	616,287	W	9,376				W	624,344	W	16,521				W	666,504	W	17,590

Total equity attributable to equity holder of the Group		49,636							52,892							55,059
Non-controlling interests		2,360							2,797							2,653

Total liabilities and equity	W	668,283	W	9,376				W	680,033	W	16,521				W	724,216	W	17,590

Net interest spread⁽⁵⁾						1.66	%						1.55	%						1.56	%
Net interest margin⁽⁶⁾						1.78	%						1.78	%						1.76	%
Average asset liability ratio⁽⁷⁾						107.61	%						108.55	%						107.70	%

Notes:

(1)	Average balances are based on (a) monthly balances for Shinhan Bank and (b) quarterly balances for other subsidiaries.

(2)	Due from banks as of December 31, 2022, 2023 and 2024, consists of due from banks at amortized cost and deposits at fair value through profit or loss.

(3)

Non-accruing loans are included in the respective average loan balances. Income on such non-accruing loans is no longer recognized from the date the loan is placed on nonaccrual status. We reclassify loans as accruing when interest (including default interest) and principal payments are current. Loans as of December 31, 2022, 2023 and 2024, consist of loans at amortized cost and loans at fair value through profit or loss.

(4)	Average balance and yield on securities are based on book value. Securities as of December 31, 2022, 2023 and 2024, consist of securities at fair value through profit or loss, securities at fair value through other comprehensive income and securities at amortized cost.

(5)	Represents the difference between the average rate of interest earned on interest-earning assets and the average rate of interest paid on interest-bearing liabilities.

(6)	Represents the ratio of net interest income to average interest-earning assets.

(7)	Represents the ratio of average interest-earning assets to average interest-bearing liabilities.

191

Analysis of Changes in Net Interest Income — Volume and Rate Analysis

The following table provides an analysis of changes in interest income, interest expense and net interest income between changes in volume and changes in rates for (i) 2024 compared to 2023 and (ii) 2023 compared to 2022. Volume and rate variances have been calculated on the movement in average balances and the change in the interest rates on average interest-earning assets and average interest-bearing liabilities in proportion to absolute volume and rate change. The variance caused by the change in both volume and rate has been allocated in proportion to the absolute volume and rate change.


	From 2023 to 2024 Interest Increase (Decrease) Due to Change in
	Volume			Rate			Change

	(In billions of Won)
Increase (decrease) in interest income
Due from banks
Domestic	W	(5	)	W	(5	)	W	(10	)
Foreign		94			105			199

Total		89			100			189

Loans:
Domestic
Retail loans		256			(251	)		5
Corporate loans		914			(370	)		544
Public and other loans		38			(2	)		36
Loans to banks		(155	)		47			(108	)
Credit card loans		1			91			92
Foreign
Retail loans		67			(34	)		33
Corporate loans		109			2			111
Loans to banks		(12	)		11			(1	)
Credit card loans		—			1			1

Total loans		1,218			(505	)		713

Securities
Domestic		303			440			743
Foreign		46			(66	)		(20	)

Total		349			374			723

Reinsurance contract assets
Domestic		2			—			2
Foreign		—			—			—

Total		2			—			2

Other interest-earning assets
Domestic		—			20			20
Foreign		—			6			6

Total		—			26			26

Total interest income	W	1,658		W	(5	)	W	1,653

192


	From 2023 to 2024 Interest Increase (Decrease) Due to Change in
	Volume			Rate			Change

	(In billions of Won)
Increase (decrease) in interest expense
Deposits:
Domestic
Demand deposits	W	9		W	12		W	21
Savings deposits		12			(15	)		(3	)
Time deposits		605			(380	)		225
Other deposits		(37	)		—			(37	)
Foreign
Demand deposits		—			13			13
Savings deposits		—			—			—
Time deposits		159			42			201
Other deposits		(18	)		28			10

Total interest-bearing deposits		730			(300	)		430

Financial liabilities designated at FVTPL
Domestic		3			—			3
Foreign		—			—			—
Total		3			—			3
Borrowings
Domestic		78			(83	)		(5	)
Foreign		(14	)		(14	)		(28	)
Total		64			(97	)		(33	)
Debt securities issued
Domestic		426			240			666
Foreign		9			(1	)		8
Total		435			239			674
Insurance contract liabilities
Domestic		120			(141	)		(21	)
Foreign		—			—			—
Total		120			(141	)		(21	)
Reinsurance contract liabilities
Domestic		—			—			—
Foreign		—			—			—

Total		—			—			—

Other interest-bearing liabilities
Domestic		92			(75	)		17
Foreign		2			(3	)		(1	)

Total		94			(78	)		16

Total interest expense		1,446			(377	)		1,069

Net increase (decrease) in net interest income	W	212		W	372		W	584

193


	From 2022 to 2023 Interest Increase (Decrease) Due to Change in
	Volume			Rate			Change

	(In billions of Won)
Increase (decrease) in interest income
Due from banks
Domestic	W	(13	)	W	171		W	158
Foreign		2			148			150

Total		(11	)		319			308

Loans:
Domestic
Retail loans		(164	)		1,719			1,555
Corporate loans		348			2,656			3,004
Public and other loans		24			62			86
Loans to banks		77			83			160
Credit card loans		39			136			175
Foreign
Retail loans		66			61			127
Corporate loans		15			472			487
Loans to banks		(12	)		74			62
Credit card loans		8			—			8

Total loans		401			5,263			5,664

Securities
Domestic		40			1,164			1,204
Foreign		24			125			149

Total		64			1,289			1,353

Reinsurance contract assets
Domestic		—			—			—
Foreign		—			—			—

Total		—			—			—

Other interest-earning assets
Domestic		—			47			47
Foreign		—			(6	)		(6	)

Total		—			41			41

Total interest income	W	454		W	6,912		W	7,366

Increase (decrease) in interest expense
Deposits:
Domestic
Demand deposits	W	(35	)	W	315		W	280
Savings deposits		(44	)		454			410
Time deposits		680			3,273			3,953
Other deposits		(89	)		170			81
Foreign
Demand deposits		1			23			24
Savings deposits		(24	)		11			(13	)
Time deposits		36			293			329
Other deposits		(7	)		91			84

Total interest-bearing deposits		518			4,630			5,148

194


	From 2022 to 2023 Interest Increase (Decrease) Due to Change in
	Volume			Rate		Change

	(In billions of Won)
Financial liabilities designated at FVTPL
Domestic		9			—		9
Foreign		—			—		—

Total		9			—		9

Borrowings
Domestic		85			560		645
Foreign		(3	)		315		312

Total		82			875		957

Debt securities issued
Domestic		(118	)		947		829
Foreign		5			—		5

Total		(113	)		947		834

Insurance contract liabilities
Domestic		(89	)		122		33
Foreign		—			—		—

Total		(89	)		122		33

Reinsurance contract liabilities
Domestic		(1	)		—		(1	)
Foreign		—			—		—

Total		(1	)		—		(1	)

Other interest-bearing liabilities
Domestic		(9	)		173		164
Foreign		—			1		1

Total		(9	)		174		165

Total interest expense		397			6,748		7,145

Net increase (decrease) in net interest income	W	57		W	164	W	221

Profitability Ratios and Other Data


	For the Years Ended December 31,
	2022			2023			2024
	(Percentages)
Profit attributable to the Group as a percentage of:
Average total assets⁽¹⁾		0.71	%		0.66	%		0.63	%
Average total Group equity⁽¹⁾		9.58			8.47			8.28
Dividend payout ratio⁽²⁾		26.27			28.49			27.75
Net interest spread⁽³⁾		1.66			1.55			1.56
Net interest margin⁽⁴⁾		1.78			1.78			1.76
Efficiency ratio⁽⁵⁾		87.33			86.73			89.35
Cost-to-income ratio⁽⁶⁾		43.86			41.38			41.68
Cost-to-average assets ratio⁽¹⁾⁽⁷⁾		6.57			5.73			6.98
Equity to average asset ratio⁽¹⁾⁽⁸⁾		7.78			8.19			7.97

195

Notes:

(1)	Average total assets (including average interest-earning assets), liabilities (including average interest-bearing liabilities) and equity are based on (a) monthly balances for Shinhan Bank and (b) quarterly balances for other subsidiaries.

(2)	Represents the ratio of total dividends declared on common and preferred stock and hybrid bonds as a percentage of profit attributable to the Group.

(3)	Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4)	Represents the ratio of net interest income to average interest-earning assets.

(5)

Represents the ratio of non-interest expense to the sum of net interest income and non-interest income. Efficiency ratio is used as a measure of efficiency for banks and financial institutions. Efficiency ratio may be reconciled to comparable line items in our income statements for the periods indicated as follows:


	For the Years Ended December 31,
	2022			2023			2024
	(In billions of Won, except percentages)
Non-interest expense (A)	W	43,875		W	38,984		W	50,568
Divided by
The sum of net interest income and non-interest income (B)		50,242			44,949			56,597
Net interest income		10,597			10,818			11,402
Non-interest income		39,645			34,131			45,195
Efficiency ratio ((A) as a percentage of (B))		87.33	%		86.73	%		89.35	%

(6)	Represents the ratio of general and administrative expenses to the operating income before general and administrative expenses and provision for credit loss allowance.

(7)	Represents the ratio of non-interest expense to average total assets.

(8)	Represents the ratio of average equity to average total assets.

Results of Operations

2024 Compared to 2023

The following table sets forth, for the periods indicated, the principal components of our operating income.


	For the Years Ended December 31,
	2023			2024			% Change
	(In billions of Won, except percentages)
Net interest income	W	10,818		W	11,402			5.4	%
Net fees and commission income		2,647			2,715			2.6
Net other operating expense		(7,364	)		(7,658	)		4.0

Operating income	W	6,101		W	6,459			5.9	%

196

Net Interest Income

The following table shows, for the periods indicated, the principal components of our net interest income.


	For the Years Ended December 31
	2023			2024			% Change

	(In billions of Won, except percentages)
Interest income:
Cash and due from bank at amortized cost	W	591		W	780			32.0	%
Deposits at fair value through profit or loss		—			—			N/M
Securities at fair value through profit or loss		1,396			1,693			21.3
Securities at fair value through other comprehensive income		2,357			2,744			16.4
Securities at amortized cost		1,062			1,102			3.8
Loans at amortized cost		21,677			22,411			3.4
Loans at fair value through profit or loss		121			100			(17.4	)
Insurance finance interest income		240			219			(8.8	)
Others		135			160			18.5

Total interest income	W	27,579		W	29,209			5.9	%

Interest expense:
Deposits	W	9,791		W	10,221			4.4	%
Financial liabilities designated at FVTPL		10			13			30.0
Borrowings		1,896			1,862			(1.8	)
Debt securities issued		2,735			3,409			24.6
Insurance finance interest expense		1,945			1,902			(2.2	)
Others		384			400			4.2

Total interest expense	W	16,761		W	17,807			6.2	%

Net interest income	W	10,818		W	11,402			5.4	%

Net interest margin⁽¹⁾		1.78	%		1.76	%

N/M = not meaningful

Note:

(1)	Represents the ratio of net interest income to average interest-earning assets. See “— Average Balance Sheet and Volume and Rate Analysis — Average Balances and Related Interest.”

Interest income. Interest income increased by 5.9% to W29,209 billion in 2024 from W27,579 billion in 2023, primarily due to a 3.3% increase in interest income on loans to W22,511 billion in 2024 from W21,798 billion in 2023, and, to a lesser extent, a 16.4% increase in interest income on securities at fair value through other comprehensive income to W2,744 billion in 2024 from W2,357 billion in 2023. Interest income on loans increased primarily due to an increase in average balance of loans by 6.1% to W439,728 billion in 2024 from W414,595 billion in 2023, which was partially offset by a decrease in the average lending rate of loans to 5.12% in 2024 from 5.26% in 2023, driven by the two base interest rate reductions by the Bank of Korea in 2024.

More specifically, the increase in interest income was primarily due to the following:

•

a 5.8% increase in interest on corporate loans to W11,948 billion in 2024 from W11,293 billion in 2023, primarily due to a 9.3% increase in the average balance of corporate loans to W241,911 billion in 2024 from W221,341 billion in 2023, which was partially offset by a decrease in the average lending rate for corporate loans to 4.94% in 2024 from 5.10% in 2023. The average balance of corporate loans increased principally due to an increase in demand for funds, including working capital. The average lending rate for corporate loans decreased primarily as a result of the general decrease in market interest rates largely driven by the two base interest rate reductions by the Bank of Korea in 2024 as discussed above.

197

•

a 0.5% increase in interest on retail loans to W7,785 billion in 2024 from W7,747 billion in 2023, primarily due to a 4.1% increase in the average balance of retail loans to W160,529 billion in 2024 from W154,139 billion in 2023, which was partially offset by a decrease in the average lending rate for retail loans to 4.85% in 2024 from 5.03% in 2023. The average balance of retail loans increased primarily as a result of a decline in market interest rates and an increase in real estate prices, particularly in the Seoul metropolitan area, which resulted in an increase in mortgage loans. The average lending rate for retail loans decreased primarily as a result of the general decrease in market interest rates, largely driven by decreases in the base interest rate set by the Bank of Korea in 2024, as discussed above. The base interest rate set by the Bank of Korea affects the market interest rate for certificates of deposit, which in turn largely determines our lending rates for a substantial majority of our retail loans

•

Interest income on securities at fair value through other comprehensive income increased primarily due to an increase in the average yield of securities at fair value through other comprehensive income by 34 basis points to 3.10% in 2024 from 2.76% in 2023, driven by purchases of securities at fair value through other comprehensive income made during the period of rising interest rates, prior to the decline in market interest rates and the two base interest rate cuts in the second half of 2024 (the 3-year government bond yield closed at 3.15% at the end of 2023, but surged to 3.55% during 2024).

Interest expense. Interest expense increased by 6.2% from W16,761 billion in 2023 to W17,807 billion in 2024, due primarily to a 24.6% increase in interest expense on debt securities issued to W3,409 billion in 2024 from W2,735 billion in 2023 and a 4.4% increase in interest expenses on deposits to W10,221 billion in 2024 from W9,791 billion in 2023.

Interest expense on debt securities issued increased primarily as a result of a 15.0% increase in the average balance of debt securities issued to W87,405 billion in 2024 from W75,999 billion in 2023, mainly driven by an increase in bond issuance to diversify our funding portfolio and to secure financing to meet the increase in long-term mortgage loans.

Interest expense on deposits increased primarily due to a 5.7% increase in the average balance of deposits to W399,260 billion in 2024 from W377,612 billion in 2023, which was partially offset by a decrease in the average interest rate payable on deposits to 2.56% in 2024 from 2.59% in 2023. The increase in the average balance of deposits was primarily due to a 10.2% increase in the average balance of time deposits to W225,586 billion in 2024 from W204,743 billion in 2023, which was largely a result of a significant amount of matured funds from the Government policy products, such as the Youth Hope Installment Savings, being partially converted into time deposits during 2024. The decrease in the average interest rate payable on deposits resulted mainly from a decrease in the average interest rate payable on time deposits by 17 basis points to 3.66% in 2024 from 3.83% in 2023, which was largely a result of lower average market interest rates for 2024 compared to 2023 as described above.

Net interest margin. Net interest margin represents the ratio of net interest income to the average balance of interest-earning assets. Net interest margin decreased by 2 basis points from 1.78% in 2023 and to 1.76% in 2024, largely due to an increase in the average volume of interest-earning assets mainly driven by the increase in the average balance of corporate loans as discussed above, outpacing the increase in net interest income.

Net interest spread. Net interest spread, which represents the difference between the average rate of interest earned on interest-earning assets and the average rate of interest paid on interest-bearing liabilities, increased by 1 basis point from 1.55% in 2023 to 1.56% in 2024, as the 1 basis point decrease in the average rate of interest receivable on interest-earning assets to 4.49% in 2024 from 4.50% in 2023 was outpaced by the 2 basis point decrease in the average rate of interest payable on interest-bearing liabilities to 2.93% in 2024 from 2.95% in 2023. Both the average rate of interest receivable on interest-earning assets and the average rate of interest payable on interest-bearing liabilities decreased resulting mainly from the impact of the two base interest rate

198

reductions by the Bank of Korea in 2024. The average volume of interest-earning assets increased by 6.4% to W646,144 billion in 2024 from W607,322 billion in 2023 largely as a result of an increase in the volume of corporate loans and retail loans. The average volume of interest-bearing liabilities increased by 7.2% to W599,934 billion in 2024 from W559,484 billion in 2023 largely as a result of an increase in the volume of time deposits and debt securities issued for the reasons discussed above.

Fees and Commission Income (Expense), Net

The following table shows, for the periods indicated, the principal components of our net fees and commission income.


	For the Years Ended December 31,
	2023		2024		% Change

	(In billions of Won, except percentages)
Fees and commission income:
Credit placement fees	W	76	W	73		(3.9	)%
Commission received as electronic charge receipt		146		148		1.4
Brokerage fees		369		393		6.5
Commission received as agency		134		154		14.9
Investment banking fees		165		229		38.8
Commission received in foreign exchange activities		296		361		22.0
Trust management fees		300		250		(16.7	)
Credit card fees		1,378		1,311		(4.9	)
Operating lease fees		600		652		8.7
Others		711		724		1.8

Total fees and commission income	W	4,175	W	4,295		2.9	%

Fees and commission expense:
Credit-related fees	W	46	W	50		8.7	%
Credit card fees		930		966		3.9
Others		552		564		2.2

Total fees and commission expense	W	1,528	W	1,580		3.4	%

Net fees and commission income	W	2,647	W	2,715		2.6	%

Net fees and commission income increased by 2.6% from W2,647 billion in 2023 to W2,715 billion in 2024, primarily due to increases in commission received in foreign exchange activities and investment banking fees, which were partially offset by a decrease in credit card fees income.

Commission received in foreign exchange activities increased by 22.0% from W296 billion in 2023 to W361 billion in 2024, primarily as a result of an increase in custody fee income on foreign securities, which was driven by the expansion of overseas securities custody business and the resulting increase in service fees.

Investment banking fees increased by 38.8% from W165 billion in 2023 to W229 billion in 2024 as a result of growth in the Global & Group Investment Banking (GIB) group driven by banking deals.

Credit card fees income decreased by 4.9% from W1,378 billion in 2023 to W1,311 billion in 2024, primarily due to a decrease in demand for credit card usage related to shopping and mobile payment services.

199

Other Operating Income (Expense), Net

The following table shows, for the periods indicated, the principal components of our net other operating expense.


	For the Years Ended December 31,
	2023			2024			% Change

	(In billions of Won, except percentages)
Net insurance income	W	1,114		W	983			(11.8	)%
Net insurance finance expenses		(516	)		(99	)		(80.8	)
Dividend income		181			239			32.0
Net gain on financial instruments at fair value through profit or loss		2,494			1,211			(51.4	)
Net loss on financial instruments designated at fair value through profit or loss		(438	)		(344	)		(21.5	)
Net foreign currency transaction gain		257			511			98.8
Net gain (loss) on disposal of securities at fair value through other comprehensive income		(130	)		60			N/M
Net loss on disposal of securities at amortized cost		—			(23	)		N/M
Provision for credit loss allowance		(2,245	)		(2,013	)		(10.3	)
General and administrative expenses		(5,895	)		(6,116	)		3.7
Other operating expenses, net		(2,186	)		(2,067	)		(5.4	)

Net other operating expenses	W	(7,364	)	W	(7,658	)		4.0	%

N/M = not meaningful

Net other operating expense increased by 4.0% from W7,364 billion in 2023 to W7,658 billion in 2024, primarily as a result of a 51.4% decrease in net gain on financial instruments at fair value through profit or loss, which was partially offset by an 80.8% decrease in net insurance finance expenses, a 98.8% increase in net foreign currency transaction gain, and a 10.3% decrease in provision for credit loss allowance. Net gain on financial instruments at fair value through profit or loss decreased from W2,494 billion in 2023 to W1,211 billion in 2024 primarily due to a decrease in net valuation and transaction gains on financial instruments at fair value through profit or loss, resulting from the decline in the stock market index compared to the prior year as well as the depreciation of the Korean Won against foreign currencies during 2024 compared to 2023, resulting in a decrease in gain or loss from valuation and transaction of derivatives. Net insurance finance expenses decreased from W516 billion in 2023 to W99 billion in 2024 primarily due to a decrease in interest expenses on variable insurance liabilities, resulting from investment losses driven by the decline in the KOSPI index. Net foreign currency transaction gain increased from W257 billion in 2023 to W511 billion in 2024 primarily due to the depreciation of the Korean Won against major foreign currencies during 2024 compared to 2023, leading to an increase in net transaction and valuation gains on foreign currency assets and liabilities. Provision for credit loss allowance decreased from W2,245 billion in 2023 to W2,013 billion in 2024 primarily due to the effect of additional provisions arising from changes in risk components and other non-recurring factors during 2023 such as COVID-19 financial support.

200

Provision for Credit Loss Allowance on Financial Assets

The following table sets forth for the periods indicated the provision for credit loss allowance by type of financial assets.


	For the Years Ended December 31,
	2023		2024			% Change

	(In billions of Won, except percentages)
Loans:
Retail	W	482	W	439			(8.9	)%
Corporate		906		661			(27.0	)
Credit card		724		750			3.6
Others		2		12			500.0

Subtotal		2,114		1,862			(11.9	)
Securities⁽¹⁾		3		(5	)		N/M
Others		128		156			21.9

Total provision for credit loss allowance on financial assets	W	2,245	W	2,013			(10.3	)%

N/M = not meaningful

Note:

(1)	Consist of securities at amortized cost and securities at fair value through other comprehensive income.

Provision for credit loss allowance on financial assets decreased by 10.3% from W2,245 billion in 2023 to W2,013 billion in 2024 principally due to an 11.9% decrease in provision for credit loss allowance on loans from W2,114 billion in 2023 to W1,862 billion in 2024. The provision for credit loss allowance on loans decreased primarily due to a decrease in provision for credit loss allowance on corporate loans, which was partially offset by an increase in provision for credit loss allowance on credit card loans. Provision for credit loss allowance on corporate loans decreased in 2024 primarily due to the effect of additional provisions arising from changes in risk components and other non-recurring factors during 2023 as discussed above. Additional provision for credit loss allowance on corporate loans in 2023 was set aside in anticipation of the discontinuation of COVID-19 financial support programs and in light of real estate project financing risks. Provision for credit loss allowance for credit card loans increased in 2024 primarily due to an increase in delinquent credit card loans.

Income Tax Expense

Income tax expense decreased by 1.1% from W1,487 billion in 2023 to W1,471 billion in 2024 primarily as a result of an increase in adjustments of non-taxable income by 328.7% to W44,370 billion in 2024 from W10,350 billion in 2023 while profit before income taxes increased by 1.1% to W6,029 billion in 2024 from W5,965 billion in 2023. Our effective rate of income tax decreased to 24.4% in 2024 from 24.9% in 2023.

Profit for the Year

As a result of the foregoing, our profit for the year increased by 1.8% from W4,478 billion in 2023 to W4,558 billion in 2024.

201

Other Comprehensive Income (loss) for the Year


	For the Years Ended December 31,
	2023			2024			% Change

	(In billions of Won, except percentages)
Items that may be reclassified to profit or loss:
Net valuation gain on securities at fair value through other comprehensive income	W	3,163		W	1,147			(63.7	)%
Equity in other comprehensive income of associates		7			7			—
Foreign currency translation adjustments for foreign operations		(6	)		416			N/M
Net change in unrealized fair value of cash flow hedges		61			38			(37.7	)
Net finance expense on insurance contracts issued		(2,172	)		(2,334	)		7.5
Net finance expense on reinsurance contracts held		(21	)		(2	)		(90.5	)

		1,032			(728	)		N/M
Items that will not be reclassified to profit or loss:
Remeasurements of the net defined benefit plans		(201	)		(62	)		(69.2	)
Net valuation gain on securities at fair value through other comprehensive income		8			43			437.5
Gain (loss) on disposal of securities at fair value through other comprehensive income		(3	)		7			N/M
Changes in own credit risk on financial liabilities designated at fair value through profit of loss		9			(6	)		N/M

		(187	)		(18	)		(90.4	)%

Total other comprehensive income (loss), net of income tax	W	845		W	(746	)		N/M

N/M = not meaningful

Other comprehensive loss of W746 billion was recognized in 2024, compared to other comprehensive income of W845 billion in 2023, primarily due to a 63.7% decrease in net valuation gain on securities at fair value through other comprehensive income that may be reclassified subsequently to profit or loss, from W3,163 billion in 2023 to W1,147 billion in 2024, which was partially offset by an increase of W422 billion of foreign currency translation adjustments for foreign operations. Net valuation gain on securities at fair value through other comprehensive income that may be reclassified subsequently to profit or loss, decreased due to a smaller fluctuation in interest rates during 2024 compared to 2023. Foreign currency translation adjustments for foreign operations increased primarily due to the depreciation of the Korean Won against major foreign currencies in 2024.

2023 Compared to 2022

The following table sets forth, for the periods indicated, the principal components of our operating income.


	For the Years Ended December 31,
	2022			2023			% Change

	(In billions of Won, except percentages)
Net interest income	W	10,597		W	10,818			2.1	%
Net fees and commission income		2,414			2,647			9.7
Net other operating expense		(7,105	)		(7,364	)		3.6

Operating income	W	5,906		W	6,101			3.3	%

202

Net Interest Income

The following table shows, for the periods indicated, the principal components of our net interest income.


	For the Years Ended December 31
	2022			2023			% Change

	(In billions of Won, except percentages)
Interest income:
Cash and due from bank at amortized cost	W	282		W	591			109.6	%
Deposits at fair value through profit or loss		1			—			(100	)
Securities at fair value through profit or loss		924			1,396			51.1
Securities at fair value through other comprehensive income		1,847			2,357			27.6
Securities at amortized cost		692			1,062			53.5
Loans at amortized cost		16,065			21,677			34.9
Loans at fair value through profit or loss		69			121			75.4
Insurance finance interest income		119			240			101.7
Others		93			135			45.2

Total interest income	W	20,092		W	27,579			37.3	%

Interest expense:
Deposits	W	4,643		W	9,791			110.9	%
Financial liabilities designated at FVTPL		1			10			900.0
Borrowings		939			1,896			101.9
Debt securities issued		1,901			2,735			43.9
Insurance finance interest expense		1,792			1,945			8.5
Others		219			384			75.3

Total interest expense	W	9,495		W	16,761			76.5	%

Net interest income	W	10,597		W	10,818			2.1	%

Net interest margin⁽¹⁾		1.78	%		1.78	%

Note:

(1)	Represents the ratio of net interest income to average interest-earning assets. See “— Average Balance Sheet and Volume and Rate Analysis — Average Balances and Related Interest.”

Interest income. Interest income increased by 37.3% to W27,579 billion in 2023 from W20,092 billion in 2022, primarily due to a 34.9% increase in interest income on loans at amortized cost to W21,677 billion in 2023 from W16,065 billion in 2022, largely as a result of an increase in the weighted average base interest rate to 3.49% in 2023 from 2.03% in 2022 resulting from increases in the base interest rate set by the Bank of Korea, as well as an increase in the average balance of loans. The average lending rate on loans increased to 5.26% in 2023 from 3.97% in 2022, principally due to an increase in average lending rates for corporate loans resulting from the higher average market interest rate for 2023 compared to 2022 as discussed above. The average balance of loans increased by 2.1% to W414,595 billion in 2023 from W405,925 billion in 2022, principally due to an increase in the average balances of corporate loans, which was partially offset by a decrease in the average balances of retail loans, as further described below.

More specifically, the increase in interest income was due to the following:

•

a 27.7% increase in interest on retail loans to W7,747 billion in 2023 from W6,065 billion in 2022, primarily due to an increase in the average lending rate for retail loans to 5.03% in 2023 from 3.85% in 2022 which was partially offset by a 2.0% decrease in the average balance of retail loans to

203

W154,140 billion in 2023 from W157,359 billion in 2022. The average lending rate for retail loans increased primarily as a result of the general increase in market interest rates largely driven by increases in the base interest rate set by the Bank of Korea in 2023 as discussed above. The base interest rate set by the Bank of Korea affects the market interest rate for certificates of deposit, which in turn largely determines our lending rates for a substantial majority of our retail loans. The average balance of retail loans decreased primarily as a result of a decrease in the average volume of household loans and collective loans.

•

a 44.7% increase in interest on corporate loans to W11,293 billion in 2023 from W7,802 billion in 2022, primarily due to an increase in the average lending rate for corporate loans to 5.10% in 2023 from 3.68% in 2022, as well as a 4.5% increase to the average balance of corporate loans to W221,341 billion in 2023 from W211,892 billion in 2022. The average lending rate for corporate loans increased primarily as a result of the general increase in market interest rates largely driven by the increase in the base interest rate set by the Bank of Korea in 2023 as discussed above. The average balance of corporate loans increased largely due to corporate customers’ preference for loans over bonds as source of financing resulting from an increase in issuance costs of bonds.

Interest expense. Interest expense increased by 76.5% from W9,495 billion in 2022 to W16,761 billion in 2023, primarily due to a 110.9% increase in interest expense on deposits from W4,643 billion in 2022 to W9,791 billion in 2023, as well as a 101.9% increase in interest expense on borrowings from W939 billion in 2022 to W1,896 billion in 2023.

The increase in interest expense on deposits was due to an increase in the average interest rate of total interest-bearing deposits from 1.26% in 2022 to 2.59% in 2023, as well as a 2.3% increase in the average balance of deposits from W369,139 billion in 2022 to W377,612 billion in 2023. The increase in the average rate of interest paid on deposits was mainly due to an increase in the average rate of interest paid on time deposits from 2.04% in 2022 to 3.83% in 2023 as well as an increase in the average rate of interest paid on savings deposits from 0.39% in 2022 to 0.85% in 2023. The average rate of interest paid on time deposits and savings deposits increased largely as a result of an increase in the weighted average base interest rate from 2.03% in 2022 to 3.49% in 2023 resulting from increases in the base interest rate set by the Bank of Korea as explained above. The increase in the average balance of deposits was primarily due to an 18.0% increase in the average balance of time deposits, which was largely a result of an increase in amounts deposited by customers in light of higher deposit interest rates.

The increase in interest expense on borrowings was primarily due to an increase in the average interest rate of borrowings from 1.91% in 2022 to 3.56% in 2023, and an 8.3% increase in the average balance of borrowings from W49,236 billion in 2022 to W53,317 billion in 2023. The average interest rate of borrowings increased principally as a result of higher average market interest rates for 2023 compared to 2022 as described above. The average balance of borrowings increased as we incurred additional borrowings to invest in bonds in anticipation of expected decrease in market interest rates.

Net interest margin. Net interest margin represents the ratio of net interest income to the average balance of interest-earning assets. Our overall net interest margin remained consistent at 1.78% in both 2022 and 2023. Interest income and interest expense increased substantially in 2023, primarily due to the rise in the weighted average base interest rate as discussed above.

Net interest spread. Net interest spread, which represents the difference between the average rate of interest earned on interest-earning assets and the average rate of interest paid on interest-bearing liabilities, decreased by 11 basis point from 1.66% in 2022 to 1.55% in 2023, as the average rate of interest on interest-bearing liabilities increased by 126 basis points from 1.69% in 2022 to 2.95% in 2023 and the average rate of interest on interest-earning assets increased by 115 basis points from 3.35% in 2022 to 4.50% in 2023. The average rate of interest on interest-bearing liabilities increased primarily due to a 133 basis point increase in the average interest rate on

204

deposits. The average rate of interest on interest-earning assets increased primarily due to a 129 basis point increase in the average interest rates on loans, which was mainly due to the increased average interest rate on corporate loans. The average rate of corporate loans increased largely as a result of the increase in the base interest rate during 2023 as discussed above.

Fees and Commission Income (Expense), Net

The following table shows, for the periods indicated, the principal components of our net fees and commission income.


	For the Years Ended December 31,
	2022		2023		% Change
	(In billions of Won, except percentages)
Fees and commission income:
Credit placement fees	W	68	W	76		11.8	%
Commission received as electronic charge receipt		148		146		(1.4	)
Brokerage fees		340		369		8.5
Commission received as agency		136		134		(1.5	)
Investment banking fees		233		165		(29.2	)
Commission received in foreign exchange activities		295		296		0.3
Trust management fees		308		300		(2.6	)
Credit card fees		1,202		1,378		14.6
Operating lease fees		478		600		25.5
Others		677		711		5.0

Total fees and commission income	W	3,885	W	4,175		7.5	%

Fees and commission expense:
Credit-related fees	W	37	W	46		24.3	%
Credit card fees		896		930		3.8
Others		538		552		2.6

Total fees and commission expense	W	1,471	W	1,528		3.9	%

Net fees and commission income	W	2,414	W	2,647		9.7	%

Net fees and commission income increased by 9.7% from W2,414 billion in 2022 to W2,647 billion in 2023 primarily due to increases in credit card fees income and operating lease fees income.

Credit card fees income increased by 14.6% from W1,202 billion in 2022 to W1,378 billion in 2023 primarily due to fees income recognized as a result of promotional agreements with MasterCard and Visa.

Operating lease fees income increased by 25.5% from W478 billion in 2022 to W600 billion in 2023 primarily due to an increase in the volume of Won-denominated operating leases. Operating leases increased primarily due to Shinhan Card’s increased focus on marketing automobile lease financings as part of its profit diversification strategy.

205

Other Operating Income (Expense), Net

The following table shows, for the periods indicated, the principal components of our net other operating expense.


	For the Years Ended December 31,
	2022			2023			% Change
	(In billions of Won, except percentages)
Net insurance income	W	1,046		W	1,114			6.5	%
Net insurance finance income (expenses)		808			(516	)		N/M
Dividend income		178			181			1.7
Net gain (loss) on financial instruments at fair value through profit or loss		(1,161	)		2,494			N/M
Net gain (loss) on financial instruments designated at fair value through profit or loss		577			(438	)		N/M
Net foreign currency transaction gain		245			257			4.9
Net loss on disposal of securities at fair value through other comprehensive income		(161	)		(130	)		(19.3	)
Provision for credit loss allowance		(1,292	)		(2,245	)		73.8
General and administrative expenses		(5,645	)		(5,895	)		4.4
Other operating expenses, net		(1,700	)		(2,186	)		28.6

Net other operating expenses	W	(7,105	)	W	(7,364	)		3.6	%

N/M = not meaningful

Net other operating expense increased by 3.6% from W7,105 billion in 2022 to W7,364 billion in 2023, primarily as a result of recognizing net insurance finance expenses of W516 billion in 2023 compared to net insurance finance income of W808 billion in 2022 as well as recognizing net loss on financial instruments designated at fair value through profit or loss of W438 billion in 2023 compared to net gain on financial instruments designated at fair value through profit or loss of W577 billion in 2022. We recognized net insurance finance expenses in 2023 compared to net insurance finance income in 2022 primarily due to a recovery in stock market indices in 2023 which led to our recognition of net gain on financial instruments at fair value through profit or loss in 2023 compared to net loss on financial instruments at fair value through profit or loss in 2022. Such recognition of net gain on financial instruments at fair value through profit or loss in 2023 led to a corresponding increase in investment contract liabilities to investors under our variable insurance funds, resulting in our recognition of net insurance finance expenses in 2023. In addition we recognized net loss on financial instruments designated at fair value through profit or loss in 2023 compared to net gain on financial instruments designated at fair value through profit or loss in 2022 primarily due to a decrease in asset values caused by rising interest rates in 2023. Such increases in other operating expense were partially offset by our recognition of net gain on financial instruments designated at fair value through profit or loss in 2023 due to a recovery in stock market indices as mentioned above.

206

Provision for Credit Loss Allowance on Financial Assets

The following table sets forth for the periods indicated the provision for credit loss allowance by type of financial assets.


	For the Years Ended December 31,
	2022			2023		% Change
	(In billions of Won, except percentages)
Loans:
Retail	W	425		W	482		13.4	%
Corporate		248			906		265.3
Credit card		565			724		28.1
Others		6			2		(66.7	)

Subtotal		1,244			2,114		69.9
Securities⁽¹⁾		(4	)		3		N/M
Others		52			128		146.2

Total provision for credit loss allowance on financial assets	W	1,292		W	2,245		73.8	%

N/M = not meaningful

Note:

(1)	Consist of securities at amortized cost and securities at fair value through other comprehensive income.

Provision for credit loss allowance on financial assets increased by 73.8% from W1,292 billion in 2022 to W2,245 billion in 2023 principally due to a 69.9% increase in credit loss allowance on loans from W1,244 billion in 2022 to W2,114 billion in 2023. Our provision for credit loss allowance on loans increased primarily due to an increase in provision for credit loss allowance on corporate loans and credit card loans. Provision for credit loss allowance for corporate loans increased in 2023 as we preemptively recognized credit loss allowance in light of real estate project financing risks. Provision for credit loss allowance for credit card loans increased in 2023 primarily due to an increase in overall delinquency rates compared to 2022.

Income Tax Expense

Income tax expense decreased by 7.7% from W1,611 billion in 2022 to W1,487 billion in 2023 primarily as a result of a decrease in profit before income taxes by 6.3% to W5,965 billion in 2023 from W6,367 billion in 2022. Our effective rate of income tax decreased to 24.9% in 2023 from 25.3% in 2022.

Profit for the Year

As a result of the foregoing, our profit for the year decreased by 5.8% from W4,756 billion in 2022 to W4,478 billion in 2023.

207

Other Comprehensive Income (loss) for the Year


	For the Years Ended December 31,
	2022			2023			% Change
	(In billions of Won, except percentages)
Items that are or may be reclassified to profit or loss:
Net gain (loss) on securities at fair value through other comprehensive income	W	(5,929	)	W	3,163			N/M	%
Equity in other comprehensive income (loss) of associates		(16	)		7			N/M
Foreign currency translation adjustments for foreign operations		15			(6	)		N/M
Net change in unrealized fair value of cash flow hedges		(70	)		61			N/M
Net finance income (expense) on insurance contract assets (liabilities)		4,706			(2,172	)		N/M
Net finance income (expense) on reinsurance contract assets (liabilities)		34			(21	)		N/M

		(1,260	)		1,032			N/M
Items that will not be reclassified to profit or loss:
Remeasurements of the net defined benefit liabilities (assets)		252			(201	)		N/M
Valuation gain on securities at fair value through other comprehensive income		5			8			60.0
Gain (loss) on disposal of securities at fair value through other comprehensive income		2			(3	)		N/M
Changes in own credit risk on financial liabilities designated at fair value through profit of loss		(4	)		9			N/M

		255			(187	)		N/M

Total other comprehensive income (loss), net of income tax	W	(1,005	)	W	845			N/M	%

N/M = not meaningful

We recognized other comprehensive income of W845 billion in 2023 compared to other comprehensive loss of W1,005 billion in 2022, primarily due to recognizing valuation gain on securities at fair value through other comprehensive income, that may be reclassified subsequently to profit or loss, of W3,163 billion in 2023 compared to valuation loss on securities at fair value through other comprehensive income, that may be reclassified subsequently to profit or loss, of W5,929 billion in 2022, which was partially offset by recognizing net finance expense on insurance contract assets (liabilities) of W2,172 billion in 2023 compared to net finance income on insurance contract assets (liabilities) of W4,706 billion in 2022. We recognized valuation gain on securities at fair value through other comprehensive income, that may be reclassified subsequently to profit or loss, in 2023 compared to valuation loss on securities at fair value through other comprehensive income, that may be reclassified subsequently to profit or loss, in 2022 due to a significant increase in gain on valuation of government bonds in 2023 compared to 2022 due to appreciation in government bond values amidst volatility and fluctuations in financial markets. We recognized net finance expense on insurance contract assets (liabilities) in 2023 compared to net finance income on insurance contract assets (liabilities) in 2022 primarily due to a recovery in stock market indices in 2023 which led to our recognition of net gain on securities at fair value through other comprehensive income in 2023 compared to net loss on securities at fair value through other comprehensive income in 2022. Such recognition of net gain on securities at fair value through other comprehensive income in 2023 led to a corresponding increase in investment contract liabilities to investors under our variable insurance funds, resulting in our recognition of net finance expense on insurance contract assets (liabilities) in 2023.

208

Results by Principal Business Segment

As of December 31, 2024, we were organized into six major business segments as follows:

•

commercial banking services, which are principally provided by Shinhan Bank:

•

credit card services, which are principally provided by Shinhan Card;

•

securities services, which are provided by Shinhan Securities;

•

insurance services, which are principally provided by Shinhan Life Insurance;

•

credit services, which are provided by Shinhan Capital; and

•

other services that do not belong to above business segments.

We report our segment information in accordance with the provisions of IFRS 8 (Operating Segments). We categorize our operating segments according to a business based approach. See Note 8 to the consolidated financial statements included in this annual report for further details on segment information, including the related components of income and expense.

Operating Income by Principal Business Segment

The table below provides the income statement data for our principal business segments for the periods indicated.


	For the Years Ended December 31,									% Change
	2022			2023			2024			2022/2023			2023/2024
	(In billions of Won, except percentages)
Banking	W	4,060		W	4,010		W	4,940			(1.2	)%		23.2	%
Credit card		880			933			878			6.0			(5.9	)
Securities		121			253			282			109.1			11.5
Insurance		539			651			708			20.8			8.8
Credit		349			343			122			(1.7	)		(64.4	)
Others		173			341			164			97.1			(51.9	)
Consolidation adjustment⁽¹⁾		(216	)		(430	)		(635	)		99.1			47.7

Total operating income	W	5,906		W	6,101		W	6,459			3.3	%		5.9	%

Note:

(1)	Consolidation adjustment consists of adjustments for inter-segment transactions.

Banking Services

The banking services segment provides commercial banking and related services through the following four sub-segments: (i) channel, which includes banking and other services provided through the general branches and private wealth management (PWM) centers of Shinhan Bank and Jeju Bank to individuals, corporations (other than large corporations), and WM clients; (ii) capital market, which include corporate banking services offered through Shinhan Bank’s corporate banking branches to large corporations, securities investing and trading, as well as derivatives trading; (iii) international group, which primarily consist of the operations of Shinhan Bank’s overseas subsidiaries and branches; and (iv) others, which primarily involve treasury operations related to our banking activities (such as internal asset and liability management and other non-deposit funding activities), as well as other back-office functions.

209

The table below provides the income statement data for our banking services segment for the periods indicated.


	For the Years Ended December 31,									% Change
	2022			2023			2024			2022/2023			2023/2024
	(In billions of Won, except percentages)
Income statement data
Net interest income	W	8,359		W	8,548		W	8,989			2.3	%		5.2	%
Net fees and commission income		801			748			868			(6.6	)		16.0
Net other expense		(5,100	)		(5,286	)		(4,917	)		3.6			(7.0	)

Operating income	W	4,060		W	4,010		W	4,940			(1.2	)%		23.2	%

Comparison of 2024 to 2023

Operating income for banking services increased by 23.2% from W4,010 billion in 2023 to W4,940 billion in 2024.

Net interest income increased by 5.2% from W8,548 billion in 2023 to W8,989 billion in 2024 primarily due to increases in net interest income for others and international group sub-segments, which were partially offset by a decrease in net interest income for channel and capital market sub-segments. More specifically:

•

Net interest income for others sub-segment increased to W11 billion in 2024 shifting from net interest loss of W494 billion in 2023 primarily due to an increase in interest income received from the channel, capital market and international sub-segments which Shinhan Bank recognizes through its others sub-segment.

•

Net interest income for international group sub-segment increased by 7.7% from W1,183 billion in 2023 to W1,274 billion in 2024 primarily due to an increase in interest income resulting from growth across Shinhan Bank’s international markets, particularly Vietnam and Japan, amid the Vietnamese government’s policies to promote loans and the increase in interest rates in Japan, respectively.

•

Net interest income for capital market sub-segment decreased by 21.6% from W232 billion in 2023 to W182 billion in 2024 primarily due to the continuous decline in government bond yields throughout 2024, which resulted from the two base interest rate reductions by the Bank of Korea during the year 2024 and expectations for further rate reductions.

•

Net interest income for channel sub-segment decreased by 1.4% from W7,627 billion in 2023 to W7,522 billion in 2024 primarily due to aggressive pricing policies taken by Shinhan Bank, as well as the impact of the two base interest rate reductions by the Bank of Korea in 2024, which led to a decline in the Shinhan Bank’s loan-to-deposit margin.

Net fees and commission income increased by 16.0% from W748 billion in 2023 to W868 billion in 2024 primarily due to an increase in net fees and commissions income for channel and capital market sub-segments. Net fees and commission income for channel sub-segment increased primarily due to an increase in investment banking fees resulting from an increase in investment banking deals in collaboration with the IB division within the capital market sub-segment, as well as an increase in fees earned on the sale of funds and bancassurance products. Net fees and commission income for capital market sub-segment increased primarily due to the growth in the GIB group’s investment banking fee income driven by an increase in investment banking deals.

Net other expense decreased by 7.0% from W5,286 billion in 2023 to W4,917 billion in 2024 primarily due to an increase in net other income for capital market sub-segment, which was partially offset by an increase in net other expense for channel sub-segment. Net other income for capital market sub-segment increased primarily due to an overall increase in other income driven by increases in gains on securities, dividend income, foreign

210

currencies transaction gains, and gains on derivatives. Net other expense for channel sub-segment increased primarily due to an increase in other operating expense, particularly contributions to local governments and other similar institutions.

Comparison of 2023 to 2022

Operating income for banking services decreased by 1.2% from W4,060 billion in 2022 to W4,010 billion in 2023.

Net interest income increased by 2.3% from W8,359 billion in 2022 to W8,548 billion in 2023 primarily due to increases in net interest income for corporate banking, international banking and other banking services, which was partially offset by a decrease in net interest income for retail banking. More specifically:

•

Net interest income for retail banking decreased by 3.2% from W4,727 billion in 2022 to W4,577 billion in 2023 primarily due to a decrease in the average volume of retail loans to W154,031 billion in 2023 from W157,442 billion in 2022 despite an increase in Shinhan Bank’s net interest margin. The average volume of retail loans decreased largely due to a decrease in household loans and collective loans.

•

Net interest income for corporate banking increased by 1.6% from W3,421 billion in 2022 to W3,476 billion in 2023 primarily due to a 4.2% increase in the average balance of corporate loans to W221,341 billion in 2023 from W211,892 billion in 2022, as well as an increase in the average lending rate for corporate loans to 5.10% in 2023 from 3.68% in 2022. The average volume of corporate loans increased largely due to corporate customers’ preference for loans over bonds as source of financing resulting from an increase in issuance costs of bonds. The increase in our net interest margin was largely due to an increase in the weighted average base interest rate to 3.49% in 2023 from 2.03% in 2022.

•

Net interest income for international banking increased by 5.6% from W1,063 billion in 2022 to W1,122 billion in 2023 primarily due to an increase in interest income resulting from an increase in interest rates in Vietnam and Indonesia.

•

For other banking, net interest expense decreased by 26.4% from W852 billion in 2022 to W627 billion in 2023 primarily due to an increase in interest income on securities held by the securities management department of Shinhan Bank.

Net fees and commission income decreased by 6.6% from W801 billion in 2022 to W748 billion in 2023 primarily due to a decrease in net fees and commissions for other banking services, which was offset in part by an increase in net fees and commissions for international banking services. Net fees and commissions for other banking services decreased primarily due to an increase in commission expenses related to foreign currency procurement and foreign currency covered bonds. Net fees and commission income for international banking increased primarily due to an increase in credit card fees in Vietnam and an increase in credit placement fees in Japan.

Net other expense increased by 3.6% from W5,100 billion in 2022 to W5,286 billion in 2023 primarily due to an increase in net other expense for other banking and retail banking services. Net other expense for other banking services increased mainly due to a transfer of other expenses from Shinhan Bank’s corporate banking segment to the other banking segment in connection with its internal operations and department structure changes, and also partly due to an increase in employee benefits expenses and fixed expenses. The increase in net other expense for retail banking services was principally due to an increase in allowance for credit loss in anticipation of the discontinuation of COVID-19 financial support programs and in light of real estate project financing risks.

211

Credit Card Services

The credit card services segment consists of the credit card business of Shinhan Card, including its installment finance and automobile leasing businesses.


	For the Years Ended December 31,									% Change
	2022			2023			2024			2022/2023			2023/2024
	(In billions of Won, except percentages)
Income statement data
Net interest income	W	1,798		W	1,895		W	1,931			5.4	%		1.9	%
Net fees and commission income		702			969			935			38.0			(3.5	)
Net other expense		(1,620	)		(1,931	)		(1,988	)		19.2			3.0

Operating income	W	880		W	933		W	878			6.0	%		(5.9	)%

Comparison of 2024 to 2023

Operating income for the credit card service decreased by 5.9% from W933 billion in 2023 to W878 billion in 2024.

Net interest income increased by 1.9% from W1,895 billion in 2023 to W1,931 billion in 2024 primarily due to an increase in interest income on loans at amortized cost, including credit card loans and installment finance loans, which was partially offset by an increase in interest expenses on debt securities. The increase in interest income on loans at amortized cost was primarily due to higher interest rates applied to installment credit sales compared to 2023, as well as efforts to expand the credit card business of Shinhan Card, which resulted in an increase in the average balance of loans at amortized cost and related interest income for credit card loans and foreign currency installment finance loans. Interest expenses on debt securities increased mainly due to issuance of debt securities.

Net fees and commission income decreased by 3.5% from W969 billion in 2023 to W935 billion in 2024 primarily as a result of a decrease in net fees income on credit cards, which was partially offset by an increase in fees and commission income from lease operations. Fees income on credit cards decreased primarily due to the effect of non-recurring fee income recognized during 2023 as a result of promotional agreements with MasterCard and Visa as well as a decrease in demand for credit card usage related to shopping and mobile payment services, while fee expenses on credit cards increased as a result of higher overseas credit card spending and the depreciation of the Korean Won against foreign currencies during 2024. Fees and commission income from lease operations increased primarily due to an increase in the average balance of operating lease assets denominated in Korean Won, resulting from the business expansion strategy for operating leases.

Net other expense increased by 3.0% from W1,931 billion in 2023 to W1,988 billion in 2024, primarily due to an increase in net losses on foreign currency translation and an increase in provision for credit loss allowance, which were partially offset by an increase in net gains from hedging activities. Net losses on foreign currency translation increased due to the depreciation of the Korean Won against foreign currencies during 2024, resulting in increased translation losses on liabilities denominated in foreign currencies. Provision for credit loss allowance increased as a result of the rise in delinquent credit card receivables. Net gains from hedging activities increased primarily due to the strengthening of the U.S. Dollar against Korean Won, along with a rise in the volume of derivative transactions.

Comparison of 2023 to 2022

Operating income for the credit card service increased by 6.0% from W880 billion in 2022 to W933 billion in 2023.

212

Net interest income increased by 5.4% from W1,798 billion in 2022 to W1,895 billion in 2023 primarily due to an increase in interest income on loans at amortized cost including credit card loans and installment finance loans, and loans denominated in Korean Won. The increase in interest income on credit card loans was mainly attributable to the impact of decrease in card loan prepayments and increase in loan maturity extensions. The increase in interest income on installment finance loans was mainly attributable to the increase in foreign currency installment finance loans in Kazakhstan. In addition, the increase in interest income on loans denominated in Korean Won was due to the increase in the average balance of loans denominated in Korean Won primarily in the form of working capital loans. The increase in net interest income was partially offset by an increase in interest expenses on debt securities issued and borrowings. The increase in interest expenses on debt securities issued was mainly attributable to the rising interest rates even though the average balance of general corporate bonds decreased. Interest expense on borrowings increased primarily due to an increase in the amount of long-term borrowings.

Net fees and commission income increased by 38.0% from W702 billion in 2022 to W969 billion in 2023 primarily as a result of an increase in fees and commission income from lease operations and, to a lesser extent, an increase in fees income on credit cards. Fees and commission income from lease operations increased primarily due to an increase in the average balance of operating leased assets resulting from customers’ expansion of operating leases. The increase in fees income on credit cards was mainly due to an overall increase in fees income (excluding revolving credit sales payment fee income) resulting from fee income recognized as a result of promotional agreements with MasterCard and Visa. The increase in net fees and commission income was partially offset by an increase in fee expense on credit cards. Fee expense on credit cards increased principally due to an increase in foreign currency credit card payment fee expense.

Net other expense increased by 19.2% from W1,620 billion in 2022 to W1,931 billion in 2023, primarily due to an increase in bad debt expenses resulting from high delinquency roll rate and, to a lesser extent, an increase in other operating expense resulting from increases in loss on hedging items and depreciation expenses on lease assets. Also, net other expense was due to an increase in general and administrative expenses from increase in employee benefits. Such increase in net other expense was offset by an increase in gains on valuation and sale of financial instruments at fair value through profit or loss, and decrease in foreign exchange transaction net loss due to lower foreign currency exchange rate (U.S. Dollar to Korean Won) in 2023 compared to 2022.

Securities Services

Securities services segment primarily reflects securities brokerage and dealing services on behalf of customers, which is conducted by Shinhan Securities, our principal securities brokerage subsidiary.


	For the Years Ended December 31,									% Change
	2022			2023			2024			2022/2023			2023/2024
	(In billions of Won, except percentages)
Income statement data
Net interest income	W	428		W	444		W	573			3.7	%		29.1	%
Net fees and commission income		485			500			536			3.1			7.2
Net other expense		(792	)		(691	)		(827	)		(12.8	)		19.7

Operating income	W	121		W	253		W	282			109.1	%		11.5	%

Comparison of 2024 to 2023

Operating income for securities services increased by 11.5% from W253 billion in 2023 to W282 billion in 2024.

Net interest income increased by 29.1% from W444 billion in 2023 to W573 billion in 2024, primarily due to an increase in interest income on securities at fair value through profit or loss, partially offset by decreases in

213

interest income on loans at amortized cost, loans at fair value through profit or loss and cash and due from banks at amortized cost. Interest income on securities at fair value through profit or loss increased primarily due to the strategic acquisition of additional bonds in response to the continued decline in interest rates, resulting in higher average balances and interest income. Interest income on loans at amortized cost and loans at fair value through profit or loss decreased mainly due to a decrease in new transactions and an increase in the number of sell-downs, driven by worsening conditions in the capital and real estate markets, along with lower interest rates. Interest income on cash and due from banks at amortized cost decreased mainly due to a decrease in interest income on time deposits denominated in Korean Won, resulting from the decline in market interest rates.

Net fees and commission income increased by 7.2% from W500 billion in 2023 to W536 billion in 2024 primarily due to an increase in custody fee income on foreign securities, driven by the expansion of overseas securities custody business and the increase in service fees, as well as higher brokerage fee income resulting from an increase in the number of securities transactions in 2024 compared to 2023. These increases were partially offset by a decrease in commission income from Korean Won transactions and investment banking fees, driven by a decline in the number of advisory services and financial services provided.

Net other expense increased by 19.7% from W691 billion in 2023 to W827 billion in 2024 primarily due to an increase in net loss on foreign currency transactions and translation, as well as an increase in provisions for other liabilities, which was partially offset by a decrease in net loss on financial instruments designated at fair value through profit or loss. Net loss on foreign currency transactions and translation increased primarily due to the depreciation of Korean Won against foreign currencies in 2024. Provisions for other liabilities increased primarily as we recognized additional provisions for legal claims resulting from lawsuits related to the alleged improper sales of Lime Asset products. Net loss on financial instruments designated at fair value through profit or loss decreased mainly due to a decrease in issuance and redemptions, driven by a relatively lower growth rate of the domestic stock market compared to the prior year, which resulted in a decrease in valuation and disposal losses.

Comparison of 2023 to 2022

Operating income for securities services increased by 109.1% from W121 billion in 2022 to W253 billion in 2023.

Net interest income increased by 3.7% from W428 billion in 2022 to W444 billion in 2023, as increase in interest income, outpaced increase in interest expenses. Interest income increased from W942 billion in 2022 to W1,399 billion in 2023, primarily due to an increase in interest income on cash and amortized cost measurement deposits, securities at fair value through profit or loss, and loans at amortized cost. Interest income on cash and amortized cost measurement deposits increased primarily due to an increase in the average balance of time deposits denominated in Korean Won. Even though the average balance of time deposits denominated in foreign currency decreased, the interest income on the time deposits denominated in foreign currency increased due to overall increase in interest rates in 2023. Interest income on securities at fair value through profit or loss increased primarily due to an increase in interest income on financial institution bonds and corporation bonds. This was mainly due to increases in the average balance and proportion of bond investments in 2023 in anticipation of expected decreases in market interest rates. The interest income on loans at amortized cost increased mainly due to the interest income on loans denominated in Korean Won resulting from increased demand from customers for securities-secured loans as well as increase in interest rates. The interest income on loans at fair value through profit or loss increased due to an increase in loans related to other facilities in foreign currency in accordance with fund supplement agreements. On the other hand, interest expenses increased from W514 billion in 2022 to W955 billion in 2023, primarily due to an increase in interest expense on deposit liabilities and borrowing debts. The increase in interest expense on deposit liabilities increased due to an increase in consignor deposits usage fees rates despite a decrease in the average balance of consignor deposits. Interest expense on borrowing debts increased mainly due to an increase in interest expense on borrowings denominated in Korean Won and bonds sold under repurchase agreements denominated in Korean Won resulting from an increase in the average balance of the borrowings as well as increase in interest rates.

214

Net fees and commission income increased by 3.1% from W485 billion in 2022 to W500 billion in 2023 primarily due to an increase in consignor fees income which was partially offset by a decrease in commission income in Korean Won as well as an increase in foreign exchange payment fees. The increase in consignor fees income was due to an increase in income on investment trust consignor fees. Commission income in Korean Won decreased due to a decrease in investment banking fees resulting from a decrease in advisory income in light of increased volatility in capital and real estate markets. Foreign exchange payment fees increased due to an increase in volume of foreign currency trades and rise in U.S. Dollar exchange rates.

Net other expense decreased by 12.8% from W792 billion in 2022 to W691 billion in 2023 primarily as a result of an increase in net gain on financial instruments at fair value through profit or loss and a decrease in net loss on trading of foreign currency assets and liabilities. The decrease in net other expense was partially offset by an increase in net loss on financial instruments designated at fair value through profit or loss and an increase in impairment loss on financial assets. The increase in net loss on financial instruments designated at fair value through profit or loss was mainly due to an increase in valuation of equity-linked securities sold and derivatives-combined securities. Net loss on foreign currency translation decreased due to the fact that U.S. Dollar to Korean Won exchange rate increase in 2023 was less than the exchange rate increase in 2022, resulting a relatively small net loss on foreign currency translation. The increase in impairment loss on financial assets was mainly due to an increase in bad debt expenses from real estate project financings and related bridge loans.

Insurance Services

Insurance services segment consists of life insurance services provided by Shinhan Life Insurance, and general insurance services provided by Shinhan EZ General Insurance.


	For the Years Ended December 31,									% Change
	2022			2023			2024			2022/2023			2023/2024
	(In billions of Won, except percentages)
Income statement data
Net interest expense	W	(124	)	W	(199	)	W	(135	)		60.5	%		(32.2	)%
Net fees expense		(4	)		(3	)		(4	)		(25.0	)		33.3
Net other income		667			853			847			27.9			(0.7	)

Operating income	W	539		W	651		W	708			20.8	%		8.8	%

Comparison of 2024 to 2023

Operating income for insurance services increased by 8.8% from W651 billion in 2023 to W708 billion in 2024.

Net interest expense decreased by 32.2% from W199 billion in 2023 to W135 billion in 2024 primarily due to a decrease in interest expenses on other liabilities and an increase in interest income on securities at fair value through other comprehensive income, which were partially offset by a decrease in interest income on securities at fair value through profit or loss. Interest expenses on other liabilities decreased primarily due to a decrease in interest expense on investment contract liabilities, which was driven by a decrease in the average balance of investment contract liabilities resulting from lower interest rates applied to retirement products. Interest income on securities at fair value through other comprehensive income increased due to an increase in interest income on government bonds, which was driven by an increase in the number of interest days (leap year) and an increase in the average balance of government bonds resulting from an increase in long-term government bond purchases to extend the average maturity profile of our government bond assets. Interest income on securities at fair value through profit or loss decreased primarily due to a decrease in interest income on government bonds, resulting from a decrease in the average balance of government bonds as underlying assets of variable insurance decreased following an increase in claims paid.

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Net fees and commission expense increased by 33.3% from W3 billion in 2023 to W4 billion in 2024 primarily due to an increase in brokerage fees expense in Korean Won, which was mainly driven by an increase in management fees through an alternative investment consignment arrangement entered into with Shinhan Asset Management in April 2024.

Net other income decreased by 0.7% from W853 billion in 2023 to W847 billion in 2024 primarily due to a decrease in net gain on financial instruments at fair value through profit or loss and an increase in other operating expenses, which were partially offset by an increase in net gain on foreign currency transactions and translation as well as a decrease in net insurance finance expense. The decrease in net gain on financial instruments at fair value through profit or loss was driven by a decrease in net valuation and transaction gains resulting from the decline in the stock market index in 2024 compared to 2023, as well as an increase in net transaction losses on currency-related derivatives due to the depreciation of the Korean Won against foreign currencies during 2024. The increase in other operating expenses was mainly due to an increase in net valuation loss related to hedging activities, primarily driven by the depreciation of the Korean Won against foreign currencies during 2024. The increase in net gain on foreign currency transactions and translation was primarily due to the depreciation of the Korean Won against foreign currencies during 2024. The decrease in net insurance finance expense was primarily due to a decrease in interest expenses on variable insurance liabilities, which are linked to the performance of underlying investment assets that incurred losses as a result of the decline in the KOSPI index.

Comparison of 2023 to 2022

Operating income for insurance services increased by 20.8% from W539 billion in 2022 to W651 billion in 2023.

Net interest expense increased by 60.5% from W124 billion in 2022 to W199 billion in 2023 primarily due to an increase in interest expenses on others. Interest expenses on others increased mainly due to an increase in interest expenses on investment contract liabilities. Even though the average balance of investment contract liabilities decreased, the interest expenses on investment contract liabilities increased due to a relatively high level of interest rates in 2023 compared to 2022.

Net fees and commission expense decreased by 25.0% from W4 billion in 2022 to W3 billion in 2023 primarily due to a decrease in fees and commission expenses. Fees and commission expenses decreased in 2023 compared to 2022 due to a decrease in brokerage fees expense in Korean Won, which was mainly because in 2022 we recognized unusually high brokerage fees (in the form of fund management fees) in connection with disposal of assets held in one of our consolidated funds.

Net other income increased by 27.9% from W667 billion in 2022 to W853 billion in 2023 primarily due to an increase in net gain on financial instruments at fair value through profit or loss, resulting from net increase in valuation gains and disposal gains due to a rise in stock market index compared to the previous year. This increase in net other income was partially offset by a decrease in net insurance finance income, a decrease in net gain on foreign currency transactions, as well as an increase in general and administrative expense. The decrease in net insurance finance income was mainly due to an increase in interest expenses recognized on investment contract liabilities of variable insurance liabilities. The decrease in net gain on foreign currency transactions was mainly due to a decrease in net gain on trading and valuation of foreign currency assets and liabilities. Net gain on trading and valuation of foreign currency assets and liabilities decreased because the increase in the U.S. Dollar exchange rates against the Korean Won in 2023 compared to 2022 was lower than such increase in 2022 compared to 2021. The increase in general and administrative expense was mainly due to an increase in termination benefits resulting from voluntary retirement programs implemented in 2023 and increased amortization in 2023 for capitalized development costs which were recognized as assets in 2022.

216

Credit Services

The credit services segment consists of the specialized credit business of Shinhan Capital, including facilities leasing, installment finance, and new technology finance businesses.


	For the Years Ended December 31,							% Change
	2022		2023		2024			2022/2023			2023/2024
	(In billions of Won, except percentages)
Income statement data
Net interest income	W	260	W	249	W	144			(4.2	)%		(42.2	)%
Net fees and commission income		31		17		17			(45.2	)		—
Net other income (expense)		58		77		(39	)		32.8			N/M

Operating income	W	349	W	343	W	122			(1.7	)%		(64.4	)%

N/M = not meaningful

Comparison of 2024 to 2023

Operating income for the specialized credit business decreased by 64.4 % from W343 billion in 2023 to W 122 billion in 2024.

Net interest income decreased by 42.2 % from W249 billion in 2023 to W 144 billion in 2024 primarily due to a decrease in interest income on loans at amortized cost, as well as increases in interest expenses on debt securities and borrowings. Interest income on loans at amortized cost decreased mainly due to a reduction in loan origination, along with an increase in repayments and disposals, and the impairment of certain loans in 2024. Interest expense on debt securities increased primarily due to the higher average interest rate resulting from the refinancing of corporate bonds that were issued prior to 2022 at lower interest rates with new corporate bonds issued at higher interest rates. Interest expense on borrowings increased as a result of an increase in the average balance of borrowings denominated in Korean Won as part of measures to diversify funding sources.

Net fees and commission income remained stable with no significant fluctuations in 2024 compared to 2023. Commission received as agency increased due to an increase in management fee income, which was mostly offset by a decrease in investment banking fees, resulting from a decrease in financial intermediary services, particularly in the corporate and investment banking sector.

Net other expense of W39 billion was recognized in 2024, compared to net other income of W77 billion in 2023, primarily due to a decrease in net gain on financial instruments at fair value through profit or loss, which was partially offset by an increase in other operating income. The decrease in net gain on financial instruments at fair value through profit or loss was primarily due to net loss recognized in relation to the valuation and disposal of investments, including venture capital investments, domestic and foreign alternative investments, and initial public offerings. The increase in other operating income was mainly driven by the valuation gains on currency swaps to mitigate exchange rate risks associated with borrowings denominated in foreign currencies, resulting from the depreciation of the Korean Won against foreign currencies in 2024.

Comparison of 2023 to 2022

Operating income for the specialized credit business decreased by 1.7% from W349 billion in 2022 to W343 billion in 2023.

Net interest income decreased by 4.2% from W260 billion in 2022 to W249 billion in 2023, as the increase in interest expenses outpaced the increase in interest income. Interest expenses increased from W227 billion in 2022 to W342 billion in 2023, primarily due to an increase in the average balance of borrowings denominated in

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Korean Won as well as an increase in interest rates. The increase in the average balance of borrowings in Korean Won was mainly due to Shinhan Capital’s increased borrowings in Korean Won. Interest income increased from W487 billion in 2022 to W591 billion in 2023, primarily due to an increase in interest income on loans denominated in Korean Won resulting from an increase in interest rates on loans denominated in Korean Won, which was partially offset by a decrease in the average balance of loans for working capital such as interest-earning financial assets related to corporate finance. The increase in interest income was also partially offset by a decrease in the average balance of general financial lease receivables denominated in Korean Won, due to sale of Shinhan Capital’s retail assets to Shinhan Card in 2020 (resulting in no new handling of lease or installment finance, other than principal repayment of remaining assets).

Net fees and commission income decreased by 45.2% from W31 billion in 2022 to W17 billion in 2023 primarily as a result of a decrease in commission fees denominated in Korean Won, which was mainly attributable to a decrease in investment finance commission fees. Investment finance commission fees decreased due to significant decrease in financial arrangement services rendered amidst slowdown in corporate and investment financings in 2023. The decrease in net commission income was also due to an increase in commission expenses, which was mainly due to an increase in commissions fees such as evaluation fees paid to external evaluation agencies due to increased volume of investments as well as increased risks related to overseas alternative investment assets.

Net other income increased by 32.8% from W58 billion in 2022 to W77 billion in 2023, primarily due to an increase in net gain on financial instruments at fair value through profit or loss and, to a lesser extent, a decrease in net loss on foreign currency translation, which was offset in part by an increase in provision for credit loss allowance. The increase in net gain on financial instruments at fair value through profit or loss was attributable to an increase in net gain on valuation and disposal from Shinhan Capital’s investments such as venture capital investment as well as domestic and foreign alternative investments, and initial public offerings of such underlying asset. The decrease in net loss on foreign currency translation was mainly because the increase in U.S. Dollar exchange rate in 2023 compared to 2022 was outpaced by the increase in U.S. Dollar exchange rate in 2022 compared to 2021. The increase in provision for credit loss allowance was mainly because we preemptively recognized credit loss allowance in light of real estate project financing risks.

Others

Other segment primarily reflects all other activities of Shinhan Financial Group, as the holding company, and our other subsidiaries, including the results of operations of Shinhan Asset Management, Shinhan Savings Bank, Shinhan Asset Trust Co., Ltd., Shinhan REITs Management and back-office functions maintained at the holding company.


	For the Years Ended December 31,									% Change
	2022			2023			2024			2022/2023			2023/2024

	(In billions of Won, except percentages)
Income statement data
Net interest income	W	153		W	125		W	93			(18.3	)%		(25.6	)%
Net fees and commission income		399			391			337			(2.0	)		(13.8	)
Net other expense		(379	)		(175	)		(266	)		(53.8	)		52.0

Operating income	W	173		W	341		W	164			97.1	%		(51.9	)%

Comparison of 2024 to 2023

Operating income for others decreased by 51.9% from W341 billion in 2023 to W164 billion in 2024.

Net interest income decreased by 25.6% from W125 billion in 2023 to W93 billion in 2024 primarily due to a decrease in net interest income of Shinhan Financial Group on a standalone basis. The decrease in net interest

218

income of Shinhan Financial Group on a standalone basis was mainly attributable to an increase in interest expenses on debt securities, which was partially offset by an increase in interest income on loans at amortized cost.

Net fees and commission income decreased by 13.8% from W391 billion in 2023 to W337 billion in 2024 primarily due to a decrease in net fees and commission income of Shinhan Asset Trust. Net fees and commission income of Shinhan Asset Trust decreased primarily due to a decrease in trust management fees and other fee income, resulting from ongoing difficulties in the project financing industry that have persisted since 2023.

Net other expense increased by 52.0% from W175 billion in 2023 to W266 billion in 2024 primarily due to an increase in net other expenses from Shinhan Asset Trust. The increase in net other expense of Shinhan Asset Trust was primarily attributable to an increase in the number of maturing project financing properties and an increase in provision for credit loss allowance and provisions for other liabilities recognized due to difficulties experienced by such project financing projects.

Comparison of 2023 to 2022

Operating income for others increased by 97.1% from W173 billion in 2022 to W341 billion in 2023.

Net interest income decreased by 18.3% from W153 billion in 2022 to W125 billion in 2023 primarily due to a decrease in net interest income of Shinhan Savings Bank and, to a lesser extent, a decrease in net interest income of consolidated structured entities. Net interest income of Shinhan Savings Bank decreased mainly due to a decrease in interest income on loans at amortized cost as a result of a decrease in the average balance of retail loans of Shinhan Savings Bank. The decrease in net interest income of consolidated structured entities was principally due to a decrease in interest income on loans measured at amortized cost.

Net fees and commission income decreased by 2.0% from W399 billion in 2022 to W391 billion in 2023 primarily due to a decrease in net fees and commission income of Shinhan Asset Trust and, to a lesser extent, our holding company’s sale of Shinhan Credit Information to Shinhan Card. Net fees and commission income of Shinhan Asset Trust decreased primarily due to a decrease in new trust contract orders amidst increased concerns of real estate project financing delinquencies and overall slowdown in the real estate market, which also led to a decrease in the profitability of existing construction projects, increases in construction fees and delays in commission fee payments due to changes in project execution schedules. Also as a result of our holding company’s sale of Shinhan Credit Information to Shinhan Card, Shinhan Credit Information’s fees and commission income is no longer recognized under the other segment, thereby contributing to the decrease in the segment’s net fees and commission income.

Net other expense decreased by 53.8% from W379 billion in 2022 to W175 billion in 2023 primarily due to an increase in net gain on financial liabilities measured at fair value through profit or loss of our holding company and, to a lesser extent, a decrease in net other operating expense of Shinhan Asset Management. The increase in net gain on financial liabilities measured at fair value through profit or loss of our holding company was mainly due to a rise in stock market indices compared to the previous year. Net other operating expense of Shinhan Asset Management also decreased due to a rise in stock market indices compared to the previous year.

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Financial Condition

Assets

The following table sets forth, as of the dates indicated, the principal components of our assets.


	As of December 31,						% Change
	2022		2023		2024		2022/2023			2023/2024

	(In billions of Won, except percentages)
Cash and due from banks at amortized cost	W	30,051	W	34,629	W	40,526		15.2	%		17.0	%
Financial assets at fair value through profit or loss		61,508		71,217		72,147		15.8			1.3
Derivative assets		6,461		4,711		10,279		(27.1	)		118.2
Securities at fair value through other comprehensive income		85,469		90,312		93,805		5.7			3.9
Securities at amortized cost		33,371		35,686		33,316		6.9			(6.6	)
Loans at amortized cost		407,899		411,740		449,295		0.9			9.1
Property and equipment, net		4,011		3,972		4,157		(1.0	)		4.7
Intangible assets		5,808		6,218		6,120		7.1			(1.6	)
Investments in associates		2,904		2,692		2,753		(7.3	)		2.3
Current tax assets		26		31		55		19.2			77.4
Deferred tax assets		915		154		206		(83.2	)		33.8
Investment property		363		258		327		(28.9	)		26.7
Net defined benefit assets		457		114		156		(75.1	)		36.8
Insurance contract assets		—		11		6		N/M			(45.5	)
Reinsurance contract assets		89		88		185		(1.1	)		110.2
Other assets		25,072		29,926		26,401		19.4			(11.8	)
Assets held for sale		29		36		30		24.1			(16.7	)

Total assets	W	664,433	W	691,795	W	739,764		4.1	%		6.9	%

N/M = not meaningful

2024 Compared to 2023

Our assets increased by 6.9% from W691,795 billion as of December 31, 2023 to W739,764 billion as of December 31, 2024, principally due to increases in loans at amortized cost, cash and due from banks at amortized cost, and derivative assets.

Loans at amortized cost increased by 9.1% to W449,295 billion as of December 31, 2024 from W411,740 billion as of December 31, 2023, primarily due to an increase in corporate loans and, to a lesser extent, an increase in retail loans.

Cash and due from banks at amortized cost increased by 17.0% to W40,526 billion as of December 31, 2024 from W34,629 billion as of December 31, 2023, primarily due to an increase in deposits denominated in foreign currency amid growth of our overseas businesses.

Derivative assets increased by 118.2% to W10,279 billion as of December 31, 2024 from W4,711 billion as of December 31, 2023, primarily due to an increase in over-the-counter derivative assets related to foreign currency amid the depreciation of the Korean Won against foreign currencies in 2024.

2023 Compared to 2022

Our assets increased by 4.1% from W664,433 billion as of December 31, 2022 to W691,795 billion as of December 31, 2023, principally due to increases in financial assets at fair value through profit or loss, securities at fair value through other comprehensive income, and cash and due from banks at amortized cost.

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Our financial assets at fair value through profit or loss increased by 15.8% to W71,217 billion as of December 31, 2023 from W61,508 billion as of December 31, 2022, primarily due to an increase in corporate bonds and bills purchased.

Our securities at fair value through other comprehensive income increased by 5.7% to W90,312 billion as of December 31, 2023 from W85,469 billion as of December 31, 2022, primarily due to an increase in government bonds and securities at fair value through other comprehensive income in foreign currency.

Our cash and due from banks at amortized cost increased by 15.2% to W34,629 billion as of December 31, 2023 from W30,051 billion as of December 31, 2022, primarily due to an increase in due from banks.

Liabilities and Equity

The following table sets forth, as of the dates indicated, the principal components of our liabilities.


	As of December 31,						% Change
	2022		2023		2024		2022/2023			2023/2024

	(In billions of Won, except percentages)
Deposits	W	382,988	W	381,513	W	422,781		(0.4	)%		10.8	%
Financial liabilities at fair value through profit or loss		1,146		1,869		955		63.1			(48.9	)
Financial liabilities designated at fair value through profit or loss		8,367		7,797		8,220		(6.8	)		5.4
Derivative liabilities		7,709		5,038		10,059		(34.6	)		99.7
Borrowings		49,279		56,901		49,920		15.5			(12.3	)
Debt securities issued		77,289		81,562		93,766		5.5			15.0
Net defined benefit liabilities		15		68		39		353.3			(42.6	)
Provisions		1,266		1,370		1,309		8.2			(4.5	)
Current tax liabilities		702		92		203		(86.9	)		120.7
Deferred tax liabilities		811		542		423		(33.2	)		(22.1	)
Insurance contracts liabilities		45,905		48,333		51,125		5.3			5.8
Reinsurance contract liabilities		63		93		98		47.6			5.4
Investment contract liabilities		2,134		1,573		1,165		(26.3	)		(25.9	)
Other liabilities		33,336		48,722		40,880		46.2			(16.1	)

Total liabilities		611,010		635,473		680,943		4.0			7.2

Total equity attributable to equity holders of the Group		50,732		53,721		56,054		5.9			4.3
Non-controlling interests		2,691		2,601		2,767		(3.3	)		6.4

Total equity		53,423		56,322		58,821		5.4			4.4

Total liabilities and equity	W	664,433	W	691,795	W	739,764		4.1	%		6.9	%

2024 Compared to 2023

Our total liabilities increased by 7.2% from W635,473 billion as of December 31, 2023 to W680,943 billion as of December 31, 2024, primarily due to increases in deposits and debt securities issued, which was partially offset by other liabilities.

Deposit increased by 10.8% to W422,781 billion as of December 31, 2024 from W381,513 billion as of December 31, 2023, primarily due to increases in time deposits in Korean Won and foreign currencies.

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Debt securities issued increased by 15.0% to W93,766 billion as of December 31, 2024 from W81,562 billion as of December 31, 2023, primarily due to an increase in debt securities issued in Korean Won and foreign currencies.

Other liabilities decreased by 16.1% to W40,880 billion as of December 31, 2024 from W48,722 billion as of December 31, 2023, primarily due to a decrease in domestic exchanges payable.

Total equity increased by 4.4% from W56,322 billion as of December 31, 2023 to W58,821 billion as of December 31, 2024, largely due to an increase in retained earnings from profit for the year and the issuance of additional hybrid bonds by the Group.

2023 Compared to 2022

Our total liabilities increased by 4.0% from W611,010 billion as of December 31, 2022 to W635,473 billion as of December 31, 2023, primarily due to an increase in borrowings, debt securities issued, and insurance contract liabilities.

Our borrowings increased by 15.5% from W49,279 billion as of December 31, 2022 to W56,901 billion as of December 31, 2023 primarily as a result of an increase in bonds sold under repurchase agreements.

Our debt securities issued increased by 5.5% from W77,289 billion as of December 31, 2022 to W81,562 billion as of December 31, 2023, primarily due to an increase in borrowings in Korean Won.

Our insurance contract liabilities increased by 5.3% from W45,905 billion as of December 31, 2022 to W48,333 billion as of December 31, 2023, primarily due to remaining coverage elements of insurance contract liabilities.

Total equity increased by 5.4% from W53,423 billion as of December 31, 2022 to W56,322 billion as of December 31, 2023, largely due to an increase in retained earnings and an increase resulting from additional hybrid bonds issued by the Group.

ITEM 5.B.

Liquidity and Capital Resources

We are exposed to liquidity risk arising from the funding of our lending, trading and investment activities and in the management of trading positions. The goal of liquidity management is for us to be able, even under adverse conditions, to meet all of our liability repayments on time and fund all investment opportunities. For an explanation of how we manage our liquidity risk, see “Item 4.B. Business Overview — Risk Management — Market Risk Management — Market Risk Management for Non-trading Activities — Liquidity Risk Management.” In our opinion, the working capital is sufficient for our present requirements.

The following table sets forth our debt and capital resources as of December 31, 2024.


	As of December 31, 2024
	(In billions of Won)
Deposits	W	422,781
Long-term debt		94,839
Call money		1,198
Borrowings from the Bank of Korea		3,106
Other short-term borrowings		33,359
Asset securitizations		11,543
Stockholders’ equity⁽¹⁾		18,922

Total	W	585,748

Note:

(1)	Includes capital stock, share premium, and hybrid bonds issued.

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Our primary funding strategy has been to achieve low-cost funding by increasing the average balances of low-cost retail customer deposits. Customer deposits accounted 72.4% of our total funding as of December 31, 2022, 70.7% of our total funding as of December 31, 2023 and 72.2% of our total funding as of December 31, 2024. Historically, except in limited circumstances, largely due to the lack of alternative investment opportunities for individuals and households in Korea, especially in light of a low interest rate environment and volatile stock market conditions, a substantial portion of such customer deposits were rolled over upon maturity and accordingly provided a stable source of funding for our banking subsidiaries. However, in the face of attractive alternative investment opportunities such as during a bullish run of the stock market, customers may transfer a significant amount of bank deposits to alternative investment products in search of higher returns, which may result in temporary difficulties in finding sufficient funding on commercial terms favorable to us. In addition, in recent years, we have faced increasing pricing competition from our competitors with respect to our deposit products. If we do not continue to offer competitive interest rates to our deposit customers, we may lose their business, which has traditionally provided a stable and low-cost source of funding. Even if we are able to match our competitors’ pricing, doing so may result in an increase in our funding costs, which may have an adverse impact on our results of operations.

While our banking subsidiaries generally have not faced, and currently are not facing, liquidity difficulties in any material respect, if we or our banking subsidiaries are unable to obtain the funding we need on terms commercially acceptable to us for an extended period of time for reasons of Won devaluation or otherwise, we may not be able to ensure our financial viability, meet regulatory requirements, implement our strategies or compete effectively. See “Item 3.D. Risk Factors — Risks Related to Our Overall Business — Changes in interest rates, foreign exchange rates, bond and equity prices, and other market factors have affected and will continue to affect our business, results of operations and financial condition.”

As of December 31, 2022, 2023 and 2024, W7,308 billion, W6,421 billion and W6,975 billion, or 2.0%, 1.7% and 1.7%, respectively, of Shinhan Bank’s total deposits were deposits made by litigants in connection with legal proceedings in Korean courts. Court deposits carry interest rates which are generally lower than market rates.

In addition, we obtain funding through borrowings and the issuances of debt and equity securities, primarily through Shinhan Bank. Our borrowings consist mainly of borrowings from financial institutions, the Government and Government-affiliated funds. Call money, which is available in both Won and foreign currencies, is obtained from the domestic call loan market, a short-term loan market for loans with maturities of less than one month. As for our long-term debt, it is principally in the form of corporate debt securities issued by Shinhan Bank. Since 1999, Shinhan Bank has actively issued and continues to issue long-term debt securities with maturities of over one year in the Korean fixed-income market. Shinhan Bank and we have maintained one of the highest credit ratings in the domestic fixed-income market since their inception in 1999 and 2001, respectively. As Shinhan Bank maintains one of the highest debt ratings in the fixed-income market in Korea, we believe that Shinhan Bank will be able to obtain replacement funding through the issuance of long-term debt securities. Shinhan Bank’s interest rates on long-term debt securities are in general 20 to 30 basis points higher than the interest rates offered on their deposits. However, since long-term debt is not subject to premiums paid for deposit insurance and the Bank of Korea reserves, we estimate that our funding costs on long-term debt securities are generally on par with our funding costs on deposits. In addition, our company, as well as Shinhan Bank may also issue long-term debt securities denominated in foreign currencies in overseas markets. Our company and Shinhan Bank each have a global medium term notes program under which foreign currency-denominated notes may be issued with an aggregate program limit of US$5 billion and US$8 billion, respectively. As of December 31, 2022, 2023 and 2024, our long-term debt amounted to W77,369 billion, W78,624 billion and W94,839 billion, respectively.

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We also have funding requirements for our credit card activities. We obtain funding for our credit card activities from a variety of sources, primarily in Korea. The principal sources of funding for Shinhan Card are debentures, commercial papers (including call money), borrowings from the holding company and third-parties, which amounted to W24,410 billion, W3,853 billion, W2,378 billion and W319 billion, or 78.8%, 12.5%, 7.7%, and 1.0%, respectively, of the funding for our credit card activities, as of December 31, 2024. Unlike other credit card companies, Shinhan Card has the benefit of obtaining funding at favorable rates through loans from Shinhan Financial Group, which currently maintains the highest credit rating assigned by local rating agencies. Shinhan Card aims to further diversify its funding sources and more actively tap the domestic and international capital markets to ensure access to liquidity as needed.

Credit ratings affect the cost and other terms upon which we and our subsidiaries are able to obtain funding. Domestic and international rating agencies regularly evaluate us, and our subsidiaries and their ratings of our and our subsidiaries’ long-term debt are based on a number of factors, including our financial strength as well as conditions affecting the financial services industry generally.

There can be no assurance that we or our subsidiaries will maintain our current credit ratings if, among other reasons, the global or Korean economy were to face another downturn, there are any changes in our corporate governance or our businesses significantly deteriorate. Our failure to maintain current credit ratings and outlooks could increase the cost of our funding, limit our access to capital markets and other borrowings, and require us to post additional collateral in financial transactions, any of which could adversely affect our liquidity, net interest margins and profitability.

Secondary funding sources also include call money, borrowings from the Bank of Korea and other short-term borrowings which amounted to W40,378 billion, W43,976 billion and W37,663 billion, as of December 31, 2022, 2023 and 2024, respectively, each representing 7.6%, 8.1% and 6.4%, respectively, of our total funding as of such dates.

We may also from time to time obtain funding through issuance of equity securities. For example, On September 29, 2020, partly in response to the prolonged COVID-19 pandemic and to increase our loss absorption capacity, we issued 39,130,000 common shares to two private equity funds, thereby increasing our paid-in capital by W195.7 billion. As a result of such offering, which was substantially fully subscribed and resulted in a capital increase of 7.5%, we raised W1,158 billion (before underwriting commissions and other offering expenses).

In addition, we obtain funding through issuance of hybrid bonds. The total of our hybrid bonds issued were W4,600 billion. In 2024, the additional hybrid bonds of W798 billion were newly issued to improve the capital adequacy ratio by expanding the capital.

In limited situations, we may also issue convertible and/or preferred shares. For example, in August 2003, in order to partly fund our acquisition of Chohung Bank, we raised a total of W2,552 billion through domestic private placements of redeemable preferred shares and redeemable convertible preferred shares to domestic financial institutions and governmental entities in Korea, all of which shares have since been redeemed or converted. In addition, in January 2007, partly to fund the acquisition of LG Card, we raised a total of W3,750 billion through domestic private placements of redeemable preferred shares and redeemable convertible preferred shares, all of which have been redeemed as of the date hereof. In April 2011, we issued redeemable preferred shares to fund redemption of such securities, and in April 2016, we redeemed the redeemable preferred shares issued in April 2011. In May 2019, we raised a total of W750 billion through domestic private placements of convertible preferred shares, all of which were fully converted into common shares in May 2023. For further details of our preferred shares, see “Item 10.B. Memorandum and Articles of Incorporation — Description of Preferred Stock.”

Pursuant to laws and regulations in Korea, we may redeem our preferred stock to the extent of our retained earnings of the previous fiscal year, net of certain reserves. At this time, we expect that cash from our future operations would be adequate to provide us with sufficient capital resources to enable us to redeem our preferred

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stock on or prior to their scheduled maturities. In the event there is a short-term shortage of liquidity to make the required cash payments for redemption as a result of, among other things, failure to receive dividend payments from our operating subsidiaries on time or as a result of significant expenditures resulting from future acquisitions, we plan to raise cash liquidity through the issuance of long-term debt in the Korean fixed-income market in advance of the scheduled maturity on our preferred stock. To the extent we need to obtain additional liquidity, we plan to do so through the issuance of long-term corporate debentures or further preferred stock and/or the use of our other secondary funding sources.

We generally may not acquire our own shares except in certain limited circumstances such as a capital reduction. However, pursuant to the Financial Investment Services and Capital Markets Act and regulations under the Financial Holding Companies Act, we may purchase our own shares on the KRX KOSPI Market of the Korea Exchange or through a tender offer, or retrieve our own shares from a trust company upon termination of a trust agreement subject to the restrictions that (1) the aggregate purchase price of such shares may not exceed the total amount available for distribution of dividends at the end of the preceding fiscal year less the amounts of dividends and reserves for such fiscal year, subtracted by the sum of (a) the purchase price of treasury stock acquired if any treasury stock has been purchased after the end of the preceding fiscal year pursuant to the Commercial Act or the Financial Investment Services and Capital Markets Act, (b) the amount subject to a trust contract, and (c) the amount of dividends approved at the ordinary general shareholders’ meeting after the end of the preceding fiscal year and the amount of retained earnings reserve required under the Commercial Act; plus if any treasury stock has been disposed of after the end of the preceding fiscal year, the acquisition cost of such treasury stock, and (2) the purchase of such shares shall meet the requisite ratio under the Financial Holding Companies Act and regulations thereunder. In addition, pursuant to the Financial Investment Services and Capital Markets Act, in certain limited circumstances, dissenting holders of shares have the right to require us to purchase their shares.

Contractual Obligations, Commitments and Guarantees

In the ordinary course of our business, we have certain contractual cash obligations and commitments which extend for several years. As we are able to obtain liquidity and funding through various sources as described in “— Liquidity and Capital Resources” above, we do not believe that these contractual cash obligations and commitments will have a material effect on our liquidity or capital resources.

Contractual Cash Obligations

The following table sets forth our contractual cash obligations as of December 31, 2024.


	As of December 31, 2024 Payments Due by Period⁽¹⁾
	Less than 1 Month		1-3 Months		3-6 Months		6-12 Months		1-5 Years		More than 5 Years		Total

	(In billions of Won)
Deposits	W	217,170	W	49,310	W	56,540	W	77,227	W	30,222	W	1,262	W	431,731
Borrowings		12,863		4,757		6,902		9,991		11,464		4,896		50,873
Debt securities issued		4,860		8,927		9,123		17,273		56,429		4,047		100,659
Investment contract liabilities		106		106		249		375		329		—		1,165
Lease liability		39		48		67		137		504		96		891

Total	W	235,038	W	63,148	W	72,881	W	105,003	W	98,948	W	10,301	W	585,319

Note:

(1)

Reflects all estimated contractual interest payments due on our interest-bearing deposits, borrowings, debt securities issued and lease liability, and the estimated contractual interest payments on borrowings and debt securities that are on a floating rate basis as of December 31, 2024 were computed as if the interest rate used

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on the last applicable date (for example, the interest payment date for such floating rate loans immediately preceding the determination date) were the interest rate applicable throughout the remainder of the term.

Commitments and Guarantees

In the normal course of business, we and our subsidiaries make various commitments and guarantees to meet the financing needs of our customers. Commitments and guarantees are usually in the form of, among others, commitments to extend credit, commercial letters of credit, standby letter of credit and performance guarantees. The contractual amount of these financial instruments represents the maximum possible loss amount if the counterparty draws down the commitment or we should fulfill our obligation under the guarantee and the counterparty fails to perform under the contract. See “Item 4.B. Business Overview — Description of Assets and Liabilities — Credit-Related Commitments and Guarantees.”

The following table sets forth our commitments and guarantees as of December 31, 2024. These commitments, apart from certain guarantees and acceptances, are not included within our consolidated statements of financial position.


	As of December 31, 2024 Commitment Expiration by Period
	Less than 1 Year		1-5 Years		More than 5 Years		Total

	(In billions of Won)
Commitments to extend credit⁽¹⁾	W	587	W	99,790	W	21,301	W	121,678
Commercial letters of credit⁽²⁾		182		3,134		37		3,353
Financial guarantees⁽³⁾		52		3,606		254		3,912
Performance guarantees⁽⁴⁾		152		11,546		914		12,612
Liquidity facilities to SPEs⁽⁵⁾		85		1,900		139		2,124
Acceptances⁽⁶⁾		—		507		—		507
Endorsed bills⁽⁷⁾		11,938		1		—		11,939
Unused credit limits on credit cards		90,701		—		—		90,701
Other		1,784		820		3,998		6,602

Total	W	105,481	W	121,304	W	26,643	W	253,428

Notes:

(1)

Commitments to extend credit represent unfunded portions of authorizations to extend credit in the form of loans. The commitments expire on fixed dates and a customer is required to comply with predetermined conditions to draw funds under the commitments. Commitments to extend credit, including credit lines, are in general subject to provisions that allow us to withdraw such commitments in the event there are material adverse changes affecting an obligor.

(2)	Commercial letters of credit are undertakings on behalf of customers authorizing third parties to draw drafts on us up to a stipulated amount under specific terms and conditions. These are generally short-term and collateralized by the underlying shipments of goods to which they relate.

(3)

Financial guarantees are contracts that require us to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortized amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities.

(4)

Performance guarantees are issued to guarantee customers’ tender bids on construction or similar projects or to guarantee completion of such projects in accordance with contractual terms. They are also issued to support a customer’s obligation to supply products, commodities, maintenance or other services to third parties.

(5)	Liquidity facilities to SPEs represent irrevocable commitments to provide contingent credit lines including commercial paper purchase agreements to special purpose entities for which we serve as the administrator.

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(6)	Acceptances represent guarantees by us to pay a bill of exchange drawn on a customer. We expect most acceptances to be presented, but reimbursement by the customer is normally immediate.

(7)	Endorsed bills represent notes transferred to third parties by us. We are obligated to fulfill the duty of payment if the person primarily liable does not honor the bill on the due date.

See also Note 47 of the notes to our consolidated financial statements included in this annual report.

Capital Adequacy

The Financial Services Commission regulations require that capital ratios be computed based on our consolidated financial statements under IFRS and regulatory guidelines. The following table sets forth a summary of our capital and capital adequacy ratios as of December 31, 2022, 2023 and 2024 based on Basel III.


	As of December 31,
	2022			2023			2024

	(In millions of Won, except percentages)
Tier I Capital:
Tier I CE Capital	W	37,287,768		W	41,388,070		W	44,570,426
Paid-in capital		2,882,231			2,969,641			2,969,641
Capital reserve		10,692,438			11,352,744			11,352,744
Retained earnings		33,342,633			36,387,314			39,020,580
Non-controlling interests in consolidated subsidiaries		52,851			50,419			54,262
Others		(9,682,158	)		(9,371,821	)		(8,576,802	)
Additional Tier I Capital		6,018,792			5,118,817			5,822,080

Total Tier I Capital	W	43,267,373		W	46,506,887		W	50,392,505

Tier II Capital:
Allowances for credit losses		962,384			1,107,906			1,015,527
Subordinated debt		—
Others		2,752,016			2,303,717			2,387,781

Total Tier II capital	W	3,714,400		W	3,685,637		W	3,512,376

Total Capital	W	46,981,773		W	50,192,524		W	53,904,881

Risk-weighted assets
Credit risk	W	254,233,024		W	260,495,455		W	286,182,372
Market risk		13,927,045			22,718,333			20,611,482
Operational risk		23,382,529			30,966,910			34,584,922

Total risk-weighted assets	W	291,542,598		W	314,180,698		W	341,378,776

Capital adequacy ratio		16.11	%		15.98	%		15.79	%
Tier I capital adequacy ratio		14.84	%		14.80	%		14.76	%
Common equity capital adequacy ratio		12.79	%		13.17	%		13.06	%


	As of December 31,
	2022		2023		2024

	(Percentages)
Group BIS ratio⁽¹⁾		16.11		15.98		15.79
Tier I Capital:
Total capital adequacy ratio of Shinhan Bank		17.77		18.08		17.58
Adjusted equity capital ratio of Shinhan Card⁽²⁾		18.60		19.71		20.00
Solvency ratio for Shinhan Life Insurance⁽³⁾		267.7		250.8		206.8

Notes:

(1)	Under the guidelines of the Financial Services Commission applicable to financial holding companies, the minimum requisite capital ratio applicable to us is 12.5% (Bank for International Settlement ratio of 8%).

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This computation is based on our consolidated financial statements in accordance with IFRS. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Capital Adequacy.”

(2)

Represents the ratio of total adjusted shareholders’ equity to total adjusted assets and is computed in accordance with the guidelines issued by the Financial Services Commission for credit card companies. Under these guidelines, a credit card company is required to maintain a minimum adjusted equity capital ratio of 8%. This computation is based on the consolidated financial statements of the credit card company prepared in accordance with IFRS. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Credit Card Companies — Capital Adequacy.”

(3)

Solvency ratio is the ratio of the solvency margin to the standard amount of solvency margin as defined and computed in accordance with the guidelines issued by the Financial Services Commission for life insurance companies. Under these guidelines, Shinhan Life Insurance is required to maintain a minimum solvency ratio of 100%. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Insurance Companies — Capital Adequacy.”

ITEM 5.C.

Research and Development, Patents and Licenses, etc.

Not applicable.

ITEM 5.D.

Trend Information

These matters are discussed under Items 4.B., 5.A. and 5.B. above where relevant.

ITEM 5.E.

Critical Accounting Estimates

Not applicable.

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

ITEM 6.A.

Directors and Senior Management

Executive Directors

Our executive director is as follows:

Name

Date of Birth

Position

Executive
Director Since

Date Term
Ends⁽¹⁾

Jin Okdong

Feb. 21, 1961

Chief Executive Officer

March 23, 2023

March 2026

Note:

(1)	The date on which the term will end will be the date of the general shareholders’ meeting in the relevant year.

Jin Okdong is our Chief Executive Officer. Prior to being elected to his current position on March 23, 2023, Mr. Jin served as the chief executive officer of Shinhan Bank from 2019 to 2023. Mr. Jin served as the deputy president of Shinhan Financial Group from 2017 to 2018, the deputy president of Shinhan Bank in 2017 and the chief executive officer of Shinhan Bank Japan from 2015 to 2016. Mr. Jin received a master’s degree in business administration from Chung Ang University.

Non-Executive and Outside Directors

Non-executive directors are directors who are not our employees and do not hold executive officer positions with us. Outside directors are non-executive directors who also satisfy the requirements set forth under the Financial Investment Services and Capital Markets Act to be independent of our major shareholders, affiliates

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and management. Our non-executive directors and outside directors are selected based on the candidates’ talents and skills in diverse areas, such as law, finance, economics, management and accounting. Currently, one non-executive director and nine outside directors are in office, all of whom were nominated by our board of directors and approved at a general meeting of shareholders.

Our non-executive and outside directors are as follows:


Name	Date of Birth	Position	Director Since	Date Term Ends⁽¹⁾
Jung Sang Hyuk	Nov. 26, 1964	Non-Executive Director	March 23, 2023	March 2027
Yoon Jaewon	Aug. 29, 1970	Outside Director	March 26, 2020	March 2026
Bae Hoon	Mar. 30, 1953	Outside Director	March 25, 2021	March 2026
Lee Yong Guk	May 11, 1964	Outside Director	March 25, 2021	March 2026
Kim Jo Seol	Dec. 5, 1957	Outside Director	March 24, 2022	March 2026
Kwak Su Keun	Aug. 16, 1953	Outside Director	March 25, 2021	March 2026
Song Seongjoo	Mar. 26, 1971	Outside Director	March 26, 2024	March 2026
Choi Young-Gwon	Jul. 16, 1964	Outside Director	March 26, 2024	March 2026
Yang In Jip	Jul. 16, 1957	Outside Director	March 26, 2025	March 2027
Chun Myosang	May. 20, 1980	Outside Director	March 26, 2025	March 2027

Note:

(1)	The date on which each term will end will be the date of the general shareholders’ meeting in the relevant year.

Jung Sang Hyuk has been our non-executive director since March 23, 2023. Mr. Jung was the chief executive officer of Shinhan Bank and previously served as the deputy president of Shinhan Bank from 2020 to 2023 Mr. Jung received a bachelor’s degree in economics from Seoul National University.

Yoon Jaewon has been our outside director since March 26, 2020. Ms. Yoon is currently a professor at Hongik University College of Business Administration and member of the committee for National Tax Service as well as the committee on national accounting policy of the Ministry of Economy and Finance and Korea Custom Service. Ms. Yoon previously served as a non-executive judge at the Tax Tribunal from 2013 to 2019. Ms. Yoon received a Ph.D. in accounting from Korea University.

Bae Hoon has been our outside director since March 25, 2021. Mr. Bae is a lawyer and Certified Public Accountant in Japan and currently serves as a representative attorney at Orbis Legal Profession Corporation. Mr. Bae received a master’s degree in business administration from Kobe University.

Lee Yong Guk has been our outside director since March 25, 2021. Mr. Lee is a clinical professor at Seoul National University, School of Law. Mr. Lee currently serves as Senior Counsel at Cleary Gottlieb Steen & Hamilton LLP. Mr. Lee received a J.D. from Harvard University Law School.

Kim Jo Seol has been our outside director since March 24, 2022. Ms. Kim is a professor who teaches economics at Osaka University of Commerce and economist with a high awareness of Northeast Asian economics. Ms. Kim received a Ph.D. in economics from Osaka City University.

Kwak Su Keun has been our outside director since March 25, 2021. Mr. Kwak currently serves as an honorary professor of accounting at Seoul National University, Business School and chair of Corporate Governance Advisory Board at Korea Listed Companies Association. Mr. Kwak received a Ph.D. in business administration from University of North Carolina Chapel Hill.

Song Seongjoo has been as our outside director since March 26, 2024. Ms. Song currently serves as a professor of statistics at Korea University since 2012 and Director of the Korea Risk Management Society.

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Ms. Song was previously an Advisory Professor, Economic Statistics Division, Bank of Korea. Ms. Song received a Ph. D in Statistics from University of Chicago.

Choi Young-Gwon has been as our outside director since March 26, 2024. Mr. Choi currently serves as an Adjunct Professor, Graduate School of Business Administration, Sogang University and Adjunct Professor, College of Business Administration, Soongsil University. Mr. Choi previously served as the chief executive officer of Woori Asset Management in 2019-2023. Mr. Choi received a Ph.D. in Financial Management from Soongsil University.

Yang In Jip has been our outside director since March 26, 2025. Mr. Yang is the founder and currently serves as the chief executive officer and chairman of Onycom, Inc. Mr. Yang was previously the head of overseas operations at Hite Jinro and the president of the Korean Chamber of Commerce in Japan.

Chun Myosang has been our outside director since March 26, 2025. Ms. Chun currently serves as the Head of Planning and Administration at SmartNews Inc. and is a Certified Public Accountant in Japan. Ms. Chun previously served as a manager at KPMG FAS and as a research and accounting advisor at the Development Bank of Japan.

Any director wishing to enter into a transaction with Shinhan Financial Group or any of its subsidiaries in his or her personal capacity is required to obtain the prior approval of our board of directors. The director having an interest in the transaction may not vote at the meeting of our board of directors at which the relevant transaction is subject to vote for approval.

Executive Officers

In addition to the executive directors who are also our executive officers, we currently have the following executive officers.


Name	Date of Birth	Position	In Charge of
Koh Seogheon	Sept. 27, 1968	Deputy President and Chief Strategy Officer	Strategic Planning Team PR Team Brand Strategy Team Digital Strategy Part
Chun Sang Yung	Jul. 25, 1969	Deputy President and Chief Financial Officer	Finance Management Team Investor Relations Part Accounting Part Group Business Synergy Part
Lee Een-kyoon	Apr. 1, 1967	Deputy President and Chief Operation Officer	Shinhan Leadership Center Management Support Team SDGs Planning Team Corporate Social Responsibility Team
Park Hyun Joo	Apr. 22, 1965	Deputy President and Chief Consumer Protection Part	Group Consumer Protection Part
Lee Youngho	Oct. 17, 1970	Executive Director and Chief Compliance Officer	Compliance Part
Bang Dong-kwon	Feb. 10, 1966	Deputy President and Chief Risk Officer	Risk Management Part
Kim Jion	May. 12, 1968	Executive Director and Chief Audit Officer	Group Audit Part
Kim Junhwan	Jun. 23, 1972	Executive Director and Head of Digital Part	Group Digital Part

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None of the executive officers have any significant activities outside Shinhan Financial Group.

Koh Seogheon has been our executive director and chief strategy officer since January 1, 2022. Mr. Koh previously served as the head of business management division and strategic planning team of Shinhan Financial Group. Mr. Koh received a bachelor’s degree in economics from Seoul National University.

Chun Sang Yung has been our deputy president and chief finance officer since January 1, 2024. Mr. Chun previously served as the head of group synergy division and business management division of Shinhan Financial Group. Mr. Chun received a bachelor’s degree in business management from Yonsei University.

Lee Een-kyoon has been our deputy president and chief operation officer since January 1, 2019. Mr. Lee previously served as the head of management support team and the head of secretary’s office of Shinhan Bank. Mr. Lee received a bachelor’s degree in English literature from Hanyang University.

Park Hyun Joo, has been our deputy president and chief consumer protection part since July 1, 2023. Ms. Park previously served as the head of Consumer Protection Division at Shinhan Bank. Ms. Park graduated from Seoul Girl’s Commercial High School.

Lee Youngho has been our executive director and chief compliance officer since January 1, 2025. Mr. Lee previously served as general manager of compliance department and chief compliance officer at Shinhan Bank. Mr. Lee received a bachelor’s degree in law from Sogang University.

Bang Dong-kwon has been our chief risk officer since January 1, 2020. Mr. Bang previously served as the head of risk management department of Shinhan Bank. Mr. Bang received a bachelor’s degree in English language and literature from Sung Kyun Kwan University.

Kim Jion has been our executive director and chief audit officer since January 1, 2024. Ms. Kim previously served as the head of PRM marketing team at Shinhan Bank. Ms. Kim received a bachelor’s degree in economics from Yonsei University.

Kim Junhwan has been our executive director and head of digital part since January 1, 2024. Mr. Kim previously served as the head of digital innovation team at Shinhan Bank. Mr. Kim received a master’s degree in computer application design studies from Korea Advanced Institute of Science & Technology.

There are no family relationships among our directors and/or executive officers.

ITEM 6.B.

Compensation

The aggregate remuneration and benefits-in-kind paid by us to our chairman, our executive directors, our non-executive directors and our executive officers for the year ended December 31, 2024 was W5.3 billion, consisting of W3.2 billion in salaries and wages and W2.1 billion in bonus payments.

We do not offer any service contracts to outside directors upon their retirement, but we may offer such service contracts to certain members of our senior management upon termination of their employment with us. We do not pay any severance payment to outside directors upon their retirement, but we pay fixed sums of severance payment to members of our senior management pursuant to our internal guidelines on severance payments. In 2024, we accrued W0.1 billion for retirement bonus.

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Since April 1, 2010, we have granted performance shares (“PS”) to certain high-ranking officers of select group companies. PS represents a stock-based long-term compensation system, wherein virtual shares backed by the Group’s common stock are granted. The total number of PS awarded is determined by assessing the performance of the affiliated company over a four-year operating period commencing from the date of grant. Upon the conclusion of this operating period, cash payments will be made to the holders based on the stock price of the Group at that time.

No performance shares have been granted to outside directors. In 2024, we recognized W16.4 billion as accrued expenses for performance shares.

Under the Financial Supervisory Service’s standards for preparing corporate disclosure forms, which standards were amended in December 2016, we are required to disclose in our Korean annual report the individual annual compensation (including stock options) paid by us to our directors and statutory auditors if the individual annual compensation for such persons is W500 million or greater.

In 2024, Jin Okdong, our Chief Executive Officer, received W1,522 million, consisting of salaries and wages. In addition, in 2024, Mr. Jin was granted 23,587 performance shares. The exercisability of these performance shares will be determined based on a review of our business performance and share price movements during four years, beginning with the fiscal year in which such shares were granted.

The Group determines annual incentive compensation by conducting performance evaluations. Performance measures include quantitative measures, such as total shareholder return, profitability, risk-adjusted return, nonperforming loan ratios before sales and write-offs and efficiency ratios, as well as qualitative measures such as the achievement of pre-established strategic initiatives. The Group determines long-term incentive compensation by conducting performance evaluations over a four-year period. Performance measures include quantitative measures, such as the relative stock price performance, adjusted ROE/ROTCE and non-performing loans ratio. The maximum number of performance shares that may be granted to directors of the board of the Group in respect of the fiscal year 2024 has been set at 30,000 shares in the aggregate.

ITEM 6.C.

Board Practices

Board of Directors

Our board of directors, which currently consists of one executive director, one non-executive director and 9 outside directors, has the ultimate responsibility for the management of our affairs.

Our Articles of Incorporation provide for no less than three but no more than fifteen directors, the number of outside directors must be more than 50% of the total number of directors, and we must maintain at least three outside directors. All directors are elected for a term not exceeding three years as determined by the shareholders’ meeting, except that outside directors are elected for a term not exceeding two years, provided that the term of re-election shall not exceed one year and the term cannot be extended in excess of six years. The aggregate term served as an outside director of us or any of our subsidiaries shall not exceed nine years.

Terms are renewable and are subject to the Korean Commercial Code, the Financial Holding Companies Act, the Act on Corporate Governance of Financial Companies and related regulations. See “Item 6.A. Directors and Senior Management” above for information concerning the terms of office of our directors and executive officers.

Our board of directors meets on a regular basis to discuss and resolve material corporate matters. Additional extraordinary meetings may also be convened at the request of the chairman and chief executive officer or a director designated by the board.

Currently, there are no outstanding service contracts between any of our directors or executive officers and us or any of our subsidiaries providing for benefits upon termination of employment by such director or executive officer.

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Committees of the Board of Directors

We currently have seven management committees that serve under the board:

•

the Risk Management Committee;

•

the Audit Committee;

•

the Remuneration Committee;

•

the Committee for Recommending Candidates for Independent Directors and Members of Audit Committee;

•

the Committee for Recommending Candidates for CEO;

•

the Environment, Social and Governance (ESG) Strategy Committee; and

•

the Subsidiary’s CEO Recommendation Committee.

Each committee member is appointed by the board of directors, except for members of the Audit Committee, who are elected at the general meeting of shareholders.

Risk Management Committee

The Risk Management Committee currently consists of three outside directors, namely Song Seongjoo (Chair), Lee Yong Guk and Choi Young-Gwon. The committee oversees and makes determinations on all issues relating to our comprehensive risk management function. In order to ensure our stable financial condition and to maximize our profits, the committee monitors our overall risk exposure and reviews our compliance with risk policies and risk limits. In addition, the committee reviews risk and control strategies and policies, evaluates whether each risk is at an adequate level, establishes or abolishes risk management divisions, reviews risk-based capital allocations, and reviews the plans and evaluation of internal control. The committee holds regular meetings every quarter.

Audit Committee

The Audit Committee currently consists of three outside directors, namely Kwak Su Keun (Chair), Yoon Jaewon and Bae Hoon. The committee oversees our financial reporting and approves the appointment of and interaction with our independent auditors and our internal audit-related officers. The committee also reviews our financial information, audit examinations, key financial statement issues and the administration of our financial affairs by the board of directors. In connection with the general meetings of stockholders, the committee examines the agenda for, and financial statements and other reports to be submitted by, the board of directors for each general meeting of shareholders. The committee holds regular meetings every quarter.

Remuneration Committee

The Remuneration Committee currently consists of three outside directors, namely Choi Young-Gwon (Chair), Kwak Su Keun, Kim Jo Seol. At least one-half of the members of this committee must be outside directors and currently all members of Remuneration Committee are outside directors. This committee is responsible for reviewing and approving the management’s evaluation and compensation programs. The committee meetings are called by the chairman of this committee, who must be an outside director.

Committee for Recommending Candidates for Independent Directors and Members of Audit Committee

The Committee for recommending candidates for independent directors and members of audit committee currently consists of four outside directors, namely Choi Jae Boong (Chair), Kim Jo Seol, Jin Hyun-duk and Song Seongjoo. Members of this committee will be appointed by our board of directors only to the extent necessary to recommend and nominate candidates for our outside director positions, audit committee members and related matters. However, when the procedure for final recommendation of outside director and audit committee member candidates commences, all outside directors are called to participate in the committee and in

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this case, all outside directors are deemed as enrolled. The committee meetings are called by the chairman of this committee, who must be an outside director. This committee is responsible and authorized for: (i) establishment, review and reinforcement of policies for outside director and audit committee member selection, (ii) recommendation of outside director and audit committee member candidates for approval at the general shareholders’ meeting and (iii) continual recruitment and screening of potential outside director candidates.

Committee for Recommending Candidates for CEO

The Committee for recommending candidates for Chief Executive Officer (CEO) was established in March 2012 and currently consists of five directors, namely Yoon Jaewon (Chair), Jin Hyun-duk, Bae Hoon, Choi Jae Boong and Choi Young-Gwon. However, when the meeting for final selection of candidates for Chief Executive Officer, all outside directors are called to participate in the committee and in this case, all outside directors are deemed as enrolled. This committee is responsible for matters concerning the recommendation of candidates for the CEO including establishing and reviewing our management succession plan and its operation, setting and evaluating the qualifications and criteria for the CEO and CEO candidate pool and other matters necessary for improving our overall corporate governance structure. The chair of the committee must be an outside director, and the incumbent CEO may be restricted from participating and voting on matters related to the CEO selection.

Environmental, Social and Governance (ESG) Strategy Committee

The ESG Strategy Committee was established in March 2015 and currently consists of five directors, namely Lee Yong Guk (Chair), Kim Jo Seol, Choi Jae Boong, Jung Sang Hyuk and Jin Okdong. This committee is responsible for setting the corporate policy for sustainable management, corporate disclosure of sustainability report and discussing specific business agenda in relation to socially responsible management and other matters such as corporate strategy toward climate change.

Subsidiary’s CEO Recommendation Committee

The Subsidiary’s CEO Recommendation Committee was established in March 2021 and currently consists of five directors, namely Jin Okdong (Chair), Kwak Su Keun, Yoon Jaewon, Bae Hoon, Lee Yong Guk. This committee is responsible for matters concerning the evaluation of subsidiary management leadership, establishment of subsidiary CEO qualifications, verification and recommendation of subsidiary CEO candidates and other matters deemed necessary by the committee.

ITEM 6.D.

Employees

At the holding company level, we had 171, 173 and 173 regular employees as of December 31, 2022, 2023 and 2024, respectively, almost all of whom are employed within Korea. Our subsidiaries had 22,700, 20,528 and 20,025 regular employees as of December 31, 2022, 2023 and 2024, respectively, almost all of whom are employed within Korea. In addition, we had seven, seven and seven non-regular employees at the holding company level as of December 31, 2022, 2023 and 2024, respectively, and 2,041, 2,006 and 1,891 non-regular employees at the subsidiary level as of December 31, 2022, 2023 and 2024, respectively. Of the total number of regular and non-regular employees at both the holding company and subsidiaries, approximately 1.21% were managerial or executive employees.

As of December 31, 2024, (i) 8,493 employees of Shinhan Bank and 319 employees of Jeju Bank were members of the Korean Financial Industry Union, (ii) 2,112 employees of Shinhan Card were members of the Korean Federation of Clerical and Financial Labor Union and (iii) 1,723 employees of Shinhan Securities, 1,121 employees of Shinhan Life Insurance, 214 employees of Shinhan Fund Partners and 13 employees of Shinhan EZ General Insurance were members of the Korea Finance & Service Workers’ Union.

Under Korean law, we may not terminate full time employees except under limited circumstances.

Since our acquisition of Chohung Bank in 2003, we have not experienced any general employee work stoppages and consider our employee relations to be good.

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Under the Korean National Pension Law, we annually contribute an amount equal to 4.5% of employee wages, and each employee contributes 4.5% of his or her wages, to the National Pension Management Corporation. In addition, pursuant to the Employee Retirement Security Act, we operate a retirement pension system under which we make annual contributions to pension funds managed by financial institutions (which replaced our former retirement pension system under which we managed the pension fund in-house) that provide employees both regular pension payments and a lump sum payment upon termination of employment. We believe that our retirement pension system confers the following benefits: (1) insulation of employees from the risk of default on their pension payments as the pension funds are deposited with large financial institutions; (2) offer of varied forms of payment, i.e., regular pension payments and a lump sum payment, upon termination of employment; (3) offer to employees the option to make investment decisions for his or her individual pension account and (4) elimination of the ability of employees to cash in his or her retirement fund prematurely, thereby guaranteeing such employee a lump sum payment upon termination of employment. Under this retirement pension system, we and our subsidiaries can opt for either a defined benefit plan or a defined contribution plan, or a combination of both. Under the defined benefit plan, the amount of pension payable upon an employee’s retirement is fixed in advance, and the employer is responsible for making the requisite payments to the pension fund and making investment decisions in relation to the fund assets. Under the defined contribution plan, the employee sets aside a fixed percentage or amount of his salaries to the pension fund and exercises investment decisions for his or her individual pension account. As of December 31, 2022, 2023 and 2024, we recognized liabilities (asset) for defined benefit obligations of W(442) billion, W(47) billion and W(117) billion, respectively. See Note 26 of the notes to our consolidated financial statements included in this annual report.

ITEM 6.E.

Share Ownership

As of March 18, 2025, the persons who are currently our directors or executive officers, as a group, beneficially held an aggregate of 88,141 shares of our common stock, representing approximately 0.02% of our outstanding common stock as of such date. None of these persons individually held more than 1% of our outstanding common stock as of such date.

Members of the employee stock ownership association have certain pre-emptive rights in relation to our shares that are publicly offered under the Financial Investment Services and Capital Markets Act. As of December 31, 2024, the employee stock ownership association owned 24,861,162 shares of our common stock.

Prior to April 1, 2010, we granted stock options to our chairman, our president and chief executive officer and other directors and executive officers. Effective April 1, 2010, we ceased granting stock options. On March 18, 2015, the exercise period for all outstanding stock options expired, except for a limited number of stock options for which exercise of such stock options (and hence the expiration of the exercise period as well) were suspended by a resolution of the board of directors in December 2010. In May 2017 and September 2017, by a resolution of the board of directors, we lifted such suspension for a portion of the stock options. As of December 31, 2024, there were no unexercisable stock options.

On February 1, 2019, we acquired a 59.15% interest in Orange Life Insurance. On January 28, 2020, we acquired the remaining interests in Orange Life Insurance by effecting a comprehensive stock exchange under Articles 360-2 of the Korean Commercial Code. As part of the comprehensive stock exchange, we transferred 980,780 shares of our common stock to Orange Life Insurance in exchange for 1,485,697 treasury shares of Orange Life Insurance held by Orange Life Insurance in accordance with the exchange ratio for the comprehensive stock exchange. Pursuant to paragraph (2) of Article 342-2 of the Korean Commercial Code, Orange Life Insurance was required to dispose of these shares of our common stock within six months from the acquisition date. In addition, we also transferred 5,514,807 shares of our common stock to Orange Life Insurance in exchange for 8,353,891 shares of Orange Life Insurance which were purchased by Orange Life Insurance as a result of the exercise of appraisal rights by dissenting shareholders of Orange Life Insurance. Pursuant to paragraph (1) of Article 62-2 of the Financial Holding Company Act, Orange Life Insurance was required to dispose of these shares of our common stock within three years from the acquisition date. The acquisition date of

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these shares of common stock was December 30, 2020. Orange Life Insurance disposed all of such shares as of January 28, 2021. Orange Life Insurance was subsequently merged with and into Shinhan Life Insurance in July 2021.

On September 29, 2020, we acquired a 96.8% interest in Neoplux, a venture capital company formerly under the Doosan Group. On December 30, 2020, we acquired the remaining interest in Neoplux by effecting a small-scale stock exchange under Article 360-10 of the Korean Commercial Code. As part of the small-scale stock exchange, we transferred 7,153 shares of our common stock to Neoplux in exchange for 80,090 treasury shares of Neoplux held by Neoplux in accordance with the exchange ratio for the small-scale stock exchange. Pursuant to paragraph (2) of Article 342-2 of the Korean Commercial Code, Neoplux was required to dispose of these shares of our common stock within six months from the acquisition date. In addition, we also transferred 1,755 shares of our common stock to Neoplux in exchange for 19,653 shares of Neoplux which were purchased by Neoplux as a result of the exercise of appraisal rights by dissenting shareholders of Neoplux. Pursuant to paragraph (1) of Article 62-2 of the Financial Holding Company Act, Neoplux was required to dispose of these shares of our common stock within three years from the acquisition date. The acquisition date of these shares of common stock was December 30, 2020. Neoplux subsequently changed its name to Shinhan Venture Investment on January 11, 2021 and disposed all of such shares as of March 8, 2021.

On September 29, 2020, partly in response to the prolonged COVID-19 pandemic and to increase our loss absorption capacity, we issued 39,130,000 common shares to two private equity funds, thereby increasing our paid-in capital by W195.7 billion.

ITEM 6.F.

Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not Applicable.

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

ITEM 7.A.

Major Shareholders

The following table sets forth certain information relating to the beneficial ownership of our common shares as of December 31, 2024.


Name of Shareholder	Number of Common Shares Beneficially Owned		Beneficial Ownership (%)
National Pension Service⁽¹⁾		43,164,599		8.57	%
BlackRock Fund Advisors⁽²⁾		27,333,666		5.43	%
Shinhan Financial Group Employee Stock Ownership Association		24,861,162		4.94	%
Citibank, N.A. (ADR Department)		18,225,698		3.62	%
IMM		16,008,255		3.18	%
NORGES BANK		11,359,845		2.26	%
KT		10,877,651		2.16	%
Centennial Investment Limited		9,742,430		1.94	%
Vanguard Total International Stock Index		6,782,344		1.35	%
NATWEST TSTEE N DPSTRY SRVCS LTD RE ST JAMES’S PL GBL EQ INC		5,591,349		1.11	%
Others		329,498,326		65.45	%

Total		503,445,325		100.00	%

Note:

(1)	On March 26, 2025, we reported that the number of common shares owned by our largest shareholder, National Pension Service, decreased to 43,318,455 shares of common stock (representing 8.60%, as of March 21, 2025).

(2)	Number of shares based on Form SC 13G/A filed by BlackRock, Inc. on February 5, 2024.

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As of December 31, 2024, the number of treasury shares held by us is 4,585,561 common shares, which do not have voting rights. Other than those listed above, no other person or entity known by us, jointly or severally, directly or indirectly own more than 1% of our issued and outstanding voting securities or otherwise exercise control or could exercise control over us. None of our shareholders have different voting rights.

As of the date hereof, our total authorized share capital is 1,000,000,000 shares, par value W5,000 per share.

As of December 31, 2024, the latest date on which we closed our shareholders’ registry, 839 shareholders of record were notated as U.S. persons, holding in the aggregate 26.7% of our then total outstanding shares (including Citibank, N.A., as the depositary for our American depositary shares, each representing one share of our common stock effective October 15, 2012, prior to which each American depositary share represented two common shares).

ITEM 7.B.

Related Party Transactions

Since the beginning of the preceding three financial years, none of our directors or officers has or had any transactions with us that are or were unusual in their nature or conditions or significant to our business, other than as set forth below and also described in Note 49 of the notes to our consolidated financial statements included in this annual report.

In December 2001, BNP Paribas acquired 4.00% of our common stock in return for an investment of approximately W155 billion in cash pursuant to an alliance agreement. Under the terms of the alliance agreement, for so long as BNP Paribas does not sell or otherwise transfer (except to any of its wholly-owned subsidiaries) any portion of its ownership interest in our common stock and maintains, after any issuances of new shares by us from time to time, its shareholding percentage of not less than 3.5% of our issued common stock, we are required to call a meeting of our shareholders to recommend that one nominee of BNP Paribas be elected to our board of directors. In addition, under the alliance agreement, BNP Paribas has the right to subscribe for new issuances of our common shares in the event that such new issuances would result in the dilution of the shareholding percentage of BNP Paribas below 3.5%. As of December 31, 2023, BNP Paribas held 18,690,310 shares, or 3.65% of our total common stock. On March 27, 2024, BNP Paribas sold all of the shares it previously held, and accordingly we are no longer required to recommend a nominee of BNP Paribas to be elected to our board of directors.

As of December 31, 2022, 2023 and 2024, we had principal loans outstanding to our directors, executive officers and their affiliates in the principal amount of W6.6 billion, W5.0 billion and W3.4 billion, which were made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features.

ITEM 7.C.

Interests of Experts and Counsel

Not applicable.

ITEM 8.

FINANCIAL INFORMATION

ITEM 8.A.

Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements” and our consolidated financial statements included in this annual report.

Legal Proceedings

We and our subsidiaries are involved in various legal actions and regulatory proceedings arising from the normal course of business. As of December 31, 2024, we and our subsidiaries were defendants in pending lawsuits (including regulatory proceedings) in the aggregate claim amount of W1,191 billion, for which we

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recorded a provision of W115 billion. We also recorded additional W5 billion for insurance contract liabilities (liability for incurred claims) for litigations, etc.

In 2021, the Financial Supervisory Service imposed a total of eight penalties against Shinhan Securities for regulatory violations, totaling W4,088 million in fines, which include a fine of W1,800 million for certain employees’ violation of conflict of interest obligations in connection with the Lime Asset incident and a fine of W1,160 million for violation of rules against advertising certain money trust products. In 2022, the Korea Exchange imposed a total of four penalties on Shinhan Securities for regulatory violations, totaling W2.0 million in fines. In 2022, the Financial Supervisory Service imposed a total of four penalties against Shinhan Securities for regulatory violations, totaling W600.9 million in fines. In November 2023, the Financial Services Commission imposed a fine of W50 million on Shinhan Securities for alleged violations of the Act on Corporate Governance Of Financial Companies. In 2023, the Financial Supervisory Service imposed a total of six penalties against Shinhan Securities for regulatory violations, totaling W2.26 billion in fines. In March 2024, the Financial Services Commission imposed a fine of W42 million on Shinhan Securities for allegedly failing to confirm the information provided to customers when selling financial investment products. In June 2024, a fine of W80 million was imposed for alleged violations of program controls that requires availability testing of authentication system in the mobile trading system. In October 2024, the Financial Services Commission imposed a fine of W100 million for the failure to provide adequate training to individual retirement pension subscribers. Additionally, in 2024, the Financial Services Commission imposed a penalty of W808 million on Shinhan Securities for alleged violations of the obligation to submit a securities registration statement as required for the offer of certain derivative-linked securities.

In January 2020, the Financial Supervisory Service notified Shinhan Life Insurance of an institutional caution and imposed an administrative fine of W266 million for allegedly omitting certain information regarding the level of expenses deducted from premiums paid when selling savings insurance products over the telephone. The Financial Supervisory Service imposed a fine of W 80 million on Shinhan Life Insurance in January 2024 for alleged violations of insurance rate calculation principles and management standards for essential documents. In May 2024, the Financial Supervisory Service imposed a fine of W25.2 million on Shinhan Life Insurance for allegedly failing to fulfill the duty to explain, along with an additional penalty of W25 million. In November 2024, the Financial Supervisory Service imposed a penalty of W192 million for alleged violations related to the solicitation of insurance contracts. In February 2021, the Financial Supervisory Service notified Shinhan Bank of an institutional warning and imposed an administrative fine of W2.1 billion for reasons including alleged violation of internal regulations and reporting procedures in connection with Shinhan Bank’s designation as the primary bank for Seoul Metropolitan Government in 2018. In March 2021, the Financial Supervisory Service notified Shinhan Bank of an institutional caution and imposed an administrative fine of W31.2 million for alleged violation of the safety standard in operating its information system in respect of the electronic financial transaction and alleged negligence in notifying its customers of the errors occurred to the electronic financial transaction and measures taken to correct the errors. On July 31, 2023, the sanctions committee of the Financial Supervisory Service recommended a partial business suspension, a fine of W1.2 million and an administrative fine of W 174 million on Shinhan Bank in connection with Shinhan Bank’s alleged violation of regulations and reporting procedures in connection with foreign exchange transactions. In October 2024, the Financial Supervisory Service issued an institutional warning to Shinhan Bank for allegedly failing to adequately manage and supervise the anti-money laundering obligations of Shinhan Bank America. In November 2024, the Financial Supervisory Service imposed a fine of W180 million on Shinhan Bank for allegedly breaching its obligation to avoid unsound business practices by holding certain customers’ accounts without approval.

In January 2021, the Financial Services Commission imposed a fine of W28.8 million on Shinhan Card citing failure to discard personal information after transaction. On December 21, 2023, the Financial Services Commission notified Shinhan Card of an institutional caution and imposed a fine of W50 million on Shinhan Card for alleged violation of security authorization standard of its mobile application. In February 2024, the Financial Services Commission imposed a fine of W80 million on Shinhan Card for alleged violations of the duty to maintain the accuracy and timeliness of client credit information.

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In August 2019, the Financial Supervisory Service launched an investigation into Lime Asset Management Co., Ltd. (“Lime Asset”), Korea’s then largest hedge fund managing approximately W4.1 trillion in assets as of December 31, 2020, including with regards to allegations that Lime Asset had concealed the fact that it had changed the multi-manager trade finance fund’s investment method and concealed losses in their trade finance funds. Beginning in October 2019, Lime Asset suspended withdrawals from certain of its funds, freezing approximately W1.7 trillion in total as of the end of 2019, according to the Financial Supervisory Service. According to Financial Supervisory Service investigations, Lime Asset’s W229.6 billion trade finance fund was found to have been associated with a debacle involving the International Investment Group LLC (“IIG”), a New York-based investment adviser charged with securities fraud and running a Ponzi scheme. On November 26, 2019, the SEC revoked the registration of IIG for allegedly overvaluing defaulted loans in the fund’s portfolio to conceal losses in its flagship hedge fund and selling at least $60 million in fake loan assets to clients. According to the Financial Supervisory Service, Lime Asset signed a contract with a Singaporean commodity trader, which took over Lime Asset’s ownership stake in an IIG fund in June 2019, with the Singaporean entity issuing promissory notes to Lime Asset, and Lime Asset did not properly disclose to its investors such change in the fund’s investment target from the IIG fund to promissory notes.

Certain investors in funds of Lime Asset have filed dispute mediation claims to the Financial Supervisory Service and criminal and civil claims against Lime Asset, as well as against financial institutions that have sold such products, claiming they learned of the change in the trade finance fund’s investment method and losses only in October 2019 and that they were also misguided and not fully informed of the risks associated with these funds when investing in such products. The Financial Supervisory Service conducted a comprehensive audit in November and December 2019. In February 2020, the Prosecutors’ Office of Korea announced that they had launched an investigation into Lime Asset as well as Shinhan Securities and also searched Shinhan Bank’s headquarters on July 1, 2020 in connection with this matter. On October 6, 2020, the Financial Supervisory Service imposed a partial 6-month business suspension and a fine of W4 billion on Shinhan Securities, and a suspension from duties on one former CEO and a cautionary warning on another former CEO of Shinhan Securities in connection with alleged violations of the Capital Markets Act and the Act on Real Name Financial Transactions and Confidentiality in failing to properly monitor its employees involved in the sale of certain money trust products. On November 12, 2021, a fine of W1.8 billion on Shinhan Securities was confirmed. On April 22, 2021, the sanctions committee of the Financial Supervisory Service recommended a partial business suspension and fine of W8.7 billion on Shinhan Bank, a cautionary warning to the CEO of Shinhan Bank, an institutional caution and fine of W50 million on Shinhan Financial Group and a caution to the CEO of Shinhan Financial Group in connection with Shinhan Bank’s alleged improper solicitation of troubled Lime Asset funds and management’s oversight in risk management. On July 11, 2022, the partial business suspension and the fine of W5.7 billion on Shinhan Bank and a cautionary warning to the CEO of Shinhan Bank were confirmed. On November 30, 2023, a final resolution by the Financial Services Commission confirmed a fine of W50 million for Shinhan Financial Group, Shinhan Bank and Shinhan Securities for violating the obligation to establish internal control standards under the Corporate Governance Act, as well as an institutional caution and a caution to the CEO of Shinhan Financial Group.

In May 2020, Shinhan Securities announced that its board of directors has resolved to compensate certain investors for amounts ranging between 30% to 70% (in the case of retail investors) and 20% to 50% (in the case of institutional investors) of the amount of such investor’s investment in Lime Asset products. In June 2020, Shinhan Bank announced that its board of directors has resolved to make prepayments to investors in certain Lime Asset funds that have reached maturity in an amount equal to 50% of such investor’s investment in the relevant product. On June 30, 2020, the Financial Dispute Mediation Committee of the Financial Supervisory Service recommended through a non-binding ruling for brokerages, including Shinhan Securities, to return 100% of the amount of investors’ investment in certain of Lime Asset products sold after November 2018 in the aggregate of approximately W161 billion. In August 2020, the board of directors of Shinhan Securities resolved to accept the non-binding ruling for certain Lime Asset’s trade finance funds sold around November 2018. With these resolutions by the board of directors of Shinhan Securities, the total amount of compensation to investors of Lime Asset funds that Shinhan Securities has agreed to pay has reached W42.46 billion. On April 19, 2021, the

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Financial Dispute Mediation Committee of the Financial Supervisory Service recommended through a non-binding ruling that Shinhan Bank compensate investors in such Lime Asset funds in amounts ranging from 40% to 80% of the losses incurred by the investors by way of making prepayments, with adjustments to be made depending on particular facts, such as the nature of the investor (e.g., whether retail or institutional investor, the age and experience level of the investor, etc.) and adequacy of documentation. In 2022, in accordance with such compensation guideline recommended by the Financial Dispute Mediation Committee, Shinhan Bank completed its voluntary settlement process with substantially all of such investors in Lime Asset funds.

In June 2020, the Financial Supervisory Service launched an investigation into Discovery Asset Management Co., Ltd. (“Discovery Asset”), which operated funds that invested in certain funds in the U.S. managed by Direct Lending Investment, LLC (“DLI”). In April 2019, the U.S. Securities and Exchange Commission obtained a preliminary injunction and order appointing a receiver to freeze DLI’s funds based on the complaint that DLI fabricated values of its assets under management and reported returns. In response, Discovery Asset suspended withdrawals from funds under its management, thereby freezing approximately W256 billion in total of its investors’ funds as of April 2019. While neither Shinhan Bank nor Shinhan Securities was involved in sale of such DLI-related funds structured by Discovery Asset, Shinhan Bank and Shinhan Securities did sell other Discovery Asset funds (affected by such suspension of withdrawal) to investors in Korea. Between 2017 and 2019, Shinhan Bank and Shinhan Securities sold W93.6 billion and W29.5 billion, respectively, of such Discovery Asset products (unrelated to DLI funds), of which Shinhan Bank and Shinhan Securities have recovered W45.1 billion and W22.7 billion, respectively, from Discovery Asset. In 2022, Shinhan Bank completed its voluntary settlement process with substantially all of such investors in Discovery Asset funds.

From May 2017 to December 2018, Shinhan Securities sold W390.7 billion of certain German Heritage derivative-linked securities (“German Heritage DLS Products”). As of December 31, 2024, the principal amount of German Heritage DLS Products that have become eligible for payment but for which payment has been delayed is W366.4 billion. The German Heritage DLS Products are derivative-linked trust products where performance is based on underlying Singapore funds that invest in Germany’s monument status building development projects. Since July 2019, maturity payments have been delayed on the German Heritage DLS Products as recovery on the underlying funds has been delayed. In March 2020, the board of directors of Shinhan Securities resolved to advance 50% of the investment to investors of German Heritage DLS Products whose maturity redemption was delayed. On November 21, 2022, the Financial Dispute Mediation Committee of the Financial Supervisory Service issued a non-binding recommendation to fully return the investment to the investors of the German Heritage DLS Product. On December 27, 2022, the board of directors of Shinhan Securities decided not to accept this non-binding recommendation and resolved to compensate investors at a rate of 100% for general investors and 80% to 95% for professional investors. As of December 31, 2024, Shinhan Securities has completed a voluntary settlement process totaling W 365.7 billion with most investors of the German Heritage DLS product according to the aforementioned criteria.

The prepayments made or to be made by Shinhan Bank and Shinhan Securities to investors of Lime Asset funds and Discovery Asset funds, respectively, as explained above, have been or will be, as the case may be, settled at the time of recovery of the underlying funds. If the amount recovered on the underlying fund is less than the amount prepaid to investors, Shinhan Bank and Shinhan Securities may not be able to recover from investors the amount of the prepaid amount that is in excess of the recovered amount and accordingly suffer losses. Depending on the performance of such underlying funds, we may record provisions for credit loss allowance to account for expected future losses.

During the fiscal year 2024, Shinhan Bank and Shinhan Securities recorded W27.3 billion and W7.9 billion, respectively, in provisions for credit loss allowance to account for expected future losses associated with financial products, including Lime Asset, Discovery Asset and German Heritage DLS Products. Depending on a variety of factors, including those outside the control of Shinhan Bank or Shinhan Securities, such as the performance of the underlying funds and progression of discussions with investors, Shinhan Bank or Shinhan Securities may record additional provisions for credit loss allowance to account for expected future losses from

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these or other financial products, and there is no guarantee that such amounts, if any, will not be significant. In response to increased incidents involving alleged improper sales of financial products such as those involving Lime Asset products, Discovery Asset products and German Heritage DLS Products, we have taken additional measures to improve our risk management systems and internal controls to prevent similar incidents. Shinhan Bank and Shinhan Securities have each updated their internal controls and performance evaluation systems and have made improvements to various stages of the sales cycle for financial products. For example, Shinhan Bank and Shinhan Securities have both upgraded their product review departments (which were initially under the investment products and services divisions) to independent divisions, thereby facilitating independent review and thorough assessment of the merits of financial products prior to such products being sold through sales channels. In addition, we have modified the composition of key performance indicators used as a basis for personnel evaluations and promotions to move away from simply increasing the volume of sales, thereby further incentivizing employees to adhere to prudent sales practices and avoid speculative or high risk sales.

In January 2024, the Financial Supervisory Service commenced an investigation into an alleged violation of, among others, the Financial Consumer Protection Act that occurred during past sales by Shinhan Bank and by other banks in Korea of Hong Kong H-Index-based equity linked trust products (“H-Index ELT”). If Hong Kong H-Index remains at current levels, customers who have purchased such H-Index ELT are expected to incur significant losses upon maturity of such products. While we intend to fully cooperate with the investigations by the Financial Supervisory Service, it is not currently possible to predict the final outcome of such investigations and the potential impact they may have on us. On March 11, 2024, the Financial Supervisory Service announced dispute resolution criteria that may be voluntarily applied by each financial institution in determining compensation for investors who suffered losses due to such institution’s alleged incomplete sales of H-Index ELT. On March 29, 2024, Shinhan Bank announced that its board of directors has resolved to initiate voluntary settlement process with the investors based on the guideline announced by the Financial Supervisory Service and began discussions with the investors starting April 2024. As of February 14, 2025, the consent rate for voluntary compensation has reached 93.2% (based on the number of accounts), and total compensation of W182 billion has been made to such investors.

In February 2023, the Korea Fair Trade Commission commenced investigations into banks in Korea with respect to whether they had engaged in any unfair practices in violation of competition laws. In January 2024, the Korea Fair Trade Commission issued a review report addressed to the four largest banks in Korea, including Shinhan Bank, which alleged that the banks had colluded among themselves to maintain similar terms and conditions for their secured loans. Specifically, the Korea Fair Trade Commission alleged that the banks had shared information about the maximum loan-to-value ratio each bank offered to its respective customers with the intent of maintaining similar levels among themselves. Such investigation is ongoing, and it is difficult to predict the results of these proceedings and the potential impact they may have on us.

In June 2022, Shinhan Bank voluntarily reported to the Financial Supervisory Service certain overseas wire transfers made in 2020 and 2021 which Shinhan Bank had detected as unusual based on its internal monitoring system. After similar activities were also reported by another major Korean bank, the Financial Supervisory Service launched an investigation in August 2022 into wire transfers made under similar circumstances across all major banks in Korea, including Shinhan Bank. In an interim report released in September 2022, the Financial Supervisory Service reported that approximately more than US$7.2 billion of suspicious overseas wire transfers were made through 12 banks, of which approximately US$2.36 billion had been wired through Shinhan Bank and that at least some of these transfers were allegedly related to cryptocurrency arbitrage transactions. The Financial Supervisory Service and the Seoul Central District Prosecutor’s Office investigated these wire transfers and the parties involved, including in relation to any violation of certain monitoring and reporting obligations under the Foreign Exchange Transactions Act of Korea and the Act on Reporting and Use of Certain Financial Transaction Information of Korea. In December 2022, the Financial Supervisory Service made a recommendation to improve Shinhan Bank’s fraud detection system, including allocating sufficient staff and establishing a computer system dedicated to identifying digital asset-related transactions and assessing risks related to digital asset management. In February 2024, the Financial Supervisory Service imposed a sanction on commercial banks in connection with

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The table below sets forth, for the periods indicated, the high and low closing prices and the average daily volume of trading activity on the Korea Exchange for our common stock since 2017, and their high and low closing prices and the average daily volume of trading activity on the New York Stock Exchange for our American depositary shares since 2017.


	Korea Exchange						New York Stock Exchange
	Closing Price per Common Stock				Average Daily Trading Volume		Closing Price per ADS				Average Daily Trading Volume
	High		Low		(Shares)		High		Low		(ADSs)
2020		42,750		22,200		2,366,124		37.45		17.37		144,214
2021		43,000		30,650		1,784,390		39.07		27.67		112,478
2022		43,200		33,400		1,303,530		34.60		23.00		154,790
2023		44,900		32,500		1,153,125		36.62		25.13		129,154
First Quarter		44,900		34,300		1,709,502		36.62		25.59		151,879
Second Quarter		35,900		33,850		1,133,213		27.74		25.69		123,019
Third Quarter		38,000		32,500		962,360		28.49		25.13		120,840
Fourth Quarter		40,150		34,100		795,571		31.12		25.13		121,141
2024		61,400		36,350		1,784,793		45.71		27.23		135,883
First Quarter		51,500		36,350		2,701,479		37.94		27.23		133,527
Second Quarter		49,000		40,550		1,473,797		36.12		29.33		114,631
Third Quarter		61,400		47,850		1,583,399		45.71		34.61		124,178
Fourth Quarter		58,100		47,650		1,378,700		43.20		32.87		164,468
October		58,100		51,300		1,264,969		43.20		37.82		146,965
November		57,000		53,000		1,276,030		41.29		38.18		133,879
December		56,400		47,650		1,600,233		38.86		32.87		212,772
2025 (through April 11)		51,100		43,600		1,331,614		35.51		29.04		271,965
January		51,100		47,750		1,022,593		35.51		32.71		188,107
February		51,000		45,850		1,615,375		35.32		31.95		340.514
March		48,950		44,650		1,290,180		33.46		31.04		279,548
April (through April 11)		48,700		43,600		1,411,150		33.27		29.04		295,908

Source: Korea Exchange; New York Stock Exchange.

ITEM 9.B.

Plan of Distribution

Not applicable.

ITEM 9.C.

Markets

The Korea Exchange

Pursuant to the Korea Stock and Futures Exchange Act, as of January 27, 2005, the Korea Stock Exchange, which began its operations in 1956, the KRX KOSDAQ, which began its operation on July 1, 1996, and the Korea Futures Exchange (as an exchange operating futures market and options market), which began its operation on February 1, 1999, were unified to form the Korea Exchange.

The Korea Exchange was established in a form of a limited liability stock company in accordance with the Korean Commercial Code with the minimum paid-in capital of W100 billion in accordance with the Financial Investment Services and Capital Markets Act. Historically, the Korea Exchange was the only exchange authorized under the Financial Investment Services and Capital Markets Act. On May 28, 2013, however, the Financial Investment Services and Capital Markets Act was amended to implement a license system under which a license may be granted to an exchange upon satisfaction of certain requirements. In addition, the Financial

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Services Commission has authorized the establishment of alternative trading systems that engage in the trading of listed beneficial certificates, among other things, for a multiple number of parties through electronic means. Notwithstanding the foregoing regulatory developments, the Korea Exchange is presently the only duly licensed exchange in Korea and there have been no definitive developments regarding newly licensed exchanges or alternative trading systems in Korea. The Korea Exchange operates and supervises four market divisions, the KRX KOSPI Market Division, the KRX KOSDAQ Market Division, the KRX Futures Market Division and the KRX KONEX Market Division. It has its principal office in Busan.

As of December 30, 2024, the aggregate market value of equity securities listed on the KOSPI was approximately W1,963 trillion. The average daily trading volume of equity securities for 2024 was approximately 487 million shares with an average transaction value of W10,742 billion.

Even though the Financial Investment Services and Capital Markets Act prescribed that the Korea Exchange be established in a form of a limited liability stock company, the Korea Exchange is expected to play a public role as a public organization. In order to safeguard against a possible conflict, the Financial Investment Services and Capital Markets Act has placed restrictions on the ownership and operation of the Korea Exchange and any newly established exchanges approved by the Financial Services Commission as follows:

•

Any person’s ownership of shares in the Korea Exchange is limited to 5% or less except for an investment trust company or investment company established under the Financial Investment Services and Capital Markets Act, or the Government. However, more than 5% ownership in Korea Exchange is permitted if necessary for forming a strategic alliance with a foreign stock or futures exchange and such amount of ownership is approved by the Financial Services Commission on grounds that such ownership may contribute to the efficiency and soundness of capital markets and the distribution of shares held by shareholders;

•

The number of outside directors on the board of directors of the Korea Exchange shall be more than half of the total number of directors;

•

Any amendment to the Articles of Incorporation, transfer or consolidation of business, spin off, stock swap in its entirety or transfer of shares in its entirety of the Korea Exchange will receive prior approval from the Financial Services Commission; and

•

In the event the Financial Services Commission determines that the chief executive officer of the Korea Exchange is not appropriate for the position, the Financial Services Commission can request the Korea Exchange upon reasonable cause, within one month from the chief executive officer’s election, to dismiss the chief executive officer. Subsequently, the chief executive officer will be suspended from performing his duties and the Korea Exchange will elect a new chief executive officer within two months from the request.

The Korea Exchange has the power in some circumstances to suspend trading in the shares of a given company or to de-list a security. The Korea Exchange also restricts share price movements. All listed companies are required to file accounting reports annually, semiannually and quarterly and to release immediately all information that may affect trading in a security.

The Government has in the past exerted, and continues to exert, substantial influence over many aspects of the private sector of the Korean economy and its actions may depress or boost the stock market. In the past, the Government has informally both encouraged and restricted the declaration and payment of dividends, induced mergers to reduce what it considers excess capacity in a particular industry and induced private companies to offer publicly their securities.

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The Korea Exchange publishes the Korea Composite Stock Price Index (“KOSPI”) every ten seconds, which is an index of all equity securities listed on the Korea Exchange. Historical movements in KOSPI are set out in the following.


	Opening⁽¹⁾		High		Low		Closing
2020		2,175.17		2,873.47		1,457.64		2,873.47
2021		2,944.45		3,305.21		2,839.01		2,977.65
2022		2,988.77		2,989.24		2,155.49		2,236.40
2023		2,225.67		2,667.07		2,218.68		2,655.28
2024		2,669.81		2,891.35		2,360.58		2,399.49
2025 (through April 14)		2,398.94		2,671.52		2,293.70		2,455.89

Source: Korea Exchange

Note:

(1)	The figures represent the daily closing price of the first trading day of the respective year.

Shares are quoted “ex-dividend” on the first trading day of the relevant company’s accounting period. “Ex-dividend” refers to a share no longer carrying the right to receive the following dividend payment because the settlement date occurs after the record date for determining which shareholders are entitled to receive dividends. “Ex-rights” refers to shares no longer carrying the right to participate in the following rights offering or bonus issuance because the settlement date occurs after the record date for determining which shareholders are entitled to new shares. The calendar year is the accounting period for the majority of listed companies, this may account for the drop in KOSPI between its closing level at the end of one calendar year and its opening level at the beginning of the following calendar year.

With certain exceptions, principally to take account of a share being quoted “ex-dividend” and “ex-rights,” permitted upward and downward movements in share prices of any category of shares on any day are limited under the rules of the Korea Exchange to 30% of the previous day’s closing price of the shares, rounded down as set out below:


Previous Day’s Closing Price	Rounded Down to Won
Less than 2,000		1
2,000 to less than 5,000		5
5,000 to less than 20,000		10
20,000 to less than 50,000		50
50,000 to less than 200,000		100
200,000 to less than 500,000		500
500,000 or more		1,000

As a consequence, if a particular closing price is the same as the price set by the fluctuation limit, the closing price may not reflect the price at which persons would have been prepared, or would be prepared to continue, if so permitted, to buy and sell shares. Orders are executed on an auction system with priority rules to deal with competing bids and offers.

Due to deregulation of restrictions on brokerage commission rates, the brokerage commission rate on equity securities transactions may be determined by the parties, subject to commission schedules being filed with the Korea Exchange by the financial investment companies with brokerage licenses.

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The number of companies listed on the KRX KOSPI Market, the corresponding total market capitalization at the end of the periods indicated and the average daily trading volume for those periods are set forth in the following table.


			Total Market Capitalization				Average Daily Trading Volume, Value
Year	Number of Listed Companies		(Millions of Won)		(Thousands of Dollars)⁽¹⁾		Thousands of Shares		(Millions of Won)		(Thousands of Dollars)⁽¹⁾
2020		795		1,980,543,162		1,823,536,656		895,256		12,200,417		11,233,235
2021		818		2,203,366,546		1,853,749,408		1,039,479		15,424,224		12,976,800
2022		820		1,767,235,221		1,402,345,041		595,197		9,008,398		7,148,387
2023		834		2,126,372,516		1,649,117,819		538,210		9,602,689		7,447,409
2024		843		1,963,328,801		1,328,458,489		486,868		10,741,556		7,268,121
2025 (through April 14)		845		2,011,102,253		1,379,640,703		483,018		10,575,576		7,254,975

Source: Korea Exchange

Note:

(1)	Converted at the Noon Buying Rate at the end of the periods indicated.

The Korean securities markets are principally regulated by the Financial Services Commission and the Financial Investment Services and Capital Markets Act. The law imposes restrictions on insider trading and price manipulation, requires specified information to be made available by listed companies to investors and establishes rules regarding margin trading, proxy solicitation, takeover bids, acquisition of treasury shares and reporting requirements for shareholders holding substantial interests.

Protection of Customer’s Interest in Case of Insolvency of Financial Investment Companies

Under Korean law, the relationship between a customer and a financial investment company in connection with a securities sell or buy order is deemed to be consignment and the securities acquired by a consignment agent (i.e., the securities company) through such sell or buy order are regarded as belonging to the customer in so far as the customer and the consignment agent’s creditors are concerned. Therefore, in the event of a bankruptcy or reorganization procedure involving a financial investment company, the customer of the financial investment company is entitled to the proceeds of the securities sold by the financial investment company. In addition, the Financial Investment Services and Capital Markets Act recognizes the ownership of a customer in securities held by a financial investment company in such customer’s account.

When a customer places a sell order with a financial investment company which is not a member of the Korea Exchange and this financial investment company places a sell order with another financial investment company which is a member of the Korea Exchange, the customer is still entitled to the proceeds of the securities sold received by the non-member company from the member company regardless of the bankruptcy or reorganization of the non-member company. Likewise, when a customer places a buy order with a non-member company and the non-member company places a buy order with a member company, the customer has the legal right to the securities received by the non-member company from the member company because the purchased securities are regarded as belonging to the customer in so far as the customer and the non-member company’s creditors are concerned.

In addition, under the Financial Investment Services and Capital Markets Act, the Korea Exchange is obliged to indemnify any loss or damage incurred by a counterparty as a result of a breach by its members. If a financial investment company which is a member of the Korea Exchange breaches its obligation in connection with a buy order, the Korea Exchange is obliged to pay the purchase price on behalf of the breaching member. Therefore, the customer can acquire the securities that have been ordered to be purchased by the breaching member.

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As the cash deposited with a financial investment company is regarded as belonging to the financial investment company, which is liable to return the same at the request of its customer, the customer cannot take back deposited cash from the financial investment company if a bankruptcy or reorganization procedure is instituted against the financial investment company and, therefore, can suffer from loss or damage as a result. However, the Depositor Protection Act provides that the Korea Deposit Insurance Corporation will, upon the request of the investors, pay each investor up to W50 million per financial institution in case of the financial investment company’s bankruptcy, liquidation, cancellation of securities business license or other insolvency events. The premiums related to this insurance are paid by financial investment companies. Pursuant to the Financial Investment Services and Capital Markets Act, a financial investment company with a dealing or brokerage license is required to deposit the cash received from its customers with the Korea Securities Finance Corporation, a special entity established pursuant to the Financial Investment Services and Capital Markets Act. Set-off or attachment of cash deposits by securities companies with the Korea Securities Finance Corporation is prohibited. In addition, in the event of bankruptcy or dissolution of the financial investment company, the cash so deposited shall be withdrawn and paid to the customer prior to payment to other creditors of the financial investment company.

Restrictions Applicable to ADSs

No Korean governmental approval is necessary for the sale and purchase of our ADSs in the secondary market outside Korea or for the withdrawal of shares of our common stock underlying the ADSs and the delivery within Korea of shares in connection with the withdrawal, provided that a foreigner procures a Legal Entity Identifier (passport number for individual) as described below. The acquisition of the shares by a foreigner must be immediately reported to the governor of the Financial Services Commission, either by the foreigner or by his standing proxy in Korea.

Persons who have acquired shares of our common stock as a result of the withdrawal of shares underlying our ADSs may exercise their preemptive rights for new shares, participate in free distributions and receive dividends on shares without any further Korean governmental approval.

Under current Korean laws and regulations, the depositary is required to obtain our prior consent for the number of shares of our common stock to be deposited in any given proposed deposit that exceeds the difference between:

(1)

the aggregate number of shares of our common stock deposited by us for the issuance of our ADSs (including deposits in connection with the initial issuance and all subsequent offerings of our ADSs and stock dividends or other distributions related to these ADSs); and

(2)

the number of shares of our common stock on deposit with the depositary at the time of such proposed deposit. We have agreed to grant such consent to the extent that the total number of shares on deposit with the depositary would not exceed 40,432,628 at any time.

Reporting Requirements for Holders of Substantial Interests

Under the Financial Investment Services and Capital Markets Act, any person whose direct or beneficial ownership of our common stock with voting rights, whether in the form of shares of common stock or ADSs, certificates representing the rights to subscribe for shares and equity-related debt securities including convertible bonds and bonds with warrants (which we refer to collectively as “Equity Securities”), together with the Equity Securities beneficially owned by certain related persons or by any person acting in concert with the person, accounts for 5% or more of the total outstanding shares (including Equity Securities of us held by such persons) is required to report the status of the holdings and the purpose of the holdings (for example, whether intending to seek management control) to the Financial Services Commission and the Korea Exchange within five business days after reaching the 5% ownership level. In addition, any change in the ownership interest subsequent to the report that equals or exceeds 1% of the total outstanding Equity Securities or change in the purpose of the

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holdings is required to be reported to the Financial Services Commission and the Korea Exchange within five business days from the date of the change, provided that (i) if the investment is for passive investment purposes the change must be reported by the 10th day of the month following an amendment event and (ii) if the investment is for general investment purposes (i.e., an investment that is not intended for active management participation, but with a intention to actively exercise its rights as a shareholder with respect to the matters such as a distribution policies of the issuer) the change must be reported within 10 business days following an amendment event. For institutional investors as prescribed by the Financial Services Commission, (i) if the investment is for portfolio investment purposes, the change must be reported by the 10th day of the following quarter in which the change occurred and (ii) if the investment is for general investment purposes, the change must be reported by the 10th day of the month following an amendment event).

Violation of these reporting requirements may subject a person to criminal sanctions such as administrative sanctions, fines, imprisonment and/or a loss of voting rights with respect to the portion of ownership of Equity Securities exceeding 5% of the total outstanding shares. In addition, the Financial Services Commission may order the disposal of the unreported Equity Securities. Any persons who reports management control as the purpose for its holdings is prohibited from acquiring additional shares or from exercising voting rights during the following five days following the reporting date.

In addition to the reporting requirements described above, any person whose direct or beneficial ownership of our stock accounts for 10% or more of the total issued and outstanding shares (which we refer to as a “major stockholder”) must report the status of his/her shareholding to the Korea Securities Futures Commission and the Korea Exchange within five days after he/she becomes a major stockholder. In addition, any change in the ownership interest subsequent to the report must be reported to the Korea Securities Futures Commission and the Korea Exchange within five days after the change occurred, provided that the obligation to report such change shall be exempt if the number shares that changed in ownership is less than 1,000 shares and the aggregate amount of such shares that changed in ownership is less than W10 million. Violation of these reporting requirements may subject a person to criminal sanctions such as fines or imprisonment. Any single stockholder or persons who have a special relationship with such stockholder that jointly acquire more than 10% (4% in case of non-financial business group companies) of the voting stock of a Korean financial holding company who controls national banks will be subject to reporting or approval requirements pursuant to the Financial Holding Company Act. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Restrictions on Financial Holding Company Ownership.”

Restrictions Applicable to Shares

Under the Foreign Exchange Transaction Laws and Financial Services Commission regulations, as amended (collectively, the “Investment Rules”), foreigners may invest, with limited exceptions and subject to procedural requirements, in all shares of Korean companies, whether listed on the Stock Market Division of the Korea Exchange or on the KOSDAQ Market Division of the Korea Exchange, unless prohibited by specific laws. Foreign investors may trade shares listed on the Stock Market Division of the Korea Exchange or on the KOSDAQ Market Division of the Korea Exchange only through the Stock Market Division of the Korea Exchange or the KOSDAQ Market Division of the Korea Exchange, except in limited circumstances, including:

•

odd-lot trading of shares;

•

acquisition of shares (which we refer to as “Converted Shares”) by exercise of warrants, conversion rights or exchange rights under bonds with warrants, convertible bonds or exchangeable bonds or withdrawal rights under depositary receipts issued outside of Korea by a Korean company;

•

acquisition of shares as a result of inheritance, donation, bequest or exercise of stockholders’ rights, including preemptive rights or rights to participate in free distributions and receive dividends;

•

over-the-counter transactions between foreigners of a class of shares for which the ceiling on aggregate acquisition by foreigners, as explained below, has been reached or exceeded subject to certain exceptions; and

248

•

sale and purchase of shares at fair value between foreigners who are part of an investor group comprised of foreign companies investing under the control of a common investment manager pursuant to applicable laws or contract.

For over-the-counter transactions of shares between foreigners outside the Stock Market Division of the Korea Exchange or the KOSDAQ Market Division of the Korea Exchange for shares with respect to which the limit on aggregate foreign ownership has been reached or exceeded, a securities company licensed in Korea must act as an intermediary. Odd-lot trading of shares outside the Stock Market Division of the Korea Exchange or the KOSDAQ Market Division of the Korea Exchange must involve a licensed securities company in Korea as the other party. Foreign investors are prohibited from engaging in margin transactions with respect to shares that are subject to a foreign ownership limit.

The Investment Rules require a foreign investor who wishes to invest in shares on the Stock Market Division of the Korea Exchange or the KOSDAQ Market Division of the Korea Exchange (including Converted Shares and shares being issued for initial listing on the Stock Market Division of the Korea Exchange or on KOSDAQ Market Division of the Korea Exchange) to identify its identity with the Legal Entity Identifier (“LEI”) or provide a passport number prior to making any such investment.

Upon a foreign investor’s purchase of shares through the Stock Market Division of the Korea Exchange or the KOSDAQ Market Division of the Korea Exchange, no separate report by the investor is required. However, a foreign investor’s acquisition or sale of shares outside the Stock Market Division of the Korea Exchange or the KOSDAQ Market Division of the Korea Exchange (as discussed above) must be reported by the foreign investor or his standing proxy to the governor of the Financial Supervisory Service at the time of each such acquisition or sale. A foreign investor must ensure that any acquisition or sale by it of shares outside the Stock Market Division of the Korea Exchange or the KOSDAQ Market Division of the Korea Exchange in the case of trades in connection with a tender offer, odd-lot trading of shares, trades of a class of shares for which the aggregate foreign ownership limit has been reached or exceeded, is reported to the governor of the Financial Supervisory Service by himself or his standing proxy, or, in the case of sale and purchase of shares at fair value between foreigners, who are part of an investor group comprised of foreign companies investing under the control of a common investment manager pursuant to applicable laws or contract. A foreign investor may appoint a standing proxy from among the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), securities companies (including domestic branches of foreign securities companies), asset management companies, futures trading companies and internationally recognized custodians which will act as a standing proxy to exercise stockholders’ rights or perform any matters related to the foregoing activities if the foreign investor does not perform these activities himself. Generally, a foreign investor may not permit any person, other than its standing proxy, to exercise rights relating to his shares or perform any tasks related thereto on his behalf. However, a foreign investor may be exempted from complying with these standing proxy rules with the approval of the governor of the Financial Supervisory Service in cases deemed inevitable by reason of conflict between laws of Korea and the home country of the foreign investor.

Certificates evidencing shares of Korean companies must be kept in custody with an eligible custodian in Korea. Only foreign exchange banks (including domestic branches of foreign banks), securities companies (including domestic branches of foreign securities companies), the Korea Securities Depository, asset management companies, futures trading companies and internationally recognized custodians are eligible to act as a custodian of shares for a non-resident or foreign investor. A foreign investor must ensure that his custodian deposits his shares with the Korea Securities Depository. However, a foreign investor may be exempted from complying with this deposit requirement with the approval of the governor of the Financial Supervisory Service in circumstances where compliance with that requirement is made impracticable, including cases where compliance would contravene the laws of the home country of such foreign investor.

Under the Investment Rules, with certain exceptions, foreign investors may acquire shares of a Korean company without being subject to any foreign investment ceiling. As one such exception, designated public

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corporations are subject to a 40% ceiling on the acquisition of shares by foreigners in the aggregate. Designated public corporations may set a ceiling on the acquisition of shares by a single person in their articles of incorporation. Furthermore, an investment by a foreign investor in 10% or more of the issued and outstanding shares with voting rights of a Korean company is defined as a foreign direct investment under the Foreign Investment Promotion Act of Korea. Generally, a foreign direct investment must be reported to the Ministry of Commerce, Industry and Energy of Korea. The acquisition of shares of a Korean company by a foreign investor may also be subject to certain foreign or other shareholding restrictions in the event that the restrictions are prescribed in a specific law that regulates the business of the Korean company. For a description of such restrictions applicable to Korean banks, see “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Banks — Restrictions on Bank Ownership.”

ITEM 9.D.

Selling Shareholders

Not applicable.

ITEM 9.E.

Dilution

Not applicable.

ITEM 9.F.

Expenses of the Issue

Not applicable.

ITEM 10.

ADDITIONAL INFORMATION

ITEM 10.A.

Share Capital

Not applicable.

ITEM 10.B.

Memorandum and Articles of Incorporation

We are a financial holding company established under the Financial Holding Company Act. As set forth in our Articles of Incorporation, our objects and purposes as a financial holding company are, among others, to operate and manage financial companies or companies engaged in similar lines of business, to provide financial support to, or investments in, our subsidiaries and to develop and jointly sell products with our subsidiaries. We are registered with the commercial registry office of Seoul Central District Court.

Our articles of incorporation, which was last amended on March 26, 2025, is annexed to this annual report as Exhibit 1.1.

Description of Share Capital

This section provides information relating to our capital stock, including brief summaries of material provisions of our Articles of Incorporation, the Korean Commercial Code, the Financial Investment Services and Capital Markets Act, the Financial Holding Companies Act and certain related laws of Korea, all as currently in effect. The following summaries are intended to provide only summaries and are subject to the full text of the Articles of Incorporation and the applicable provisions of the Financial Investment Services and Capital Markets Act, the Korean Commercial Code, and certain other related laws of Korea.

General

As of December 31, 2024 and as of the date hereof, our authorized share capital is 1,000,000,000 shares. Our Articles of Incorporation provide that we are authorized to issue shares of preferred stock up to one-half of

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all of the issued and outstanding shares. Furthermore, through an amendment of the Articles of Incorporation, we have created new classes of shares in addition to the common shares and the preferred shares. As of December 31, 2024, the number of our issued and outstanding common shares was 503,445,325.

On January 25, 2007, we issued 28,990,000 Series 10 redeemable preferred shares and 14,721,000 Series 11 redeemable convertible preferred shares as part of our funding for the acquisition of LG Card, all of which were redeemed on January 25, 2012. On April 21, 2011, as part of funding for partial redemption of the Series 10 redeemable preferred stock and the Series 11 redeemable convertible preferred stock, we issued 11,100,000 shares of the Series 12 non-voting redeemable preferred stock, all of which were redeemed on April 21, 2016. On May 1, 2019, as part of funding for the acquisition of Orange Life Insurance, we issued 17,482,000 shares of non-voting convertible preferred stock through third-party allotment at a price of W42,900. In addition, we issued 8,232,906 shares of common stock in relation to a comprehensive stock exchange between Shinhan Financial Group and Orange Life Insurance on January 28, 2020. On May 1, 2023, 17,482,000 shares of our convertible preferred stock issued on May 1, 2019 have been automatically converted to common stock. See “— Description of Preferred Stock.”

From April 29, 2020 to May 28, 2020, we acquired 5,035,658 treasury shares which we retired entirely on June 1, 2020. On September 29, 2020, partly in response to the prolonged COVID-19 pandemic and to increase our loss absorption capacity, we issued 39,130,000 common shares to two private equity funds, thereby increasing our paid-in capital by W195.7 billion. On December 30, 2020, as part of the small-scale stock exchange for the acquisition of the remaining interest in Neoplux, we issued 72,719 shares of common stocks.

All of the issued and outstanding shares are fully-paid and non-assessable, and are in registered form. As of December 31, 2024, our authorized but unissued share capital was 491,969,114 shares. We may issue the unissued shares without further shareholder approval but subject to a board resolution as provided in the Articles of Incorporation. See “— Distribution of Free Shares.” The par value of our common shares per share is W5,000.

Dividends

Dividends are distributed to shareholders in proportion to the number of shares of the relevant class of capital stock owned by each shareholder following approval by the shareholders at an annual general meeting of shareholders. We pay full annual dividends on newly issued shares (such as the common shares representing the American depositary shares (“ADSs”)) for the year in which the new shares are issued. We declare our dividend annually at the annual general meeting of shareholders which is held within three months after the end of the fiscal year. Once declared, the annual dividend must be paid to the stockholders of record as of the end of the preceding fiscal year within one month after the annual general meeting unless otherwise resolved thereby. Annual dividends may be distributed either in (i) cash or (ii) shares provided that shares must be distributed at par value. In addition to the annual dividend, we may also distribute cash dividends to the stockholders of record as of the end of March, June and September of each year upon a resolution by the board of directors. Under the Korean Commercial Code we do not have an obligation to pay any annual dividend unclaimed for five years from the scheduled payment date.

In addition, under the Financial Investment Services and Capital Markets Act and our Articles of Incorporation, we may pay quarterly dividends to our shareholders of record as of the end of March, June and September of each year upon the resolution of the board of directors. The quarterly dividend, if any, will be paid to the shareholders in cash. Our Articles of Incorporation stipulates that any quarterly dividends shall not exceed the net assets as of the end of the immediately preceding fiscal year, after deducting (i) the paid-in capital as of the end of the immediately preceding fiscal year, (ii) the aggregate amount of the capital reserves and earned surplus reserves, accumulated up to the end of the immediately preceding fiscal year, (iii) unrealized profits as prescribed under the Enforcement Decree of the Commercial Code, (iv) the amount resolved to be distributed as dividends at the Ordinary General Meeting of Shareholders held in respect of the immediately preceding fiscal

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year, (v) voluntary reserves accumulated for specific purposes in accordance with the relevant provisions of these Articles of Incorporation or by the resolution of the General Meetings of Shareholders as of the end of the immediately preceding fiscal year, (vi) earned surplus reserves that account for at least 10% of the net profits of the relevant fiscal year until such reserves equal the aggregate amount of its stated capital and (vii) the aggregate amount of quarterly dividends paid during the current fiscal year, if any.

The table below sets forth the cash dividend per share of common stock and the cash dividend per share of preferred stock declared by us in respect of the years ended December 31, 2022, 2023 and 2024.

Dividends


	For the Years Ended December 31,
	2022		2023		2024

	(In Won and US$)
Cash dividends per share of common stock:
In Korean Won	W	2,065	W	2,100	W	2,160
In U.S. Dollars⁽¹⁾					$	1.47
Cash dividends per share of preferred stock:
In Korean Won	W	2,065	W	525	W	—
In U.S. Dollars⁽¹⁾					$	—

Note:

(1)

Won amounts for the year ended December 31, 2024 have been expressed in U.S. Dollars at the rate of W1,477.9 to US$1.00, the Noon Buying Rate in effect on December 31, 2024, for the convenience of readers. No representation is made that the Won or U.S. Dollar amounts referred to above could have been or could be converted into U.S. Dollars or Won, as the case may be, at any particular rate or at all.

Under the Financial Holding Companies Act and the regulations thereunder, a financial holding company may not pay an annual dividend unless it has set aside as its legal reserve an amount equal to at least one-tenth of its net income after tax and shall set aside such amount as its legal reserve until its legal reserve reaches at least the aggregate amount of its stated capital.

Other than as set forth above and the dividend rights granted to preferred shareholders as further described in “— Description of Preferred Stock,” our articles of incorporation do not provide special rights to our common or preferred shareholders to share in our profits. For information regarding Korean taxes on dividends, see “Item 10.E. Taxation — Korean Taxation.”

Distribution of Free Shares

In addition to permitting dividends in the form of shares to be paid out of retained or current earnings, the Korean Commercial Code permits a company to distribute to its shareholders, in the form of free shares, an amount transferred from the capital surplus or legal reserve to stated capital. These free shares must be distributed to all of the shareholders pro rata. Our Articles of Incorporation require the same types of preferred shares to be distributed to the holders of preferred shares in case of distribution of free shares. For information regarding the treatment under Korean tax laws of free share distributions, see “Item 10.E. Taxation — Korean Taxation — Taxation of Dividends on Shares of Common Stock or American Depositary Shares.”

Preemptive Rights and Issuance of Additional Shares

Unless otherwise provided in the Korean Commercial Code, a company may issue authorized but unissued shares at such times and upon such terms as the board of directors of the company may determine. The company

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must offer the new shares on uniform terms to all shareholders who have preemptive rights and who are listed on the shareholders’ register as of the record date. Our shareholders are entitled to subscribe for any newly issued shares in proportion to their existing shareholdings. However, as provided in the Articles of Incorporation, we may issue new shares by resolution of board of directors to persons other than existing shareholders if those shares are (1) publicly offered (where the number of such shares so offered may not exceed 50% of our total number of issued and outstanding shares); (2) preferentially allocated to the members of the ESOA pursuant to relevant provisions of the Financial Investment Services and Capital Markets Act; (3) issued for the purpose of issuing depositary receipts pursuant to relevant provisions of the Financial Investment Services and Capital Markets Act (where the number of such shares so issued may not exceed 50% of our total number of issued and outstanding shares); (4) issued to directors or employees as a result of exercise of stock options we granted to them pursuant to the Korean Commercial Code; (5) issued to a financial investment company, a private equity fund or a special purpose company under the Financial Investment Services and Capital Markets Act; or (6) issued to any specified foreign investors, foreign or domestic financial institutions or alliance companies for operational needs such as introduction of advanced financial technology, improvement of its or subsidiaries’ financial structure and funding or strategic alliance (where such number of shares so issued may not exceed 50% of our total number of issued and outstanding shares). Under the Korean Commercial Code, a company may vary, without stockholders’ approval, the terms of such preemptive rights for different classes of shares. Public notice of the preemptive rights to new shares and the transferability thereof must be given not less than two weeks (excluding the period during which the shareholders’ register is closed) prior to the record date. We will notify the shareholders who are entitled to subscribe for newly issued shares of the deadline for subscription at least two weeks prior to the deadline. If a shareholder fails to subscribe on or before such deadline, the shareholder’s preemptive rights will lapse. Our board of directors may determine how to distribute shares in respect of which preemptive rights have not been exercised or where fractions of shares occur. Under the Financial Investment Services and Capital Markets Act, if a listed company intends to issue new shares by way of allotment to shareholders, it must issue a certificate of preemptive right to the newly issued shares. Furthermore, the company must list the newly issued shares on the Korea Exchange for a certain period of time or designate a securities company to broker and/or deal in such newly issued shares in order to ensure that they are properly distributed. In the event certain shareholder forfeit their right to subscribe to newly issued shares, the company may allot the forfeited shares to a third party under certain conditions, including in relation to the purchase price of such shares, although in principle, the company must withdraw the forfeited shares. Under the Korean Commercial Code, when a company issues new shares by way of allotment to a third party, such company must notify its stockholders or make public notice of the conditions and other details of such new shares not less than two weeks prior to the relevant subscription payment date. Under the Financial Investment Services and Capital Markets Act, however, a listed company may substitute such notification or public notice by disclosing the material fact in a report publicly filed with the listing authorities.

Under the Financial Investment Services and Capital Markets Act, members of a company’s employee stock ownership association, whether or not they are shareholders, have a preemptive right, subject to certain exceptions, to subscribe for up to 20% of the shares publicly offered pursuant to the Financial Investment Services and Capital Markets Act. However, this right is exercisable only to the extent that the total number of shares so acquired and held by such members does not exceed 20% of the total number of shares to be newly issued and shares then outstanding. As of December 31, 2024, the employee stock ownership association owned 24,861,162 shares, or 4.9%, of our common stock.

Corporate Value Up Plan

In February 2024, the Government announced a corporate value-up support plan for listed companies, encouraging voluntary disclosures with the aim of improving valuations. In response, upon discussion among our board of directions, we announced our Corporate Value Up Plan in July 2024, which includes specific goals through 2027 of improving return on equity and implementing shareholder return policies focused on share buybacks and cancellations. We plan to continue engaging with our shareholders and other market participants

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and strive to enhance our corporate value. However, such goals are subject to a number of factors and uncertainties, many of which are beyond our control, and no assurance can be given that we will be able to achieve such goals in a timely manner or at all.

General Meeting of Shareholders

There are two types of general meetings of shareholders: annual general meetings and extraordinary general meetings. We are required to convene our annual general meeting within three months after the end of each fiscal year. Subject to a board resolution or court approval, an extraordinary general meeting of shareholders may be held when necessary or at the request of our Audit Committee. In addition, under the Korean Commercial Code, an extraordinary general meeting of shareholders may be held at the request of the shareholders holding shares for at least six months of an aggregate of 1.5% or more of the outstanding shares with voting rights of the listed company, subject to a board resolution or court approval. Furthermore, under the Act on the Corporate Governance of Financial Companies of Korea and its sub-regulations, an extraordinary general meeting of shareholders may be held at the request of the shareholders holding shares for at least six months of an aggregate of 1.5% (0.75% in the case of a financial holding company (i) whose total assets at the end of the latest fiscal year is W5 trillion or more and (ii) who is in control of two or more subsidiaries, each with total assets of W2 trillion or more) or more of the outstanding shares of the company, subject to a board resolution or court approval. Meeting agendas are determined by the board of directors or proposed by holders of an aggregate of 3% or more of the outstanding shares with voting rights by way of a written proposal to the board of directors at least six weeks prior to the meeting. In addition, under the Korean Commercial Code, the meeting agenda may be proposed by the shareholders holding shares for at least six months of an aggregate of 1% (0.5% in the case of a listed company whose capital at the end of the latest operating year is W100 billion or more) or more of the outstanding shares of the listed company. Furthermore, under the Act on the Corporate Governance of Financial Companies and its sub-regulations, the meeting agenda may be proposed by the shareholders holding shares for at least six months of an aggregate of 0.1%. Written notices stating the date, place and agenda of the meeting must be given to the shareholders at least two weeks prior to the date of the general meeting of shareholders; provided, that, notice may be given to holders of 1% or less of the total number of issued and outstanding shares which are entitled to vote, by placing at least two public notices at least two weeks in advance of the meeting in at least two daily newspapers or by using an electronic method defined under the Korean Commercial Code and related regulations at least two weeks in advance of the meeting. Currently, we use The Korea Economic Daily and Maeil Business Newspaper for the publication of such notices. Shareholders who are not on the shareholders’ register as of the record date are not entitled to receive notice of the general meeting of shareholders, and they are not entitled to attend or vote at such meeting.

The general meeting of shareholders is held at our executive office (which is our registered executive office) or, if necessary, may be held anywhere in the vicinity of our executive office.

Voting Rights

Holders of common shares are entitled to one vote for each share. However, voting rights with respect to common shares that we hold and common shares that are held by a corporate shareholder, more than one-tenth of the outstanding capital stock of which is directly or indirectly owned by such shareholder, may not be exercised. Unless stated otherwise in a company’s Articles of Incorporation, the Korean Commercial Code permits holders of an aggregate of 3% (1%, in case of a company whose total assets as at the end of the latest fiscal year is W2 trillion or more) or more of the outstanding shares with voting rights to request cumulative voting when electing two or more directors. Our Articles of Incorporation currently do not prohibit cumulative voting. If a listed company’s total assets amounted to W 2 trillion or more as of the end of the latest fiscal year, the company is required to establish and maintain an audit committee, whose members must be composed of directors of such company as appointed at a shareholders meeting. At least one member of the audit committee must be an outside director of such company. For a large listed company with total assets of W2 trillion or more as of the end of the latest fiscal year and a listed company with total assets of W100 billion or more as of the end of the latest fiscal year that has established an audit committee instead of a full-time auditor, the company is required that at least

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one director (or more than two directors, if specified in the articles of incorporation) who will serve as an audit committee member must be appointed separately from the other directors at the general meeting of shareholders. If the aggregate number of voting shares held by any shareholder exceeds 3% of the total number of issued and outstanding voting shares, then the shareholder may not exercise its voting rights with respect to the shares it holds in excess of such 3% threshold to elect or remove a member of the audit committee. In case the shareholder is the company’s largest shareholder, the shareholder and its specially related persons (as defined under the relevant laws) may not exercise their voting rights with respect to the shares they collectively hold in excess of the 3% threshold to elect or remove the audit committee member who is not an outside director of the company. If the listed company’s total assets amounted to W100 billion or above but below W2 trillion as of the end of the latest fiscal year, the company is required to appoint at least one standing director or one director to its audit committee through a shareholders’ meeting. If the aggregate number of voting shares held by any shareholder of such company exceeds 3% of the total number of issued and outstanding voting shares, then the shareholder may not exercise its voting rights with respect to the shares it holds in excess of the 3% threshold to elect or remove the company’s statutory auditor.

The Korean Commercial Code and our Articles of Incorporation provide that an ordinary resolution may be adopted if approval is obtained from the holders of at least a majority of those common shares present or represented at such meeting and such majority also represents at least one-fourth of the total of our issued and outstanding common shares. Holders of non-voting shares (other than enfranchised non-voting shares) are not entitled to vote on any resolution or to receive notice of any general meeting of shareholders unless the agenda of the meeting includes consideration of a resolution on which such holders are entitled to vote. The Korean Commercial Code provides that a company’s articles of incorporation may prescribe conditions for enfranchisement of non-voting shares. For example, if our general shareholders’ meeting resolves not to pay to holders of preferred shares the annual dividend as determined by the board of directors at the time of issuance of such shares, the holders of preferred shares will be entitled to exercise voting rights from the general shareholders’ meeting immediately following the meeting adopting such resolution until the end of the meeting to declare to pay such dividend with respect to the preferred shares. Holders of such enfranchised preferred shares have the same rights as holders of common shares to request, receive notice of, attend and vote at a general meeting of shareholders.

The Korean Commercial Code provides that to amend the Articles of Incorporation (which is also required for any change to the authorized share capital of the company) and in certain other instances, including removal of a director of a company, dissolution, merger or consolidation of a company, transfer of the whole or a significant part of the business of a company, acquisition of all of the business of any other company or issuance of new shares at a price lower than their par value, a special resolution must be adopted by the approval of the holders of at least two-thirds of those shares present or represented at such meeting and such special majority must also represent at least one-third of the total issued and outstanding shares with voting rights of the company.

In addition, in the case of amendments to the Articles of Incorporation or any merger or consolidation of a company or in certain other cases which affect the rights or interest of the shareholders of the preferred shares, a resolution must be adopted by a separate meeting of shareholders of the preferred shares. Such a resolution may be adopted if the approval is obtained from shareholders of at least two-thirds of the preferred shares present or represented at such meeting and such preferred shares also represent at least one-third of the total issued and outstanding preferred shares of the company.

A shareholder may exercise his voting rights by proxy given to another shareholder. If a particular shareholder intends to obtain proxy from another shareholder, a reference document specified by the Financial Supervisory Service must be sent to the shareholder giving proxy, with a copy furnished to the company’s executive office or the branch office, transfer agent and the Financial Services Commission. The proxy must present the power of attorney prior to the start of the general meeting of shareholders.

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Rights of Dissenting Shareholders

Pursuant to the Financial Investment Services and Capital Markets Act, in certain limited circumstances (including, without limitation, if we transfer all or any significant part of our business or if we merge or consolidate with another company), dissenting holders of shares have the right to require us to purchase their shares. Pursuant to the Financial Holding Companies Act, the Financial Investment Services and Capital Markets Act and the Korean Commercial Code, if a financial holding company acquires a new direct or indirect subsidiary through the exchange or transfer of shares except in limited circumstances, the dissenting holders of such shares have the right to require us to purchase their shares. To exercise such a right, shareholders must submit to us a written notice of their intention to dissent prior to the general meeting of shareholders. Within 20 days (or 10 days under certain circumstances according to the Financial Holding Companies Act) after the date on which the relevant resolution is passed at such meeting, such dissenting shareholders must request in writing that we purchase their shares. We are obligated to purchase the shares of dissenting shareholders within one month after the end of such request period at a price to be determined by negotiation between the shareholder and us. If we cannot agree on a price with the shareholder through such negotiations, the purchase price will be the arithmetic mean of (1) the weighted average of the daily closing share prices on the KRX KOSPI Market of the Korea Exchange for two months prior to the date of the adoption of the relevant board of directors’ resolution, (2) the weighted average of the daily closing share prices on the KRX KOSPI Market of the Korea Exchange for one month prior to the date of the adoption of the relevant board of directors’ resolution and (3) the weighted average of the daily closing share prices on the KRX KOSPI Market of the Korea Exchange for one week prior to the date of the adoption of the relevant board of directors’ resolution. If we or the dissenting shareholder who requested purchase of their shares do not accept such purchase price, we or the shareholder may request to the court to adjust such purchase price.

We maintain the register of our shareholders at our transfer agent’s office in Seoul, Korea. The Korea Securities Depository as our transfer agent, registers transfers of shares on the register of shareholders upon presentation of the share certificates.

The Korean Commercial Code and the Articles of Incorporation permit our board of directors to set a record date which must be publicly announced at least two weeks’ prior to such date, and/or close the register of shareholders for not more than three months for the purpose of determining the shareholders entitled to certain rights pertaining to the shares. The trading of shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed.

Other Shareholder Rights

Our articles of incorporation do not have sinking fund provisions or provisions creating liability to further capital calls. Other than to amend our articles of incorporation in accordance with the Korean Commercial Code, no particular action is necessary to change the rights of holders of our capital stock. In addition, our articles of incorporation do not have specific provisions for governing changes in capital or which would have an effect of delaying, deferring or preventing a change in control of us and that would operate only with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries.

Directors

Under the Korean Commercial Code and our articles of incorporation, any director wishing to enter into a transaction with us or our subsidiaries in his or her personal capacity is required to obtain the prior approval of the board of directors, and any director having an interest in the transaction may not vote at the meeting of the board of directors to approve the transaction.

Neither our articles of incorporation nor applicable Korean laws have provisions relating to (i) the directors’ power, in the absence of an independent quorum, to vote compensation to themselves or any members of their

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body (ii) borrowing powers exercisable by the directors and how such borrowing powers can be varied; (iii) retirement or non-retirement of directors under an age limit requirement; or (iv) the number of shares required for a director’s qualification.

Description of Preferred Stock

On January 25, 2007, as part of funding our acquisition of LG Card, we issued 28,990,000 Series 10 non-voting redeemable preferred shares. On January 25, 2012, we redeemed all of the Series 10 preferred shares.

On January 25, 2007, as part of funding our acquisition of LG Card, we issued 14,721,000 Series 11 non-voting redeemable convertible preferred shares. On January 25, 2012, we redeemed all of the Series 11 preferred shares.

On April 21, 2011, as part of funding for preferred stocks due to be redeemed in January 2012, we issued 11,100,000 Series 12 non-voting redeemable preferred shares for the subscription price of W100,000 per share, or W1,110 billion in the aggregate. On April 21, 2016, we redeemed all of the Series 12 redeemable preferred shares.

On May 1, 2019, as part of funding for the acquisition of Orange Life Insurance, we issued 17,482,000 shares of non-voting convertible preferred stock through third-party allotment at a price of W42,900.

On May 1, 2023, 17,482,000 shares of our convertible preferred stock issued on May 1, 2019 have been automatically converted to common stock.

Annual Report

Under the Financial Investment Services and Capital Markets Act, we must file with the Financial Services Commission and the Korea Exchange an annual business report (containing audit report and audited annual nonconsolidated and consolidated financial statements) within 90 days after the end of our fiscal year as well as a semiannual business report within 45 days after the end of the first six months of our fiscal year and quarterly business reports within 45 days after the end of the first three months and nine months of our fiscal year, respectively (in each case, containing review report and reviewed interim nonconsolidated and consolidated financial statements). Copies of such reports are available for public inspection at the websites of the Financial Services Commission and the Korea Exchange.

Transfer of Shares

Under the Korean Commercial Code, the transfer of shares is effected by the delivery of share certificates. In order to exercise shareholders’ rights, the transferee must have his name and address registered on the registry of shareholders. For this purpose, shareholders are required to file with us their name, address and seal. Nonresident shareholders must notify us of the name of their proxy in Korea to which our notice can be sent. Under the Financial Services Commission regulations, nonresident shareholders may appoint a standing proxy and may not allow any person other than the standing proxy to exercise rights regarding the acquired share or perform any task related thereto on his behalf, subject to certain exceptions. Under current Korean regulations, the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license and internationally recognized custodians are authorized to act as standing proxy and provide related services. Certain foreign exchange controls and securities regulations apply to the transfer of shares by nonresidents or non-Koreans. See “Item 10.D. Exchange Controls.” As to the ceiling on the aggregate shareholdings of a single shareholder and persons who have a special relationship with such shareholder, please see “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Restrictions on Financial Holding Company Ownership.”

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Acquisition of Treasury Shares

Under the Korean Commercial Code, we may acquire our own shares upon resolution of the general meeting of the shareholders or resolution of the board of directors pursuant to Article 165-3 of the Financial Investment Services and Capital Markets Act by either (i) purchasing them on a stock exchange or (ii) purchasing a number of shares, other than the redeemable shares as set forth in Article 345, Paragraph (1) of the Korean Commercial Code, from each shareholder in proportion to its existing shareholding ratio through the methods set forth in the Presidential Decree, provided that the total purchase price does not exceed the amount of our profit that may be distributed as dividends in respect of the immediately preceding fiscal year. In addition, pursuant to the Financial Investment Services and Capital Markets Act and regulations under the Financial Holding Companies Act, we may purchase our own shares on the KRX KOSPI Market of the Korea Exchange, through a tender offer, or through a trust agreement with a trust company, or retrieve our own shares from a trust company upon termination of a trust agreement, subject to the restrictions that (1) the aggregate purchase price of such shares may not exceed the total amount available for distribution of dividends at the end of the preceding fiscal year less the amounts of dividends and reserves for such fiscal year, subtracted by the sum of (a) the purchase price of treasury stock acquired if any treasury stock has been purchased after the end of the preceding fiscal year pursuant to the Commercial Act or the Financial Investment Services and Capital Markets Act, (b) the amount subject to trust agreements, and (c) the amount of dividends approved at the ordinary general shareholders’ meeting after the end of the preceding fiscal year and the amount of retained earnings reserve required under the Commercial Act; plus if any treasury stock has been disposed of after the end of the preceding fiscal year, the acquisition cost of such treasury stock and (2) the purchase of such shares shall meet the requisite capital ratio under the Financial Holding Companies Act and the guidelines issued by the Financial Services Commission. In general, under the Financial Holding Companies Act, our subsidiaries are not permitted to acquire our shares.

Liquidation Rights

In the event we are liquidated, the assets remaining after the payment of all debts, liquidation expenses and taxes will be distributed to shareholders in proportion to the number of shares held by such shareholders. Holders of preferred shares may have preferences over holders of common shares in liquidation.

ITEM 10.C.

Material Contracts

None.

ITEM 10.D.

Exchange Controls

General

The Foreign Exchange Transaction Act of Korea the related Presidential Decree and the regulations under such Act and Decree (collectively the “Foreign Exchange Transaction Laws”) herein, regulate investment in Korean securities by nonresidents and issuance of securities by Korean companies outside Korea. Under the Foreign Exchange Transaction Laws, nonresidents may invest in Korean securities only to the extent specifically allowed by these laws or otherwise permitted by the Ministry of Strategy and Finance of Korea. The Financial Services Commission has also adopted, pursuant to its authority under the Financial Investment Services and Capital Markets Act, regulations that restrict investment by foreigners in Korean securities and regulate issuance of securities by Korean companies outside Korea.

Under the Foreign Exchange Transaction Laws, (1) if the Government determines that it is inevitable due to the outbreak of natural calamities, wars, conflict of arms or grave and sudden changes in domestic or foreign economic circumstances or other situations equivalent thereto, the Ministry of Strategy and Finance may temporarily suspend payment, receipt or the whole or part of transactions to which the Foreign Exchange Transaction Laws apply, or impose an obligation to safe keep, deposit or sell means of payment in or to certain

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Korean governmental agencies or financial institutions; and (2) if the Government determines that international balance of payments and international finance face or are likely to face serious difficulty or the movement of capital between Korea and abroad will cause or is likely to cause serious obstacles in carrying out its currency policies, exchange rate policies and other macroeconomic policies, the Ministry of Strategy and Finance may take measures to require any person who intends to perform capital transactions to obtain permission or to require any person who performs capital transactions to deposit part of the payments received in such transactions at certain Korean governmental agencies or financial institutions, in each case subject to certain limitations.

Restrictions Applicable to Shares

Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a foreign exchange bank at which he must open a foreign currency account and a Won account exclusively for stock investments. No approval is required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to make a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened at a financial investment company with a securities dealing or brokerage license. Funds in the foreign currency account may be remitted abroad without any Korean governmental approval.

Dividends on shares of Korean companies are paid in Won. No Korean governmental approval is required for foreign investors to receive dividends on, or the Won proceeds of the sale of, any shares to be paid, received and retained in Korea. Dividends paid on, and the Won proceeds of the sale of, any shares held by a nonresident of Korea must be deposited either in a Won account with the investor’s financial investment company with a securities dealing or brokerage license or in his Won account. Funds in the investor’s Won account may be transferred to his foreign currency account or withdrawn for local living expenses, provided that any withdrawal of local living expenses by any one person exceeding US$10,000 per day needs to be reported to the governor of the Financial Supervisory Service by the foreign exchange bank at which the Won account is maintained. Funds in the Won account may also be used for future investment in shares or for payment of the subscription price of new shares obtained through the exercise of preemptive rights.

Financial investment companies with a securities dealing, brokerage or collective investment license are allowed to open foreign currency accounts with foreign exchange banks exclusively for accommodating foreign investors’ stock investments in Korea. Through these accounts, financial companies with a securities dealing, brokerage or collective investment license may enter into foreign exchange transactions on a limited basis, such as conversion of foreign currency funds and Won funds, either as a counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.

ITEM 10.E.

Taxation

The following summary is based upon tax laws, regulations, rulings, decrees, income tax conventions (treaties), administrative practice and judicial decisions of Korea and the United States as of the date of this annual report, and is subject to any change in Korean or United States law that may come into effect after such date. Investors in shares of common stock or American depositary shares are advised to consult their own tax advisers as to the Korean, United States or other tax consequences of the purchase, ownership and disposition of such securities, including the effect of any national, state or local tax laws.

Korean Taxation

The following summary of Korean tax considerations applies to you so long as you are not:

•

a resident of Korea;

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•

a corporation having its head office, principal place of business, or place of effective management in Korea (a Korean corporation); or

•

engaged in a trade or business in Korea through a permanent establishment or a fixed base to which the relevant income is attributable or with which the relevant income is effectively connected.

Taxation of Dividends on Shares of Common Stock or American Depositary Shares

We will deduct Korean withholding tax from dividends (whether in cash or in shares) paid to you at a rate of 22% (including local income surtax). If you are a qualified resident and a beneficial owner of the dividends in a country that has entered into a tax treaty with Korea, you may qualify for a reduced rate of Korean withholding tax. See “— Tax Treaties” below for a discussion of treaty benefits. If we distribute to you free shares representing a transfer of certain capital reserves or asset revaluation reserves into paid-in capital, such distribution may be subject to a Korean withholding tax.

Taxation of Capital Gains from Transfer of Common Shares or American Depositary Shares

As a general rule, capital gains earned by non-residents upon transfer of our common shares or ADSs are subject to a Korean withholding tax at the lower of (1) 11% (including local income surtax) of the gross proceeds realized or (2) 22% (including local income surtax) of the net realized gain, subject to the production of satisfactory evidence of acquisition costs and certain direct transaction costs associated with common shares or ADSs, unless exempt from Korean income taxation under an applicable tax treaty between Korea and the country of your tax residence. See “— Tax Treaties” below for a discussion on treaty benefits. Even if you do not qualify for the exemption under a tax treaty, you will not be subject to the foregoing withholding tax on capital gains if you meet certain requirements for the exemption under Korean domestic tax laws discussed in the following paragraphs.

You will not be subject to the Korean income taxation on capital gains realized upon a transfer of our common shares through the Korea Exchange if you (1) have no permanent establishment in Korea and (2) do not own and have never owned (together with any shares owned by any entity with which you have a special relationship and possibly including the shares represented by the ADSs) 25% or more of our total issued and outstanding shares at any time during the calendar year in which the sale occurs and during the five consecutive calendar years prior to the calendar year in which the sale occurs.

Under Korean tax law, ADSs are viewed as shares of stock for capital gains tax purposes. Accordingly, capital gains from sale or disposition of ADSs are taxed (if taxable) as if such gains are from sale or disposition of shares of our common stock. It should be noted that (i) capital gains earned by you (regardless of whether you have a permanent establishment in Korea) from a transfer of ADSs outside Korea will generally be exempt from Korean income taxation by virtue of the Special Tax Treatment Control Law of Korea, or the STTCL, provided that the issuance of ADSs is deemed to be an overseas issuance under the STTCL, but (ii) in the case where an owner of the underlying shares of stock transfers ADSs after conversion of the underlying shares into ADSs, the exemption under the STTCL described in (i) will not apply. In the case where an owner of the underlying shares of stock transfers the ADSs after conversion of the underlying shares of stock into ADSs, such person is obligated to file corporate income tax returns and pay tax unless a purchaser or a financial investment company with a brokerage license, as applicable, withholds and pays the tax on capital gains derived from transfer of ADSs, as discussed below.

If you are subject to tax on capital gains with respect to a sale of common shares or ADSs, the purchaser or, in the case of a sale of common shares on the Korea Exchange or through a financial investment company with a brokerage license in Korea, the financial investment company is required to withhold Korean tax from the sales proceeds in an amount equal to 11% (including local income surtax) of the gross realization proceeds and to remit the withheld tax to the Korean tax authority, unless you establish your entitlement to an exemption under

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an applicable tax treaty or domestic tax law or produce satisfactory evidence of your acquisition costs and certain direct transaction costs associated with common shares or ADSs. See the discussion under “— Tax Treaties” below for an explanation of claiming treaty benefits.

Tax Treaties

Korea has entered into a number of income tax treaties with other countries, including the United States, which reduce or exempt Korean withholding tax on the income derived by residents of such treaty countries. For example, under the Korea-U.S. income tax treaty, reduced rates of Korean withholding tax on dividends of 16.5% or 11.0%, respectively (including local income surtax), depending on your shareholding ratio, and an exemption from Korean withholding tax on capital gains are generally available to residents of the United States that are beneficial owners of the relevant dividend income or capital gains. However, under Article 17 (Investment or Holding Companies) of the Korea-U.S. income tax treaty, such reduced rates and exemption do not apply if (1) you are a United States corporation, (2) by reason of any special measures the tax imposed on you by the United States with respect to such dividends or capital gains is substantially less than the tax generally imposed by the United States on corporate profits, and (3) 25% or more of your capital is held of record or is otherwise determined, after consultation between competent authorities of the United States and Korea, to be owned directly or indirectly by one or more persons who are not individual residents of the United States. Also, under Article 16 (Capital Gains) of the Korea-U.S. income tax treaty, the exemption on capital gains does not apply if (a) you have a permanent establishment in Korea and any shares of common stock in which you hold an interest and which gives rise to capital gains are effectively connected with such permanent establishment, (b) you are an individual and you maintain a fixed base in Korea for a period or periods aggregating 183 days or more during the taxable year and your common shares or ADSs giving rise to capital gains are effectively connected with such fixed base or (c) you are an individual and you are present in Korea for a period or periods of 183 days or more during the taxable year.

You should inquire for yourself whether you are entitled to the benefit of an income tax treaty with Korea. It is the responsibility of the party claiming the benefits of an income tax treaty in respect of dividend payments or capital gains to submit to us, the purchaser, the financial investment company, or other withholding agent, as the case may be, a certificate as to his tax residence. In the absence of sufficient proof, we, the purchaser, the financial investment company, or other withholding agent, as the case may be, must withhold tax at the normal rates. Furthermore, in order for you to claim the benefit of a tax rate reduction or tax exemption on certain Korean source income (e.g., dividends or capital gains) under an applicable tax treaty as the beneficial owner of such Korean source income, Korean tax law requires you (or your agent) to submit an application (in the case for reduced withholding tax rate, an “application for entitlement to reduced tax rate,” and in the case for exemption from withholding tax, an “application for tax exemption”) with a certificate of your tax residency issued by the competent authority of your country of tax residence, subject to certain exceptions (together, the “BO application”). For example, a U.S. resident would be required to provide a Form 6166 as a certificate of tax residency with the application for entitlement to reduced tax rate or the application for tax exemption, as the case may be. However, if such application for tax exemption is being sought by an entity for an amount that is Won 1 billion or more (including where the aggregate amount exempted within one year from the last day of the month in which the payment was made, is Won 1 billion or more), in addition to the certificate of tax residence issued by a competent authority of such entity’s country of residence, such entity will be required to additionally submit (i) the names and addresses of all of the members of its board of directors, (ii) the identities and shareholding percentages of all of its shareholders (provided that if there are more than 100 shareholders, it may instead provide a statement showing the total number of shareholders and the aggregate investment amount from each country), and (iii) audit reports for the most recent three years submitted to the country of residence (or, if the entity has been in existence for less than three years, audit reports since incorporation). Such application should be submitted to the withholding agent prior to the payment date of the relevant income. Subject to certain exceptions, where the relevant income is paid to an overseas investment vehicle (an “OIV”) that is not the beneficial owner of such income, a beneficial owner claiming the benefit of an applicable tax treaty with respect to such income must submit its BO application to such OIV, which in turn must submit an OIV report and a

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schedule of beneficial owners (and the BO applications collected from each beneficial owner, if such beneficial owner is applying for tax exemption) to the withholding agent prior to the payment date of such income. Effective as of January 1, 2022, an OIV shall be deemed to be a beneficial owner of the Korean source income if (i) under the applicable tax treaty, the OIV bears tax liabilities in the country in which it is established and (ii) the Korean source income is eligible for the treaty benefits under the tax treaty. The benefits under a tax treaty between Korea and the country of such OIV’s residence will apply with respect to the relevant income paid to such OIV, subject to certain application requirements as prescribed by the Corporate Income Tax or Individual Income Tax Law. In the case of a tax exemption application, the withholding agent is required to submit such application (together with the applicable OIV report in the event the income will be paid to an OIV) to the relevant district tax office by the ninth day of the month following the date of the payment of such income.

Inheritance Tax and Gift Tax

If you die while holding an ADS or donate an ADS, it is unclear whether, for Korean inheritance and gift tax purposes, you would be treated as the owner of the shares of common stock underlying the ADSs. If the tax authority interprets depositary receipts as the underlying share certificates, you may be treated as the owner of the shares of common stock and your heir or the donee (or in certain circumstances, you as the donor) will be subject to Korean inheritance or gift tax, which ranges from 10% to 50% recently, assessable based on the value of the ADSs or shares of common stock and the identity of the individual against whom the tax is assessed.

If you die while holding a common share or donate a subscription right or a common share, your heir or donee (or in certain circumstances, you as the donor) will be subject to Korean inheritance or gift tax at the same rate as indicated above.

At present, Korea has not entered into any tax treaty relating to inheritance or gift taxes.

Securities Transaction Tax

If you transfer common shares through the Korea Exchange, you will not be subject to a securities transaction tax but will be subject to an agriculture and fishery special surtax at the rate of 0.15% of the sales price of common shares. If your transfer of common shares is not made through the Korea Exchange, subject to certain exceptions, you will be subject to a securities transaction tax at the rate 0.35% but will not be subject to an agriculture and fishery special surtax.

Depositary receipts, which the ADSs constitute, are included in the scope of securities transfer subject to securities transaction tax. Nonetheless, transfer of depositary receipts listed on a foreign securities exchange similar to the Korea Exchange (e.g., the New York Stock Exchange, the NASDAQ National Market) will not be subject to the securities transaction tax.

In principle, the securities transaction tax, if applicable, must be paid by a transferor of common shares. When a transfer is effected through a securities settlement company in Korea, such settlement company is generally required to withhold and remit the tax to the tax authorities. When such transfer is made through a financial investment company only, such financial investment company is required to withhold and remit the tax. Where a transfer is affected by a non-resident who has no permanent establishment in Korea by a method other than through a securities settlement company or a financial investment company, the transferee is required to withhold the securities transaction tax.

Non-reporting or underreporting of securities transaction tax will generally result in the imposition of penalties equal to 20% to 60% of the non-reported or 10% to 60% of underreported tax amount and a failure to timely pay securities transaction tax due will result in penalties of 8.03% per annum of the due but unpaid tax. The penalty is imposed on the party responsible for paying the securities transaction tax or, if the securities transaction tax is to be withheld, on the party that has the withholding obligation.

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Certain United States Federal Income Tax Consequences

The following summary describes certain U.S. federal income tax considerations for beneficial owners of our common shares or ADSs that hold the common shares or ADSs as capital assets and are “U.S. holders.” You are a “U.S. holder” if you are for U.S. federal income tax purposes:

(i)

an individual citizen or resident of the United States;

(ii)

a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

(iii)

an estate the income of which is subject to U.S. federal income taxation regardless of its source;

(iv)

a trust that is subject to the primary supervision of a court within the United States and has one or more U.S. persons with authority to control all substantial decisions of the trust; or

(v)

a trust that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

In addition, this summary only applies to you if you are a U.S. holder that is a resident of the United States for purposes of the current income tax treaty between the United States and Korea (the “Treaty”), your common shares or ADSs are not, for purposes of the Treaty, effectively connected with a permanent establishment in Korea and you otherwise qualify for the full benefits of the Treaty.

This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations (including proposed regulations), rulings and judicial decisions thereunder as of the date hereof, as well as the Treaty, all of which are subject to change, perhaps retroactively. It is for general purposes only and you should not consider it to be tax advice. In addition, it assumes that each obligation under the deposit agreement will be performed in accordance with its terms. This summary does not represent a detailed description of all the U.S. federal income tax consequences to you in light of your particular circumstances, and does not address the Medicare tax on net investment income, U.S. federal estate and gift taxes or the effects of any state, local or non-U.S. tax laws. In addition, it does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:

•

a bank or one of certain other financial institutions;

•

a dealer in securities or currencies;

•

an insurance company;

•

a regulated investment company;

•

a real estate investment trust;

•

a tax-exempt entity;

•

a trader in securities that has elected to use a mark-to-market method of accounting for your securities holdings;

•

a person holding common shares or ADSs as part of a hedging, conversion, constructive sale or integrated transaction or a straddle;

•

a person liable for alternative minimum tax;

•

a partnership or other pass-through entity for United States federal income tax purposes (or an investor in such an entity);

•

a person who owns or is deemed to own 10% or more of our stock (by vote or value);

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•

a person required to accelerate the recognition of any item of gross income with respect to our common shares or ADSs as a result of such income being recognized on an applicable financial statement; or

•

a person whose functional currency is not the U.S. Dollar.

If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common shares or ADSs, you are urged to consult your tax advisor.

You should consult your own tax advisor concerning the particular U.S. federal tax consequences to you of the ownership and disposition of common shares or ADSs, as well as any consequences arising under the laws of any other taxing jurisdiction.

American Depositary Shares

If you hold ADSs, for U.S. federal income tax purposes, you generally will be treated as the owner of the underlying common shares that are represented by such ADSs. Accordingly, deposits or withdrawals of common shares for ADSs will not be subject to U.S. federal income tax.

Distributions on Common Shares or American Depositary Shares

Subject to the discussion below under “— Passive Foreign Investment Company Rules,” the gross amount of distributions on our common shares or ADSs (including amounts withheld to reflect Korean withholding tax) will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Such income (including withheld taxes) will be includable in your gross income as ordinary income on the day you actually or constructively receive it, in the case of our common shares, or the day actually or constructively received by the ADS depositary, in the case of ADSs. Such dividends will not be eligible for the dividends-received deduction generally allowed to corporations under the Code.

Subject to applicable limitations (including a minimum holding period requirement), dividends received by non-corporate U.S. investors from a qualified foreign corporation may be treated as “qualified dividend income” that is subject to reduced rates of taxation. A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States which the U.S. Treasury Department determines to be satisfactory for these purposes and which includes an exchange of information provision. The U.S. Treasury Department has determined that the Treaty meets these requirements, and we believe we are eligible for the benefits of the Treaty. A foreign corporation is also treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares (or ADSs backed by such shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that our ADSs, which are listed on the New York Stock Exchange, are readily tradable on an established securities market in the United States for these purposes. However, our common shares that are not represented by ADSs will generally not be considered readily tradable on an established securities market in the United States for these purposes. There also can be no assurance that our ADSs will be considered readily tradable on an established securities market in the United States in later years. Furthermore, non-corporate U.S. holders will not be eligible for the rate reduction on any dividends that we pay if we are a passive foreign investment company (as discussed below under “— Passive Foreign Investment Company Rules”) in the taxable year in which such dividends are paid or were a passive foreign investment company in the preceding taxable year. If you are a non-corporate U.S. holder, you should consult your own tax advisor regarding the application of these rules given your particular circumstances.

The amount of any dividend paid in Korean Won will equal the U.S. Dollar value of the Korean Won received calculated by reference to the exchange rate in effect on the date you receive the dividend, in the case of

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our common shares, or the date received by the ADS depositary, in the case of ADSs, regardless of whether the Korean Won are converted into U.S. Dollars. If the Korean Won received as a dividend are converted into U.S. Dollars on the date they are received, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the Korean Won received are not converted into U.S. Dollars on the day of receipt, you will have a basis in the Korean Won equal to their U.S. Dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Korean Won will be treated as United States source ordinary income or loss.

Subject to certain significant conditions and limitations, Korean taxes withheld from dividends (at a rate not exceeding the rate provided in the Treaty) may be treated as foreign income taxes eligible for credit against your U.S. federal income tax liability. See “— Korean Taxation — Tax Treaties” for a discussion of the Treaty rate. Korean taxes withheld in excess of the rate provided in the Treaty will not be eligible for credit against your U.S. federal income tax until you exhaust all effective and practical remedies to recover such excess withholding, including the seeking of competent authority assistance from the Internal Revenue Service (the “IRS”). For purposes of the foreign tax credit, dividends paid on our common shares or ADSs will be treated as income from sources outside the United States and will generally constitute passive category income. The rules governing the foreign tax credit are complex. For example, U.S. Treasury regulations addressing foreign tax credits (the “Foreign Tax Credit Regulations”) impose additional requirements for foreign taxes to be eligible for a foreign tax credit, and there can be no assurance that those requirements will be satisfied if you do not elect to apply the benefits of the Treaty. The Department of the Treasury and the IRS are considering proposing amendments to the Foreign Tax Credit Regulations. In addition, recent notices from the IRS provide temporary relief by allowing taxpayers that comply with applicable requirements to apply many aspects of the foreign tax credit regulations as they previously existed (before the release of the current Foreign Tax Credit Regulations) for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). Instead of claiming a foreign tax credit, you may be able to deduct Korean withholding taxes on dividends in computing your taxable income, subject to generally applicable limitations under U.S. federal income tax law (including that a U.S. holder is not eligible for a deduction for otherwise creditable foreign income taxes paid or accrued in a taxable year if such U.S. holder claims a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year). You are urged to consult your tax advisors regarding the Foreign Tax Credit Regulations (and the related temporary relief in the IRS notices) and the availability of the foreign tax credit or a deduction under your particular circumstances.

To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction of your adjusted basis in our common shares or ADSs (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by you on a subsequent disposition of our common shares or ADSs), and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. However, we do not expect to determine earnings and profits in accordance with U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be reported and treated as a dividend (as discussed above).

Distributions of our common shares or ADSs or rights to subscribe for our common shares or ADSs that are received as part of a pro rata distribution to all of our shareholders (including holders of ADSs) generally will not be subject to U.S. federal income tax to recipient common shareholders (including holders of ADSs). Consequently, such distributions will not give rise to foreign source income and you will not be able to use a foreign tax credit for any Korean withholding tax imposed on such distributions unless such credit can be applied (subject to applicable limitations) against U.S. federal income tax due on other income derived from foreign sources.

Disposition of Common Shares or American Depositary Shares

For U.S. federal income tax purposes, you will recognize gain or loss upon the sale, exchange or other disposition of our common shares or ADSs in an amount equal to the difference between the amount realized

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upon the sale, exchange or other disposition and your adjusted tax basis in our common shares or ADSs, as the case may be, both as determined in U.S. Dollars. Subject to the discussion below under “— Passive Foreign Investment Company Rules,” such gain or loss will generally be capital gain or loss and will generally be long-term capital gain or loss if at the time of sale, exchange or other disposition, our common shares or ADSs have been held for more than one year. Long-term capital gains of non-corporate U.S. holders (including individuals) are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

Any gain or loss you recognize on the sale, exchange or other disposition of our common shares or ADSs will generally be treated as United States source gain or loss. Consequently, you may not be able to claim a foreign tax credit for any Korean tax imposed on the disposition of our common shares or ADSs unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. However, pursuant to the Foreign Tax Credit Regulations, unless you elect to apply the benefits of the Treaty, any such Korean tax would generally not be a foreign income tax eligible for a foreign tax credit (regardless of any other income that you may have that is derived from foreign sources). In such case, it is possible that the non-creditable Korean tax would reduce the amount realized on the sale, exchange or other disposition of our common shares or ADSs. As discussed above, however, recent notices from the IRS provide temporary relief by allowing taxpayers that comply with applicable requirements to apply many aspects of the foreign tax credit regulations as they previously existed (before the release of the current Foreign Tax Credit Regulations) for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). If any Korean tax is imposed upon the disposition of our common shares or ADSs and you apply such temporary relief, such Korean tax may be eligible for a foreign tax credit or deduction, subject to the applicable conditions and limitations. You are urged to consult your tax advisors regarding the Foreign Tax Credit Regulations (and the related temporary relief in the IRS notices) and the availability of the foreign tax credit or a deduction under your particular circumstances.

You should note that any Korean securities transaction tax imposed upon a disposition of our common shares or ADSs generally will not be treated as a creditable foreign tax for U.S. federal income tax purposes.

Passive Foreign Investment Company Rules

Based upon the past and projected composition of our income and assets and valuation of our assets, we do not believe that we were a PFIC for 2024, and we do not expect to be a PFIC in 2025 or to become one in the foreseeable future, although there can be no assurance in this regard. PFIC status is a factual determination that is made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in composition of our income or assets or valuation of our assets.

In general, we will be considered a PFIC for any taxable year in which:

•

at least 75% of our gross income is passive income; or

•

at least 50% of the value (generally determined based on a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income.

For this purpose, passive income generally includes dividends, interest, certain royalties and rents and gains from financial investments (other than certain income derived in the active conduct of a banking business as discussed below). In addition, cash and other assets readily convertible into cash are generally considered passive assets. If we own at least 25% by value of another corporation’s stock, we will be treated, for purposes of the PFIC rules, as owning our proportionate share of the assets and receiving our proportionate share of the income of that corporation.

Our determination with respect to our PFIC status is based in part upon certain proposed U.S. Treasury regulations and other administrative pronouncements from the IRS which provide special rules for determining

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the character of income derived in the active conduct of a banking business for purposes of the PFIC rules. Specifically, these rules treat certain income earned by a non-U.S. corporation engaged in the active conduct of a banking business as non-passive income. Although we believe we have adopted a reasonable interpretation of the proposed U.S. Treasury regulations and administrative pronouncements, there can be no assurance that the IRS will follow the same interpretation. You should consult your own tax advisor regarding the application of these rules.

If we are a PFIC for any taxable year during which you hold our common shares or ADSs (and you do not make a timely mark-to-market election, as described below), you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from the sale or other disposition (including a pledge) of our common shares or ADSs. These special tax rules generally will apply even if we cease to be a PFIC in future years. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for our common shares or ADSs will be treated as excess distributions. Under these special tax rules:

•

the excess distribution or gain will be allocated ratably over your holding period for our common shares or ADSs;

•

the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we are a PFIC, will be treated as ordinary income; and

•

the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year for individuals or corporations, as applicable, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

In certain circumstances, you could make a mark-to-market election (under which in lieu of being subject to the special rules discussed above, you will include gain on our common shares or ADSs on a mark-to-market basis as ordinary income), provided that our common shares or ADSs are regularly traded on a qualified exchange or other market. Our common shares are listed on the Korea Exchange, which must meet certain trading, listing, financial disclosure and other requirements to be treated as a qualified exchange under applicable U.S. Treasury regulations for purposes of the mark-to-market election, and no assurance can be given that the common shares are or will continue to be “regularly traded” for purposes of the mark-to-market election. Our ADSs are currently listed on the New York Stock Exchange, which constitutes a qualified exchange, although there can be no assurance that the ADSs are or will continue to be “regularly traded.” If you make a valid mark-to-market election, for each year that we are a PFIC you will include as ordinary income the excess of the fair market value of your common shares or ADSs at the end of the year over your adjusted tax basis in the common shares or ADSs. You will be entitled to deduct as an ordinary loss in each such year the excess of your adjusted tax basis in the common shares or ADSs over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. If you make an effective mark-to-market election, in each year that we are a PFIC any gain you recognize upon the sale or other disposition of your common shares or ADSs will be treated as ordinary income, and any loss will be treated as ordinary loss, but such loss will be ordinary only to the extent of the net amount previously included in income as a result of the mark-to-market election, and thereafter will be capital loss.

A U.S. holder’s adjusted tax basis in common shares or ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. If a U.S. holder makes a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the common shares or ADSs are no longer regularly traded on a qualified exchange or other market or the IRS consents to the revocation of the election. You should consult your tax advisor about the availability of the mark-to-market election, and whether making the election would be advisable with respect to your particular circumstances.

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In addition, a holder of common shares or ADSs in a PFIC can sometimes avoid the rules described above by electing to treat the company as a “qualified electing fund” under Section 1295 of the Code. This option is not available to you because we do not intend to comply with the requirements necessary to permit holders to make this election.

If we are a PFIC for any taxable year during which you hold our common shares or ADSs and any of our non-U.S. subsidiaries is also a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of the PFIC rules. You will not be able to make the mark-to-market election described above in respect of any lower-tier PFIC. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.

If you hold our common shares or ADSs in any year in which we are classified as a PFIC, you will generally be required to file IRS Form 8621.

Non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which such dividends are paid or were a PFIC in the preceding taxable year. You should consult your tax advisor concerning the determination of our PFIC status and the U.S. federal income tax consequences of holding our common shares or ADSs if we are considered a PFIC in any taxable year.

Information Reporting and Backup Withholding

In general, information reporting will apply to dividends in respect of our common shares or ADSs and the proceeds from the sale, exchange or other disposition of our common shares or ADSs that are paid to you within the United States (and in certain cases, outside the United States), unless you establish that you are an exempt recipient. A backup withholding tax may apply to such payments if you fail to provide a taxpayer identification number and a certification that you are not subject to backup withholding or if you fail to report in full dividend and interest income.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is timely furnished to the IRS.

FATCA

Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), certain entities in a broadly defined class of foreign financial institutions (“FFIs”) may be subject to a 30% U.S. federal withholding tax on certain United States source payments made to the FFI, unless the FFI is a “participating FFI,” which is generally defined as an FFI that (i) enters into an agreement with the IRS pursuant to which it agrees to comply with a complicated and expansive reporting regime or (ii) complies with the requirements of an intergovernmental agreement entered into by the United States and another jurisdiction regarding the implementation of FATCA (an “IGA”), or the FFI is otherwise deemed compliant with or exempt from FATCA.

The FATCA legislation also contains complex provisions requiring certain participating FFIs to withhold on certain “foreign passthru payments” made to FFIs that are not participating FFIs or otherwise exempt from FATCA withholding and to holders that fail to provide the information required by FATCA. Although the definition of a “foreign passthru payment” is still reserved under current regulations, the term generally refers to payments that are from non-United States sources but that are “attributable to” certain United States payments described above. Pursuant to proposed U.S. Treasury regulations (upon which taxpayers may rely until final regulations are issued), withholding on foreign passthru payments, if applicable, would not be required with respect to payments made before the date that is two years after the date of publication of final regulations defining the term foreign passthru payment. It is unclear whether or to what extent payments on our common shares or ADSs would be considered foreign passthru payments that are subject to withholding under FATCA.

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(ii)

such registration fees as may from time to time be in effect for the registration of common shares or other deposited securities on the share register and applicable to transfers of common shares or other deposited securities to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;

(iii)

such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the Deposit Agreement to be at the expense of the person depositing or withdrawing common shares or holders and beneficial owners of ADSs;

(iv)

the expenses and charges incurred by the depositary in the conversion of foreign currency;

(v)

such fees and expenses as are incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to common shares, deposited securities, ADSs and ADRs; and

(vi)

the fees and expenses incurred by the depositary, the custodian or any nominee in connection with the servicing or delivery of deposited securities.

Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers (on behalf of their clients) receiving the newly-issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for cancellation. The brokers in turn charge these transaction fees to their clients.

Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date. The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividends, rights offerings), the depositary charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or un-certificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts via the central clearing and settlement system, The Depository Trust Company (DTC), the depositary generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary banks.

In the event of refusal to pay the depositary fees, the depositary may, under the terms of the Deposit Agreement, refuse the requested service until payment is received or may set- off the amount of the depositary fees from any distribution to be made to the ADS holder.

The fees and charges the ADS holders may be required to pay may vary over time and may be changed by us and by the depositary. The ADS holders will receive prior notice of such changes.

Depositary Payments for the Fiscal Year 2024

In 2024, we received the following payments from Citibank, N.A., acting as depositary for our ADSs:


Reimbursement of settlement infrastructure fees (including DTC fees)	US$	—
Reimbursement of proxy process expenses (printing, postage and distribution)	US$	92,417.84
Legal expenses	US$	—
Contributions towards our investor relations efforts (i.e., non-deal roadshows, investor conferences and IR agency fees) and legal expenses incurred in connection to the preparation of our Form 20-F for the fiscal year 2024	US$	725,728.01

Total:	US$	818,145.85

Note: The amounts provided above are after deduction of applicable of U.S. taxes.

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ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15.

CONTROLS AND PROCEDURES

Disclosure Control

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of December 31, 2024. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that the design and operation of our disclosure controls and procedures as of December 31, 2024 were effective to provide reasonable assurance that information required to be disclosed by us in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decision regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for our company. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we have evaluated the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the framework established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Internal Control-Integrated Framework (2013) suspended the original framework issued by COSO in 1992 on December 15, 2014. We adopted the 2013 Framework on December 15, 2014. Further details of the changes made are set out below. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of a company’s management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to consolidated financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of

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compliance with the policies or procedures may deteriorate. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.

The effectiveness of our internal control over financial reporting has been audited by KPMG Samjong, an independent registered public accounting firm, who has also audited our consolidated financial statements for the year ended December 31, 2024. KPMG Samjong has issued an attestation report on the effectiveness of our internal control over financial reporting, as stated in its report included herein.

Attestation Report of the Independent Registered Public Accounting Firm

KPMG Samjong’s attestation report on the effectiveness of internal control over financial reporting can be found on page F-2 of this annual report.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16.

[RESERVED]

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

Our Audit Committee currently consists of four outside directors, namely Kwak Su Keun (Chair), Yoon Jaewon, Bae Hoon and Lee Yong Guk. Our board of directors has determined that Kwak Su Keun, the chair of our Audit Committee is an “audit committee financial expert,” as such term is defined by the regulations of the Securities and Exchange Commission issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002. Kwak Su Keun, Yoon Jaewon, Bae Hoon, and Lee Yong Guk are independent as such term is defined in Section 303A.02 of the NYSE Listed Company Manual, Rule 10A-3 under the Exchange Act and the Korea Stock Exchange listing standards.

ITEM 16B.

CODE OF ETHICS

We have adopted a code of ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions as required under Section 406 of the Sarbanes-Oxley Act of 2002, together with an insider reporting system in compliance with Section 301 of the Sarbanes-Oxley Act. We have not granted any waiver, including an implicit waiver, from a provision of the code of ethics to any of the above-mentioned officers during our most recently completed fiscal year. As a further detailed guideline to the code of ethics, we have also adopted a code of ethics applicable to all the officers and employees of our holding company and our subsidiaries and established a supplemental code of behavior for all officers and employees of our holding company and our subsidiaries in order to provide additional guideline for the performance of their work-related duties as well as their daily behavior. Our code of ethics outlines seven standards that all employees must adhere to, which encompass guidelines for customers, shareholders and investors, society, interactions among employees, performance of duties, external communications, and relationships with partner companies and competitors. Additionally, our employees are required under our code of ethics to report internal misconduct, prevent money laundering, manage internal accounting, and ensure transparent financial reporting. In the event of a violation of our code of ethics, employees may face penalties and disciplinary actions in accordance with applicable laws and internal regulations. Our code of ethics is available on our website www.shinhangroup.com.

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate fees billed for professional services rendered by our principal auditors for the years ended December 31, 2022, 2023 and 2024, for various types of services and a brief

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description of the nature of such services. Samil PricewaterhouseCoopers, a Korean independent registered public accounting firm, was our principal auditors for the year ended December 31, 2022. KPMG Samjong Accounting Corp., a Korean independent registered public accounting firm, was our principal auditors for the years ended December 31, 2023 and 2024 and we currently expect KPMG Samjong Accounting Corp. to serve as our principal auditors for the year ended December 31, 2025.


Type of Services	Aggregate Fees Billed During the Year Ended December 31,						Nature of Services
Type of Services	2022		2023		2024		Nature of Services
	(In millions of Won)
Audit fees	W	12,807	W	14,580	W	13,246	Audit service for Shinhan Financial Group and its subsidiaries.
Audit related fees		373		370		130	Assurance services rendered in the ordinary course of our business
Tax fees		—		—		—	Tax return and consulting advisory service.
All other fees		—		—		—	All other services which do not meet the three categories above.

Total	W	13,180	W	14,950	W	13,376

Our Audit Committee generally pre-approves all engagements of our principal accountants pursuant to policies and procedures adopted by it. Our Audit Committee has adopted the following policies and procedures for consideration and approval of requests to engage our principal accountants to perform audit and non-audit services. Engagement requests for audit and non-audit services for us or our subsidiaries must, in the first instance, be submitted to our Audit Team. If the request relates to services that would impair the independence of our principal accountants, the request must be rejected. If the engagement request relates to audit and permitted non-audit services, it must be forwarded to the Audit Committee for consideration. To facilitate the consideration of engagement requests between its meetings, the Audit Committee has delegated approval authority of the following: (i) permitted non-audit services to our holding company, (ii) audit services to our subsidiaries and (iii) permitted non-audit services to our subsidiaries, to one of its members who is “independent” as defined by the Securities and Exchange Commission and the New York Stock Exchange. Such member in our case is Kwak Su Keun, the chair of our Audit Committee, and he is required to report any approvals made by him to the Audit Committee at its next meeting. Our Audit Committee meets regularly once every quarter.

Any other audit or permitted non-audit service must be pre-approved by the Audit Committee on a case-by-case basis. Our Audit Committee did not pre-approve any non-audit services under the de minimis exception of Rule 2.01(c)(7)(i)(C) of Regulation S-X as promulgated by the Securities and Exchange Commission.

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

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ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table sets forth information regarding purchases by us of our common shares during the period covered by this annual report.


Period	Total Number of Shares Purchased⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (as of end of period)
January 1 to January 31, 2024		—		—		—		—
February 1 to February 29⁽¹⁾		1,700,000	W	43,114		1,700,000	$	48,869,711
March 1 to March 31⁽¹⁾		1,666,257	W	46,035		1,666,257	$	0
April 1 to April 30		—		—		—		—
May 1 to May 31⁽²⁾		1,600,000	W	47,675		1,600,000	$	51,085,657
June 1 to June 30⁽²⁾		1,575,153	W	46,802		1,575,153	$	73,226,984
July 1 to July 31⁽²⁾		2,300,000	W	53,743		2,300,000	$	17,283,179
August 1 to August 31⁽²⁾		472,736	W	55,826		472,736	$	0
September 1 to September 30		—		—		—		—
October 1 to October 31⁽³⁾		600,000	W	54,623		600,000	$	115,190,865
November 1 to November 30⁽³⁾		3,100,000	W	55,224		3,100,000	$	33,267,936
December 1 to December 31⁽³⁾		885,560	W	51,982		885,560	$	0

Total		13,899,706	W	50,361		13,899,706		0

Note:

(1)

Comprises common shares that were purchased through a broker in a series of open-market transactions in Korea during the periods indicated above, acquisition of up to W150 billion worth of treasury shares between February 9, 2024, and May 9, 2024, as announced via our report of foreign private issuer furnished to the U.S. Securities and Exchange Commission via Form 6-K on February 8, 2024. We completed such purchases on March 20, 2024 and canceled all such shares on March 22, 2024.

(2)

Comprises common shares that were purchased through a broker in a series of open-market transactions in Korea during the periods indicated above, pursuant to a trust agreement for the acquisition of up to W300 billion worth of treasury shares between April 29, 2024, and October 28, 2024, as announced via our report of foreign private issuer furnished to the U.S. Securities and Exchange Commission via Form 6-K on April 26, 2024. We completed such purchases on October 28, 2024 and canceled all such shares on November 1, 2024.

(3)

Comprises common shares that were purchased through a broker in a series of open-market transactions in Korea during the periods indicated above, pursuant to a trust agreement for the acquisition of up to W400 billion worth of treasury shares between October 18, 2024, and April 27, 2025, as announced via our report of foreign private issuer furnished to the U.S. Securities and Exchange Commission via Form 6-K on October 25, 2024. We completed such purchase on January 31, 2025, and we plan to cancel all such shares during the second quarter of 2025.

Other than as described above, neither we nor any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.

ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

275

ITEM 16G.

CORPORATE GOVERNANCE

We are committed to high standards of corporate governance. We are in compliance with the corporate governance provisions of the Korean Commercial Code, the Financial Holding Companies Act of Korea, the Act on Corporate Governance of Financial Companies, the Financial Investment Services and Capital Markets Act and the Listing Rules of the Korea Exchange. We, like all other companies in Korea, must comply with the corporate governance provisions of the Korean Commercial Code. In addition, as a financial holding company, we are also subject to the Financial Holding Companies Act and the Act on Corporate Governance of Financial Companies. Also, our subsidiaries that are financial institutions must comply with the respective corporate governance provisions under the Act on Corporate Governance of Financial Companies and relevant laws under which they were established.

The Act on Corporate Governance of Financial Companies came into effect as of August 1, 2016. The Act was enacted to address calls for strengthened regulations on corporate governance of financial companies and to serve as a uniform regulation on corporate governance matters applicable to all financial companies in place of the separate regulations for each sector that existed. The Act contains several key measures, including, but not limited, to (i) condition of eligibility of officers of financial companies and standards for determining whether financial companies’ officers may hold concurrent positions in other companies, (ii) standards for composition and operation of board of directors, (iii) standards for establishment, composition and operation of committees of the board of directors, (iv) internal control and risk management, (v) requirements and procedures for the approval of a change of major shareholders and (vi) special regulations for rights of minority shareholders of financial companies.

We are a “foreign private issuer” (as such term is defined in Rule 3b-4 under the Exchange Act), and our ADSs are listed on the New York Stock Exchange, or NYSE. Under Section 303A of the NYSE Listed Company Manual, NYSE-listed companies that are foreign private issuers are permitted to follow home country practice in lieu of the corporate governance provisions specified by the NYSE with limited exceptions. Under the NYSE Listed Company Manual, we as a foreign private issuer are required to disclose significant differences between NYSE’s corporate governance standards and those we follow under Korean law. The following summarizes some significant ways in which our corporate governance practices differ from those followed by U.S. companies listed on the NYSE under the listing rules of the NYSE:

Majority of Independent Directors on the Board

Under the NYSE listing rules, U.S. companies listed on the NYSE must have a board the majority of which is comprised of independent directors satisfying the requirements of “independence” as set forth in Rule 10A-3 under the Exchange Act. While as a foreign private issuer, we are exempt from this requirement, but our board of directors is in compliance with this requirement as it currently consists of 11 directors, of which 9 directors satisfy the requirements of “independence” as set forth in Rule 10A-3 under the Exchange Act. 9 of our directors are also “outside directors” as defined in the Financial Holding Companies Act of Korea. An “outside director” for purposes of the Act on Corporate Governance of Financial Companies and the Korean Commercial Code means a director who does not engage in the regular affairs of the financial holding company, and who is elected at a shareholders’ meeting, after having been nominated by the outside director nominating committee, and none of the largest shareholder, those persons “specially related” to the largest shareholder of such company, persons who during the past two years have served as an officer or employee of such company, the spouses and immediate family members of an officer of such company, and certain other persons specified by law may qualify as an outside director of such company. Under the Korea Exchange listing rules and the Korean Commercial Code, at least one-fourth of a listed company’s directors must be outside directors. In the case of “large listed companies” as defined under the Korean Commercial Code or “large financial companies” as defined under the Act on Corporate Governance of Financial Companies, like us, a majority of the directors must be outside directors provided that there must be at least three outside directors.

276

Executive Session

Under the NYSE listing rules, non-management directors of U.S. companies listed on the NYSE are required to meet on a regular basis without management present and independent directors must meet separately at least once per year. While there is no such requirement under Korean law or listing standards or our internal regulations, our non-executive directors hold executive sessions as needed in accordance with the Regulation of the Board of Directors.

Audit Committee

Under the NYSE listing rules, listed companies must have an audit committee that has a minimum of three members, and all audit committee members must satisfy the requirements of independence set forth in Section 303A.02 of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. We are in compliance with this requirement as our Audit Committee is comprised of three outside directors meeting the requirements of independence set forth in Section 303A.02 of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. A large listed company under the Korea Exchange listing rules and the Korean Commercial Code or a large financial company under the Act on Corporate Governance of Financial Companies must also establish an audit committee of which at least two-thirds of its members must be outside directors and whose chair must be an outside director. In addition, under the Act on Corporate Governance of Financial Companies, at least one member of the audit committee who is an outside director must also be an accounting or financial expert. We are also in compliance with the foregoing requirements.

Nomination/Corporate Governance Committee

Under the NYSE listing rules, U.S. companies listed on the NYSE must have a nomination/corporate governance committee composed entirely of independent directors. In addition to identifying individuals qualified to become board members, this committee must develop and recommend to the board a set of corporate governance principles. Under the Korean Commercial Code and other applicable laws, large listed companies, financial holding companies, commercial banks, and certain other financial institutions are required to have an outside director nominating committee of which at least one-half of its members are required to be outside directors. However, there is no requirement to establish a corporate governance committee under applicable Korean law. Our outside director nominating committee consists of a majority of outside directors. However, if the agenda for a general shareholders’ meeting includes appointment of an outside director, all outside directors are required to participate as committee members during the final candidate recommendation process. The composition of the committee is in compliance with the relevant provisions under the Korean Commercial Code and the Act on Corporate Governance of Financial Companies, and the chair of the committee must be an outside director pursuant to the Act on Corporate Governance of Financial Companies.

We currently have a committee for recommending candidates for CEO, which is responsible for general corporate governance, reviewing and recommending nominees for the president and/or CEO of our group and the development, operation and review of our management succession plan, including setting the qualifications for the CEO, evaluating the CEO candidate pool and recommending CEO candidates. The chair of the committee must be an outside director, and the incumbent CEO may be restricted from participating and voting on matters related to CEO selection. We also have a committee for recommending candidates for independent directors and members of the audit committee, which is responsible for matters related to the recommendation and nomination of outside directors including audit committee members. In addition, in light of the recent emphasis on corporate governance, in March 2021, we transferred certain functions, such as those relating to code of ethics and other code of behavior, determination of the size of the board of directors and other matters necessary for improving our overall corporate governance structure, from the corporate governance committee to the board of directors.

Internal Control Committee

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which at least one-half of its members must be outside directors and whose chairman must be an outside director. However, internal control committee may not be established if, as prescribed by the financial company’s articles of incorporation, the audit committee or the risk management committee requests for the inspection, evaluation and necessary measures regarding whether executives or the representative director are properly performing management measures and reporting duties, and deliberates and resolves on (i) the establishment of the basic policy and strategy for internal control, (ii) the establishment of a plan to establish an organizational culture that values the professional ethics and compliance spirit of officers and employees, (iii) the establishment and amendment of internal regulations on governance structure, and (iv) the establishment and amendment of internal control standards. In 2025, we plan to review whether to establish an internal control committee.

Responsibilities Map for Internal Control

Under the amended Act on Corporate Governance of Financial Companies which came into effect on July 3, 2024, financial institutions including financial holding companies must clarify in advance the scope and details of the matters subject to internal control that each officer is responsible for by preparing the responsibilities map. CEOs must establish a responsibilities map and submit it to the financial authorities after deliberation and resolution by the board of directors. Financial companies are obligated to verify whether their executives have the necessary qualifications including expertise, character and credibility to perform their duties. Executive officers stated in the responsibilities map must oversee internal control over the matters for which they are responsible, by taking certain prescribed measures. The CEO, as the top overseer of internal control, is responsible for establishing a company-wide internal control system and supervising each officer’s internal control activities.

Compensation Committee

Under the NYSE listing rules, U.S. companies listed on the NYSE are required to have a compensation committee which is composed entirely of independent directors. In January 2013, the SEC approved amendments to the listing rules of NYSE and NASDAQ regarding the independence of compensation committee members and the appointment, payment and oversight of compensation consultants. The listing rules were adopted as required by Section 952 of the Dodd-Frank Act and rule 10C-1 of the Securities Exchange Act of 1934, as amended, which direct the national securities exchanges to prohibit the listing of any equity security of a company that is not in compliance with the rule’s compensation committee director and advisor independence requirements. Certain elements of the listing rules became effective on July 1, 2013 and companies listed on the NYSE must comply with such listing rules by the earlier of the company’s first annual meeting after January 15, 2014, or October 31, 2014.

Under the Act on Corporate Governance of Financial Companies, financial institutions including financial holding companies must establish a compensation committee of which at least one-half of its members must be outside directors and whose chairman must be an outside director.

We currently have a remuneration committee, which is responsible for reviewing and approving the management’s evaluation and compensation programs. The committee consists of three members, all of whom are outside directors and satisfy the independent director requirements as set forth in Rule 10A-3 under the Exchange Act.

Corporate Governance Guidelines and Code of Business Conduct and Ethics

Under the NYSE listing rules, U.S. companies listed on the NYSE are required to establish corporate governance guidelines and to adopt a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. As a foreign private issuer, we are exempt from this requirement. In Korea, the Financial Services Commission implemented the Standard Corporate Governance Guidelines for Financial Service Companies in December 2014, and accordingly, we have

278

adopted in February 2015 and are currently complying with international regulators on corporate governance modeled after the standard guidelines implemented by the Financial Services Commission,

Pursuant to the requirements of the Sarbanes-Oxley Act, we have adopted a code of ethics applicable to all the officers and employees of our holding company and our subsidiaries, including all financial, accounting and other officers and employees that are involved in the preparation and disclosure of Shinhan Financial Group’s consolidated financial statements and internal control of financial reporting. As a further detailed guideline to the code of ethics, we have also established a supplemental code of behavior for all officers and employees of our holding company and our subsidiaries in order to provide additional guideline for the performance of their work-related duties as well as their daily behavior. We have also adopted an insider reporting system in compliance with Section 301 of the Sarbanes-Oxley Act. The above-mentioned code of ethics and the code of behavior are available on our website www.shinhangroup.com.

On May 25, 2011, the SEC adopted final rules to implement whistleblower provisions of the Dodd-Frank Act, which are applicable to foreign private issuers with securities registered under the U.S. securities laws. The final rules provide that any eligible whistleblower who voluntarily provides the SEC with original information that leads to the successful enforcement of an action brought by the SEC under U.S. securities laws must receive an award of between 10% and 30% of the total monetary sanctions collected if the sanctions exceed US$1,000,000. An eligible whistleblower is defined as someone who provides information about a possible violation of the securities laws that he or she reasonably believes has occurred, is ongoing, or is about to occur. The possible violation does not need to be material, probably or even likely, but the information must have a “facially plausible relationship to some securities law violation”; frivolous submissions would not qualify. The final rules also prohibit retaliation against the whistleblower. While the final rules do not require employees to first report allegations of wrongdoing through a company’s corporate compliance system, they do seek to incentivize whistleblowers to utilize internal corporate compliance first by, among other things, (i) giving employees who first report information internally the benefit of the internal reporting date for purposes of the SEC program so long as the whistleblower submits the same information to the SEC within 120 days of the initial disclosure; (ii) clarifying that the SEC will consider, as part of the criteria for determining the amount of a whistleblower’s award, whether the whistleblower effectively utilized the company’s corporate compliance program or hindered the function of the program; and (iii) crediting a whistleblower who reports internally first and whose company passes the information along to the SEC, which would mean the whistleblower could receive a potentially higher award for information gathered in an internal investigation initiated as a result of the whistleblower’s internal report.

In addition, the final rules address concerns that the whistleblower rules incentivize officers, directors and those with legal, audit, compliance or similar responsibilities to abuse these positions by making whistleblower complaints to the SEC with respect to information they obtained in these roles by generally providing that information obtained through a communication subject to attorney-client privilege or as a result of legal representation would not be eligible for a whistleblower award unless disclosure would be permitted by attorney conduct rules. Accordingly, officers and directors, auditors and compliance personnel and other persons in similar roles would not be eligible to receive awards for information received in these positions unless (x) they have a reasonable basis to believe that (1) disclosure of the information is necessary to prevent the entity from engaging in conduct that is likely to cause substantial injury to the financial interests of the entity or investors; or (2) the entity is engaging in conduct that will impede an investigation of the misconduct, for example, destroying documents or improperly influencing witnesses; or (y) 120 days have passed since the whistleblower provided the information to senior responsible persons at the entity or 120 days have passed since the whistleblower received the information at a time when these people were already aware of the information.

In Korea, the Act on the Protection of Public Interest Whistleblowers (the “Act on Whistleblowers”) was enacted in March 29, 2011 and became effective on September 30, 2011. Under the Act on Whistleblowers, a “conduct detrimental to the public interest” means any conduct falling under the penalty provisions of certain acts or any conduct subject to administrative measures such as cancellation or suspension of an approval or a

279

permit. As the Financial Holding Companies Act is included in the “certain acts” above, any conduct falling under the penalty provisions or subject to administrative measures for a violation of the Financial Holding Companies Act constitutes a “conduct detrimental to the public interest.” Any person deeming that a conduct detrimental to the public interest has been, or is likely to be, committed may make a public interest report to a representative of the organization involved or a relevant investigative agency. The personal information of a public interest whistleblower shall be kept in confidence, and the measures necessary for personal protection of a public interest whistleblower shall be taken. In addition, any disadvantageous measures against a public interest whistleblower, including discriminatory treatment and delayed payment of wage, are prohibited, and where a public interest report leads to a recovery of, or increase in, revenues of the Government, the public interest whistleblower may be entitled to compensation by the Anti-Corruption and Civil Rights Commission of Korea.

We established a group-wide whistleblower policy in July 2005 and maintain related policies and programs for most of our subsidiaries. For example, Shinhan Bank maintains a whistleblower program named “Shinhan Jikimi,” through which any employee, vendor or customer can raise concerns and report suspicious circumstances in confidence using a variety of channels including the Internet, email, postal mail, facsimile and mobile phones. In addition, Shinhan Bank distributes to its employees a quarterly email notice intended to raise awareness of the whistleblower program and posts relevant informative materials on the company bulletin board. At Shinhan Card and Shinhan Securities, we strive to maintain transparency in every aspect of business activities and provide secure and accessible channels for all related parties to raise concerns and report violations.

Shareholder Approval of Equity Compensation Plans

Under the NYSE listing rules, shareholders of U.S. companies listed on the NYSE are required to approve all equity compensation plans.

Under Korean law, board of directors of a listed company with capital of W300 billion or more may grant stock options to officers and employees other than directors exercisable for up to 1% of the company’s issued and outstanding shares by board’s resolution, provided that such grant is permitted by such company’s articles of incorporation and is approved by a resolution of the subsequent general meeting of stockholders. Under our articles of incorporation, we may also grant stock options, but since April 1, 2010, we have not granted any stock options.

We currently have two equity compensation plans, consisting of a performance share plan for directors and key employees and an employee stock ownership plan for all employees under the Framework Act on Labor Welfare.

In accordance with our internal regulations, performance shares granted to directors are granted pursuant to a resolution by the board of director, subject to the limit amount set by a resolution at the shareholders’ meeting while performance shares granted to key employees are granted pursuant to a resolution by the board of director, without any requirement that the limit amount be approved at the shareholders’ meeting. There are no requirements relating to the granting of performance shares under applicable Korean laws and our articles of incorporation.

Under the Framework Act on Labor Welfare, a Korean company may issue stock options up to 20% of its issued and outstanding shares by a resolution at the shareholders’ meeting, if permitted by the articles of incorporation. Our articles of incorporation does not contain such provision. The equity compensation scheme for the employee stock ownership association is governed by its internal regulations, over which we have no control under Korean law.

Annual Certification of Compliance

Under the NYSE listing rules, a chief executive officer of a U.S. company listed on the NYSE must annually certify that he or she is not aware of any violation by the company of NYSE corporate governance

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ITEM 16J.

INSIDER TRADING POLICIES

Our board of directors has established insider trading policies and procedures to provide guidance on the purchases, sales and other dispositions of our securities by our directors, officers, employees and other relevant persons, with the goal of promoting compliance with applicable insider trading laws, rules and regulations, and the listing standards of the New York Stock Exchange. A copy of our insider trading policy is annexed to this annual report as Exhibit 11.1.

ITEM 16K.

CYBERSECURITY

1. Risk Management and Strategy

Cybersecurity is integrated into our risk management procedures through which we identify, assess, monitor, control, communicate and escalate related risks.

As cybersecurity threats continue to evolve, we expect to continue to expend substantial resources to modify or enhance our measures to detect and prevent cybersecurity attacks or to investigate and remediate information security vulnerabilities that are found. The risks posed by cybersecurity threats that could materially affect us, including our business strategy, results of operations or financial condition, are discussed in “Item 3.D. Risk Factors — Other Risks Relating to Us as the Holding Company — Our activities are subject to cyber security risk.” For a description of our information technology system, see “Item 4.B. Business Overview — Information Technology.”

We examine cybersecurity threats annually through a professional institution holding a license recognized by the Government, and such examination includes risk assessment to predict potential impact of any identified risks. Action plans are developed based on the results of these evaluation, and after these action plans are implemented the results are reported to our Chief Information Security Officer (CISO).

We operate the Information Protection Council, a collaborative body that includes the Information Protection Committee, information security task forces, and our and our subsidiaries’ CISOs, to strengthen cybersecurity governance and ensure alignment across the organization.

We report on the status of cybersecurity and ICT operational risk management to the board of directors and management. The main components of such reports consist of (i) findings from periodic security risk evaluations, (ii) results of internal security drills designed to improve responses to breaches, outages, and natural disasters, and (iii) current status of our certifications for information security management systems such as ISO 27001 and ISMS.

We have appointed an experienced professional with required qualifications in information security technology and personal data protection as our CISO, in compliance with relevant domestic regulations. As a trusted advisor, the CISO ensures the accuracy of information related to cybersecurity risk, makes final decisions related thereto, and convenes the Information Protection Committee to effectively address significant risks that could potentially impact our customer services. We regularly conduct vulnerability assessments and

black-box

penetration testing to check for potential external breaches and establish preventive measures. Additionally, we monitor the exposure of sensitive information such as customer data to dark web and deep web and carry out additional preventive activities such as attack surface management, cyber threat intelligence collection, and phishing and pharming detection.

2. Governance.

regularly

report on cybersecurity risks and operational matters to the board of directors and management. Reports provide a comprehensive overview of various areas, such as ICT risk recognition and assessment, cybersecurity incident response and recovery training, systems change management, incident management processes, and periodic testing.

To manage various information security risks, we have appointed a CISO as well as a Chief Privacy Officer (“CPO”), and we have established related organizations.

The CISO and CPO oversee the management of our information protection strategy and internal controls by periodically reviewing comprehensive reports on the outcomes of various information protection activities related to cyber security, such as periodic vulnerability inspections, internal control and security monitoring, digital checkup, incident response training, and emergency response training. Based on these reports, the CISO and CPO make informed decisions related to cybersecurity in general. As part of his or her role, the CPO is also appointed as the Credit Information Management Protection Officer as required by domestic regulations.

The Credit Information Management Protection Officer is required to provide annual reports related to credit information protection to the board of directors and to submit related reports to governmental agencies.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
Index to Consolidated Financial Statements		F-1

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Statements of Financial Position		F-7

Consolidated Statements of Comprehensive Income		F-9

Consolidated Statements of Changes in Equity		F-11

Consolidated Statements of Cash Flows		F-14

Notes to the Consolidated Financial Statements		F-17


Auditor Firm ID: 1357		Auditor Name: KPMG Samjong Accounting Corp.		Auditor Location: 27th Floor, Gangnam Finance Center, 152, Teheran-ro, Gangnam-gu, Seoul, Republic of Korea 06236

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Shinhan Financial Group Co., Ltd.

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Shinhan Financial Group Co., Ltd. and subsidiaries (“the Group”) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the years in the

two-year

period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). We also have audited the Group’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited the adjustments to the 2022 consolidated financial statements to retrospectively apply the change in accounting due to the adoption of IFRS 17 Insurance Contracts, as described in Note 52. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2022 consolidated financial statements of the Group other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 consolidated financial statements taken as a whole.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the

two-year

period ended December 31, 2024, in conformity with IFRS Accounting Standards (International Financial Reporting Standards Accounting Standards) as issued by the International Accounting Standards Board. Also in our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Group’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Group’s consolidated financial statements and an opinion on the Group’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of

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the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

(i) Assessment of allowance for credit losses for loans calculated on a collective basis

As discussed in Notes 3.(h), 5.(b), and 13 to the consolidated financial statements, the Group has KRW 4,565,931 million of allowance for credit losses (ACL) for loans at amortized cost as of December 31, 2024, a portion of which is calculated on a collective basis (collective ACL). The collective ACL is measured on a collective basis using models to estimate probability of default (PD), the loss given default (LGD) and the exposure at default (EAD) as well as the impact of forward-looking information (FLI). The Group has considered multiple economic scenarios in applying FLI which is estimated through modeling between macroeconomic variables and measurement factors. For corporate loans, one of the relevant inputs for determining PD is the internal credit risk rating of the borrower. The internal credit risk rating of the borrower is defined by the Group using quantitative and qualitative factors that indicate risk of default. The credit risk-rating model’s quantitative considerations include the borrower’s financial and other data, while the qualitative considerations are based on the judgment of the Group’s credit officers as to the borrower’s ability to repay.

We identified the assessment of the collective ACL as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to significant measurement uncertainty. The assessment encompassed the evaluation of the collective ACL methodology, including the methods and models used to estimate the PD, LGD, and FLI and

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their significant assumptions in the collective ACL. Such significant assumptions included the selection of macroeconomic variables and the determination of multiple economic forecast scenarios used to reflect forward-looking information. Specific to corporate loans, the assessment also included the credit risk-rating model and the credit officer’s judgment assumption used in determining the internal credit risk rating.

The following are the primary audit procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Group’s measurement of the collective ACL, including controls over the (i) continued use and appropriateness of the collective ACL methodology and models; (ii) selection of the macroeconomic variables; (iii) determination of multiple economic forecast scenarios; and (iv) evaluation of the credit officer’s judgment in determining the internal credit risk rating.

We evaluated the Group’s process to develop the collective ACL estimate by testing certain sources of data, factors, and assumptions that the Group used, and considered the relevance and reliability of such data, factors, and assumptions. For a selection of corporate loans, we assessed the internal credit risk rating assigned by the Group and the credit officer’s judgment by evaluating the financial performance of the borrower, sources of repayment, and any relevant guarantees or underlying collateral. In addition, we involved credit risk professionals with specialized skills and knowledge who assisted in the (i) evaluation of the Group’s collective ACL methodology for compliance with IFRS as issued by the IASB; (ii) assessment of the conceptual soundness and performance of the PD, LGD, FLI, and credit risk-rating models by inspecting the model documentation to determine whether the models are suitable for their intended use, and (iii) evaluation of the selection of the macroeconomic variables and determination of the multiple economic forecast scenarios by applying statistical methods to analyze the historic correlation between the macroeconomic variables selected by management and measurement factors.

(ii) Fair value of Level 3 derivatives and derivative-combined securities

As discussed in Notes 4.(c) and 5.(e) to the consolidated financial statements, as of December 31, 2024 the Group, through its subsidiary Shinhan Securities Co. Ltd, has KRW 718,788 million and KRW 535,162 million of Level 3 derivative assets and liabilities, respectively, and KRW 86,279 million and KRW 7,146,909 million of Level 3 derivative-combined securities held and issued, respectively, a portion of which related to Level 3 fair values measured using internally developed valuation models (internally measured Level 3 derivatives and derivative-combined securities).

Level 3 financial instruments are measured at fair value using valuation techniques where one or more significant inputs are not based on observable market data. In order to measure the fair value of these internally measured Level 3 derivatives and derivative-combined securities, the Group uses internal valuation models such as discounted cash flow models and option models. These models use various inputs and assumptions, depending on the nature of the financial instruments, such as the volatility of the underlying asset and correlations.

We identified the measurement of the fair value of the internally measured Level 3 derivatives and derivative-combined securities as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to significant measurement uncertainty. The assessment encompassed the evaluation of the fair value methodology, including the methods, models and significant assumptions used to estimate fair value. Such significant assumptions included the volatility of the underlying asset and correlations. The assessment also included an evaluation of the conceptual soundness and performance of the internally developed valuation models.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the measurement of fair value of the internally measured Level 3 derivatives and derivative-combined securities, including controls over the (i) valuation methodologies, including significant assumptions; (ii) independent price verification; (iii) evaluation

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of significant model assumptions reflected those which a market participant would use to determine an exit price in the current market environment; (iv) the valuation models used were mathematically accurate and appropriate to value the internally measured Level 3 derivatives and derivative-combined securities; and (v) relevant information used within the Group’s models that was reasonably available was considered in the fair value determination.

We evaluated the Group’s fair value methodology for compliance with IFRS as issued by the IASB. We involved valuation professionals with specialized skills and knowledge who assisted in developing an independent fair value estimate for a selection of internally measured Level 3 derivatives and derivative-combined securities based on independently developed valuation models and assumptions, as applicable, using market data sources we determined to be relevant and reliable and compared our independent expectation to the Group’s fair value measurements.

/s/ KPMG Samjong Accounting Corp.

We have served as the Group’s auditor since 2023.

Seoul, Korea

April 23, 2025

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Report of Independent Registered Public Accounting Firm

To the board of directors and shareholders

Shinhan Financial Group Co., Ltd.:

Opinion on the Financial Statements

We have audited the consolidated statements of comprehensive income, changes in equity and cash flows of Shinhan Financial Group Co., Ltd. and subsidiaries (the “Group”) for the year ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”), before the effects of the adjustments to retrospectively reflect the adoption of IFRS 17

Insurance Contracts

on the 2022 consolidated financial statements described in Note 52. In our opinion, the consolidated financial statements for the year ended December 31, 2022, before the effects of the adjustments to retrospectively reflect the adoption of IFRS 17

Insurance Contracts

on the 2022 consolidated financial statements described in Note 52, present fairly, in all material respects, the results of operations and cash flows of the Group for the year ended December 31, 2022, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (the 2022 financial statements before the effects of the adjustments discussed in Note 52 are not presented herein).

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively reflect the adoption of IFRS 17

Insurance Contracts

on the 2022 consolidated financial statements described in Note 52 and accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.

Basis for Opinion

These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s consolidated financial statements, before the effects of the adjustments described above, based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these consolidated financial statements, before the effects of the adjustments described above, in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/Samil PricewaterhouseCoopers

Seoul, the Republic of Korea

April 20, 2023

We served as the Company’s auditor from 2020 to 2023

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

1.	Reporting entity

Shinhan Financial Group Co., Ltd., the controlling company, and its subsidiaries included in consolidation (collectively the “Group”) are summarized as follows:

(a)

Controlling company

Shinhan Financial Group Co., Ltd. (the “Shinhan Financial Group” or the “Company”), the controlling company, is incorporated on September 1, 2001 for the main purposes of controlling, managing and funding Shinhan Bank, Shinhan Securities Co., Ltd., Shinhan Capital Co., Ltd. and Shinhan BNP Asset Management Co., Ltd. by way of share transfers. The total capital stock amounted to

1,461,721 million. Also, Shinhan Financial Group’s shares have been listed on the Korea Exchange since September 10, 2001 and Shinhan Financial Group’s American Depositary Shares have been registered with the Securities and Exchange Commission (SEC) and listed on the New York Stock Exchange since September 16, 2003.

(b)

Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of December 31, 2023 and 2024 are as follows:

Date of
financial
information

Ownership (%)

Investor

Investee (*1)

Location

2023

2024

Shinhan Financial Group Co., Ltd.

Shinhan Bank

Korea

December 31

100.0

”

Shinhan Card Co., Ltd.

”

100.0

”

Shinhan Securities Co., Ltd.

”

100.0

”

Shinhan Life Insurance Co., Ltd.

”

100.0

”

Shinhan Capital Co., Ltd.

”

100.0

”

Jeju Bank

”

75.3

”

Shinhan Asset Management Co., Ltd.

”

100.0

”

SHC Management Co., Ltd.

”

100.0

”

Shinhan DS

”

100.0

”

Shinhan Savings Bank

”

100.0

”

Shinhan Asset Trust Co., Ltd.

”

100.0

”

Shinhan Fund Partners Co., Ltd.

”

99.8

”

Shinhan REITs Management Co., Ltd.

”

100.0

”

Shinhan AI Co., Ltd. (*2)

”

100.0

—

”

Shinhan Venture Investment Co., Ltd.

”

100.0

”

Shinhan EZ General Insurance Co., Ltd.

”

85.1

Shinhan Bank

Shinhan Bank America

USA

”

100.0

”

Shinhan Bank Europe GmbH

Germany

”

100.0

”

Shinhan Bank Cambodia

Cambodia

”

97.5

”

Shinhan Bank Kazakhstan Limited

Kazakhstan

”

100.0

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

1.	Reporting entity (continued)

Date of
financial
information

Ownership (%)

Investor

Investee (*1)

Location

2023

2024

”

Shinhan Bank Canada

Canada

”

100.0

”

Shinhan Bank (China) Limited

China

”

100.0

”

Shinhan Bank Japan

Japan

”

100.0

”

Shinhan Bank Vietnam Ltd.

Vietnam

”

100.0

”

Banco Shinhan de Mexico

Mexico

”

99.9

”

PT Bank Shinhan Indonesia

Indonesia

”

99.0

Shinhan Bank Japan

SBJDNX

Japan

”

100.0

Shinhan Card Co., Ltd.

Shinhan Credit Information Co., Ltd.

Korea

December 31

100.0

”

LLP MFO Shinhan Finance

Kazakhstan

”

100.0

75.0

”

PT. Shinhan Indo Finance

Indonesia

”

76.3

”

Shinhan Microfinance Co., Ltd.

Myanmar

”

100.0

”

Shinhan Vietnam Finance Co., Ltd.

Vietnam

”

100.0

Shinhan Securities Co., Ltd.

Shinhan Securities America Inc.

USA

”

100.0

”

Shinhan Securities Asia Ltd.

Hong Kong

”

100.0

”

SHINHAN SECURITIES VIETNAM CO., LTD.

Vietnam

”

100.0

”

PT. Shinhan Sekuritas Indonesia

Indonesia

”

99.0

PT Shinhan Sekuritas Indonesia

PT. Shinhan Asset Management Indonesia (*3)

Indonesia

”

75.0

—

Shinhan Life Insurance Co., Ltd.

Shinhan Financial Plus Co., Ltd.

Korea

”

100.0

”

Shinhan LifeCare Co., Ltd.

”

100.0

”

Shinhan Life Insurance Vietnam Co., Ltd.

Vietnam

”

100.0

Shinhan Asset Management Co., Ltd.

SHINHAN ASSET MGT HK, LIMITED (*4)

Hong Kong

”

100.0

—

Shinhan DS

SHINHAN DS VIETNAM CO., LTD.

Vietnam

”

100.0

(*1)

Subsidiaries such as trust, beneficiary certificate, special purpose company, partnerships and private equity fund which are not actually operating their own business are excluded.

(*2)

The major assets were sold to Shinhan Bank in January 2024, and the liquidation process was completed after the distribution of remaining assets on July 15, 2024.

(*3)

As of August 30, the entire stock was sold, and it was excluded from the consolidated subsidiaries.

(*4)

Due to a decline in ownership interest for the year ended December 31, 2024, control was lost, and it was excluded from consolidation.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

1.	Reporting entity (continued)

(c)

Consolidated structured entities

Consolidated structured entities are as follows:


Category	Consolidated structured entities	Description

Trust	Shinhan Bank (including development trust) and 17 others	A trust is consolidated when the Group as a trustee is exposed to significant variable returns, if principle or interest amounts of the entrusted properties falls below guaranteed amount, the Group should compensate it, and the Group has the ability to affect those returns.

Asset-Backed Securitization	Tiger Eyes 3 Co., Ltd. and 181 others	An entity for asset backed securitization is consolidated when the Group has sole decision-making authority to dispose assets or change the conditions of the assets, and the Group is substantially exposed to, or has rights to significant variable returns by providing credit enhancement and purchases of subordinated securities.

Structured Financing	—	An entity established for structured financing relating to real estate, shipping, or mergers and acquisitions is consolidated, when the Group has the greatest credit to the entity, has sole decision-making authority of these Entities due to the entities default, and is substantially exposed to, or has rights to significant variable returns.

Investment Fund	One Shinhan Future’s Fund and 171 others	An investment fund is consolidated, when the Group manages or invests assets of the investment funds on behalf of other investors as a collective investor or a business executive, or has the ability to dismiss the manager of the investment funds, and is substantially exposed to, or has rights to, the significant variable returns.

(*)

The Group provides ABCP purchase agreements and others of

6,903,822 million for the purpose of credit enhancement of structured companies.

2.	Basis of preparation

(a)

Statement of compliance

The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards (International Financial Reporting Standards Accounting Standards). IFRS Accounting Standards are the accounting standards and related interpretations issued by the International Accounting Standards Board (“IASB”).

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

2.	Basis of preparation (continued)

The Group’s consolidated financial statements as of and for the year ended December 31, 2024, were certified by management on April

, 2025.

(b)

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the consolidated statement of financial position:

•

derivative financial instruments measured at fair value

•

financial instruments at fair value through profit or loss measured at fair value

•

financial instruments at fair value through other comprehensive income measured at fair value

•

liabilities for cash-settled share-based payment arrangements measured at fair value

•

financial assets and liabilities designated as hedged items in a fair value hedge accounting of which changes in fair value attributable to the hedged risk recognized in profit or loss

•

liabilities for defined benefit plans recognized at the net of the total present value of defined benefit obligations less the fair value of plan assets

•

Insurance and reinsurance contract assets and liabilities measured at fair value

(c)

Functional and presentation currency

The respective financial statements of the Group entities are prepared in the functional currency of the economic environment in which each individual company of group entities operate. These consolidated financial statements are presented and reported in Korean won, which is the controlling company’s functional and presentation currency.

(d)

Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires management to

make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. If the estimates and assumptions based on management’s best judgment as of December 31, 2024 are different from the actual environment, these estimates and actual results may be different.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have a significant effect on the amounts recognized in the consolidated financial statements and information about assumptions and estimation uncertainties that might have a significant risk of resulting in a material adjustment within the next financial year are described in Note 4.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

2.	Basis of preparation (continued)

In preparing these consolidated financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainties are the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2023 except as explained below.

(e)

Standards

and amendments adopted by the Group

The Group has newly applied the following accounting policies upon preparation of the annual consolidated financial statements from the beginning on January 1, 2024.

i) Amendments to IAS 1 ‘Presentation of Financial Statements’ amended – Classification of Liabilities as Current or

Non-current

The amendments clarify that the classification of liabilities as current or

non-current

should be based on the substantive rights existing at the end of the reporting period and that the classification is unaffected by management’s intentions or expectations about whether the company will exercise its right to defer settlement of a liability. The amendments also introduce a definition of settlement to make clear that settlement includes the transfer to the counterparty of the company’s own equity instruments, however, it would be excluded if an option to settle the liability by the transfer of the company’s own equity instruments is recognized separately from the liability in compound financial instruments. There is no significant impact on the consolidated financial statements from these amendments.

ii) Amendments to IAS 7 ‘Cash Flow Statement’ and IFRS 7 ‘Financial Instruments: Disclosures’ Supplier Finance Agreement

The amendments add to the disclosure objectives in IAS 7, ‘Cash Flow Statement,’ that information about supplier finance arrangements should be disclosed to enable users of financial statements to assess the impact of those arrangements on the Company’s liabilities and cash flows. The amendments also amend IFRS 7, ‘Financial Instruments: Disclosures,’ to add supplier finance arrangements as an example of a requirement to disclose information about an entity’s exposure to concentrations of liquidity risk. There is no significant impact on the consolidated financial statements from these amendments.

iii) The following new and amended standards are not expected to have a significant impact on the consolidated financial statements.

•

Lease liabilities arising from sale and leaseback transactions (IFRS 16 ‘Lease’)

•

Crypto assets disclosure (IAS 1 ‘Presentation of Financial Statements’)

3.	Material accounting policies

Material accounting policies applied by the Group upon the preparation of consolidated financial statements under IFRS are described below, and consolidated financial statements for the year ended December 31, 2024 and comparative periods were prepared using the same accounting policy, except as described in Note 2.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

(a)

Operating segments

The Group has divided the segments based on internal reports reviewed periodically by the top sales decision maker to make decisions about the resources allocated to the segments and evaluate their performance. There are six reporting segments as described in Note 8. The reporting segments are operated separately according to the nature of the goods and services provided and the organizational structure of the Group.

The segment reported to the Chief Executive Officer (“CEO”) includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

It is the CEO’s responsibility to evaluate the resources to be distributed to the business and the performance of the business, and to make strategic decisions.

(b)

Basis of consolidation

i) Subsidiaries

If an entity of the Group uses accounting policies other than those adopted in the consolidated financial statements for the same transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.

ii) Structured entity

The Group establishes or invests in various structured entities. Considering the terms and conditions of the arrangement in which the structured entity was established, the entity is included in the consolidated entities if it is determined that the Group obtains gains and losses from the operations thereof, and the Group has the ability to direct the activities of the entity that can most significantly affect these gains and losses. The Group does not recognize any

non-controlling

interests as equity in relation to structured entities in the consolidated statements of financial position since the

non-controlling

interests in these entities are recognized as liabilities of the Group.

iii) Intra-group transactions eliminated on consolidation

Intra-group balances, transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealized intra-group losses are recognized as expense if intra-group losses indicate an impairment that requires recognition in the consolidated financial statements.

iv)

Non-controlling

interests

Non-controlling

interests in a subsidiary are accounted for separately from the parent’s ownership interests in a subsidiary. Each component of net profit or loss and other comprehensive income is attributed to the owners of the parent and

non-controlling

interest holders, even when the

non-controlling

interests balance is reduced to below zero.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

(c)

Business combinations

i) Business combinations

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control.

Each identifiable asset or liability is measured at its acquisition-date fair value except for below:

•

Leases are required to be classified based on the contractual terms and other factors

•

Only those contingent liabilities assumed in a business combination that are a present obligation and can be measured reliably are recognized

•

Deferred tax assets or liabilities are recognized and measured in accordance with IAS 12,

‘Income Taxes’

•

Employee benefit arrangements are recognized and measured in accordance with IAS 19,

‘Employee Benefits’

•

Compensation assets are recognized and measured on the same basis as the items subject to compensation

•

Reacquired rights are measured in accordance with special provisions

•

Liabilities or equity instruments related to share-based payment transactions are measured in accordance with the method in IFRS 2,

‘Share-based Payment’

•

Non-current

assets held for sale are measured at fair value less costs to sell in accordance with IFRS 5,

‘Non-current

Assets Held for Sale and Discontinued Operations’

As of the acquisition date,

non-controlling

interests in the acquired are measured as the

non-controlling

interests’ proportionate share of the acquirer’s identifiable net assets.

(d)

Investments in associates and joint ventures

An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The investment in an associate and a joint venture is initially recognized at cost, and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss and changes in the investments of the associate and the joint venture after the date of acquisition. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated the Group’s stake in preparing the consolidated financial statements. Unrealized losses are also being derecognized unless the transaction provides evidence of an impairment of the transferred assets.

If an associate or a joint venture uses accounting policies different from those of the Group for transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in applying the equity method.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

When the carrying amount of that interest, including any long-term investments, is reduced to nil, the recognition of further losses is discontinued except to the extent that the Group has an obligation or has to make payments on behalf of the investee for further losses.

(e)

Cash and cash equivalents

The Group classifies cash balances, call deposits and highly liquid investment assets with original maturities of three months or less from the acquisition date that are easily converted into a fixed amount of cash, and are subject to an insignificant risk of changes in their fair value as cash and cash equivalents.

(f)

Non-derivative

financial assets

Financial assets are recognized in the consolidated statement of financial position when the Group becomes a party to the contract. In addition, a standardized purchase or sale (a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the market concerned) is recognized on the trade date.

i) Financial assets designated at FVTPL

Financial assets can be irrevocably designated as measured at FVTPL despite of classification standards stated below, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise from measuring assets or liabilities or recognizing the gains or losses on them on different bases. However, once the financial assets are designated at FVTPL, it is irrevocable.

ii) Equity instruments

For the equity instruments that are not held for short-term trading, at initial recognition, the Group may make an irrevocable election to present subsequent changes in fair value in other comprehensive income. Equity instruments that are not classified as financial assets at Fair Value through Other Comprehensive Income (“FVOCI”) are classified as financial assets at FVTPL.

The Group subsequently measures all equity investments at fair value. Valuation gains or losses of the equity instruments that are classified as financial assets at FVOCI previously recognized as other comprehensive income is not reclassified as profit or loss on recognition. The Group recognizes dividends in profit or loss when the Group’s right to receive payments of the dividend is established.

Valuation gains or losses due to changes in fair value of the financial assets at FVTPL are recognized in the consolidated statement of comprehensive income gains or losses on financial assets at FVTPL. Impairment loss (reversal) on equity instruments at FVOCI is not recognized separately.

iii) Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model in which the asset is managed and the contractual cash flow characteristics of the asset. Debt instruments are classified as financial assets at amortized cost, at FVOCI, or at FVTPL. Debt instruments are reclassified only when the Group’s business model changes.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

iii-1)

Financial assets at amortized cost

Assets that are held within a business model whose objective is to hold assets to collect contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a financial asset measured at amortized cost that is not subject to a hedging relationship is recognized in profit or loss when the financial asset is derecognized or impaired. Interest income on the effective interest method is included in the ‘Interest income’ in the consolidated statement of comprehensive income.

iii-2)

Financial assets at FVOCI

Assets that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Other than (reversal of) impairment losses, interest income, foreign exchange differences, gains or losses of the financial assets at FVOCI are recognized as other comprehensive income in equity. On removal, gains or losses accumulated in other comprehensive income are reclassified to profit or loss. The interest income on the effective interest method is included in the ‘Interest income’ in the consolidated statement of comprehensive income. Foreign exchange differences and impairment losses are included in the ‘Net foreign currency transaction gain’ and ‘Provision for credit losses allowance’ in the consolidated statement of comprehensive income, respectively.

iii-3)

Financial assets at FVTPL

Debt securities other than financial assets at amortized costs or FVOCI are classified at FVTPL. Unless hedge accounting is applied, gains or losses from financial assets at FVTPL are recognized as profit or loss and are included in ‘Net gain (loss) on financial assets at fair value through profit or loss’ in the consolidated statement of comprehensive income.

iv) Embedded derivatives

Financial assets with embedded derivatives are classified regarding the entire hybrid contract, and the embedded derivatives are not separately recognized. The entire hybrid contract is considered when it is determined whether the contractual cash flows represent solely payments of principal and interest.

(g)

Derivative financial instruments

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

i) Hedge accounting

The Group holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Group designated derivatives as hedging instruments to hedge the risk of changes in the fair value of assets, liabilities or firm commitments (a fair value hedge) and foreign currency risk of highly probable forecasted transactions or firm commitments (a cash flow hedge).

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction. In addition, this document describes the hedging instrument, hedged item, and the method of evaluating the effect of the hedging instrument offsetting changes in the fair value or cash flow of the hedged item due to the hedged risk at the initiation of the hedging relationship and in subsequent periods.

i-1)

Fair value hedge

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit or loss. The gain or loss from remeasuring the hedging instrument at fair value for a derivative hedging instrument and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss in the same line item of the separate statement of comprehensive income.

The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, or if the hedge no longer meets the criteria. Any adjustment arising from G/L on the hedged item attributable to the hedged risk is amortized to profit or loss from the date the hedge accounting is discontinued.

i-2)

Cash flow hedge

When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.

i-3)

Net investment hedge

The portion of the change in fair value of a financial instrument designated as a hedging instrument that meets the requirements for hedge accounting for a net investment in a foreign operation is recognized in other comprehensive income and the ineffective portion of the hedge is recognized in profit or loss. The portion recognized as other comprehensive income that is effective as a hedge is recognized in the statement of comprehensive income as a result of reclassification adjustments in accordance with IAS 21, “Effect of Changes in Foreign Exchange Rates” at the time of disposing of its overseas operations or disposing of a portion of its overseas operations to profit or loss.

ii) Other derivative financial instruments

All derivatives except those designated as hedging instruments and are effective in hedging are measured at fair value. Changes in the fair value of other derivative financial instrument not designated as a hedging instrument are recognized immediately in profit or loss.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

iii) Gains and losses on initial recognition

Any difference between the fair value of over the counter derivatives at initial recognition and the amount that would be determined at that date using a valuation technique in a situation in which the valuation is dependent on unobservable parameters is not recognized in profit or loss but is deferred, and the deferred gains and losses on initial transaction are depreciated on a straight-line basis over the life of the instrument or the remainder is recognized in profit or loss immediately when the fair value becomes observable.

(h)

Expected credit losses of financial assets

Except for financial assets measured at fair value through profit or loss, financial assets measured at amortized cost and financial assets measured at fair value through other comprehensive income are assessed for expected credit losses at the end of each reporting period and recognized as loss allowance. Financial assets migrate through the following three stages based on the change in credit risk since initial recognition and allowance for credit loss for the financial assets are measured at the

12-month

expected credit losses (“ECL”) or the lifetime ECL, depending on the stage.


Category		Allowance for credit loss
STAGE 1	When credit risk has not increased significantly since the initial recognition	12-months ECL: the ECL associated with the probability of default events occurring within the next 12 months
STAGE 2	When credit risk has increased significantly since the initial recognition	Lifetime ECL: a lifetime ECL associated with the probability of default events occurring over the remaining lifetime
STAGE 3	When assets are impaired	Same as above

The Group, meanwhile, only recognizes the cumulative changes in lifetime expected credit losses since the initial recognition as an allowance for credit loss for purchased or originated credit-impaired financial assets.

The total period refers to the expected life span of the financial instrument up to the contract expiration date.

i) Reflection of forward-looking information

The Group reflects forward-looking information when measuring expected credit losses. Assuming that the measurement factor of expected credit losses has a certain correlation with economic fluctuations, the expected credit losses are calculated by reflecting forward-looking information through modeling between macroeconomic variables and measurement factors.

ii) Measurement of expected credit loss of financial assets at amortized cost

The expected credit loss of amortized financial assets is measured as the difference between the present value of the cash flows expected to be received and the cash flow to be received in accordance with loan agreements. For this purpose, the Group calculates expected cash flows for individually significant financial assets. For financial assets that are not individually significant, the Group collectively measures the expected credit losses thereof with similar credit risk characteristics.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

Expected credit losses are deducted from financial assets at amortized cost using ACL, which are written off along with the assets if the assets are not recoverable. The allowance for credit loss is increased when the

written-off

loan receivables are subsequently collected, and the changes in the allowance for credit loss are recognized in profit or loss.

iii) Measurement of estimated credit loss of financial assets at FVOCI

The calculation of expected credit loss of financial assets at FVOCI is the same as for financial assets measured at amortized cost, but changes in allowance for credit loss are recognized in other comprehensive income. In the case of disposal and redemption of financial assets at FVOCI, the allowance for credit loss is reclassified from other comprehensive income to profit or loss and recognized in profit or loss.

(i)

Property and equipment

Land is not depreciated. Other property and equipment are depreciated on a straight-line basis over the estimated useful lives for the acquisition cost after deduction of the residual value. The estimated useful lives for the current and comparative periods are as follows:


Descriptions		Useful lives
Buildings		40 ~ 50 years
Other properties		4 ~ 5 years

(j)

Intangible assets

Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.

Amortization of intangible assets except for goodwill is calculated on a straight-line basis over the estimated useful lives of intangible assets as shown below, from the date that they are available for use. The residual value of intangible assets is zero. However, if there are no foreseeable limits to the periods over which certain intangible assets are expected to be available for use, they are determined to have indefinite useful lives and are not amortized.


Descriptions		Useful lives
Software		5 years
Capitalized development cost		5 years
Other intangible assets		5 years or contract periods

(k)

Investment properties

An investment property is initially recognized at cost including any directly attributable expenditure. Subsequent to initial recognition, the asset is measured at cost less accumulated depreciation and accumulated impairment losses, if any.

The depreciation method and the estimated useful lives for the current and comparative periods are as follows:


Descriptions	Useful lives	Depreciation method
Buildings	40 ~ 50 years	Straight-line

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

(l)

Leases

i) Accounting treatment as the lessee

The Group leases various tangible assets, such as real estate and vehicles, and each of the lease contract is negotiated individually and includes a variety of terms and conditions. There are no other restrictions imposed by the lease contracts, but the lease assets cannot be provided as collaterals for borrowings.

At the commencement date of the lease, the Group recognizes the

right-of-use

assets and the lease liabilities. Each lease payment is allocated to payment for the principal portion of the lease liability and financial costs. The Group recognizes in profit or loss the amount calculated to produce a constant periodic rate of interest on the lease liability balance for each period as financial costs.

Right-of-use

assets are depreciated using a straight-line method from the commencement date over the lease term.

If internal rate of return from in the lease is readily determined, the lease payments are discounted by the rate; if the rate is not readily determined, the lessee’s incremental borrowing rate is used.

The cost of the

right-of-use

assets comprise:

•

The amount of the initial measurement of the lease liability

•

Any lease payments made at or before the commencement date (less any lease incentives received)

•

Any initial direct costs incurred by the lessee

•

An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease

Lease payments related to short-term leases or

low-value

assets are recognized as current expenses over the lease term using the straight-line method. A short-term lease is a lease that has a lease term of 12 months or less, and the

low-value

assets lease is a lease of which the underlying asset value is not more than

6 million.

Additional considerations for the Group when accounting for lessees include:

Extension and termination options are included in a number of real estate lease contracts of the Group. In determining the lease term, management considers all relevant facts and circumstances that create an economic incentive not to exercise the options. The periods covered by, a) an option to extend the lease if the lessee is reasonably certain to exercise that option, or b) an option to terminate the lease if the lessee is reasonably certain not to exercise that option, is included when determining the lease term. The Group reassesses whether the Group is reasonably certain to exercise the extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that is within the control of the lessee, and affects whether the lessee is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.

ii) Accounting treatment as the lessor

The Group leases out to lessee various tangible assets, including vehicles under operating and finance lease contracts, and each of the lease contract is negotiated individually and includes a variety of terms and

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

conditions. The risk management method for all rights held by the Group in the underlying assets includes repurchase agreements, residual value guarantees, etc.

ii-1)

Finance leases

The Group recognizes them as a receivable at an amount equal to the net investment in the lease, and the difference from the carrying amount of the leasing asset as of the commencement date is recognized as profit or loss from disposal of the lease asset. In addition, interest income is recognized by applying the effective interest method for the amount of the Group’s net investment in finance leases. Lease-related direct costs are included in the initial recognition of financial lease receivables and are accounted for in a way that reduces the revenue for the lease term.

ii-2)

Operating leases

The Group recognizes the lease payments as income on straight-line basis, and adds the lease initial direct costs incurred during negotiation and contract phase of the operating lease to the carrying amount of the underlying asset. In addition, the depreciation policy of operating lease assets is consistent with the Group’s depreciation policy of other similar assets.

(m)

Impairment of

non-financial

assets

The carrying amounts of the Group’s

non-financial

assets, other than assets arising from employee benefits, deferred tax assets and

non-current

assets held for sale, are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amount to their carrying amount.

The Group estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual recoverable amount of an asset, then the Group estimates the recoverable amount of cash-generating unit (“CGU”). The recoverable amount of an asset or a CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying a

pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or the CGU.

An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergies arising from the goodwill acquired. Any impairment identified at the CGU level will first reduce the carrying amount of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Impairment losses of goodwill cannot be reversed in the subsequent period. For other assets than goodwill, at the end of each reporting period, the Group reviews whether there is any indication that the impairment loss for those assets that was previously recognized no longer exists or has

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

decreased, and reverses the impairment loss only if there is a change in the estimate used to determine the recoverable amount after the recognition of the impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

(n)

Non-derivative

financial liabilities

The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liability in accordance with the substance of the contractual arrangement and the definitions of financial liabilities.

Transaction costs on the financial liabilities at FVTPL are recognized in profit or loss as incurred.

i) Financial liabilities designated at FVTPL

Financial liabilities can be irrevocably designated as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases, or a group of financial instruments is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. The amount of change in the fair value of the financial liabilities designated at FVTPL that is attributable to changes in the credit risk of that liabilities shall be presented in other comprehensive income.

ii) Financial liabilities at FVTPL

Since initial recognition, financial liabilities at FVTPL are measured at fair value, and changes in the fair value are recognized as profit or loss.

iii) Other financial liabilities

Non-derivative

financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities, and other financial liabilities include deposits, borrowings, debt securities and etc. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the acquisition. Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the effective interest method.

The Group derecognizes a financial liability from the consolidated statement of financial position when it is extinguished (i.e. when the obligation specified in the contract is discharged, canceled or expires).

(o)

Foreign currency

i) Foreign operations

The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

(p)

Equity capital

i) Hybrid bonds

The Group classifies an issued financial instrument, or its component parts, as a financial liability or an equity instrument depending on the substance of the contractual arrangement of such financial instrument. Hybrid bonds where the Group has an unconditional right to avoid delivering cash or another financial asset to settle a contractual obligation are classified as an equity instrument and presented in equity. Hybrid bonds issued by subsidiaries of the Group are classified as

non-controlling

interests according to this classification criteria. In addition, distributions paid are treated as net income attributable to

non-controlling

interests in the consolidated statement of comprehensive income.

ii) Capital adjustment

The effect of changes in ownership interests in subsidiaries that do not lose control over the equity attributable to owners of the parent is included in capital adjustments.

(q)

Employee benefits

i) Short-term employee benefits

Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render the related service. When an employee has rendered service to the Group during an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.

ii) Other long-term employee benefits

The Group’s net obligation in respect of other long-term employee benefits that are not expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.

iii) Retirement benefits: defined benefit plans

For the year ended December 31, 2024, defined benefit liabilities related to the defined benefit plan are recognized by deducting the fair value of external reserve from the present value of the defined benefit plan debt.

Defined benefit liabilities are calculated annually by independent actuaries using the predicted unit credit method. If the net present value of the defined benefit obligation less the fair value of the plan assets is an asset then the present value of the economic benefits available to the entity in the form of a refund from the plan or a reduction in future contributions to the plan.

(r)

Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Provisions shall be used only for expenditures for which the provisions are originally recognized.

(s)

Financial guarantee contract

A financial guarantee contract is a contract that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial guarantee contract.

After initial recognition, financial guarantee contracts are measured at the higher of:

•

Loss allowance in accordance with IFRS 9, ‘

Financial Instruments

’

•

The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of IFRS 15, ‘

Revenue from Contracts with Customers

’

(t)

Insurance contracts

– policy applicable from January 1, 2023

i) Definition and classification of insurance contracts

The Group classifies the insurance contract issued as an insurance contract when assuming significant insurance risk from the policyholder, regardless of its legal form. It is classified as an insurance contract if, based on present value, there is a potential loss exposure and if, under any commercially plausible scenario, significant additional payments (determined on a present value basis) would be required to the policyholder. The assessment of assuming significant insurance risk is performed for each contract at the time of issuance. For reinsurance contracts, they are classified as insurance contracts when transferring significant insurance risk to the reinsurer. Additionally, contracts with discretionary participation features are also classified as insurance contracts.

ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)

ii-1)

Accounting unit

The Group identifies insurance contract portfolios by integrating insurance contracts that are exposed to similar risks and managed together based on coverage, currency, and interest rate types. The Group divides a portfolio of insurance contracts issued into the following groups of insurance contracts based on similarity of profitability. However, for insurance contracts applying the premium allocation approach, it assumes that there is onerous insurance contract (or net gain contract for reinsurance contracts held) at the initial recognition unless evidence suggests otherwise.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

A group of insurance contracts issued consists of:

•

A group of contracts that are onerous at initial recognition.

•

A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently

•

A group of the remaining contracts

A group of reinsurance contracts held consists of:

•

A group of contracts with net profits at initial recognition.

•

A group of contracts that at initial recognition have possibility of having net profits subsequently

•

A group of the remaining contracts

The Group does not include contracts with a difference in issuance dates exceeding one year in the same group of insurance contracts issued, and it does not reassess the composition of the group subsequently.

ii-2) Recognition of a group of insurance contracts issued

The Group shall recognize a group of insurance contracts it issues from the earliest of the following:

•

The beginning of the coverage period of the group of contracts;

•

The date when the first payment from a policyholder in the group becomes due (If there is no contractual payment due date, the time the first premium is received is considered that date); and

•

For a group of onerous contracts, when the group becomes onerous.

The Group recognizes a group of reinsurance contracts held at the beginning of the coverage period of the group of insurance contracts held. However, in the case of

non-proportional

reinsurance, if the group of underlying contracts is a group of onerous contract and the group of reinsurance contracts held is concluded at or before the time when the group of underlying contracts is recognized, the Group recognizes a group of reinsurance contracts held at the earlier of the beginning of the coverage period of the group of reinsurance contracts held or the recognition time of the group of underlying insurance contracts which is the onerous contract for the current year. In addition, in the case of proportional reinsurance, the Group recognizes the group of reinsurance contracts held at the time of initial recognition of the group of underlying insurance contracts, if the initial recognition time of the group of underlying insurance contracts is later than the beginning of the coverage period of the group of reinsurance contracts held.

ii-3) Measurement of insurance liabilities (assets) and reinsurance assets (liabilities) under the general model

At the time of initial recognition, the Group measures a group of insurance contracts issued as the sum of fulfillment cash flows (estimates of future cash flows, adjustments to the time value of money related to financial risks to future cash flows, and risk adjustments to

non-financial

risks) and contractual service margin, and subsequently, as the sum of the liability or assets for remaining coverage (fulfillment cash flow and contractual service margin) and the liability or asset for incurred claims (fulfillment cash flow). The liability for remaining coverage includes the obligation to investigate and pay reasonable insurance benefits according to the current insurance contract for insurance events that have not yet occurred, the obligation to

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

pay amounts related to insurance contract services that have not yet been provided, the obligation to pay amounts related to insurance contract services that have not yet been provided, and represents the obligation to pay investment elements and other amounts that have not been transferred to incurred liability. The liability for incurred claims comprises the obligation to investigate insurance events that have already occurred and pay reasonable insurance premiums and other incurred insurance costs, the obligation to pay amounts related to insurance contract services already provided, and obligation to pay investment elements and other amounts not related to insurance contract services and not included in the liability for remaining coverage.

The estimate of future cash flows

The Group estimates future cash flows using a probability-weighted average based on all relevant, reliable, and neutral information available without undue cost or effort regarding the timing, scope, and uncertainty of future cash flows. Estimates for market variables are consistent with observable market prices and reflect the perspective of the entity, while estimates for

non-market

variables incorporate all reasonable and reliable internal and external evidence available without undue cost or effort, while ensuring consistency with observable market variables. The Group segregates the future cash flows of reinsurance contracts held from those of the underlying insurance contracts issued and measures them separately, using assumptions consistent with the underlying insurance contracts issued but including the effect of risk of

non-performance

by the issuer of the reinsurance contract.

Future cash flows within the contract boundary

The Group includes all future cash flows within the boundary of a group of insurance contracts issued when measuring the group. Cash flows within the contract boundary refer to cash flows up to the reporting period in which there exists a substantive right or obligation to compel the policyholder to pay premiums (or compel the reinsurer to pay reinsurance premiums for a group of reinsurance contracts held) or to provide substantive services under the insurance contract (or receive substantive services from the reinsurer for a group of reinsurance contracts held).

Cash flows within the contract boundary include premiums from policyholders, claims and benefits payable to policyholders (including payments linked to underlying items), insurance claim handling expenses, undivided options and guarantees-related cash flows, insurance acquisition cash flows directly attributable to the contract or its portfolio, fixed/variable indirect expenses directly attributable to fulfilling the insurance contract, costs related to investment activities and the provision of investment return services/investment-related services, insurance policy loans, etc; and excludes investment income or future insurance-related cash flows, product development expenses, and training expenses not directly attributable to the insurance contract portfolio.

The substantive obligations to provide insurance contract services (or the substantive right to receive insurance contract services for a group of reinsurance contracts held) ends when there is the practical ability to reassess the risks of the particular policyholder or the risks of the portfolio of insurance contracts(the risk transferred to reinsurance company for a group of reinsurance contracts held), and, as a result, to fully reflect such risks in pricing or settlement; during the reassessment of portfolio pricing, the risks related to periods after the reassessment date is not considered. The Group reassesses the contract boundary at the end of each reporting period to reflect changes in circumstances affecting substantive rights and obligations.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

Discretionary cash flows

The Group identifies and distinguishes the effects of discretionary cash flow variations, which pertain to amounts or timing of cash flows subject to discretion, and the effects of changes in assumptions related to financial risks on the recognition, separately. Any impact of changes in discretion on recognition is adjusted in contractual service margin. The Group considers any adjustment rate applied to the disclosed benchmark rate as discretionary when applying the disclosed interest rate to payments to policyholders.

Insurance acquisition cash flows

The Group allocates insurance acquisition cash flows directly attributable to the insurance contract portfolio to the group of insurance contracts issued in the portfolio and to the group of future insurance contracts that will be recognized upon renewal of the insurance contracts included in the group in a reasonable and systematic manner. Insurance acquisition cash flows recognized as assets after distribution are assessed for recoverability at the end of each reporting period if the fact and circumstances exist that the asset is impaired. If an impairment loss is identified, it is recognized in profit or loss for the current period and insurance acquisition cash flow assets and adjusted to the carrying amount of insurance acquisition cash flow assets. Insurance acquisition cash flow assets are derecognized when the related group of contracts is initially recognized and are included in the fulfillment cash flow measurement for that group of contracts.

Discount rate

The Group measures the time value of money using a discount rate that reflects the cash flow and liquidity characteristics of insurance contracts while being consistent with current observable market prices and then adjusts future cash flow estimates. To do this, the Group calculates a risk-free interest rate term structure using the Smith-Wilson interpolation method, incorporating yields on government bonds with maturities observed in the market up to the longest term available, along with initial convergence periods and long-term forward interest rates. Liquidity premiums are then added to determine deterministic scenarios. The liquidity premium is derived by multiplying an adjustment ratio to the difference between the risk spread of the representative insurance industry portfolio and the credit risk spread. Additionally, the Group generates 1,000 stochastic scenarios based on this deterministic scenario, reflecting convergence speed parameters and volatility parameters. Deterministic and stochastic scenarios for foreign currencies are calculated separately from scenarios for Korean Won, taking into account the characteristics of each currency.

Risk adjustment for

non-financial

risks

The Group explicitly reflects between estimated future cash flows and discount rates, reflecting the compensation of the uncertainty surrounding the amounts and timing of cash flows arising from

non-financial

risks through adjustments for

non-financial

risk. These adjustments are made in accordance with insurance regulations and are allocated at the individual contract level through reasonable and systematic methods. For reinsurance contracts held, adjustments for

non-financial

risk are calculated to reflect the risk transferred from the holder of the reinsurance contract to the reinsurer, consistent with the assumptions applied in the underlying insurance contracts issued.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

Contractual service margin

At the time of initial recognition of a group of insurance contracts issued, the Group measures the contractual service margin, which is unrealized profit that will be recognized as insurance contract services are provided in the future, as the amount that does not generate revenue or expenses from:

The amount of fulfillment cash flows expected at initial recognition date for the group of insurance contracts issued.

ii)

All cash flows already incurred from contracts within the group at the initial recognition date.

iii)

The insurance acquisition cash flows allocated to the group at the initial recognition date.

iv)

Other assets or liabilities recognized previously for cash flows associated with the group at the initial recognition date.

In the case of a reinsurance contracts held, the net cost or net gain on purchasing a group of the reinsurance contracts held is recognized as contractual service margin. However, if the net cost of purchasing reinsurance coverage is related to costs incurred prior to purchasing a group of reinsurance contracts held, it is recognized in profit or loss.

Changes in fulfillment cash flows and contractual service margin.

The Group

re-estimates

the future cash flows as of the end of each reporting period at current estimates. Changes in fulfillment cash flows related to the future are adjusted in the contractual service margin, while the current and past service-related portions are recognized in profit or loss. The Group also adjusts the contractual service margin for experience adjustments related to future service-related premiums and related insurance acquisition cash flows, as well as for differences between expected and actual investment elements. However, changes in the time value of money and financial risk, changes in estimated fulfillment cash flows for the liabilities for incurred claims (assets), and other experience adjustments related to current and past services are not adjusted in the contractual service margin.

The Group adjusts the current contractual service margin at the end of the reporting period by adding the following amounts to the base amount:

Impact of newly added contracts to the current group of insurance contracts issued.

ii)

Accrued interest on the carrying amount of the contractual service margin, measured at the discount rate determined at initial recognition.

iii)

Changes in future service-related fulfillment cash flows (excluding recognition and recovery elements of losses).

iv)

Effects of currency exchange differences on the contractual service margin.

Amounts recognized in the current period’s profit or loss due to the transfer of insurance contract services during the period.

Loss components and loss recovery components

The Group considers an insurance contract as one that incurs a loss if, at the initial recognition date, the total of the fulfillment cash flows allocated to the insurance contract, previously recognized insurance acquisition

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

cash flows, and cash flows arising from the contract at that date result in a net outflow. Additionally, the Group categorizes a group of insurance contracts issued as a group of onerous contract if, at subsequent measurement dates, adverse fluctuations related to future services allocated to the group of insurance contracts issued exceed the carrying amount of the contractual service margin.

In a group of onerous contracts, there is no contractual service margin, and the measurement of the group consists entirely of the fulfillment cash flows. Any portion at the initial recognition date in the group of onerous contract that is expected to result in a net outflow or exceeds the carrying amount of the contractual service margin subsequently is considered a loss component of that group and recognized as a loss in the current period. After recognizing the loss component, the Group systematically allocates subsequent fluctuations in the remaining insurance liability fulfillment cash flows between the loss component and the liability for remaining coverage, excluding the loss component, based on established criteria. However, subsequent decreases in cash flows related to future services are allocated only to the loss component until it is fully exhausted and recognized in the current period. Any excess beyond the loss component’s exhaustion is then recognized as contractual service margin again.

In the case of a group of reinsurance contracts held, when a loss component is recognized in the group of the underlying insurance contracts, the Group calculates the loss recovery component of the group of the reinsurance contracts held by multiplying the expected recovery ratio for claims under the group of the underlying insurance contracts by the loss component attributed to those claims. This loss recovery component is then used to adjust assets for the remaining coverage of the reinsurance group and to adjust the contractual service margin (or directly adjust the remaining insurance liability if the premium allocation approach is applied) for recognition of the current period’s profit or loss. The loss recovery component is adjusted to reflect fluctuations in the loss component of the group of the underlying insurance contracts within the range that does not exceed the loss component’s carrying amount for the group of the underlying insurance contracts.

ii-4) Measurement of insurance liabilities (assets) under the variable fee approach

The Group applies the variable fee approach to measure insurance liabilities (assets) for insurance contracts with direct participation features that meet the following criteria at inception. The Group provides investment-related services at the commencement of the insurance contract, and the insurance contract has direct participation features. The Group does not reassess the fulfillment of these criteria unless there is a contract modification. The variable fee approach is not applied to reinsurance contracts held.

i) the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items.

ii) the Group expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items.

iii) the Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items.

In the variable fee approach, it is clear that the obligation to pay an amount equal to the fair value of the underlying items, deducted by the variable fee, constitutes the liability to the policyholder. The variable fee is the company’s share of the fair value of the underlying items minus fulfillment cash flows, which do not vary depending on the performance of the underlying items. Fluctuations in the obligation to pay an amount

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

equal to the fair value of the underlying items are not adjusted in the contractual service margin. However, adjustments are made in the contractual service margin for the portion of the fair value of the underlying items attributable to the company and the changes in the fulfillment cash flows not subject to variations based on the performance of the underlying items.

The Group measures the present value of cash flows at the initial recognition date and at the end of the reporting period using the same general model. The contractual service margin is calculated by adjusting the base amount with the following amounts.

i) The effect of new contracts added to the current group of insurance contracts issued.

ii) Changes in the portion of the fair value of underlying items attributable to the entity (excluding recognition and reversal of loss components).

iii) Changes in the fulfillment cash flows related to future services (excluding recognition and reversal of loss components).

iv) The effect of exchange rate fluctuations on contractual service margins.

v) Amounts recognized in the current period’s profit or loss due to the transfer of insurance contract services during the period.

ii-5) Insurance liabilities (assets) and reinsurance assets (liabilities) measured under the premium allocation approach.

At the inception of a group of insurance contracts issued, if there is a reasonable expectation that the measurement of liabilities for remaining coverage under premium allocation approach does not differ materially from the one under the general model, and if the coverage period for all contracts within the group of insurance contracts issued is one year or less, the insurance liabilities (assets) are measured using the premium allocation approach, which is a simplified method compared to the general model.

The Group measures the liabilities (assets) for remaining coverage at the initial recognition by deducting from the cash received as premiums (or reinsurance premiums paid for reinsurance contracts held), the amount of insurance acquisition cash flows not immediately recognized as expenses (including amounts removed from assets). Subsequently, it determines the carrying amount by adding or subtracting the following amounts from the initial amount:

i) Premiums received during the reporting period. (reinsurance premiums paid for reinsurance contracts held)

ii) Insurance acquisition cash flows not recognized as expenses and amortization of those insurance acquisition cash flows

iii) Adjustments related to significant financial components

iv) Amount recognized in profit or loss for the reporting period due to providing insurance contract services.

v) Investment components paid (received for reinsurance contracts held) or transferred to the liability for incurred claims.

The Group does not adjust the carrying amount of the remaining insurance liabilities at the initial recognition date if the coverage period of each contract within the group of insurance contracts issued does

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

not exceed one year, in order to reflect the time value of money and the financial risk effect. Additionally, acquisition cash flows are recognized as expenses when they occur. However, if circumstances indicate that the group of insurance contracts issued incurs losses, the Group performs impairment tests. If the fulfillment cash flows exceed the carrying amount of the liabilities for remaining coverage, the difference is recognized as a loss in the current period, is also recognized as increase of the liabilities for remaining coverage.

ii-6) Policyholders’ equity adjustments

It requires estimating the related cash flows from dividends and measuring liabilities using discount rates that reflect assumptions and risks for participating insurance contracts, as per IFRS 17.

In response to concerns regarding the discrepancy between past accounting practices under IFRS 4 and the accurate representation of obligations to participating policyholders, our company has adopted the methodology prescribed in Article

4-1(2)

of the Insurance Supervisory Regulations to calculate liabilities associated with potential future obligations arising from unrealized gains on assets as of the reporting period end.

iii) Recognition of insurance revenue and insurance service expenses

iii-1)

Recognition of insurance revenue in general model and variable fee approach model

Insurance revenue is measured as the amount expected to be received in exchange for providing insurance contract services for a group of insurance contracts issued. It consists of the sum of changes in the liabilities for remaining coverage as following and insurance acquisition cash flows:

i) Insurance service expenses incurred during the period, measured at the amount estimated at the inception date (excluding transaction-related taxes collected on behalf of third parties, allocated amounts to loss components, insurance acquisition costs, investment components repaid to policyholders even if an insured event does not occur, and the executed loan from insurance contracts).

ii) Changes in the risk adjustment for

non-financial

risks (excluding allocated amounts to loss components and changes related to future services).

iii) Contractual service margin recognized in the current period as profit or loss (contractual service margin allocated to current coverage units among all coverage units calculated considering the quantity of benefits payments and the expected duration for coverage within the group of insurance contracts issued, and the frequency and severity of occurrence of insured events.

iv) Other amounts such as experience adjustments on premiums collected for current or past services.

The Group determines insurance revenue related to insurance acquisition cash flows by allocating the portion of the premiums that related to recovering those cash flows to each reporting period in a systematic way on the basis of the passage of time; also, recognizes the same amount as insurance service expenses.

iii-2) Recognition of insurance revenue under the premium allocation approach

Under the premium allocation approach, insurance revenue is recognized by allocating the expected premium income (excluding investment components) for services provided over each period on the basis of the passage of time. However, if the expected pattern of release of risk during the coverage period differs

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

significantly from the passage of time, the expected premium income is calculated on the basis of expected timing of incurred insurance service expenses.

iii-3)

Recognition of insurance service expenses

The insurance service expenses incurred as a result of issuing the group of insurance contracts issued consist of the following.

i) Increase in the liabilities for incurred claims and changes in the fulfillment cash flows related to premiums and expenses (excluding repayment of investment components).

ii) Amortization of insurance acquisition cash flows (the same amount is recognized as insurance revenue and insurance service expenses).

iii) Changes in loss components recognized for the first time in onerous groups of contracts and loss components related to future services.

iii-4) Recognition of reinsurance revenue and reinsurance service expenses for the group of reinsurance contracts held.

The revenue and expenses arising from the group of reinsurance contracts held is recognized by adopting the method of recognizing insurance service expenses and insurance revenue of the group of underlying insurance contracts, with adjustments made to reflect the characteristics of reinsurance contracts held (revenue being the amount recovered from reinsurers and expenses being the allocated portion of premiums paid to reinsurers).

iv) Contract modifications and terminations

The Group derecognizes the original contract and recognizes the modified contract as a new contract when the insurance contract terms are changed and specific criteria are met. If the contract modification does not meet such criteria, the effect of the contract modification is accounted for as changes in estimated fulfillment cash flows. There were no instances during the current and prior periods where the original contract was removed and the modified contract was recognized as a new contract. When an insurance contract is extinguished (due to expiration, fulfillment, or cancelation of obligations stated in the insurance contract), the Group removes the insurance contract, adjusts the estimated fulfillment cash flows and contractual service margin related to the removed contract within the group of insurance contracts issued, and reflects the removed contract in the number of coverage units of the group of insurance contracts issued.

v) Accounting estimates used in the preparation of interim financial statements

The Group has adopted an accounting policy of not changing the accounting treatment of accounting estimates measured in interim financial statements when preparing subsequent interim financial statements and annual financial statements.

vi) Presentation

The Group separately presents the book value of insurance contract portfolio, which is an asset, the book value of the insurance contract portfolio, which is a liability, the reinsurance contract portfolio held, which

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

is an asset, and the reinsurance contract portfolio held, which is a liability, respectively, in the consolidated statement of financial position. Furthermore, it distinguishes between insurance revenue and reinsurance service expenses, as well as insurance service expenses and reinsurance revenue, without offsetting them against each other in the statement of comprehensive income.

The Group includes the time value of money and the effects of financial risks, as well as their fluctuations, in insurance finance income (expenses). The Group has chosen an accounting policy to differentiate between insurance finance income (expenses) for the period as either recognized in the current income or in other comprehensive income. For insurance groups where changes in assumptions related to financial risks significantly impact policyholder benefits, the effective interest rate method is applied. For other insurance groups, the effective interest rate determined at initial recognition is used to calculate insurance finance income (expenses) recognized in the current period. In cases where the variable fee approach is applied to insurance groups holding underlying items, the amount recognized as insurance finance income (expenses) in the current period is determined to eliminate accounting mismatches with the underlying items and recognized in the current income.

vii) Accounting policies related to transitions

Under IFRS 17, insurance companies are required to identify, recognize, and measure the group of insurance contracts issued (using the retrospective approach) as if they had always applied IFRS 17 before the transition date. However, if this method is impractical, they may choose to apply the modified retrospective approach or the fair value approach. However, for the group of insurance contracts issued with certain direct participation features, even if they meet the criteria for applying the retrospective approach, the fair value approach may be applied.

The Group has applied the modified retrospective approach to the group of insurance contracts issued within three years prior to the transition date (January 1, 2022, the beginning of the annual reporting period preceding the initial application date of IFRS 17

‘Insurance Contracts

’), covering contracts issued from 2019 to 2021, as well as to the group of insurance contracts acquired through business combinations (date of business combination: January 1, 2019) applying the general model. For other group of insurance contracts issued and reinsurance contracts held, the fair value approach has been adopted. Additionally, the Group adjusted the existing carrying amounts based on historical cost to the current fulfillment value assessment.

The modified retrospective approach aims to achieve results very close to those of fully retrospective application, utilizing reasonable and supportable information without excessive costs or efforts. The fair value approach involves evaluating the group of insurance contracts issued using fair value measurements, as per IFRS 13

‘Fair Value Measurement’

. When applying the fair value approach, items such as contractual service margins for remaining coverage are determined based on the difference between the fair value of the group of insurance contracts issued at the transition date and the fulfillment cash flows.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

(u)

Insurance contracts – policy applicable before January 1, 2023

i) Investment contract liabilities, including insurance contract liabilities and discretionary dividend factors

The group establishes liability reserves in accordance with the Insurance Business Law and the related regulations. The reserves are calculated according to the insurance policy, insurance premiums and liability reserve calculation method. The main contents are as follows.

i-1)

Premium reserves

This is the amount to be accumulated for insurance claim payable for the existing contracts as of the end of the reporting period, the reserves are calculated by deducting the present value of net premiums to be earned after the end of the reporting period from the present value of claims to be paid to the policyholder after the date of the statement of financial position.

i-2)

Unearned premium reserves

Among premiums that are due for payment before the end of the reporting period, the prepaid premium reserves for the next period are calculated through a premium and liability reserves calculation method.

i-3)

Guarantee reserves

The total amount of reserve for variable minimum guarantee (①) and reserve for general account guarantee (②) is provided as guarantee reserve.

①

Variable minimum guarantee reserve

This reserve is the amount that must be accumulated to guarantee insurance premiums above a certain level for contracts maintained as of the end of the reporting period, and is measured at the higher of:

i) the average amount of the top 30% of net loss expected in the future

ii) the minimum required amount by insurance types, minimum guarantees, level of guarantees and limits of stock investment portion

②

General account guarantee reserve

As of the end of the reporting period, the amount of reserve for insurance contracts that are insured under general account is required to be paid to guarantee the level of refunds, and select the largest of the following:

i) Average of the amount deducted from the appropriateness of the liability reserve calculated by excluding the guarantee option from the appropriateness evaluation of the liability reserve calculated by including the guarantee option for each interest rate scenario

ii) The amount of compensation (including annulment contract) against the guarantee received from the policy holder by the rate applied at the premium calculation in the insurance premium and liability reserve calculation method

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

i-4)

Reserve for outstanding claims

As of the end of the reporting period, the Group has accrued the amount for which the reason for the payment of insurance claims, etc. has been incurred and the amount of the claim payment has not been paid yet due to the dispute or lawsuit related to the insurance settlement (pending in the Financial Dispute Mediation Committee). In addition, the Group recognizes unrecognized losses based on historical experience.

i-5)

Reserves for participating policyholders’ dividends

The reserve is provided for the purpose of contributing to the policyholder dividend according to the laws and regulations and the reserve for dividend reserve for the policyholder and the dividend reserve for the subsequent business year.

The policyholder dividend reserve is the amount that is not paid as of the end of the reporting period for the settlement amount and the reserve for dividend policy for the next fiscal year is based on the policyholder dividend calculated on the insurance contract effective as of the end of the reporting period.

①

Excess crediting rate reserve

In the case of a dividend insurance contract which has been maintained for more than one year as of the end of the reporting period among contracts signed before October 1, 1997, the difference between the planned interest rate and the

one-year

maturity deposit rate shall be preserved.

②

Mortality dividend reserve

Dividends arising from contracts that are maintained for more than one year at the end of the reporting period are used to offset the expected mortality and actual mortality rates applied to premiums.

③

Interest dividend reserve

For the contracts that have been maintained for more than one year as of the end of the reporting period, the amount calculated by applying the interest dividend reserve rate to the net written premium reserve less the unearned acquisition costs. However, the insurance sold before October 1, 1997 is applied to the amount deducted from the net premium in the event that the planned interest rate by the insurance product is less than the dividend standard.

④

Reserves for long-term special dividends

For the effective dividend policy agreement that has been maintained for 6 years or more, the amount calculated by applying the long-term special dividend rate to the amount deducted from the net premiums for the end of the year.

However, insurance sold before October 1, 1997 is applied to the deduction of unearned premiums at the end of the year when the expected interest rate by the insurance product is less than the dividend standard rate.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

i-6)

Reserve for interest dividends

In order to cover the policyholder dividend in the future, the total amount is set aside according to business performance according to the law or insurance contracts.

i-7)

Reserve for dividend insurance loss reserve

In accordance with the regulations set by the supervisory authority, dividend insurance profit is accumulated within 30/100 of the contractor’s stake. The reserve for the compensation of dividend insurance losses shall compensate for the loss of dividend insurance contracts in accordance with the provisions of the fiscal year within five years from the end of the accumulated reporting period and shall be used as the policyholder dividend source for the individual contractor.

ii) Contractor’s equity adjustment

In accordance with IAS 39, the Group classifies the gains and losses of available for sale financial assets as policyholder’s equity and shareholders’ equity based on the reserve ratio for dividend paying and

non-dividend

paying insurance for the year ended December 31, 2022, and the portion of policyholder’s equity is accounted as policyholder’s equity adjustment.

iii) Evaluation of debt appropriateness

At the end of each reporting period, the group assesses whether the recognized insurance liability is appropriate using the current estimates of future cash flows of the policy, and if the carrying value of the insurance liability is deemed to be inappropriate in terms of the estimated future cash flows. The reserve for premiums is added to the profit or loss by the amount corresponding to the deficiency.

iv) Reinsurance assets

The group presents the recoverable amount of reinsurance assets. The group assesses at the end of each reporting period whether there is objective evidence that a reinsurance asset is impaired. If there is objective evidence that the entity will not be able to collect all amounts under the terms of the agreement as a result of an event that occurred after the initial recognition and if the event has a reliable and measurable impact on the amount to be received. If reinsurance assets are determined to be impaired, impairment loss is recognized in the profit and loss for the current period.

v) Deferred acquisition cost

The group recognizes unrealized gains and losses arising from long-term insurance contracts as assets and amortizes the premiums over the life of the insurance contracts equally. If the contribution period exceeds 7 years, the amortization period is 7 years if there is an unrecognized balance at the date of the cancelation, the entire amount of the cancelation is amortized in the fiscal year to which the cancelation date belongs. But, if the ratio of additional premiums is higher at the early stage of the insurance period for the purpose of recovering the excess of the unearned premiums and the early settlement costs, the new settlement expenses are treated as the period expense.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

(v)

Recognition of revenues and expenses

The Group’s revenues are recognized using five-step revenue recognition model as follows: ① ‘Identifying the contract’

② ‘Identifying performance obligations’

③ ‘Determining the transaction price’

④ ‘Allocating the transaction price to performance obligations’

⑤ ‘Recognizing the revenue by satisfying performance obligations’.

i) Interest income and expense

Interest income and expense are recognized in profit or loss using the effective interest method.

ii) Fees and commission income

The recognition of revenue for financial service fees depends on the purposes for which the fees are assessed and the basis of accounting for any associated financial instrument.

ii-1)

Fees that are an integral part of the effective interest rate of a financial instrument

Such fees are generally treated as an adjustment to the effective interest rate. Such fees may include compensation for activities such as evaluating the borrower’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, preparing and processing documents, closing the transaction and the origination fees received on issuing financial liabilities. However, when the financial instrument is measured at fair value with the change in fair value recognized in profit or loss, the fees are recognized as revenue when the instrument is initially recognized.

ii-2)

Fees earned as services are provided

Fees and commission income, including investment management fees, sales commission, and account servicing fees, are recognized as the related services are provided.

ii-3)

Fees that are earned on the execution of a significant act

The fees that are earned on the execution of a significant act including commission on the allotment of shares or other securities to a client, placement fee for arranging a loan between a borrower and an investor and sales commission, are recognized as revenue when the significant act has been completed.

iii) Dividend income

Dividend income is recognized when the shareholder’s right to receive payment is established. Dividend income is categorized on the classification of equity instruments.

(

)

Revenue from Contracts with Customers

The fair value of the consideration received or receivable in exchange for the initial transaction is allocated to the reward points (“points”) and the remainder of the fee income. The Group provides compensation in various forms such as payment discounts and free gifts. The consideration to be allocated to the points is estimated based on the fair value of the monetary benefits to be provided in consideration of the expected

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

recovery rate of points awarded in accordance with the customer loyalty program and the expected time of recovery. The consideration allocated to the points is recognized as a consideration to be paid to the customer and deducted from fees and commission income.

(x)

Income tax

The Group applies a consolidated tax method based on a consolidated tax base and a domestic corporation (hereinafter referred to as the “Consolidated Entity Corporation “) that is fully controlled by the consolidated parent company and the consolidated tax base.

The Group evaluates the feasibility of temporary differences, taking into account the future taxable income of individual companies and consolidated groups, respectively. The change in deferred tax assets (liabilities) was recognized as expense (income), except for the amount associated with items directly added to the equity account.

For additional temporary differences in subsidiaries, associates, and joint venture investment interests, the Group may control the timing of the disappearance of temporary differences. All deferred tax liabilities are recognized except in cases where temporary differences are unlikely to dissipate in the foreseeable future. Deferred tax assets arising from deductible temporary differences are likely to be extinguished in the foreseeable future. In addition, it is recognized when taxable income is likely to be used for temporary differences.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period. The carrying amount of deferred tax assets is reduced when it is no longer likely that sufficient taxable income will be generated to use benefits from deferred tax assets.

Tax uncertainties arise from a claim of reassessment or refund of tax that the Group made, or tax investigation etc., due to complexity of transactions or the differences between the Group’s tax policy and authority’s interpretation. In accordance with IFRIC 23, the Group recognizes tax assets when anticipating tax refund on the tax paid due to tax authorities imposing, and tax liabilities when anticipating tax payment due to tax investigations, etc. In addition, the amount expected to be paid as a result of the tax investigation is recognized as the tax liability.

The Group is subject to the Global Minimum Corporate Tax Act and applies the temporary exception to deferred tax in IAS 12. As a result, the Group does not recognize deferred tax assets and liabilities related to the Global Minimum Corporate Tax Act and does not disclose information related to the related deferred tax assets. The Group separately discloses the details of the current corporate income tax expense (income) related to the Global Minimum Corporate Tax Act.

(

)

Accounting for trust accounts

The Group accounts for trust accounts separately from its bank accounts under the Financial Investment Services and Capital Markets Act No. 114 and thus the trust accounts are not included in the accompanying consolidated financial statements. In this regard, the funds lent to the trust account are counted as trust account loans and loans borrowed from the trust account as other accounting accounts

(non-payment

of the trust account). In accordance with the Financial Investment Business Regulations, trust remuneration is acquired in connection with the operation, management, and disposal of trust property, and it is counted as the operating profit of trust business.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

(z)

The adoption of the Financial Supervisory Service’s guidelines for the application of IFRS 17

The Financial Supervisory Service issued the actuarial assumption guidelines for the application of IFRS 17. The Group has applied these guidelines, particularly regarding actuarial assumptions for

zero/low-surrender-value

insurance contracts, recognition criteria for contractual service margin, and actuarial assumptions for medical expense reimbursement insurance, and applied to the previous consolidated financial statements. In addition, the Group has applied these guidelines, particularly regarding actuarial assumptions for

zero/low-surrender-value

insurance contracts and whole life insurance with short premium payment term, and applied to the current consolidated financial statements.

(aa)

New standards and amendments not yet adopted by the Group

The following new accounting standards and amendments have been published that are not mandatory for annual periods beginning after January 1, 2024, and have not been early adopted by the Group. The Group did not early adopt the following new standards and amendments when preparing consolidated financial statements.

i) Amendment to IAS 21 ‘Effects of Changes in Foreign Exchange Rates’ and IFRS 1 ‘First-time adoption of IFRS’ — Lack of Exchangeability

These amendments define scenarios where exchanges with other currencies are considered possible for accounting purposes, clarify the assessment of exchangeability with other currencies, and specify requirements for estimating and disclosing the spot exchange rate in cases where no exchangeability exists. If exchange with other currencies is not possible, the spot exchange rate must be estimated on the measurement date using observable exchange rates without adjustment or employing alternative estimation techniques. These amendments are set for prospective application to fiscal years beginning on or after January 1, 2025, with early application permitted. The Group does not expect these amendments to have a significant impact on the consolidated financial statements.

ii) IFRS 9 ‘Financial Instruments and IFRS 7 Financial Instruments: Disclosures’ — Classification and measurement requirements of financial instruments

The amendments clarify the conditions related to the discharge of a financial liability before the settlement date when settling such financial liabilities using an electronic payment system. They further specify an interest feature, a contingent feature, financial assets with

non-recourse

features and contractually linked instruments which should be considered in assessing whether contractual cash flows of a financial asset are consistent with a basic lending arrangement. Furthermore, the amendments include additional disclosure requirements for investments in equity instruments designated at fair value through other comprehensive income and contractual terms that could change the timing or amount of contractual cash flows. The amendments are applied retrospectively for annual reporting periods beginning on or after January 1, 2026 with earlier application permitted. The Group does not expect these amendments to have a significant impact on the consolidated financial statements.

iii) IFRS 18 ‘Presentation and Disclosure in Financial Statements’

In April 2024, the IASB issued IFRS 18, ‘Presentation and Disclosure in Financial Statements’, which replaces IAS 1, ‘Presentation of Financial Statements’. While many sections have been carried forward from

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

3.	Material accounting policies (continued)

IAS 1 with limited wording changes, IFRS 18 introduces new presentation requirements within the statement of profit or loss, including specified totals and subtotals. It also requires the disclosure of management-defined performance measures and includes new requirements for the aggregation and disaggregation of financial information. Additionally, certain amendments have been made to IAS 7, ‘Statement of Cash Flows’.

IFRS 18 and the amendments to other standards are effective for reporting periods beginning on or after January 1, 2027, and the Group is currently assessing the impact of these amendments.

iv) IFRS Annual Improvements

IFRS annual improvements are applied for annual reporting periods beginning on or after January 1, 2026 with earlier application permitted. The Group believes that there will be no material impact on the consolidated financial statement.

•

IFRS 9 ‘Financial Instruments’ — Derecognition of lease liabilities and transaction price

•

IFRS 10 ‘Consolidated Financial Statements’ — Determination of ‘de facto agent’

•

IFRS 1 ‘First-time adoption of International Financial Reporting Standards’ — Hedging accounting by a first-time adopter

•

IFRS 7 ‘Financial Instruments: Disclosures’ — Gain or loss on derecognition

•

IAS 7 ‘Statement of Cash Flows’ — Cost method

4.	Significant estimates and judgments

The preparation of financial statements requires the Group to make estimates and assumptions concerning the future. Management also needs to exercise judgment in applying the Group’s accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the related actual results, it can contain a significant risk of causing a material adjustment. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

(a)

Estimation of impairment of goodwill

The Group reviews the goodwill annually in accordance with the accounting policy in Note 3. The recoverable amount of the cash-generating unit (group) is determined based on the

value-in-use

calculation. These calculations are based on estimates.

(b)

Income taxes

The Group is subject to tax laws from various countries. In the normal course of business, there are various types of transactions and different accounting methods that may add uncertainties to the decision of the final income taxes. The Group has recognized current and deferred taxes that reflect tax consequences based on the best estimates in which the Group expects, at the end of the reporting period, to recover or settle the

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

4.	Significant estimates and judgments (continued)

carrying amount of its assets and liabilities. However, actual income taxes in the future may not be identical to the recognized deferred tax assets and liabilities, and this difference can affect current and deferred tax at the period when the final tax effect is determined.

(c)

Fair value of financial instruments

The fair values of financial instruments (e.g.

over-the-counter

derivatives) which are not actively traded in the market are determined by using valuation techniques. The Group determines valuation techniques and assumptions based on significant market conditions at the end of each reporting period. Diverse valuation techniques are used to determine the fair value of financial instruments, from generic valuation techniques to internally developed valuation models that incorporate various types of assumptions and variables.

(d)

Allowance for credit loss, guarantees and unused loan commitments

The Group determines and recognizes allowances for losses on debt securities, loans and other receivables measured at amortized cost or FVOCI, and recognizes provisions for guarantees and unused loan commitments through impairment testing. The accuracy of allowances and provisions for credit losses are determined by the estimation of expected cash flows for individually assessed allowances, and methodology and assumptions used for collectively assessed allowances and provisions for groups of loans, guarantees and unused loan commitments.

(e)

Insurance contract liabilities and reinsurance contract assets (liabilities)

The Group calculates the present value of the future cash flows of the remaining benefit liabilities and incurred claims liabilities for measurement purposes. This involves estimating the neutral present value of future cash flows, considering the time value of money, adjusting for financial risks associated with future cash flows, and making risk adjustments for

non-financial

risks. The measurement of the present value of these cash flows is determined by estimating relevant market variables, assessing uncertainties regarding the amounts and timing of future cash flows, considering actuarial and economic assumptions, and other risks.

The number of coverage units in the group of insurance contracts is determined by considering the amount of benefit provided by contracts within the group

the duration of expected coverage, the frequency and recurrence of the coverage risk for all coverage units allocated to the current period.

5.	Financial risk management

(a) Overview

Shinhan Financial Group Co., Ltd. (collectively the “Group”) manages various risks that may arise within business sector and the major risks to which the Group is exposed include credit risk, market risk, interest rate risk, and liquidity risk. These risks are recognized, measured, controlled and reported in accordance with risk management guidelines established at the controlling company level and at the subsidiary level.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

i) Risk management principles

The risk management principles of the Group are as follows:

•

All business activities take into account the balance of risks and profits within a predetermined risk appetite.

•

The controlling company shall present the Group Risk Management Model Standards and supervise their compliance, and have responsibility and authority for group-level monitoring.

•

Operate a risk-related decision-making system that enhances management’s involvement.

•

Organize and operate risk management organizations independent of the business sector.

•

Operate a performance management system that clearly considers risks when making business decisions.

•

Aim for preemptive and practical risk management functions.

•

Share a cautious view to prepare for possible deterioration of the situation.

ii) Risk management organization

The basic policies and strategies for risk management of the Group are established by the Risk Management Committee (collectively the “Group Risk Management Committee”) within the controlling company’s Board of Directors. The Group’s Chief Risk Management Officer (CRO) assists the Group Risk Management Committee and consults the risk policies and strategies of the group and each subsidiary through the Group Risk Council, which includes the Chief Risk Management Officer of each subsidiary. The subsidiary implements the risk policies and strategies of the Group through each company’s risk management committee, risk-related committee, and risk management organization, and consistently establishes and implements the detailed risk policies and strategies of the subsidiary. The risk management team of the controlling company assists the Group’s chief risk management officer for risk management and supervision.

Shinhan Financial Group has a hierarchical limit system to manage the risks of the Group to an appropriate level. The Group Risk Management Committee sets the risk limits that can be assumed by the Group and its subsidiaries, while the Risk Management Committee and the Committee of each subsidiary set and manage detailed risk limits by risk, department, desk and product types.

ii-1)

Group Risk Management Committee

The Group established the risk management system for the Group and each of its subsidiaries, and comprehensively manages group risk-related matters such as establishing risk policies, limits, and approvals. The Committee consists of directors of the controlling company.

The resolution of the Committee is as follows:

•

Establish risk management basic policy in line with management strategy

•

Determine the level of risk that can be assumed by the Group and each subsidiary

•

Approve appropriate investment limit or loss allowance limit

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

•

Enact and amend the Group Risk Management Regulations and the Group Risk Council Regulations

•

Matters concerning risk management organization structure and division of duties

•

Matters concerning the operation of the risk management system

•

Matters concerning the establishment of various limits and approval of limits

•

Make decisions on approval of the FSS’s internal rating based approach for

non-retail

and retail credit rating systems

•

Matters concerning risk disclosure policy

•

Analysis of crisis situation, related capital management plan and financing plan

•

Matters deemed necessary by the board of directors

•

Materials required by external regulations such as the Financial Services Commission and other regulations and guidelines

•

Matters deemed necessary by the Chairman

The resolution of the Group Risk Management Committee is reported to the Board of Directors.

ii-2)

Group Risk Management Council

In order to maintain the Group’s risk policy and strategy consistently, the Group decides what is necessary to discuss the risks of the Group and to carry out the policies set by the Group Risk Management Committee. The members are chaired by the Group’s risk management officer and consist of the risk management officers of major subsidiaries.

iii) Group Risk Management System

iii-1)

Management of the risk capital

Risk capital refers to the capital required to compensate for the potential loss (risk) if it is actually realized. Risk capital management refers to the management of the risk assets considering its risk appetite, which is a datum point on the level of risk burden compared to available capital, so as to maintain the risk capital at an appropriate level. The Group and subsidiaries establish and operate a risk planning process to reflect the risk plan in advance when establishing financial and business plans for risk capital management, and establish a risk limit management system to control risk to an appropriate level.

iii-2)

Risk Monitoring

In order to proactively manage risks by periodically identifying risk factors that can affect the Group’s business environment, the Group has established a multi-dimensional risk monitoring system. Each subsidiary is required to report to the Group on key issues that affect risk management at the Group level. The Group prepares weekly, monthly and occasional monitoring reports to report to Group management including the CRO.

In addition, the Risk Dashboard is operated to derive abnormal symptoms through three-dimensional monitoring of major portfolios, increased risks, and external environmental changes of assets for each subsidiary. If necessary, the Group takes preemptive risk management to establish and implement countermeasures.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

iii-3)

Risk Reviewing

When conducting new product, new business and major policy changes, risk factors are reviewed by using a

pre-defined

checklist to prevent indiscriminate promotion of business that is not easy to judge risk and to support rational decision making. The subsidiary’s risk management department conducts a preliminary review and post-monitoring process on products, services, and projects to be pursued in the business division. In case of matters that are linked or jointly promoted with other subsidiaries, the risk reviews are carried out after prior-consultation with the risk management department of the Group.

iii-4)

Crisis management

The Group maintains a group wide crisis management system to detect the signals of any risk crisis preemptively and, in the event of a crisis actually happening, to respond on a timely, efficient and flexible basis so as to ensure the Group’s survival as a going concern. Each subsidiary maintains crisis planning for four levels of contingencies, namely, ‘cautious’, ‘alert’, ‘imminent crisis’ and ‘crisis’ determination of which is made based on quantitative and qualitative monitoring and consequence analysis, and upon the happening of any such contingency, is required to respond according to a prescribed contingency plan. At the controlling company level, the Group maintains and installs crisis detection and response system which is applied consistently group-wide, and upon the happening of any contingency at two or more subsidiary level, the Group directly takes charge of the situation so that the Group manages it on a concerted group wide basis.

(b)

Credit risk

Credit risk is the risk of potential economic loss that may be caused if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and is the largest risk which the Group faces. The Group’s credit risk management encompasses all areas of credit that may result in potential economic loss, including not just transactions that are recorded on the balance sheet, but also

off-balance-sheet

transactions such as guarantees, loan commitments and derivative transactions.

Shinhan Bank’s basic policy on credit risk management is determined by the Risk Policy Committee. The Risk Policy Committee consists of the chairman of the Chief Risk Officer (CRO), the Chief Credit Officer (CCO), the head of the business group, and the head of the risk management department. The Risk Policy Committee decides the credit risk management plan and the direction of the loan policy for the entire bank. Apart from the Risk Policy Committee, the Credit Review Committee is established to separate credit monitoring, such as large loans and limit approval, and is composed of chairman, the CCO, CRO and the head of the Group in charge of the credit-related business group, the head of the credit planning department, and the senior examination team to enhance the credit quality of the loan and profitability of operation.

Shinhan Bank’s credit risk management includes processes such as credit evaluation, credit monitoring and supervision, credit risk measurement of counterparties and limit management processes and credit risk measurements for portfolios. All loan customers of Shinhan Bank are evaluated and managed with credit ratings. Retail customers are evaluated by summing up customer information from Shinhan Bank’s internal information and external credit information, and the corporate customers are evaluated by considering financial and

non-financial

items such as industrial risk, operating risk, and management risk. The evaluated credit rating is used for credit approval, limit management, pricing, credit loss provisioning, etc., and is the basis for credit risk management. The credit evaluation system is divided into an evaluation system for retail

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

customers, a small office home office (SOHO) evaluation system, and an evaluation system for corporate customers. It is subdivided and refined by each model to reflect the Basel III requirements. The corporate credit decision is based on a collective decision-making system, making objective and prudent decisions. In the case of a general credit of loans, the credit is approved based on the consultation between branch RM’s (Relationship Manager) and loan officers of each business division’s headquarters. In the case of a large or important credit, the credit is approved by the review council. In particular, the Credit Review Committee, the highest decision-making body for loan approvals, reviews for important loans such as large loans. Credits for retail customers are monitored by an automated credit scoring systems (CSS) based on objective statistical methods and bank credit policies.

Shinhan Bank operates a regular monitoring system for the regular management of individual loans. The loan officers and RM’s evaluate the adequacy of the result of the loan review by automatically searching for anticipated insolvent companies among business loan partners, and if necessary, the credit rating of the corporate is adjusted. In accordance with these procedures, corporate customers are classified either as an early warning company, an observation company, or a normal company, and then managed differently according to management guidelines for each risk classification, thereby mitigating the risk of insolvency of the loan at an early stage. The financial analysis support system affiliated with a professional credit rating agency supports credit screening and management, and the credit planning department calculates and manages industrial grades, and analyzes and provides industry trends and company information. In order to control the credit risk for the credit portfolio to an appropriate level, credit VaR limits are set and managed for each business and business sector, and to prepare for the credit risk caused by biased exposure to specific sectors, the Group sets and manages exposure limits for each sector by party, industry, country, etc.

Shinhan Card’s basic policy on credit risk is determined by the Risk Management Committee. The Risk Management Committee (RMC) consists of the Risk Management Officer (CRO) as the chairperson, and is composed of the heads of each business group and supporting group and the heads of related departments. Apart from the RMC, a credit committee in charge of monitoring corporate credits and other important credits over a certain amount, has been established to separate credit policy decisions from credit monitoring.

Shinhan Card’s credit rating system is divided into ASS (Application Scoring System) and BSS (Behavior Scoring System). Unless a customer falls under “rejection due to policy” (such circumstances include delinquency of other credit card companies) and his/her credit rating is above a certain rate, an application of ASS is approved. There is a separate screening criterion for credit card customers, who have maintained a long-term relationship with Shinhan Financial Group and have a good credit history. In addition, the elements of credit ratings are used as the basis for setting limits when issuing cards. The BSS, which is recalculated monthly, predicts the delinquency probability of cardholders, and is utilized to monitor member and portfolio risk.

i) Techniques, assumptions and input variables used to measure impairment

i-1)

Determining significant increases in credit risk since initial recognition

At the end of each reporting period, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

To make the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, and is indicative of significant increases in credit risk since initial recognition. Information includes the default experience data held by the Group and analysis by an internal credit rating expert.

① Measuring the risk of default

The Group assigns an internal credit risk rating to each individual exposure based on observable data and historical experiences that have been found to have a reasonable correlation with the risk of default. The internal credit risk rating is determined by considering both qualitative and quantitative factors that indicate the risk of default, which may vary depending on the nature of the exposure and the type of borrower.

② Measuring term structure of probability of default

Internal credit risk ratings are the main variable input to determine the duration structure for the risk of default. The Group accumulates information after analyzing the information regarding exposure to credit risk and default information by the type of product and borrower and results of internal credit risk assessment. For some portfolios, the Group uses information obtained from external credit rating agencies when performing these analyzes.

The Group applies statistical techniques to estimate the probability of default for the remaining life of the exposure from the accumulated data and to estimate changes in the estimated probability of default over time.

③ Significant increases in credit risk

The Group uses the indicators defined as per portfolio to determine the significant increase in credit risk and such indicators generally consist of changes in the risk of default estimated from changes in the internal credit risk rating, qualitative factors, days of delinquency, and others. The method used to determine whether credit risk of financial instruments has significantly increased after the initial recognitions is summarized as follows:


Corporate exposures	Retail exposures	Card exposures
Significant change in credit ratings	Significant change in credit ratings	Significant change in credit ratings

Continued past due more than 30 days	Continued past due more than 30 days	Continued past due more than 7 days (personal card)

Loan classification of precautionary or below	Loan classification of precautionary or below	Loan classification of precautionary or below

Borrower with early warning signals	Borrower with early warning signals	Specific delinquent pool segment

Negative net assets	Specific pool segment

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


Corporate exposures	Retail exposures	Card exposures

Adverse audit opinion or disclaimer of opinion	Collective loans for housing for which the constructors are insolvent

Interest coverage ratio below 1 for a consecutive period of three years or negative cash flows from operating activities for a consecutive period of two years	Loans with identified indicators for significant increases in other credit risk

Loans with identified indicators for significant increases in other credit risk

The Group assumes that the credit risk of the financial instrument has been increased significantly since initial recognition if a specific exposure is past due more than 30 days (except, for card exposures if it is past due more than 7 days). The Group counts the number of days past due from the earliest date on which the Group fails to fully receive the contractual payments from the borrower, and does not take into account any grace period granted to the borrower.

The Group regularly reviews the criteria for determining if there has been a significant increase in credit risk from the following perspective:

•

A significant increase in credit risk shall be identified prior to the occurrence of default.

•

The criteria established to judge the significant increase in credit risk shall have a more predictive power than the criteria for days of delinquency.

•

As a result of applying the judgment criteria, management would not expect frequent movement between the

12-month

expected credit loss accumulation target and the entire period expected credit loss accumulation target.

i-2)

Modified financial assets

If the contractual cash flows on a financial asset have been modified through renegotiation and the financial asset is not derecognized, the Group assesses whether there has been a significant increase in the credit risk of the financial instrument by comparing the risk of a default occurring at initial recognition based on the original, unmodified contractual terms and the risk of a default occurring at the reporting date based on the modified contractual terms.

The Group may adjust the contractual cash flows of loans to customers who are in financial difficulties in order to manage the risk of default and enhance the collectability (hereinafter referred to as ‘debt restructuring’). These adjustments generally involve extension of maturity, changes in interest payment schedule, and changes in other contractual terms.

Debt restructuring is a qualitative indicator of a significant increase in credit risk and the Group recognizes lifetime expected credit losses for the exposure expected to be the subject of such adjustments. If a borrower faithfully makes payments of contractual cash flows that are modified in accordance with the debt restructuring or if the borrower’s internal credit rating has recovered to the level prior to the recognition of the lifetime expected credit losses, the Group recognizes the

12-month

expected credit losses for that exposure again.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

i-3)

Risk of default

The Group considers a financial asset to be in default if it meets one or more of the following conditions:

•

If a borrower is overdue 90 days or more from the contractual payment date,

•

If the Group judges that it is not possible to recover principal and interest without enforcing the collateral on a financial asset

The Group uses the following indicators when determining whether a borrower is in default:

•

Qualitative factors (e.g. breach of contractual terms),

•

Quantitative factors (e.g. if the same borrower does not perform more than one payment obligations to the Group, the number of days past due per payment obligation. However, in the case of a specific portfolio, the Group uses the number of days past due for each financial instrument),

•

Internal observation data and external data

The definition of default applied by the Group generally conforms to the definition of default defined for regulatory capital management purposes; however, depending on the situations, the information used to determine whether a default has occurred and the extent thereof may vary.

i-4)

Reflection of forward-looking information

The Group reflects future forward-looking information presented by a group of internal experts based on various information when measuring expected credit losses. The Group utilizes economic forecasts disclosed by domestic and foreign research institutes, governments, and public institutions to predict forward-looking information.

The Group reflects future macroeconomic conditions anticipated from a neutral standpoint that is free from bias in measuring expected credit losses. Expected credit losses in this respect reflect conditions that are most likely to occur and are based on the same assumptions that the Group used in its business plan and management strategy.

The Group analyzed data from its past experience, derived correlations between major macroeconomic variables and credit risks required for predicting credit risk and credit loss for each portfolio, and then reflected future forecast information through a regression estimation. To reflect external and internal economic uncertainties, the Group has incorporated the forward-looking information by reviewing an additional worst-case scenario along with the three existing scenarios of upside, central and downside.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

For the years ended December 31, 2023 and 2024, macroeconomic variables used by the Group are as follows for each scenario.

① Upside scenario


Major variables (1),(2),(*3)	Correlation between credit risks	2023.4Q			2024
Major variables (1),(2),(*3)	Correlation between credit risks	2023.4Q			1Q			2Q			3Q		4Q
GDP growth rate (YoY %)	(-)		2.1			2.2			2.1			2.2		2.1
Private consumption index (YoY %)	(-)		1.8			1.7			2.3			2.5		2.4
Facility investment growth rate (YoY %)	(-)		(6.4	)		(0.6	)		(0.2	)		4.0		5.0
Consumer price index growth rate (%)	(+)		3.2			2.6			2.4			2.1		1.8
Balance on current account (100 million dollars)	(-)		140.0			80.0			90.0			130.0		150.0
Government bond 3y yields (%)	—		3.7			3.6			3.6			3.3		3.1

② Central scenario


Major variables (1),(2),(*3)	Correlation between credit risks	2023.4Q			2024
Major variables (1),(2),(*3)	Correlation between credit risks	2023.4Q			1Q			2Q			3Q		4Q
GDP growth rate (YoY %)	(-)		1.5			1.6			1.4			1.5		1.8
Private consumption index (YoY %)	(-)		0.9			0.7			1.2			1.4		2.0
Facility investment growth rate (YoY %)	(-)		(7.5	)		(2.0	)		(1.7	)		2.4		3.9
Consumer price index growth rate (%)	(+)		3.4			2.8			2.8			2.5		2.1
Balance on current account (100 million dollars)	(-)		130.0			70.0			80.0			110.0		140.0
Government bond 3y yields (%)	—		3.7			3.6			3.6			3.5		3.3

③ Downside scenario


Major variables (1),(2),(*3)	Correlation between credit risks	2023.4Q			2024
Major variables (1),(2),(*3)	Correlation between credit risks	2023.4Q			1Q			2Q			3Q		4Q
GDP growth rate (YoY %)	(-)		1.1			1.1			0.8			0.9		1.2
Private consumption index (YoY %)	(-)		0.4			0.0			0.3			0.6		1.0
Facility investment growth rate (YoY %)	(-)		(8.3	)		(3.8	)		(4.0	)		0.2		1.4
Consumer price index growth rate (%)	(+)		3.6			3.2			3.2			3.0		2.7
Balance on current account (100 million dollars)	(-)		120.0			60.0			70.0			100.0		120.0
Government bond 3y yields (%)	—		3.7			3.7			3.6			3.6		3.6

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

④ Worst scenario


Major variables (1),(2),(*4)	Correlation between credit risks	Economic Crisis for 1 year
Major variables (1),(2),(*4)	Correlation between credit risks	Economic Crisis for 1 year
GDP growth rate (YoY %)	(-)		(5.1	)
Private consumption index (YoY %)	(-)		(11.9	)
Facility investment growth rate (YoY %)	(-)		(38.6	)
Consumer price index growth rate (%)	(+)		7.5
Balance on current account (100 million dollars)	(-)		401.1
Government bond 3y yields (%)	—		6.7

(*1)

As a result of examining the correlation between each variable, Shinhan Bank applied the GDP growth rate and private consumption index increase rate, etc. as the major variables to reflect the final forward-looking information, while, Shinhan Card applied the private consumption rate and CPI increase rate, etc. as the major variables. In addition to the table above, the Group has selected unemployment rate and KOSPI forecasts.

(*2)

Considering the default forecast period, the Group reflected the future economic outlook.

(*3)

The macroeconomic outlook figures are estimated by the Group for the purpose of calculating expected credit losses based on information from domestic and foreign research institutes. Therefore, it could be different from other institutions’ estimates.

(*4)

Shinhan Bank and Jeju Bank reviewed and reflected the Worst scenario (during the foreign exchange crisis) in addition to the three scenarios of Upside, Central and Downside.

① Upside scenario


Major variables (1),(2),(*3)	Correlation between credit risks		2024.4Q		2025
Major variables (1),(2),(*3)	Correlation between credit risks		2024.4Q		1Q		2Q		3Q		4Q
GDP growth rate (YoY %)		(-)		2.1		1.5		2.4		3.2		2.8
Private consumption index (YoY %)		(-)		1.2		1.6		2.5		2.6		2.5
Facility investment growth rate (YoY %)		(-)		4.9		4.4		6.5		1.2		3.5
Consumer price index growth rate (%)		(+)		1.6		2.2		2.4		2.4		2.3
Balance on current account (100 million dollars)		(-)		220.0		210.0		190.0		180.0		200.0
Government bond 3y yields (%)		—		2.8		3.1		3.2		3.2		3.2
② Central scenario
Major variables (1),(2),(*3)	Correlation between credit risks		2024.4Q		2025
Major variables (1),(2),(*3)	Correlation between credit risks		2024.4Q		1Q		2Q		3Q		4Q
GDP growth rate (YoY %)		(-)		2.1		1.2		2.0		2.4		2.2
Private consumption index (YoY %)		(-)		1.2		1.3		2.1		2.0		1.8
Facility investment growth rate (YoY %)		(-)		4.9		4.0		5.8		0.8		2.5
Consumer price index growth rate (%)		(+)		1.6		1.9		2.1		2.1		2.0
Balance on current account (100 million dollars)		(-)		200.0		190.0		170.0		160.0		180.0
Government bond 3y yields (%)		—		2.8		2.9		2.9		3.0		2.9

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

③ Downside scenario


Major variables (1),(2),(*3)	Correlation between credit risks	2024.4Q		2025
Major variables (1),(2),(*3)	Correlation between credit risks	2024.4Q		1Q		2Q		3Q		4Q
GDP growth rate (YoY %)	(-)		2.1		0.8		1.4		1.7		1.0
Private consumption index (YoY %)	(-)		1.2		0.9		1.5		1.1		0.6
Facility investment growth rate (YoY %)	(-)		4.9		2.8		4.5		0.2		1.3
Consumer price index growth rate (%)	(+)		1.6		1.6		1.8		1.8		1.7
Balance on current account (100 million dollars)	(-)		170.0		160.0		140.0		120.0		130.0
Government bond 3y yields (%)	—		2.8		2.8		2.7		2.4		2.2

④ Worst scenario


Major variables (1),(2),(*4)	Correlation between credit risks	Economic Crisis for 1 year
Major variables (1),(2),(*4)	Correlation between credit risks	Economic Crisis for 1 year
GDP growth rate (YoY %)	(-)		(5.1	)
Private consumption index (YoY %)	(-)		(11.9	)
Facility investment growth rate (YoY %)	(-)		(38.6	)
Consumer price index growth rate (%)	(+)		7.5
Balance on current account (100 million dollars)	(-)		401.1
Government bond 3y yields (%)	—		6.18

(*1)

As a result of examining the correlation between each variable, the Group applied key variables to reflect the final future economic outlook. Shinhan Bank applied key variables such as GDP growth rate, current account balance, and

3-year

government bond yield, while Shinhan Card applied key variables such as GDP growth rate. In addition to the table above, the Group has selected macroeconomic indicators such as KOSPI index.

(*2)

Considering the default forecast period, the Group reflected the future economic outlook.

(*3)

(*4)

Reflected considering the foreign exchange crisis.

The predicted correlations between the macroeconomic variables and the risk of default, used by the Group, are derived based on long-term data over the past ten years.

Since 2020, the Group has been implementing various policy support measures in response to the economic downturn caused by

COVID-19.

The Group manages the credit risk through classifying borrowers in moratorium of interest payments and moratorium of repayment that is one of the financial relief programs into Stage2 to reflect the impact of potential insolvency. In addition, credit risk is managed through additional expected loss assessments for

non-retail

and retail SOHO loans of borrowers holding the relevant loans, extended maturity loans and estimated loss loans from financial support programs. The Group has considered multiple economic scenarios in applying forward-looking information to measure the expected credit losses. When assuming a 100% weighting of Upside, Central, Downside and Worst scenarios, while keeping all other assumptions unchanged, the sensitivity to the Group’s provision for expected credit loss is not significant for both the current and prior periods.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

i-5)

Measurement of expected credit losses

Key variables used in measuring expected credit losses are as follows:

•

Probability of default (“PD”)

•

Loss given default (“LGD”)

•

Exposure at default (“EAD”)

These variables have been estimated from historical experience data by using the statistical techniques developed internally by the Group and have been adjusted to reflect forward-looking information.

Estimates of PD over a specified period are estimated by reflecting characteristics of counterparties and their exposure, based on a statistical model at a specific point of time. The Group uses its own information to develop a statistical credit assessment model used for the estimation, and additional information observed in the market is considered for some portfolios such as a group of large corporates. When a counterparty or exposure is concentrated in specific grades, the method of measuring PD for those grades would be adjusted, and the PD by grade is estimated by considering contract expiration of the exposure.

LGD refers to the expected loss if a borrower defaults. The Group calculates LGD based on the experience recovery rate measured from past default exposures. The model for measuring LGD is developed to reflect type of collateral, seniority of collateral, type of borrower, and cost of recovery. In particular, LGD for retail loan products uses loan to value (LTV) as a key variable. The recovery rate reflected in the LGD calculation is based on the present value of recovery amount, discounted at the effective interest rate.

EAD refers to the expected exposure at the time of default. The Group derives EAD reflecting a rate at which the current exposure is expected to be used additionally up to the point of default within the contractual limit. EAD of financial assets is equal to the total carrying amount of the asset, and EAD of loan commitments or financial guarantee contracts is calculated as the sum of the amount expected to be used in the future.

In measuring expected credit losses on financial assets, the Group uses the contractual maturity as the period subject to expected credit loss measurement. The contractual maturity is computed taking into account the extension right held by the borrower.

Risk factors of PD, LGD and EAD are collectively estimated according to the following criteria:

•

Type of products

•

Internal credit risk rating

•

Type of collateral

•

Loan to value (“LTV”)

•

Industry that the borrower belongs to

•

Location of the borrower or collateral

•

Days of delinquency

The criteria classifying groups is periodically reviewed to maintain homogeneity of the group and adjusted if necessary. The Group uses external benchmark information to supplement internal information for a particular portfolio that did not have sufficient internal data accumulated from the past experience.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

i-6)

Write-off

of financial assets

The Group writes off a portion of or entire loan or debt security that is not expected to receive its principal and interest. In general, the Group conducts

write-off

when it is deemed that the borrower has no sufficient resources or income to repay the principal and interest. Such determination on

write-off

is carried out in accordance with the internal rules of the Group and is carried out with the approval of an external institution, if necessary. Apart from

write-off,

the Group may continue to exercise its right of collection under its own recovery policy even after the

write-off

of financial assets.

ii) Maximum exposure to credit risk

Exposure to credit risk is the exposure related to due from banks, loans, investments in debt securities, derivative transactions,

off-balance

sheet accounts such as loan commitment. The exposures of due from banks and loans are classified into government, bank, corporation or retail based on the exposure classification criteria of BASEL III credit risk weights, and the net carrying amount, excluding provisions, is presented as the maximum amount that can be exposed by credit risk.

The Group’s maximum exposure to credit risk without taking into account of any collateral held or other credit enhancements as of December 31, 2023 and 2024 is as follows:


	2023		2024
Due from banks and loans at amortized cost (1),(3):
Banks	W	15,099,247		14,058,051
Retail		177,454,344		199,809,576
Government/Public sector/Central bank		21,981,065		27,228,308
Corporations		202,763,657		218,713,457
Card receivable		26,896,950		27,714,596

		444,195,263		487,523,988

Due from banks and loans at fair value through profit or loss (*3):
Banks		238,740		134,609
Corporations		1,550,565		1,780,787

		1,789,305		1,915,396

Securities at fair value through profit or loss		65,575,798		67,134,121
Securities at fair value through other comprehensive income		88,637,000		92,016,210
Securities at amortized cost (*1)		35,686,487		33,315,999
Derivative assets		4,711,421		10,279,257
Other financial assets (1),(2)		26,880,554		23,116,960
Guarantee contracts		18,374,287		22,509,195
Loan commitments and other credit liabilities		212,078,870		218,980,794

	W	897,928,985		956,791,920

(*1)

The maximum exposure amounts for due from banks, loans, securities at amortized cost and other financial assets at amortized cost are recorded as net of allowances.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	12-month expected credit loss				Life time expected credit loss						Total		Allowances			Net		Mitigation of credit risk due to collateral
	Grade 1		Grade 2		Grade 1		Grade 2		Impaired		Total		Allowances			Net		Mitigation of credit risk due to collateral
Due from banks and loans at amortized cost:
Banks	W	11,740,875		2,027,427		254,625		60,114		—		14,083,041		(24,990	)		14,058,051		27,874
Retail		177,166,099		6,397,386		11,714,193		4,387,929		1,198,594		200,864,201		(1,054,625	)		199,809,576		151,610,129
Government/Public sector/Central bank		25,118,226		2,030,126		83,783		49		—		27,232,184		(3,876	)		27,228,308		2,500
Corporations		117,893,181		55,345,067		20,324,015		25,633,821		1,880,868		221,076,952		(2,363,495	)		218,713,457		117,575,757
Card receivable		21,631,071		2,974,287		1,170,078		2,436,456		642,991		28,854,883		(1,140,287	)		27,714,596		18,881

		353,549,452		68,774,293		33,546,694		32,518,369		3,722,453		492,111,261		(4,587,273	)		487,523,988		269,235,141

Securities at fair value through other comprehensive income (*)		83,218,889		8,736,563		10,034		50,724		—		92,016,210		—			92,016,210		—
Securities at amortized cost		31,103,200		2,219,343		—		3,644		—		33,326,187		(10,188	)		33,315,999		—

	W	467,871,541		79,730,199		33,556,728		32,572,737		3,722,453		617,453,658		(4,597,461	)		612,856,197		269,235,141

(*)

Credit loss allowance recognized as other comprehensive income of securities at fair value through other comprehensive income amounted to

42,477 million and

38,346 million as of December 31, 2023 and 2024.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

v) Credit risk exposures per credit grade of

off-balance

items

Credit risk exposures per credit grade of

off-balance

items as of December 31, 2023 and 2024 are as follows:


	2023
	Grade 1		Grade 2		Impaired		Total
Guarantee contracts:
12-month expected credit loss	W	15,112,974		2,578,086		—		17,691,060
Life time expected credit loss		513,229		168,287		—		681,516
Impaired		—		—		1,711		1,711

		15,626,203		2,746,373		1,711		18,374,287

Loan commitment and other credit line
12-month expected credit loss		181,662,271		19,763,504		—		201,425,775
Life time expected credit loss		7,510,601		3,138,342		—		10,648,943
Impaired		—		—		4,152		4,152

		189,172,872		22,901,846		4,152		212,078,870

	W	204,799,075		25,648,219		5,863		230,453,157


	2024
	Grade 1		Grade 2		Impaired		Total
Guarantee contracts:
12-month expected credit loss	W	19,212,434		2,786,804		—		21,999,238
Life time expected credit loss		361,440		127,153		—		488,593
Impaired		—		—		21,364		21,364

		19,573,874		2,913,957		21,364		22,509,195

Loan commitment and other credit line
12-month expected credit loss		183,928,715		21,687,932		—		205,616,647
Life time expected credit loss		10,370,570		2,988,286		—		13,358,856
Impaired		—		—		5,291		5,291

		194,299,285		24,676,218		5,291		218,980,794

	W	213,873,159		27,590,175		26,655		241,489,989

vi) Credit qualities are classified based on the internal credit rating as follows:


Type of Borrower	Grade 1	Grade 2
Individuals	Probability of default below 2.25% for each pool	Probability of default 2.25% or above for each pool
Government/Public agency/Central bank	OECD sovereign credit rating of 6 or above	OECD sovereign credit rating of below 6
Banks and Corporations (Including credit card bond)	Internal credit rating of BBB+ or above	Internal credit rating of below BBB+
Card receivables (Individuals)	Behavior scoring system of 7 grade or above	Behavior scoring system of below 7 grade

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
Classification (*)	Korea		USA		UK		Japan		Germany		Vietnam		China		Other		Total
Due from banks and loans at amortized cost
Banks	W	6,303,730		1,284,361		624,468		334,073		354,583		1,295,863		1,633,954		2,227,019		14,058,051
Retail		185,102,271		506,525		7,064		5,165,687		3,399		4,391,692		2,002,467		2,630,471		199,809,576
Government/Public sector/Central bank		21,716,534		1,018,284		—		1,914,100		197,042		334,366		360,451		1,687,531		27,228,308
Corporations		189,219,966		5,203,409		789,820		7,075,869		218,422		4,533,648		3,125,771		8,546,552		218,713,457
Card receivable		27,356,847		12,469		528		2,992		330		274,884		42,310		24,236		27,714,596

		429,699,348		8,025,048		1,421,880		14,492,721		773,776		10,830,453		7,164,953		15,115,809		487,523,988

Deposits and loans at FVTPL
Banks		99,159		35,450		—		—		—		—		—		—		134,609
Corporations		1,457,224		163,511		—		15,402		—		5,193		—		139,457		1,780,787

		1,556,383		198,961		—		15,402		—		5,193		—		139,457		1,915,396

Securities measured at FVTPL		61,955,771		3,321,700		377,462		135,194		2,564		—		7,144		1,334,286		67,134,121
Securities at FVOCI		81,294,290		5,367,178		441,203		564,635		35,026		50,368		708,567		3,554,943		92,016,210
Securities at amortized cost		31,113,242		207,817		—		499,988		—		761,386		116,944		616,622		33,315,999

		605,619,034		17,120,704		2,240,545		15,707,940		811,366		11,647,400		7,997,608		20,761,117		681,905,714

Off-balance accounts
Guarantees		20,517,889		579,426		250,938		44,186		9,663		199,535		511,891		395,667		22,509,195
Loan commitments and other liabilities related to credit		206,833,657		1,873,831		290,909		352,256		87,212		2,187,736		2,158,798		5,196,395		218,980,794

	W	227,351,546		2,453,257		541,847		396,442		96,875		2,387,271		2,670,689		5,592,062		241,489,989

(*)	The amounts by geographic location are presented as the net carrying amount after deducting allowances for loan losses.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

ix) Concentration by industry sector

An analysis of concentration by industry sector of financial instrument, net of allowance, as of and December 31, 2023 and 2024 is as follows:


	2023
Classification (*)	Finance and insurance		Manufacturing		Retail and wholesale		Real estate and business		Construction service		Lodging and Restaurant		Other		Retail customers		Total
Due from banks and loans at amortized cost:
Banks	W	14,677,168		—		—		—		—		—		422,079		—		15,099,247
Retail		—		—		—		—		—		—		—		177,454,344		177,454,344
Government/Public sector/Central bank		21,767,450		—		—		—		—		—		213,615		—		21,981,065
Corporations		17,974,146		58,338,956		23,517,815		47,301,730		4,823,554		6,730,886		44,076,570		—		202,763,657
Card receivable		56,507		276,256		284,905		71,169		45,769		19,810		948,359		25,194,175		26,896,950

		54,475,271		58,615,212		23,802,720		47,372,899		4,869,323		6,750,696		45,660,623		202,648,519		444,195,263

Due from banks and loans at FVTPL
Banks		30,743		—		—		49,526		99,043		—		59,428		—		238,740
Corporations		1,037,896		235,232		105,890		70,716		—		1,000		99,831		—		1,550,565

		1,068,639		235,232		105,890		120,242		99,043		1,000		159,259		—		1,789,305

Securities measured at FVTPL		35,228,859		3,211,188		1,175,495		1,308,223		98,864		68,630		24,484,539		—		65,575,798
Securities at FVOCI		30,283,670		2,934,740		734,170		1,698,290		1,774,505		31,055		51,180,570		—		88,637,000
Securities at amortized cost		11,514,420		9,961		—		354,906		284,080		—		23,523,120		—		35,686,487

		132,570,859		65,006,333		25,818,275		50,854,560		7,125,815		6,851,381		145,008,111		202,648,519		635,883,853

Off-balance accounts
Guarantees		2,518,182		9,139,168		3,504,409		119,573		152,112		60,077		2,601,841		278,925		18,374,287
Loan commitments and other liabilities related to credit		17,773,113		32,356,393		10,328,099		4,715,541		2,471,645		428,695		17,788,097		126,217,287		212,078,870

	W	20,291,295		41,495,561		13,832,508		4,835,114		2,623,757		488,772		20,389,938		126,496,212		230,453,157

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
Classification (*)	Finance and insurance		Manufacturing		Retail and wholesale		Real estate and business		Construction service		Lodging and Restaurant		Other		Retail customers		Total
Due from banks and loans at amortized cost:
Banks	W	13,495,577		—		—		—		—		—		562,474		—		14,058,051
Retail		—		—		—		—		—		—		—		199,809,576		199,809,576
Government/Public sector/Central bank		27,042,097		—		—		—		—		—		186,211		—		27,228,308
Corporations		22,485,184		62,200,259		23,447,863		47,109,684		5,409,739		6,735,852		51,324,876		—		218,713,457
Card receivable		81,613		323,992		288,452		65,256		51,107		20,277		1,189,255		25,694,644		27,714,596

		63,104,471		62,524,251		23,736,315		47,174,940		5,460,846		6,756,129		53,262,816		225,504,220		487,523,988

Due from banks and loans at FVTPL
Banks		35,450		—		—		—		99,159		—		—		—		134,609
Corporations		859,295		391,667		301,658		149,652		10,000		—		68,515		—		1,780,787

		894,745		391,667		301,658		149,652		109,159		—		68,515		—		1,915,396

Securities measured at FVTPL		34,194,979		3,634,273		1,286,997		2,149,229		304,020		136,364		25,428,259		—		67,134,121
Securities at FVOCI		35,854,914		2,636,678		712,936		1,790,042		1,056,603		12,160		49,952,877		—		92,016,210
Securities at amortized cost		9,761,249		19,984		—		539,416		260,379		—		22,734,971		—		33,315,999

		143,810,358		69,206,853		26,037,906		51,803,279		7,191,007		6,904,653		151,447,438		225,504,220		681,905,714

Off-balance accounts
Guarantees		3,733,957		11,712,348		3,548,909		92,172		179,255		115,827		3,113,748		12,979		22,509,195
Loan commitments and other liabilities related to credit		18,218,204		34,199,306		10,324,128		4,325,044		2,408,759		531,832		20,644,317		128,329,204		218,980,794

	W	21,952,161		45,911,654		13,873,037		4,417,216		2,588,014		647,659		23,758,065		128,342,183		241,489,989

(*)	The amounts by industry sector are presented as the net carrying amount after deducting allowances for loan losses.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

(c)

Market risk

i) Market risk management from trading positions

i-1)

Concept of Market risk

Market risk is defined as the risk of loss of trading account position of financial institutions due to changes on market price, such as interest rates, exchange rates and stock prices, etc. and is divided into general market risks and individual risks. A general market risk refers to a loss from price variability caused by events affecting the market as a whole, such as interest rates, exchange rates and stock prices; and an individual risk refers to a loss from price variability related to individual events of securities issuer, such as bonds and stocks.

i-2)

Market Risk Management Method

The basic principle of market risk management in the trading sector is to maintain the maximum possible loss due to market risk within a certain level. To this end, the Group sets and operates VaR limits, investment limits, position limits, sensitivity limits, and loss limits from the portfolio to individual desks. These limits are managed daily by the department in charge of risk management, independent from the operating department.

Trading positions refer to all transactions for holding purposes such as short-term resale, profit seeking through short-term price fluctuations, risk-free arbitrage, and risk hedging. Trading positions refer to securities, foreign exchange positions, and derivative financial instruments held for the purpose of obtaining short-term trading gains. As a method of measuring market risk, VaR (Value at Risk) is typical, and it is a statistical measurement of the potential maximum loss that can occur due to changes in market conditions. VaR calculates the standard method market risk using the Group Market Risk Measurement System, and Shinhan Bank calculates the standard method market risk using its own model market risk calculation system. Shinhan Financial Investment uses its own market risk calculation system to calculate historical simulation VaR and the Group market risk system to calculate standard method market risk.

Stress tests are conducted to supplement risk measurement by statistical methods and to manage losses that may arise from rapid changes in the economic environment.

Shinhan Bank measures the risk of trading account products by applying market risk standard methods. The trading account calculates market risk if it is for holding purposes such as short-term resale, profit seeking through short-term price fluctuations, risk-free arbitrage, and risk hedging. The standard approach calculates and aggregates sensitivity risk, default risk, and residual risk. Sensitivity risk measures coverage of general interest rates, credit spreads, stocks, commodity, and delta and vega of foreign exchange. Delta refers to the change in product value due to changes in the price of the underlying asset, and vega refers to the change in product value due to changes in the volatility of the underlying asset. Curvature is defined as a loss that exceeds the delta risk in the event of an upward or downward shock to the underlying asset. Sensitivity risk is designed to measure both linear and

non-linear

risks of factors affecting value fluctuations regardless of the characteristics of the product. Default risk measures the discrete default risk of the underlying asset that cannot be captured in sensitivity risk. Complete offsetting between purchase and sale exposures of the same borrower is possible. Residual risk is a concept that calculates additional risk because sensitivity risk and default risk are not accurately measured when there is a special profit/loss structure or the underlying asset is special.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

Trading position data is automatically interfaced into management system, and the system conducts VaR measurement and manages the limit. In addition, Shinhan Bank sets loss limit, sensitivity limit, investment limit, stress limit, etc. for Trading Department and desks, and monitors daily.

Shinhan Securities measures daily market risk by applying historical simulation VaR method of 99.9% confidence level-based VaR. It also measures market risk standard methods to ensure consistent market risk management at the Group level. Historical simulation VaR method does not require assumption on a particular distribution since the method derives scenarios directly from historical market data, and measures

non-linear

products, such as options, in details. In addition to the VaR limit, Shinhan Securities sets and manages issuance and transaction limit, and stop-loss limit for each department.

An analysis of the Group’s requisite capital for market risk related to trading positions as of December 31, 2023 and 2024, based on the standard guidelines for risk management promulgated by the Financial Supervisory Service, including the minimum, maximum, and average risk amounts during the reporting period, is as follows:


	2023		2024
Sensitivity risk
GIRR (*1)	W	276,940		257,705
CSR-Non-Securitisations (*2)		480,494		565,017
CSR-Securitisations (Non-CTP)		70,685		91,048
CSR-Non-Securitisations (CTP)		376		508
Stock		330,212		210,850
Foreign		449,030		389,673
Commodity		1,600		2,829

	W	1,609,337		1,517,630

Default risk
Non-Securitisations	W	37,808		—
Securitisations (Excluding CTP)		162,599		121,146
Securitisations (CTP)		71		596

	W	200,478		121,742

Residual risk		7,654		9,547

	W	1,817,469		1,648,919

(*1)

GIRR (General Interest Rate Risk): General interest rate risk, a concept that measures the risk of loss due to changes in the risk-free interest rate. In general, if the maturity is long and the value changes fluctuates a lot due to interest rate changes, the risk value is calculated to be large.

(*2)

CSR (Credit Spread Risk): Credit spread risk, a concept that measures the risk of value fluctuations as credit spreads fluctuate independently of the risk-free interest rate for products with inherent credit risk.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

i-3)

Shinhan Bank

The details of the minimum, maximum, and average risk amount during the reporting period for trading positions of Shinhan Bank and the market risk regulatory capital based on the Basel 3 new standard method as of and for the years ended December 31, 2023 and 2024 are as follows:


	2023		2024
Sensitivity Risk
GIRR (*1)	W	107,348		116,501
CSR-Non-Securitisations (*2)		153,034		129,603
CSR-Securitisations (Non-CTP)		26,187		27,930
Stock		30,750		28,582
Foreign		458,406		368,999
Commodity		119		199

	W	775,844		671,814

Default Risk
Non-Securitisations	W	107,695		98,699
Securitisations (Excluding CTP)		59,549		60,866

	W	167,244		159,565

Residual Risk		1,719		2,984

	W	944,807		834,363

(*1)

GIRR: General Interest Rate Risk

(*2)

CSR: Credit Spread Risk

i-4)

Shinhan Card

The analyzes of Shinhan Card’s requisite capital in light of the market risk for trading positions as of December 31, 2023 and 2024, based on the standard guidelines for risk management promulgated by the Financial Supervisory Service, are as follows:


	2023		2024
Interest rate risk (*)	W	4,352		2,551

(*)

Foreign subsidiaries are excluded from the calculation.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

i-5)

Shinhan Securities

The VaR details for trading positions of Shinhan Securities as of and for the years ended December 31, 2023 and 2024 are as follows:


	2023			2024
Interest rate risk	W	32,186			15,662
Stock price risk		20,384			14,321
Foreign exchange risk		52,150			30,310
Option volatility risk		12,418			42,703
Portfolio diversification effect		(81,712	)		(41,549	)

		35,426			61,447

i-6)

Shinhan Life Insurance

The VaR details for trading positions of Shinhan Life Insurance as of and for the years ended December 31, 2023 and 2024 are as follows:


	2023		2024
Interest rate risk	W	1,796		683
Stock price risk		7,522		11,523
Foreign exchange risk		52,394		55,467
Option volatility risk		1,233		559

		62,945		68,232

(*)

The market risk exposure for performance dividend-type assets held is

5,346,730 million and

4,956,743 million as of December 31, 2023, and 2024 respectively, and the minimum guaranteed risk amount that could result in an impact on the Group calculated using the internal shock scenario method as of the end of the reporting period is

228,451 million and

280,577 million as of December 31, 2023 and 2024 respectively.

ii) Interest rate risk management from

non-trading

positions

ii-1)

Principle

Interest rate risk refers to the possibility of a decrease in net interest income or in net asset value that occurs when interest rates fluctuate unfavorably from the Group’s financial position. The Group manages changes in net interest income or net asset value that occur due to changes in interest rates by early predicting the factors of interest rate risk fluctuation related to the Group’s net interest income and net asset value through the interest rate risk management.

ii-2)

Managements

Shinhan Financial Group’s major financial subsidiaries manage interest rate risks independently by the risk management organization and the treasury department, and have internal regulations on interest rate risk management strategies, procedures, organization, measurement, and major assumptions.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

One of the key indicators of managing interest rate risk is the Earnings at Risk (EaR) from an earning perspective and the Value at Risk (VaR) from an economic value perspective. Interest rate VaR represents the maximum anticipated loss in a net present value calculation, whereas interest rate EaR represents the maximum anticipated loss in a net interest income calculation for the immediately following

one-year

period, in each case, as a result of negative movements in interest rates.

Each subsidiary’s interest rate risk measurement method varies depending on industry-specific regulations. However, interest rate VaR and interest rate EaR are measured using internal methodologies or IRRBB (Interest Rate Risk in the Banking Book). Interest rate risk limits are set based on interest rate VaR and monitored accordingly. In accordance with the amendments in Regulations for Supervision of Financial Holding Companies, the Group measures the interest rate risk using the standardized approach of IRRBB under Basel III, which measures the interest rate risk more precisely than the existing BIS standard framework by segmenting maturities of interest rates, reflecting customer behavior models and diversifying interest rate shocks. The interest rate VaR scenario based IRRBB measures ① parallel up shock ② parallel down shock ③ steepener shock ④ flattener shock ⑤ short rate up shock ⑥ short rate down shock. By the parallel up shock and parallel down shock, the interest rate EaR scenario measures the scenario value with the largest loss as interest rate risk. Under the existing BIS standard framework, ± 200bp parallel shock scenario is applied to all currency. However, as the shock width is set differently by currency and period, interest rate risk is measured significantly by the IRRBB (e.g. (KRW) Parallel ± 300bp, Short Term ± 400bp, Long Term ± 200bp, (USD) Parallel ± 200bp, Short Term ± 300bp, Long Term ± 150bp). In the IRRBB method, the existing interest rate VaR and the interest rate EaR are expressed as Δ EVE (Economic Value of Equity) and Δ NII (Net Interest Income), respectively.

Since impacts of each subsidiary on changes of interest rates are differentiated by portfolios, the Group is preparing to respond proactively while monitoring the financial market and regulatory environment, and making efforts to hedge or reduce interest rate risk. In addition, the subsidiaries conduct the crisis analysis on changes in market interest rates and report it to management and the Group.

In particular, through its ALM (Asset and Liability Management) system, Shinhan Bank measures and manages its interest rate risk based on various analytical measures such as interest rate gap, duration gap and NPV (Net Present Value) and NII (Net Interest Income) simulations, and monitors on a monthly basis its interest rate VaR limits, interest rate EaR (Earnings at Risk) limits and interest rate gap ratio limits.

The details of interest rate VaR and EaR for major subsidiaries for as of December 31, 2023 and 2024 are as follows:

ii-3)

Shinhan Bank


	2023		2024
ΔEVE (*1)	W	1,185,973		1,508,514
ΔNII (*2)		394,996		406,207

ii-4)

Shinhan Card


	2023		2024
ΔEVE (*1)	W	952,836		990,898
ΔNII (*2)		591,935		600,681

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

ii-5)

Shinhan Securities


	2023		2024
ΔEVE (*1)	W	249,806		252,625
ΔNII (*2)		269,678		418,741

ii-6)

Shinhan Life Insurance


	2023		2024
ΔEVE (*1)	W	4,434,253		3,848,473
ΔNII (*2)		35,901		44,525

(*1)

ΔEVE is the change in economic value of equity capital that can arise from changes in interest rates that affect the present value of assets, liabilities and

off-balance

sheet items by using the Basel III standard based IRRBB method.

(*2)

ΔNII is the change in net interest income that can occur over the next year due to changes in interest rates by using the Basel III standard based IRRBB method.

iii) Foreign exchange risk

Exposure to foreign exchange risk can be defined as the difference (net position) between assets and liabilities presented in foreign currency, including derivative financial instruments linked to foreign exchange rate. Foreign exchange risk is a factor that causes market risk of the trading position and is managed by the Group under the market risk management system.

The management of Shinhan Bank’s foreign exchange position is centralized at the S&T Center. The desks and dealers of this department manage the overall position of spot foreign exchange or foreign exchange derivatives within the established market risk and foreign exchange position limits. Shinhan Bank sets a limit for net open positions by currency and the limits for currencies other than the U.S. dollars (USD), Japanese yen (JPY), Euros (EUR) and Chinese yuan (CNY) are set in order to minimize exposures from the other foreign exchange trading.

F-7

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

Foreign currency denominated assets and liabilities as of December 31, 2023 and 2024 are as follows:


	2023
	USD		JPY			EUR			CNY			Other			Total
Assets:
Cash and due from banks at amortized cost	W	10,473,766		2,318,380			140,319			654,444			3,975,017			17,561,926
Due from banks at FVTPL		30,743		—			—			—			—			30,743
Loans at FVTPL		385,844		—			114,389			—			—			500,233
Loan at amortized cost		23,694,171		11,663,301			1,556,746			4,018,660			12,182,861			53,115,739
Securities at FVTPL		5,765,741		8,255			761,046			5,230			545,306			7,085,578
Derivative assets		1,014,150		2,346			27,418			878			105,335			1,150,127
Securities at FVOCI		8,308,952		175,740			544,248			564,791			2,169,907			11,763,638
Securities at amortized cost		263,027		553,509			—			110,532			1,281,941			2,209,009
Other financial assets		5,971,194		637,612			831,019			441,906			979,795			8,861,526

	W	55,907,588		15,359,143			3,975,185			5,796,441			21,240,162			102,278,519

Liabilities:
Deposits	W	22,790,616		14,562,435			1,535,925			4,152,363			12,428,069			55,469,408
Financial liabilities at FVTPL		362,642		—			—			—			422,861			785,503
Derivative liabilities		841,175		2			35,679			591			94,701			972,148
Borrowings		9,670,444		1,392,637			208,335			115,798			1,284,046			12,671,260
Debt securities issued		10,916,488		337,684			713,295			—			1,258,257			13,225,724
Financial liabilities designated at FVTPL		909,250		3,188			—			—			—			912,438
Other financial liabilities		6,844,891		183,500			769,928			777,986			805,002			9,381,307

	W	52,335,506		16,479,446			3,263,162			5,046,738			16,292,936			93,417,788

Net domestic and foreign currency exposure	W	3,572,082		(1,120,303	)		712,023			749,703			4,947,226			8,860,731
Off-balance derivative exposure		808,139		1,716,328			(340,327	)		(328,756	)		(1,898,176	)		(42,792	)

Net foreign currency exposure	W	4,380,221		596,025			371,696			420,947			3,049,050			8,817,939

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	USD		JPY			EUR			CNY			Other			Total
Assets:
Cash and due from banks at amortized cost	W	12,337,661		2,952,548			263,878			731,304			5,387,372			21,672,763
Due from banks at FVTPL		35,450		—			—			—			—			35,450
Loans at FVTPL		275,434		—			28,229			—			19,899			323,562
Loan at amortized cost		25,948,190		13,073,162			1,832,150			4,873,899			15,186,486			60,913,887
Securities at FVTPL		6,687,351		133,864			852,382			4,124			726,565			8,404,286
Derivative assets		1,568,025		4,578			232,197			1,987			98,297			1,905,084
Securities at FVOCI		10,334,842		171,177			521,289			681,404			2,536,312			14,245,024
Securities at amortized cost		340,153		500,269			—			117,008			1,381,765			2,339,195
Other financial assets		5,471,934		1,264,209			197,766			355,004			830,886			8,119,799

	W	62,999,040		18,099,807			3,927,891			6,764,730			26,167,582			117,959,050

Liabilities:
Deposits	W	28,517,193		15,642,126			1,194,240			5,245,526			15,132,335			65,731,420
Financial liabilities at FVTPL		3,117		—			—			—			597,058			600,175
Derivative liabilities		1,513,732		5,297			50,101			1,964			55,052			1,626,146
Borrowings		9,498,518		1,446,603			280,140			544			1,485,415			12,711,220
Debt securities issued		15,926,430		168,566			764,365			—			1,865,788			18,725,149
Financial liabilities designated at FVTPL		804,324		313			—			—			—			804,637
Other financial liabilities		6,432,533		936,178			229,063			652,514			1,061,947			9,312,235

	W	62,695,847		18,199,083			2,517,909			5,900,548			20,197,595			109,510,982

Net domestic and foreign currency exposure	W	303,193		(99,276	)		1,409,982			864,182			5,969,987			8,448,068
Off-balance derivative exposure		2,433,296		1,085,962			(397,997	)		(379,652	)		(1,555,122	)		1,186,487

Net foreign currency exposure	W	2,736,489		986,686			1,011,985			484,530			4,414,865			9,634,555

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

(d)

Liquidity risk

Liquidity risk refers to the risk of unexpected losses (such as the disposal of assets abnormal pricing, high interest-rate financing, etc.) or insolvency due to inconsistency in funding periods between assets and liabilities or a sudden outflow of funds.

Each subsidiary seeks to minimize liquidity risk through early detection of risk factors related to the sourcing and managing of funding that may cause volatility in liquidity and by ensuring that it maintains an appropriate level of liquidity through systematic management. At the Group level, the Group manages liquidity risk by conducting monthly stress tests that compare liquidity requirements under normal situations against those under three types of stress situations, namely, the

Group-specific

internal crisis, crisis in the external market and a combination of internal and external crisis. Therefore, the Group is checking the liquidity side for abnormalities in preparation for the usual crisis.

In particular, after the bankruptcy of Silicon Valley Bank, the Group have been strengthening its ability to respond to liquidity crises by conducting crisis situation analysis using bank run scenarios for banks and savings bank subsidiaries and establishing and inspecting emergency procurement plans accordingly.

In addition, in order to

pre-emptively

and comprehensively manage liquidity risk, the Group measures and monitors liquidity risk management using various indices, including the ‘limit management index’, ‘early warning index’ and ‘monitoring index’.

Shinhan Bank applies the following basic principles for liquidity risk management:

•

Raise funding in sufficient amounts, at the optimal time at reasonable costs;

•

Maintain risk at appropriate levels and preemptively manage them through a prescribed risk limit system and an early warning signal detection system;

•

Secure stable sources of revenue and minimize actual losses by implementing an effective asset-liability management system based on diversified sources of funding with varying maturities;

•

Monitor and manage daily and intra-daily liquidity positions and risk exposures for timely payment and settlement of financial obligations due under both normal and crisis situations;

•

Conduct periodic contingency analysis in anticipation of any potential liquidity crisis and establish and implement emergency plans in case of a crisis actually happening; and

•

Consider liquidity-related costs, benefits of and risks in determining the pricing of the Group’s products and services, employee performance evaluations and approval of launching of new products and services.

Shinhan Card sets and operates a level that can withstand a

3-month

credit crunch for

end-of-month

liquidity. The Group defines and manages the level of ‘cautious’, ‘alert’, ‘imminent crisis’, and ‘crisis’ and risk for the real liquidity gap ratio, liquidity buffer ratio, and ratio of ABS (asset backed securities) to borrowings which are major indicators related to liquidity risk. A contingency plan has been established to prepare for a crisis.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

The details of the composition of

non-derivative

financial instruments and derivative financial instruments by remaining period are as of December 31, 2023 and 2024 are as follows:


	2023 (*1)
	Less than 1 month (*3)		1~3 months			3~6 months			6 months ~ 1 year			1~5 years			More than 5 years		Total
Non-derivative financial instruments:
Assets:
Cash and due from banks at amortized cost	W	31,107,629		734,193			83,972			159,377			189,601			2,560,084		34,834,856
Due from banks at fair value through profit or loss		—		—			—			—			—			30,743		30,743
Loans at fair value through profit or loss		308,740		421,193			85,467			9,739			923,364			76,062		1,824,565
Loans at amortized cost		37,692,048		50,813,677			65,503,264			96,981,341			130,306,477			101,012,508		482,309,315
Securities at fair value through profit or loss		38,919,131		1,642,951			682,000			559,767			7,258,255			20,304,519		69,366,623
Securities at fair value through other comprehensive income		42,256,944		445,463			539,255			2,336,017			14,033,768			30,785,721		90,397,168
Securities at amortized cost		899,355		3,258,092			1,964,229			4,323,906			21,357,255			7,573,653		39,376,490
Other financial assets		22,148,927		393,344			128,067			324,305			384,541			1,866,191		25,245,375

	W	173,332,774		57,708,913			68,986,254			104,694,452			174,453,261			164,209,481		743,385,135

Liabilities:
Deposits (*2)	W	204,353,639		49,995,140			43,382,707			65,673,174			24,930,159			2,931,998		391,266,817
Financial liabilities at fair value through profit or loss		410,381		358			586			1,202			6,816			1,449,634		1,868,977
Borrowings		19,310,777		5,678,981			6,166,750			9,811,684			14,182,221			5,170,111		60,320,524
Debt securities issued		4,496,200		7,218,255			7,931,732			18,000,681			45,961,768			3,734,554		87,343,190
Financial liabilities designated at fair value through profit or loss		309,713		1,252,877			1,774,016			1,821,666			1,324,185			1,356,579		7,839,036
Investment contract liabilities		245,353		110,050			67,039			423,484			726,759			—		1,572,685
Other financial liabilities		39,957,559		219,656			394,997			252,445			1,637,763			808,731		43,271,151

	W	269,083,622		64,475,317			59,717,827			95,984,336			88,769,671			15,451,607		593,482,380

Off balance (*3):
Guarantee contracts	W	18,374,287		—			—			—			—			—		18,374,287
Other liabilities related to loan commitments		212,078,870		—			—			—			—			—		212,078,870

	W	230,453,157		—			—			—			—			—		230,453,157

Derivatives	W	131,174		(101,655	)		(335,841	)		(104,002	)		(1,657,294	)		134,835		(1,932,783	)

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024 (*1)
	Less than 1 month (*3)		1~3 months			3~6 months			6 months ~ 1 year		1~5 years			More than 5 years			Total
Non-derivative financial instruments:
Assets:
Cash and due from banks at amortized cost	W	36,069,005		678,029			293,900			290,070		295,757			3,107,597			40,734,358
Due from banks at fair value through profit or loss		—		—			—			—		—			35,450			35,450
Loans at fair value through profit or loss		275,263		531,544			136,762			95		660,244			276,599			1,880,507
Loans at amortized cost		37,868,875		54,775,441			69,211,593			99,131,674		145,027,757			123,300,327			529,315,667
Securities at fair value through profit or loss		41,515,377		1,066,771			473,077			894,621		8,851,339			20,043,058			72,844,243
Securities at fair value through other comprehensive income		45,714,502		997,618			825,089			2,680,515		10,809,850			32,861,952			93,889,526
Securities at amortized cost		878,077		3,117,274			3,152,468			3,236,438		20,604,654			5,540,522			36,529,433
Other financial assets		18,550,324		58,298			59,159			631,667		599,959			1,975,249			21,874,656

	W	180,871,423		61,224,975			74,152,048			106,865,080		186,849,560			187,140,754			797,103,840

Liabilities:
Deposits (*2)	W	217,170,450		49,309,656			56,540,309			77,227,315		30,221,968			1,261,816			431,731,514
Financial liabilities at fair value through profit or loss		954,899		—			—			—		—			—			954,899
Borrowings		12,862,532		4,757,090			6,901,957			9,990,468		11,464,431			4,896,426			50,872,904
Debt securities issued		4,859,511		8,927,081			9,122,810			17,273,392		56,429,636			4,046,575			100,659,005
Financial liabilities designated at fair value through profit or loss		439,367		861,277			991,871			1,963,789		2,473,275			1,513,662			8,243,241
Investment contract liabilities		106,106		105,788			248,954			375,300		328,874			—			1,165,022
Other financial liabilities		32,314,670		174,388			257,115			587,834		1,351,145			140,254			34,825,406

	W	268,707,535		64,135,280			74,063,016			107,418,098		102,269,329			11,858,733			628,451,991

Off balance (*3):
Guarantee contracts	W	22,509,195		—			—			—		—			—			22,509,195
Other liabilities related to loan commitments		218,980,794		—			—			—		—			—			218,980,794

	W	241,489,989		—			—			—		—			—			241,489,989

Derivatives	W	453,751		(12,670	)		(68,634	)		6,511		(1,847,862	)		(165,170	)		(1,634,074	)

(*1)	These amounts include cash flows of principal and interest on financial assets and financial liabilities.

(*2)	Demand deposits amounting to W 151,177,041 million and W 160,031,760 million as of December 31, 2023 and 2024 are included in the ‘Less than 1 month’ category, respectively.

(*3)	Though guarantees, loan agreements, and other credit offerings provided by the Group exist, if the counterparty requests a payment, the Group should fulfill the obligation immediately.

F-

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

(e)

Measurement of fair value

The fair values of financial instruments being traded in an active market are determined by the published market prices of each period end. The published market prices of financial instruments being held by the Group are based on the trading agencies’ notifications.

If the market for a financial instrument is not active, such as OTC (Over The Counter market) derivatives, fair value is determined either by using a valuation technique or independent third-party valuation service. The Group uses its judgment to select a variety of methods and make rational assumptions that are mainly based on market conditions existing at the end of each reporting period.

The fair value of financial instruments is determined using valuation techniques; a method of using recent transactions between independent parties with reasonable judgment and willingness to trade, a method of referring to the current fair value of other financial instruments that are substantially identical, discounted cash flow model and option pricing models. For example, the fair value of an interest rate swap is calculated as the present value of the expected future cash flows, and the fair value of foreign exchange forwarding contract is calculated by applying the public forward exchange rate at the end of the reporting period.

The Group classifies and discloses fair value of financial instruments into the following three-level hierarchy:

•

Level 1: Financial instruments measured at quoted prices from active markets are classified as fair value level 1.

•

Level 2: Financial instruments measured using valuation techniques where all significant inputs are observable market data are classified as level 2.

•

Level 3: Financial instruments measured using valuation techniques where one or more significant inputs are not based on observable market data are classified as level 3.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

i) Financial instruments measured at fair value

i-1)

The fair value hierarchy of financial instruments presented at their fair values in the statements of financial position as of December 31, 2023 and 2024 are as follows:


	2023
	Level 1		Level 2		Level 3 (*3)		Total
Financial assets:
Due from banks measured at FVTPL	W	—		30,743		—		30,743
Loans at FVTPL (*1)		—		515,564		1,242,998		1,758,562
Securities at FVTPL:
Debt securities and other securities (*2)		11,248,555		39,736,457		14,487,080		65,472,092
Equity securities		2,253,651		—		1,597,810		3,851,461
Gold/silver deposits		103,706		—		—		103,706

		13,605,912		39,736,457		16,084,890		69,427,259

Derivative assets:
Trading		117,929		3,709,058		632,213		4,459,200
Hedging		—		252,221		—		252,221

		117,929		3,961,279		632,213		4,711,421

Securities measured at FVOCI:
Debt securities		39,111,078		49,525,922		—		88,637,000
Equity securities		725,796		—		949,183		1,674,979

		39,836,874		49,525,922		949,183		90,311,979

	W	53,560,715		93,769,965		18,909,284		166,239,964

Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold	W	1,449,634		—		—		1,449,634
Gold/silver deposits		419,343		—		—		419,343

		1,868,977		—		—		1,868,977

Financial liabilities designated at fair value through profit or loss:
Derivatives-combined securities (*2)		—		816,643		6,725,252		7,541,895
Debt securities issued		—		254,832		—		254,832

		—		1,071,475		6,725,252		7,796,727

Derivative liabilities:
Trading		46,578		3,369,771		783,587		4,199,936
Hedging		—		614,285		224,195		838,480

		46,578		3,984,056		1,007,782		5,038,416

	W	1,915,555		5,055,531		7,733,034		14,704,120

(*1)	Of the Financial assets at FVTPL invested by the Group, P-note’s valuation of amount related to Lime Asset Management is W 92 billion. As of December 31, 2023, in this regard, international disputes are under way,

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

the Group has estimated its fair value based on financial information within the recent audit report of underlying assets since it doesn’t have fair market value observable through active trading markets. Accounting estimates and assumptions used in preparing consolidated financial statements may lead to adjustment in response to changes in uncertainty, such as information and market conditions available in the future. In addition, the ultimate impact on the business, financial condition, performance, and liquidity of the Group is unpredictable.

(*2)

Financial instruments (Beneficiary certificates:

143.5 billion and derivatives-combined securities:

143.5 billion) related to GEN2 Partners asset management were delayed in repurchase for the year ended December 31, 2020. The Group estimated fair value using the net asset value based on the most recent data available for the repurchase suspension fund. Since then, it has an uncertainty in measuring fair value due to market conditions.

(*3)

Shinhan Securities Co., Ltd.’ level 3

over-the-counter

derivatives is recognized

66,866 million in financial assets measured at fair value through profit or loss,

6,725,252 million in financial liabilities designated at fair value through profit or loss,

629,223 million in derivative assets, and

785,312 million in derivative liabilities. The fair value of

over-the-counter

derivatives classified as level 3 above is measured using Shinhan Securities Co., Ltd.’s internal valuation model.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	Level 1		Level 2		Level 3 (*3)		Total
Financial assets:
Due from banks measured at FVTPL	W	—		35,450		—		35,450
Loans at FVTPL (*1)		—		745,412		1,134,534		1,879,946
Securities at FVTPL:
Debt securities and other securities (*2)		11,870,768		39,052,189		16,082,867		67,005,824
Equity securities		1,618,125		64,277		1,414,926		3,097,328
Gold/silver deposits		128,297		—		—		128,297

		13,617,190		39,116,466		17,497,793		70,231,449

Derivative assets:
Trading		85,439		8,772,280		719,177		9,576,896
Hedging		—		702,361		—		702,361

		85,439		9,474,641		719,177		10,279,257

Securities measured at FVOCI:
Debt securities		35,984,894		56,031,316		—		92,016,210
Equity securities		866,968		—		922,191		1,789,159

		36,851,862		56,031,316		922,191		93,805,369

	W	50,554,491		105,403,285		20,273,695		176,231,471

Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold (*2)	W	357,841		—		—		357,841
Gold/silver deposits		597,058		—		—		597,058

		954,899		—		—		954,899

Financial liabilities designated at fair value through profit or loss:
Derivatives-combined securities		—		819,919		7,139,257		7,959,176
Debt securities issued		—		261,299		—		261,299

		—		1,081,218		7,139,257		8,220,475

Derivative liabilities:
Trading		22,721		8,476,885		536,855		9,036,461
Hedging		—		814,374		207,697		1,022,071

		22,721		9,291,259		744,552		10,058,532

	W	977,620		10,372,477		7,883,809		19,233,906

(*1)

Of the Financial assets at FVTPL invested by the Group,

P-note’s

valuation of amount related to Lime Asset Management is

40.8 billion. As of December 31, 2024, in this regard, international disputes are under way, the Group has estimated its fair value based on financial information within the recent audit report of underlying assets since it doesn’t have fair market value observable through active trading markets. Accounting estimates and assumptions used in preparing consolidated financial statements may lead to adjustment in response to changes in uncertainty, such as information and market conditions available in the future. In addition, the ultimate impact on the business, financial condition, performance, and liquidity of the Group is unpredictable.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

(*2)

Financial instruments (Beneficiary certificates:

175 billion and derivatives-combined securities:

175 billion) related to GEN2 Partners asset management were delayed in repurchase for the year ended December 31, 2020. The company estimated fair value using the net asset value based on the most recent data available for the repurchase suspension fund. Since then, it has an uncertainty in measuring fair value due to market conditions.

(*3)

Shinhan Securities Co., Ltd.’ level 3

over-the-counter

derivatives is recognized

86,279 million in financial assets measured at fair value through profit or loss,

7,146,909 million in financial liabilities designated at fair value through profit or loss,

718,788 million in derivative assets, and

535,162 million in derivative liabilities. The fair value of

over-the-counter

derivatives classified as level 3 above is measured using Shinhan Securities Co., Ltd.’s internal valuation model.

i-2)

Classification of financial instruments as fair value level 3

The Group uses the value from evaluators who are qualified and external independent to determine the fair value for Group’s assets at the end of each reporting period.

Changes in carrying amounts of financial instruments classified as Level 3 for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Financial asset at fair value through profit or loss			Securities at fair value through other comprehensive profit or loss			Financial liabilities designated at fair value through profit or loss			Derivative assets and liabilities, net
	Financial asset at fair value through profit or loss									Held for trading			Held for hedging
Beginning balance	W	15,047,137			981,329			(7,930,909	)		61,622			(343,759	)
Recognized in total comprehensive income for the year:
Recognized in profit (loss) for the year (*1)		69,334			—			(244,146	)		(15,540	)		119,564
Recognized in other comprehensive income (loss) for the year		(532	)		12,747			(1,907	)		—			—

		68,802			12,747			(246,053	)		(15,540	)		119,564
Purchase		5,987,732			55,078			—			36,786			—
Issue		—			—			(6,343,080	)		—			—
Settlement		(4,071,062	)		(100,000	)		7,794,790			(234,242	)		—
Transfer to level3 (*2)		299,148			29			—			—			—
Transfer out of level3 (*2)		(3,869	)		—			—			—			—

Ending balance	W	17,327,888			949,183			(6,725,252	)		(151,374	)		(224,195	)

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	Financial asset at fair value through profit or loss			Securities at fair value through other comprehensive profit or loss			Financial liabilities designated at fair value through profit or loss			Derivative assets and liabilities, net
	Financial asset at fair value through profit or loss									Held for trading			Held for hedging
Beginning balance	W	17,327,888			949,183			(6,725,252	)		(151,374	)		(224,195	)
Recognized in total comprehensive income for the year:
Recognized in profit (loss) for the year (*1)		355,895			—			(74,680	)		(243,855	)		16,498
Recognized in other comprehensive income (loss) for the year		3,287			(77,241	)		(8,614	)		—			—

		359,182			(77,241	)		(83,294	)		(243,855	)		16,498
Purchase		7,120,860			55,431			—			1,307,186			—
Issue		—			—			(7,993,276	)		—			—
Settlement		(5,798,938	)		(5,153	)		7,662,565			(733,566	)		—
Transfer to level3 (*2)		17,407			—			—			3,931			—
Transfer out of level3 (*2)		(394,072	)		(29	)		—			—			—

Ending balance	W	18,632,327			922,191			(7,139,257	)		182,322			(207,697	)

(*1)	Recognized profit or loss of the changes in carrying amount of financial instruments classified as Level 3 for the years ended December 31, 2023 and 2024 are included in the accounts of the statements of comprehensive income, of which the amounts and the related accounts are as follows:


	2023
	Amounts recognized in profit or loss			Recognized profit or loss from the financial instruments held as of December 31
Net gain on financial assets at fair value through profit or loss	W	53,794			47,708
Net gain (loss) on financial liabilities designated at fair value through profit or loss		(244,146	)		96,223
Net other operating expense		119,564			119,564

	W	(70,788	)		263,495

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

ii) Financial instruments measured at amortized cost

ii-1)

The method of measuring the fair value of financial instruments measured at amortized cost is as follows:


Type		Measurement methods of fair value

Cash and due from banks		The carrying amount and the fair value for cash are identical and most of deposits are floating interest rate deposits or next day deposits of a short-term instrument. For this reason, the carrying amount approximates fair value.

Loans		The fair value of the loans is measured by discounting the expected cash flow at the market interest rate and credit risk of the borrower.

Securities		An external professional evaluation agency is used to calculate the valuation amount using the market information. The agency calculates the fair value based on active market prices, and DCF model is used to calculate the fair value if there is no quoted price.

Deposits and borrowings		The carrying amount and the fair value for demand deposits, cash management account deposits, call money as short-term instrument are identical. The fair value of others is measured by discounting the contractual cash flow at the market interest rate that takes into account the residual risk.

Debt securities issued		Where available, the fair value of deposits and borrowings is based on the published price quotations in an active market. In case there is no data for an active market price, it is measured by discounting the contractual cash flow at the market interest rate that takes into account the residual risk.

Investment contract liabilities		The book value of retirement pension contract reserves as prescribed by the Insurance Business Act and Insurance Business Supervision Regulations was used as a proxy for fair value because of the difficulty of calculating reliable expected cash flows.

Other financial assets and other financial liabilities		The carrying amount is measured at fair value for short-term and suspense accounts, such as spot exchange, inter-bank fund transfer, and domestic exchange of payments, and for the remaining financial instruments, the present value is calculated by discounting the contractual cash flows at a discount rate which considered residual risk at the market interest rate.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

ii-2)

The carrying amount and the fair value of financial instruments measured at amortized cost as of December 31, 2023 and 2024 are as follows:


	2023				2024
	Carrying amount		Fair value		Carrying amount		Fair value
Assets:
Deposits measured at amortized cost	W	32,455,701		32,338,446		38,228,750		38,159,135
Loans measured at amortized cost		411,739,562		414,024,035		449,295,238		452,724,752

Securities measured at amortized cost:
Government bonds		22,787,609		22,182,130		21,808,057		21,625,666
Financial institution bonds		5,864,626		5,906,724		3,787,661		3,828,599
Corporation bonds		7,034,252		6,879,983		7,720,281		7,694,086

		35,686,487		34,968,837		33,315,999		33,148,351

Other financial assets		26,880,554		27,175,002		23,116,960		23,469,322

	W	506,762,304		508,506,320		543,956,947		547,501,560

Liabilities:
Deposit liabilities:
Demand deposits	W	151,177,041		151,177,041		160,031,759		160,031,759
Time deposits		202,106,686		202,405,752		236,527,490		236,878,216
Certificate of deposit		12,059,730		12,114,566		10,409,701		10,481,318
Issued bill deposit		7,614,701		7,614,012		7,624,787		7,624,245
CMA deposits		4,950,392		4,950,392		4,451,561		4,451,561
Others		3,604,114		3,604,031		3,735,747		3,735,726

		381,512,664		381,865,794		422,781,045		423,202,825

Borrowing debts:
Call-money		2,195,849		2,195,849		1,197,823		1,197,823
Bills sold		11,252		11,208		8,872		8,831
Bonds sold under repurchase agreements		17,312,576		17,312,576		11,542,956		11,542,956
Borrowings		37,381,675		37,322,235		37,170,722		37,236,104

		56,901,352		56,841,868		49,920,373		49,985,714

Debt securities issued:
Borrowings in Korean won		68,382,242		68,189,097		75,106,885		75,610,971
Borrowings in foreign currency		13,179,483		13,143,721		18,658,969		18,759,433

		81,561,725		81,332,818		93,765,854		94,370,404

Investment contract liabilities		1,572,685		1,572,685		1,165,022		1,165,022

Other financial liabilities		47,328,051		47,295,828		39,472,400		39,429,575

	W	568,876,477		568,908,993		607,104,694		608,153,540

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

ii-3)

The fair value hierarchy of financial assets and liabilities which are not measured at their fair values in the statements of financial position but with their fair value disclosed as of December 31, 2023 and 2024 are as follows:


	2023
	Level 1		Level 2		Level 3		Total
Assets:
Deposits measured at amortized cost	W	554,703		31,783,743		—		32,338,446
Loans measured at amortized cost		—		1,633,949		412,390,086		414,024,035
Securities measured at amortized cost:
Government bonds		10,727,244		11,454,886		—		22,182,130
Financial institution bonds		2,005,877		3,900,847		—		5,906,724
Corporation bonds		—		6,879,983		—		6,879,983

		12,733,121		22,235,716		—		34,968,837

Other financial assets		—		16,393,625		10,781,377		27,175,002

	W	13,287,824		72,047,033		423,171,463		508,506,320

Liabilities:
Deposit liabilities:
Demand deposits	W	—		151,177,041		—		151,177,041
Time deposits		—		—		202,405,752		202,405,752
Certificate of deposit		—		—		12,114,566		12,114,566
Issued bill deposit		—		—		7,614,012		7,614,012
CMA deposits		—		4,950,392		—		4,950,392
Other		—		3,565,491		38,540		3,604,031

		—		159,692,924		222,172,870		381,865,794

Borrowing debts:
Call-money		—		2,195,849		—		2,195,849
Bills sold		—		—		11,208		11,208
Bonds sold under repurchase agreements		—		—		17,312,576		17,312,576
Borrowings		—		221,256		37,100,979		37,322,235

		—		2,417,105		54,424,763		56,841,868

Debt securities issued:
Borrowings in won		—		36,388,349		31,800,748		68,189,097
Borrowings in foreign currency		—		10,456,332		2,687,389		13,143,721

		—		46,844,681		34,488,137		81,332,818

Investment contract liabilities		—		—		1,572,685		1,572,685

Other financial liabilities		—		20,658,155		26,637,673		47,295,828

	W	—		229,612,865		339,296,128		568,908,993

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	Level 1		Level 2		Level 3		Total
Deposits measured at amortized cost	W	537,760		37,621,375		—		38,159,135
Loans measured at amortized cost		—		965,455		451,759,297		452,724,752
Securities measured at amortized cost:
Government bonds		11,292,066		10,333,600		—		21,625,666
Financial institution bonds		331,421		3,497,178		—		3,828,599
Corporation bonds		—		7,694,086		—		7,694,086

		11,623,487		21,524,864		—		33,148,351

Other financial assets		—		13,474,763		9,994,559		23,469,322

	W	12,161,247		73,586,457		461,753,856		547,501,560

Liabilities:
Deposit liabilities:
Demand deposits	W	—		160,031,759		—		160,031,759
Time deposits		—		—		236,878,216		236,878,216
Certificate of deposit		—		—		10,481,318		10,481,318
Issued bill deposit		—		—		7,624,245		7,624,245
CMA deposits		—		4,451,561		—		4,451,561
Other		—		3,694,921		40,805		3,735,726

		—		168,178,241		255,024,584		423,202,825

Borrowing debts:
Call-money		—		1,197,823		—		1,197,823
Bills sold		—		—		8,831		8,831
Bonds sold under repurchase agreements		—		—		11,542,956		11,542,956
Borrowings		—		19,922		37,216,182		37,236,104

		—		1,217,745		48,767,969		49,985,714

Debt securities issued:
Borrowings in won		—		43,460,315		32,150,656		75,610,971
Borrowings in foreign currency		—		12,899,498		5,859,935		18,759,433

		—		56,359,813		38,010,591		94,370,404

Investment contract liabilities		—		—		1,165,022		1,165,022

Other financial liabilities		—		10,428,026		29,001,549		39,429,575

	W	—		236,183,825		371,969,715		608,153,540

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

ii-4)

Valuation techniques and inputs used in the fair value measurements categorized within Level 2 and Level 3 for fair value disclosures, which are not recognized at fair value, as at December 31, 2023 and 2024, are as follows:


	2023
	Fair value (*)		Valuation technique		Inputs
Financial instruments classified as level 2:
Assets
Due from banks measured at amortized cost	W	31,783,743		DCF	Discount rate
Loans measured at amortized cost		1,633,949		DCF	Discount rate, Credit spread and Prepayment rate
Securities measured at amortized cost		22,235,716		DCF	Discount rate
Other financial assets		16,393,625		DCF	Discount rate
Financial instruments classified as level 3:
Assets
Loans measured at amortized cost		412,390,086		DCF	Discount rate, Credit spread and Prepayment rate
Other financial assets		10,781,377		DCF	Discount rate

	W	495,218,496

Financial instruments classified as level 2:
Liabilities
Deposits	W	159,692,924		DCF	Discount rate
Borrowings		2,417,105		DCF	Discount rate
Debt securities issued		46,844,681		DCF	Discount rate
Other financial liabilities		20,658,155		DCF	Discount rate
Financial instruments classified as level 3:
Liabilities
Deposits		222,172,870		DCF	Discount rate
Borrowings		54,424,763		DCF	Discount rate
Debt securities issued		34,488,137		DCF	Discount rate, Regression coefficient and Correlations
Investment contract liabilities		1,572,685		—	—
Other financial liabilities		26,637,673		DCF	Discount rate

	W	568,908,993

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	Fair value (*)		Valuation technique		Inputs
Financial instruments classified as level 2 :
Assets
Due from banks measured at amortized cost	W	37,621,375		DCF	Discount rate
Loans measured at amortized cost		965,455		DCF	Discount rate, Credit spread and Prepayment rate
Securities measured at amortized cost		21,524,864		DCF	Discount rate
Other financial assets		13,474,763		DCF	Discount rate
Financial instruments classified as level 3 :
Assets
Loans measured at amortized cost		451,759,297		DCF	Discount rate, Credit spread and Prepayment rate
Other financial assets		9,994,559		DCF	Discount rate

	W	535,340,313

Financial instruments classified as level 2 :
Liabilities
Deposits	W	168,178,241		DCF	Discount rate
Borrowings		1,217,745		DCF	Discount rate
Debt securities issued		56,359,813		DCF	Discount rate
Other financial liabilities		10,428,026		DCF	Discount rate
Financial instruments classified as level 3 :
Liabilities
Deposits		255,024,584		DCF	Discount rate
Borrowings		48,767,969		DCF	Discount rate
Debt securities issued		38,010,591		DCF	Discount rate, Regression coefficient and Correlations
Investment contract liabilities		1,165,022		—	—
Other financial liabilities		29,001,549		DCF	Discount rate

	W	608,153,540

(*)	Valuation techniques and inputs are not disclosed when the carrying amount is a reasonable approximation of fair value.

iii) Changes in gains or losses on valuation at the transaction date for the years ended December 31, 2023 and 2024, are as follows:


	2023			2024
Beginning balance	W	(143,959	)		(81,747)
New transactions		(48,548	)		(33,712	)
Recognized in profit for the year		110,760			26,229

Ending balance	W	(81,747	)		(89,230	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	FVTPL		FVTPL liabilities designated		Financial liabilities measured at amortized cost		Derivatives held for hedging		Total
Liabilities:
Deposits	W	—		—		422,781,045		—		422,781,045
Financial liabilities at fair value through profit or loss		954,899		—		—		—		954,899
Financial liabilities designated at FVTPL		—		8,220,475		—		—		8,220,475
Derivatives liabilities		9,036,461		—		—		1,022,071		10,058,532
Borrowings		—		—		49,920,373		—		49,920,373
Debt securities issued		—		—		93,765,854		—		93,765,854
Investment contract liabilities		—		—		1,165,022		—		1,165,022
Others		—		—		39,472,400		—		39,472,400

	W	9,991,360		8,220,475		607,104,694		1,022,071		626,338,600

(g)

Transfer of financial instruments

i) Transfers that do not qualify for derecognition

i-1) Sale of repurchase bonds

Among the Group’s sale of repurchase bonds, followings are the details of financial instruments that do not qualify for derecognition because the Group sold under repurchase agreement at a fixed price as of December 31, 2023 and 2024:


	2023		2024
Transferred asset:
Securities at FVTPL	W	11,042,486		10,141,306
Securities at FVOCI		1,286,990		645,888
Securities at amortized cost		3,622,838		199,261
Loans at amortized cost		—		20,600

	W	15,952,314		11,007,055

Associated liabilities:
Bonds sold under repurchase agreements	W	17,312,576		11,542,956

i-2) Securities loaned

If the securities owned by the Group are loaned, the ownership of the securities is transferred, but is required to be returned at the end of the loan period. Therefore, the Group continues to recognize the entire securities loaned as it holds most of the risks and compensation of the securities.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

Securities loaned as of December 31, 2023 and 2024 are as follows:


	2023		2024		Borrowers
Government bonds	W	15,340,768		13,611,571	Korea Securities Finance Corp., Korea Securities Depository, etc.
Financial institutions bonds		398,252		607,175	Korea Securities Finance Corp., Korea Securities Depository, etc.
Corporation bonds		221,435		465,211	BNP Paribas Securities Corp.
Equity securities		48,004		15,826	Korea Securities Depository
Beneficiary certificate		40,890		—	Korea Securities Depository

	W 16,049,349		14,699,783

i-3) Securitization of financial assets

The Group uses the securitization of financial assets as a means of financing and to transfer risk. Generally, these securitization transactions result in the transfer of contractual cash flows to the debt securities holders issued from the financial asset portfolio. The Group recognizes debt securities issued without derecognition of assets under individual agreements, partially recognizes assets to the extent of the Group’s level of involvement in assets, or recognizes rights and obligations arising from the derecognition and transfer of assets as separate assets and liabilities. The Group derecognizes the entire asset only if it transfers contractual rights to the cash flows of financial assets or if it holds contractual rights but bears contractual obligations to pay cash flows to the other party without significant delays or reinvestment and transfers most of the risks and benefits of ownership (e.g., credit risk, interest rate risk, prepayment risk, etc.).

For the years ended December 31, 2023 and 2024, the carrying amount of financial assets related to securitization transactions that have neither been transferred nor derecognized are

10,950,727 million and

11,369,662 million, respectively; the carrying amounts of related liabilities are

6,634,887 million and

7,144,588 million, respectively.

ii) Financial instruments qualified for derecognition and continued involvement

There are no financial instruments which qualify for derecognition and in which the Group has continuing involvements as of December 31, 2023, and 2024.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

(h)

Offsetting financial assets and financial liabilities

Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2023 and 2024 are as follows:


	2023
	Gross amounts of recognized financial assets/ liabilities		Gross amounts of recognized financial assets/ liabilities set off in the statement of financial position		Net amounts of financial assets/ liabilities presented in the statement of financial position		Related amounts not set off in the statement of financial position				Net amount
	Gross amounts of recognized financial assets/ liabilities						Financial instruments		Cash collateral received		Net amount
Assets:
Derivatives (*1)	W	4,706,696		—		4,706,696		14,428,984		448,025		2,042,058
Other financial instruments (*1)		12,212,371		—		12,212,371		14,428,984		448,025		2,042,058
Securities repurchased under repurchase agreements and bonds purchased under repurchase agreements (*2)		19,200,694		—		19,200,694		18,814,022		—		386,672
Securities loaned (*2)		6,284,849		—		6,284,849		6,283,227		—		1,622
Domestic exchange settlement debit (*3)		47,791,602		42,766,815		5,024,787		—		—		5,024,787
Receivables from disposal of securities (*4)		7,421,808		3,734,544		3,687,264		3,006,017		—		681,247

	W	97,618,020		46,501,359		51,116,661		42,532,250		448,025		8,136,386

Liabilities:
Derivatives (1), (5)	W	12,637,884		—		12,637,884		14,701,829		—		8,958,880
Other financial instruments (*1)		11,022,825		—		11,022,825		14,701,829		—		8,958,880
Bonds sold under repurchase agreements (*2)		17,312,576		—		17,312,576		15,450,999		—		1,861,577
Securities borrowed (*2)		1,449,634		—		1,449,634		1,449,634		—		—
Domestic exchange settlement pending (*3)		52,004,974		42,766,815		9,238,159		9,151,927		—		86,232
Payable from purchase of securities (*4)		7,466,010		3,734,544		3,731,466		3,006,534		—		724,932

	W	101,893,903		46,501,359		55,392,544		43,760,923		—		11,631,621

(*1)

The Group has certain derivative transactions subject to the ISDA (International Derivatives Swaps and Dealers Association) agreement. According to the ISDA agreement, when credit events (e.g. default) of counterparties occur, all derivative agreements are terminated and set off. At the time of termination, the parties to the transaction will offset the amount of payment or payment to each other, and one party will pay the other party a single amount will be paid to the other party.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

(*2)	Resale and repurchase agreement, securities borrowing and lending agreement are also similar to ISDA agreement with respect to enforceable netting agreements.

(*3)	The Group has legally enforceable right to set off and settles financial assets and liabilities on a net basis under normal business terms. Therefore, domestic exchanges settlement receivables (payables) are recorded on a net basis in the consolidated statements of financial position.

(*4)

It is an account that deals with bonds and liabilities based on the settlement of listed stocks traded in the market. The Group currently has a legally enforceable right to set off the recognized amounts and intends to settle on a net basis. Therefore, the net amount is presented in the consolidated statement of financial position. The offset amount of related bonds and liabilities based on the settlement of

over-the-counter

derivatives

in-house

payment by Central Clearing System is included.

(*5)

As of December 31, 2023, the total amount of financial liabilities includes

7,541,895 million of ELS (equity-linked securities) products and of DLS (derivative linked securities) products. In the course of this transaction, the Group has provided collateral for some transactions. The financial instruments provided as collateral of

365,074 million are included in the related instruments not offset in the statement of financial position.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)


	2024
	Gross amounts of recognized financial assets/ liabilities		Gross amounts of recognized financial assets/ liabilities set off in the statement of financial position		Net amounts of financial assets/ liabilities presented in the statement of financial position		Related amounts not set off in the statement of financial position				Net amount
	Gross amounts of recognized financial assets/ liabilities						Financial instruments		Cash collateral received		Net amount
Assets:
Derivatives (*1)	W	10,560,214		—		10,560,214		13,744,859		522,860		5,592,302
Other financial instruments (*1)		9,299,807		—		9,299,807		13,744,859		522,860		5,592,302
Securities repurchased under repurchase agreements and bonds purchased under repurchase agreements (*2)		17,514,396		—		17,514,396		15,238,643		—		2,275,753
Securities loaned (*2)		6,456,316		—		6,456,316		6,393,972		—		62,344
Domestic exchange settlement debit (*3)		39,697,639		34,787,860		4,909,779		—		—		4,909,779
Receivables from disposal of securities (*4)		4,879,073		2,199,610		2,679,463		1,925,615		—		753,848

	W	88,407,445		36,987,470		51,419,975		37,303,089		522,860		13,594,026

Liabilities:
Derivatives (1), (5)	W	18,245,590		—		18,245,590		14,692,837		1,000		11,767,096
Other financial instruments (*1)		8,215,343		—		8,215,343		14,692,837		1,000		11,767,096
Bonds sold under repurchase agreements (*2)		11,542,956		—		11,542,956		10,667,259		—		875,697
Securities borrowed (*2)		357,842		—		357,842		357,842		—		—
Domestic exchange settlement pending (*3)		36,593,966		34,787,860		1,806,106		1,735,983		—		70,123
Payable from purchase of securities (*4)		4,868,572		2,199,610		2,668,962		1,926,038		—		742,924

	W	79,824,269		36,987,470		42,836,799		29,379,959		1,000		13,455,840

(*1)

(*2)	Resale and repurchase agreement, securities borrowing and lending agreement are also similar to ISDA agreement with respect to enforceable netting agreements.

(*3)	The Group has legally enforceable right to set off and settles financial assets and liabilities on a net basis under normal business terms. Therefore, domestic exchanges settlement receivables (payables) are recorded on a net basis in the consolidated statements of financial position.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

(*4)

over-the-counter

derivatives

in-house

payment by Central Clearing System is included.

(*5)

As of December 31, 2024, the total amount of financial liabilities includes

7,966,828 million of ELS (equity-linked securities) products and of DLS (derivative linked securities) products. In the course of this transaction, the Group has provided collateral for some transactions. The financial instruments provided as collateral of

586,768 million are included in the related instruments not offset in the statement of financial position.

(i)

Capital risk management

The criteria for capital adequacy to be complied with by the Group are 8.0%. In addition, the minimum regulatory BIS capital ratio, which should be maintained additionally to increase the ability to absorb losses, has been raised to up to 14% as the capital regulation based on the Basel III standard is enforced from 2016. This is based on the addition of capital conservation capital (2.5%p) and domestic system-critical banks

(D-SIB)

capital (1.0%p) and economic response capital (2.5%p) to the existing lowest common equity capital ratio. The economic response capital can be charged up to 2.5%p during credit expansion and required economic response capital in Korea was increased from 0% to 1%, effective May 1,2024. As of December 31, 2024, the minimum regulatory BIS capital ratio to be observed is 12.5%, which is the standard for applying capital conservation capital (2.5%p),

D-SIB

capital (1.0%p), and economic response capital (1.0%p).

Basel III capital ratio is the concept of ‘International Agreement on the Measurement and Standards of Equity Capital’ of the Basel Bank Supervisory Commission of BIS (International Settlement Bank). It is calculated as ‘(common stock capital (after deduction of deductions) + other basic capital + supplementary capital) ÷ risk weighted assets’.

The capital of common stock can be the first to make up for the loss of the financial holding company. The capital of common stock consists of capital stock, capital reserve, retained earnings and other, which will not be redeemed until the liquidation and will be redeemed at the last during the liquidation. Other basic capital consists of capital securities that meet certain requirements as capital of permanent nature. Complementary capital is capital that can compensate for losses of financial holding companies during liquidation, and consists of capital securities, etc. that meet certain requirements. The deduction items are those held by the Group as assets or capital items, but do not contribute to the ability to absorb losses. Unless otherwise noted, it will be deducted from common stock capital.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

5.	Financial risk management (continued)

The capital ratio of the Group based on Basel III is as of December 31, 2023 and 2024 are as follows:


	2023			2024
Capital :
Tier I common equity capital	W	41,388,070			44,570,426
Additional tier 1 capital		5,118,817			5,822,079

Tier I capital		46,506,887			50,392,505
Tier II capital		3,685,637			3,512,376

Total capital (A)	W	50,192,524			53,904,881

Total risk-weighted assets (B)	W	314,180,698			341,378,776
Capital adequacy ratio (A/B)		15.98	%		15.79	%
Tier I capital adequacy ratio		14.80	%		14.76	%
Common stock ratio		13.17	%		13.06	%

(*)	As of December 31, 2024, the Group maintains an appropriate capital adequacy ratio in accordance with the BIS capital regulation system and the capital ratio as of that date is a provisional figure.

6.	Insurance Risk

(a)

Overview of the insurance risk – Shinhan Life Insurance Co., Ltd.

Overview of the insurance risk

i-1)

Insurance risk

Insurance risk is the likelihood that insured events occur and the uncertainty of the total amount and timing of claims for the insured events occurred. The main risk covered by insurance contracts is the risk that the actual claim or benefit payment will exceed the accumulated insurance liability. This risk can occur for the following reasons:

① Frequency risk: a possibility that the number of occurrences of the insured event is different from the expected number

② Severity risk: a possibility that the cost of an incident may be different from the expected cost level

By experience, when there is more similar insurance or they are more diversified, the less likely it is that abnormal effects from some contracts will occur. The Group takes this into account when underwriting contracts and strives to form a sufficiently large and diversified group of contracts.

Insurance risk includes a lack of risk diversification and relates to geographical location and the nature of the policyholder as well as to the diversification of risk forms or sizes.

If the insurance contract covers death, a catastrophe affects the frequency the most and can affect the frequency of death earlier than expected due to a wide range of causes such as eating habits, smoking, and exercise habits, etc. And if the coverage is survival, medical technology and social conditions can increase the survival rate. The frequency may also be affected by excessive concentration in residential areas of policy holders.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

Insurance accidents in life insurance include not only the death of the policyholder(insured) but also their survival, disability, and hospitalization.

The Group basically classifies the Group’s insurance products into individual insurance and group insurance according to the policyholder. Group insurance means a contract under which the insured belongs to a group of a certain size or larger and in which the policyholder is the representative of the Group or organization. The group insurance can be divided into savings and protections. Protection insurance means insurance in which the sum of benefits paid for survival at the base age does not exceed the premium already paid; savings insurance is defined as insurance, except for protection insurance, in which the sum of benefits paid for survival exceeds the premium already paid. Individual insurance can be classified into death insurance in which the insured’s death is insured, survival insurance in which the life is insured for a certain period of time, and endowment insurance in which life insurance and survival insurance are mixed.

Life insurance products can also be divided into guaranteed fixed rates, floating rates, interest accreted rate linked , and variable types by the applying term structures of interest types.

In the guaranteed fixed interest type, since the expected rate does not change from the time the policyholder enters into the contract to the end of the insurance period, the Group assumes the interest rate risk if the asset management return rate or market interest rate is lower than the expected rate. Floating interest rate type divides the net insurance premium into the guaranteed portion and the reserve portion; the guaranteed portion is applied with the predetermined expected rate, and the reserve portion changes based on the reserve rate for policy reserve according to asset management return rate, which makes partial hedge to interest rate risk, but the Group assumes some interest rate risk from the changes of asset management return rate, etc. since the minimum reserve rate for policy reserve is predetermined.

The Group uses acquisition strategies and reinsurance strategies to manage insurance risk of uncertainties of the total amount and timing of insurance claims paid due to insured events.

① Acceptance strategy

Acceptance strategy means diversifying the type of risk or the level of claims from that are accepted insurance policies. For example, the Group can balance mortality and survival risks. In addition, the selection of policyholders through regular health

check-ups

is one of the major acceptance strategies.

② Reinsurance strategy

The risk of reinsurance contracts held to the Group is based on the accepted insurance contracts, which can be the total amount of risk or risk per contract on a per capita basis or per contract basis. In principle, the reinsurance method provides the risk premium excess reinsurance, but other methods may be used within the scope of the relevant laws as required. The degree of reinsurance held by the Group shall be determined by considering the Group’s assets, contract conditions, risk level, and technology for selecting the contract.

Insurance risk can also be affected by the policyholder’s right to terminate the contract or exercise annuity conversion rights to reduce or not pay the full premium. As a result, insurance risks may be affected by the policyholder’s actions and decisions. The Group’s insurance risk can be estimated on the assumption that the policyholder is reasonable. For example, a person who is worse than a person in good health would have less intention of terminating insurance that covers death. These factors are also reflected in the assumptions about the Group’s insurance liabilities.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

ii)

Insurance risk management policy

-1)

Measurement of Insurance Risk

Unlike other financial instruments, life insurance companies’ insurance policies have the characteristics of long-term contracts, which can be exposed to insurance risk that may arise due to an increase in actual claim payments than the risk rate determined at the time of development of the product and interest rate risk that may arise due to differences in interest rates and maturities between insurance liabilities and asset management.

The purpose of the Group’s risk management is to generate long-term stable growth and profits by proactively preventing and systematically managing the various risks that may arise in the course of management activities, reflecting these uncertain financial environments and the characteristics of life insurance products with long-term attributes.

The Group divides insurance risks arising from life insurance contracts into six

sub-risks:

death risk, longevity risk, disability and illness risk, cancelation risk, operating expense risk, and catastrophe risk. The risk amount for each

sub-risk

is measured on assets and liabilities that may directly or indirectly cause loss to the Group in the event of changes in actuarial assumptions, and is calculated based on the net asset value through the shock scenario method or risk coefficient method for each

sub-risk.

The shock scenario method, one of the insurance risk measurement methods, is a method of calculating the amount of change in net asset value when applying a scenario in which the basic assumptions used for market valuation of assets or liabilities change. On the other hand, the risk coefficient method is a method that calculates the amount by multiplying a specific exposure by a specified risk coefficient, and is suitable for risk amounts that have short maturity or do not have large changes in net asset value during market valuation. In addition, the Group calculates the life insurance risk amount considering the diversification effect by adding the risk amount calculated for each

sub-risk,

reflecting the correlation coefficient between the

sub-risks.

-2)

Insurance risk management organization and management method

The Group measures the statutory minimum level of capital based on the life insurance risk amount and manages it within the allowable range. For this purpose, the Group establishes basic principles of risk management and establishes and implements regulations and management systems to implement them. In addition, the Group supports decision-making related to various risks through the Risk Management Committee and risk management organization, and prepare risk management procedures to identify and manage risks in a timely manner.

In general, risk management procedures are to recognize exposed risks, measure their size, set acceptable limits, monitor them regularly to report to management, and efficiently control and manage risks in case they exceed their limits.

Management methods by risk type are as follows:

Insurance risk management

The Group develops insurance products with proper profitability by setting the profitability guidelines from the time of product development, establishes and operates the acceptance policy to prevent reverse selection, running the claim-screening policy to make claim payments.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

Interest rate risk management

The Group establishes a guideline and consider the market interest rate and asset management return rate to determine the published interest rate and expected interest rate within the guidelines. The Group also establishes the asset management strategy considering the interest rate level and maturity of liabilities; establishes a long-term target portfolio by comprehensively considering the risk level and rate of return of operating assets after analyzing the properties of long-term insurance liabilities, and sets a viable portfolio as a guideline every year to allocate and manage assets.

Liquidity risk management

The Group reviews and manages the amount of claims paid insurance and liquid assets periodically.

iii)

Korean Insurance Capital Standard(K-ICS)

K-ICS

is an equity capital system that precisely evaluates risk and financial soundness by evaluating the assets and liabilities of insurance companies to market so that they can be applied under the financial statements prepared in accordance with IFRS 17 on insurance contracts. To maintain consistency in

mark-to-market

valuation and ensure consistency with international capital regulations, the supervisory authorities introduced

K-ICS

based on

mark-to-market

valuation, which improves the quality of insurance companies’ capital by calculating available and required capital in line with economic substance. This is a system designed to encourage improvement and strengthen risk management.

With the introduction of

K-ICS,

the supervisory authorities have established standards for preparing a financial position statement based on soundness supervision standards to separately calculate assets and liabilities that meet the purpose of supervision and at the same time substantially reflect the risks of insurance companies. In the

K-ICS,

the available capital, or solvency amount, is measured based on the basic capital and supplementary capital classified by the loss absorption capacity of the net asset amount in the statement of financial position based on soundness supervision standards evaluated at market price, and there are some restrictions on loss compensation. Supplementary capital, defined as having, can be reflected in the solvency amount up to 50% of the required capital. In addition, the required capital under the

K-ICS,

that is, the solvency standard amount, refers to the amount of potential losses that may occur in the insurance company over the next year. Specifically, the

K-ICS

divides the risks exposed due to insurance contract underwriting and asset management into five risks: life and long-term

non-life

insurance risk, general

non-life

insurance risk, market risk, credit risk, and operational risk. Under the 99.5% confidence level, the solvency standard amount is required to be measured by calculating the maximum loss that can occur over the next year using the shock scenario method.

Under the

K-ICS,

the solvency ratio is calculated by dividing the solvency amount by the solvency standard amount. If the insurance company’s solvency ratio is less than 100%, it indicates that the solvency standard amount measured by the potential loss amount cannot be covered with capital, which means that the insurance company’s capital soundness has become poor, and the supervisory authority must comply with the Insurance Business Supervision Regulations. Accordingly, insurance companies with a solvency ratio of less than 100% are required to take timely corrective actions such as management improvement recommendations, management improvement requests, or management improvement orders. As such, the new solvency system is a system in which the supervisory authorities seek to protect policyholders by supervising the capital adequacy and risk management capabilities of insurance companies.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

iv)

Financial risks related to insurance contracts

Investment contracts that include insurance contracts and discretionary participation feature may be exposed to financial risks although it is an insurance liability, and the form of exposure is as follows:

iv-1)

Credit risk

Credit risk refers to the risk of loss resulting from the borrower’s failure to repay a loan or meet contractual obligations. the Group’s reinsurance assets are exposed to credit risk as assets that may incur losses if the reinsurer defaults at the time of receipt of the claims and receivables.

iv-2) Interest rate risk

Interest rate risk means the risk that arises when the Group’s financial position fluctuates unfavorably due to the effect of interest rates on assets and liabilities. The Group manages matched assets and liabilities for each portfolio to minimize the impact of mismatches between assets and liabilities caused by interest rate fluctuations, thus reducing the risk.

iv-3) Liquidity risk

Liquidity risk refers to the risk that assets and liabilities are subject to inconsistency or failure to respond to unexpected cash outflows. Therefore, future cash outflows from investment contracts, including insurance liabilities which account for most of the Group’s liabilities and discretionary participation features, are factors used to determine the level of risk associated with the Group’s liquidity.

The purpose of the Group’s management of liquidity risk is to maintain sufficient liquidity to prepare for repayments arising from insurance contracts under normal circumstances or when market shocks occur. The Group’s main liquidity risk management methods are as follows:

Regularly inspect and manage the amount of insurance payments and liquid assets

Maintain and manage a portfolio comprised of assets that can be relatively easily liquidated in preparation for unexpected disruptions in financing.

Monitoring liquidity ratios by running liquidity stress tests

Establishment of asset liability management strategy considering insurance contract liability cash flow

iv-4) Market risk

Market risk refers to the risk of loss arising when the Group’s financial position fluctuates unfavorably due to adverse price fluctuations such as stock prices and exchange rates. The Group carries out insurance contract transactions denominated in foreign currencies and is therefore exposed to exchange rate fluctuations. Exposure to exchange rate fluctuations is managed through foreign exchange forward contracts and interest rate swaps between different currencies.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

Concentration of Insurance Risk

v-1)

The concentration of insurance risks by region as of December 31, 2023 and 2024 are as follow:


	2023
	Insurance Contract		Reinsurance Contract		Total
Domestic	W	38,360,261		161,301		38,521,562
International		5,001		—		5,001

	W	38,365,262		161,301		38,526,563


	2024
	Insurance Contract			Reinsurance Contract		Total
Domestic	W	41,195,537			345,177		41,540,714
International		(1,341	)		—		(1,341	)

	W	41,194,196			345,177		41,539,373

v-2)

Market risk arising from insurance contracts

The amount of currency insurance liabilities (based on the fulfillment cash flows) as of December 31, 2023 and December 31, 2024 are as follows:


	2023				2024
	Foreign currency amount		KRW converted amount		Foreign currency amount			KRW converted amount
Foreign currency insurance contract liabilities:
USD (thousand)		192,052		247,632		168,209			247,267
EUR (thousand)		124		177		119			182
VND (million)		94,010		5,001		(23,242	)		(1,341	)

				252,810					246,108

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

vi) Sensitivity to Insurance Risk

The impact of changes in key assumptions on insurance contract liabilities (assets) as of December 31, 2023 and 2024 are as follows:


		2023
		Base amount and base amount after change								Profit and capital impact (before tax)
		Fulfillment cash flows (*2)				Contractual service margin				Profit(loss) (*3)						Other comprehensive income
	Sensitivity (*1)	Before reflecting reinsurance effect		After reflecting reinsurance effect		Before reflecting reinsurance effect		After reflecting reinsurance effect		Before reflecting reinsurance effect			After reflecting reinsurance effect			Before reflecting reinsurance effect			After reflecting reinsurance effect
Base amount		W	36,532,133		36,758,686		7,168,725		7,037,730		—			—			—			—
Mortality rate	Increased by 3.27%		36,649,373		36,873,667		7,048,751		6,920,015		2,734			2,734			(669	)		16,340
Disability and illness (fixed compensation)	Increased by 3.40%
Disability and illness (actual loss compensation)	Increased by 2.62%		37,207,600		37,392,758		6,518,899		6,429,299		(25,641	)		(25,641	)		79,046			91,155
Long-term property and other	Increased by 4.19%		36,532,133		36,758,686		7,168,725		7,037,730		—			—			—			—
Surrender rate (increase)	Increased by 9.16%		37,012,292		37,216,745		6,696,604		6,587,709		(8,038	)		(8,038	)		(248,007	)		(231,815	)
Surrender rate (decrease)	Decreased by 9.16%		36,002,582		36,252,706		7,700,114		7,545,548		(1,838	)		(1,838	)		265,129			283,049
Expense	Increased by 2.62%
Expense (inflation)	0.26%p		36,724,665		36,951,218		6,982,049		6,851,054		(5,856	)		(5,856	)		29,725			29,725

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)


		2024
		Base amount and base amount after change								Profit and capital impact (before tax)
		Fulfillment cash flows (*2)				Contractual service margin				Profit(loss) (*3)						Other comprehensive income
	Sensitivity (*1)	Before reflecting reinsurance effect		After reflecting reinsurance effect		Before reflecting reinsurance effect		After reflecting reinsurance effect		Before reflecting reinsurance effect			After reflecting reinsurance effect			Before reflecting reinsurance effect			After reflecting reinsurance effect
Base amount		W	39,380,251		39,819,864		7,224,114		6,869,326		—			—			—			—
Mortality rate	Increased by 3.27%		39,511,663		39,946,680		7,091,068		6,740,875		1,635			1,635			(9,952	)		8,702
Disability and illness (fixed compensation)	Increased by 3.40%
Disability and illness (actual loss compensation)	Increased by 2.62%		40,083,199		40,478,965		6,567,655		6,256,714		(46,488	)		(46,488	)		16,176			34,285
Long-term property and other	Increased by 4.19%		39,380,251		39,819,864		7,224,114		6,869,326		—			—			—			—
Surrender rate(increase)	Increased by 9.16%		40,126,708		40,533,222		6,503,159		6,181,469		(25,501	)		(25,501	)		(104,650	)		(86,772	)
Surrender rate(decrease)	Decreased by 9.16%		38,556,883		39,031,830		8,041,498		7,651,376		5,984			5,984			115,085			133,903
Expense	Increased by 2.62%
Expense(inflation)	0.26%p		39,592,255		40,031,868		7,024,540		6,669,753		(12,430	)		(12,430	)		9,624			9,624

(*1)

The risk adjustment is calculated at the 75% confidence level.

(*2)

The risk adjustment included in the fulfillment cash flows was calculated without shock.

(*3)

The profit (loss) for the year consists of (i) an increase in the present value estimate of future cash flows that exceeds the carrying amount of the contractual service margin, resulting in a loss due to changes in assumptions, and (ii) changes in the present value estimate of future cash flows allocated to the loss component, which also result from changes in assumptions.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

vii)

Credit risk arising from insurance contracts

The amount of the reinsurance contracts held, which is an asset according to risk level, as of December 31, 2023 and December 31, 2024 are as follows:


	2023				2024
	Reinsurance residual coverage assets		Reinsurance incident assets		Reinsurance residual coverage assets		Reinsurance incident assets
AA+ ~ AA-	W	38,207		5,204		—		146

viii)

Interest rate risk arising from insurance contracts

The impact of exposure to interest rate risk and interest rate changes on profit and loss and capital as of December 31, 2023 and December 31, 2024 are as follows:

viii-1)

Interest rate risk exposure


	2023		2024
Exposure to financial products measured at fair value (*1)	W	46,700,713		48,843,348
Exposure to insurance contract (*2)		36,758,783		39,820,035

Net exposure (financial products - insurance contracts)	W	9,941,930		9,023,313

(*1)

It is the total amount of financial assets measured at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, and derivative assets (liabilities).

(*2)

It is the total amount excluding the contractual service margin from the remaining coverage elements of insurance contract liabilities and reinsurance contract assets (liabilities).

viii-2)

Interest rate risk sensitivity


	2023						2024
	Profit and loss effect			Capital effect			Profit and loss effect			Capital effect
100 bp Increase
Insurance contract (*1)	W	—			3,412,769			—			4,357,245
Reinsurance contract (*1)		—			15,543			—			50,365
Financial assets (*2)		(37,574	)		(4,258,875	)		(35,934	)		(4,777,699	)
100 bp Decrease
Insurance contract (*1)	W	—			(4,382,646	)		—			(6,073,734	)
Reinsurance contract (*1)		—			(17,723	)		—			(59,948	)
Financial assets (*2)		37,574			4,258,875			35,934			5,837,965

(*1)

This is the impact on capital (before tax) due to changes in expected cash flows of insurance and reinsurance contracts, excluding variable annuities/savings.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

(*2)

Calculated for assets related to insurance contracts excluding variable annuities/savings. The profit and loss effect is the change in financial assets recognized at fair value through profit or loss, and the capital effect is the change in financial assets measured at fair value through other comprehensive income.

ix)

Liquidity risk arising from insurance contracts

The maturity amount of undiscounted remaining contractual cash flows as of December 31, 2023 and 2024 are as follow. This amount does not include matters relating to remaining coverage liabilities (insurance contracts and reinsurance contracts) measured under the premium allocation approach.


	2023
	Less than or equal to 1 year			1 ~ 2 years			2 ~ 3 years			3 ~ 4 years			4 ~ 5 years			More than 5 years			Total
Insurance contract
General insurance:
Cash Inflow	W	5,120,022			4,408,374			3,892,580			3,500,316			3,073,794			51,775,416			71,770,502
Cash Outflow		(5,509,719	)		(4,969,773	)		(4,263,071	)		(4,356,801	)		(4,235,246	)		(132,831,760	)		(156,166,370	)

		(389,697	)		(561,399	)		(370,491	)		(856,485	)		(1,161,452	)		(81,056,344	)		(84,395,868	)
Variable insurance:
Cash Inflow		582,036			485,566			412,870			350,176			297,209			3,160,998			5,288,855
Cash Outflow		(943,282	)		(836,548	)		(764,049	)		(711,324	)		(641,963	)		(10,096,136	)		(13,993,302	)

		(361,246	)		(350,982	)		(351,179	)		(361,148	)		(344,754	)		(6,935,138	)		(8,704,447	)

		(750,943	)		(912,381	)		(721,670	)		(1,217,633	)		(1,506,206	)		(87,991,482	)		(93,100,315	)

Reinsurance contract
Cash Inflow		203,944			204,852			204,904			204,760			205,383			7,421,755			8,445,598
Cash Outflow		(225,690	)		(225,630	)		(224,694	)		(222,873	)		(221,054	)		(7,686,228	)		(8,806,169	)

		(21,746	)		(20,778	)		(19,790	)		(18,113	)		(15,671	)		(264,473	)		(360,571	)
Total (including variable insurance)		(772,689	)		(933,159	)		(741,460	)		(1,235,746	)		(1,521,877	)		(88,255,955	)		(93,460,886	)

Total (excluding variable insurance)	W	(411,443	)		(582,177	)		(390,281	)		(874,598	)		(1,177,123	)		(81,320,817	)		(84,756,439	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)


	2024
	Less than or equal to 1 year			1 ~ 2 years			2 ~ 3 years			3 ~ 4 years			4 ~ 5 years			More than 5 years			Total
Insurance contract
General insurance:
Cash Inflow	W	4,959,356			4,502,944			4,087,588			3,652,621			3,114,091			40,523,130			60,839,730
Cash Outflow		(5,324,282	)		(4,157,931	)		(4,287,561	)		(4,084,548	)		(4,318,989	)		(126,037,788	)		(148,211,099	)

		(364,926	)		345,013			(199,973	)		(431,927	)		(1,204,898	)		(85,514,658	)		(87,371,369	)
Variable insurance:
Cash Inflow		446,902			371,371			307,145			254,674			214,352			1,923,480			3,517,924
Cash Outflow		(880,558	)		(752,425	)		(682,066	)		(612,330	)		(536,499	)		(7,753,564	)		(11,217,442	)

		(433,656	)		(381,054	)		(374,921	)		(357,656	)		(322,147	)		(5,830,084	)		(7,699,518	)

		(798,582	)		(36,041	)		(574,894	)		(789,583	)		(1,527,045	)		(91,344,742	)		(95,070,887	)

Reinsurance contract
Cash Inflow		225,165			216,544			209,995			207,721			207,575			8,223,398			9,290,398
Cash Outflow		(244,930	)		(237,756	)		(230,883	)		(227,262	)		(226,934	)		(9,123,146	)		(10,290,911	)

		(19,765	)		(21,212	)		(20,888	)		(19,541	)		(19,359	)		(899,748	)		(1,000,513	)
Total (including variable insurance)		(818,347	)		(57,253	)		(595,782	)		(809,124	)		(1,546,404	)		(92,244,490	)		(96,071,400	)

Total (excluding variable insurance)	W	(384,691	)		323,801			(220,861	)		(451,468	)		(1,224,257	)		(86,414,406	)		(88,371,882	)

As of December 31, 2023 and 2024, the amount to be paid upon request by the contractor of insurance contracts issued by Shinhan Life Insurance Co., Ltd. is

52,555,004 million and

53,227,935 million.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

(x)

Claims development

The amount of claims development as of December 31, 2023 and 2024 are as follows:


	2023
Progress year	Year of incident
	2019		2020		2021		2022		2023		Total
Undiscounted estimate of ultimate loss	W	962,548		950,728		1,062,120		1,098,646		1,153,875		5,227,917
Paid claims:
Current year		777,773		771,780		857,031		888,276		932,827		4,227,687
1 year after		151,943		144,712		167,000		172,431		—		636,086
2 years after		19,955		19,220		23,317		—		—		62,492
3 years after		8,972		11,202		—		—		—		20,174
4 years after		3,905		—		—		—		—		3,905

Cumulative paid claims	W	962,548		946,914		1,047,348		1,060,707		932,827		4,950,344
The difference between the estimated ultimate loss and paid claims		—		3,815		14,772		37,940		221,048		277,575
Discount effect		—		—		—		—		—		(9,311	)
Future loss adjustment expenses		—		—		—		—		—		5,313
Reported but unpaid claims		—		—		—		—		—		1,535,849
Risk adjustment for non-financial risks		—		—		—		—		—		18,604
Reinsurance effect		—		—		—		—		—		(65,252	)

Total liabilities for incurred claims	W	—		—		—		—		—		1,762,778


	2024
Progress year	Year of incident
	2020		2021		2022		2023		2024		Total
Undiscounted estimate of ultimate loss	W	959,974		1,070,850		1,104,112		1,152,207		1,233,110		5,520,253
Paid claims:
Current year		746,984		833,427		857,650		896,474		957,713		4,292,248
1 year after		166,072		187,415		195,026		202,132		—		750,645
2 years after		23,751		27,433		27,763		—		—		78,947
3 years after		13,248		12,079		—		—		—		25,327
4 years after		4,849		—		—		—		—		4,849

Cumulative paid claims	W	954,904		1,060,354		1,080,439		1,098,606		957,713		5,152,016
The difference between the estimated ultimate loss and paid claims		5,070		10,497		23,673		53,601		275,396		368,237
Discount effect		—		—		—		—		—		(11,011	)
Future loss adjustment expenses		—		—		—		—		—		7,316
Reported but unpaid claims		—		—		—		—		—		1,436,530
Risk adjustment for non-financial risks		—		—		—		—		—		14,041
Reinsurance effect		—		—		—		—		—		(94,435	)

Total liabilities for incurred claims	W	—		—		—		—		—		1,720,678

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

(b)

Overview of the insurance risk – Shinhan EZ General Insurance CO., Ltd.

Overview of insurance risks

Insurance risk is defined as the risk that arises in connection with the underwriting of insurance contracts and payment of claims, which are the unique tasks of an insurance company, and is managed by dividing it into long-term

non-life

insurance risk and general

non-life

insurance risk.

Long-term

non-life

insurance risk refers to the risk of loss due to risk factors that may arise in a long-term

non-life

insurance contract and is divided and measured into death risk, longevity risk, disability and illness risk, property/other risk, operating expense risk, project cost risk, and catastrophe risk. General

non-life

insurance risk refers to the risk of loss due to risk factors that may arise in general

non-life

insurance contracts, and is measured by dividing it into insurance price risk, reserve risk, and catastrophe risk.

i-1)

Long-term

non-life

insurance risk

Mortality risk and longevity risk refer to the risk of unexpected losses related to the death of the policyholder, and are measured by the risk of a decrease in net asset value due to changes in the mortality level.

Disability and illness risk is the risk of unexpected losses related to the policyholder’s disability or illness, and is measured as the risk of a decrease in net asset value due to changes in the risk level of disability and illness coverage.

Property and other risks are the risk of unexpected losses related to property, costs, compensation, and other collateral, and are measured as the risk of a decrease in net asset value due to changes in the risk level of property, costs, compensation, and other collateral.

Cancelation risk refers to the risk of unexpected losses due to the policyholder’s exercise of options, such as contract termination or early withdrawal, and is measured by the risk of a decrease in net asset value due to changes in the policyholder’s option exercise rate or group termination of policyholders.

Operating expense risk includes the risk arising from changes in spending due to inflation and the level of future costs related to insurance contract costs. Costs related to insurance contracts include all cost items except allowances.

Catastrophe risk refers to the risk of potential loss due to extreme or exceptional risks (e.g. epidemic disease, major accident, etc.) that are not considered in the risk of death.

i-2)

General

non-life

insurance risk

Insurance price risk refers to the risk resulting from uncertainty related to the timing, frequency, and severity of future insured events.

Reserve risk refers to the risk that the reserve liability accumulated to pay insurance claims for insurance events that have occurred in the relevant contract will not cover the insurance claims to be paid in the future.

Catastrophe risk refers to the risk of potential loss due to extreme or exceptional risks (natural disasters, major accidents, major guarantees, etc.) that are not considered in insurance prices and reserve risks.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

6.	Insurance Risk (continued)

ii)

Measurement and management of insurance risk

ii-1)

Measurement of insurance risk

Shinhan EZ General Insurance Co., Ltd. measures general and long-term insurance risks through the solvency amount and the statutory solvency amount calculation criteria of Enforcement Rules of the Insurance Business Supervisory Regulations and operates related risk management policies.

ii-2)

Insurance risk management organization and management method

Shinhan EZ General Insurance Co., Ltd. determines an insurance risk permissible limit every year, monitors compliance with the limit, and executes in accordance with predetermined countermeasures when the insurance risk exceeds the limit. In addition, underwriting guidelines, retention, and reinsurance strategies are established and operated so that risks can be retained at an appropriate level for each type of insurance.

ii-3)

Claims development

When estimating occurrences of accidents, Shinhan EZ General Insurance Co., Ltd. considers that the probability of occurrence and scale of occurrence of future experience may be more unfavorable than the assumptions reflected in risk adjustment. In general, uncertainty related to insurance claims and costs due to an insured event is greatest when the accident is in its early stages, and as the year of the accident progresses, the uncertainty of the final claims and costs decreases.

ii-4)

Sensitivity to insurance risk

Shinhan EZ General Insurance Co., Ltd. manages insurance risks through sensitivity analysis based on cancelation rates, loss ratios, and operating expense rates that are judged to have a significant impact on the amount, timing, and uncertainty of the insurer’s future cash flows.

ii-5)

Liquidity risk arising from insurance contracts

Liquidity risk arising from insurance contracts may result in the inability to respond to payment demands due to inconsistencies in the operation of funds and the procurement period and amount, or incur losses due to the procurement of high-interest funds or unfavorable sales of held assets to resolve fund shortages. It means there is a risk. Shinhan EZ General Insurance Co., Ltd. monitors liquidity ratios to manage liquidity risk.

ii-6)

Credit risk arising from insurance contracts

Credit risk arising from an insurance contract refers to the possibility of economic loss that may occur if the reinsurer, the counterparty to the transaction, is unable to fulfill its obligations specified in the contract due to default or deterioration of credit rating. Shinhan EZ General Insurance Co., Ltd. transacts as a reinsurer with high-quality insurance companies that have been given a rating of

BBB-

or higher by S&P or an equivalent rating through strict internal review.

ii-7)

Interest rate risk arising from insurance contracts

Interest rate risk exposed to Shinhan EZ General Insurance Co., Ltd. ‘s insurance contracts is the risk of unexpected losses arising from changes in net interest income or net asset value depending on changes in interest rates. The consolidated entity manages this to minimize unexpected losses arising from interest rate changes.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

7.	Investment in subsidiaries

(a)

The summarized financial information of the controlling company and the Group’s major subsidiaries as of December 31, 2023 and 2024 is as follows:


	2023						2024
Investees (1), (2)	Asset balance		Liability balance		Equity balance		Asset balance		Liability balance		Equity balance
Shinhan Financial Group (separate)	W	37,289,555		11,190,414		26,099,141		37,672,303		11,324,128		26,348,175
Shinhan Bank		508,497,276		474,966,063		33,531,213		556,691,161		519,926,426		36,764,735
Shinhan Card Co., Ltd.		43,420,162		35,365,175		8,054,987		44,137,094		35,860,198		8,276,896
Shinhan Securities Co., Ltd.		52,497,500		47,131,211		5,366,289		49,026,790		43,532,326		5,494,464
Shinhan Life Insurance Co., Ltd.		58,641,345		50,218,211		8,423,134		59,843,268		52,802,301		7,040,967
Shinhan Capital Co., Ltd.		13,018,880		10,791,281		2,227,599		12,512,659		10,259,145		2,253,514
Jeju Bank		7,162,714		6,626,863		535,851		7,444,771		6,854,663		590,108
Shinhan Asset Management Co., Ltd.		409,246		134,030		275,216		503,319		186,991		316,328
SHC Management Co., Ltd.		10,051		—		10,051		10,325		—		10,325
Shinhan DS		137,141		85,417		51,724		139,322		76,603		62,719
Shinhan Savings Bank		3,046,110		2,696,597		349,513		2,879,145		2,512,348		366,797
Shinhan Asset Trust Co., Ltd.		463,445		85,555		377,890		775,844		471,890		303,954
Shinhan Fund Partners Co., Ltd		110,849		20,136		90,713		122,507		22,580		99,927
Shinhan REITs Management Co., Ltd.		72,018		9,522		62,496		82,781		12,640		70,141
Shinhan AI Co., Ltd. (*3)		35,674		940		34,734		—		—		—
Shinhan Venture Investment Co., Ltd.		171,783		90,515		81,268		176,165		90,967		85,198
Shinhan EZ General Insurance Co., Ltd.		261,204		131,875		129,329		289,867		178,573		111,294

(*1)	The consolidated financial statements of the consolidated subsidiaries are based on consolidated financial statements, if applicable.

(*2)	Trusts, beneficiary certificates, securitization special limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.

(*3)	Shinhan AI Co., Ltd. was liquidated in the current period.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

7.	Investment in subsidiaries (continued)

(b) The summarized income information of the controlling company and the Group’s major subsidiaries for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022								2023								2024
Investees (1), (2)	Operating Revenue		Net Income (*3)			Comprehensive Income (*3)			Operating Revenue		Net Income (*3)			Comprehensive Income (*3)			Operating Revenue		Net Income (*3)			Comprehensive Income (*3)
Shinhan Financial Group (separate)	W	1,806,604		1,249,251			1,251,294			2,160,092		1,671,011			1,669,579			2,556,503		1,619,867			1,617,202
Shinhan Bank		35,514,460		3,045,732			2,394,238			37,459,678		3,067,991			3,707,829			47,357,783		3,695,913			4,414,685
Shinhan Card Co., Ltd.		4,761,181		644,555			671,113			5,378,610		621,908			583,014			6,173,106		575,261			553,274
Shinhan Securities Co., Ltd.		10,548,842		412,339			427,451			9,947,400		100,840			128,378			11,446,637		179,160			179,829
Shinhan Life Insurance Co., Ltd.		6,377,305		449,392			(143,049	)		6,451,715		472,395			475,656			7,044,374		528,401			(1,056,025	)
Shinhan Capital Co., Ltd.		922,592		303,276			307,988			1,204,941		304,024			298,609			1,201,874		116,948			115,203
Jeju Bank		275,582		22,820			11,657			371,210		5,101			20,189			382,121		10,416			12,709
Shinhan Credit Information Co., Ltd.		20,705		1,029			1,450			—		—			—			—		—			—
Shinhan Asset Management Co., Ltd.		174,242		37,064			36,892			171,145		51,272			51,225			241,409		66,003			65,512
SHC Management Co., Ltd.		—		110			110			—		305			305			—		274			274
Shinhan DS		279,453		6,835			7,739			322,895		7,954			4,191			331,631		8,756			10,996
Shinhan Savings Bank		241,013		38,384			37,884			273,630		29,943			29,724			255,650		17,855			17,310
Shinhan Asset Trust Co., Ltd.		152,563		73,654			74,236			148,980		53,430			53,055			100,626		(320,601	)		(320,675	)
Shinhan Fund Partners Co., Ltd. (*5)		55,270		9,500			9,500			62,674		12,193			12,193			67,420		15,371			15,310
Shinhan REITs Management Co., Ltd.		11,433		540			609			21,512		9,485			9,446			26,131		7,688			7,644
Shinhan AI Co., Ltd. (*4)		10,668		(2,217	)		(2,301	)		8,727		(4,596	)		(4,432	)		—		(1,927	)		(1,928	)
Shinhan Venture Investment Co., Ltd.		19,839		1,526			1,418			28,209		4,441			4,266			45,542		3,776			3,931
Shinhan EZ General Insurance Co., Ltd. (*6)		10,228		(5,438	)		(5,062	)		43,747		(7,778	)		(7,289	)		93,894		(17,403	)		(18,035	)

(*1)	The consolidated financial statements of the consolidated subsidiaries are based on consolidated financial statements, if applicable.

(*2)	Trusts, beneficiary certificates, securitization special limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.

(*3)	This amount includes non-controlling interests.

(*4)	Shinhan AI Co., Ltd was liquidated in the current period, and the amounts for the current and prior periods are those incurred before the liquidation.

(*5)	Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners Co., Ltd. on April 3, 2023.

(*6)	For the acquired company, the amount is from the consolidated statements of comprehensive income for the period after the acquisition point.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

7.	Investment in subsidiaries (continued)

(c)

Change in the scope of consolidation

Change in consolidated subsidiaries for the year ended December 31, 2024 are as follows:


	2024
	Company	Description
Excluded	Shinhan AI Co., Ltd.	Liquidation
	PT Shinhan Asset Management Indonesia	Disposal
	SHINHAN ASSET MGT HK, LIMITED	Decrease in ownership stake

(*)

Subsidiaries such as trust, beneficiary certificate, corporate restructuring fund and private equity fund which are not actually operating their own business are excluded.

8.	Operating segments

(a)

Segment information

The

general descriptions by operating segments as of December 31, 2024 are as follows:


Segment		Description
Banking		Credit to customers, lending to and receiving deposits from customers, and its accompanying work

Credit card		Sales of credit cards, cash services, card loan services, installment financing, lease and its accompanying work

Securities		Securities trading, consignment trading, underwriting and its accompanying work

Insurance		Life insurance business, Non-Life insurance business and its accompanying work

Credit		Facility rental, new technology business financing, others and its accompanying work

Others		Business segments that do not belong to the above segments, such as real estate trust, investment advisory services, venture business investment and other remaining business

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

8.	Operating segments (continued)

(b)

The following tables provide information of income and expense for each operating segment for the years ended December 31, 2022, 2023 and 2024:


	2022
	Banking			Credit card			Securities			Life insurance			Credit			Others			Consolidation adjustment			Total
Net interest income	W	8,358,526			1,798,005			428,420			(124,453	)		260,011			153,214			(276,870	)		10,596,853
Net fees and commission income (expense)		801,109			702,392			484,632			(4,348	)		30,587			398,854			316			2,413,542
Reversal of (provision for) credit loss allowance		(621,690	)		(560,264	)		546			(16,459	)		(19,803	)		(72,857	)		(1,286	)		(1,291,813	)
General and administrative expenses		(3,761,767	)		(777,496	)		(690,539	)		(166,255	)		(80,320	)		(390,419	)		222,636			(5,644,160	)
Other income (expense), net		(715,837	)		(283,011	)		(102,084	)		850,708			158,560			84,214			(161,408	)		(168,858	)
Operating income (expense)		4,060,341			879,626			120,975			539,193			349,035			173,006			(216,612	)		5,905,564
Equity method income (loss)		22,301			7,115			70,270			4,221			54,937			(735	)		(36,412	)		121,697
Income tax expense		1,030,445			227,769			145,301			83,514			98,468			35,006			(9,391	)		1,611,112

Profit for the year	W	2,974,716			738,391			412,339			439,850			303,275			142,872			(255,929	)		4,755,514

Controlling interest	W	2,973,996			735,204			412,496			439,850			303,275			142,872			(342,050	)		4,665,643
Non-controlling interests		720			3,187			(157	)		—			—			—			86,121			89,871

	2023
	Banking			Credit card			Securities			Insurance			Credit			Others			Consolidation adjustment			Total
Net interest income	W	8,548,138			1,895,298			443,676			(198,785	)		248,804			125,238			(244,447	)		10,817,922
Net fees and commission income (expense)		748,044			968,665			500,441			(3,210	)		17,463			391,122			24,681			2,647,206
Reversal of (provision for) credit loss allowance		(914,848	)		(883,956	)		(152,146	)		(16,116	)		(177,912	)		(99,203	)		(322	)		(2,244,503	)
General and administrative expenses		(3,876,485	)		(778,564	)		(720,835	)		(218,820	)		(80,106	)		(403,395	)		182,868			(5,895,337	)
Other income (expense), net		(495,331	)		(267,959	)		181,927			1,087,789			335,205			327,511			(393,580	)		775,562
Operating income (expense)		4,009,518			933,484			253,063			650,858			343,454			341,273			(430,800	)		6,100,850
Equity method income (loss)		8,556			(2,831	)		93			(302	)		66,918			664			51,990			125,088
Income tax expense		936,472			218,332			36,239			167,417			89,849			81,695			(43,044	)		1,486,960

Profit for the year	W	2,969,829			725,171			100,840			464,617			304,024			243,928			(330,409	)		4,478,000

Controlling interest	W	2,969,519			723,845			100,915			464,617			304,024			243,928			(438,813	)		4,368,035
Non-controlling interests		310			1,326			(75	)		—			—			—			108,404			109,965

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

8.	Operating segments (continued)


	2024
	Banking			Credit card			Securities			Insurance			Credit			Others			Consolidation adjustment			Total
Net interest income	W	8,988,515			1,931,171			573,375			(135,352	)		143,672			92,600			(191,679	)		11,402,302
Net fees and commission income (expense)		867,909			934,519			535,910			(4,380	)		17,442			336,957			26,517			2,714,874
Provision for credit loss allowance		(425,429	)		(917,239	)		(136,466	)		(6,237	)		(151,258	)		(375,991	)		(654	)		(2,013,274	)
General and administrative expenses		(3,983,172	)		(855,125	)		(786,141	)		(201,994	)		(65,273	)		(437,691	)		213,156			(6,116,240	)
Other income (expense), net		(507,922	)		(215,670	)		95,227			1,055,611			177,677			548,614			(682,529	)		471,008
Operating income (expense)		4,939,901			877,656			281,905			707,648			122,260			164,489			(635,189	)		6,458,670
Equity method income (loss)		9,856			(4,053	)		(558	)		(894	)		25,148			(5,453	)		(47,868	)		(23,822	)
Income tax expense		1,040,924			224,731			54,238			193,041			27,044			52,899			(121,955	)		1,470,922

Profit for the year	W	3,610,084			671,506			179,160			510,998			116,948			(124,845	)		(405,681	)		4,558,170

Controlling interest	W	3,609,620			668,392			179,157			510,998			116,948			(124,845	)		(510,093	)		4,450,177
Non-controlling interests		464			3,114			3			—			—			—			104,412			107,993

(c)

Interest gains and losses from segment external customers and cross-sector interest gains and losses for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022
	Banking			Credit card			Securities			Insurance			Credit			Others		Consolidation adjustment (*)			Total
Net interest income from:
External customers (*)	W	8,366,892			1,857,351			442,554			(127,840	)		269,230			71,561		(282,895	)		10,596,853
Internal transactions		(8,366	)		(59,346	)		(14,134	)		3,387			(9,219	)		81,653		6,025			—

	W	8,358,526			1,798,005			428,420			(124,453	)		260,011			153,214		(276,870	)		10,596,853


	2023
	Banking			Credit card			Securities			Insurance			Credit			Others		Consolidation adjustment (*)			Total
Net interest income from:
External customers (*)	W	8,557,545			1,961,035			449,835			(208,812	)		265,943			36,700		(244,324	)		10,817,922
Internal transactions		(9,407	)		(65,737	)		(6,159	)		10,027			(17,139	)		88,538		(123	)		—

	W	8,548,138			1,895,298			443,676			(198,785	)		248,804			125,238		(244,447	)		10,817,922


	2024
	Banking			Credit card			Securities			Insurance			Credit			Others		Consolidation adjustment (*)			Total
Net interest income from:
External customers (*)	W	8,987,390			1,997,334			596,982			(129,874	)		170,737			1,207		(221,474	)		11,402,302
Internal transactions		1,125			(66,163	)		(23,607	)		(5,478	)		(27,065	)		91,393		29,795			—

	W	8,988,515			1,931,171			573,375			(135,352	)		143,672			92,600		(191,679	)		11,402,302

(*)	Consolidated adjustment to net interest income from external customers is from the securities and others which were measured in fair values as a part of business combination accounting.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

8.	Operating segments (continued)

(d)

The following tables provide information of net fees and commission income (expense) of each operating segment for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022
	Banking			Credit card			Securities			Insurance			Credit		Others		Consolidation adjustment		Total
Net fees and commission income from:
External customers	W	844,894			734,900			494,829			8,648			26,737		303,534		—		2,413,542
Internal transactions		(43,785	)		(32,508	)		(10,197	)		(12,996	)		3,850		95,320		316		—

	W	801,109			702,392			484,632			(4,348	)		30,587		398,854		316		2,413,542


	2023
	Banking			Credit card			Securities			Insurance			Credit		Others		Consolidation adjustment		Total
Net fees and commission income from:
External customers	W	794,021			1,019,262			507,109			2,151			14,917		309,746		—		2,647,206
Internal transactions		(45,977	)		(50,597	)		(6,668	)		(5,361	)		2,546		81,376		24,681		—

	W	748,044			968,665			500,441			(3,210	)		17,463		391,122		24,681		2,647,206


	2024
	Banking			Credit card			Securities			Insurance			Credit		Others		Consolidation adjustment		Total
Net fees and commission income from:
External customers	W	911,057			984,884			541,673			3,561			15,910		257,789		—		2,714,874
Internal transactions		(43,148	)		(50,365	)		(5,763	)		(7,941	)		1,532		79,168		26,517		—

	W	867,909			934,519			535,910			(4,380	)		17,442		336,957		26,517		2,714,874

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

11.	Derivatives (continued)


	2023
	Gains (losses) on hedges recognized in other comprehensive income			Hedge ineffectiveness recognized in profit or loss (*2)			From cash flow hedge reserve to profit or loss reclassified amount
Cash flow hedges:
Interest rate risk (*1)	W	99,268			(512	)		(1,760	)
Foreign exchange risk (*1)		(10,294	)		(7,069	)		(25,698	)
Discontinuation of cash flow hedges		(5,531	)		—			14,659
Hedge of net investments:
Foreign exchange risk (*1)		(3,903	)		3,673			—

	W	79,540			(3,908	)		(12,799	)


	2024
	Gains (losses) on hedges recognized in other comprehensive income			Hedge ineffectiveness recognized in profit or loss (*2)			From cash flow hedge reserve to profit or loss reclassified amount
Cash flow hedges:
Interest rate risk (*1)	W	89,293			(5,034	)		(151	)
Foreign exchange risk (*1)		2,548			(6,184	)		210,424
Discontinuation of cash flow hedges		(39,621	)		—			47,957
Hedge of net investments:
Foreign exchange risk (*1)		(221,221	)		(1,191	)		—

	W	(169,001	)		(12,409	)		258,230

(*1)	The related account categories are presented as interest rate swap assets / liabilities and currency swap assets / liabilities, currency forwards assets / liabilities and borrowings.

(*2)	The hedge ineffectiveness is the difference between gains and losses on hedged items and hedging instruments.

(e)

Effect of hedge accounting on the consolidated financial statements, statement of comprehensive income, statement of changes in equity

Hedging purpose and strategy

The Group transacts with derivative financial instruments to hedge its interest rate risk, currency risk and stock price fluctuation risk arising from the assets and liabilities of the Group. The Group applies the fair value hedge accounting for the changes in the market interest rates, foreign exchange rates and stock price of the Korean won structured notes, foreign currency generated financial debentures, Korean won structured deposits, foreign currency investment receivables and beneficiary securities in foreign currency; and cash flow hedge accounting for forward interest rate, interest rate swaps, forward currency and currency swaps to hedge cash flow risk due to interest rates and foreign exchange rates of the Korean won debt, foreign currency debt, foreign currency structured deposits, the Korean won bonds and foreign currency bonds, etc.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

11.	Derivatives (continued)

In addition, in order to hedge the exchange rate risk of the net investment in overseas business, the Group applies the net investment hedge accounting for foreign operations using currency forward and

non-derivative

financial instruments.

ii)

Nominal amounts and average hedge ratios for hedging instruments as of December 31, 2023 and 2024 are as follows:


	2023
	Less than 1 year			1~2 years			2~3 years			3~4 years			4~5 years			More than 5 years			Total
Interest risk:
Nominal values:	W	3,038,263			609,182			2,143,914			804,873			1,935,599			3,937,749			12,469,580
Average price condition (*1)		0.82	%		3.02	%		1.64	%		1.65	%		1.37	%		0.74	%		1.18	%
Average hedge ratio:		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Exchange risk: (*2)
Nominal values:		1,871,327			1,335,798			2,139,371			974,113			1,687,341			49,109			8,057,059
Average hedge ratio:		100	%		100	%		100	%		100	%		100	%		100	%		100	%

(*1)

Interest rate swaps consist of 3M CD, USD SOFR, 3M Euribor, and 3M AUD Bond.

(*2)

The average exchange rates of net investment hedge instruments are USD/KRW 1,235.14, JPY/KRW 9.46, EUR/KRW 1,358.46, GBP/KRW 1,547.81, AUD/KRW 865.53, CAD/KRW 921.27, CNY/KRW 177.98, SEK/KRW 126.18.


	2024
	Less than 1 year			1~2 years			2~3 years			3~4 years			4~5 years			More than 5 years			Total
Interest risk:
Nominal values:	W	910,440			2,621,365			1,943,818			2,350,027			1,161,927			4,231,840			13,219,417
Average price condition (*1)		2.49	%		1.75	%		1.57	%		1.54	%		1.36	%		0.38	%		1.27	%
Average hedge ratio:		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Exchange risk: (*2)
Nominal values:		4,319,632			2,421,806			3,072,483			2,870,442			1,059,147			447,703			14,191,213
Average hedge ratio:		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Other price risk: (*3)
Nominal values:		—			—			18,750			—			—			—			18,750
Average hedge ratio:		—			—			100	%		—			—			—			100	%

(*1)

Interest rate swaps consist of 3M CD, USD SOFR, 3M Euribor, and 3M AUD Bond.

(*2)

The average exchange rates of net investment hedge instruments are USD/KRW 1,280.52, JPY/KRW 9.25, EUR/KRW 1,402.37, GBP/KRW 1,561.57, AUD/KRW 892.94, CAD/KRW 991.06, CNY/KRW 189.50, SEK/KRW 127.54.

(*3)

The equity option, which has an exercise price of

324,027.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

12.	Securities at fair value through other comprehensive income and securities at amortized cost (continued)

(b)

Changes in carrying amount of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Debt securities at fair value through other comprehensive income								Debt securities at amortized cost
	12-month expected credit loss			Life time expected credit loss			Total		12-month expected credit loss		Life time expected credit loss			Total
Beginning balance	W	83,729,377			67,198			83,796,575		33,371,599		10,515			33,382,114
Transfer (from) to 12-month expected credit loss		18,873			(18,873	)		—		—		—			—
Transfer (from) to life time expected credit loss		(47,209	)		47,209			—		—		—			—
Net increase and decrease (*)		4,844,010			(3,585	)		4,840,425		2,318,788		(2,992	)		2,315,796

Ending balance	W	88,545,051			91,949			88,637,000		35,690,387		7,523			35,697,910


	2024
	Debt securities at fair value through other comprehensive income							Debt securities at amortized cost
	12-month expected credit loss		Life time expected credit loss			Total		12-month expected credit loss			Life time expected credit loss			Total
Beginning balance	W	88,545,051		91,949			88,637,000		35,690,387			7,523			35,697,910
Transfer (from) to 12-month expected credit loss		3,798		(3,798	)		—		—			—			—
Transfer (from) to life time expected credit loss		—		—			—		—			—			—
Net increase and decrease (*)		3,406,603		(27,393	)		3,379,210		(2,367,844	)		(3,879	)		(2,371,723	)

Ending balance	W	91,955,452		60,758			92,016,210		33,322,543			3,644			33,326,187

(*)	Included the effects from changes in purchase, disposal, repayment, valuation, changes in foreign exchange rate and amortization of fair value adjustments recognized through business combination accountings and the others.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

12.	Securities at fair value through other comprehensive income and securities at amortized cost (continued)

(c)

Changes in allowance for credit loss of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Debt securities at fair value through other comprehensive income									Debt securities at amortized cost
	12 months expected credit loss			Life time expected credit loss			Total			12 months expected credit loss			Life time expected credit loss			Total
Beginning balance	W	40,501			113			40,614			10,759			157			10,916
Transfer (from) to 12-month expected credit loss		14			(14	)		—			—			—			—
Transfer (from) to life time expected credit loss		(111	)		111			—			—			—			—
Provision (Reversal)		1,573			698			2,271			(113	)		(23	)		(136	)
Disposal and others (*)		(409	)		1			(408	)		637			6			643

Ending balance	W	41,568			909			42,477			11,283			140			11,423


	2024
	Debt securities at fair value through other comprehensive income									Debt securities at amortized cost
	12 months expected credit loss			Life time expected credit loss			Total			12 months expected credit loss			Life time expected credit loss			Total
Beginning balance	W	41,568			909			42,477			11,283			140			11,423
Transfer (from) to 12-month expected credit loss		14			(14	)		—			—			—			—
Transfer (from) to life time expected credit loss		—			—			—			—			—			—
Provision (Reversal)		(2,279	)		(420	)		(2,699	)		(1,515	)		(97	)		(1,612	)
Disposal and others (*)		(1,053	)		(379	)		(1,432	)		369			8			377

Ending balance	W	38,250			96			38,346			10,137			51			10,188

(*)	Included the effects from changes in debt restructuring, investment conversion, foreign exchange rate and the others.

F-1

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

13.	Loans at amortized cost, etc. (continued)

(b)

Changes in carrying amount of loans at amortized cost, etc. as of December 31, 2023 and 2024 are as follows:

i) Loans at amortized cost


	2023
	Retail									Corporate									Credit card									Others
	12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	146,741,436			8,491,997			600,340			183,229,940			32,054,591			970,719			23,586,633			4,333,611			493,480			10,367,271			665,676			14,091			411,549,785
Transfer (from) to 12 months expected credit losses		3,684,473			(3,671,574	)		(12,899	)		6,312,378			(6,310,771	)		(1,607	)		59,586			(59,510	)		(76	)		51,588			(51,588	)		—			—
Transfer (from) to lifetime expected credit losses		(6,347,880	)		6,382,499			(34,619	)		(14,969,646	)		14,984,213			(14,567	)		(72,489	)		72,551			(62	)		(154,268	)		154,268			—			—
Transfer (from) to credit- impaired financial assets		(462,894	)		(266,533	)		729,427			(511,906	)		(476,684	)		988,590			(19,349	)		(10,202	)		29,551			(476	)		(6,139	)		6,615			—
Net increase and decrease (*1)		1,826,622			(1,544,703	)		148,463			7,797,722			1,502,116			449,944			(259,750	)		(226,043	)		928,319			(3,819,606	)		65,262			8,018			6,876,364
Charge off (*2)		—			—			(489,511	)		—			—			(352,324	)		—			—			(805,454	)		—			—			(2,127	)		(1,649,416	)
Disposal		—			(1,477	)		(147,151	)		(56,032	)		(7,325	)		(491,911	)		—			—			(155	)		—			(500	)		(2,150	)		(706,701	)

Ending balance	W	145,441,757			9,390,209			794,050			181,802,456			41,746,140			1,548,844			23,294,631			4,110,407			645,603			6,444,509			826,979			24,447			416,070,032

(*1)

The amount is due to execution, collection, debt restructuring, investment conversion, exchange rate fluctuation, etc.

(*2)

The amount of uncollected loans currently in recovery (principal and interest) is

9,964,573 million, which is written off as of December 31, 2023.

F-14

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

13.	Loans at amortized cost, etc. (continued)


	2024
	Retail									Corporate									Credit card									Others
	12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	145,441,757			9,390,209			794,050			181,802,456			41,746,140			1,548,844			23,294,631			4,110,407			645,603			6,444,509			826,979			24,447			416,070,032
Transfer (from) to 12 months expected credit losses		3,147,209			(3,133,165	)		(14,044	)		8,633,328			(8,567,306	)		(66,022	)		59,878			(59,830	)		(48	)		30,878			(30,878	)		—			—
Transfer (from) to lifetime expected credit losses		(7,176,298	)		7,236,219			(59,921	)		(14,466,401	)		14,506,969			(40,568	)		(50,080	)		50,133			(53	)		(189,201	)		189,201			—			—
Transfer (from) to credit- impaired financial assets		(478,797	)		(281,842	)		760,639			(424,077	)		(611,269	)		1,035,346			(19,995	)		(12,913	)		32,908			(43	)		(9,600	)		9,643			—
Net increase and decrease (*1)		12,578,349			(843,971	)		18,273			24,466,147			2,178,224			893,286			1,320,926			(481,264	)		1,008,038			(303,276	)		50,784			6,123			40,891,639
Charge off (*2)		—			—			(393,809	)		—			—			(450,932	)		—			—			(685,877	)		—			—			(5,483	)		(1,536,101	)
Disposal		—			(2,706	)		(200,812	)		(33,148	)		(190,000	)		(761,001	)		—			—			(357,581	)		—			(410	)		(18,743	)		(1,564,401	)

Ending balance	W	153,512,220			12,364,744			904,376			199,978,305			49,062,758			2,158,953			24,605,360			3,606,533			642,990			5,982,867			1,026,076			15,987			453,861,169

(*1)

The amount is due to execution, collection, debt restructuring, investment conversion, exchange rate fluctuation, etc.

(*2)

The amount of uncollected loans currently in recovery (principal and interest) is

10,268,898 million, which is written off as of December 31, 2024.

F-1

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

13.	Loans at amortized cost, etc. (continued)

ii) Due from banks at amortized cost and other financial assets


	2023
	12 month expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	49,701,131			165,723			87,512			49,954,366
Transfer (from) to 12 month expected credit losses		23,476			(23,305	)		(171	)		—
Transfer (from) to lifetime expected credit losses		(96,073	)		96,096			(23	)		—
Transfer (from) to credit- impaired financial assets		(9,110	)		(40,985	)		50,095			—
Net increase and decrease (*)		9,789,697			48,392			60,859			9,898,948
Charge off		—			—			(28,665	)		(28,665	)
Disposal		—			(5	)		(1,819	)		(1,824	)

Ending balance	W	59,409,121			245,916			167,788			59,822,825


	2024
	12 month expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	59,409,121			245,916			167,788			59,822,825
Transfer (from) to 12 month expected credit losses		34,752			(34,626	)		(126	)		—
Transfer (from) to lifetime expected credit losses		(62,021	)		62,091			(70	)		—
Transfer (from) to credit- impaired financial assets		(8,949	)		(21,143	)		30,092			—
Net increase and decrease (*)		2,116,517			(10,556	)		205,387			2,311,348
Charge off		—			—			(61,157	)		(61,157	)
Disposal		(475	)		(6,430	)		(124,756	)		(131,661	)

Ending balance	W	61,488,945			235,252			217,158			61,941,355

(*)

The amount is due to execution, collection, debt restructuring, investment conversion, exchange rate fluctuation, etc.

F-1

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

13.	Loans at amortized cost, etc. (continued)

(c)

Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2023 and 2024 are as follows:

i) Loans at amortized cost


	2023
	Retail									Corporate									Credit card									Others
	12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	264,836			165,090			264,530			560,207			840,557			487,239			211,112			471,473			355,975			13,882			9,218			6,694			3,650,813
Transfer (from) to 12 months expected credit losses		25,984			(24,982	)		(1,002	)		92,347			(92,254	)		(93	)		23,474			(23,422	)		(52	)		213			(213	)		—			—
Transfer (from) to lifetime expected credit losses		(28,336	)		44,543			(16,207	)		(69,404	)		74,346			(4,942	)		(18,412	)		18,557			(145	)		(305	)		305			—			—
Transfer (from) to credit- impaired financial assets		(13,823	)		(32,129	)		45,952			(7,456	)		(47,157	)		54,613			(2,023	)		(3,402	)		5,425			(7	)		(25	)		32			—
Provision (reversal)		(4,029	)		56,164			429,789			225,719			223,266			456,854			15,525			(3,720	)		711,724			(348	)		1,095			2,403			2,114,442
Charge off		—			—			(489,511	)		—			—			(352,324	)		—			—			(805,454	)		—			—			(2,127	)		(1,649,416	)
Amortization of discount		—			—			(12,327	)		—			—			(25,929	)		—			—			7,344			—			—			—			(30,912	)
Disposal		—			(177	)		(40,297	)		(36	)		(240	)		(56,118	)		—			—			(155	)		—			(9	)		(115	)		(97,147	)
Collection		—			—			101,653			—			—			69,674			—			—			186,715			—			—			451			358,493
Others (*)		(1,366	)		(1,147	)		611			(12,327	)		(4,173	)		(487	)		610			1,362			1,177			(63	)		—			—			(15,803	)

Ending balance	W	243,266			207,362			283,191			789,050			994,345			628,487			230,286			460,848			462,554			13,372			10,371			7,338			4,330,470

(*)

Other changes are due to debt restructuring, investment conversion and changes in foreign exchange rate, etc.

F-1

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

13.	Loans at amortized cost, etc. (continued)


	2024
	Retail									Corporate									Credit card									Others
	12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	243,266			207,362			283,191			789,050			994,345			628,487			230,286			460,848			462,554			13,372			10,371			7,338			4,330,470
Transfer (from) to 12 months expected credit losses		40,874			(39,258	)		(1,616	)		140,511			(137,260	)		(3,251	)		25,333			(25,273	)		(60	)		85			(85	)		—			—
Transfer (from) to lifetime expected credit losses		(24,178	)		50,652			(26,474	)		(79,310	)		86,108			(6,798	)		(19,981	)		20,177			(196	)		(1,310	)		1,310			—			—
Transfer (from) to credit- impaired financial assets		(15,753	)		(21,007	)		36,760			(5,838	)		(84,444	)		90,282			(2,696	)		(4,919	)		7,615			—			(60	)		60			—
Provision (reversal)		21,772			25,003			392,200			(123,593	)		23,937			760,786			30,805			(32,602	)		751,753			412			6,016			5,524			1,862,013
Charge off		—			—			(393,809	)		—			—			(450,932	)		—			—			(685,877	)		—			—			(5,483	)		(1,536,101	)
Amortization of discount		—			—			(13,501	)		—			—			(27,710	)		—			—			6,180			—			—			—			(35,031	)
Disposal		—			(261	)		(53,538	)		(2,946	)		(19,347	)		(90,141	)		—			—			(257,543	)		—			(1	)		(1,061	)		(424,838	)
Collection		—			—			112,627			—			—			75,082			—			—			172,842			—			—			487			361,038
Others (*)		2,552			526			4,251			7,231			9,565			(16,997	)		167			24			848			189			24			—			8,380

Ending balance	W	268,533			223,017			340,091			725,105			872,904			958,808			263,914			418,255			458,116			12,748			17,575			6,865			4,565,931

(*)

Other changes are due to debt restructuring, investment conversion and changes in foreign exchange rate, etc.

F-1

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

13.	Loans at amortized cost, etc. (continued)

ii)

Due from banks at amortized cost and other financial assets


	2023
	12 months expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	296,346			10,440			74,621			381,407
Transfer (from) to 12 months expected credit losses		364			(299	)		(65	)		—
Transfer (from) to lifetime expected credit losses		(40,026	)		40,041			(15	)		—
Transfer (from) to credit- impaired financial assets		(228	)		(37,000	)		37,228			—
Provision		44,035			2,326			44,409			90,770
Charge off		—			—			(28,665	)		(28,665	)
Disposal		—			—			(178	)		(178	)
Collection		—			—			2,198			2,198
Others (*)		32,460			142			8,435			41,037

Ending balance	W	332,951			15,650			137,968			486,569


	2024
	12 months expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	332,951			15,650			137,968			486,569
Transfer (from) to 12 months expected credit losses		1,262			(1,229	)		(33	)		—
Transfer (from) to lifetime expected credit losses		(5,414	)		5,441			(27	)		—
Transfer (from) to credit- impaired financial assets		(178	)		(5,715	)		5,893			—
Provision		175			629			112,858			113,662
Charge off		—			—			(61,157	)		(61,157	)
Disposal		(1	)		(38	)		(15,028	)		(15,067	)
Collection		—			—			3,292			3,292
Others (*)		65,689			14			2,644			68,347

Ending balance	W	394,484			14,752			186,410			595,646

(*)

Other changes are due to debt restructuring, investment conversion and changes in foreign exchange rate, etc.

(d)

Changes in deferred loan origination costs for the years ended December 31, 2023 and 2024 are as follows:


	2023			2024
Beginning balance	W	525,205			505,986
Loan origination		231,007			344,963
Amortization, etc.		(250,226	)		(205,380	)

Ending balance	W	505,986			645,569

F-1

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

15.	Intangible assets

(a)

Details of intangible assets as of December 31, 2023 and 2024 are as follows:


	2023		2024
Goodwill	W	4,677,204		4,665,417
Software		259,233		235,229
Development cost		464,638		677,572
Others		816,871		541,915

	W	6,217,946		6,120,133

(b)

Changes in intangible assets for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Goodwill			Software			Development cost			Others			Total
Beginning balance	W	4,683,902			263,341			454,284			406,309			5,807,836
Acquisition		—			90,051			133,709			605,225			828,985
Disposal and write-off		—			(3,901	)		(3,560	)		(6,793	)		(14,254	)
Amounts transferred from (to) property and equipment		—			—			(1,550	)		—			(1,550	)
Impairment (*1)		(5,402	)		(4,006	)		(1,001	)		(273	)		(10,682	)
Amortization (*2)		—			(91,894	)		(131,043	)		(168,583	)		(391,520	)
Effects of changes in foreign exchange rate		(1,296	)		5,642			13,799			(19,014	)		(869	)

Ending balance	W	4,677,204			259,233			464,638			816,871			6,217,946

(*1)

Goodwill impairment incurred from the cash-generating unit of security sector at PT Shinhan Sekuritas Indonesia and life insurance sector at Shinhan Financial Plus Co., Ltd. As a result of the impairment test for goodwill of PT Shinhan Sekuritas Indonesia, the Group recognized an impairment loss amounting to

1,842 million for the carrying amount exceeding the recoverable amount of the CGU. This is due to the decrease in recoverable amounts (

2,934 million decrease comparing to the previous year) due to continuing high price index and domestic foreign economic turndown mainly from the prolongation of the Ukraine crisis, global high interest rates, etc. In addition, as a result of the impairment test for goodwill of Shinhan Financial Plus Co., Ltd., the Group recognized an impairment loss amounting to

3,560 million for the carrying amount exceeding the recoverable amount of the CGU. This is due to the decrease in recoverable amounts (

9,750 million decrease comparing to the previous year) due to the underperformance from the cash-generating unit and the reflection of the future outlook. The amount of impairment loss recognized is included in the non-operating expenses, of the consolidated statement of comprehensive income.

(*2)

Included in general administrative expense, other operating income (expense), and insurance service expense of the consolidated statements of comprehensive income.

F-15

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

15.	Intangible assets (continued)


	2024
	Goodwill			Software			Development cost			Others			Total
Beginning balance	W	4,677,204			259,233			464,638			816,871			6,217,946
Acquisition		—			67,077			196,292			110,230			373,599
Disposal and write-off		—			(2,822	)		(418	)		(8,383	)		(11,623	)
Amounts transferred from (to) property and equipment		—			—			(2,302	)		—			(2,302	)
Amounts transferred within intangible assets		—			905			165,761			(166,666	)		—
Impairment (*1)		(24,513	)		—			(715	)		(128	)		(25,356	)
Amortization (*2)		—			(96,335	)		(179,302	)		(174,341	)		(449,978	)
Effects of changes in foreign exchange rate		12,726			7,171			33,618			(35,668	)		17,847

Ending balance	W	4,665,417			235,229			677,572			541,915			6,120,133

(*1)

Goodwill impairment incurred from the cash-generating unit of security sector at SHINHAN SECURITIES VIETNAM CO., LTD and other sector at Shinhan Asset Trust. As a result of the impairment test for goodwill of SHINHAN SECURITIES VIETNAM CO., LTD., the Group recognized an impairment loss amounting to

1,298 million for the carrying amount exceeding the recoverable amount of the CGU. This is due to the decrease in recoverable amounts resulting from the reduced trading volume and trading value on the Vietnamese stock market, caused by the global high interest rate environment and domestic and external economic recessions. In addition, as a result of the impairment test for goodwill of Shinhan Asset Trust, the Group recognized an impairment loss amounting to

23,215 million for the carrying amount exceeding the recoverable amount of the CGU. This is due to the decrease in recoverable amounts resulting from the deterioration of the business environment caused by the slowdown in the real estate and construction sectors. The amount of impairment loss recognized is included in the non-operating expenses, of the consolidated statement of comprehensive income.

(*2)

Included in general administrative expense, other operating income (expense), and insurance service expense of the consolidated statements of comprehensive income.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates

(a)

Investments in associates as of December 31, 2023 and 2024 are as follows:


Investees	Country		Reporting Date	Ownership (%)
Investees	Country		Reporting Date	2023		2024
BNP Paribas Cardif Life Insurance (1), (7)		Korea	September 30		14.99		14.99
Shinhan-Neoplux Energy Newbiz Fund		Korea	December 31		31.66		31.66
Shinhan-Albatross tech investment Fund (*1)		Korea	November 30		50.00		50.00
KCGI-SingA330-A Private Special Asset Investment Trust (*5)		Korea	—		23.89		—
VOGO Debt Strategy Qualified IV Private		Korea	December 31		20.00		20.00
Shinhan-Midas Donga Secondary Fund		Korea	December 31		50.00		50.00
ShinHan – Soo Young Entrepreneur Investment Fund No.1		Korea	December 31		24.00		24.00
Shinhan Praxis K-Growth Global Private Equity Fund (*7)		Korea	December 31		14.15		14.15
Kiwoom Milestone Professional Private Real Estate Trust No.19		Korea	—		50.00		50.00
Shinhan Global Healthcare Fund No.1 (*7)		Korea	—		4.41		3.13
KB NA Hickory Private Special Asset Fund		Korea	December 31		37.50		37.50
Koramco Europe Core Private Placement Real Estate Fund No.2-2		Korea	December 31		44.02		44.02
KDBC-Midas Dong-A Global contents Fund		Korea	December 31		23.26		23.26
Shinhan-Nvestor Liquidity Solution Fund		Korea	December 31		24.92		24.92
Shinhan AIM FoF Fund 1-A		Korea	December 31		25.00		25.00
IGIS Global Credit Fund 150-1		Korea	December 31		25.00		25.00
Korea Omega Project Fund III (*5)		Korea	—		23.53		—
Genesis North America Power Company No.1 PEF		Korea	December 31		43.84		43.84
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3		Korea	December 31		23.33		23.33
KOREA FINANCE SECURITY CO., LTD (1), (7)		Korea	September 30		14.91		14.91
MIEL CO.,LTD. (*2)		Korea	—		28.77		28.77
AIP Transportation Specialized Privately Placed Fund Trust #1		Korea	December 31		35.73		35.73
Kiwoom-Shinhan Innovation Fund I		Korea	December 31		50.00		50.00
Midas Asset Global CRE Debt Private Fund No.6 (*5)		Korea	—		40.10		—
Samchully Midstream Private Placement Special Asset Fund 5-4		Korea	December 31		42.92		41.67
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 (*5)		Korea	—		20.00		—
MK Ventures-K Clavis Growth Capital Venture Fund 1		Korea	—		26.67		26.67
NH-Amundi Global Infrastructure Trust 14 (*5)		Korea	—		30.00		—
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 (*6)		Korea	December 31		60.00		60.00

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


Investees	Country		Reporting Date	Ownership (%)
Investees	Country		Reporting Date	2023		2024
Milestone Private Real Estate Fund 3		Korea	December 31		32.06		32.06
Nomura-Rifa Private Real Estate Investment Trust 31		Korea	December 31		31.31		31.31
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		Korea	December 31		21.27		21.27
FuturePlay-Shinhan TechInnovation Fund 1		Korea	December 31		50.00		50.00
Stonebridge Corporate 1st Fund		Korea	December 31		44.12		44.12
Vogo Realty Partners Private Real Estate Fund V		Korea	December 31		21.64		21.64
Korea Credit Bureau (1), (7)		Korea	September 30		9.00		9.00
Goduck Gangil1 PFV Co., Ltd. (1), (7)		Korea	September 30		1.04		1.04
SBC PFV Co., Ltd. (1), (7), (*8)		Korea	September 30		25.00		25.00
NH-amundi global infra private fund 16		Korea	December 31		50.00		50.00
SH BNCT Professional Investment Type Private Special Asset Investment Trust (*9)		Korea	December 31		72.50		72.50
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24 (*5)		Korea	—		52.28		—
Sparklabs-Shinhan Opportunity Fund 1		Korea	December 31		49.50		49.50
IGIS Real-estate Private Investment Trust No.33		Korea	December 31		40.86		40.86
Goduck Gangil10 PFV Co., Ltd. (1), (7)		Korea	September 30		19.90		19.90
Fidelis Global Private Real Estate Trust No.2 (*6)		Korea	December 31		79.63		79.63
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		Korea	December 31		28.70		28.70
Shinhan Healthcare Fund 2 (*7)		Korea	—		13.68		13.68
Shinhan AIM Real Estate Fund No.2		Korea	December 31		30.00		30.00
Shinhan AIM Real Estate Fund No.1		Korea	December 31		21.01		21.01
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		Korea	December 31		22.02		22.02
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		Korea	December 31		29.19		29.19
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2 (*6)		Korea	December 31		71.43		71.43
Korea Omega-Shinhan Project Fund I		Korea	December 31		50.00		50.00
Samsung SRA Real Estate Professional Private 45		Korea	December 31		25.00		25.00
IBK Global New Renewable Energy Special Asset Professional Private2		Korea	December 31		28.98		28.98
VS Cornerstone Fund		Korea	December 31		41.18		41.18
NH-Amundi US Infrastructure Private Fund2		Korea	December 31		25.91		25.91
Kakao-Shinhan 1st TNYT Fund		Korea	December 31		48.62		48.62
Pacific Private Placement Real Estate Fund No.40		Korea	December 31		24.73		24.73
Mastern Private Real Estate Loan Fund No.2		Korea	December 31		33.57		33.57

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


Investees	Country		Reporting Date	Ownership (%)
Investees	Country		Reporting Date	2023		2024
LB Scotland Amazon Fulfillment Center Fund 29 (*6)		Korea	December 31		70.14		65.00
JR AMC Hungary Budapest Office Fund 16		Korea	December 31		32.57		32.57
EDNCENTRAL Co.,Ltd. (*7)		Korea	—		13.47		13.47
Gyeonggi-Neoplux Superman Fund		Korea	December 31		21.76		21.76
NewWave 6th Fund		Korea	December 31		30.00		30.00
Neoplux No.3 Private Equity Fund (*3)		Korea	December 31		10.00		10.00
PCC Amberstone Private Equity Fund I		Korea	December 31		21.67		21.67
KIAMCO POWERLOAN TRUST 4TH		Korea	December 31		47.37		47.37
Mastern Opportunity Seeking Real Estate Fund II		Korea	December 31		22.22		22.22
Neoplux Market-Frontier Secondary Fund (*3)		Korea	December 31		19.74		19.74
Synergy Green New Deal 1st New Technology Business Investment Fund		Korea	December 31		28.17		28.17
KIAMCO Vietnam Solar Special Asset Private Investment Trust		Korea	December 31		50.00		50.00
SHINHAN-NEO Core Industrial Technology Fund		Korea	December 31		49.75		49.75
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		Korea	December 31		30.00		30.00
Eum Private Equity Fund No.7		Korea	December 31		21.00		21.00
Kiwoom Hero No.4 Private Equity Fund		Korea	December 31		21.05		21.05
Vogo Canister Professional Trust Private Fund I (*5)		Korea	—		36.74		—
AJ-KOSNET Semicon One Venture Fund		Korea	December 31		22.22		22.22
Timefolio The Venture-V second		Korea	December 31		20.73		20.73
Shinhan Smilegate Global PEF I (*7)		Korea	December 31		14.21		14.21
Genesis Eco No.1 PEF		Korea	December 31		29.00		29.00
SHINHAN-NEO Market-Frontier 2nd Fund		Korea	December 31		42.70		42.70
NH-Synergy Core Industrial New Technology Fund (*5)		Korea	—		36.93		—
J& Moorim Jade Investment Fund		Korea	December 31		24.89		24.89
Ulmus SHC innovation investment fund		Korea	December 31		24.04		24.04
T Core Industrial Technology 1st Venture PEF		Korea	December 31		31.47		31.47
Fine Value POST IPO No.5 Private Equity Fund (*5)		Korea	—		40.00		—
TI First Property Private Investment Trust 1		Korea	December 31		40.00		40.00
IBKC Global Contents Investment Fund (*5)		Korea	—		24.39		—
Kiwoom-Shinhan Innovation Fund 2		Korea	December 31		42.86		42.86
ETRI Holdings-Shinhan 1st Unicorn Fund		Korea	December 31		50.00		50.00
SJ ESG Innovative Growth Fund		Korea	December 31		28.57		28.57
AVES 1st Corporate Recovery Private Equity Fund (*4)		Korea	December 31		76.19		76.19
Reverent-Shinhan Vista Fund (*3)		Korea	December 31		13.41		13.41
JS Shinhan Private Equity Fund (*3)		Korea	December 31		3.85		3.85

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


Investees	Country		Reporting Date	Ownership (%)
Investees	Country		Reporting Date	2023		2024
Daishin Newgen New Technology Investment Fund 1 st (*5)		Korea	—		50.60		—
META ESG Private Equity Fund I		Korea	December 31		27.40		27.40
Shinhan VC tomorrow venture fund 1		Korea	December 31		39.62		39.62
H-IOTA Fund		Korea	December 31		24.81		24.81
Stonebridge-Shinhan Unicorn Secondary Fund		Korea	December 31		26.01		26.01
Tres-Yujin Trust		Korea	December 31		50.00		50.00
Shinhan-Time mezzanine blind Fund		Korea	December 31		50.00		50.00
Capstone REITs No.26		Korea	December 31		50.00		50.00
JB Incheon-Bucheon REITS No.54		Korea	December 31		39.31		39.31
Hankook Smart Real Asset Investment Trust No.3		Korea	December 31		33.33		33.33
JB Hwaseong-Hadong REITs No.53		Korea	December 31		31.03		31.03
KB Oaktree Trust No.3		Korea	December 31		33.33		33.33
Daehan No.36 Office Asset Management Company (*5)		Korea	—		48.05		—
Rhinos Premier Mezzanine Private Investment Fund No.1 (*5)		Korea	—		27.93		—
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		Korea	December 31		29.73		29.73
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		Korea	December 31		24.85		24.85
SKS-Yozma Fund No.1 (*5)		Korea	—		29.85		—
KB Distribution Private Real Estate 3-1		Korea	December 31		37.50		37.50
Pacific Private Investment Trust No.49-1 (*6)		Korea	December 31		79.28		79.28
KIWOOM Real estate private placement fund for normal investors No. 31 (*6)		Korea	December 31		60.00		60.00
RIFA Real estate private placement fund for normal investoes No. 51		Korea	December 31		40.00		40.00
Fivetree general private equity fund No.15 (*5)		Korea	—		49.98		—
Shinhan-Kunicorn first Fund		Korea	December 31		38.31		38.31
Shinhan-Quantum Startup Fund		Korea	December 31		49.18		49.18
Shinhan Simone Fund I		Korea	December 31		38.46		38.46
Korea Investment develop seed Trust No.1		Korea	December 31		40.00		40.00
Tiger Green alpha Trust No.29 (*4)		Korea	December 31		95.24		95.24
STIC ALT Global II Private Equity Fund		Korea	December 31		21.74		21.74
NH-Brain EV Fund (*5)		Korea	—		25.00		—
DDI LVC Master Real Estate Investment Trust Co., Ltd. (1), (7)		Korea	September 30		15.00		15.00
Leverent-Frontier 4th Venture PEF		Korea	December 31		23.89		23.89
Find-Green New Deal 2nd Equity Fund		Korea	December 31		22.57		22.57
ShinhanFitrin 1st Technology Business Investment Association (*3)		Korea	December 31		16.17		16.17
Koramco Private Real Estate Fund 143		Korea	December 31		30.30		30.30

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


Investees	Country		Reporting Date	Ownership (%)
Investees	Country		Reporting Date	2023		2024
Korea Investment Top Mezzanine Private Real Esate Trust No.1		Korea	December 31		22.22		22.22
LB YoungNam Logistics Private Trust No.40		Korea	December 31		25.00		25.00
Shinhan-Cognitive Start-up Fund L.P.		Korea	December 31		32.77		32.77
Cornerstone J&M Fund I		Korea	December 31		26.67		26.67
Logisvalley Shinhan REIT Co.,Ltd. (*1)		Korea	September 30		20.27		20.27
DA Value-Honest New Technology Investment Fund 1 (*5)		Korea	—		23.66		—
Shinhan-Ji and Tec Smart Innovation Fund		Korea	December 31		50.00		50.00
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st		Korea	December 31		50.00		50.00
Korea Investment Green Newdeal Infra Trust No.1		Korea	December 31		27.97		27.97
BTS 2nd Private Equity Fund (*1)		Korea	November 30		26.00		26.00
NH-J&-IBKC Label Technology Fund		Korea	December 31		27.81		27.81
Hanyang Time Mezzanine Fund		Korea	December 31		28.57		28.57
Shinhan-Sneak Peek Bio&Healthcare Bounce Back Fund		Korea	December 31		50.00		50.00
Shinhan-isquare Venture PEF 1		Korea	December 31		40.00		40.00
Aurum Goldrush ESG Private Fund No. 1		Korea	December 31		28.33		28.33
Capstone Develop Frontier Trust		Korea	December 31		21.43		21.43
Nextrade Co., Ltd. (*7)		Korea	December 31		8.00		8.00
SH 1.5years Maturity Investment Type Security Investment Trust No.2 (*5)		Korea	—		29.10		—
Eventus-IBKC LIB Fund (*5)		Korea	—		21.88		—
IBKC-Behigh Fund 1st		Korea	December 31		29.73		29.73
ON No.1 Private Equity Fund		Korea	December 31		28.57		28.57
Digital New Deal Kappa Private Equity Fund		Korea	December 31		24.75		24.75
IBKCJS New Technology Fund No.1		Korea	December 31		29.41		29.41
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1		Korea	December 31		20.83		20.83
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18		Korea	December 31		28.57		28.57
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38 (*4)		Korea	December 31		75.00		75.00
TogetherKorea Private Investment Trust No. 6 (*6)		Korea	December 31		99.98		99.98
TogetherKorea Private Investment Trust No. 7 (*6)		Korea	December 31		99.98		99.98
Kiwoom Core Industrial Technology Investment Fund No.3		Korea	December 31		34.75		34.75
Penture K-Content Investment Fund (*7)		Korea	December 31		21.96		19.78
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund		Korea	December 31		30.00		30.00

F-16

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


Investees	Country		Reporting Date	Ownership (%)
Investees	Country		Reporting Date	2023		2024
Hana Alternative Investment Kosmes PCBO General PEF No. 1		Korea	December 31		37.04		37.04
Shinhan-timefolio Bio Development Investment Fund		Korea	December 31		48.39		48.39
Shinhan M&A-ESG Fund		Korea	December 31		23.33		23.33
SHINHAN Mid and SMALL-SIZED OFFICE VALUE-ADDED MO REIT Co., Ltd.		Korea	December 31		28.43		28.43
KDBC meta-enter New Technology investment fund		Korea	December 31		27.89		27.89
Shinhan Time Secondary Blind New Technology Investment Trust		Korea	December 31		47.50		47.50
Shinhan DS Secondary Investment Fund		Korea	December 31		39.93		49.83
Shinhan-openwater pre-IPO Investment Trust 1		Korea	December 31		50.00		50.00
Shinhan-CJ TechInnovation Fund 1st		Korea	December 31		40.00		40.00
Shinhan-Eco Venture Fund 2nd		Korea	December 31		40.00		40.00
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1		Korea	December 31		40.00		40.00
Hantoo Shinhan Lake K-beauty Technology Investment Trust		Korea	December 31		22.96		22.96
Shinhan HB Wellness 1st Investment Trust		Korea	December 31		48.54		48.54
Korea real Asset Fund No.3		Korea	December 31		28.57		28.57
PineStreet Global Corporate FoF XIII-2 (*6)		Korea	December 31		100.00		100.00
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518		Korea	December 31		31.49		26.22
Samsung-dunamu Innovative IT Technology Investment Trust No. 1		Korea	December 31		22.99		22.99
Time Robotics New Technology Investment Trust		Korea	December 31		29.86		29.86
Ascent-welcome Tehcnology Investment Trust No.2		Korea	December 31		27.65		27.65
Newmain I funds		Korea	December 31		36.36		36.36
Igis General PE Real Estate Investment Trust 517-1 (*6)		Korea	December 31		96.30		96.78
SH Ulmus M.P.E. Innovative Venture Fund 7		Korea	December 31		28.57		28.57
Consus Osansegyo No.2		Korea	December 31		50.00		50.00
Mastern General Private Real Estate Investment Trust No.189(Type 1 Beneficiary Securities) (*5)		Korea	—		32.69		—
Shinhan AIM Private Fund of Fund 9-B		Korea	December 31		25.00		25.00
Shinhan General Private Real Estate Investment Trust No.3		Korea	December 31		20.75		20.75
NH Absolute Project L General Private Investment Trust (*5)		Korea	—		26.03		—
Paros Kosdaq Venture General Private Investment Trust No. 5		Korea	December 31		28.56		28.56

F-16

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)

Investees

Country

Reporting

Date

Ownership (%)

2023

2024

Happy Pet Life Care New Technology Investment Association No.2

Korea

December 31

30.00

Shinhan-Soo Secondary Investment Association (*6)

Korea

December 31

77.61

TECHFIN RATINGS Co., Ltd. (*1), (*11)

Korea

September 30

—

45.00

SONGPA BIZ CLUSTER PFV CO LTD (*1), (*7), (*10)

Korea

September 30

—

27.40

Planeta PTE LTD

Singapore

December 31

—

33.33

The E&Shinhan New Growth Up Fund

Korea

December 31

—

50.00

Shinhan-GB FutureFlow Fund L.P. (*6)

Korea

December 31

—

58.18

Credila Financial Services (*1), (*7), (*12)

India

September 30

—

10.93

DB IPO HighYield Fund 1

Korea

December 31

—

28.57

Exponential SQUARE Private Investment Trust No.1 (*6)

Korea

December 31

—

50.99

Fine North America Credit Private Mixed Asset Investment Trust 22 (*6)

Korea

December 31

—

58.82

IGIS Private Real Estate Investment No.454

Korea

December 31

—

24.04

IGIS Private Real Estate Investment No.462 (*6)

Korea

December 31

—

69.20

BNW Recharge Private Equity Fund

Korea

December 31

—

21.13

United Partners Realasset Fund No.14

Korea

December 31

—

33.33

Shinhan Market-Frontier Fund III

Korea

December 31

—

44.02

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.12 (*7)

Korea

December 31

—

5.00

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.13 (*7)

Korea

December 31

—

5.00

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.14 (*7)

Korea

December 31

—

5.00

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.15 (*7)

Korea

December 31

—

5.00

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.16 (*7)

Korea

December 31

—

5.00

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.17 (*7)

Korea

December 31

—

5.00

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.18 (*7)

Korea

December 31

—

5.00

Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.19 (*7)

Korea

December 31

—

5.00

SH US Buyback&High Dividend Security Feeder Investment Trust(H)[Equity]

Korea

December 31

—

22.37

(*1)

The most recent financial statements available are used for the equity method since the financial statements as of December 31, 2024 are not available. Significant trades and events occurred within the period are properly reflected.

F-16

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)

(*2)

In the course of the rehabilitation process, the shares were acquired through investment conversion. Although voting rights cannot be exercised during the rehabilitation process, normal voting rights are exercised because the rehabilitation process was completed before December 31, 2024. Therefore, it has been reclassified into the investments in associates.

(*3)

As a managing partner, the Group has a significant influence over the investees.

(*4)

As a limited partner, the Group does not have an ability to participate in policy-making processes to obtain economic benefit from the investees that would allow the Group to control the entity.

(*5)

Excluded from the investments in associates due to full or partial disposal of shares, or loss of significant influence.

(*6)

Although the ownership percentages are more than 50%, the Group applies the equity method accounting as the Group does not have an ability to participate in the financial and operating policy-making process.

(*7)

Although the ownership percentages are less than 20%, the Group applies the equity method accounting since it participates in policy-making processes and therefore can exercise significant influence on investees.

(*8)

The rate of Group’s voting rights is 4.65%.

(*9)

Although the Group has a significant influence with ownership percentage more than 50%, the contribution was classified as investments in associates as the Group is not exposed to variable returns due to the payment guarantee for the entire investment amount.

(*10)

The rate of Group’s voting rights is

19.86

(*11)

Douzon3 TECHFIN Co., Ltd. has changed its name to TECHFIN RATINGS Co., Ltd.

(*12)

HDFC Credila Financial Services has changed its name to Credila Financial Services.

F-1

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)

(b)

Changes in investments in associates for the years ended December 31, 2023 and 2024 are as follows:


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss			Ending balance
BNP Paribas Cardif Life Insurance	W	30,169		—			920			8,183		—			39,272
Partners 4th Growth Investment Fund		13,542		(13,542	)		—			—		—			—
KTB Newlake Global Healthcare PEF		4,309		(3,954	)		(355	)		—		—			—
Shinhan-Neoplux Energy Newbiz Fund		20,837		—			1,521			—		—			22,358
Shinhan-Albatross tech investment Fund		12,253		(1,500	)		4,618			128		—			15,499
KCGI-SingA330-A Private Special Asset Investment Trust		4,232		—			377			—		—			4,609
VOGO Debt Strategy Qualified IV Private		6,085		50			397			—		—			6,532
Shinhan -Midas Dong-A Secondary Fund		4,431		—			(130	)		—		—			4,301
ShinHan – Soo Young Entrepreneur Investment Fund No.1		4,414		(864	)		1,312			—		—			4,862
Shinhan Praxis K-Growth Global Private Equity Fund		3,691		—			1			—		—			3,692
Kiwoom Milestone Professional Private Real Estate Trust 19 (*1)		3,961		—			(136	)		—		(3,825	)		—
Shinhan Global Healthcare Fund 1 (*1)		—		—			—			—		—			—
KB NA Hickory Private Special Asset Fund		34,339		(11,436	)		1,193			—		—			24,096
Koramco Europe Core Private Placement Real Estate Fund No.2-2		19,236		(919	)		482			—		—			18,799
Hermes Private Investment Equity Fund		5,562		(5,562	)		—			—		—			—
KDBC-Midas Dong-A Global contents Fund		4,277		—			11			—		—			4,288
Shinhan-Nvestor Liquidity Solution Fund		6,438		(265	)		(85	)		—		—			6,088
Shinhan AIM FoF Fund 1-A		10,110		(1,653	)		1,178			—		—			9,635
IGIS Global Credit Fund 150-1		4,692		(803	)		397			—		—			4,286
Partner One Value up I Private Equity Fund		5,144		(5,144	)		—			—		—			—
Genesis No.1 Private Equity Fund		59,924		(59,916	)		(8	)		—		—			—
Korea Omega Project Fund III		3,674		—			22			—		—			3,696

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Genesis North America Power Company No.1 PEF	W	8,118		(4,384	)		2,624			—		—		6,358
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3		43,244		(10,595	)		8,115			—		—		40,764
KOREA FINANCE SECURITY CO., LTD		2,411		—			(169	)		1,003		—		3,245
MIEL CO., LTD. (*1)		—		—			—			—		—		—
AIP Transportation Specialized Privately Placed Fund Trust #1		44,821		782			769			—		—		46,372
Kiwoom-Shinhan Innovation Fund I		9,441		(1,425	)		(162	)		—		—		7,854
Midas Asset Global CRE Debt Private Fund No.6		57,029		(8,663	)		6,515			—		—		54,881
Samchully Midstream Private Placement Special Asset Fund 5-4		30,624		795			1,744			—		—		33,163
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3		24,492		(18,264	)		1,026			—		—		7,254
NH-Amundi Global Infrastructure Trust 14		20,975		(3,086	)		839			—		—		18,728
Jarvis Memorial Private Investment Trust 1		9,786		(10,642	)		856			—		—		—
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37		33,357		(683	)		2,591			—		—		35,265
Milestone Private Real Estate Fund 3		19,071		563			(2,019	)		—		—		17,615
Nomura-Rifa Private Real Estate Investment Trust 31		7,364		—			(475	)		—		—		6,889
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		2,969		(2,675	)		2,844			—		—		3,138
T&F 2019 bearing Private Equity Fund Specializing in Start-up and Venture Business		3,231		(3,231	)		—			—		—		—
FuturePlay-Shinhan TechInnovation Fund 1		6,916		—			931			—		—		7,847
Stonebridge Corporate 1st Fund		3,622		—			520			—		—		4,142
Vogo Realty Partners Private Real Estate Fund V		10,915		(378	)		255			—		—		10,792
Korea Credit Bureau		5,039		(90	)		1,789			—		—		6,738

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss			Ending balance
Goduck Gangil1 PFV Co., Ltd.	W	60		—			120			—		—			180
SBC PFV Co., Ltd.		28,468		3,750			(1,444	)		—		—			30,774
NH-amundi global infra private fund 16		56,211		(1,299	)		(4,260	)		—		—			50,652
IMM Global Private Equity Fund		147,384		(147,384	)		—			—		—			—
SH BNCT Professional Investment Type Private Special Asset Investment Trust		263,052		(32,093	)		13,813			—		—			244,772
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24		22,683		(5,882	)		1,309			—		—			18,110
Sparklabs-Shinhan Opportunity Fund 1		4,631		(1,137	)		420			—		—			3,914
BNW Tech-Innovation Private Equity Fund		5,833		(5,833	)		—			—		—			—
IGIS Real-estate Private Investment Trust No.33		14,552		(360	)		1,079			—		—			15,271
WWG Global Real Estate Investment Trust no.4		10,331		(10,795	)		464			—		—			—
Goduck Gangil10 PFV Co., Ltd.		3,236		—			1,845			—		—			5,081
Fidelis Global Private Real Estate Trust No.2		21,945		—			(9,925	)		—		(11,469	)		551
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		48,427		(5,864	)		6,056			—		—			48,619
Shinhan Global Healthcare Fund 2 (*1)		—		—			—			—		—			—
Shinhan AIM Real Estate Fund No.2		25,243		—			1,435			—		—			26,678
Shinhan AIM Real Estate Fund No.1		44,642		6,586			645			—		—			51,873
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		32,627		(916	)		3,070			—		—			34,781
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		19,296		3			754			—		—			20,053
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2		24,598		(7,618	)		536			—		—			17,516

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Korea Omega-Shinhan Project Fund I	W	10,022		—			1,608			—		—		11,630
Samsung SRA Real Estate Professional Private 45[FoFs]		21,650		8,487			1,295			—		—		31,432
IBK Global New Renewable Energy Special Asset Professional Private2		33,412		(2,303	)		1,187			—		—		32,296
VS Cornerstone Fund		3,335		—			(55	)		—		—		3,280
Aone Mezzanine Opportunity Professional Private		5,009		(5,072	)		63			—		—		—
NH-Amundi US Infrastructure Private Fund2		31,941		(4,395	)		2,179			—		—		29,725
SH Japan Photovoltaic Private Special Asset Investment Trust No.2		6,332		(4,360	)		341			—		—		2,313
Kakao-Shinhan 1st TNYT Fund		21,330		—			(1,464	)		—		—		19,866
Pacific Private Placement Real Estate Fund No.40		11,622		(748	)		750			—		—		11,624
Mastern Private Real Estate Loan Fund No.2		6,387		(3,679	)		332			—		—		3,040
LB Scotland Amazon Fulfillment Center Fund 29		29,637		(1,753	)		3,044			—		—		30,928
JR AMC Hungary Budapest Office Fund 16		12,457		(773	)		1,003			—		—		12,687
EDNCENTRAL Co.,Ltd. (*1)		—		—			—			—		—		—
Future-Creation Neoplux Venture Capital Fund		4,251		(889	)		(682	)		—		—		2,680
Gyeonggi-Neoplux Superman Fund		5,467		—			(411	)		—		—		5,056
NewWave 6th Fund		13,540		—			176			—		—		13,716
Neoplux No.3 Private Equity Fund		20,454		(4	)		(1,469	)		—		—		18,981
PCC Amberstone Private Equity Fund I		18,785		(2,425	)		898			—		—		17,258
KIAMCO POWERLOAN TRUST 4TH		43,524		(2,306	)		3,881			—		—		45,099
Mastern Opportunity Seeking Real Estate Fund II		14,710		(4,029	)		2,454			—		—		13,135
AION ELFIS PROFESSIONAL PRIVATE 1		3,566		(3,376	)		(190	)		—		—		—
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business		5,709		(7,843	)		2,134			—		—		—

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Neoplux Market-Frontier Secondary Fund	W	13,960		(3,673	)		140			—		—		10,427
Harvest Private Equity Fund II		3,139		(26	)		(135	)		—		—		2,978
Synergy Green New Deal 1st New Technology Business Investment Fund		10,632		(145	)		(172	)		—		—		10,315
KIAMCO Vietnam Solar Special Asset Private Investment Trust		6,727		(220	)		329			—		—		6,836
SHINHAN-NEO Core Industrial Technology Fund		9,409		—			4,207			—		—		13,616
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		25,024		(2,542	)		874			—		—		23,356
SIMONE Mezzanine Fund No.3		3,017		(1,965	)		150			—		—		1,202
Eum Private Equity Fund No.7		9,170		—			(4	)		—		—		9,166
Kiwoom Hero No.4 Private Equity Fund		3,517		—			(75	)		—		—		3,442
Vogo Canister Professional Trust Private Fund I		46,329		(3,075	)		2,617			—		—		45,871
SW-S Fund		7,248		(11,177	)		3,929			—		—		—
CL Buyout 1st PEF		12,842		(20,216	)		7,374			—		—		—
Timefolio The Venture-V second		4,096		—			1,705			—		—		5,801
Newlake Growth Capital Partners2 PEF		12,496		(12,496	)		—			—		—		—
Shinhan Smilegate Global PEF I		3,771		—			30			—		—		3,801
Genesis Eco No.1 PEF		11,418		—			(199	)		—		—		11,219
SHINHAN-NEO Market-Frontier 2nd Fund		34,420		4,270			(6,020	)		—		—		32,670
NH-Synergy Core Industrial New Technology Fund		6,377		—			62			—		—		6,439
J& Moorim Jade Investment Fund		5,434		(787	)		273			—		—		4,920
Helios-KDBC Digital Contents 1st		3,356		(1,457	)		357			—		—		2,256
Ulmus SHC innovation investment fund		4,886		—			657			—		—		5,543
Mirae Asset Partners X Private Equity Fund		7,792		(7,792	)		—			—		—		—
T Core Industrial Technology 1st Venture PEF		4,529		—			(275	)		—		—		4,254
Curious Finale Corporate Recovery Private Equity Fund		3,591		(3,636	)		45			—		—		—
Fine Value POST IPO No.5 Private Equity Fund		2,270		—			1,496			—		—		3,766

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
TI First Property Private Investment Trust 1	W	3,127		(203	)		178			—		—		3,102
MPLUS Professional Private Real Estate Fund 25		4,231		—			(1,873	)		—		—		2,358
IBKC Global Contents Investment Fund		4,552		—			149			—		—		4,701
Premier Luminous Private Equity Fund		8,966		(12,439	)		3,473			—		—		—
Hanyang-Meritz 1 Fund		3,466		(689	)		204			—		—		2,981
Kiwoom-Shinhan Innovation Fund 2		11,271		(4,434	)		2,328			—		—		9,165
ETRI Holdings-Shinhan 1st Unicorn Fund		1,895		1,500			(100	)		—		—		3,295
Maple Mobility Fund		16,859		(16,859	)		—			—		—		—
SJ ESG Innovative Growth Fund		4,197		—			1			—		—		4,198
AVES 1st Corporate Recovery Private Equity Fund		5,057		—			(289	)		—		—		4,768
JS Shinhan Private Equity Fund		4,953		—			(20	)		—		—		4,933
NH Kyobo AI Solution Investment Fund		3,288		(4,138	)		850			—		—		—
Daishin Newgen New Technology Investment Fund 1st		5,704		—			378			—		—		6,082
META ESG Private Equity Fund I		5,857		—			(86	)		—		—		5,771
SWFV FUND-1		9,128		(9,433	)		305			—		—		—
PHAROS DK FUND		3,835		(1,413	)		40			—		—		2,462
Shinhan VC tomorrow venture fund 1		26,926		18,258			26			—		—		45,210
Highland 2021-8 Fund		4,826		(5,366	)		540			—		—		—
H-IOTA Fund		9,623		(239	)		140			—		—		9,524
Stonebridge-Shinhan Unicorn Secondary Fund		6,082		2,924			(1,579	)		—		—		7,427
Tres-Yujin Trust		10,004		—			355			—		—		10,359
Shinhan-Time mezzanine blind Fund		13,312		—			809			—		—		14,121
Capstone REITs No.26		3,852		(300	)		2,198			—		—		5,750
JB Incheon-Bucheon REITS No.54		4,989		—			(11	)		—		—		4,978
Hankook Smart Real Asset Investment Trust No.3		6,993		—			675			—		—		7,668
JB Hwaseong-Hadong REITs No.53		4,991		—			(8	)		—		—		4,983
KB Oaktree Trust No.3		8,605		(771	)		834			—		—		8,668
Daehan No.36 Office Asset Management Company		22,058		—			424			—		—		22,482

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Rhinos Premier Mezzanine Private Investment Fund No.1	W	2,873		—			183			—		—		3,056
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		57,334		3,369			2,066			—		—		62,769
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		40,571		36			827			—		—		41,434
SKS-Yozma Fund No.1		6,599		(4,140	)		996			—		—		3,455
IBKC-METIS Global Contents Investment Fund		4,550		(3,921	)		(629	)		—		—		—
Keistone Unicorn Private Equity Fund		6,249		(6,249	)		—			—		—		—
KB Distribution Private Real Estate 3-1		26,651		—			(675	)		—		—		25,976
Pacific Private Investment Trust No.49-1		28,641		—			(1,264	)		—		—		27,377
KIWOOM Real estate private placement fund for normal investors No. 31		8,558		(518	)		518			—		—		8,558
RIFA Real estate private placement fund for normal investoes No. 51		5,726		(340	)		345			—		—		5,731
Fivetree general private equity fund No.15		12,281		(489	)		780			—		—		12,572
Shinhan-Kunicorn first Fund		9,831		—			(205	)		—		—		9,626
Harvest Fund No.3		15,854		(15,854	)		—			—		—		—
Shinhan-Quantum Startup Fund		1,119		3,000			(133	)		—		—		3,986
Shinhan Simone Fund I		4,796		—			41			—		—		4,837
Korea Investment develop seed Trust No.1		10,242		(901	)		191			—		—		9,532
Tiger Green alpha Trust No.29		26,806		(588	)		2,355			—		—		28,573
STIC ALT Global II Private Equity Fund		9,859		(218	)		(137	)		—		—		9,504
NH-Brain EV Fund		11,592		—			(467	)		—		—		11,125
DDI LVC Master Real Estate Investment Trust Co., Ltd.		6,405		450			(272	)		—		—		6,583
Leverent-Frontier 4th Venture PEF		2,964		—			330			—		—		3,294
Find-Green New Deal 2nd Equity Fund		4,508		—			(43	)		—		—		4,465
ShinhanFitrin 1st Technology Business Investment Association		4,437		—			82			—		—		4,519
PARATUS No.3 Private Equity Fund		4,936		(4,936	)		—			—		—		—

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Golden Route 2nd Startup Venture Specialized Private Equity Fund	W	3,003		(3,003	)		—			—		—		—
Koramco Private Real Estate Fund 143		3,030		3,636			1			—		—		6,667
Korea Investment Top Mezzanine Private Real Esate Trust No.1		9,885		(1,169	)		1,300			—		—		10,016
LB YoungNam Logistics Private Trust No.40		9,748		(600	)		634			—		—		9,782
Shinhan-Cognitive Start-up Fund L.P.		9,953		(5,052	)		428			—		—		5,329
IGEN2022 No.1 private Equity Fund		9,045		(9,045	)		—			—		—		—
Cornerstone J&M Fund I		3,561		—			(73	)		—		—		3,488
Logisvalley Shinhan REIT Co.,Ltd.		3,804		—			(206	)		—		—		3,598
DA Value-Honest New Technology Investment Fund 1		2,663		(1,145	)		2,581			—		—		4,099
KDB Investment Global Healthcare Private Equity Fund I		34,468		(34,468	)		—			—		—		—
Shinhan-Ji and Tec Smart Innovation Fund		2,587		7,800			(410	)		—		—		9,977
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st		1,776		5,400			(208	)		—		—		6,968
Korea Investment Green Newdeal Infra Trust No.1		5,714		4,537			6			—		—		10,257
BTS 2nd Private Equity Fund		3,772		2,860			(290	)		—		—		6,342
Shinhan Global Active REIT Co.Ltd.		19,222		(69	)		(156	)		—		—		18,997
NH-J&-IBKC Label Technology Fund		9,866		—			(119	)		—		—		9,747
Hanyang Time Mezzanine Fund		3,000		—			12			—		—		3,012
IMM Global Venture Opportunity, LP		3,115		(3,115	)		—			—		—		—
Shinhan-isquare Venture PEF 1		497		4,000			(211	)		—		—		4,286
Capstone Develop Frontier Trust		6,857		(565	)		1,255			—		—		7,547
Nextrade Co., Ltd.		9,700		—			—			—		—		9,700
SH Sustainable Management ESG Short term Bond Security Feeder Investment Trust No.1 (*2)		3,011		(3,011	)		—			—		—		—
SH 1.5years Maturity Investment Type Security Investment Trust No.2		4,601		—			234			—		—		4,835
Eventus-IBKC LIB Fund		6,035		—			597			—		—		6,632

F-17

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
NH-Daishin-Kyobo healthcare 1 Fund	W	3,948		(3,948	)		—			—		—		—
IBKC-Behigh Fund 1st		3,268		—			(49	)		—		—		3,219
Nautic Green Innovation ESG Co-investment No.1 Private Equity Fund		3,956		(3,956	)		—			—		—		—
ON No.1 Private Equity Fund		5,362		—			(41	)		—		—		5,321
Digital New Deal Kappa Private Equity Fund		4,946		—			(101	)		—		—		4,845
IBKCJS New Technology Fund No.1		—		5,000			1,130			—		—		6,130
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1		—		10,000			(197	)		—		—		9,803
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18		—		11,014			999			—		—		12,013
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38		—		3,000			171			—		—		3,171
TogetherKorea Private Investment Trust No. 6		—		5,122			148			—		—		5,270
TogetherKorea Private Investment Trust No. 7		—		5,122			148			—		—		5,270
Kiwoom Core Industrial Technology Investment Fund No.3		—		4,000			180			—		—		4,180
Penture K-Content Investment Fund		—		6,000			(378	)		—		—		5,622
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund		—		7,838			131			—		—		7,969
Hana Alternative Investment Kosmes PCBO General PEF No. 1		—		4,740			367			—		—		5,107
Shinhan-timefolio Bio Development Investment Fund		—		6,000			(73	)		—		—		5,927
Shinhan M&A-ESG Fund		—		4,354			(185	)		—		—		4,169
Shinhan SM Office Value Add – Outsource Management Real Estate Investment Co., Ltd. –		—		9,565			1,009			—		—		10,574
KDBC meta-enter New Technology investment fund		—		7,000			(60	)		—		—		6,940

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Beginning balance		Investment and dividend		Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Shinhan Time Secondary Blind New Technology Investment Trust	W	—		4,750		4			—		—		4,754
Shinhan DS Secondary Investment Fund		—		1,815		5,662			—		—		7,477
Shinhan-openwater pre-IPO Investment Trust 1		—		5,000		(27	)		—		—		4,973
Shinhan-Eco Venture Fund 2nd		—		3,650		(40	)		—		—		3,610
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1		—		3,200		(46	)		—		—		3,154
Hantoo Shinhan Lake K-beauty Technology Investment Trust		—		10,000		(31	)		—		—		9,969
Shinhan HB Wellness 1st Investment Trust		—		5,000		(8	)		—		—		4,992
Korea real Asset Fund No.3		—		9,370		(55	)		—		—		9,315
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518		—		23,900		(769	)		—		—		23,131
Samsung-dunamu Innovative IT Technology Investment Trust No. 1		—		4,000		536			—		—		4,536
Time Robotics New Technology Investment Trust		—		4,000		(34	)		—		—		3,966
Ascent-welcome Tehcnology Investment Trust No.2		—		9,000		(229	)		—		—		8,771
Igis General PE Real Estate Investment Trust 517-1		—		52,000		(264	)		—		—		51,736
Consus Osansegyo No.2		—		8,000		104			—		—		8,104
Mastern General Private Real Estate Investment Trust No.189 (Type 1 Beneficiary Securities)		—		8,500		(678	)		—		—		7,822
Shinhan AIM Private Fund of Fund 9-B		—		23,036		982			—		—		24,018
Shinhan General Private Real Estate Investment Trust No.3		—		7,721		117			—		—		7,838

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Kiwoom-Shinhan Innovation Fund I	W	7,854		—			125			—		—		7,979
Midas Asset Global CRE Debt Private Fund No.6		54,881		(57,919	)		3,038			—		—		—
Samchully Midstream Private Placement Special Asset Fund 5-4		33,163		2,416			3,905			—		—		39,484
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3		7,254		(7,664	)		410			—		—		—
MK Ventures-K Clavis Growth Capital Venture Fund 1 (*)		—		(183	)		3			—		183		3
NH-Amundi Global Infrastructure Trust 14		18,728		(20,589	)		1,861			—		—		—
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37		35,265		(1,591	)		1,739			—		—		35,413
Milestone Private Real Estate Fund 3		17,615		1,619			(114	)		—		—		19,120
Nomura-Rifa Private Real Estate Investment Trust 31		6,889		—			(546	)		—		—		6,343
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		3,138		(889	)		269			—		—		2,518
FuturePlay-Shinhan TechInnovation Fund 1		7,847		(1,238	)		(824	)		—		—		5,785
Stonebridge Corporate 1st Fund		4,142		—			(165	)		—		—		3,977
Vogo Realty Partners Private Real Estate Fund V		10,792		1,379			(1,509	)		—		—		10,662
Korea Credit Bureau		6,738		(45	)		881			—		—		7,574
Goduck Gangil1 PFV Co., Ltd.		180		(148	)		64			—		—		96
SBC PFV Co., Ltd.		30,774		8,750			(1,908	)		—		—		37,616
NH-amundi global infra private fund 16		50,652		4,293			(21,977	)		—		—		32,968
SH BNCT Professional Investment Type Private Special Asset Investment Trust		244,772		(31,676	)		12,612			—		—		225,708
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24		18,110		(19,646	)		1,536			—		—		—
Sparklabs-Shinhan Opportunity Fund 1		3,914		—			(1,189	)		—		—		2,725
IGIS Real-estate Private Investment Trust No.33		15,271		(809	)		1,170			—		—		15,632

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss			Ending balance
Goduck Gangil10 PFV Co., Ltd.	W	5,081		(212	)		1,296			—		—			6,165
Fidelis Global Private Real Estate Trust No.2		551		—			—			—		—			551
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		48,619		2,955			2,919			—		(29,849	)		24,644
Shinhan Healthcare Fund 2 (*)		—		—			—			—		—			—
Shinhan AIM Real Estate Fund No.2		26,678		1,760			(26,884	)		—		—			1,554
Shinhan AIM Real Estate Fund No.1		51,873		2,613			(51,602	)		—		—			2,884
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		34,781		(856	)		5,566			—		—			39,491
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		20,053		—			1,894			—		—			21,947
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2		17,516		(3,377	)		1,631			—		—			15,770
Korea Omega-Shinhan Project Fund I		11,630		(1,957	)		9,800			—		—			19,473
Samsung SRA Real Estate Professional Private 45		31,432		(3,954	)		2,798			—		—			30,276
IBK Global New Renewable Energy Special Asset Professional Private2		32,296		(1,266	)		2,068			—		—			33,098
VS Cornerstone Fund		3,280		—			(55	)		—		—			3,225
NH-Amundi US Infrastructure Private Fund2		29,725		(30,845	)		1,664			—		—			544
Kakao-Shinhan 1st TNYT Fund		19,866		—			3,812			—		—			23,678
Pacific Private Placement Real Estate Fund No.40		11,624		(748	)		747			—		—			11,623
Mastern Private Real Estate Loan Fund No.2		3,040		(1,908	)		198			—		—			1,330
LB Scotland Amazon Fulfillment Center Fund 29		30,928		3,780			(15,860	)		—		—			18,848
JR AMC Hungary Budapest Office Fund 16		12,687		221			279			—		—			13,187
EDNCENTRAL Co.,Ltd. (*)		—		—			—			—		—			—
Gyeonggi-Neoplux Superman Fund		5,056		—			(918	)		—		—			4,138

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
NewWave 6th Fund	W	13,716		(1,425	)		(1,583	)		—		—		10,708
Neoplux No.3 Private Equity Fund		18,981		(404	)		(6,425	)		—		—		12,152
PCC Amberstone Private Equity Fund I		17,258		(5,513	)		2,795			—		—		14,540
KIAMCO POWERLOAN TRUST 4TH		45,099		(2,331	)		5,935			—		—		48,703
Mastern Opportunity Seeking Real Estate Fund II		13,135		(4,868	)		(2,995	)		—		—		5,272
Neoplux Market-Frontier Secondary Fund		10,427		(4,006	)		1,754			—		—		8,175
Synergy Green New Deal 1st New Technology Business Investment Fund		10,315		(72	)		614			—		—		10,857
KIAMCO Vietnam Solar Special Asset Private Investment Trust		6,836		(580	)		847			—		—		7,103
SHINHAN-NEO Core Industrial Technology Fund		13,616		(9,247	)		3,742			—		—		8,111
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		23,356		(2,538	)		892			—		—		21,710
Eum Private Equity Fund No.7		9,166		(400	)		390			—		—		9,156
Kiwoom Hero No.4 Private Equity Fund		3,442		(96	)		851			—		—		4,197
Vogo Canister Professional Trust Private Fund I		45,871		(47,321	)		1,450			—		—		—
AJ-KOSNET Semicon One Venture Fund		2,854		—			358			—		—		3,212
Timefolio The Venture-V second		5,801		(4,444	)		8			—		—		1,365
Shinhan Smilegate Global PEF I		3,801		(4,326	)		4,407			—		—		3,882
Genesis Eco No.1 PEF		11,219		—			(142	)		—		—		11,077
SHINHAN-NEO Market-Frontier 2nd Fund		32,670		(5,466	)		295			—		—		27,499
NH-Synergy Core Industrial New Technology Fund		6,439		(6,175	)		(264	)		—		—		—
J& Moorim Jade Investment Fund		4,920		—			433			—		—		5,353
Ulmus SHC innovation investment fund		5,543		(1,150	)		(88	)		—		—		4,305
T Core Industrial Technology 1st Venture PEF		4,254		(378	)		(881	)		—		—		2,995

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Fine Value POST IPO No.5 Private Equity Fund	W	3,766		(3,565	)		(201	)		—		—		—
TI First Property Private Investment Trust 1		3,102		(203	)		203			—		—		3,102
IBKC Global Contents Investment Fund		4,701		(4,764	)		63			—		—		—
Kiwoom-Shinhan Innovation Fund 2		9,165		1,148			(86	)		—		—		10,227
ETRI Holdings-Shinhan 1st Unicorn Fund		3,295		1,500			(99	)		—		—		4,696
SJ ESG Innovative Growth Fund		4,198		—			(1,083	)		—		—		3,115
AVES 1st Corporate Recovery Private Equity Fund		4,768		—			(245	)		—		—		4,523
Reverent-Shinhan Vista Fund		2,600		54			755			—		—		3,409
JS Shinhan Private Equity Fund		4,933		—			1,448			—		—		6,381
Daishin Newgen New Technology Investment Fund 1 st		6,082		(5,742	)		(340	)		—		—		—
META ESG Private Equity Fund I		5,771		—			(88	)		—		—		5,683
Shinhan VC tomorrow venture fund 1		45,210		25,608			(185	)		—		—		70,633
H-IOTA Fund		9,524		(2,639	)		2,492			—		—		9,377
Stonebridge-Shinhan Unicorn Secondary Fund		7,427		6,160			—			—		—		13,587
Tres-Yujin Trust		10,359		—			2,672			—		—		13,031
Shinhan-Time mezzanine blind Fund		14,121		—			2,305			—		—		16,426
Capstone REITs No.26		5,750		—			(381	)		—		—		5,369
JB Incheon-Bucheon REITS No.54		4,978		—			(11	)		—		—		4,967
Hankook Smart Real Asset Investment Trust No.3		7,668		—			(1,662	)		—		—		6,006
JB Hwaseong-Hadong REITs No.53		4,983		—			(9	)		—		—		4,974
KB Oaktree Trust No.3		8,668		304			916			—		—		9,888
Daehan No.36 Office Asset Management Company		22,482		(25,394	)		2,912			—		—		—
Rhinos Premier Mezzanine Private Investment Fund No.1		3,056		(3,048	)		(8	)		—		—		—
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		62,769		(12,710	)		2,738			—		—		52,797
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		41,434		(1,142	)		(647	)		—		—		39,645
SKS-Yozma Fund No.1		3,455		(2,931	)		(524	)		—		—		—

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
KB Distribution Private Real Estate 3-1	W	25,976		—			(1,897	)		—		—		24,079
Pacific Private Investment Trust No.49-1		27,377		—			623			—		—		28,000
KIWOOM Real estate private placement fund for normal investors No. 31		8,558		(435	)		(91	)		—		—		8,032
RIFA Real estate private placement fund for normal investoes No. 51		5,731		(294	)		(66	)		—		—		5,371
Fivetree general private equity fund No.15		12,572		(12,572	)		—			—		—		—
Shinhan-Kunicorn first Fund		9,626		—			(202	)		—		—		9,424
Shinhan-Quantum Startup Fund		3,986		1,800			(121	)		—		—		5,665
Shinhan Simone Fund I		4,837		(991	)		(424	)		—		—		3,422
Korea Investment develop seed Trust No.1		9,532		(939	)		1,552			—		—		10,145
Tiger Green alpha Trust No.29		28,573		(664	)		2,083			—		—		29,992
STIC ALT Global II Private Equity Fund		9,504		(217	)		554			—		—		9,841
NH-Brain EV Fund		11,125		(12,999	)		1,874			—		—		—
DDI LVC Master Real Estate Investment Trust Co., Ltd.		6,583		—			(783	)		—		—		5,800
Leverent-Frontier 4th Venture PEF		3,294		—			(1,220	)		—		—		2,074
Find-Green New Deal 2nd Equity Fund		4,465		—			(141	)		—		—		4,324
ShinhanFitrin 1st Technology Business Investment Association		4,519		—			(287	)		—		—		4,232
Koramco Private Real Estate Fund 143		6,667		—			2			—		—		6,669
Korea Investment Top Mezzanine Private Real Esate Trust No.1		10,016		(994	)		854			—		—		9,876
LB YoungNam Logistics Private Trust No.40		9,782		(600	)		443			—		—		9,625
Shinhan-Cognitive Start-up Fund L.P.		5,329		—			(1,120	)		—		—		4,209
Cornerstone J&M Fund I		3,488		—			(74	)		—		—		3,414
Logisvalley Shinhan REIT Co.,Ltd.		3,598		—			(209	)		—		—		3,389
DA Value-Honest New Technology Investment Fund 1		4,099		(2,754	)		(1,345	)		—		—		—
Shinhan-Ji and Tec Smart Innovation Fund		9,977		2,535			492			—		—		13,004

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st	W	6,968		—			(210	)		—		—		6,758
Korea Investment Green Newdeal Infra Trust No.1		10,257		5,962			(123	)		—		—		16,096
BTS 2nd Private Equity Fund		6,342		3,796			21			—		—		10,159
NH-J&-IBKC Label Technology Fund		9,747		—			(101	)		—		—		9,646
Hanyang Time Mezzanine Fund		3,012		(300	)		(201	)		—		—		2,511
Shinhan-Sneak Peek Bio&Healthcare Bounce Back Fund		2,261		1,250			405			—		—		3,916
Shinhan-isquare Venture PEF 1		4,286		100			(149	)		—		—		4,237
Aurum Goldrush ESG Private Fund No. 1		2,917		—			90			—		—		3,007
Capstone Develop Frontier Trust		7,547		(549	)		1,051			—		—		8,049
Nextrade Co., Ltd.		9,700		—			—			—		—		9,700
SH 1.5years Maturity Investment Type Security Investment Trust No.2		4,835		(4,835	)		—			—		—		—
Eventus-IBKC LIB Fund		6,632		(7,064	)		432			—		—		—
IBKC-Behigh Fund 1st		3,219		—			(59	)		—		—		3,160
ON No.1 Private Equity Fund		5,321		—			391			—		—		5,712
Digital New Deal Kappa Private Equity Fund		4,845		—			(98	)		—		—		4,747
IBKCJS New Technology Fund No.1		6,130		(2,418	)		(1,094	)		—		—		2,618
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1		9,803		—			(157	)		—		—		9,646
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18		12,013		(2,170	)		1,481			—		—		11,324
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38		3,171		(61	)		168			—		—		3,278
TogetherKorea Private Investment Trust No. 6		5,270		—			153			—		—		5,423
TogetherKorea Private Investment Trust No. 7		5,270		—			153			—		—		5,423
Kiwoom Core Industrial Technology Investment Fund No.3		4,180		—			39			—		—		4,219
Penture K-Content Investment Fund		5,622		6,000			(303	)		—		—		11,319

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income		Impairment loss		Ending balance
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund	W	7,969		6,413			(914	)		—		—		13,468
Hana Alternative Investment Kosmes PCBO General PEF No. 1		5,107		(526	)		544			—		—		5,125
Shinhan-timefolio Bio Development Investment Fund		5,927		6,000			(220	)		—		—		11,707
Shinhan M&A-ESG Fund		4,169		2,576			(291	)		—		—		6,454
Shinhan SM Office Value Add – Outsource Management Real Estate Investment Co., Ltd. –		10,574		6,609			1,621			—		—		18,804
KDBC meta-enter New Technology investment fund		6,940		—			(143	)		—		—		6,797
Shinhan Time Secondary Blind New Technology Investment Trust		4,754		—			(117	)		—		—		4,637
Shinhan DS Secondary Investment Fund		7,477		(1,408	)		(3,630	)		—		—		2,439
Shinhan-openwater pre-IPO Investment Trust 1		4,973		—			693			—		—		5,666
Shinhan-CJ TechInnovation Fund 1st		2,364		2,400			(169	)		—		—		4,595
Shinhan-Eco Venture Fund 2nd		3,610		450			(103	)		—		—		3,957
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1		3,154		3,200			143			—		—		6,497
Hantoo Shinhan Lake K-beauty Technology Investment Trust		9,969		—			295			—		—		10,264
Shinhan HB Wellness 1st Investment Trust		4,992		—			334			—		—		5,326
Korea real Asset Fund No.3		9,315		7,865			(628	)		—		—		16,552
PineStreet Global Corporate FoF XIII-2 (NC XI)		721		3,087			(65	)		—		—		3,743
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518		23,131		(5,596	)		(391	)		—		—		17,144
Samsung-dunamu Innovative IT Technology Investment Trust No. 1		4,536		—			(786	)		—		—		3,750
Time Robotics New Technology Investment Trust		3,966		(200	)		12			—		—		3,778
Ascent-welcome Tehcnology Investment Trust No.2		8,771		—			(311	)		—		—		8,460
Newmain I funds		1,991		—			7,373			—		—		9,364

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Beginning balance		Investment and dividend			Equity method income (loss)			Change in other comprehensive income			Impairment loss		Ending balance
Igis General PE Real Estate Investment Trust 517-1	W	51,736		5,000			(1,834	)		—			—		54,902
SH Ulmus M.P.E. Innovative Venture Fund 7		3,000		—			32			—			—		3,032
Consus Osansegyo No.2		8,104		—			(95	)		—			—		8,009
Mastern General Private Real Estate Investment Trust No.189(Type 1 Beneficiary Securities)		7,822		(7,502	)		(320	)		—			—		—
Shinhan AIM Private Fund of Fund 9-B		24,018		9,751			2,972			—			—		36,741
Shinhan General Private Real Estate Investment Trust No.3		7,838		18,970			(102	)		—			—		26,706
NH Absolute Project L General Private Investment Trust		4,893		(5,264	)		371			—			—		—
Paros Kosdaq Venture General Private Investment Trust No. 5		5,994		—			596			—			—		6,590
Happy Pet Life Care New Technology Investment Association No.2		3,456		—			(457	)		—			—		2,999
Shinhan-Soo Secondary Investment Association		5,249		12,250			(762	)		—			—		16,737
TECHFIN RATINGS Co., Ltd.		—		27,000			(1,390	)		—			—		25,610
SONGPA BIZ CLUSTER PFV CO LTD		—		13,700			(336	)		—			—		13,364
Planeta PTE LTD		—		11,341			—			—			—		11,341
The E&Shinhan New Growth Up Fund		—		3,600			(82	)		—			—		3,518
Shinhan-GB FutureFlow Fund L.P.		—		5,855			(352	)		(353	)		—		5,150
Credila Financial Services		—		250,270			4,017			8,829			—		263,116
Shinhan Market-Frontier Fund III		—		13,205			(414	)		—			—		12,791
DB IPO HighYield Fund 1		—		4,000			278			—			—		4,278
Exponential SQUARE Private Investment Trust No.1		—		6,146			(938	)		—			—		5,208
Fine North America Credit Private Mixed Asset Investment Trust 22		—		4,549			64			—			—		4,613
IGIS Private Real Estate Investment No.454		—		3,393			(25	)		—			—		3,368
IGIS Private Real Estate Investment No.462		—		4,607			(174	)		—			—		4,433
BNW Recharge Private Equity Fund		—		6,767			371			—			—		7,138

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
MIEL CO., LTD.	W	422		565		36		—			—		—
AIP Transportation Specialized Privately Placed Fund Trust #1		130,174		373		4,237		(38,058	)		—		(38,058	)
Kiwoom-Shinhan Innovation Fund I		16,081		373		1,531		(325	)		—		(325	)
Midas Asset Global CRE Debt Private Fund No.6		138,202		1,352		18,827		15,828			—		15,828
Samchully Midstream Private Placement Special Asset Fund 5-4		77,296		28		15,914		4,186			—		4,186
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3		36,283		10		5,351		5,130			—		5,130
NH-Amundi Global Infrastructure Trust 14		62,431		2		10,567		2,796			—		2,796
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37		58,814		38		12,899		4,319			—		4,319
Milestone Private Real Estate Fund 3		54,945		—		5,117		(7,989	)		—		(7,989	)
Nomura-Rifa Private Real Estate Investment Trust 31		93,950		71,946		1,882		(192	)		—		(192	)
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		14,760		6		17,929		13,371			—		13,371
FuturePlay-Shinhan TechInnovation Fund 1		15,922		227		2,392		1,861			—		1,861
Stonebridge Corporate 1st Fund		9,390		—		1,262		1,179			—		1,179
Vogo Realty Partners Private Real Estate Fund V		49,968		86		4,879		1,179			—		1,179
Korea Credit Bureau		129,155		54,287		160,189		19,880			—		19,880
Goduck Gangil1 PFV Co., Ltd.		209,615		192,311		340,451		11,493			—		11,493
SBC PFV Co., Ltd.		472,860		309,802		—		(5,733	)		—		(5,733	)
NH-amundi global infra private fund 16		102,499		1,195		291		(10,397	)		—		(10,397	)
SH BNCT Professional Investment Type Private Special Asset Investment Trust		337,617		—		32,744		19,052			—		19,052
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24		35,359		716		29,833		2,504			—		2,504

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Sparklabs-Shinhan Opportunity Fund 1	W	7,916		9		1,834		848			—		848
IGIS Real-estate Private Investment Trust No.33		91,806		54,428		15,927		2,642			—		2,642
Goduck Gangil10 PFV Co., Ltd.		129,399		103,864		158,905		9,272			—		9,272
Fidelis Global Private Real Estate Trust No.2		745		52		—		(9	)		—		(9	)
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		170,567		1,159		1,097		37			—		37
Shinhan Global Healthcare Fund 2		31		183		1		(2	)		—		(2	)
Shinhan AIM Real Estate Fund No.2		90,066		1,140		19,579		4,783			—		4,783
Shinhan AIM Real Estate Fund No.1		247,193		296		89,979		3,070			—		3,070
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		158,010		55		18,673		13,942			—		13,942
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		69,059		361		2,753		2,583			—		2,583
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2		24,554		31		2,926		750			—		750
Korea Omega-Shinhan Project Fund I		23,261		—		3,356		3,216			—		3,216
Samsung SRA Real Estate Professional Private 45		128,943		3,215		13		(44	)		—		(44	)
IBK Global New Renewable Energy Special Asset Professional Private2		111,460		36		16,458		(9,724	)		—		(9,724	)
VS Cornerstone Fund		8,094		127		—		(133	)		—		(133	)
NH-Amundi US Infrastructure Private Fund2		114,783		45		60,166		8,411			—		8,411
SH Japan Photovoltaic Private Special Asset Investment Trust No.2		7,797		85		9,439		1,137			—		1,137
Kakao-Shinhan 1st TNYT Fund		40,992		134		77		(3,012	)		—		(3,012	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Pacific Private Placement Real Estate Fund No.40	W	145,871		98,869		4,152		3,031			—		3,031
Mastern Private Real Estate Loan Fund No.2		9,081		24		1,049		989			—		989
LB Scotland Amazon Fulfillment Center Fund 29		44,187		93		7,071		4,339			—		4,339
JR AMC Hungary Budapest Office Fund 16		40,697		1,742		8,394		3,081			—		3,081
EDNCENTRAL Co.,Ltd.		120,947		163,105		657		(18,592	)		—		(18,592	)
Future-Creation Neoplux Venture Capital Fund		20,097		3,601		6,093		(4,198	)		—		(4,198	)
Gyeonggi-Neoplux Superman Fund		24,409		1,174		2,874		(1,889	)		—		(1,889	)
NewWave 6th Fund		46,704		984		5,322		585			—		585
Neoplux No.3 Private Equity Fund		195,669		5,877		24,125		(14,695	)		—		(14,695	)
PCC Amberstone Private Equity Fund I		82,150		2,509		13,537		4,144			—		4,144
KIAMCO POWERLOAN TRUST 4TH		95,224		15		8,657		8,193			—		8,193
Mastern Opportunity Seeking Real Estate Fund II		59,113		—		11,061		11,043			—		11,043
Neoplux Market-Frontier Secondary Fund		53,425		597		17,711		708			—		708
Harvest Private Equity Fund II		13,718		217		119		(613	)		—		(613	)
Synergy Green New Deal 1st New Technology Business Investment Fund		36,618		—		764		(610	)		—		(610	)
KIAMCO Vietnam Solar Special Asset Private Investment Trust		13,693		21		2,644		658			—		658
SHINHAN-NEO Core Industrial Technology Fund		27,494		123		8,970		8,456			—		8,456
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		77,888		34		3,376		2,913			—		2,913
SIMONE Mezzanine Fund No.3		4,179		3		2,625		521			—		521
Eum Private Equity Fund No.7		43,658		6		632		(19	)		—		(19	)
Kiwoom Hero No.4 Private Equity Fund		16,580		228		356		(356	)		—		(356	)
Vogo Canister Professional Trust Private Fund I		249,535		124,697		19,630		7,122			—		7,122

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Timefolio The Venture-V second	W	28,125		135		8,764		8,226			—		8,226
Shinhan Smilegate Global PEF I		30,053		3,305		14		(477	)		—		(477	)
Genesis Eco No.1 PEF		38,676		—		1		(686	)		—		(686	)
SHINHAN-NEO Market-Frontier 2nd Fund		78,108		1,596		4,660		(14,099	)		—		(14,099	)
NH-Synergy Core Industrial New Technology Fund		17,437		—		1,813		168			—		168
J& Moorim Jade Investment Fund		19,829		57		1,054		1,097			—		1,097
Helios-KDBC Digital Contents 1st		9,785		85		19		1,535			—		1,535
Ulmus SHC innovation investment fund		23,060		—		2,967		2,734			—		2,734
T Core Industrial Technology 1st Venture PEF		13,541		22		216		(874	)		—		(874	)
Fine Value POST IPO No.5 Private Equity Fund		9,441		26		3,921		3,740			—		3,740
TI First Property Private Investment Trust 1		7,773		17		1,353		445			—		445
MPLUS Professional Private Real Estate Fund 25		11,946		6,286		—		(4,495	)		—		(4,495	)
IBKC Global Contents Investment Fund		19,634		359		1,127		611			—		611
Hanyang-Meritz 1 Fund		13,202		—		1,093		903			—		903
Kiwoom-Shinhan Innovation Fund 2		21,555		170		5,952		5,431			—		5,431
ETRI Holdings-Shinhan 1st Unicorn Fund		6,590		—		6		(199	)		—		(199	)
SJ ESG Innovative Growth Fund		14,693		—		127		4			—		4
AVES 1st Corporate Recovery Private Equity Fund		6,331		72		—		(380	)		—		(380	)
JS Shinhan Private Equity Fund		123,099		—		8		(1,470	)		—		(1,470	)
Daishin Newgen New Technology Investment Fund 1st		12,044		25		907		747			—		747
META ESG Private Equity Fund I		21,063		—		31		(314	)		—		(314	)
PHAROS DK FUND		10,179		21		838		165			—		165
Shinhan VC tomorrow venture fund 1		114,834		730		3,462		147			—		147
H-IOTA Fund		38,721		338		966		564			—		564
Stonebridge-Shinhan Unicorn Secondary Fund		28,551		—		3		(6,069	)		—		(6,069	)
Tres-Yujin Trust		20,820		102		712		710			—		710

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Shinhan-Time mezzanine blind Fund	W	28,243		—		2,237		1,617			—		1,617
Capstone REITs No.26		46,661		35,161		9,371		4,395			—		4,395
JB Incheon-Bucheon REITS No.54		12,667		5		—		(27	)		—		(27	)
Hankook Smart Real Asset Investment Trust No.3		23,032		26		2,052		2,026			—		2,026
JB Hwaseong-Hadong REITs No.53		16,065		5		1		(27	)		—		(27	)
KB Oaktree Trust No.3		26,012		8		6,097		2,502			—		2,502
Daehan No.36 Office Asset Management Company		153,846		107,055		6,232		882			—		882
Rhinos Premier Mezzanine Private Investment Fund No.1		10,965		20		98		83			—		83
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		211,192		59		11,320		6,949			—		6,949
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		166,822		84		8,934		3,328			—		3,328
SKS-Yozma Fund No.1		12,315		740		4,529		3,337			—		3,337
KB Distribution Private Real Estate 3-1		69,558		289		67		42			—		42
Pacific Private Investment Trust No.49-1		40,024		5,491		—		(437	)		—		(437	)
KIWOOM Real estate private placement fund for normal investors No. 31		14,278		14		—		(16	)		—		(16	)
RIFA Real estate private placement fund for normal investoes No. 51		14,358		29		1		(16	)		—		(16	)
Fivetree general private equity fund No.15		25,184		29		817		788			—		788
Shinhan-Kunicorn first Fund		25,126		—		9		(534	)		—		(534	)
Shinhan-Quantum Startup Fund		8,105		—		40		(270	)		—		(270	)
Shinhan Simone Fund I		12,582		4		311		107			—		107
Korea Investment develop seed Trust No.1		24,168		338		582		478			—		478
Tiger Green alpha Trust No.29		30,054		51		2,634		2,473			—		2,473
STIC ALT Global II Private Equity Fund		43,848		130		5		(630	)		—		(630	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
NH-Brain EV Fund	W	44,499		—		4		(1,868	)		—		(1,868	)
DDI LVC Master Real Estate Investment Trust Co., Ltd.		43,817		8		—		(1,809	)		—		(1,809	)
Leverent-Frontier 4th Venture PEF		13,792		—		1,530		1,380			—		1,380
Find-Green New Deal 2nd Equity Fund		19,779		—		2		(190	)		—		(190	)
ShinhanFitrin 1st Technology Business Investment Association		28,025		73		3,160		2,758			—		2,758
Koramco Private Real Estate Fund 143		22,026		23		11		2			—		2
Korea Investment Top Mezzanine Private Real Esate Trust No.1		45,815		740		5,900		5,849			—		5,849
LB YoungNam Logistics Private Trust No.40		39,139		10		2,561		2,538			—		2,538
Shinhan-Cognitive Start-up Fund L.P.		16,518		254		2,557		2,197			—		2,197
Cornerstone J&M Fund I		13,129		47		3		(274	)		—		(274	)
Logisvalley Shinhan REIT Co.,Ltd.		78,925		56,307		4,840		(1,017	)		—		(1,017	)
DA Value-Honest New Technology Investment Fund 1		17,329		—		10,911		10,910			—		10,910
Shinhan-Ji and Tec Smart Innovation Fund		19,954		—		21		(820	)		—		(820	)
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st		14,318		382		6		(416	)		—		(416	)
Korea Investment Green Newdeal Infra Trust No.1		36,689		21		52		21			—		21
BTS 2nd Private Equity Fund		25,136		742		101		(1,116	)		—		(1,116	)
Shinhan Global Active REIT Co. Ltd.		191,211		97,944		—		(766	)		—		(766	)
NH-J&-IBKC Label Technology Fund		35,347		294		13		(428	)		—		(428	)
Hanyang Time Mezzanine Fund		10,543		—		127		43			—		43
Shinhan-isquare Venture PEF 1		10,741		25		3		(528	)		—		(528	)
Capstone Develop Frontier Trust		35,305		83		5,942		5,859			—		5,859
Nextrade Co., Ltd.		140,424		19,174		6,626		(8,432	)		—		(8,432	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
SH 1.5years Maturity Investment Type Security Investment Trust No.2	W	17,814		1,200		908		798			—		798
Eventus-IBKC LIB Fund		30,326		8		3,215		2,729			—		2,729
IBKC-Behigh Fund 1st		10,829		—		31		(165	)		—		(165	)
ON No.1 Private Equity Fund		18,625		—		125		(144	)		—		(144	)
Digital New Deal Kappa Private Equity Fund		19,576		—		1		(408	)		—		(408	)
IBKCJS New Technology Fund No.1		20,842		—		4,123		3,842			—		3,842
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1		47,055		—		3		(945	)		—		(945	)
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18		42,082		35		5,917		3,496			—		3,496
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38		4,248		19		247		228			—		228
TogetherKorea Private Investment Trust No. 6		5,273		1		223		218			—		218
TogetherKorea Private Investment Trust No. 7		5,273		1		223		218			—		218
Kiwoom Core Industrial Technology Investment Fund No.3		12,058		29		592		518			—		518
Penture K-Content Investment Fund		25,938		338		196		(1,721	)		—		(1,721	)
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund		26,684		121		785		438			—		438
Hana Alternative Investment Kosmes PCBO General PEF No. 1		13,806		15		1,007		992			—		992
Shinhan-timefolio Bio Development Investment Fund		12,420		170		23		(150	)		—		(150	)
Shinhan M&A-ESG Fund		18,154		285		31		(791	)		—		(791	)
Shinhan SM Office Value Add – Outsource Management Real Estate Investment Co., Ltd. –		37,231		41		3,710		3,548			—		3,548

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Asset		Liability		Operating revenue		Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
KDBC meta-enter New Technology investment fund	W	24,889		2		—		(215	)		—		(215	)
Shinhan Time Secondary Blind New Technology Investment Trust		10,009		—		50		9			—		9
Shinhan DS Secondary Investment Fund		18,709		15		14,179		14,156			—		14,156
Shinhan-openwater pre-IPO Investment Trust 1		9,947		—		2		(55	)		—		(55	)
Shinhan-Eco Venture Fund 2nd		9,067		42		1		(100	)		—		(100	)
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1		7,885		—		65		(115	)		—		(115	)
Hantoo Shinhan Lake K-beauty Technology Investment Trust		43,417		—		1		(133	)		—		(133	)
Shinhan HB Wellness 1st Investment Trust		10,285		—		17		(17	)		—		(17	)
Korea real Asset Fund No.3		32,625		20		170		(193	)		—		(193	)
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518		278,662		205,204		3,943		(650	)		—		(650	)
Samsung-dunamu Innovative IT Technology Investment Trust No. 1		20,175		444		2,875		2,331			—		2,331
Time Robotics New Technology Investment Trust		13,284		—		—		(114	)		—		(114	)
Ascent-welcome Tehcnology Investment Trust No.2		31,722		—		2		(828	)		—		(828	)
Igis General PE Real Estate Investment Trust 517-1		54,015		289		—		(274	)		—		(274	)
Consus Osansegyo No.2		16,209		—		24		22			—		22
Mastern General Private Real Estate Investment Trust No.189(Type 1 Beneficiary Securities)		123,657		99,729		1,285		(2,073	)		—		(2,073	)
Shinhan AIM Private Fund of Fund 9-B		96,124		51		9,992		3,928			—		3,928
Shinhan General Private Real Estate Investment Trust No.3		38,175		410		591		564			—		564
NH Absolute Project L General Private Investment Trust		18,863		65		7		1,556			—		1,556

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Kiwoom-Shinhan Innovation Fund I	W	16,166		209		469			253			—		253
Samchully Midstream Private Placement Special Asset Fund 5-4		94,792		30		22,021			9,371			—		9,371
MK Ventures-K Clavis Growth Capital Venture Fund 1 (*1)		10		—		151			146			—		146
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37		59,045		23		11,969			2,925			—		2,925
Milestone Private Real Estate Fund 3		59,637		—		1,297			(10,711	)		—		(10,711	)
Nomura-Rifa Private Real Estate Investment Trust 31		92,219		71,961		43,830			32,959			—		32,959
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		11,845		6		1,183			1,265			—		1,265
FuturePlay-Shinhan TechInnovation Fund 1		11,855		285		2,219			(1,648	)		—		(1,648	)
Stonebridge Corporate 1st Fund		9,016		1		—			(373	)		—		(373	)
Vogo Realty Partners Private Real Estate Fund V		49,374		96		5,403			(6,973	)		—		(6,973	)
Korea Credit Bureau		153,079		68,920		172,186			9,791			—		9,791
Goduck Gangil1 PFV Co., Ltd.		9,794		542		85,798			6,326			—		6,326
SBC PFV Co., Ltd.		1,315,956		1,125,532		4			(7,622	)		—		(7,622	)
NH-amundi global infra private fund 16		72,552		6,617		84,498			38,998			—		38,998
SH BNCT Professional Investment Type Private Special Asset Investment Trust		311,321		—		3,086			17,396			—		17,396
Sparklabs-Shinhan Opportunity Fund 1		5,505		—		25			(2,405	)		—		(2,405	)
IGIS Real-estate Private Investment Trust No.33		93,113		54,852		5,709			2,863			—		2,863
Goduck Gangil10 PFV Co., Ltd.		31,122		144		59,353			6,350			—		6,350
Fidelis Global Private Real Estate Trust No.2		748		57		(1	)		(2	)		—		(2	)
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		145,170		59,302		(7,077	)		(10,179	)		—		(10,179	)
Shinhan Healthcare Fund 2		31		183		1			—			—		—

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Shinhan AIM Real Estate Fund No.2	W	6,641		1,461		123,427			(89,613	)		—		(89,613	)
Shinhan AIM Real Estate Fund No.1		14,604		877		164,469			(245,607	)		—		(245,607	)
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		179,396		52		22,204			25,277			—		25,277
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		75,611		426		11,878			6,489			—		6,489
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2		22,106		29		2,581			2,283			—		2,283
Korea Omega-Shinhan Project Fund I		38,945		—		19,657			19,599			—		19,599
Samsung SRA Real Estate Professional Private 45		139,222		18,119		(11,232	)		(11,358	)		—		(11,358	)
IBK Global New Renewable Energy Special Asset Professional Private2		114,189		—		(4,160	)		(32,244	)		—		(32,244	)
VS Cornerstone Fund		8,085		254		—			(134	)		—		(134	)
NH-Amundi US Infrastructure Private Fund2		2,100		1		107			6,423			—		6,423
Kakao-Shinhan 1st TNYT Fund		48,793		96		12,387			7,840			—		7,840
Pacific Private Placement Real Estate Fund No.40		145,794		98,798		4,270			3,022			—		3,022
Mastern Private Real Estate Loan Fund No.2		3,977		14		627			590			—		590
LB Scotland Amazon Fulfillment Center Fund 29		29,223		227		3,917			(16,566	)		—		(16,566	)
JR AMC Hungary Budapest Office Fund 16		42,031		1,543		858			858			—		858
EDNCENTRAL Co.,Ltd.		122,357		200,291		(35,285	)		(70,591	)		—		(70,591	)
Gyeonggi-Neoplux Superman Fund		20,711		1,697		716			(4,218	)		—		(4,218	)
NewWave 6th Fund		36,572		878		9,185			(5,276	)		—		(5,276	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Neoplux No.3 Private Equity Fund	W	129,055		7,532		1,307			(64,247	)		—		(64,247	)
PCC Amberstone Private Equity Fund I		67,099		—		17,359			12,898			—		12,898
KIAMCO POWERLOAN TRUST 4TH		102,831		13		8,143			12,529			—		12,529
Mastern Opportunity Seeking Real Estate Fund II		25,087		1,362		12,764			(13,478	)		—		(13,478	)
Neoplux Market-Frontier Secondary Fund		41,423		2		13,712			8,889			—		8,889
Synergy Green New Deal 1st New Technology Business Investment Fund		38,542		—		2,578			2,180			—		2,180
KIAMCO Vietnam Solar Special Asset Private Investment Trust		14,267		62		4,527			1,697			—		1,697
SHINHAN-NEO Core Industrial Technology Fund		16,704		400		21,363			7,522			—		7,522
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		72,396		31		3,173			2,973			—		2,973
Eum Private Equity Fund No.7		43,608		4		2,427			1,857			—		1,857
Kiwoom Hero No.4 Private Equity Fund		19,934		—		3,624			4,042			—		4,042
AJ-KOSNET Semicon One Venture Fund		14,576		122		1,827			1,613			—		1,613
Timefolio The Venture-V second		6,589		3		2,744			31			—		31
Shinhan Smilegate Global PEF I		27,798		475		(18,714	)		(19,824	)		—		(19,824	)
Genesis Eco No.1 PEF		38,654		469		—			(490	)		—		(490	)
SHINHAN-NEO Market-Frontier 2nd Fund		65,802		1,402		11,931			691			—		691
J& Moorim Jade Investment Fund		21,508		—		1,862			1,740			—		1,740
Ulmus SHC innovation investment fund		17,910		—		207			(366	)		—		(366	)
T Core Industrial Technology 1st Venture PEF		9,541		23		206			(2,800	)		—		(2,800	)
TI First Property Private Investment Trust 1		7,776		21		4,139			507			—		507

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Kiwoom-Shinhan Innovation Fund 2	W	23,991		129		429			(200	)		—		(200	)
ETRI Holdings-Shinhan 1st Unicorn Fund		9,391		—		7			(197	)		—		(197	)
SJ ESG Innovative Growth Fund		10,941		39		1			(3,791	)		—		(3,791	)
AVES 1st Corporate Recovery Private Equity Fund		6,131		194		—			(321	)		—		(321	)
Reverent-Shinhan Vista Fund		25,415		—		6,002			5,629			—		5,629
JS Shinhan Private Equity Fund		165,748		1		(39,164	)		(40,720	)		—		(40,720	)
META ESG Private Equity Fund I		20,742		—		23			(321	)		—		(321	)
Shinhan VC tomorrow venture fund 1		180,741		2,474		19,038			(467	)		—		(467	)
H-IOTA Fund		38,306		517		10,346			10,044			—		10,044
Stonebridge-Shinhan Unicorn Secondary Fund		52,230		—		71			(6	)		—		(6	)
Tres-Yujin Trust		26,264		202		5,347			5,344			—		5,344
Shinhan-Time mezzanine blind Fund		32,851		—		4,901			4,613			—		4,613
Capstone REITs No.26		51,536		40,798		914			(761	)		—		(761	)
JB Incheon-Bucheon REITS No.54		12,639		5		—			(29	)		—		(29	)
Hankook Smart Real Asset Investment Trust No.3		18,083		66		—			(4,986	)		—		(4,986	)
JB Hwaseong-Hadong REITs No.53		16,034		5		—			(29	)		—		(29	)
KB Oaktree Trust No.3		29,674		9		7,074			2,749			—		2,749
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		177,733		143		12,600			9,210			—		9,210
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		159,621		83		6,948			(2,604	)		—		(2,604	)
KB Distribution Private Real Estate 3-1		64,261		50		5,118			5,118			—		5,118
Pacific Private Investment Trust No.49-1		40,988		5,671		(1,819	)		(2,852	)		—		(2,852	)
KIWOOM Real estate private placement fund for normal investors No. 31		13,403		17		1,669			1,604			—		1,604

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
RIFA Real estate private placement fund for normal investoes No. 51	W	13,461		33		153			140			—		140
Shinhan-Kunicorn first Fund		24,603		7		7			(527	)		—		(527	)
Shinhan-Quantum Startup Fund		11,519		—		61			(246	)		—		(246	)
Shinhan Simone Fund I		8,901		3		206			(1,098	)		—		(1,098	)
Korea Investment develop seed Trust No.1		25,407		45		3,987			3,881			—		3,881
Tiger Green alpha Trust No.29		31,545		53		2,345			2,187			—		2,187
STIC ALT Global II Private Equity Fund		45,398		129		3,073			2,548			—		2,548
DDI LVC Master Real Estate Investment Trust Co., Ltd.		38,594		8		(60	)		(5,340	)		—		(5,340	)
Leverent-Frontier 4th Venture PEF		8,758		75		—			(5,109	)		—		(5,109	)
Find-Green New Deal 2nd Equity Fund		19,201		47		28			(625	)		—		(625	)
ShinhanFitrin 1st Technology Business Investment Association		26,243		68		2,869			2,445			—		2,445
Koramco Private Real Estate Fund 143		22,055		44		15			7			—		7
Korea Investment Top Mezzanine Private Real Esate Trust No.1		44,605		165		3,876			3,845			—		3,845
LB YoungNam Logistics Private Trust No.40		38,510		10		1,794			1,771			—		1,771
Shinhan-Cognitive Start-up Fund L.P.		12,844		—		4,046			2,657			—		2,657
Cornerstone J&M Fund I		12,849		47		1			(278	)		—		(278	)
Logisvalley Shinhan REIT Co.,Ltd.		78,877		55,563		3,872			(1,031	)		—		(1,031	)
Shinhan-Ji and Tec Smart Innovation Fund		26,008		—		1,395			984			—		984
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st		13,899		383		8			(420	)		—		(420	)
Korea Investment Green Newdeal Infra Trust No.1		57,567		25		—			(441	)		—		(441	)
BTS 2nd Private Equity Fund		39,434		359		527			81			—		81

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
NH-J&-IBKC Label Technology Fund	W	35,111		425		6			(363	)		—		(363	)
Hanyang Time Mezzanine Fund		8,790		—		270			(703	)		—		(703	)
Shinhan-Sneak Peek Bio&Healthcare Bounce Back Fund		7,831		—		815			810			—		810
Shinhan-isquare Venture PEF 1		10,655		63		—			(372	)		—		(372	)
Aurum Goldrush ESG Private Fund No. 1		10,629		16		332			316			—		316
Capstone Develop Frontier Trust		37,644		81		4,987			4,906			—		4,906
Nextrade Co., Ltd.		123,829		2,579		(12,517	)		(34,855	)		—		(34,855	)
IBKC-Behigh Fund 1st		10,629		—		26			(198	)		—		(198	)
ON No.1 Private Equity Fund		19,991		—		1,628			1,369			—		1,369
Digital New Deal Kappa Private Equity Fund		19,178		—		—			(396	)		—		(396	)
IBKCJS New Technology Fund No.1		8,901		—		2,523			(3,720	)		—		(3,720	)
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1		46,301		—		9			(753	)		—		(753	)
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18		39,658		24		9,617			5,184			—		5,184
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38		4,390		19		244			224			—		224
TogetherKorea Private Investment Trust No. 6		5,425		1		150			147			—		147
TogetherKorea Private Investment Trust No. 7		5,425		1		150			147			—		147
Kiwoom Core Industrial Technology Investment Fund No.3		12,139		—		239			112			—		112
Penture K-Content Investment Fund		57,553		337		505			(1,532	)		—		(1,532	)
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund		45,013		119		43			(3,047	)		—		(3,047	)
Hana Alternative Investment Kosmes PCBO General PEF No. 1		13,852		15		1,524			1,469			—		1,469

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Shinhan-timefolio Bio Development Investment Fund	W	24,659		464		32			(458	)		—		(458	)
Shinhan M&A-ESG Fund		27,661		1		137			(1,245	)		—		(1,245	)
Shinhan SM Office Value Add – Outsource Management Real Estate Investment Co., Ltd. –		103,444		37,314		21,731			5,701			—		5,701
KDBC meta-enter New Technology investment fund		24,375		2		1			(513	)		—		(513	)
Shinhan Time Secondary Blind New Technology Investment Trust		9,762		—		133			(246	)		—		(246	)
Shinhan DS Secondary Investment Fund		5,047		152		(653	)		(9,219	)		—		(9,219	)
Shinhan-openwater pre-IPO Investment Trust 1		11,337		5		1,873			1,386			—		1,386
Shinhan-CJ TechInnovation Fund 1st		11,488		—		66			(422	)		—		(422	)
Shinhan-Eco Venture Fund 2nd		9,935		42		—			(257	)		—		(257	)
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1		16,243		—		835			358			—		358
Hantoo Shinhan Lake K-beauty Technology Investment Trust		44,701		—		1,878			1,284			—		1,284
Shinhan HB Wellness 1st Investment Trust		10,971		—		808			688			—		688
Korea real Asset Fund No.3		58,401		468		—			(2,198	)		—		(2,198	)
PineStreet Global Corporate FoF XIII-2 (NC XI)		3,748		5		173			(47	)		—		(47	)
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518		271,916		206,529		16,409			(614	)		—		(614	)
Samsung-dunamu Innovative IT Technology Investment Trust No. 1		16,313		—		11			(3,419	)		—		(3,419	)
Time Robotics New Technology Investment Trust		12,651		—		240			40			—		40
Ascent-welcome Tehcnology Investment Trust No.2		30,597		—		16			(1,125	)		—		(1,125	)
Newmain I funds		25,757		3		25,313			20,278			—		20,278
Igis General PE Real Estate Investment Trust 517-1		57,074		346		11			(1,983	)		—		(1,983	)

F-20

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
SH Ulmus M.P.E. Innovative Venture Fund 7	W	10,612		—		250			112			—		112
Consus Osansegyo No.2		16,024		6		284			282			—		282
Shinhan AIM Private Fund of Fund 9-B		147,033		70		25,619			11,888			—		11,888
Shinhan General Private Real Estate Investment Trust No.3		130,731		2,057		5,557			(491	)		—		(491	)
Paros Kosdaq Venture General Private Investment Trust No. 5		23,074		—		916			2,087			—		2,087
Happy Pet Life Care New Technology Investment Association No.2		9,997		—		—			(1,523	)		—		(1,523	)
Shinhan-Soo Secondary Investment Association		21,567		—		77			(982	)		—		(982	)
TECHFIN RATINGS Co., Ltd.		32,223		4,000		170			(3,089	)		—		(3,089	)
SONGPA BIZ CLUSTER PFV CO LTD		909,499		860,724		—			(1,225	)		—		(1,225	)
Planeta PTE LTD		36,088		2,061		1,677			3,354			—		3,354
The E&Shinhan New Growth Up Fund		7,035		—		16			(163	)		—		(163	)
Shinhan-GB FutureFlow Fund L.P.		8,951		99		(98	)		(801	)		—		(801	)
Credila Financial Services		6,597,497		5,362,148		188,931			36,768			—		36,768
Shinhan Market-Frontier Fund III		29,058		—		89			(940	)		—		(940	)
DB IPO HighYield Fund 1		14,974		—		970			846			—		846
Exponential SQUARE Private Investment Trust No.1		10,233		18		3,365			220			—		220
Fine North America Credit Private Mixed Asset Investment Trust 22		8,610		769		1,062			401			—		401
IGIS Private Real Estate Investment No.454		14,022		12		95			81			—		81
IGIS Private Real Estate Investment No.462		6,445		39		223			176			—		176
BNW Recharge Private Equity Fund		33,918		133		2,050			1,755			—		1,755
United Partners Realasset Fund No.14		30,026		32		206			(6	)		—		(6	)
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.12		1,758,651		1,399,238		78,021			30,627			—		30,627

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Asset		Liability		Operating revenue			Net profit (loss)			Other comprehen- sive income (loss)		Total comprehen- sive income (loss)
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.13	W	1,186,406		945,673		50,564			19,152			—		19,152
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.14		1,086,016		811,622		37,721			19,563			—		19,563
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.15		1,085,298		810,379		36,610			18,667			—		18,667
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.16		1,084,569		818,607		42,410			24,595			—		24,595
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.17		525,649		418,113		2,206			(155	)		—		(155	)
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.18		1,045,465		826,940		(1,922	)		(4,905	)		—		(4,905	)
Shinhan Securities HIFI Bond SafeR 2Y Private Fund No.19		523,914		422,896		5,962			5,122			—		5,122
SH US Buyback&High Dividend Security Feeder Investment Trust(H)[Equity]		18,870		109		7,131			3,895			—		3,895

(*)

Excluded the financial information of associates that are not subject to equity method due to disposal or of which the financial information is not available as of end of the year.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)

(d)

Reconciliation of the financial information to the carrying amount of its interests in the associates as of December 31, 2023 and 2024 are as follows:


	2023
Investees	Net assets (a)			Ownership (%) (b)		Interests in the net assets (a)*(b)			Intra-group transactions			Others		Carrying amount
BNP Paribas Cardif Life Insurance	W	262,022			14.99		39,277			(5	)		—		39,272
Shinhan-Neoplux Energy Newbiz Fund		70,619			31.66		22,358			—			—		22,358
Shinhan-Albatross tech investment Fund		31,000			50.00		15,499			—			—		15,499
KCGI-SingA330-A Private Special Asset Investment Trust		19,297			23.89		4,609			—			—		4,609
VOGO Debt Strategy Qualified IV Private		32,658			20.00		6,532			—			—		6,532
Shinhan -Midas Dong-A Secondary Fund		8,602			50.00		4,301			—			—		4,301
ShinHan – Soo Young Entrepreneur Investment Fund No.1		20,258			24.00		4,862			—			—		4,862
Shinhan Praxis K-Growth Global Private Equity Fund		26,095			14.15		3,692			—			—		3,692
Kiwoom Milestone Professional Private Real Estate Trust 19 (*2)		(38,868	)		50.00		(19,434	)		—			19,434		—
Shinhan Global Healthcare Fund 1 (*2)		(3,469	)		4.41		(153	)		—			153		—
KB NA Hickory Private Special Asset Fund		64,256			37.50		24,096			—			—		24,096
Koramco Europe Core Private Placement Real Estate Fund No.2-2		42,706			44.02		18,799			—			—		18,799
KDBC-Midas Dong-A Global contents Fund		18,437			23.26		4,288			—			—		4,288
Shinhan-Nvestor Liquidity Solution Fund		24,430			24.92		6,088			—			—		6,088
Shinhan AIM FoF Fund 1-A		38,541			25.00		9,635			—			—		9,635
IGIS Global Credit Fund 150-1		17,142			25.00		4,286			—			—		4,286
Korea Omega Project Fund III		15,708			23.53		3,696			—			—		3,696
Genesis North America Power Company No.1 PEF		14,501			43.84		6,358			—			—		6,358
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3		174,701			23.33		40,764			—			—		40,764
KOREA FINANCE SECURITY CO., LTD		21,762			14.91		3,245			—			—		3,245
MIEL CO.,LTD. (*2)		(144	)		28.77		(41	)		—			41		—
AIP Transportation Specialized Privately Placed Fund Trust #1		129,800			35.73		46,372			—			—		46,372
Kiwoom-Shinhan Innovation Fund I		15,707			50.00		7,854			—			—		7,854
Midas Asset Global CRE Debt Private Fund No.6		136,849			40.10		54,881			—			—		54,881
Samchully Midstream Private Placement Special Asset Fund 5-4		77,267			42.92		33,163			—			—		33,163
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3		36,272			20.00		7,254			—			—		7,254
NH-Amundi Global Infrastructure Trust 14		62,428			30.00		18,728			—			—		18,728

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Net assets (a)			Ownership (%) (b)		Interests in the net assets (a)*(b)			Intra-group transactions		Others			Carrying amount
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37	W	58,775			60.00		35,265			—		—			35,265
Milestone Private Real Estate Fund 3		54,944			32.06		17,615			—		—			17,615
Nomura-Rifa Private Real Estate Investment Trust 31		22,003			31.31		6,889			—		—			6,889
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		14,753			21.27		3,138			—		—			3,138
FuturePlay-Shinhan Tech Innovation Fund 1		15,694			50.00		7,847			—		—			7,847
Stonebridge Corporate 1 st Fund		9,389			44.12		4,142			—		—			4,142
Vogo Realty Partners Private Real Estate Fund V		49,881			21.64		10,792			—		—			10,792
Korea Credit Bureau		74,867			9.00		6,738			—		—			6,738
Goduck Gangil1 PFV Co., Ltd.		17,303			1.04		180			—		—			180
SBC PFV Co., Ltd. (*3)		163,057			25.00		40,764			—		(9,990	)		30,774
NH-amundi global infra private fund 16		101,303			50.00		50,652			—		—			50,652
SH BNCT Professional Investment Type Private Special Asset Investment Trust		337,616			72.50		244,772			—		—			244,772
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24		34,642			52.28		18,110			—		—			18,110
Sparklabs-Shinhan Opportunity Fund 1		7,906			49.50		3,914			—		—			3,914
IGIS Real-estate Private Investment Trust No.33		37,377			40.86		15,271			—		—			15,271
Goduck Gangil10 PFV Co., Ltd.		25,534			19.90		5,081			—		—			5,081
Fidelis Global Private Real Estate Trust No.2		692			79.63		551			—		—			551
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		169,407			28.70		48,619			—		—			48,619
Shinhan Healthcare Fund 2 (*2)		(153	)		13.68		(21	)		—		21			—
Shinhan AIM Real Estate Fund No.2		88,925			30.00		26,678			—		—			26,678
Shinhan AIM Real Estate Fund No.1		246,896			21.01		51,873			—		—			51,873
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		157,954			22.02		34,781			—		—			34,781
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		68,697			29.19		20,053			—		—			20,053
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2		24,522			71.43		17,516			—		—			17,516
Korea Omega-Shinhan Project Fund I		23,260			50.00		11,630			—		—			11,630
Samsung SRA Real Estate Professional Private 45		125,727			25.00		31,432			—		—			31,432

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Net assets (a)			Ownership (%) (b)		Interests in the net assets (a)*(b)			Intra-group transactions		Others		Carrying amount
IBK Global New Renewable Energy Special Asset Professional Private2	W	111,423			28.98		32,296			—		—		32,296
VS Cornerstone Fund		7,966			41.18		3,280			—		—		3,280
NH-Amundi US Infrastructure Private Fund2		114,737			25.91		29,725			—		—		29,725
SH Japan Photovoltaic Private Special Asset Investment Trust No.2		7,711			30.00		2,313			—		—		2,313
Kakao-Shinhan 1 st TNYT Fund		40,857			48.62		19,866			—		—		19,866
Pacific Private Placement Real Estate Fund No.40		47,001			24.73		11,624			—		—		11,624
Mastern Private Real Estate Loan Fund No.2		9,056			33.57		3,040			—		—		3,040
LB Scotland Amazon Fulfillment Center Fund 29		44,093			70.14		30,928			—		—		30,928
JR AMC Hungary Budapest Office Fund 16		38,954			32.57		12,687			—		—		12,687
EDNCENTRAL Co., Ltd. (*2)		(42,159	)		13.47		(5,677	)		—		5,677		—
Future-Creation Neoplux Venture Capital Fund		16,495			16.25		2,680			—		—		2,680
Gyeonggi-Neoplux Superman Fund		23,234			21.76		5,056			—		—		5,056
NewWave 6 th Fund		45,719			30.00		13,716			—		—		13,716
Neoplux No.3 Private Equity Fund		189,791			10.00		18,979			—		—		18,979
PCC Amberstone Private Equity Fund I		79,640			21.67		17,258			—		—		17,258
KIAMCO POWERLOAN TRUST 4 th		95,208			47.37		45,099			—		—		45,099
Mastern Opportunity Seeking Real Estate Fund II		59,112			22.22		13,135			—		—		13,135
Neoplux Market-Frontier Secondary Fund		52,827			19.74		10,427			—		—		10,427
Harvest Private Equity Fund II		13,500			22.06		2,978			—		—		2,978
Synergy Green New Deal 1 st New Technology Business Investment Fund		36,617			28.17		10,315			—		—		10,315
KIAMCO Vietnam Solar Special Asset Private Investment Trust		13,671			50.00		6,836			—		—		6,836
SHINHAN-NEO Core Industrial Technology Fund		27,370			49.75		13,616			—		—		13,616
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		77,853			30.00		23,356			—		—		23,356
SIMONE Mezzanine Fund No.3		4,175			28.78		1,202			—		—		1,202
Eum Private Equity Fund No.7		43,651			21.00		9,166			—		—		9,166
Kiwoom Hero No.4 Private Equity Fund		16,351			21.05		3,442			—		—		3,442
Vogo Canister Professional Trust Private Fund I		124,837			36.74		45,871			—		—		45,871
Timefolio The Venture-V second		27,989			20.73		5,801			—		—		5,801
Shinhan Smilegate Global PEF I		26,747			14.21		3,801			—		—		3,801
Genesis Eco No.1 PEF		38,675			29.01		11,219			—		—		11,219

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Net assets (a)		Ownership (%) (b)		Interests in the net assets (a)*(b)		Intra-group transactions		Others		Carrying amount
SHINHAN-NEO Market-Frontier 2 nd Fund	W	76,511		42.70		32,670		—		—		32,670
NH-Synergy Core Industrial New Technology Fund		17,436		36.93		6,439		—		—		6,439
J& Moorim Jade Investment Fund		19,771		24.89		4,920		—		—		4,920
Helios-KDBC Digital Contents 1 st		9,699		23.26		2,256		—		—		2,256
Ulmus SHC innovation investment fund		23,059		24.04		5,543		—		—		5,543
T Core Industrial Technology 1 st Venture PEF		13,518		31.47		4,254		—		—		4,254
Fine Value POST IPO No.5 Private Equity Fund		9,414		40.00		3,766		—		—		3,766
TI First Property Private Investment Trust 1		7,755		40.00		3,102		—		—		3,102
MPLUS Professional Private Real Estate Fund 25		5,659		41.67		2,358		—		—		2,358
IBKC Global Contents Investment Fund		19,274		24.39		4,701		—		—		4,701
Hanyang-Meritz 1 Fund		13,201		22.58		2,981		—		—		2,981
Kiwoom-Shinhan Innovation Fund 2		21,384		42.86		9,165		—		—		9,165
ETRI Holdings-Shinhan 1 st Unicorn Fund		6,589		50.00		3,295		—		—		3,295
SJ ESG Innovative Growth Fund		14,692		28.57		4,198		—		—		4,198
AVES 1 st Corporate Recovery Private Equity Fund		6,258		76.19		4,768		—		—		4,768
JS Shinhan Private Equity Fund		123,098		3.85		4,737		—		—		4,737
Daishin Newgen New Technology Investment Fund 1 st		12,018		50.60		6,081		—		—		6,081
META ESG Private Equity Fund I		21,062		27.40		5,770		—		—		5,770
PHAROS DK FUND		10,157		24.24		2,462		—		—		2,462
Shinhan VC tomorrow venture fund 1		114,103		39.62		45,210		—		—		45,210
H-IOTA Fund		38,382		24.81		9,524		—		—		9,524
Stonebridge-Shinhan Unicorn Secondary Fund		28,550		26.01		7,427		—		—		7,427
Tres-Yujin Trust		20,717		50.00		10,359		—		—		10,359
Shinhan-Time mezzanine blind Fund		28,242		50.00		14,121		—		—		14,121
Capstone REITs No.26		11,499		50.00		5,750		—		—		5,750
JB Incheon-Bucheon REITS No.54		12,661		39.31		4,978		—		—		4,978
Hankook Smart Real Asset Investment Trust No.3		23,005		33.33		7,668		—		—		7,668
JB Hwaseong-Hadong REITs No.53		16,059		31.03		4,983		—		—		4,983
KB Oaktree Trust No.3		26,003		33.33		8,668		—		—		8,668
Daehan No.36 Office Asset Management Company		46,790		48.05		22,482		—		—		22,482
Rhinos Premier Mezzanine Private Investment Fund No.1		10,944		27.93		3,056		—		—		3,056
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		211,132		29.73		62,769		—		—		62,769

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Net assets (a)		Ownership (%) (b)		Interests in the net assets (a)*(b)		Intra-group transactions		Others			Carrying amount
Shinhan JigaeNamsan Road Private Special Asset Investment Trust	W	166,737		24.85		41,434		—		—			41,434
SKS-Yozma Fund No.1		11,574		29.85		3,455		—		—			3,455
KB Distribution Private Real Estate 3-1		69,268		37.50		25,976		—		—			25,976
Pacific Private Investment Trust No.49-1		34,532		79.28		27,377		—		—			27,377
KIWOOM Real estate private placement fund for normal investors No. 31		14,263		60.00		8,558		—		—			8,558
RIFA Real estate private placement fund for normal investoes No. 51		14,328		40.00		5,731		—		—			5,731
Fivetree general private equity fund No.15		25,154		49.98		12,572		—		—			12,572
Shinhan-Kunicorn first Fund		25,125		38.31		9,626		—		—			9,626
Shinhan-Quantum Startup Fund		8,104		49.18		3,986		—		—			3,986
Shinhan Simone Fund I		12,577		38.46		4,837		—		—			4,837
Korea Investment develop seed Trust No.1		23,829		40.00		9,532		—		—			9,532
Tiger Green alpha Trust No.29		30,002		95.24		28,573		—		—			28,573
STIC ALT Global II Private Equity Fund		43,717		21.74		9,504		—		—			9,504
NH-Brain EV Fund		44,498		25.00		11,125		—		—			11,125
DDI LVC Master Real Estate Investment Trust Co., Ltd. (*1)		43,808		15.00		6,571		—		12			6,583
Leverent-Frontier 4 th Venture PEF		13,791		23.89		3,294		—		—			3,294
Find-Green New Deal 2 nd Equity Fund		19,778		22.57		4,465		—		—			4,465
ShinhanFitrin 1 st Technology Business Investment Association		27,951		16.17		4,519		—		—			4,519
Koramco Private Real Estate Fund 143		22,002		30.30		6,667		—		—			6,667
Korea Investment Top Mezzanine Private Real Esate Trust No.1		45,074		22.22		10,016		—		—			10,016
LB YoungNam Logistics Private Trust No.40		39,128		25.00		9,782		—		—			9,782
Shinhan-Cognitive Start-up Fund L.P.		16,263		32.77		5,329		—		—			5,329
Cornerstone J&M Fund I		13,081		26.67		3,488		—		—			3,488
Logisvalley Shinhan REIT Co.,Ltd. (*1)		22,617		20.27		4,584		—		(986	)		3,598
DA Value-Honest New Technology Investment Fund 1		17,328		23.66		4,099		—		—			4,099
Shinhan-Ji and Tec Smart Innovation Fund		19,953		50.00		9,977		—		—			9,977
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1 st		13,935		50.00		6,968		—		—			6,968
Korea Investment Green Newdeal Infra Trust No.1		36,667		27.97		10,257		—		—			10,257
BTS 2 nd Private Equity Fund		24,393		26.00		6,342		—		—			6,342
Shinhan Global Active REIT Co.Ltd.		93,266		20.37		18,997		—		—			18,997
NH-J&-IBKC Label Technology Fund		35,052		27.81		9,748		—		—			9,748
Hanyang Time Mezzanine Fund		10,542		28.57		3,012		—		—			3,012

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Net assets (a)		Ownership (%) (b)		Interests in the net assets (a)*(b)		Intra-group transactions		Others		Carrying amount
Shinhan-isquare Venture PEF 1	W	10,715		40.00		4,286		—		—		4,286
Capstone Develop Frontier Trust		35,221		21.43		7,547		—		—		7,547
Nextrade Co., Ltd.		121,249		8.00		9,700		—		—		9,700
SH 1.5years Maturity Investment Type Security Investment Trust No.2		16,613		29.10		4,834		—		—		4,834
Eventus-IBKC LIB Fund		30,317		21.88		6,632		—		—		6,632
IBKC-Behigh Fund 1 st		10,828		29.73		3,219		—		—		3,219
ON No.1 Private Equity Fund		18,624		28.57		5,321		—		—		5,321
Digital New Deal Kappa Private Equity Fund		19,575		24.75		4,845		—		—		4,845
IBKCJS New Technology Fund No.1		20,841		29.41		6,130		—		—		6,130
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1		47,054		20.83		9,803		—		—		9,803
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18		42,046		28.57		12,013		—		—		12,013
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38		4,228		75.00		3,171		—		—		3,171
TogetherKorea Private Investment Trust No. 6		5,271		99.98		5,270		—		—		5,270
TogetherKorea Private Investment Trust No. 7		5,271		99.98		5,270		—		—		5,270
Kiwoom Core Industrial Technology Investment Fund No.3		12,028		34.75		4,180		—		—		4,180
Penture K-Content Investment Fund		25,599		21.96		5,622		—		—		5,622
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund		26,562		30.00		7,969		—		—		7,969
Hana Alternative Investment Kosmes PCBO General PEF No. 1		13,790		37.04		5,107		—		—		5,107
Shinhan-timefolio Bio Development Investment Fund		12,249		48.39		5,927		—		—		5,927
Shinhan M&A-ESG Fund		17,868		23.33		4,169		—		—		4,169
Shinhan SM Office Value Add – Outsource Management Real Estate Investment Co., Ltd. -		37,189		28.43		10,575		—		—		10,575
KDBC meta-enter New Technology investment fund		24,886		27.89		6,940		—		—		6,940
Shinhan Time Secondary Blind New Technology Investment Trust		10,008		47.50		4,754		—		—		4,754
Shinhan DS Secondary Investment Fund		18,693		40.00		7,477		—		—		7,477
Shinhan-openwater pre-IPO Investment Trust 1		9,946		50.00		4,973		—		—		4,973
Shinhan-Eco Venture Fund 2 nd		9,024		40.00		3,610		—		—		3,610
Heungkuk-Shinhan the1 st Visionary Technology Investment Trust no. 1		7,884		40.00		3,154		—		—		3,154

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2023
Investees	Net assets (a)		Ownership (%) (b)		Interests in the net assets (a)*(b)		Intra-group transactions		Others		Carrying amount
Hantoo Shinhan Lake K-beauty Technology Investment Trust	W	43,416		22.96		9,969		—		—		9,969
Shinhan HB Wellness 1 st Investment Trust		10,284		48.54		4,992		—		—		4,992
Korea real Asset Fund No.3		32,604		28.57		9,315		—		—		9,315
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518		73,457		31.49		23,131		—		—		23,131
Samsung-dunamu Innovative IT Technology Investment Trust No. 1		19,730		22.99		4,536		—		—		4,536
Time Robotics New Technology Investment Trust		13,283		29.86		3,966		—		—		3,966
Ascent-welcome Tehcnology Investment Trust No.2		31,721		27.65		8,771		—		—		8,771
Igis General PE Real Estate Investment Trust 517-1		53,725		96.30		51,735		—		—		51,735
Consus Osansegyo No.2		16,208		50.00		8,104		—		—		8,104
Mastern General Private Real Estate Investment Trust No.189 (Type 1 Beneficiary Securities)		23,927		32.69		7,822		—		—		7,822
Shinhan AIM Private Fund of Fund 9-B		96,072		25.00		24,018		—		—		24,018
Shinhan General Private Real Estate Investment Trust No.3		37,764		20.75		7,838		—		—		7,838
NH Absolute Project L General Private Investment Trust		18,797		26.03		4,893		—		—		4,893
Paros Kosdaq Venture General Private Investment Trust No. 5		8,994		66.65		5,994		—		—		5,994
Happy Pet Life Care New Technology Investment Association No.2		11,521		30.00		3,456		—		—		3,456
Shinhan-Soo Secondary Investment Association		6,764		77.61		5,249		—		—		5,249

(*1)

Others represents the adjustments of fair value when acquired.

(*2)

Others are the amount of fair value adjustments that occurred at the time of acquisition and accumulated losses that were not recognized due to the suspension of equity method recognition as the investment account balance became “0” due to the accumulation of losses for the current period.

(*3)

Others are the unrecognized equity method for preferred stocks without voting rights issued by the investee.

F-21

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Net assets (a)			Ownership (%) (b)		Interests in the net assets (a)*(b)			Intra-group transactions			Others		Carrying amount
BNP Paribas Cardif Life Insurance	W	243,101			14.99		36,441			(5	)		—		36,436
Shinhan-Neoplux Energy Newbiz Fund		46,152			31.66		14,612			—			—		14,612
Shinhan-Albatross tech investment Fund		17,346			50.00		8,672			—			—		8,672
VOGO Debt Strategy Qualified IV Private		18,565			20.00		3,713			—			—		3,713
Shinhan-Midas Donga Secondary Fund		6,304			50.00		3,152			—			—		3,152
ShinHan – Soo Young Entrepreneur Investment Fund No.1		14,087			24.00		3,381			—			—		3,381
Shinhan Praxis K-Growth Global Private Equity Fund		26,081			14.15		3,690			—			—		3,690
Kiwoom Milestone Professional Private Real Estate Trust 19 (*2)		(39,013	)		50.00		(19,506	)		—			19,506		—
Shinhan Global Healthcare Fund 1 (*2)		(4,886	)		3.13		(153	)		—			153		—
KB NA Hickory Private Special Asset Fund		46,649			37.50		17,493			—			—		17,493
Koramco Europe Core Private Placement Real Estate Fund No.2-2		15,481			44.02		6,815			—			—		6,815
KDBC-Midas Dong-A Global contents Fund		11,354			23.26		2,640			—			—		2,640
Shinhan-Nvestor Liquidity Solution Fund		20,571			24.92		5,126			—			—		5,126
Shinhan AIM For Fund 1-A		39,214			25.00		9,804			—			—		9,804
IGIS Global Credit Fund 150-1		19,954			25.00		4,989			—			—		4,989
Genesis North America Power Company No.1 PEF		15,514			43.84		6,802			—			—		6,802
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3		40,294			23.33		9,402			—			—		9,402
KOREA FINANCE SECURITY CO., LTD		23,754			14.91		3,542			—			—		3,542
MIEL CO.,LTD. (*2)		(142	)		28.77		(41	)		—			41		—
AIP Transportation Specialized Privately Placed Fund Trust #1		164,607			35.73		58,807			—			—		58,807
Kiwoom-Shinhan Innovation Fund I		15,957			50.00		7,979			—			—		7,979
Samchully Midstream Private Placement Special Asset Fund 5-4		94,762			41.67		39,484			—			—		39,484
MK Ventures-K Clavis Growth Capital Venture Fund 1		10			26.67		3			—			—		3
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37		59,022			60.00		35,413			—			—		35,413
Milestone Private Real Estate Fund 3		59,637			32.06		19,120			—			—		19,120
Nomura-Rifa Private Real Estate Investment Trust 31		20,258			31.31		6,343			—			—		6,343
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		11,839			21.27		2,518			—			—		2,518
FuturePlay-Shinhan TechInnovation Fund 1		11,570			50.00		5,785			—			—		5,785
Stonebridge Corporate 1st Fund		9,015			44.12		3,977			—			—		3,977

F-21

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Net assets (a)			Ownership (%) (b)		Interests in the net assets (a)*(b)			Intra-group transactions		Others			Carrying amount
Vogo Realty Partners Private Real Estate Fund V	W	49,278			21.64		10,662			—		—			10,662
Korea Credit Bureau		84,159			9.00		7,574			—		—			7,574
Goduck Gangil1 PFV Co., Ltd.		9,252			1.04		96			—		—			96
SBC PFV Co., Ltd. (*3)		190,424			25.00		47,606			—		(9,990	)		37,616
NH-amundi global infra private fund 16		65,935			50.00		32,968			—		—			32,968
SH BNCT Professional Investment Type Private Special Asset Investment Trust		311,321			72.50		225,708			—		—			225,708
Sparklabs-Shinhan Opportunity Fund 1		5,505			49.50		2,725			—		—			2,725
IGIS Real-estate Private Investment Trust No.33		38,261			40.86		15,632			—		—			15,632
Goduck Gangil10 PFV Co., Ltd.		30,978			19.90		6,165			—		—			6,165
Fidelis Global Private Real Estate Trust No.2		691			79.63		551			—		—			551
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		85,868			28.70		24,644			—		—			24,644
Shinhan Healthcare Fund 2 (*2)		(152	)		13.68		(21	)		—		21			—
Shinhan AIM Real Estate Fund No.2		5,180			30.00		1,554			—		—			1,554
Shinhan AIM Real Estate Fund No.1		13,727			21.01		2,884			—		—			2,884
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		179,344			22.02		39,491			—		—			39,491
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		75,185			29.19		21,947			—		—			21,947
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2		22,077			71.43		15,770			—		—			15,770
Korea Omega-Shinhan Project Fund I		38,945			50.00		19,473			—		—			19,473
Samsung SRA Real Estate Professional Private 45		121,103			25.00		30,276			—		—			30,276
IBK Global New Renewable Energy Special Asset Professional Private2		114,189			28.98		33,098			—		—			33,098
VS Cornerstone Fund		7,831			41.18		3,225			—		—			3,225
NH-Amundi US Infrastructure Private Fund2		2,099			25.91		544			—		—			544
Kakao-Shinhan 1st TNYT Fund		48,697			48.62		23,678			—		—			23,678
Pacific Private Placement Real Estate Fund No.40		46,996			24.73		11,623			—		—			11,623
Mastern Private Real Estate Loan Fund No.2		3,963			33.57		1,330			—		—			1,330
LB Scotland Amazon Fulfillment Center Fund 29		28,996			65.00		18,848			—		—			18,848
JR AMC Hungary Budapest Office Fund 16		40,488			32.57		13,187			—		—			13,187

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Net assets (a)			Ownership (%) (b)		Interests in the net assets (a)*(b)			Intra-group transactions		Others		Carrying amount
EDNCENTRAL Co.,Ltd. (*2)	W	(77,934	)		13.47		(10,495	)		—		10,495		—
Gyeonggi-Neoplux Superman Fund		19,014			21.76		4,138			—		—		4,138
NewWave 6th Fund		35,694			30.00		10,708			—		—		10,708
Neoplux No.3 Private Equity Fund		121,523			10.00		12,152			—		—		12,152
PCC Amberstone Private Equity Fund I		67,099			21.67		14,540			—		—		14,540
KIAMCO POWERLOAN TRUST 4TH		102,818			47.37		48,703			—		—		48,703
Mastern Opportunity Seeking Real Estate Fund II		23,725			22.22		5,272			—		—		5,272
Neoplux Market-Frontier Secondary Fund		41,421			19.74		8,175			—		—		8,175
Synergy Green New Deal 1st New Technology Business Investment Fund		38,542			28.17		10,857			—		—		10,857
KIAMCO Vietnam Solar Special Asset Private Investment Trust		14,205			50.00		7,103			—		—		7,103
SHINHAN-NEO Core Industrial Technology Fund		16,304			49.75		8,111			—		—		8,111
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		72,365			30.00		21,710			—		—		21,710
Eum Private Equity Fund No.7		43,604			21.00		9,156			—		—		9,156
Kiwoom Hero No.4 Private Equity Fund		19,934			21.05		4,197			—		—		4,197
AJ-KOSNET Semicon One Venture Fund		14,454			22.22		3,212			—		—		3,212
Timefolio The Venture-V second		6,586			20.73		1,365			—		—		1,365
Shinhan Smilegate Global PEF I		27,323			14.21		3,882			—		—		3,882
Genesis Eco No.1 PEF		38,185			29.01		11,077			—		—		11,077
SHINHAN-NEO Market-Frontier 2nd Fund		64,400			42.70		27,499			—		—		27,499
J& Moorim Jade Investment Fund		21,508			24.89		5,353			—		—		5,353
Ulmus SHC innovation investment fund		17,910			24.04		4,305			—		—		4,305
T Core Industrial Technology 1st Venture PEF		9,518			31.47		2,995			—		—		2,995
TI First Property Private Investment Trust 1		7,755			40.00		3,102			—		—		3,102
Kiwoom-Shinhan Innovation Fund 2		23,862			42.86		10,227			—		—		10,227
ETRI Holdings-Shinhan 1st Unicorn Fund		9,391			50.00		4,696			—		—		4,696
SJ ESG Innovative Growth Fund		10,902			28.57		3,115			—		—		3,115
AVES 1st Corporate Recovery Private Equity Fund		5,937			76.19		4,523			—		—		4,523
Reverent-Shinhan Vista Fund		25,415			13.41		3,409			—		—		3,409
JS Shinhan Private Equity Fund		165,747			3.85		6,381			—		—		6,381
META ESG Private Equity Fund I		20,742			27.40		5,683			—		—		5,683
Shinhan VC tomorrow venture fund 1		178,267			39.62		70,633			—		—		70,633
H-IOTA Fund		37,789			24.81		9,377			—		—		9,377
Stonebridge-Shinhan Unicorn Secondary Fund		52,230			26.01		13,587			—		—		13,587
Tres-Yujin Trust		26,062			50.00		13,031			—		—		13,031

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Net assets (a)		Ownership (%) (b)		Interests in the net assets (a)*(b)		Intra-group transactions		Others			Carrying amount
Shinhan-Time mezzanine blind Fund	W	32,851		50.00		16,426		—		—			16,426
Capstone REITs No.26		10,738		50.00		5,369		—		—			5,369
JB Incheon-Bucheon REITS No.54		12,634		39.31		4,967		—		—			4,967
Hankook Smart Real Asset Investment Trust No.3		18,017		33.33		6,006		—		—			6,006
JB Hwaseong-Hadong REITs No.53		16,029		31.03		4,974		—		—			4,974
KB Oaktree Trust No.3		29,665		33.33		9,888		—		—			9,888
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		177,590		29.73		52,797		—		—			52,797
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		159,538		24.85		39,645		—		—			39,645
KB Distribution Private Real Estate 3-1		64,211		37.50		24,079		—		—			24,079
Pacific Private Investment Trust No.49-1		35,317		79.28		28,000		—		—			28,000
KIWOOM Real estate private placement fund for normal investors No. 31		13,386		60.00		8,032		—		—			8,032
RIFA Real estate private placement fund for normal investoes No. 51		13,428		40.00		5,371		—		—			5,371
Shinhan-Kunicorn first Fund		24,596		38.31		9,424		—		—			9,424
Shinhan-Quantum Startup Fund		11,519		49.18		5,665		—		—			5,665
Shinhan Simone Fund I		8,898		38.46		3,422		—		—			3,422
Korea Investment develop seed Trust No.1		25,362		40.00		10,145		—		—			10,145
Tiger Green alpha Trust No.29		31,492		95.24		29,992		—		—			29,992
STIC ALT Global II Private Equity Fund		45,269		21.74		9,841		—		—			9,841
DDI LVC Master Real Estate Investment Trust Co., Ltd. (*1)		38,586		15.00		5,788		—		12			5,800
Leverent-Frontier 4th Venture PEF		8,683		23.89		2,074		—		—			2,074
Find-Green New Deal 2nd Equity Fund		19,154		22.57		4,324		—		—			4,324
ShinhanFitrin 1st Technology Business Investment Association		26,175		16.17		4,232		—		—			4,232
Koramco Private Real Estate Fund 143		22,011		30.30		6,669		—		—			6,669
Korea Investment Top Mezzanine Private Real Esate Trust No.1		44,440		22.22		9,876		—		—			9,876
LB YoungNam Logistics Private Trust No.40		38,500		25.00		9,625		—		—			9,625
Shinhan-Cognitive Start-up Fund L.P.		12,844		32.77		4,209		—		—			4,209
Cornerstone J&M Fund I		12,802		26.67		3,414		—		—			3,414
Logisvalley Shinhan REIT Co., Ltd. (*1)		23,314		20.27		4,726		—		(1,337	)		3,389
Shinhan-Ji and Tec Smart Innovation Fund		26,008		50.00		13,004		—		—			13,004
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st		13,516		50.00		6,758		—		—			6,758
Korea Investment Green Newdeal Infra Trust No.1		57,542		27.97		16,096		—		—			16,096

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Net assets (a)		Ownership (%) (b)		Interests in the net assets (a)*(b)		Intra-group transactions		Others		Carrying amount
BTS 2nd Private Equity Fund	W	39,075		26.00		10,159		—		—		10,159
NH-J&-IBKC Label Technology Fund		34,686		27.81		9,646		—		—		9,646
Hanyang Time Mezzanine Fund		8,790		28.57		2,511		—		—		2,511
Shinhan-Sneak Peek Bio&Healthcare Bounce Back Fund		7,831		50.00		3,916		—		—		3,916
Shinhan-isquare Venture PEF 1		10,592		40.00		4,237		—		—		4,237
Aurum Goldrush ESG Private Fund No. 1		10,613		28.33		3,007		—		—		3,007
Capstone Develop Frontier Trust		37,563		21.43		8,049		—		—		8,049
Nextrade Co., Ltd.		121,250		8.00		9,700		—		—		9,700
IBKC-Behigh Fund 1st		10,629		29.73		3,160		—		—		3,160
ON No.1 Private Equity Fund		19,991		28.57		5,712		—		—		5,712
Digital New Deal Kappa Private Equity Fund		19,178		24.75		4,747		—		—		4,747
IBKCJS New Technology Fund No.1		8,901		29.41		2,618		—		—		2,618
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1		46,301		20.83		9,646		—		—		9,646
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18		39,634		28.57		11,324		—		—		11,324
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38		4,371		75.00		3,278		—		—		3,278
TogetherKorea Private Investment Trust No. 6		5,424		99.98		5,423		—		—		5,423
TogetherKorea Private Investment Trust No. 7		5,424		99.98		5,423		—		—		5,423
Kiwoom Core Industrial Technology Investment Fund No.3		12,139		34.75		4,219		—		—		4,219
Penture K-Content Investment Fund		57,216		19.78		11,319		—		—		11,319
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund		44,894		30.00		13,468		—		—		13,468
Hana Alternative Investment Kosmes PCBO General PEF No. 1		13,837		37.04		5,125		—		—		5,125
Shinhan-timefolio Bio Development Investment Fund		24,195		48.39		11,707		—		—		11,707
Shinhan M&A-ESG Fund		27,660		23.33		6,454		—		—		6,454
Shinhan SM Office Value Add – Outsource Management Real Estate Investment Co., Ltd. –		66,130		28.43		18,804		—		—		18,804
KDBC meta-enter New Technology investment fund		24,373		27.89		6,797		—		—		6,797
Shinhan Time Secondary Blind New Technology Investment Trust		9,762		47.50		4,637		—		—		4,637
Shinhan DS Secondary Investment Fund		4,895		49.83		2,439		—		—		2,439
Shinhan-openwater pre-IPO Investment Trust 1		11,332		50.00		5,666		—		—		5,666
Shinhan-CJ TechInnovation Fund 1st		11,488		40.00		4,595		—		—		4,595

F-22

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

16.	Investments in associates (continued)


	2024
Investees	Net assets (a)		Ownership (%) (b)		Interests in the net assets (a)*(b)		Intra-group transactions		Others		Carrying amount
Shinhan-Eco Venture Fund 2nd	W	9,893		40.00		3,957		—		—		3,957
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1		16,243		40.00		6,497		—		—		6,497
Hantoo Shinhan Lake K-beauty Technology Investment Trust		44,701		22.96		10,264		—		—		10,264
Shinhan HB Wellness 1st Investment Trust		10,971		48.54		5,326		—		—		5,326
Korea real Asset Fund No.3		57,933		28.57		16,552		—		—		16,552
PineStreet Global Corporate FoF XIII-2 (NC XI)		3,743		100.00		3,743		—		—		3,743
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518		65,387		26.22		17,144		—		—		17,144
Samsung-dunamu Innovative IT Technology Investment Trust No. 1		16,313		22.99		3,750		—		—		3,750
Time Robotics New Technology Investment Trust		12,651		29.86		3,778		—		—		3,778
Ascent-welcome Tehcnology Investment Trust No.2		30,597		27.65		8,460		—		—		8,460
Newmain I funds		25,754		36.36		9,364		—		—		9,364
Igis General PE Real Estate Investment Trust 517-1		56,728		96.78		54,902		—		—		54,902
SH Ulmus M.P.E. Innovative Venture Fund 7		10,612		28.57		3,032		—		—		3,032
Consus Osansegyo No.2		16,018		50.00		8,009		—		—		8,009
Shinhan AIM Private Fund of Fund 9-B		146,963		25.00		36,741		—		—		36,741
Shinhan General Private Real Estate Investment Trust No.3		128,674		20.75		26,706		—		—		26,706
Paros Kosdaq Venture General Private Investment Trust No. 5		23,074		28.56		6,590		—		—		6,590
Happy Pet Life Care New Technology Investment Association No.2		9,997		30.00		2,999		—		—		2,999
Shinhan-Soo Secondary Investment Association		21,567		77.61		16,737		—		—		16,737
TECHFIN RATINGS Co., Ltd. (*4)		28,223		45.00		12,700		—		12,910		25,610
SONGPA BIZ CLUSTER PFV CO LTD		48,775		27.40		13,364		—		—		13,364
Planeta PTE LTD		34,027		33.33		11,341		—		—		11,341
The E&Shinhan New Growth Up Fund		7,035		50.00		3,518		—		—		3,518
Shinhan-GB FutureFlow Fund L.P.		8,852		58.18		5,150		—		—		5,150
Credila Financial Services (*4)		1,235,349		10.93		135,024		—		128,092		263,116
Shinhan Market-Frontier Fund III		29,058		44.02		12,791		—		—		12,791
DB IPO HighYield Fund 1		14,974		28.57		4,278		—		—		4,278

F-22

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

26.	Defined benefit plans (continued)

(d)

Actuarial assumptions as of December 31, 2023 and 2024 are as follows:


	2023	2024	Description
Discount rate	4.00%~5.20%	3.45%~4.66%	AA0 corporate bond yields
Future salary increase rate	0.00%~7.00% + Upgrade rate	1.94%~5.94% + Upgrade rate	Average for 5 years
Weighted average maturity	1.00 years~ 11.50 years	5.00 years~ 11.00 years

(e)

Sensitivity analysis

As of December 31, 2023 and 2024, reasonably possible changes in one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.


	2023
	Defined benefit obligation
	Increase			Decrease
Discount rate (1%p movement)	W	(190,760	)		205,916
Future salary increase rate (1%p movement)		209,531			(196,909	)


	2024
	Defined benefit obligation
	Increase			Decrease
Discount rate (1%p movement)	W	(180,402	)		204,053
Future salary increase rate (1%p movement)		211,736			(190,347	)

(f)

The Group’s estimated contribution is

176,412 million as of December 31, 2025.

27.	Provisions

(a)

Provisions as of December 31, 2023 and 2024 are as follows:


	2023		2024
Asset retirement obligations	W	99,927		99,306
Expected loss related to litigation		31,371		114,750
Unused credit commitments		355,591		411,275
Guarantee contracts issued		63,161		104,451
Financial guarantee contracts issued		39,998		87,088
Non-financial guarantee contracts issued		23,163		17,363
Others (1), (2), (*3)		819,616		579,114

	W	1,369,666		1,308,896

(*1)

As of December 31, 2023 and 2024, the Group recognizes a provision of

360,137 million and

317,857 million, respectively, an estimated amount which is highly probable to be paid for customer losses expected due to delays in redemption of Lime CI funds, etc.

F-23

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

27.	Provisions (continued)

(*2)

As of December 31, 2023 and 2024, the Group recognizes a provision of

293,824 million and

25,856 million, respectively for vulnerable groups such as self-employed people, small business owners and institutions supporting vulnerable groups, etc. in accordance with the “Banking financial support plan for people’s livelihood”.

(*3)

As of December 31, 2024, the Group recognizes a provision of

19,086 million for the estimated customer compensation amount related to equity-linked products based on the Hong Kong H-Index (Hang Seng China Enterprises Index).

(b)

Changes in provision for unused credit commitments and financial guarantee contracts issued for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Unused credit commitments									Financial guarantee contracts issued									Total
	12 months expected credit loss			Life time expected credit loss			Impaired financial asset			12 months expected credit loss			Life time expected credit loss			Impaired financial asset			Total
Beginning balance	W	175,562			139,998			2,030			48,113			7,687			28			373,418
Transfer (from) to 12 months expected credit loss		65,058			(64,897	)		(161	)		3,921			(3,921	)		—			—
Transfer (from) to life time expected credit loss		(13,466	)		13,502			(36	)		(7,659	)		7,659			—			—
Transfer (from) to impaired financial asset		(609	)		(1,953	)		2,562			(530	)		—			530			—
Provided (reversed)		(20,883	)		42,506			15,327			150			70			(14	)		37,156
Change in foreign exchange rate		1,025			26			—			294			92			1			1,438
Others (*)		—			—			—			(12,287	)		(3,997	)		(139	)		(16,423	)

Ending balance	W	206,687			129,182			19,722			32,002			7,590			406			395,589

(*)	Others include effects of the provision from the new financial guarantee contracts measured at fair value, and the expired contracts, the change of discount rate and others.

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities

(a)

The details of insurance contract liabilities as of December 31, 2023 and 2024 are as follow:


	2023
	Life insurance														Non-life insurance
	Death			Health			Pension Savings		Variable		Etc.		Complex		Long- term			General			Car		Total
Insurance contract assets	W	—			—			—		—		—		—		(444	)		(10,210	)		—		(10,654	)
Insurance contract liabilities (*)		16,895,075			5,347,357			20,536,870		5,445,493		5,001		—		—			102,921			1,515		48,334,232
Net insurance contract liability (asset) total		16,895,075			5,347,357			20,536,870		5,445,493		5,001		—		(444	)		92,711			1,515		48,323,578
Reinsurance contract assets		—			—			—		—		—		62,815		—			25,538			—		88,353
Reinsurance contract liabilities		(27,046	)		(66,075	)		—		—		—		—		(41	)		(78	)		—		(93,240	)

Total net reinsurance contract assets (liabilities)	W	(27,046	)		(66,075	)		—		—		—		62,815		(41	)		25,460			—		(4,887	)


	2024
	Life insurance														Non-life insurance
	Death			Health			Pension Savings		Variable		Etc.		Complex		Long- term			General			Car		Total
Insurance contract assets	W	—			—			—		—		—		—		(1,051	)		(4,588	)		—		(5,639	)
Insurance contract liabilities (*)		20,021,186			5,556,614			20,227,829		5,157,827		—		—		—			160,346			1,189		51,124,991
Net insurance contract liability (asset) total		20,021,186			5,556,614			20,227,829		5,157,827		—		—		(1,051	)		155,758			1,189		51,119,352

Reinsurance contract assets		—			—			—		—		—		107,668		21			77,065			—		184,754
Reinsurance contract liabilities		(26,214	)		(71,844	)		—		—		—		—		—			(5	)		—		(98,063	)

Total net reinsurance contract assets (liabilities)	W	(26,214	)		(71,844	)		—		—		—		107,668		21			77,060			—		86,691

(*)	As of December 31, 2023 and 2024 contractor’s share adjustment amount is excluded W (-)1,024 million and W (-)362 million, respectively.

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities (continued)

(b)

The assumptions and calculation basis for the current estimates of future cash flows applied to the holding contract as of December 31, 2023 and 2024 are as follow:


	Assumption value (%)
	2023	2024	Basis for calculation
Life insurance:
Surrender ratio	0.00 ~ 73.78	0.00 ~ 69.75	- The ratio of surrendered contract amounts to the retained contract amounts, calculated based on statistics, by premium payment type, product group, interest rate category, payment term (zero/low-surrender-value insurance products), and duration - For zero/low-surrender-value insurance products, the surrender ratio for the period when there is insufficient experience statistics is calculated, using the log-linear regression model, so that it converges to 0.1% at the time of completion of premium payments.

Loss ratio	17.00 ~ 756.00	8.00 ~ 316.00	- Other than general mortality: the ratio of accident claims to insurance premiums to on-level risk insurance premiums by risk coverage and elapsed period based on the last five years’ experience statistics

			- General mortality: the ratio of actual mortality rate to expected mortality rate by risk coverage and elapsed period based on the last five years’ experience statistics

Expense ratio	—	—	- Calculate unit costs such as performance, agent commissions, number of new/retained contracts, initial/continuing premiums, reserve funds, etc. based on a business plan (budget) incorporating future expense policies based on recent experience statistics.

Discount rate	3.75 ~ 4.80	2.31 ~ 4.55	- Disclosure standard interest rate term structure provided by the Financial Supervisory Service

The confidence level for the risk adjustments regarding non-financial	75.00	75.00	- The risk adjustment is calculated as the portion of 75th percentile exceeding the probability-weighted average of the present value of future cash flows, assuming that the probability distribution of the present value of future cash flows follows a normal distribution at each reporting date.

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities (continued)


	Assumption value (%)
	2023	2024	Basis for calculation
Non-life insurance:
Surrender ratio	General: 0.54 ~ 38.56	General: 0.00 ~ 52.76	General: Calculated as the ratio of the number of and effective contracts compared to the number of contracts with experience from July 2017 to June 2024. The assumptions are derived based on contracts where surrender and lapse have actually occurred.
	Long-term: 1.60 ~ 25.25	Long-term: 1.60 ~ 25.47	Long-term: Calculated as the ratio of the number of canceled and effective contracts compared to the number of contracts with experience from October 2017 to June 2024. The surrender ratio for zero and low surrender value products is separately calculated in accordance with the practical standards of the Financial Supervisory Service.
			For products with insufficient experience data, the assumptions applied during product development are used (e.g., pet insurance and indemnity medical insurance).

Loss ratio	General: 24.47 ~ 112.27	General: 12.98 ~ 81.54	General: Calculated as the ratio of incurred losses to experienced risk insurance premiums from July 2017 to June 2024
	Long-term: 40.99 ~ 187.70	Long-term: 36.81 ~ 422.10	Long-term: Calculated as the ratio of incurred losses to experienced risk insurance premiums from October 2017 to June 2024
			For products with insufficient experience data, the Insurance Development Institute’s industry statistics are applied.

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities (continued)


	Assumption value (%)		Basis for calculation
	2023	2024	Basis for calculation
Expense ratio	Contract conclusion cost: Variable cost (%) 11.73 ~ 2170.24 Fixed cost (won) 44,653 ~ 68,795	Contract conclusion cost: Variable cost (%) General VC: 12.45 ~ 16.14 Long-term VC: 198.79	Using the Group’s experience statistics for the year immediately preceding the calculation (October 2024 - September 2025), the operating expense unit price was subdivided by workload and type of work on a portfolio basis, and calculated by applying the variable cost/fixed ratio according to the operating expense allocation standard.
	Contract maintenance cost: Variable cost (%) 31.73 ~ 36.37 Fixed cost (won) 2,220 ~ 2,538	Fixed cost (won) General FC: 53,192 Long-term FC: 15,131	Contract conclusion cost - Variable cost: Distribution of contract variable cost compared to imported insurance premium. - Fixed cost: Fixed cost distribution for contract conclusion compared to the number of new contracts.
	Damage investigation cost: Variable cost (%) 11.65 ~ 14.30	Contract maintenance cost: Variable cost (%) General VC: 24.10 ~ 24.74 Long-term VC: 13.30	Contract maintenance cost - Variable cost: Variable cost allocation for contract maintenance compared to earned insurance premiums.


		Fixed cost (won) General FC: 2,895 Long-term FC: 1,576	- Fixed cost: Fixed cost allocation for contract maintenance compared to the number of contracts held.

		Damage investigation cost: Variable cost (%) General VC: 6.91 ~ 6.95 Long-term VC: 3.78	Damage investigation cost: Amount of damage investigation cost allocated to the amount of damage incurred

Discount rate	4.55 ~ 4.80	2.31 ~ 4.55	Term structure of interest rates provided by the Financial Supervisory Service.
		;
The confidence level for non-financial risks	75.00	75.00	- The risk adjustment is calculated as the portion of 75th percentile exceeding the probability-weighted average of the present value of future cash flows, assuming that the probability distribution of the present value of future cash flows follows a normal distribution at each reporting date.

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities (continued)

(d)

The changes in the remaining coverage elements and incurred claim elements of net insurance contract liabilities applying the premium allocation approach for the years ended December 31, 2023 and 2024 are as follows:


	2023
		Remaining coverage elements						Incurred claim elements
		Excluding loss component			Loss component			Present value estimate of future cash flows			Risk adjustment for non-financial risks			Total
Beginning balance	Insurance contract assets	W	—			—			—			—			—
	Insurance contract liabilities		78,665			3,139			5,372			451			87,627

	Net insurance contract liabilities		78,665			3,139			5,372			451			87,627

Insurance income			(39,641	)		—			—			—			(39,641	)

Insurance service expenses	Accrued insurance premiums and other incurred insurance service expenses		33			—			29,966			1,093			31,092
	Changes in incident fulfillment cash flow		—			—			(2,669	)		(684	)		(3,353	)
	Costs related to loss-bearing contracts		23			2,449			—			—			2,472
	Amortization of insurance acquisition Cash flows		4,126			—			—			—			4,126
	Etc.		—			—			70			—			70

			4,182			2,449			27,367			409			34,407

Investment factors and insurance premium refund			(9	)		—			9			—			—

Insurance finance income and expenses	Current profit or loss		2,412			—			67			10			2,489
	Other comprehensive income		—			—			23			2			25

			2,412			—			90			12			2,514

Cash flow for the period	Insurance premium received		46,680			—			—			—			46,680
	Insurance acquisition cash flow payment		(12,751	)		—			—			—			(12,751	)
	Payment of insurance benefits and other insurance service expenses		—			—			(22,643	)		—			(22,643	)
	Receipt (payment) of investment elements and refund of insurance premiums		—			—			288			—			288

			33,929			—			(22,355	)		—			11,574

Other increase/decrease			(1,684	)		(770	)		307			122			(2,025	)

Ending balance	Insurance contract assets		(10,670	)		3			450			7			(10,210	)
	Insurance contract liabilities		88,524			4,815			10,340			987			104,666

	Net insurance contract liabilities	W	77,854			4,818			10,790			994			94,456

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities (continued)


	2024
		Remaining coverage elements						Incurred claim elements
		Excluding loss component			Loss component			Present value estimate of future cash flows			Risk adjustment for non-financial risks		Total
Beginning balance	Insurance contract assets	W	(10,670	)		3			450			7		(10,210	)
	Insurance contract liabilities		88,524			4,815			10,340			987		104,666

	Net insurance contract liabilities		77,854			4,818			10,790			994		94,456

Insurance income			(64,554	)		—			—			—		(64,554	)

Insurance service expenses	Accrued insurance premiums and other incurred insurance service expenses		45			—			61,148			528		61,721
	Changes in incident fulfillment cash flow		—			—			3,209			421		3,630
	Costs related to loss-bearing contracts		54			(2,239	)		—			—		(2,185	)
	Amortization of insurance acquisition Cash flows		13,238			—			—			—		13,238
	Etc.		—			—			(9	)		—		(9	)

			13,337			(2,239	)		64,348			949		76,395

Investment factors and insurance premium refund			(2	)		—			2			—		—

Insurance finance income and expenses	Current profit or loss		4,363			—			162			17		4,542
	Other comprehensive income		—			—			22			6		28

			4,363			—			184			23		4,570

Cash flow for the period	Insurance premium received		109,597			—			—			—		109,597
	Insurance acquisition cash flow payment		(19,841	)		—			—			—		(19,841	)
	Payment of insurance benefits and other insurance service expenses		—			—			(45,564	)		—		(45,564	)
	Receipt (payment) of investment elements and refund of insurance premiums		—			—			(2	)		—		(2)

			89,756			—			(45,566	)		—		44,190

Other increase/decrease			8,410			—			(6,108	)		2		2,304

Ending balance	Insurance contract assets		(6,506	)		—			1,894			24		(4,588	)
	Insurance contract liabilities		135,670			2,579			21,756			1,944		161,949

	Net insurance contract liabilities	W	129,164			2,579			23,650			1,968		157,361

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities (continued)

(j)

Details of changes in the remaining coverage elements and incurred claim elements of reinsurance contract assets (liabilities) applying the premium allocation approach for the years ended December 31, 2023 and 2024 are as follow:


		2023
		Remaining coverage elements						Incurred claim elements						Total
		Excluding loss recovery component			Loss recovery component			Present value estimate of future cash flows			Risk adjustment for non-financial risks			Total
Beginning balance	Reinsurance contract assets	W	26,901			75			2,659			120			29,755
	Reinsurance contract liabilities		—			—			(33	)		—			(33	)

	Net reinsurance contract assets (liabilities)		26,901			75			2,626			120			29,722

Reinsurance revenue	Accrued reinsurance amount		—			—			2,813			79			2,892
	Changes in incident fulfillment cash flow		—			1,194			318			(71	)		1,441
	Etc.		217			—			—			—			217

			217			1,194			3,131			8			4,550

Reinsurance service expense			(10,104	)		—			—			—			(10,104	)
Recovery of investment elements and reinsurance premiums			—			—			—			—			—
Reinsurance finance income and expense	Current profit or loss		915			—			27			3			945
	Other comprehensive income		—			—			9			1			10

			915			—			36			4			955

Cash flow for the period	Reinsurance premium paid		3,716			—			—			—			3,716
	Recovery of reinsurance proceeds and other reinsurance profits		—			—			(1,079	)		—			(1,079	)
	Receipt of investment elements and recovery of reinsurance premiums		—			—			—			—			—

			3,716			—			(1,079	)		—			2,637

Other increase/decrease			(1,733	)		(49	)		(489	)		(28	)		(2,299	)
Ending balance	Reinsurance contract assets		19,971			1,220			4,244			104			25,539
	Reinsurance contract liabilities		(59	)		—			(19	)		—			(78	)

	Net reinsurance contract assets (liabilities)	W	19,912			1,220			4,225			104			25,461

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

28.	Insurance contract liabilities (continued)


		2024
		Remaining coverage elements						Incurred claim elements					Total
		Excluding loss recovery component			Loss recovery component			Present value estimate of future cash flows			Risk adjustment for non-financial risks		Total
Beginning balance	Reinsurance contract assets	W	19,971			1,220			4,244			104		25,539
	Reinsurance contract liabilities		(59	)		—			(19	)		—		(78	)

	Net reinsurance contract assets (liabilities)		19,912			1,220			4,225			104		25,461


Reinsurance revenue	Accrued reinsurance amount		—			—			15,934			564		16,498
	Changes in incident fulfillment cash flow		—			(255	)		3,476			838		4,059
	Etc.		(120	)		—			—			—		(120	)

			(120	)		(255	)		19,410			1,402		20,437

Reinsurance service expense			(18,052	)		—			—			—		(18,052	)
Recovery of investment elements and reinsurance premiums			—			—			—			—		—
Reinsurance finance income and expense	Current profit or loss		2,071			—			97			7		2,175
	Other comprehensive income		—			—			14			4		18

			2,071			—			111			11		2,193

Cash flow for the period	Reinsurance premium paid		2,128			—			—			—		2,128
	Recovery of reinsurance proceeds and other reinsurance profits		—			—			33,051			—		33,051
	Receipt of investment elements and recovery of reinsurance premiums		—			—			—			—		—

			2,128			—			33,051			—		35,179

Other increase/decrease			45,500			—			(33,658	)		—		11,842
Ending balance	Reinsurance contract assets		51,439			965			23,144			1,517		77,065
	Reinsurance contract liabilities		—			—			(5	)		—		(5	)

	Net reinsurance contract assets (liabilities)	W	51,439			965			23,139			1,517		77,060

F-2

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

30.	Investment contract liabilities

Details of investment contract liabilities as of December 31, 2023 and 2024 are as follow:


	2023		2024
Financial liabilities measured at amortized cost (*)	W	1,572,685		1,165,022

(*)	This is retirement pension policyholder reserve.

31.	Other liabilities

Other liabilities as of December 31, 2023 and 2024 are as follows:


	2023			2024
Lease liabilities (*)	W	613,914			890,689
Accounts payable		18,917,257			15,140,873
Accrued expenses		5,877,135			7,023,165
Dividend payable		8,809			7,997
Advance received		168,940			198,317
Unearned income		492,886			453,706
Withholding value-added tax and other taxes		876,814			1,020,113
Securities deposit received		2,552,266			2,252,424
Foreign exchange settlement pending		302,322			551,196
Domestic exchange settlement pending		9,238,159			1,806,106
Payable from trust account		6,537,565			8,174,066
Due to agencies		801,976			1,178,661
Deposits for subscription		30,729			61,578
Sundry liabilities		2,394,202			2,198,383
Others		45,221			54,133
Present value discount		(135,855	)		(131,898	)

	W	48,722,340			40,879,509

(*)

As of December 31, 2023 and 2024, the Group accounts for the lease liabilities as other liabilities. For the year ended December 31, 2023, the amount of variable lease payments that are not included in the measurement of lease liabilities is

23,272 million, cash outflows from leases are

293,240 million, and interest expense on lease liabilities is

18,855 million. For the year ended December 31, 2024, the amount of variable lease payments that are not included in the measurement of lease liabilities is

1,987 million, cash outflows from leases are

299,061 million, and interest expense on lease liabilities is

22,787 million.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.

Equity

(a)

Equity as of December 31, 2023 and 2024 are as follows:


	2023			2024
Capital stock (*1):
Common stock	W	2,695,586			2,695,586
Preferred stock		274,055			274,055

		2,969,641			2,969,641

Hybrid bond		4,001,731			4,600,121

Capital surplus:
Share premium		11,352,744			11,352,744
Others		742,224			742,224

		12,094,968			12,094,968

Capital adjustments		(658,664	)		(807,114	)

Accumulated other comprehensive income, net of tax:
Loss on financial assets at fair value through other comprehensive income		(3,503,542	)		(2,314,518	)
Equity in other comprehensive loss of associates		(970	)		5,701
Foreign currency translation adjustments for foreign operations		(118,517	)		296,489
Net loss from cash flow hedges		(35,108	)		3,406
Remeasurement of net defined benefit liabilities (assets)		(292,328	)		(354,087	)
Changes in own credit risk on financial liabilities designated under fair value option		(3,884	)		(5,569	)
Net finance income on insurance contract assets (liabilities)		2,866,623			532,388
Net finance income on reinsurance contract assets (liabilities)		13,273			11,750

		(1,074,453	)		(1,824,440	)

Retained earnings (2), (3), (*4)		36,387,314			39,020,580
Non-controlling interest (*5)		2,601,328			2,767,277

	W	56,321,865			58,821,033

(*1)	Due to profit retirement, the capital is different from the total face value of issued stocks.

(*2)	As of December 31, 2023 and 2024, profits reserved by the Group in accordance with Article 53 of the Financial Holding Companies Act amounted to W 2,698,360 million and W 2,865,461 million, respectively.

(*3)	As of December 31, 2023 and 2024, the regulatory reserve for loan losses the Group appropriated in retained earnings are W 21,078 million and W 20,656 million, respectively.

(*4)	As of December 31, 2024, profit dividends within retained earnings of subsidiaries of the Group restricted in accordance with laws, etc. amounted to W 23,606,325 million.

(*5)	As of December 31, 2023 and 2024, the total amounts of hybrid bonds that Shinhan Bank, Jeju Bank, Shinhan Capital Co,.Ltd. and Shinhan Life Insurance Co., Ltd. issued are W 2,437,561 million and

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)

2,587,478 million, respectively, and are recognized as

non-controlling

interests. And, for the years ended December 31, 2023 and 2024, the amounts of dividends paid for the hybrid bonds of Shinhan Bank, Jeju Bank, Shinhan Capital Co,.Ltd. and Shinhan Life Insurance Co., Ltd.

106,715 million and

104,400 million, respectively, are allocated to profit attributed to

non-controlling

interest.

(b)

Capital stock

Capital stock of the Group as of December 31, 2023 and 2024 are as follows:


	2023			2024
Number of authorized shares			1,000,000,000			1,000,000,000
Types of stock		Common stocks	Preferred stocks		Common stocks	Preferred stocks
Par value per share in won	W	5,000	—		5,000	—
Number of issued common stocks		512,759,471	—		503,445,325	—
Capital stock (*)	W	2,695,586	274,055		2,695,586	274,055

(*)

Due to profit retirement, the capital is different from the total face value of issued stocks.

(ii)

The details of changes in the number of common shares outstanding as of December 31, 2023 and 2024 are as follows:


	2023			2024
Beginning balance		508,778,517			512,753,119
Increase		17,482,000			6,353
Decrease		(13,507,398	)		(13,899,708	)
Ending balance		512,753,119			498,859,764

(iii)

The details of convertible preferred stock as of December 31, 2023 and 2024 are as follows:


	2023			2024
Beginning balance		17,482,000			—
Decrease (*)		(17,482,000	)		—
Ending balance		—			—

(*)

Convertible preferred shares of 17,482,000 that were issued on May 1, 2019 have been converted into common shares at a 1:1 ratio on May 1, 2023.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)

(c)

Hybrid bonds

Hybrid bonds classified as other equity instruments as of December 31, 2023 and 2024 are as follows:


	Issue date	Maturity date		Interest rate (%)		2023		2024
KRW	June 25, 2015		June 25, 2045		4.38	W	199,455		199,455
	September 15, 2017		Perpetual bond		4.25		89,783		89,783
	April 13, 2018		Perpetual bond		4.56		14,955		14,955
	June 28, 2019		Perpetual bond		3.27		199,476		—
	September 17, 2020		Perpetual bond		3.12		448,699		448,699
	March 16, 2021		Perpetual bond		2.94		429,009		429,009
	March 16, 2021		Perpetual bond		3.30		169,581		169,581
	January 25, 2022		Perpetual bond		3.90		560,438		560,438
	January 25, 2022		Perpetual bond		4.00		37,853		37,853
	August 26, 2022		Perpetual bond		4.93		343,026		343,026
	August 26, 2022		Perpetual bond		5.15		55,803		55,803
	January 30, 2023		Perpetual bond		5.14		398,831		398,831
	July 13, 2023		Perpetual bond		5.40		498,815		498,815
	January 31, 2024		Perpetual bond		4.49		—		398,833
	September 12, 2024		Perpetual bond		4.00		—		399,033

USD	May 12, 2021		Perpetual bond		2.88		556,007		556,007

						W	4,001,731		4,600,121

(*)

For the year ended December 31, 2024, the deduction for capital related to hybrid bonds issued is

2,134 million.

The hybrid bonds above can be repaid early after 5 or 10 years from the date of issuance, and the controlling company has an unconditional right to extend the maturity under the same condition or change them to perpetual bonds.

(d)

Capital adjustments

(i)

Changes in capital adjustments for the years ended December 31, 2023 and 2024 are as follows:


	2023			2024
Beginning balance	W	(582,859	)		(658,664	)
Acquisition of treasury stocks		(485,947	)		(700,000	)
Disposal and retirement of treasury stocks		485,947			450,297
Repayments of hybrid bonds		(102,350	)		102,143
Other transactions with owners		26,545			(890	)

Ending balance	W	(658,664	)		(807,114	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)

(ii)

Details of treasury stock acquisition for the years ended December 31, 2023 and 2024 are as follows:


	2023						2024
	The number of share			Carrying amount			The number of share			Carrying amount
Beginning balance		6,352		W	227			6,352		W	227
Acquisition		13,507,398			485,947			13,899,708			700,000
Disposal		—			—			(6,353	)		(227	)
Retirement (*)		(13,507,398	)		(485,947	)		(9,314,146	)		(450,000	)

Ending balance		6,352		W	227			4,585,561		W	250,000

(*)

For the year ended December 31, 2023, the Group acquired treasury stocks for retirement, and the retirement of 3,676,470 shares, 4,243,281 shares, 2,842,929 shares and 2,744,718 shares was completed on March 28, 2023, June 16, 2023, August 31, 2023 and December 27, 2023, respectively. For the year ended December 31, 2024, the Group acquired treasury stocks for retirement, and the retirement of 3,366,257 shares, 5,947,889 shares was completed on March 22, 2024, November 1, 2024, respectively.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)

(e)

Accumulated other comprehensive income

Changes in accumulated other comprehensive income for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022
	Items that are or may be reclassified to profit or loss																								Items that will never be reclassified to profit or loss
	Gain (loss) on securities at fair value through other comprehensive income			Gain (loss) on valuation of financial asset measured at FVTPL (overlay approach)			Equity in other comprehensive income (expense) of associates			Foreign currency translation adjustments for foreign operations			Net gain (loss) from cash flow hedges			Other Comprehensive income of separate account			Net finance Income (expense) on insurance contract assets (liabilities)			Net finance income (expense) on reinsurance contract assets (liabilities)			Remeasure -ments of the defined benefit plans			Equity in other comprehensive income (expense) of associates			Gain (loss) on securities at fair value through other comprehensive income			Gain (loss) on financial Liabilities measured at FVTPL attributable to changes in credit risk			Total
Beginning balance	W	(730,295	)		141,821			7,623			(125,219	)		(26,471	)		(22,850	)		—			—			(343,124	)		(28	)		115,423			(1,816	)		(984,936	)
Adjustment on initial application of IFRS 17		(137,385	)		(141,821	)		—			—			347			22,850			333,178			—			—			—			2,544			—			79,713
Beginning balance (restated)		(867,680	)		—			7,623			(125,219	)		(26,124	)		—			333,178			—			(343,124	)		(28	)		117,967			(1,816	)		(905,223	)
Change due to fair value		(8,059,410	)		—			(16,914	)		—			—			—			6,396,337			46,320			—			9			10,880			(5,919	)		(1,628,697	)
Reclassification:
Change due to impairment or disposal		(37,142	)		—			(7,333	)		—			—			—			—			—			—			—			—			—			(44,475	)
Effect of hedge accounting		—			—			—			—			(190,372	)		—			—			—			—			—			—			—			(190,372	)
Hedging		63,480			—			—			(25,793	)		87,491			—			—			—			—			—			—			—			125,178
Effects from changes in foreign exchange rate		—			—			—			40,679			—			—			—			—			—			—			(823	)		—			39,856
Remeasurements of the net defined benefit plans		—			—			—			—			—			—			—			—			348,017			—			—			—			348,017
Deferred income taxes		2,110,516			—			8,489			(154	)		32,617			—			(1,690,434	)		(12,275	)		(96,026	)		(14	)		(9,171	)		1,170			344,718
Transfer to other account		—			—			—			—			—			—			—			—			—			42			(2,134	)		1,410			(682	)
Non-controlling interests		3,586			—			—			(1,796	)		—			—			—			—			(860	)		—			—			—			930

Ending balance	W	(6,786,650	)		—			(8,135	)		(112,283	)		(96,388	)		—			5,039,081			34,045			(91,993	)		9			116,719			(5,155	)		(1,910,750	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)


	2023
	Items that are or may be reclassified to profit or loss																		Items that will never be reclassified to profit or loss											Total
	Gain (loss) on securities at fair value through other comprehensive income			Equity in other comprehensive income (expense) of associates			Foreign currency translation adjustments for foreign operations			Net gain (loss) from cash flow hedges			Net finance Income (expense) on insurance contract assets (liabilities)			Net finance Income (expense) on reinsurance contract assets (liabilities)			Remeasure -ments of the defined benefit plans			Equity in other comprehensive income (expense) of associates		Gain (loss) on securities at fair value through other comprehensive income			Gain (loss) on financial Liabilities measured at FVTPL attributable to changes in credit risk			Total
Beginning balance	W	(6,786,650	)		(8,135	)		(112,283	)		(96,388	)		5,039,081			34,045			(91,993	)		9		116,719			(5,155	)		(1,910,750	)
Change due to fair value		3,862,277			9,738			—			—			(2,961,019	)		(28,283	)		—			—		1,459			4,011			888,183
Reclassification:
Change due to impairment or disposal		465,343			—			—			—			—			—			—			—		4,199			5,077			474,619
Effect of hedge accounting		—			—			—			(69,484	)		—			—			—			—		—			—			(69,484	)
Hedging		(28,044	)		—			(3,903	)		152,927			—			—			—			—		—			—			120,980
Effects from changes in foreign exchange rate		—			—			2,316			—			—			—			—			—		2,862			—			5,178
Remeasurements of the net defined benefit plans		—			—			—			—			—			—			(272,792	)		—		—			—			(272,792	)
Deferred income taxes		(1,137,032	)		(2,582	)		(4,658	)		(22,163	)		788,561			7,511			71,935			—		(3,402	)		(465	)		(302,295	)
Transfer to other account		—			—			—			—			—			—			—			—		3,055			(7,352	)		(4,297	)
Non-controlling interests		(4,328	)		—			11			—			—			—			522			—		—			—			(3,795	)

Ending balance	W	(3,628,434	)		(979	)		(118,517	)		(35,108	)		2,866,623			13,273			(292,328	)		9		124,892			(3,884	)		(1,074,453	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)


	2024
	Items that are or may be reclassified to profit or loss																		Items that will never be reclassified to profit or loss											Total
	Gain (loss) on securities at fair value through other comprehensive income			Equity in other comprehensive income (expense) of associates			Foreign currency translation adjustments for foreign operations			Net gain (loss) from cash flow hedges			Net finance Income (expense) on insurance contract assets (liabilities)			Net finance Income (expense) on reinsurance contract assets (liabilities)			Remeasure - ments of the defined benefit plans			Equity in other comprehensive income (expense) of associates		Gain (loss) on securities at fair value through other comprehensive income			Gain (loss) on financial Liabilities measured at FVTPL attributable to changes in credit risk			Total
Beginning balance	W	(3,628,434	)		(979	)		(118,517	)		(35,108	)		2,866,623			13,273			(292,328	)		9		124,892			(3,884	)		(1,074,453	)
Change due to fair value		1,465,249			16,732			—			—			(3,171,476	)		(2,077	)		—			—		55,179			(8,616	)		(1,645,009	)
Reclassification:
Change due to impairment or disposal		119,594			—			(593	)		—			—			—			—			—		—			—			119,001
Effect of hedge accounting		—			—			—			(582,424	)		—			—			—			—		—			—			(582,424	)
Hedging		(30,371	)		—			(221,221	)		634,645			—			—			—			—		—			—			383,053
Effects from changes in foreign exchange rate		—			(7,668	)		624,565			—			—			—			—			—		13,017			—			629,914
Remeasurements of the net defined benefit plans		—			—			—			—			—			—			(83,937	)		—		—			—			(83,937	)
Deferred income taxes		(407,849	)		(2,393	)		13,431			(13,707	)		837,241			554			21,794			—		(17,609	)		2,275			433,737
Transfer to other account		—			—			—			—			—			—			—			—		(7,329	)		4,656			(2,673	)
Non-controlling interests		(857	)		—			(1,176	)		—			—			—			384			—		—			—			(1,649	)

Ending balance	W	(2,482,668	)		5,692			296,489			3,406			532,388			11,750			(354,087	)		9		168,150			(5,569	)		(1,824,440	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)

(f)

Appropriation of retained earnings

The appropriation of retained earnings for the years ended December 31, 2023 and 2024 are as follows:


	2023			2024
Date of appropriation:	March 26, 2024			March 26, 2025
Unappropriated retained earnings:
Balance at beginning of year	W	5,033,475			4,672,650
Retirement of treasury stock		(486,999	)		(450,402	)
Dividend to hybrid bonds		(189,672	)		(176,945	)
Interim dividends		(817,122	)		(820,287	)
Net income		1,671,011			1,619,867

		5,210,693			4,844,883

Transfer from voluntary reserves
Loan loss reserve reversal amount		422			194

		5,211,115			4,845,077

Appropriation of retained earnings:
Legal reserve		167,101			104,180
Dividends on common stocks paid		268,697			267,755
Loss on repayments of hybrid bonds		102,667			524

		538,465			372,459

Unappropriated retained earnings to be carried over to subsequent year	W	4,672,650			4,472,618

(*)

These statements of appropriation of retained earnings are based on the separate financial statements of Shinhan Financial Group.

(g)

Regulatory reserve for loan losses

In accordance with Regulations for the Supervision of Financial Institutions, the Group reserves the difference between allowance for credit losses by IFRS and that as required by the Regulations at the account of regulatory reserve for loan losses in retained earnings.

i) Changes in regulatory reserve for loan losses including

non-controlling

interests as of December 31, 2023 and 2024 are as follows:


	2023			2024
Beginning balance	W	3,609,851			3,456,487
Expected reversal of regulatory reserve for loan losses		(153,364	)		512,852

Ending balance	W	3,456,487			3,969,339

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

32.	Equity (continued)

ii) Profit attributable to equity holders of Shinhan Financial Group and earnings per share after factoring in regulatory reserve for loan losses for the years ended December 31, 2023 and 2024 are as follows:


	2023		2024
Profit attributable to equity holders of Shinhan Financial Group	W	4,368,035		4,450,177
Provision for regulatory reserve for loan losses		151,357		(512,278	)

Profit attributable to equity holders of Shinhan Financial Group adjusted for regulatory reserve	W	4,519,392		3,937,899

Basic and diluted earnings per share adjusted for regulatory reserve in won (*)		8,361		7,779

(*)

Dividends for hybrid bonds are deducted.

33.

Dividends

(a)

The interim dividends paid for the years ended December 31, 2022, 2023 and 2024 are as follows:


2022
Dividend base date		Amount
March 31, 2022 (1 st Quarter)	Common stock ( W 400 per share)	W	206,277
	Convertible preferred stock ( W 400 per share)		6,993

		W	213,270

June 30, 2022 (2 nd Quarter)	Common stock ( W 400 per share)	W	205,171
	Convertible preferred stock ( W 400 per share)		6,993

		W	212,164

September 30, 2022 (3 rd Quarter)	Common stock ( W 400 per share)	W	205,171
	Convertible preferred stock ( W 400 per share)		6,993

		W	212,164

		W	637,598


2023
Dividend base date		Amount
March 31, 2023 (1 st Quarter)	Common stock ( W 525 per share)	W	265,179
	Convertible preferred stock ( W 525 per share)		9,178

		W	274,357

June 30, 2023 (2 nd Quarter)	Common stock ( W 525 per share)	W	272,129

September 30, 2023 (3 rd Quarter)	Common stock ( W 525 per share)	W	270,636

		W	817,122

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

36.	Net fees and commission income

Net fees and commission income for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Fees and commission income:
Credit placement fees	W	68,101			75,930			73,339
Commission received as electronic charge receipt		147,727			146,037			147,625
Brokerage fees		340,367			369,175			392,836
Commission received as agency		136,114			134,432			153,684
Investment banking fees		232,512			165,366			228,976
Commission received in foreign exchange activities		295,161			295,722			361,341
Trust management fees		308,353			299,600			249,586
Credit card fees		1,202,129			1,378,200			1,311,422
Operating lease fees (*)		478,374			600,283			651,691
Others		675,508			710,498			724,866

		3,884,346			4,175,243			4,295,366

Fees and commission expense:
Credit-related fee		(37,313	)		(45,739	)		(49,924	)
Credit card fees		(895,787	)		(930,044	)		(966,303	)
Others		(537,704	)		(552,254	)		(564,265	)

		(1,470,804	)		(1,528,037	)		(1,580,492	)

Net fees and commission income	W	2,413,542			2,647,206			2,714,874

(*)

Among operating lease fees recognized for the years ended December 31, 2022, 2023 and 2024, there is no variable lease fee income which does not vary by index or rate.

37.	Dividend income

Dividend income for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022		2023		2024
Securities at FVTPL	W	144,869		121,347		152,990
Securities at FVOCI		32,700		60,139		86,107

	W	177,569		181,486		239,097

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

38.	Net gain (loss) on financial instruments measured at fair value through profit or loss

Net gain (loss) on financial instruments measured at fair value through profit or loss for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Net gain (loss) on due from banks measured at FVTPL
Gain (loss) on valuation	W	(10,600	)		3,964			(711	)

Net gain (loss) on loans measured at FVTPL
Loss on valuation		(35,653	)		(6,562	)		(2,755	)
Gain on sale		14,062			36,774			90,227

		(21,591	)		30,212			87,472

Net gain (loss) on securities measured at FVTPL
Debt securities
Gain (loss) on valuation		(677,327	)		755,501			663,877
Gain (loss) on sale		(244,263	)		197,148			(39,354	)
Other gains		590,933			624,282			803,645

		(330,657	)		1,576,931			1,428,168

Equity securities
Gain (loss) on valuation		(337,302	)		540,188			161,316
Gain (loss) on sale		(284,267	)		428,947			485,566

		(621,569	)		969,135			646,882

Other
Gain on valuation		2,089			11,635			36,688

		(950,137	)		2,557,701			2,111,738

Net gain (loss) on financial liabilities measured at FVTPL
Debt securities
Gain (loss) on valuation		41,316			(60,144	)		(3,593	)
Gain (loss) on disposal		53,066			(88,398	)		(249,398	)

		94,382			(148,542	)		(252,991	)

Other
Loss on valuation		(38,996	)		(60,565	)		(173,058	)
Gain on disposal		2,726			1,606			2,930

		(36,270	)		(58,959	)		(170,128	)

		58,112			(207,501	)		(423,119	)

Derivatives:
Gain (loss) on valuation		(702,735	)		292,483			82,184
Gain (loss) on transaction		466,118			(183,233	)		(646,793	)

		(236,617	)		109,250			(564,609	)

	W	(1,160,833	)		2,493,626			1,210,771

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

39.	Net gain (loss) on financial instruments designated at fair value through profit or loss

Net gain (loss) on financial instruments designated at fair value through profit or loss for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Financial liabilities designated at fair value through profit or loss:
Debt securities issued:
Gain(loss) on valuation	W	2,673			2,495			(6,466	)
Compound financial instruments:
Gain(loss) on valuation		804,068			51,750			(29,162	)
Loss on sale and redemption		(229,799	)		(492,025	)		(308,825	)

	W	574,269			(440,275	)		(337,987	)

		576,942			(437,780	)		(344,453	)

40.	Provision for credit loss allowance

Provision for credit loss allowance on financial assets for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Allowance provided:
Loans at amortized cost	W	(1,244,351	)		(2,114,442	)		(1,862,013	)
Other financial assets at amortized cost		(32,831	)		(90,770	)		(113,662	)
Securities at fair value through other comprehensive income		—			(2,271	)		—
Unused credit line and financial guarantee		(19,106	)		(37,156	)		(41,910	)
Securities at amortized cost		(538	)		—			—

		(1,296,826	)		(2,244,639	)		(2,017,585	)

Allowance reversed:
Securities at fair value through other comprehensive income	W	5,013			—			2,699
Securities at amortized cost		—			136			1,612

		5,013			136			4,311

	W	(1,291,813	)		(2,244,503	)		(2,013,274	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

41.	General and administrative expenses

General and administrative expenses for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022		2023		2024
Employee benefits:
Salaries	W	3,218,540		3,247,162		3,316,503
Severance benefits:
Defined contribution		35,290		35,679		37,745
Defined benefit		156,181		109,444		114,943
Termination benefits		154,012		197,184		235,330

		3,564,023		3,589,469		3,704,521

Entertainment		46,374		46,050		46,903
Depreciation		462,024		514,100		535,571
Amortization		186,448		225,900		279,095
Taxes and utility bills		206,421		245,723		272,018
Advertising		339,915		285,495		315,281
Research		20,703		21,494		23,917
Others		818,252		967,106		938,934

	W	5,644,160		5,895,337		6,116,240

42.	Share-based payments

(a)

Performance shares granted as of December 31, 2024 are as follows:


	Expired	Not expired
Type	Cash-settled share-based payment
Performance conditions	Relative stock price linked (20.0%), management index (80.0%)
Exercising period	4 years from the commencement date of the year to which the grant date belongs
Estimated number of shares vested at December 31, 2024	964,742 shares	2,211,101 shares
Fair value per share in Korean won (*)	W 33,122, W 37,387, W 37,081, W 38,156 and W 50,444 for the expiration of exercising period from 2020 to 2024	W 47,650

(*)

Based on performance-based stock compensation, the reference stock price (the arithmetic average of the weighted average share price of transaction volume for the past two months, the past one month, and the past one week from the day before the base date) of four years after the commencement of the grant year is paid in cash, and the fair value of the reference stock price to be paid in the future is assessed as the closing price of the settlement.

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

44.	Net other non-operating income

Other

non-operating

income and other

non-operating

expense for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Other non-operating income
Gain on disposal of assets:
Property and equipment	W	67,411			4,944			3,287
Investment property		29,305			56,640			3,427
Assets held for sale (*1)		448,770			1,753			—
Lease assets		36			9			1
Right-of-use assets		4,131			3,388			9,712

		549,653			66,734			16,427

Investments in associates:
Gain on disposal		8,965			12,435			9,908
Reversal of impairment loss		5,924			—			183

		14,889			12,435			10,091

Others:
Rental income on investment property		33,366			24,472			28,708
Reversal of impairment losses on intangible asset		396			50			112
Gain from assets contributed		4			—			—
Gain from bargain purchase		12,349			—			—
Others		75,511			66,546			86,458

		121,626			91,068			115,278

		686,168			170,237			141,796

Other non-operating expense
Loss on disposal of assets:
Property and equipment		(2,546	)		(6,009	)		(5,785	)
Investment property		—			—			—
Lease assets		(9	)		—			(7	)
Right-of-use assets		(737	)		(1,063	)		(804	)
Others		(183	)		(29	)		(50	)

		(3,475	)		(7,101	)		(6,646	)

Investments in associates:
Loss on disposal		(19,045	)		(19,266	)		(5,193	)
Impairment loss		(7,529	)		(15,583	)		(43,262	)

		(26,574	)		(34,849	)		(48,455	)

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

44.	Net other non-operating income (continued)


	2022			2023			2024
Others:
Donations	W	(67,558	)		(100,201	)		(144,212	)
Depreciation of investment properties		(18,115	)		(15,058	)		(15,063	)
Impairment loss on property and equipment		—			(1,409	)		(1,650	)
Impairment loss on intangible assets		(3,158	)		(10,732	)		(25,468	)
Write-off of intangible assets		(1,822	)		(446	)		(1,662	)
Expenses on collection of special bonds		(10,259	)		(9,130	)		(10,236	)
Others		(215,842	)		(252,289	)		(294,160	)

		(316,754	)		(389,265	)		(492,451	)

		(346,803	)		(431,215	)		(547,552	)

Net other non-operating gain (loss)	W	339,365			(260,978	)		(405,756	)

(*1)

Gain and loss on disposal of

sale-and-leaseback

are included in gain and loss on disposal of property and equipment, gain and loss on disposal of investment property and gain on assets held for sale, respectively. Gain on disposal of

sale-and-leaseback

for the year ended December 31, 2022 is

443,780 million.

45.	Income tax expense

(a)

Income tax expense for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Current income tax expense	W	1,663,188			1,301,802			1,210,083
Temporary differences		(397,017	)		493,026			(163,840	)
Income tax recognized in other comprehensive income		344,941			(307,868	)		424,679

Income tax expenses	W	1,611,112			1,486,960			1,470,922

(b)

Income tax expense calculated by multiplying net income before tax with the tax rate for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Profit before income taxes	W	6,366,626			5,964,960			6,029,092

Income taxes at statutory tax rates		1,740,460			1,564,388			1,581,318
Adjustments:
Non-taxable income		(13,902	)		(10,350	)		(44,370	)
Non-deductible expense		16,762			16,514			19,755
Tax credit		(1,233	)		(1,185	)		(1,484	)
Others		(130,975	)		(82,407	)		(84,297	)

Income tax expense	W	1,611,112			1,486,960			1,470,922

Effective tax rate		25.31	%		24.93			24.40

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

45.	Income tax expense (continued)

(c)

Deferred tax expenses by origination and reversal of deferred assets and liabilities and temporary differences for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Beginning Balance			Profit or loss			Other comprehensive income (loss)			Ending Balance
Unearned income	W	(350,772	)		(81,504	)		—			(432,276	)
Account receivable		(23,695	)		2,341			—			(21,354	)
Financial assets measured at fair value		1,006,441			587,125			(1,139,313	)		454,253
Investment in associates and etc.		183,410			7,439			(2,581	)		188,268
Valuation and depreciation of property and equipment		(100,618	)		(3,460	)		—			(104,078	)
Derivative asset		262,353			(81,234	)		(28,731	)		152,388
Deposits		37,047			(3,494	)		—			33,553
Accrued expenses		209,728			11,730			—			221,458
Defined benefit obligation		475,777			(1,566	)		70,456			544,667
Plan assets		(635,981	)		16,645			1,353			(617,983	)
Other provisions		398,873			111,731			—			510,604
Allowance for acceptances and guarantees		24,423			(2,406	)		—			22,017
Allowance related to asset revaluation		(47,891	)		182			—			(47,709	)
Allowance for expensing depreciation		(202	)		62			—			(140	)
Accrued contributions		37,039			630			—			37,669
Financial assets (liabilities) designated at fair value through profit of loss		(279,089	)		46,492			—			(232,597	)
Allowances		166,078			57,988			—			224,066
Constructive dividend		17,187			531			—			17,718
Liability under insurance contracts		93,537			(82,092	)		—			11,445
Others		(1,588,403	)		(754,058	)		790,948			(1,551,513	)

		(114,758	)		(166,918	)		(307,868	)		(589,544	)

Expired unused tax losses:
Extinguishment of deposit and insurance liabilities		219,558			(18,890	)		—			200,668

	W	104,800			(185,808	)		(307,868	)		(388,876	)

(*1)

Deferred tax assets from overseas subsidiaries are decreased by

650 million due to foreign exchange rate movements.

(*2)

The Group does not recognize deferred tax assets and liabilities related to global minimum tax laws by applying the temporary exception provision for deferred tax in IAS 12.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

45.	Income tax expense (continued)


	2024
	Beginning Balance			Profit or loss			Other comprehensive income (loss)			Ending Balance
Unearned income	W	(432,276	)		2,101			—			(430,175	)
Account receivable		(21,354	)		(15,052	)		—			(36,406	)
Financial assets measured at fair value		454,253			(408,640	)		(425,218	)		(379,605	)
Investment in associates and etc.		188,268			8,543			(2,396	)		194,415
Valuation and depreciation of property and equipment		(104,078	)		147			—			(103,931	)
Derivative asset		152,388			(79,962	)		(21,242	)		51,184
Deposits		33,553			(6,274	)		—			27,279
Accrued expenses		221,458			64,571			—			286,029
Defined benefit obligation		544,667			(17,567	)		19,995			547,095
Plan assets		(617,983	)		32,565			1,710			(583,708	)
Other provisions		510,604			(15,187	)		—			495,417
Allowance for acceptances and guarantees		22,017			13,467			—			35,484
Allowance related to asset revaluation		(47,709	)		—			—			(47,709	)
Allowance for expensing depreciation		(140	)		61			—			(79	)
Accrued contributions		37,669			19,935			—			57,604
Financial assets (liabilities) designated at fair value through profit of loss		(232,597	)		119,658			—			(112,939	)
Allowances		224,066			50,152			—			274,218
Constructive dividend		17,718			857			—			18,575
Liability under insurance contracts		11,445			(1,089	)		—			10,356
Others		(1,551,513	)		(2,239	)		851,830			(701,922	)

		(589,544	)		(233,953	)		424,679			(398,818	)

Expired unused tax losses:
Extinguishment of deposit and insurance liabilities		200,668			(20,165	)		—			180,503

	W	(388,876	)		(254,118	)		424,679			(218,315	)

(*1)

Deferred tax assets from overseas subsidiaries are

increased

6,721 million due to foreign exchange rate movements.

(*2)

The Group does not recognize deferred tax assets and liabilities related to global minimum tax laws by applying the temporary exception provision for deferred tax in IAS 12.

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

45.	Income tax expense (continued)

(d)

Deferred tax assets and liabilities that are directly charged or credited to equity for the years ended December 31, 2023 and 2024 are as follows:


	January 1, 2023						Changes						December 31, 2023
	OCI			Tax effect			OCI			Tax effect			OCI			Tax effect
Gain (loss) on valuation of financial assets measured at FVOCI	W	(9,032,747)			2,362,816			4,305,703			(1,139,313	)		(4,727,044	)		1,223,503
Gain (loss) on financial liabilities measured at FVTPL attributable to changes in credit risk		(7,014	)		1,859			1,736			(466	)		(5,278	)		1,393
Foreign currency translation adjustments for foreign operations		(103,767	)		(8,516	)		(1,576	)		(4,658	)		(105,343	)		(13,174	)
Gain (loss) on cash flow hedges		(138,634	)		42,246			90,011			(28,731	)		(48,623	)		13,515
Equity in other comprehensive income (loss) of associates		(11,059	)		2,933			9,738			(2,581	)		(1,321	)		352
Remeasurements of the defined benefit liability		(126,394	)		34,400			(272,144	)		71,809			(398,538	)		106,209
Net finance income (expense) on insurance contract		6,902,211			(1,829,086	)		(2,989,301	)		796,072			3,912,910			(1,033,014	)

	W	(2,517,404	)		606,652			1,144,167			(307,868	)		(1,373,237	)		298,784


	January 1, 2024						Changes						December 31, 2024
	OCI			Tax effect			OCI			Tax effect			OCI			Tax effect
Gain (loss) on valuation of financial assets measured at FVOCI	W	(4,727,044)			1,223,503			1,614,241			(425,218	)		(3,112,803	)		798,285
Gain (loss) on financial liabilities measured at FVTPL attributable to changes in credit risk		(5,278	)		1,393			(2,288	)		604			(7,566	)		1,997
Foreign currency translation adjustments for foreign operations		(105,343	)		(13,174	)		401,576			13,431			296,233			257
Gain (loss) on cash flow hedges		(48,623	)		13,515			59,756			(21,242	)		11,133			(7,727	)
Equity in other comprehensive income (loss) of associates		(1,321	)		352			9,067			(2,396	)		7,746			(2,044	)
Remeasurements of the defined benefit liability		(398,538	)		106,209			(83,464	)		21,705			(482,002	)		127,914
Net finance income (expense) on insurance contract		3,912,910			(1,033,014	)		(3,173,553	)		837,795			739,357			(195,219	)

	W	(1,373,237	)		298,784			(1,174,665	)		424,679			(2,547,902	)		723,463

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

45.	Income tax expense (continued)

(e)

The amount of deductible temporary differences that are not recognized as deferred tax assets as of December 31, 2023 and 2024 are as follows:


	2023		2024
Temporary differences related to Shinhan EZ General Insurance Co., Ltd. (*1)	W	112,293		109,731
Shinhan AI Co., Ltd. (*2)		13		—

		112,306		109,731

(*1)

Shinhan EZ General Insurance Co., Ltd., a subsidiary of the Group, suffered a net loss for the current period, etc. As of the end of 2024, deferred corporate tax assets were not recognized as it was determined that the temporary difference to be deducted in excess of the temporary difference to be added and the tax loss were not feasible.

(*2)

Shinhan AI Co., Ltd, a subsidiary of the Group, did not recognize deferred corporate tax assets for temporary differences in consideration of liquidation in 2024.

(*3)

The expiration date of unused carried tax losses not recognized as deferred tax assets as of the end of the reporting period is as follows:


	Less than 1 year		1~2 years		2~3 years		More than 3 years		Total
Tax loss carried-forward	W	9,006		7,444		9,253		77,186		102,889

(f)

The amount of temporary difference regarding investment in subsidiaries that are not recognized as deferred tax liabilities as of December 31, 2023 and 2024 are as follows:


	2023		2024
Investment in subsidiaries, etc.	W	(9,331,214)		(10,203,270	)

(g)

The Group set off a deferred tax asset against a deferred tax liability of the same taxable entity if, and only if, they relate to income taxes levied by the same taxation authority and the entity has a legally enforceable right to set off current tax assets against current tax liabilities. Deferred tax assets and liabilities presented on a gross basis prior to any offsetting as of December 31, 2023 and 2024 are as follows:


	2023		2024
Deferred tax assets	W	1,300,568		1,375,325
Deferred tax liabilities		1,689,444		1,593,640

(h)

Under the Global Minimum Corporate Tax Act, effective from 2024, the Group is required to pay additional taxes on the difference between the effective tax rate and the minimum tax rate of 15% for each unit of jurisdiction in which each constituent company belongs. However, since most jurisdictions either qualify for the transitional relief provisions or already have an effective tax rate of 15% or higher, it is anticipated that no significant additional taxes will arise. As a result, the Group has not recognized any amount related to the Global Minimum Corporate Tax Act in its current period income tax expense. Additionally, the Group also applies the temporary exception to deferred tax, which does not recognize deferred tax assets and liabilities related to the Global Minimum Corporate Tax Act and does not disclose information related to deferred tax.

F-

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

46.	Earnings per share

(a)

Basic and diluted earnings per share for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Profit attributable to equity holders of Shinhan Financial Group	W	4,665,643			4,368,035			4,450,177
Less:
Dividends to hybrid bond		(156,277	)		(189,672	)		(176,945	)

Net profit available for common stock	W	4,509,366			4,178,363			4,273,232

Weighted average number of common shares outstanding (*)		530,638,621			519,207,776			506,231,595
Basic and diluted earnings per share in won	W	8,498			8,048			8,441

(*)

The number of common shares outstanding is 503,445,325 shares, and the above weighted-average number of shares has been calculated by reflecting changes in treasury stock, including shares acquired and subsequently retired, for the years ended December 31, 2023 and 2024.

(b)

The calculation details of the weighted average number of ordinary shares for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Number of shares			Accumulated Number of shares
Number of common shares issued		512,759,471			187,756,015,279
Shares of convertible preferred stock		—			2,097,840,000
Shares of treasury stock		(6,352	)		(343,017,080	)
Average number of ordinary shares		512,753,119			189,510,838,199
Days					365 days
Weighted average number of ordinary shares					519,207,776


	2024
	Number of shares			Accumulated Number of shares
Number of common shares issued		503,445,325			186,347,761,912
Shares of convertible preferred stock		—			—
Shares of treasury stock		(4,585,561	)		(1,066,997,991	)
Average number of ordinary shares		498,859,764			185,280,763,921
Days					366 days
Weighted average number of ordinary shares					506,231,595

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Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

47.	Commitments and contingencies

(a)

Guarantees, acceptances and credit commitments as of December 31, 2023 and 2024 are as follows:


	2023		2024
Guarantees and purchase agreements:
Outstanding guarantees	W	12,503,445		15,315,381
Contingent guarantees		4,337,751		5,068,782
ABS and ABCP purchase agreements		1,533,047		2,123,665

		18,374,243		22,507,828

Commitments to extend credit:
Loan commitments in won		88,913,555		93,064,772
Loan commitments in foreign currency		26,970,371		28,613,692
Unused credit commitments		90,832,893		90,700,766
Other agreements		5,362,051		6,601,564

		212,078,870		218,980,794

Endorsed bills:
Secured endorsed bills		44		1,367
Unsecured endorsed bills		10,519,665		11,937,894

		10,519,709		11,939,261

	W	240,972,822		253,427,883

(b)

Pending litigations

The Group’s pending lawsuits as a defendant as of December 31, 2024 are as follows:


Case	Number of claim	Claim amount		Description	Status
Return of unjust earning	1	W	33,096	The plaintiff claims that the group of lenders, including Shinhan Bank, unfairly sold two oil drilling vessels, which were core assets of the borrower, causing losses to other bankrupt creditors.	The first trial is ongoing as of December 31, 2024

Loss claim	2		73,830	A case in which OO Bank and OO Securities filed a lawsuit for damages against employees of Shinhan Investment Corp., alleging their involvement in the illegal activities of Lime Asset Management.	The first trial is ongoing as of December 31, 2024. (an appeal is planned following the first trial announced on February 14, 2025)

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

47.	Commitments and contingencies (continued)


Case	Number of claim	Claim amount		Description	Status
Loss claim	2	W	36,937	A case in which OO Bank and OO Securities filed a lawsuit for damages against employees of Shinhan Investment Corp., alleging their involvement in the illegal activities of Lime Asset Management.	The first trial is ongoing as of December 31, 2024

Loss claim regarding responsibility for construction completion in a management-type land trust (Eojin-dong, Sejong-si,)	1		65,770	A case in which 13 plaintiffs, including OO Securities and others, claim the loan principal and interest, convertible bond principal and interest, and delayed damages due to the failure to fulfill the responsibilities for completing the construction by Shinhan Asset Trust.	The first trial is ongoing as of December 31, 2024

Loss claim regarding responsibility for construction completion in a management-type land trust (Wonchang-dong, Incheon-si)	1		57,500	A case in which 4 plaintiffs, including OO Capital and others, claim the loan principal and interest, and delayed damages due to the failure to fulfill the responsibilities for completing the construction by Shinhan Asset Trust.	The first trial is ongoing as of December 31, 2024

Loss claim regarding responsibility for construction completion in a management-type land trust (Sanho-dong, Changwon-si)	1		52,360	A case in which 8 plaintiffs, including OO Securities and others, claim the loan principal and interest, due to the failure to fulfill the responsibilities for completing the construction by Shinhan Asset Trust.	The first trial is ongoing as of December 31, 2024

Loss claim regarding responsibility for construction completion in a management-type land trust (Naegang-ri, Anseong-si)	1		47,400	A case in which 23 plaintiffs, including mutual finance companies, claim the loan principal and interest, due to the failure to fulfill the responsibilities for completing the construction by Shinhan Asset Trust.	The first trial is ongoing as of December 31, 2024

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

47.	Commitments and contingencies (continued)


Case	Number of claim	Claim amount		Description	Status
Loss claims regarding responsibility for construction completion in a management-type land trust (others)	6	W	45,605	Claims for losses due to the failure to fulfill construction completion responsibilities in a management-type land trust.	The first trial is ongoing as of December 31, 2024

Others	1,091		778,132	Includes various cases, such as compensation for loss claim.

	1,106	W	1,190,630

As of the December 31, 2024, the Group has recorded

114,750 million and

5,450 million, respectively, as provisions and incurred claims element of insuranc

contract liabilities for litigations, etc., which are for the lawsuits ruled against in the first trial. The outcome of the remaining litigations other than those accounted for provisions, etc. are not expected to have a material impact on the consolidated financial statements, but additional losses may result from future litigation.

(c)

As a Prime Brokerage Service operator, the Group entered into a total return swap agreement (“TRS”, derivatives that exchange profits and losses from underlying assets such as stocks, bonds and funds) with a fund operated by Lime Asset Management (“Lime Fund”). Through TRS with the Group, the Lime Fund invested approximately $200 million in IIG Global Trade Finance Fund, IIG Trade Finance Fund, and IIG Trade Finance

Fund-FX

Hedge (“IIG Fund”) from May 2017 to September 2017. The Group invested the IIG Fund in LAM Enhanced Finance III L.P (“LAM III Fund”) in kind and acquired the LAM III Fund’s beneficiary certificates in accordance with the management instructions of Lime Asset Management in 2019. The recoverable value of the LAM III Fund beneficiary certificates is affected by the recoverable value of the IIG Fund invested in kind. Meanwhile, IIG Fund received cancelation of registration and asset freeze from the US Securities and Exchange Commission in November 2019.

The Financial Supervisory Service (FSS) announced in its interim inspection of Lime Fund in February 2020 that the Group is charged with being involved in concealment of losses and fraud of Lime Fund while operating TRSs with Lime Fund, and a related prosecution investigation has been under way since then. Institutional sanctions (banned from the sale of new private equity funds and etc. for six months) against the Group was finalized by the Financial Services Commission on November 12, 2021.

In addition, the prosecution arrested and indicted the former director of Prime Brokerage Services for fraud charges and violation of the Capital Market and Financial Investment Services Act. Finally, the former director of Prime Brokerage Services was found guilty.

The prosecution indicted the Group and the former director of Prime Brokerage Services on January 22, 2021 for violating ‘Financial Investment Services and Capital Markets Act’, and the Group was sentenced to a fine of

50 million for neglection its duty of supervision. Meanwhile, the Group is still involved in civil litigation with Woori Bank, Mirae Asset Securities, Hana Bank, and Shin Young Securities regarding the criminal ruling mentioned above. On February 14, 2025, the consolidated

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

47.	Commitments and contingencies (continued)

entity partially lost in the first trial with Woori Bank and Mirae Asset Securities. Considering the first trial verdict, the Group has recognized a litigation provision of approximately

101.4 billion as of the end of the current period.

Considering the board resolutions and the results of the Financial Supervisory Service’s dispute settlement committee, the Group has been completed or will be carried out the compensation and liquidity supply for some of the Lime Fund sales in the future.

(d)

The Group has sold Gen2 related trust instruments from May 2014 to November 2019. As of December 31, 2023, approximately

420 billion, the entire outstanding balance, is suspended from redemption and delayed in repayment. In accordance with a resolution of the Board of Directors on September 28, 2021, the Group has decided to pay 40% of the investment principal to the customers who have agreed to the suspension of redemption and settle the amount upon investment recovery. On August 29, 2023, the Board of Directors decided to proceed with privatization using the post-settlement method. In addition, on December 8, 2023, the Board of Directors decided to privatize

NH-UK

Peterborough Power Plant Trust and others through a post-settlement method.

(e)

The Group is responsible for the completion of construction if the contractor fails to fulfill its obligations. In the event that the Group fails to meet its responsibilities, it is currently engaged in a responsible-for-completion land trust project to compensate for damages incurred by the financial institutions. The status of land trust project with completion guarantee progress as of the period ended December 31, 2024, is as follows:


		Loan commitments with financial institution (*1)
Description	Number of constructions	Temporary loan		Limit loan		Outstanding balance with financial institution
Construction site in progress without failure to meet completion	21	W	851,901		744,389		1,309,186
Construction site in progress with contractor’s failure to meet completion	7		233,500		196,899		390,839
Construction site in progress with contractor’s failure to meet completion by the Group (*2)	9		157,270		196,299		352,458

	37	W	1,242,671		1,137,587		2,052,483

(*1)

The outstanding loan commitment balance including lump-sum payments, limit deductions, and repayments.

(*2)

Land trust projects with completion guarantees that are subject to ongoing litigation have been included.

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

47.	Commitments and contingencies (continued)

(f)

As of the end of the current period, the Group may provide trust account loans for a portion of the total project cost in relation to 52 borrowed-land trust contracts, including the Magok D13 Knowledge Industry Center in Gangseo-gu, Seoul. The maximum additional loan amount (unused limit) is

383,071 million. The decision on whether the Group will provide trust account loans for the relevant projects is not an unconditional obligation but is determined after comprehensively considering various factors, including proprietary accounts and the cash flow plans of each trust project.

48.	Statement of cash flows

(a)

Cash and cash equivalents in the consolidated statements of cash flows as of December 31, 2022, 2023 and 2024 are as follows:


	2022			2023			2024
Cash and due from banks at amortized cost	W	30,070,043			34,650,390			40,547,054
Adjustments:
Due from financial institutions with a maturity over three months from date of acquisition		(1,956,179	)		(1,322,274	)		(1,655,932	)
Restricted due from banks		(3,699,918	)		(2,911,232	)		(3,643,579	)

		(5,656,097	)		(4,233,506	)		(5,299,511	)

	W	24,413,946			30,416,884			35,247,543

(b)

Significant

non-cash

activities for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022		2023		2024
Transfers from construction-in-progress to property and equipment		33,983		82,179		26,185
Transfers between property and equipment and investment property		9,554		16,678		77,752
Transfers between assets held for sale and property and equipment		101,757		2,442		1,039
Transfers between investment property and assets held for sale		83,664		6,057		5,551
Accounts payable for purchase of intangible assets, etc.		117,743		374,685		(132,270	)
Transaction for right-of-use assets	W	293,590		299,672		578,651

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

48.	Statement of cash flows (continued)

(c)

Changes in assets and liabilities arising from financing activities for the years ended December 31, 2023 and 2024 are as follows:


	2023
	Net Derivative liabilities			Borrowings			Debt securities issued		Lease liabilities			Financial liabilities designated at FVTPL			Total
Beginning balance	W	531,934			49,279,175			77,288,783		623,339			47,327			127,770,558
Changes from cash flows		79,563			8,153,087			3,865,582		(262,055	)		209,969			12,046,146
Changes from non-cash flows
Amortization of discount on borrowings and debentures		—			(61,561	)		33,295		18,855			—			(9,411	)
Changes in foreign currency		—			90,914			197,895		(4,331	)		32			284,510
Other		(253,480	)		(560,263	)		176,170		238,106			(2,496	)		(401,963	)

Ending balance	W	358,017			56,901,352			81,561,725		613,914			254,832			139,689,840


	2024
	Net Derivative liabilities			Borrowings			Debt securities issued			Lease liabilities			Financial liabilities designated at FVTPL		Total
Beginning balance	W	358,017			56,901,352			81,561,725			613,914			254,832		139,689,840
Changes from cash flows		119,361			(8,231,239	)		9,578,027			(272,634	)		—		1,193,515
Changes from non-cash flows
Amortization of discount on borrowings and debentures		—			(131,663	)		(4,401	)		22,787			—		(113,277	)
Changes in foreign currency		—			770,798			2,178,255			28,602			—		2,977,655
Other		(617,651	)		611,125			452,248			498,020			6,467		950,209

Ending balance	W	(140,273	)		49,920,373			93,765,854			890,689			261,299		144,697,942

49.	Related parties

Intra-group balances, and income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. In accordance with IAS 24, the Group defines the retirement benefit plans of the associates, key management and their families, the consolidation group and related parties as the scope of related parties. The amount of profit and loss, bond and debt balance between the Group and the related parties are disclosed. For details of the subsidiaries and associates, refer to ‘Note 16’.

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)

(a)

Balances with the related parties as of December 31, 2023 and 2024 are as follows:


Related party	Account		2023			2024
Investments in associates:
BNP Paribas Cardif Life Insurance		Credit card loans	W	105			154
”		ACL		(1	)		(1	)
”		Accrued income		32			23
”		Deposits		2,984			5,559
”		Allowance for Undrawn Commitment		2			1
Incorporated association Finance Saving Information Center		Credit card loans		—			2
”		Deposits		7			3
Nomura-Rifa Private Real Estate Investment Trust No.19		Loans		12,000			11,700
”		ACL		(471	)		(247	)
”		Accrued income		51			—
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3		Accrued income		310			71
KOREA FINANCE SECURITY CO., LTD		Deposits		132			131
”		Credit card loans		—			6
Korea Credit Bureau		Deposits		640			24
”		Credit card loans		—			616
”		ACL		—			(1	)
Goduck Gangil1 PFV Co., Ltd		Deposits		11			4
SBC PFV Co., Ltd		Loans		—			984,600
”		ACL		—			(1,345	)
”		Accrued income		—			89
”		Deposits		13,113			105
Goduck Gangil10 PFV Co., Ltd		Loans		1,100			—
”		ACL		(5	)		—
”		Deposits		7,568			11,899
EDNCENTRAL Co.,Ltd.		Loans		—			25,400
”		ACL		—			(74	)
”		Accrued income		—			64
”		Deposits		—			1,170
”		Provisions		—			156
Shinhan Global Healthcare Fund 2		Deposits		1			1
Future-Creation Neoplux Venture Capital Fund		Account receivables		3,600			3,600
Neoplux Market-Frontier Secondary Fund		Account receivables		592			—
Gyeonggi-Neoplux Superman Fund		Account receivables		1,174			1,696

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account		2023			2024
Investments in associates (continued):
Shinhan-Neoplux Energy Newbiz Fund		Account receivables	W	1,883			721
SHINHAN-NEO Core Industrial Technology Fund		Account receivables		123			399
Neoplux No.3 Private Equity Fund		Account receivables		5,866			7,532
Korea Digital Asset Custody (*1)		Deposits		34			—
Shinhan Smilegate Global PEF I		Unearned revenue		7			—
WaveTechnology co.Ltd		Deposits		17			115
SHINHAN-NEO Market-Frontier 2nd Fund		Account receivables		1,596			1,402
iPIXEL Co.,Ltd.		Credit card loans		—			14
”		ACL		—			(1	)
”		Deposits		11			717
”		Allowance for Undrawn Commitment		—			1
CJL No.1 Private Equity Fund		Deposits		265			—
NewWave 6th Fund		Account receivables		984			877
DDI LVC Master Real Estate Investment Trust Co., Ltd.		Deposits		923			852
Logisvalley Shinhan REIT Co.,Ltd.		Loans		33,000			33,000
”		ACL		(36	)		(30	)
”		Accrued income		81			75
”		Deposits		1,134			1,340
Shinhan-Albatross tech investment Fund		Deposits		2,229			4,339
Shinhan Global Active REIT Co.Ltd (1), (2)		Deposits		206			—
Shinhan VC tomorrow venture fund 1		Account receivables		730			2,474
SH Global Net Zero Solution Security Investment Trust (*1)		Accrued income		2			—
SEOKWANG T&I		Deposits		1			—
Shinhan Time 1st Investment fund		Deposits		151			64
Shinhan-Cognitive Start-up Fund L.P.		Unearned revenue		52			—
NH-J&-IBKC Label Technology Fund		Deposits		301			59
Shinhan-JW Mezzanin New Technology Fund 1 st (*1)		Unearned revenue		7			—
Shinhan M&A-ESG Investment fund		Account receivables		285			—
SH K REITs Infra Real Estate Investment Trust		Accrued income		—			5
Shinhan-CJ TechInnovation Fund 1st		Deposits		—			3,100
SH US Buyback&High Dividend Security Feeder Investment Trust(H)[Equity]		Accrued income		—			12
SH Prestige High Dividend Security Feeder No.1[Equity]		Accrued income		—			14

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account		2023		2024
Investments in associates (continued):
Shinhan General Private Real Estate Investment Trust No.3		Accrued income	W	13		44
Capston General Private Real Estate Investment Trust No.26(Professional)		Loans		—		20,000
”		ACL		—		(21	)
”		Accrued income		—		90
”		Deposits		1		—
SHINHAN Mid and SMALL-SIZED OFFICE VALUE-ADDED MO REIT Co., Ltd.		Accrued income		21		145
Shinhan-GB FutureFlow L.P.		Account receivables		—		41
LB Scotland Amazon Fulfillment Center Fund 29		Derivative assets		—		503
Shinhan AIM FoF Fund 1-A		Derivative assets		—		3,511
PineStreet Global Corporate FoF XIII-2		Derivative assets		—		104
CASCADETECH INC		Deposits		—		35
SONGPA BIZ CLUSTER PFV CO LTD		Loans		—		22,424
”		ACL		—		(119	)
”		Accrued income		—		26
STIC ALT Global II Private Equity Fund		Deposits		—		2,207
TECHFIN RATINGS Co., Ltd.(*3)		Credit card loans		—		13
”		ACL		—		(2	)
”		Deposits		—		21,611
”		Allowance for Undrawn Commitment		—		7
Nomura-Rifa Private Real Estate Investment Trust 31		Loans		—		14,000
”		ACL		—		(27	)
Pacific Private Placement Real Estate Fund No.40		Loans		—		14,000
”		ACL		—		(160	)
”		Accrued income		—		124
Shinhan-DS Mezzanine Fund 1		Unearned revenue		—		93
Shinhan-Csquared Mezzanine Fund 1		Unearned revenue		—		19
KR Seocho Co., Ltd		Loans		—		11,871
”		ACL		—		(213	)
”		Accrued income		—		573

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account		2023		2024
Investments in associates (continued):
KB Distribution Private Real Estate 3-1		Loans	W	—		2,000
”		ACL		—		(4	)
”		Accrued income		—		17
Key management personnel and their immediate relatives:		Loans		5,003		3,402

		Assets		68,038		1,165,189

		Liabilities	W	29,797		53,612

(*1)

Excluded from the associates due to disposal and liquidation for the year ended December 31, 2024.

(*2)

It includes details of receivables and payables with the subsidiaries of associates for the year ended December 31, 2023.

(*3)

Douzon3 TECHFIN Co., Ltd. has changed its name to TECHFIN RATINGS Co., Ltd..

(b)

Transactions with the related parties for the years ended December 31, 2022, 2023 and 2024 are as follows:


Related party	Account	2022			2023			2024
Investments in associates
BNP Paribas Cardif Life Insurance	Fees and commission income	W	1,890			4,125			1,312
”	Provision of credit loss		—			(2	)		—
”	Interest expense		(52	)		(57	)		(12	)
”	General and administrative expenses		(1	)		—			—
Shinhan Praxis K-Growth Global Private Equity Fund	Fees and commission income		42			—			—
Shinhan EZ General Insurance Co., Ltd. (*2)	Fees and commission income		2			—			—
”	Reversal for credit loss		5			—			—
”	Interest expense		(1	)		—			—
Partners 4 th Growth Investment Fund (*3)	Interest expense		(12	)		—			—
Shinhan-Albatross Tech Investment Fund	Fees and commission income		146			115			1,047
”	Interest expense		(7	)		(4	)		(12	)
Shinhan-Midas Dong-A Secondary Fund	Fees and commission income		121			—			—
Shinhan-Nvestor Liquidity Solution Fund	Fees and commission income		181			173			192
Shinhan-PS Investment Fund No.1	Fees and commission income		15			25			20

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account	2022			2023			2024
Investments in associates (continued)
Nomura-Rifa Private Real Estate Investment Trust No.19	Interest income	W	522			568			588
”	Reversal of credit loss		—			—			223
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3	Fees and commission income		1,550			1,262			886
KOREA FINANCE SECURITY CO., LTD	Fees and commission income		6			4			4
”	Other administrative expense		—			—			(145	)
ShinHan – Soo Young Entrepreneur Investment Fund No.1	Fees and commission income		140			589			3,122
Shinhan-Rhinos 1 Fund (*1)	Fees and commission income		61			—			—
Kiwoom-Shinhan Innovation Fund I	Fees and commission income		118			140			148
One Shinhan Global Fund1	Fees and commission income		104			—			—
FuturePlay-Shinhan Tech Innovation Fund 1	Fees and commission income		227			56			158
Korea Credit Bureau	Fees and commission income		13			14			1,753
”	Fees and commission expense		—			—			(4,830	)
”	Other administrative expense		—			—			(91	)
Goduck Gangil1 PFV Co., Ltd	Interest income		377			143			—
”	Reversal of credit loss		31			20			—
SBC PFV Co., Ltd	Fees and commission income		808			—			7,839
”	Interest income		—			—			36,957
”	Interest expense		(23	)		(13	)		(13	)
”	Provision for credit loss		—			—			(679	)
Goduck Gangil10 PFV Co., Ltd	Interest income		171			69			30
”	Interest expense		(738	)		(647	)		(295	)
”	Reversal of credit loss		14			4			17
Korea Omega Project Fund I	Fees and commission income		180			166			146
Sparklabs-Shinhan Opportunity Fund 1	Fees and commission income		202			39			18
EDNCENTRAL Co.,Ltd.	Interest income		267			—			615
”	Interest expense		—			—			(2	)
”	Provision for credit loss		—			—			(74	)
”	Fees and commission income		3,212			—			—

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Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account	2022			2023			2024
Investments in associates (continued)
Kakao-Shinhan 1 st TNYT Fund	Fees and commission income	W	386			386			338
Future-Creation Neoplux Venture Capital Fund	Interest income		74			86			76
”	Fees and commission income		53			—			—
Neoplux Market-Frontier Secondary Fund	Fees and commission income		904			592			—
Gyeonggi-Neoplux Superman Fund	Fees and commission income		623			551			522
Shinhan-Neoplux Energy Newbiz Fund	Fees and commission income		978			906			706
NewWave 6 th Fund	Fees and commission income		1,014			984			877
SHINHAN-NEO Core Industrial Technology Fund	Fees and commission income		498			496			401
KTC-NP Growth Champ 2011-2 Private Equity Fund (*3)	Interest income		59			36			—
Neoplux No.3 Private Equity Fund	Fees and commission income		3,190			2,676			—
Shinhan Smilegate Global PEF I	Fees and commission income		49			—			238
SHINHAN-NEO Market-Frontier 2 nd Fund	Fees and commission income		2,050			1,596			1,402
SWK-Shinhan New Technology Investment Fund 1 st	Fees and commission income		76			61			61
Ulmus SHC innovation investment fund	Fees and commission income		94			91			69
iPIXEL Co.,Ltd.	Interest income		1			—			—
”	Interest expense		—			—			(1	)
CJL No.1 Private Equity Fund	Interest expense		(7	)		(10	)		(2	)
Reverent-Shinhan Vista Fund	Fees and commission income		40			80			80
Kiwoom-Shinhan Innovation Fund 2	Fees and commission income		279			268			120
ETRI Holdings-Shinhan 1 st Unicorn Fund	Fees and commission income		100			100			93
Shinhan-Time mezzanine blind Fund	Fees and commission income		107			226			300
Shinhan VC tomorrow venture fund 1	Fees and commission income		3,400			3,280			2,474

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account	2022			2023			2024
Investments in associates (continued)
JS Shinhan Private Equity Fund	Fees and commission income	W	587			600			600
Stonebridge-Shinhan Unicorn Secondary Fund	Fees and commission income		591			444			722
Shinhan-Kunicorn first Fund	Fees and commission income		261			232			261
Shinhan-Quantum Startup Fund	Fees and commission income		125			153			153
Shinhan Simone Fund I	Fees and commission income		78			78			78
ShinhanFitrin 1 st Technology Business Investment Association	Fees and commission income		59			85			82
DDI LVC Master Real Estate Investment Trust Co., Ltd.	Interest expense		(1	)		(1	)		(1	)
Logisvalley Shinhan REIT Co.,Ltd.	Interest income		1,018			1,841			1,703
”	Fees and commission income		458			163			143
”	Interest expense		(1	)		(2	)		(2	)
”	Provision for credit loss		(28	)		(8	)		—
Shinhan-Dev healthcare Fund I	Fees and commission income		66			77			82
Shinhan-Cognitive Start-up Fund L.P.	Fees and commission income		192			188			222
Global Commerce Fund	Fees and commission income		10			30			38
Shinhan-HGI Social Enterprise Fund	Fees and commission income		27			63			47
Shinhan-WWG Energy Fund New Technology Venture Investment Fund	Fees and commission income		22			45			45
IGIS-Shinhan New Technology Fund 1	Fees and commission income		36			36			36
Shinhan-G.N.Tech Smart Innovation Fund	Fees and commission income		81			260			195
SH Sustainable Management ESG Short term Bond Security Feeder Investment Trust No.1 (*4)	Fees and commission income		6			—			—
SH Global Net Zero Solution Security Investment Trust (*5)	Fees and commission income		82			75			17
SH 1.5years Maturity Investment Type Security Investment Trust No.2 (*5)	Fees and commission income		—			16			4

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account	2022			2023			2024
Investments in associates (continued)
Newlake Growth Capital Partners2 PEF (*3)	Interest expense	W	(1	)		—			—
Shinhan Global Active REIT Co.Ltd (5), (6)	Interest income		—			17			3,982
”	Fees and commission income		—			—			2,498
”	Derivative-related income		—			—			8,220
”	Interest expense		(1	)		(2	)		(4	)
”	Reversal of credit loss		—			—			533
DeepBlue No.1 Private Equity Fund (*3)	Interest expense		(2	)		—			—
DS SHINHAN Content Investment Fund 1	Fees and commission income		18			18			18
Shinhan Time 1 st Investment fund	Fees and commission income		4			26			26
SHINHAN SGC ESG Fund No.1	Fees and commission income		5			115			115
Shinhan-Sneak Peek Bio&Healthcare Bounce Back Fund	Fees and commission income		4			125			125
Shinhan-iSquare Venture PEF 1	Fees and commission income		3			100			100
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1 st	Fees and commission income		—			42			207
DS-Shinhan-JBWoori New Media New Tehcnology Investment Fund No.1	Fees and commission income		—			216			216
NH-J&-IBKC Label Technology Fund	Interest expense		—			(12	)		(6	)
Bonanza-Shinhan GIB Innovative Semiconductor Investment Fund	Fees and commission income		—			55			55
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund	Fees and commission income		—			113			214
Shinhan M&A - ESG Investment Fund	Fees and commission income		—			726			1,083
Shinhan-JW Mezzanine New Technology Fund 1 st (*5)	Fees and commission income		—			46			7
MAN Global Strategy Bond(H)	Fees and commission income		—			2			5

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account	2022		2023		2024
Investments in associates (continued)
SH US Buyback&High Dividend Security Feeder Investment Trust(H)[Equity]	Fees and commission income	W	—		—		18
SH Prestige High Dividend Security Feeder No.1[Equity]	Fees and commission income		—		—		24
Shinhan time secondary blind new technology investment trust	Fees and commission income		—		71		200
Shinhan-openwater pre-IPO Investment Trust 1	Fees and commission income		—		36		100
Shinhan-CJ Technology Innovation Fund No. 1	Fees and commission income		—		88		200
”	Interest expense		—		—		(25	)
Shinhan-Eco Venture Fund 2 nd	Fees and commission income		—		49		100
Heungkuk-Shinhan the1 st Visionary Technology Investment Trust no. 1	Fees and commission income		—		87		200
Hantoo Shinhan Lake K-beauty Technology Investment Trust	Fees and commission income		—		94		237
Shinhan HB Wellness 1 st Investment Trust	Fees and commission income		—		35		77
Shinhan JN Wave Technology Investment Trust	Fees and commission income		—		2		18
Shinhan General Private Real Estate Investment Trust No.3	Fees and commission income		—		13		135
Shinhan-Timefolio Bio Accelerator Fund	Fees and commission income		—		163		310
Shinhan DS Secondary Investment Fund	Fees and commission income		—		139		303
Fortress-shinhan New Tech Fund No.1	Fees and commission income		—		27		101
Shinhan-Ulmus Sobujang hyeokshin Enterprise Investment Association No.7	Fees and commission income		—		18		94

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account	2022		2023		2024
Investments in associates (continued)
SHINHAN Mid and SMALL-SIZED OFFICE VALUE-ADDED MO REIT Co., Ltd.	Fees and commission income	W	—		25		208
Shinhan-GB FutureFlow Fund L.P.	Fees and commission income		—		—		279
LB Scotland Amazon Fulfillment Center Fund 29	Derivative-related income		—		—		503
”	Other expense		—		—		(2	)
Shinhan AIM FoF Fund 1-A	Derivative-related income		—		—		3,331
”	Derivative-related expense		—		—		(232	)
”	Other income		—		—		22
”	Interest expense		—		—		(12	)
PineStreet Global Corporate FoF XIII-2	Derivative-related income		—		—		96
Shinhan-Regent Fund I	Fees and commission income		—		—		23
Shinhan-soo secondary Fund	Fees and commission income		—		—		247
The E&Shinhan New Growth Up Fund	Fees and commission income		—		—		216
CASCADETECH INC	Reversal of credit loss		—		—		6
TECHFIN RATINGS Co., Ltd. (*7)	Fees and commission income		—		—		2
”	Interest expense		—		—		(726	)
SONGPA BIZ CLUSTER PFV CO LTD	Interest income		—		—		356
”	Fees and commission income		—		—		9,178
”	Interest expense		—		—		(1	)
STIC ALT Global II Private Equity Fund	Interest expense		—		—		(3	)
Nomura-Rifa Private Real Estate Investment Trust No.31.	Interest income		—		—		746
”	Provision for credit loss		—		—		(27	)
Pacific Private Placement Real Estate Fund No.40	Interest income		—		—		825
Shinhan-DS Mezzanine Fund 1	Fees and commission income		—		—		172
Shinhan-Csquared Mezzanine Fund 1	Fees and commission income		—		—		20
Shinhan Time BM sobujang Fund	Fees and commission income		—		—		110
KR Seocho Co., Ltd	Interest income		—		—		1,287

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


Related party	Account		2022		2023		2024
Investments in associates (continued)
Shinhan Market-Frontier Fund III		Fees and commission income	W	—		—		1,022
SH K REITs Infra Real Estate Investment Trust[FoFs])		Fees and commission income		—		25		50
KB Distribution Private Real Estate 3-1		Interest income		—		—		103
”		Provision for credit loss		—		—		(4	)
Capstone REITs No.26		Interest income		—		—		589
”		Provision for credit loss		—		—		(21	)
Wave Technology		Fees and commission expense		—		—		(300	)
Key management personnel and their immediate relatives
		Interest income		205		242		133

			W	27,443		26,270		98,783

(*1)

Excluded from the associates due to disposal and liquidation for the year ended December 31, 2022.

(*2)

It is incorporated into the consolidation target as the Group held control due to increased equity ratio and BNP Paribas Cardif General Insurance, Ltd. has changed its name to Shinhan EZ General Insurance Co., Ltd for the year ended December 31, 2022. The transaction amount for the years ended December 31, 2021 and 2022 is the amount before being incorporated into the consolidation target.

(*3)

Excluded from associates due to the loss of significant influence through disposal, liquidation, or other means for the year ended December 31, 2023.

(*4)

It is incorporated into the consolidation target as the Group held control due to increased equity ratio for the year ended December 31, 2023.

(*5)

Excluded from the associates due to disposal and liquidation for the year ended December 31, 2024.

(*6)

The transaction details between the associate and its subsidiary are included for the years ended December 31, 2023 and 2024.

(*7)

Douzon3 TECHFIN Co., Ltd. has changed its name to TECHFIN RATINGS Co., Ltd..

(c)

Key management personnel compensation

Key management personnel compensation for the years ended December 31, 2022, 2023 and 2024 are as follows:


	2022		2023		2024
Short-term employee benefits	W	27,591		25,007		21,963
Severance benefits		817		809		824
Share-based payment transactions (*)		9,777		11,862		12,478

	W	38,185		37,678		35,265

(*)

The expenses of share-based payment transactions are the renumeration expenses during the vesting period.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)

(d)

The guarantees and purchase agreement provided between the related parties as of December 31, 2023 and 2024 are as follows:

Amount of guarantees

Guarantor

Guaranteed Parties

2023

2024

Account

Shinhan Bank

BNP Paribas Cardif Life Insurance

10,000

—

Unused loan limit

”

SBC PFV Co., Ltd.

—

65,400

Unused loan limit

”

Key Management Personnel

3,241

2,801

Unused loan limit

Shinhan Card

BNP Paribas Cardif Life Insurance

895

846

Unused credit line

The Group

Structured entities

326,830

204,035

Purchase agreement

”

—

31,440

Derivative agreement

340,966

304,522

(e)

Details of collaterals provided by the related parties as of December 31, 2023 and 2024 are as follows:


			Amount of assets pledged
Provided to	Provided by	Pledged assets	2023		2024
Shinhan Bank	BNP Paribas Cardif Life Insurance	Government bonds	W	2,400		—
	Logisvalley Shinhan REIT Co.,Ltd.	Collateral trust		39,600		39,600
	Nomura- Rifa Private Real Estate Investment Trust 31	Collateral trust		—		16,800
	SBC PFV Co., Ltd.	Collateral trust		—		960,000
	Key Management Personnel	Properties		4,417		6,799
	”	Deposits and etc.		1,127		1,466
	”	Guarantee		1,308		2,132

				6,852		10,397

			W	48,852		1,026,797

(f)

Details of significant loan transactions with related parties as of December 31, 2023 and 2024 are as follows:


		2023
Classification	Company	Beginning		Execution		Collection			Others (*)			Ending
Investments in associates	Nomura-Rifa Private Real Estate Investment Trust No.19	W	11,880		—		—			(351	)		11,529
	Goduck Gangil1 PFV Co., Ltd.		6,825		—		(6,825	)		—			—
	Goduck Gangil10 PFV Co., Ltd.		3,100		—		(2,000	)		—			1,100
	Logisvalley Shinhan REIT Co.,Ltd.		43,000		33,000		(43,000	)		—			33,000
Key Management Personnel			6,563		3,154		(4,712	)		—			5,005

	Total	W	71,368		36,154		(56,537	)		(351	)		50,634

(*)	The effect on changes in allowance for credit loss is included.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

49.	Related parties (continued)


		2024
Classification	Company	Beginning		Execution		Collection			Others (*1)			Ending
Investments in associates	Nomura-Rifa Private Real Estate Investment Trust No.19	W	11,529		—		(300	)		471			11,700
	Shinhan Global Active REIT Co.Ltd. (*2)		—		165,400		(125,700	)		(39,700	)		—
	SBC PFV Co., Ltd.		—		1,169,700		(185,100	)		—			984,600
	Goduck Gangil10 PFV Co., Ltd.		1,100		—		(1,100	)		—			—
	Logisvalley Shinhan REIT Co.,Ltd.		33,000		34,175		(34,175	)		—			33,000
	CASCADETECH INC		—		66		(66	)		—			—
	Nomura-Rifa Private Real Estate Investment Trust No.31.		—		28,000		(14,000	)		—			14,000
	Pacific Private Placement Real Estate Fund No.40		—		14,000		—			—			14,000
	KR Seocho Co., Ltd		—		11,871		(7,000	)		7,000			11,871
	SONGPA BIZ CLUSTER PFV CO LTD		—		22,424		—			—			22,424
	KB Distribution Private Real Estate 3-1		—		2,000		—			—			2,000
	Capstone REITs No.26		—		20,000		—			—			20,000
	EDNCENTRAL Co.,Ltd		—		25,400		—			—			25,400
Key Management Personnel			5,005		1,493		(3,095	)		—			3,403

	Total	W	50,634		1,494,529		(370,536	)		(32,229	)		1,142,398

(*1)	The effect on changes in allowance for credit loss is included.

(*2)	It was excluded from associates due to the loss of significant influence during the year ended December 31, 2024, and the year-end balance has been reclassified under ‘Others’

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

50.	Interests in unconsolidated structured entities

(a)

The nature and extent of interests in unconsolidated structured entities

The Group involved in assets-backed securitization, structured financing, beneficiary certificates (primarily investment funds) and other structured entities and characteristics of these structured entities are as follows:


		Description
Assets-backed securitization		Securitization vehicles are established to buy assets from originators and issue asset-backed securities in order to facilitate the originators’ funding activities and enhance their financial soundness. The Group is involved in the securitization vehicles by purchasing (or committing to purchase) the asset-backed securities issued and/or providing other forms of credit enhancement. The Group does not consolidate a securitization vehicle if (i) the Group is unable to make or approve decisions as to the modification of the terms and conditions of the securities issued by such vehicle or disposal of such vehicles’ assets, (ii) (even if the Group is so able) if the Group does not have the exclusive or primary power to do so, or (iii) if the Group does not have exposure, or right, to a significant amount of variable returns from such entity due to the purchase (or commitment to purchase) of asset-backed securities so issued or subordinated obligations or by providing other forms of credit support.

Structured financing		Structured entities for project financing are established to raise funds and invest in a specific project such as M&A (mergers and acquisitions), BTL (build-transfer-lease), shipping finance, etc. The Group is involved in the structured entities by originating loans, investing in equity, or providing credit enhancement.

Investment fund		Investment fund means an investment trust, a PEF (private equity fund) or a partnership which invests in a group of assets such as stocks or bonds by issuing a type of beneficiary certificates to raise funds from the general public, and distributes its income and capital gains to their investors. The Group manages assets by investing in shares of investment fund or playing a role of an operator or a GP (general partner) of investment fund, on behalf of other investors.

The size of unconsolidated structured entities as of December 31, 2023 and 2024 are as follows:


	2023		2024
Total assets:
Asset-backed securitization	W	214,750,119		193,570,970
Structured financing		427,272,034		506,473,200
Investment fund		364,272,967		508,704,815

	W	1,006,295,120		1,208,748,985

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

50.	Interests in unconsolidated structured entities (continued)

(b)

Nature of risks

i) The carrying amounts of the assets and liabilities relating to its interests in unconsolidated structured entities as of December 31, 2023 and 2024 are as follows:


	2023
	Assets-backed securitization		Structured financing		Investment fund		Total
Assets under consolidated financial statements:
Loans measured at fair value through profit or loss	W	9,598		309,635		123,282		442,515
Loan at amortized cost		1,061,060		16,604,162		227,185		17,892,407
Securities at fair value through profit or loss		4,366,192		129,795		13,304,176		17,800,163
Derivate assets		674		—		—		674
Securities at fair value through other comprehensive income		4,041,459		183,517		3,315		4,228,291
Securities at amortized cost		4,806,904		—		65		4,806,969
Other assets		4,636		79,822		11,935		96,393

	W	14,290,523		17,306,931		13,669,958		45,267,412

Liabilities under consolidated financial statements:
Derivate liabilities	W	9,939		315		—		10,254
Other liabilities		301		1,628		—		1,929

	W	10,240		1,943		—		12,183


	2024
	Assets-backed securitization		Structured financing		Investment fund		Total
Assets under consolidated financial statements:
Loans measured at fair value through profit or loss	W	11,669		600,796		—		612,465
Loan at amortized cost		2,326,196		18,660,200		93,296		21,079,692
Securities at fair value through profit or loss		4,233,165		255,936		14,902,327		19,391,428
Derivate assets		16,012		—		—		16,012
Securities at fair value through other comprehensive income		4,124,742		176,273		—		4,301,015
Securities at amortized cost		4,879,484		—		93		4,879,577
Other assets		13,700		73,981		28,076		115,757

	W	15,604,968		19,767,186		15,023,792		50,395,946

Liabilities under consolidated financial statements:
Derivate liabilities	W	3,130		220		—		3,350
Other liabilities		510		4,295		3		4,808

	W	3,640		4,515		3		8,158

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

50.	Interests in unconsolidated structured entities (continued)

ii) The maximum risk exposure of the Group relating to its interests in unconsolidated structured entities as of December 31, 2023 and 2024 are as follows:


	2023
	Assets-backed securitization		Structured financing		Investment fund		Total
Assets held	W	14,290,523		17,306,931		13,669,958		45,267,412
ABS and ABCP purchase agreements		1,029,819		10,462		2,134,239		3,174,520
Loan commitments		353,790		913,252		—		1,267,042
Others		—		429,549		—		429,549

	W	15,674,132		18,660,194		15,804,197		50,138,523


	2024
	Assets-backed securitization		Structured financing		Investment fund		Total
Assets held	W	15,604,968		19,767,186		15,023,792		50,395,946
ABS and ABCP purchase agreements		1,125,400		224,184		2,246,239		3,595,823
Loan commitments		327,367		916,236		41,656		1,285,259
Guarantees		111,150		8,900		—		120,050
Others		—		383,071		—		383,071

	W	17,168,885		21,299,577		17,311,687		55,780,149

51.	Subsequent events

To enhance the shareholders’ value, the Company made a decision on the acquisition and retirement of treasury stock amounted to

500 billion based on the resolution of the board of directors on February 6, 2025.

52.	Adoption of IFRS 17 ‘Insurance Contracts’

The Group begins to apply IFRS 17

‘Insurance Contracts’

on accounting periods beginning on January 1, 2023. The prior year’s financial statements were retrospectively restated in accordance with the transition requirement of this Standard. This Standard replaces IFRS 4

‘Insurance Contracts’

. IFRS 17 provides new or revised requirements relating to recognition, measurement, presentation and disclosure principles of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features. The Standard significantly changed the insurer’s accounting by requiring groups of insurance contracts to be measured at current estimates of future cash flows expected to occur in the performance of the contract and at risk adjustments and contractual service margins for separate

non-financial

risks.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

52.	Adoption of IFRS 17 ‘Insurance Contracts’ (continued)

The Group applied a retrospective application as described below in accordance with IFRS 17 to insurance contracts, to the extent practicable, from the beginning date of the annual reporting period (the transition date) before its initial application date commences. The Group applied either the modified retrospective approach or the fair value approach to the insurance contracts impracticable to be applied with 1) below.

To identify, recognize and measure each group of insurance contracts issued as if this Standard had always applied;

1-1)

To identify, recognize and measure any assets for insurance acquisition cash flows as if this Standard had always applied (except that an entity is not required to apply the recoverability assessment before the transition date);

To derecognize any existing balances that would not exist had this Standard always applied; and

To recognize all net differences arising from the initial application of this Standard as an adjustment to the retained earnings (or, if appropriate, other components of equity) at the date of initial application, without adjusting goodwill recognized from the past business combinations.

In addition, the Group changed the classification and measurement of financial instruments related to the insurance business to manage the volatility of equity arising from the market value of insurance contract liabilities according to IFRS 17. For the financial instruments, their classification and measurement changed in accordance with the transition requirement of IFRS 17, the Group prepared the statement of financial position at the date of initial application of IFRS 17 by adjusting the classification and measurement of financial assets removed between the transition date of IFRS 17 and the initial application date in order to present comparative information as if IFRS 9 had been applied to the financial instruments.

Separate account assets and liabilities from the statements of financial position and revenues or expenses in separate accounts from the statements of comprehensive income, which had been presented as one line item in accordance with the Enforcement Rules of the Insurance Business Act under IFRS 4, are combined with the Group’s general account and presented as related assets, liabilities, incomes, and expenses under IFRS 17 with the elimination of intra-group transactions between the general account and the separate account.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

52.	Adoption of IFRS 17 ‘Insurance Contracts’ (continued)

(a)

Significant effects in the financial statement at the transition date, January 1, 2022 under IFRS 17 are as follows:

Significant effects in the financial position at the transition date, January 1, 2022 under IFRS 17 are as follows:


	Amount (A) (*1)			Amount (B) (*2)		Increase (B-A)
Assets:			Assets:
Cash and due from banks at amortized cost	W	28,453,404	Cash and due from banks at amortized cost	W	29,049,341
Financial assets at fair value through profit or loss		62,403,759	Financial assets at fair value through profit or loss		68,161,348
Securities at fair value through other comprehensive income		64,838,323	Securities at fair value through other comprehensive income		90,893,467
Securities at amortized cost		49,930,076	Securities at amortized cost		26,164,942
Loans at amortized cost		389,137,156	Loans at amortized cost		384,810,774
Other assets (*3)		53,389,467	Other assets		42,784,650

	W	648,152,185		W	641,864,522	W	(6,287,663	)

Liabilities:			Liabilities:
Deposits	W	364,896,675	Deposits	W	364,874,652
Borrowing		43,167,065	Borrowing		43,167,065
Debt securities issued		80,149,362	Debt securities issued		80,149,362
Insurance contract liabilities		54,333,498	Insurance contract liabilities		53,774,915
			Reinsurance contract liabilities		281,763
			Investment contract liabilities		2,953,698
Other liabilities (*3)		56,067,163	Other liabilities		46,447,117

	W	598,613,763		W	591,648,572	W	(6,965,191	)

Equity	W	49,538,422	Equity	W	50,215,950	W	677,528

(*1)

Prepared in accordance with IFRS 9 ‘financial instruments’, IFRS 4 ‘Insurance Contracts’, and Enforcement Rules of the Insurance Business Act. (Application of the overlay approach under IFRS 4 to financial assets related to insurance contracts)

(*2)

Prepared in accordance with IFRS 9

‘financial instruments’

and IFRS 17

‘Insurance Contracts’

(changed business model is applied to financial assets related to insurance contracts under IFRS 17)

(*3)

Other assets and other liabilities under IFRS 4 include separate account assets amounted to

9,501,135 million and separate account liabilities amounted to

9,834,894 million, respectively.

F-32

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

52.	Adoption of IFRS 17 ‘Insurance Contracts’ (continued)

ii)

Classification of financial assets (derivatives excluded) on January 1, 2022 as the transition date in accordance with IFRS 17 is as follows:


	January 1, 2022
	Classification	Transition date (Jan. 1, 2022) under IFRS 4		Separate account (*1)		Policy loan excluded (*2)			Classifica- tion due to new business model			Transition date (Jan. 1, 2022) under IFRS 17
Cash and due from banks at amortized cost	Financial assets at amortized cost	W	28,453,404		595,937		—			—			29,049,341
Due from banks at fair value through profit or loss	Financial assets at fair value through profit or loss		34,262		—		—			—			34,262
Securities at fair value through profit or loss	Financial assets at fair value through profit or loss		60,686,153		6,121,716		—			(364,127	)		66,443,742
Loans at fair value through profit or loss	Financial assets at fair value through profit or loss		1,683,344		—		—			—			1,683,344
Securities at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income		64,838,323		2,035,462		—			24,019,681			90,893,466
Securities at amortized cost	Financial assets at amortized cost		49,930,076		—		—			(23,765,134	)		26,164,942
Loans at amortized cost	Financial assets at amortized cost		389,137,156		768,256		(5,094,638	)		—			384,810,774

(*1)	Consisted of the total of separate account and intercompany transactions that are eliminated.

(*2)	Policy loans, which used to be recognized as separate assets under IFRS 4 ‘Insurance Contracts’ and Enforcement Rules of the Insurance Business Act., are measured as part of insurance contracts in accordance with IFRS 17.

F-32

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

52.	Adoption of IFRS 17 ‘Insurance Contracts’ (continued)

(b)

Significant effects in the primary financial statements such as the financial position as of December 31, 2022 and comprehensive income statement for the period ended December 31, 2022 under IFRS 17 are as follows:

The statement of financial position as of December 31, 2022


	Amount under IFRS 4		Adjustment for IFRS 17			Amount under IFRS 17
Assets
Cash and due from banks at amortized cost	W	29,532,235		518,605			30,050,840
Financial assets at fair value through profit or loss		56,643,669		4,864,612			61,508,281
Securities at fair value through other comprehensive income		63,661,719		21,807,442			85,469,161
Securities at amortized cost		57,971,492		(24,600,294	)		33,371,198
Loans at amortized cost		412,291,511		(4,392,539	)		407,898,972
Reinsurance contract assets		—		88,772			88,772
Other assets		55,783,655		(9,737,649	)		46,046,006

		675,884,281		(11,451,051	)		664,433,230

Liabilities
Deposits		383,010,745		(22,451	)		382,988,294
Borrowings		49,279,175		—			49,279,175
Debt securities issued		77,288,783		—			77,288,783
Insurance contract liabilities		54,315,124		(8,410,351	)		45,904,773
Reinsurance contract liabilities		—		62,803			62,803
Investment contract liabilities		—		2,133,586			2,133,586
Other liabilities		60,860,032		(7,507,774	)		53,352,258

		624,753,859		(13,744,187	)		611,009,672

Equity	W	51,130,422		2,293,136			53,423,558

F-3

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

52.	Adoption of IFRS 17 ‘Insurance Contracts’ (continued)

ii)

The statement of comprehensive income for the period ended December 31, 2022


	Amount under IFRS 4			Adjustment for IFRS 17			Amount under IFRS 17
Operating income
Net interest income	W	12,463,681			(1,866,828	)		10,596,853
Net fees and commission income		2,525,566			(112,024	)		2,413,542
Net insurance income (expense)		(827,233	)		1,873,457			1,046,224
Net insurance finance income		—			807,964			807,964
Other operating expenses		(8,273,935	)		(685,084	)		(8,959,019	)

		5,888,079			17,485			5,905,564
Equity method income		121,697			—			121,697
Other non-operating income, net		339,475			(110	)		339,365
Profit before income taxes		6,349,251			17,375			6,366,626
Income tax expense		(1,617,088	)		5,976			(1,611,112	)
Profit for the period		4,732,163			23,351			4,755,514
Other comprehensive loss for the period, net of income tax		(2,598,032	)		1,592,257			(1,005,775	)

Total comprehensive income for the period	W	2,134,131			1,615,608			3,749,739

iii)

The statement of cash flows for the period ended December 31, 2022


	Amount under IFRS 4			Adjustment for IFRS 17			Amount under IFRS 17
Cash flows from operating activities	W	7,592,560			(404,120	)		7,188,440
Cash flows from investing activities		(11,031,456	)		335,529			(10,695,927	)
Cash flows from financing activities		3,394,715			—			3,394,715
Effect of exchange rate changes on cash and cash equivalents held		(57,837	)		(1,118	)		(58,955	)
Cash and cash equivalents at the beginning of the period		24,103,443			482,230			24,585,673

Cash and cash equivalents at the end of the period	W	24,001,425			412,521			24,413,946

F-3

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

Condensed Shinhan Financial Group (Parent Company only) Financial Statements

CONDENSED STATEMENTS OF FINANCIAL POSITION


	2023		2024
Assets
Deposits
Banking subsidiaries	W	22		12
Other		—		151,131
Receivables from subsidiaries:
Non-banking subsidiaries		4,051,004		3,837,298
Investment (at equity) in subsidiaries:
Banking subsidiaries		13,797,222		13,797,222
Non-banking subsidiaries		16,925,865		16,826,429
Financial assets at FVTPL		1,985,760		2,552,750
Property, equipment and intangible assets, net		15,331		12,997
Other assets
Banking subsidiaries		187,118		274,212
Non-banking subsidiaries		219,118		212,703
Other		108,115		7,549

Total assets	W	37,289,555		37,672,303

Liabilities and equity
Borrowings	W	223,722		19,914
Debt securities issued		10,389,276		10,731,336
Accrued expenses & other liabilities		577,416		572,878

Total liabilities	W	11,190,414		11,324,128

Equity		26,099,141		26,348,175

Total liabilities and equity	W	37,289,555		37,672,303

F-33

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

Condensed Shinhan Financial Group (Parent Company only) Financial Statements (continued)

CONDENSED STATEMENTS OF INCOME


	2022			2023			2024
Income
Dividends from banking subsidiaries	W	902,420			1,159,525			1,198,816
Dividends from non-banking subsidiaries		568,474			626,443			827,141
Interest income from banking subsidiaries		236			512			424
Interest income from non-banking subsidiaries		87,215			92,991			95,231
Other income		251,999			284,072			435,996

Total income		1,810,344			2,163,543			2,557,608

Expenses
Interest expense		(222,413	)		(286,642	)		(334,798	)
Other expense		(367,015	)		(177,484	)		(591,058	)

Total expenses		(589,428	)		(464,126	)		(925,856	)

Profit before income tax expense		1,220,916			1,699,417			1,631,752

Income tax expense (benefit)		(28,335	)		28,406			11,885

Profit for the year	W	1,249,251			1,671,011			1,619,867

F-3

Table of Contents

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(In millions of won)

December 31, 2023 and 2024

Condensed Shinhan Financial Group (Parent Company only) Financial Statements (continued)

CONDENSED STATEMENTS OF CASH FLOWS


	2022			2023			2024
Cash flows from operating activities
Profit for the period	W	1,249,251			1,671,011			1,619,867
Non-cash items included in profit for the period		(1,274,183	)		(1,653,331	)		(1,634,252	)
Changes in operating assets and liabilities		163,179			187,618			(338,522	)
Net interest paid		(127,247	)		(172,937	)		(228,642	)
Dividend received from subsidiaries		1,470,400			1,783,758			2,025,368
Income tax paid		(3,487	)		(640	)		792

Net cash provided by operating activities		1,477,913			1,815,479			1,444,611

Cash flows from investing activities
Net loan origination to non-banking subsidiaries		68,000			(11,277	)		435,696
Acquisition of investments in subsidiaries		(374,126	)		11			(100,000	)
Disposal of investments in subsidiaries		20,354			—			32,804
Other, net		(403,743	)		(303,582	)		(152,174	)

Net cash used in investing activities		(689,515	)		(314,848	)		216,326

Cash flows from financing activities
Issuance of hybrid bonds		997,120			897,646			797,867
Repayments of hybrid bonds		(135,000	)		(1,195,550	)		(200,000	)
Net changes in borrowings		20,000			201,713			(205,684	)
Issuance of debt securities issued		2,206,672			2,253,173			1,836,934
Repayments of debt securities issued		(2,036,000	)		(1,709,626	)		(1,770,000	)
Convertible preferred stock conversion cost		—			(75	)		—
Dividend paid		(1,540,871	)		(1,461,371	)		(1,267,146	)
Acquisition of treasury stock		(300,600	)		(486,919	)		(700,300	)
Payment for disposal of treasury stock		—			—			297
Costs for retirement of treasury stock		(60	)		(81	)		(102	)
Redemption of lease liabilities		(1,431	)		(1,708	)		(1,619	)

Net cash used in financing activities		(790,170	)		(1,502,798	)		(1,509,753	)

Effect of exchange rate changes on cash and cash equivalents held		(3	)		—			—

Net increase (decrease) in cash and cash equivalents		(1,775	)		(2,167	)		151,184

Cash and cash equivalents at beginning of year		3,961			2,186			19

Cash and cash equivalents at end of year	W	2,186			19			151,203

F-3


	As of December 31, 2024

	(In billions of Won)
Portion of Time deposits in excess of insurance limit:	W	132,784
Time deposits otherwise uninsured with a maturity of:
Maturing within three months	W	22,571
After three but within six months		10,295
After six but within 12 months		15,887
After 12 months		11,014

Total	W	59,767


	As of December 31, 2024
	0-3 Months			3-6 Months			6-12 Months			1-3 Years			Over 3 Years			Total

	(in millions of U.S. dollars, except percentages)
Interest-earning assets		31,052			8,259			3,768			6,512			6,201			55,793
Interest-bearing liabilities		34,482			7,085			6,109			8,393			7,438			63,507

Sensitivity gap		(3,430	)		1,175			(2,341	)		(1,881	)		(1,237	)		(7,714	)
Cumulative gap		(3,430	)		(2,255	)		(4,596	)		(6,477	)		(7,714	)		(7,714	)
% of total assets		(6.15	)%		(4.04	)%		(8.24	)%		(11.61	)%		(13.83	)%		(13.83	)%


	Duration as of December 31, 2024
	(In months)
Interest-earning assets		12.29
Interest-bearing liabilities		10.30
Gap		1.99


				Page
PART I
	ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS			3
	ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE			3
	ITEM 3.	KEY INFORMATION			3
		ITEM 3.A.	[Reserved]		3
		ITEM 3.B.	Capitalization and Indebtedness		3
		ITEM 3.C.	Reasons for the Offer and Use of Proceeds		3
		ITEM 3.D.	Risk Factors		3
	ITEM 4.	INFORMATION ON THE COMPANY			42
		ITEM 4.A.	History and Development of the Company		42
		ITEM 4.B.	Business Overview		46
		ITEM 4.C.	Organizational Structure		180
		ITEM 4.D.	Properties		181
	ITEM 4A.	UNRESOLVED STAFF COMMENTS			182
	ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS			182
		ITEM 5.A.	Operating Results		182
		ITEM 5.B.	Liquidity and Capital Resources		222
		ITEM 5.C.	Research and Development, Patents and Licenses, etc.		228
		ITEM 5.D.	Trend Information		228
		ITEM 5.E.	Critical Accounting Estimates		228
	ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			228
		ITEM 6.A.	Directors and Senior Management		228
		ITEM 6.B.	Compensation		231
		ITEM 6.C.	Board Practices		232
		ITEM 6.D.	Employees		234
		ITEM 6.E.	Share Ownership		235
		ITEM 6.F.	Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation		236
	ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS			236
		ITEM 7.A.	Major Shareholders		236
		ITEM 7.B.	Related Party Transactions		237
		ITEM 7.C.	Interests of Experts and Counsel		237
	ITEM 8.	FINANCIAL INFORMATION			237
		ITEM 8.A.	Consolidated Statements and Other Financial Information		237
		ITEM 8.B.	Significant Changes		242
	ITEM 9.	THE OFFER AND LISTING			242
		ITEM 9.A.	Offer and Listing Details		242
		ITEM 9.B.	Plan of Distribution		243
		ITEM 9.C.	Markets		243
		ITEM 9.D.	Selling Shareholders		250
		ITEM 9.E.	Dilution		250
		ITEM 9.F.	Expenses of the Issue		250
	ITEM 10.	ADDITIONAL INFORMATION			250
		ITEM 10.A.	Share Capital		250
		ITEM 10.B.	Memorandum and Articles of Incorporation		250
		ITEM 10.C.	Material Contracts		258
		ITEM 10.D.	Exchange Controls		258
		ITEM 10.E.	Taxation		259
		ITEM 10.F.	Dividends and Paying Agents		269


				Page
		ITEM 10.G.	Statements by Experts		269
		ITEM 10.H.	Documents on Display		269
		ITEM 10.I.	Subsidiary Information		269
		ITEM 10.J.	Annual Report to Security Holders		269
	ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			269
	ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			269
		ITEM 12.A.	Debt Securities		269
		ITEM 12.B.	Warrants and Rights		269
		ITEM 12.C.	Other Securities		269
		ITEM 12.D.	American Depositary Shares		270
PART II
	ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			272
	ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			272
	ITEM 15.	CONTROLS AND PROCEDURES			272
	ITEM 16.	[RESERVED]			273
	ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT			273
	ITEM 16B.	CODE OF ETHICS			273
	ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES			273
	ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES			274
	ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS			275
	ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT			275
	ITEM 16G.	CORPORATE GOVERNANCE			276
	ITEM 16H.	MINE SAFETY DISCLOSURE			281
	ITEM 16I.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS			281
	ITEM 16J.	INSIDER TRADING POLICIES			282
	ITEM 16K.	CYBERSECURITY			282
PART III
	ITEM 17.	FINANCIAL STATEMENTS			283
	ITEM 18.	FINANCIAL STATEMENTS			283
	ITEM 19.	EXHIBITS			283
INDEX OF EXHIBITS					284
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS					F-1


	Current				Past Due Up to 3 Months				Past Due 3-6 Months				Past Due More Than 6 Months				Total
As of December 31,	Amount		%		Amount		%		Amount		%		Amount		%		Amount

	(In billions of Won, except percentages)
2022	W	409,954		99.16	W	1,726		0.42	W	879		0.21	W	877		0.21	W	413,436
2023		412,710		98.89		2,420		0.58		1,093		0.26		1,123		0.27		417,346
2024		449,680		98.80		2,804		0.62		1,305		0.29		1,336		0.29		455,125


	Corporate Bond Rates⁽¹⁾		Treasury Bond Rates⁽²⁾		Certificate of Deposit Rates⁽³⁾		COFIX Balance- Based⁽⁴⁾		New COFIX Balance-Based⁽⁵⁾		COFIX New Borrowing-Based⁽⁶⁾
June 30, 2020		2.25		0.85		0.79		1.55		1.26		1.06
December 31, 2020		2.21		0.97		0.66		1.21		0.96		0.90
June 30, 2021		1.97		1.45		0.67		1.02		0.81		0.82
December 31, 2021		2.42		1.80		1.28		1.19		0.94		1.55
June 30, 2022		4.36		3.55		2.02		1.68		1.31		1.98
December 30, 2022		5.23		3.73		3.98		3.19		2.65		4.34
June 30, 2023		4.47		3.60		3.75		3.76		3.14		3.56
December 29, 2023		3.90		3.15		3.83		3.89		3.35		4.00
June 28, 2024		3.66		3.18		3.60		3.74		3.20		3.56
December 31, 2024		3.28		2.60		3.39		3.53		3.07		3.35


Item	Services	Fees	Paid by
1	Issuance of ADSs upon deposit of common shares (excluding issuances contemplated by items 3(b) and 5 below	Up to US$5.00 per 100 ADSs (or fraction thereof) issued	Person depositing common shares or person receiving ADSs

2	Delivery of deposited securities against surrender of ADSs	Up to US$5.00 per 100 ADSs (or fraction thereof) surrendered	Person surrendering ADSs for purpose of withdrawal of deposited securities or person to whom deposited securities are delivered

3	Distribution of (a) cash dividends or (b) ADSs pursuant to stock dividends	No fee, to the extent prohibited by the exchange on which the ADSs are listed. If the charging of such fee is not prohibited, the fees specified in item 4 below shall be payable	Person to whom distribution is made

4	Distribution of (a) cash proceeds (i.e., upon sale of rights and other entitlements) or (b) free shares in the form of ADSs (not constituting a stock dividend)	Up to US$2.00 per 100 ADSs (or fraction thereof) held	Person to whom distribution is made

5	Distribution of securities other than ADSs or rights to purchase additional ADSs (i.e., spinoff shares)	Up to US$5.00 per 100 ADSs (or fraction thereof) distributed	Person to whom distribution is made

6	Depositary Services	Unless prohibited by the exchange on which the ADSs are listed, up to US$2.00 per 100 ADSs (or fraction thereof) held as of the last day of each calendar year, except to the extent of any cash dividend fee(s) charged under paragraph (3)(a) above during the applicable calendar year	Person holding ADSs on last day of calendar year

7	Distribution of ADSs pursuant to exercise of rights to purchase additional ADSs	Up to US$2.00 per 100 ADSs (or fraction thereof) held	Person who exercises such rights


1.1		Articles of Incorporation, last amended as of March 26, 2025 (in English)†

2.1		Form of Common Stock Certificate (in English) †*

2.2		Form of Deposit Agreement to be entered into among Shinhan Financial Group, Citibank, N.A., as depositary, and all owners and holders from time to time of American depositary shares issued thereunder, including the form of American depositary receipt*

2.3		Long-term debt instruments of Shinhan Financial Group, Shinhan Bank and other consolidated subsidiaries for which financial statements are required to be filed are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. Shinhan Financial Group agrees to furnish the Commission on request a copy of any instrument defining the rights of holders of its long-term debt and that of any subsidiary for which consolidated or unconsolidated financial statements are required to be filed.*

4.1		Stock Purchase Agreement by and between Korea Deposit Insurance Corporation and Shinhan Financial Group dated July 9, 2003**

4.2		Investment Agreement by and between Shinhan Financial Group and Korea Deposit Insurance Corporation dated July 9, 2003*

4.3		Agreed Terms, dated June 22, 2003, by and among the President of Korea Deposit Insurance Corporation, CEO of Shinhan Financial Group, CEO of Chohung Bank, Chairman of the National Financial Industry Labor Union of Korea and the Head of the Chohung Bank Chapter of the National Financial Industry Labor Union*

4.4		Merger Agreement between Shinhan Bank and Chohung Bank (in English) † ***

4.5		Split-Merger Agreement between Shinhan Card and Chohung Bank (in English) † ***

4.6		Form of Share Purchase Agreement, dated January 17, 2007, by and between Shinhan Financial Group and the holders of the redeemable preferred shares and the redeemable convertible shares issued by Shinhan Financial Group as part of the funding for the acquisition of LG Card Co., Ltd. (in English) †****

4.7		LG Card Acquisition Agreement, dated 2006, between Korea Development Bank and 13 other financial institutions, on the one hand, and Shinhan Financial Group†*****

8.1		List of all subsidiaries of Shinhan Financial Group

11.1		Insider Trading Policy

12.1		Certifications of our Chief Executive Officer required by Rule 13a-14(a) of the Exchange Act

12.2		Certifications of our Chief Financial Officer required by Rule 13a-14(a) of the Exchange Act

13.1		Certifications of our Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of the United States Code (18 U.S.C. 1350)

13.2		Certifications of our Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of the United States Code (18 U.S.C. 1350)

97.1		Policy Relating to Recovery of Erroneously Awarded Compensation required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1******

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)


Shinhan Financial Group Co., Ltd.

By:		/s/ Jin Okdong
		Name: Jin Okdong
		Title: Chief Executive Officer


(In millions of won)	Note		December 31, 2023		December 31, 2024
Assets
Cash and due from banks at amortized cost		5, 9, 13, 20	W	34,629,251		40,525,712
Financial assets at fair value through profit or loss		5, 10, 20		71,216,564		72,146,845
Derivative assets		5, 11		4,711,421		10,279,257
Securities at fair value through other comprehensive income		5, 12, 20		90,311,979		93,805,369
Securities at amortized cost		5, 12, 20		35,686,487		33,315,999
Loans at amortized cost		5, 13, 20		411,739,562		449,295,238
Property and equipment, net		14, 19, 20		3,972,304		4,157,592
Intangible assets		15		6,217,946		6,120,133
Investments in associates		16		2,692,031		2,752,980
Current tax assets				30,590		54,658
Deferred tax assets		45		153,719		205,506
Investment property		17		257,806		327,696
Net defined benefit assets		26		114,378		155,697
Insurance contract assets		28		10,654		5,639
Reinsurance contract assets		28		88,353		184,754
Other assets		5, 13, 18, 20		29,925,844		26,401,598
Assets held for sale				36,444		29,583

Total assets			W	691,795,333		739,764,256

Liabilities
Deposits		5, 21	W	381,512,664		422,781,045
Financial liabilities at fair value through profit or loss		5, 22		1,868,977		954,899
Financial liabilities designated at fair value through profit or loss		5, 23		7,796,727		8,220,475
Derivative liabilities		5, 11		5,038,416		10,058,532
Borrowings		5, 24		56,901,352		49,920,373
Debt securities issued		5, 25		81,561,725		93,765,854
Net defined benefit liabilities		26		67,620		38,974
Provisions		27		1,369,666		1,308,896
Current tax liabilities				92,253		203,131
Deferred tax liabilities		45		542,595		423,821
Insurance contract liabilities		28		48,333,208		51,124,629
Reinsurance contract liabilities		28		93,240		98,063
Investment contract liabilities		5, 30		1,572,685		1,165,022
Other liabilities		5, 31		48,722,340		40,879,509

Total liabilities				635,473,468		680,943,223


(In millions of won, except earnings per share data)	Note		2022			2023			2024
Other comprehensive income for the year, net of income tax		32
Items that are or may be reclassified to profit or loss:
Gain (loss) on securities at fair value through other comprehensive income			W	(5,928,937	)		3,162,544			1,146,623
Equity in other comprehensive income (loss) of associates				(15,758	)		7,156			6,671
Foreign currency translation adjustments for foreign operations				14,732			(6,245	)		416,182
Net change in unrealized fair value of cash flow hedges				(70,264	)		61,280			38,514
Net finance income (expense) on insurance contract assets (liabilities)				4,705,903			(2,172,458	)		(2,334,235	)
Net finance income (expense) on reinsurance contract assets (liabilities)				34,045			(20,772	)		(1,523	)

				(1,260,279	)		1,031,505			(727,768	)
Items that will not be reclassified to profit or loss:
Remeasurements of the net defined benefit liabilities (assets)				251,991			(200,857	)		(62,143	)
Equity in other comprehensive loss of associates				(5	)		—			—
Valuation gain(loss) on securities at fair value through other comprehensive income				5,133			8,174			43,258
Gain (loss) on disposal of securities at fair value through other comprehensive income				2,134			(3,056	)		7,329
Changes in own credit risk on financial liabilities designated at fair value through profit of loss				(4,749	)		8,623			(6,341	)

				254,504			(187,116	)		(17,897	)

Total other comprehensive income (loss), net of income tax				(1,005,775	)		844,389			(745,665	)

Total comprehensive income for the year			W	3,749,739			5,322,389			3,812,505

Profit attributable to:
Equity holders of Shinhan Financial Group Co., Ltd.		32, 46	W	4,665,643			4,368,035			4,450,177
Non-controlling interests				89,871			109,965			107,993

			W	4,755,514			4,478,000			4,558,170

Total comprehensive income attributable to:
Equity holders of Shinhan Financial Group Co., Ltd.			W	3,660,798			5,208,629			3,702,863
Non-controlling interests				88,941			113,760			109,642

			W	3,749,739			5,322,389			3,812,505

Earnings per share:		32, 46
Basic and diluted earnings per share in won			W	8,498			8,048			8,441


(In millions of won)	Equity attributable to equity holders of Shinhan Financial Group Co., Ltd.
	Capital stock		Hybrid bonds			Capital surplus		Capital adjustments			Accumulated other compre- hensive income (loss)			Retained earnings			Sub-total			Non- controlling interests			Total
Balance at January 1, 2022	W	2,969,641		3,334,531			12,095,043		(664,429	)		(984,936	)		30,541,300			47,291,150			2,247,272			49,538,422
Adjustment on initial application of IFRS 17 (Note 52)		—		—			—		—			79,713			597,815			677,528			—			677,528
Balance (restated) at January 1, 2022		2,969,641		3,334,531			12,095,043		(664,429	)		(905,223	)		31,139,115			47,968,678			2,247,272			50,215,950
Profit for the year		—		—			—		—			—			4,665,643			4,665,643			89,871			4,755,514
Other comprehensive income (loss), net of income tax:
Loss on valuation and disposal of securities at fair value through other comprehensive income		—		—			—		—			(5,918,084	)		—			(5,918,084	)		(3,586	)		(5,921,670	)
Equity in other comprehensive income(loss) of associates		—		—			—		—			(15,763	)		—			(15,763	)		—			(15,763	)
Foreign currency translation adjustments for foreign operations		—		—			—		—			12,936			—			12,936			1,796			14,732
Net change in unrealized fair value of cash flow hedges		—		—			—		—			(70,264	)		—			(70,264	)		—			(70,264	)
Net finance income on insurance contract assets (liabilities)		—		—			—		—			4,705,903			—			4,705,903			—			4,705,903
Net finance income on reinsurance contract assets (liabilities)		—		—			—		—			34,045			—			34,045			—			34,045
Remeasurements of the net defined benefit liabilities (assets)		—		—			—		—			251,131			—			251,131			860			251,991
Changes in own credit risk on financial liabilities designated at fair value through profit or loss		—		—			—		—			(4,749	)		—			(4,749	)		—			(4,749	)

Total other comprehensive loss		—		—			—		—			(1,004,845	)		—			(1,004,845	)		(930	)		(1,005,775	)

Total comprehensive income (loss)		—		—			—		—			(1,004,845	)		4,665,643			3,660,798			88,941			3,749,739

Other changes in equity
Dividends		—		—			—		—			—			(747,705	)		(747,705	)		—			(747,705	)
Interim dividends		—		—			—		—			—			(637,598	)		(637,598	)		—			(637,598	)
Dividends to hybrid bonds		—		—			—		—			—			(156,277	)		(156,277	)		—			(156,277	)
Issuance of hybrid bonds (Note 32)		—		997,120			—		—			—			—			997,120			—			997,120
Repayment of hybrid bonds (Note 32)		—		(134,683	)		—		(317	)		—			—			(135,000	)		—			(135,000	)
Acquisition of treasury stock (Note 32)		—		—			—		(300,000	)		—			—			(300,000	)		—			(300,000	)
Retirement of treasury stock (Note 32)		—		—			—		300,000			—			(300,061	)		(61	)		—			(61	)
Change in other capital adjustments		—		—			—		(3,904	)		—			—			(3,904	)		—			(3,904	)
Change in other non-controlling interests		—		—			—		85,791			—			—			85,791			355,503			441,294

		—		862,437			—		81,570			—			(1,841,641	)		(897,634	)		355,503			(542,131	)

Reclassification of OCI to retained earnings		—		—			—		—			(682	)		682			—			—			—

Balance at December 31, 2022	W	2,969,641		4,196,968			12,095,043		(582,859	)		(1,910,750	)		33,963,799			50,731,842			2,691,716			53,423,558


	2023
Classification	12 months Expected credit loss		Life time expected credit loss				Total
Classification	12 months Expected credit loss		Not impaired		Impaired		Total
Guarantee	W	57,461,539		10,231,324		479,278		68,172,141
Deposits and Savings		2,680,530		356,489		7,391		3,044,410
Property and equipment		1,610,021		470,284		10,269		2,090,574
Real estate		141,472,617		20,751,067		389,560		162,613,244
Securities		2,106,426		286,855		251,272		2,644,553
Others		11,500		—		—		11,500

Total	W	205,342,633		32,096,019		1,137,770		238,576,422


	2024
Classification	12 months Expected credit loss		Life time expected credit loss				Total
Classification	12 months Expected credit loss		Not impaired		Impaired		Total
Guarantee	W	55,422,696		11,872,362		450,079		67,745,137
Deposits and Savings		2,508,238		401,970		4,971		2,915,179
Property and equipment		1,576,438		367,086		4,154		1,947,678
Real estate		170,210,822		26,682,978		528,200		197,422,000
Securities		1,846,531		155,761		—		2,002,292
Others		7,687		—		—		7,687

Total	W	231,572,412		39,480,157		987,404		272,039,973


	2023
Type of financial instrument	Valuation technique		Carrying value		Significant inputs
Assets
Financial asset at fair value through profit or loss
Debt securities		DCF, NAV, Option model (*)	W	40,282,764	Discount rate, interest rate, stock price and etc.

				40,282,764

Derivative assets
Trading		Option model (*), Implied forward interest rate, DCF		3,709,058	Discount rate, foreign exchange rate, volatility, stock price and commodity index, etc.
Hedging				252,221

				3,961,279

Securities at fair value through other comprehensive income
Debt securities		DCF, Option model (*)		49,525,922	Interest rate, discount rate, etc.

			W	93,769,965


	2023
	Favorable changes		Unfavorable changes
Financial assets:
Effects on profit or loss for the period (1), (2):
Financial asset at fair value through profit or loss	W	45,433		(42,214	)
Derivative assets		19,994		(20,386	)

Securities at fair value through other comprehensive income (*2)		44,286		(33,212	)

	W	109,713		(95,812	)

Financial liabilities:
Effects on profit or loss for the period (*1):
Financial liabilities designated at fair value through profit or loss	W	30,543		(29,790	)
Derivative liabilities		27,561		(27,525	)

	W	58,104		(57,315	)


	2023
	FVTPL		FVOCI		Amortized cost		Derivatives held for hedging		Total
Assets:
Cash and due from banks at amortized cost	W	—		—		34,629,251		—		34,629,251
Due from banks at fair value through profit or loss		30,743		—		—		—		30,743
Securities at fair value through profit or loss		69,427,259		—		—		—		69,427,259
Derivatives assets		4,459,200		—		—		252,221		4,711,421
Loans at fair value through profit or loss		1,758,562		—		—		—		1,758,562
Loans at amortized cost		—		—		411,739,562		—		411,739,562
Securities at fair value through other comprehensive income		—		90,311,979		—		—		90,311,979
Securities at amortized cost		—		—		35,686,487		—		35,686,487
Others		—		—		26,880,554		—		26,880,554

	W	75,675,764		90,311,979		508,935,854		252,221		675,175,818


	2023			2024
Cash	W	2,173,550			2,296,962

		2,173,550			2,296,962

Deposits denominated in Korean won:
Reserve deposits		10,909,697			11,594,266
Time deposits		1,450,123			2,198,645
Certificate of deposit		14,446			—
Other		3,042,525			3,365,689

		15,416,791			17,158,600

Deposits denominated in foreign currency:
Deposits		12,117,199			14,934,942
Time deposits		3,000,279			3,956,971
Other		1,942,571			2,199,579

		17,060,049			21,091,492

Allowance for credit losses		(21,139	)		(21,342	)

	W	34,629,251			40,525,712


	2023		2024		Related Regulations or Acts
Deposits denominated in Korean won:
Reserve deposits	W	10,909,697		11,594,266	Article 55 of the Bank of Korea Act
Other		1,633,297		1,978,415	Article 74 of the Capital Markets and Financial Investment Business Act, etc.

		12,542,994		13,572,681

Deposits denominated in foreign currency		7,148,169		11,046,189	Articles of the Bank of Korea Act, New York State Banking Act, derivatives related, etc.

	W	19,691,163		24,618,870


	2023		2024
Debt instruments:
Governments	W	6,392,302		8,983,699
Financial institutions		12,590,217		11,127,785
Corporations		10,949,245		12,579,941
Stocks with put option		651,045		691,684
Equity investment with put option		5,019,107		5,483,075
Beneficiary certificates		14,489,698		14,414,681
Commercial papers		8,631,502		9,270,928
CMA		3,473,984		1,613,961
Others (*)		3,274,992		2,840,070

		65,472,092		67,005,824
Equity instruments:
Stocks		3,732,637		2,954,653
Equity investment		8,093		6,680
Others		110,731		135,995

		3,851,461		3,097,328
Gold/silver deposits		103,706		128,297

	W	69,427,259		70,231,449

Other:
Loans at FVTPL	W	1,758,562		1,879,946
Due from banks at fair value		30,743		35,450

	W	71,216,564		72,146,845


	2023		2024
Foreign currency related:
Over the counter:
Currency forwards	W	142,779,721		167,805,176
Currency swaps		45,159,344		59,641,567
Currency options		1,265,326		2,182,530

		189,204,391		229,629,273
Exchange traded:
Currency futures		2,189,413		1,534,764

		191,393,804		231,164,037

Interest rates related:
Over the counter:
Interest rate forwards and swaps		41,950,711		57,169,341
Interest rate options		516,577		825,057

		42,467,288		57,994,398
Exchange traded:
Interest rate futures		3,943,763		4,875,687
Interest rate swaps (*)		94,186,140		142,194,805

		98,129,903		147,070,492

		140,597,191		205,064,890

Credit related:
Over the counter:
Credit swaps		4,178,441		5,041,093

Equity related:
Over the counter:
Equity swaps and forwards		4,100,836		5,975,657
Equity options		3,552,337		2,923,962

		7,653,173		8,899,619
Exchange traded:
Equity futures		2,764,186		1,600,342
Equity options		240,603		452,322

		3,004,789		2,052,664

		10,657,962		10,952,283

Commodity related:
Over the counter:
Commodity swaps and forwards		1,034,225		2,121,686
Commodity options		8,000		—

		1,042,225		2,121,686

Exchange traded:
Commodity futures and options		93,004		172,899

		1,135,229		2,294,585


	2023		2024
Hedge:
Currency forwards		2,142,233		4,345,149
Currency swaps		4,448,030		7,993,851
Interest rate forwards and swaps		12,469,580		13,219,417
Equity options		—		18,750

		19,059,843		25,577,167

	W	367,022,470		480,094,055


	2022
	Gains and losses on fair value hedges (hedged items)			Gains and losses on fair value hedges (hedging instruments)			Hedge ineffectiveness recognized in profit or loss (*2)
Fair value hedges:
Interest rate risk (*1)	W	697,330			(728,397	)		(31,067	)
Foreign exchange risk (*1)		20,748			(22,056	)		(1,308	)
Stock price volatility risk		(4,762	)		3,411			(1,351	)

	W	713,316			(747,042	)		(33,726	)


	2023
	Nominal amount		Carrying amount of asset (*)		Carrying amount of liability (*)		Changes in fair value in the period
Fair value hedges
Interest rate forward and swap	W	10,112,789		65,787		614,219		246,594
Currency forward		308,117		2,949		791		(327	)
Cash flow hedges
Interest rate swap		2,356,791		53,830		90,676		99,442
Currency swap		4,448,030		111,024		99,093		(21,649	)
Currency forward		1,150,734		12,593		30,925		2,170
Hedge of net investments in foreign operations
Currency forward		683,382		6,038		2,776		4,537
Borrowings		1,466,795		—		1,462,329		(4,767	)


	2023
	Carrying amount of assets (*)		Carrying amount of liabilities (*)		Assets of Cumulative fair value hedge adjustment		Liabilities of Cumulative fair value hedge adjustment			Changes of fair value in the year			Cash flow hedge reserve			Foreign currency translation reserves
Fair value hedges
Interest rate risk Borrowings and others	W	685,340		9,224,390		41,643		(579,315	)		(240,965	)		—			—
Foreign exchange risk Securities in foreign currency		544,706		—		—		—			1,313			—			—
Cash flow hedges
Interest rate risk Debentures in won and debentures in foreign currency		641,750		1,029,542		—		—			(11,068	)		26,648			—
Foreign exchange risk Debentures in foreign currency and loans in foreign currency		2,490,098		2,342,230		—		—			69,784			(17,812	)		—
Hedge of net investments in foreign operations
Foreign exchange risk Net assets in foreign operation		—		—		—		—			3,903			—			(36,931	)


	2023		2024
Securities at FVOCI:
Debt securities:
Government bonds	W	44,418,450		42,463,118
Financial institutions bonds		21,303,402		25,983,405
Corporate bonds and others		22,915,148		23,569,687

		88,637,000		92,016,210

Equity securities (*):
Stocks		1,527,182		1,594,019
Equity investments		2,153		4,367
Others		145,644		190,773

		1,674,979		1,789,159

		90,311,979		93,805,369

Securities at amortized cost:
Debt securities:
Government bonds		22,787,609		21,808,057
Financial institutions bonds		5,864,626		3,787,661
Corporate bonds and others		7,034,252		7,720,281

		35,686,487		33,315,999

	W	125,998,466		127,121,368


	2023			2024
Gain on disposal of securities at FVOCI	W	50,793			197,708
Loss on disposal of securities at FVOCI		(180,368	)		(137,448	)
Gain on disposal of securities at amortized cost (*)		358			—
Loss on disposal of securities at amortized cost (*)		(107	)		(23,155	)

	W	(129,324	)		37,105


	Fair value at the date of disposal				Cumulative net gain (loss) at the time of disposal
	2023		2024		2023			2024
Stocks	W	156,872		106,810		(4,152	)		9,429
Contingent convertible bonds		—		3,023		—			5


	2023
	Acquisition cost		Accumulated depreciation			Accumulated Impairment			Carrying amount
Land	W	2,043,119		—			—			2,043,119
Buildings		1,307,424		(508,171	)		(9,002	)		790,251
Other assets		2,410,101		(1,877,642	)		—			532,459
Right-of-use assets		1,378,027		(771,552	)		—			606,475

	W	7,138,671		(3,157,365	)		(9,002	)		3,972,304


	2024
Type of insurance	Insured assets and objects	Amount covered		Insurance company
Comprehensive insurance for financial institutions	Cash (including ATM)		31,500	Samsung Fire & Marine Insurance Co., Ltd., etc.
Comprehensive Property insurance	Property Total Risk, Machine Risk, General Liability Collateral		1,380,897	Samsung Fire & Marine Insurance Co., Ltd., etc.
Fire insurance	Business property and real estate		12,869	Meritz Fire & Marine Insurance Co., Ltd., etc.
Compensation liability insurance for officers	Officer liability of executives		50,000	Meritz Fire & Marine Insurance Co., Ltd., etc.
Burglary insurance	Cash and securities		60,000	Samsung Fire & Marine Insurance Co., Ltd., etc.
Others	Personal information liability insurance, etc.		56,639	Samsung Fire & Marine Insurance Co., Ltd., etc.


	Pre-tax discount rate before tax(%)	Perpetual growth rate(%)
Banking	9.5 ~ 15.2	0.0 ~ 2.0
Credit card	11.3 ~ 16.1	1.0 ~ 2.0
Securities	17.2	2.0
Others	10.4 ~ 12.6	1.0


	2024		2025		2026		2027		2028		2029
CPI growth (%)		2.4		2.1		1.5		1.8		1.6		1.6
Private consumption growth (%)		1.1		2.1		2.5		2.6		2.5		2.5
Real GDP growth (%)		2.6		2.7		2.2		2.5		2.7		2.7


	Key assumptions
Consumer price index growth rate (Bank of Korea) (%)		2.0
Risk-based confidence level (%)		99.5