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September 30, 2023

Employees of

The controlling company

The subsidiaries

Stock options granted:

Performance share

6-K 1 6-k-20231114.htm 6-K 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

For the Month of November 2023

SHINHAN FINANCIAL GROUP CO., LTD.

(Translation of registrant's name into English)

20, Sejong-daero 9-gil, Jung-gu, Seoul 04513, Korea
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will

file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F √ Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in

paper as permitted by Regulation S-T Rule 101(b)(1): _______

Indicate by check mark if the registrant is submitting the Form 6-K in

paper as permitted by Regulation S-T Rule 101(b)(7): _______

Indicate by check mark whether the registrant by furnishing the

information contained in this form is also thereby furnishing the

information to the Commission pursuant to Rule 12g3-2(b) under the

Securities Exchange Act of 1934.

Yes No___√___

If "Yes" is marked, indicate below the file number assigned to the

registrant in connection with Rule 12g3-2(b): 82- n/a .

EXHIBIT INDEX


Exhibit No.		Description
99.1		Shinhan Financial Group Review Report for the 3Q of 2023 (Consolidated)
99.2		Shinhan Financial Group Review Report for the 3Q of 2023 (Seperate)

Summary of 3Q 2023 Business Report

On November 14, 2023, Shinhan Financial Group (“SFG”) filed its 3Q 2023 Business Report (the “Business Report”) with the Financial Services Commission of Korea and the Korea Exchange pursuant to the Financial Investment Services and Capital Market Act of Korea. This is the summary of the Business Report translated into English. Non-material or previously disclosed information are omitted or abridged.

The financial information in this report has been prepared in accordance with Korean International Financial Reporting Standards.

Table of Contents

1. Introduction of the Group

2. Business Results

3. Other Financial Information

4. Independent Auditor

5. Corporate Governance

6. Major Shareholders and Market Price Information of our Common Shares and ADRs

7. Directors, Executive Officers and Employees

8. Related Party Transactions

9. Material Information after the reporting period Jan. 2010: Shinhan Data System became a direct subsidiary of SFG

1. Introduction of the Group

Company History (from Jan. 2010 through the reporting date)

▪

Aug. 2010: Shinhan Macquarie Financial Advisory was disaffiliated from SFG

▪

Feb. 2011: Shinhan BNP Paribas Asset Management (Hong Kong) Ltd. became an indirect subsidiary of SFG

▪

Nov. 2011: Shinhan Bank Vietnam was merged with Shinhan Vina Bank

▪

Dec. 2011: Shinhan Savings Bank became a direct subsidiary of SFG

▪

Nov. 2012: Shinhan AITAS Co., Ltd. joined SFG as a direct subsidiary

▪

Jan. 2013: Yehanbyoul Savings Bank joined SFG as a direct subsidiary

▪

Apr. 2013: Shinhan Savings Bank merged with Yehanbyoul Savings Bank. As a result of the integration, Shinhan Savings Bank has been liquidated and Yehanbyoul Savings Bank now exists under the name of “Shinhan Savings Bank” as an existing legal entity

▪

Nov. 2014: LLP MFO Shinhan Finance (Kazakhstan) became an indirect subsidiary of SFG

▪

Jul. 2015: Shinhan Securities Vietnam Co., Ltd became an indirect subsidiary of SFG

▪

Oct. 2015: Banco Shinhan de Mexico became an indirect subsidiary of SFG

▪

Nov. 2015: PT Bank Shinhan Indonesia became an indirect subsidiary of SFG

▪

Dec. 2015: PT. Shinhan Indo Finance became an indirect subsidiary of SFG

▪

Dec. 2015: PT Centratama Nasional Bank became an indirect subsidiary of SFG

▪

Jun. 2016: Shinhan Microfinance Co., Ltd. became an indirect subsidiary of SFG

▪

Jul. 2016: PT Shinhan Securities Indonesia became an indirect subsidiary of SFG

▪

Dec. 2016: Launched new integrated PT Bank Shinhan Indonesia

▪

Oct. 2017: Established Shinhan REITs(Real Estate Investment Trusts) Management Co.,Ltd. as SFG subsidiary

▪

Dec. 2017: Shinhan K REITs became an indirect subsidiary of SFG

▪

Apr. 2018: Shinhan Alpha REITs (formerly known as Shinhan K REITs) was disaffiliated from SFG’s indirect subsidiary due to a change in the largest shareholder

▪

May 2018: GX SHINHAN INTERVEST 1st PEF became an indirect subsidiary of SFG

▪

May 2018: Shinhan DS Vietnam became an indirect subsidiary of SFG

▪

Sep. 2018: Shinhan Alpha Yongsan REIT became an indirect subsidiary of SFG

▪

Oct. 2018: SFG entered into a share purchase agreement with Asia Trust Co., Ltd. for the 100% acquisition.

▪

Feb. 2019: Orange Life Insurance, Ltd. joined SFG as a direct subsidiary (acquisition from majority shareholders)

▪

May 2019: Asia Trust. Co., Ltd. joined SFG as a direct subsidiary

▪

Aug. 2019: Shinhan AI Co., Ltd. incorporated and joined as a direct subsidiary

▪

Jan. 2020: Orange Life Insurance, Ltd. became a wholly-owned subsidiary (acquisition of remaining interests by effecting a comprehensive stock exchange)

▪

Sep. 2020: Neoplux Co., Ltd. joined SFG as a direct subsidiary (acquisition from majority shareholder)

▪

Dec. 2020: SFG acquired the remaining interests in Neoplux by effecting a small-scale stock exchange and hence Neoplux has become our wholly owned subsidiary and was renamed to Shinhan Venture Investment.

▪

Jan. 2021: SFG acquired the remaining 35% interests in Shinhan BNPP Asset Management and it became a wholly-owned subsidiary. Shinhan BNPP Asset Management changed its legal name to Shinhan Asset Management.

▪

May. 2021: Shinhan Naotic No. 1 Private Equity Joint Venture joined SFG as a direct subsidiary as a sub-subsidiary.

▪

May. 2021: JS Shinhan Private Equity Limited joined SFG as a direct subsidiary as a sub-subsidiary.

▪

July. 2021: Integrated Shinhan Life Insurance Co., Ltd launched after the merger between Shinhan Life Insurance and Orange Life Insurance, wholly-owned subsidiaries of Shinhan Financial Group.

▪

Jan. 2022: Shinhan Asset Management Co., Ltd. and Shinhan Alternative Investment Management Inc. have merged to form a holding company named Shinhan Asset Management Co., Ltd.

▪

Jun. 2022: SFC acquired 94.54% of the total issued shares of Shinhan EZ General Insurance, Ltd (formerly, BNP Paribas Cardif Life Insurance Ltd.) after the Financial Services Commission approved the incorporation of subsidiary

▪

July 2022 Shinhan Credit Information Co., Ltd. (hereinafter “Shinhan Credit Information”) has been dissolved from the list of group’s direct subsidiaries and became an indirect subsidiary of SFG.

▪

Oct 2022 Shinhan Financial Investment Securities Co., Ltd. has changed its legal name to Shinhan Securities Co., Ltd.

▪

April 2023 AITAS Co., Ltd has changed its legal name to Shinhan Fund Partners.

Principal(Direct) Subsidiaries under Korean Law (as of September 30, 2023)


Subsidiaries		Ownership by SFG
Shinhan Bank		100.0%
Shinhan Card		100.0%
Shinhan Securities		100.0%
Shinhan Life Insurance 1)		100.0%
Shinhan Capital		100.0%
Shinhan Asset Management 2)		100.0%
Jeju Bank 3)		75.3%
Shinhan Savings Bank 4)		100.0%
Shinhan Asset Trust 5)		100.0%
Shinhan DS		100.0%
Shinhan Fund Partners 6)		99.8%
Shinhan REITs Management		100.0%
Shinhan AI		100.0%
Shinhan Venture Investrment 7)		100.0%
Shinhan EZ General Insurance 8)		85.1%
SHC Management		100.0%
1) Shinhan Life Insurance and Orange Life Insurance merged on July 1st, 2021 and became Shinhan Life Insurance Co., Ltd 2) On January 15, SFG acquired remaining 35% interests in Shinhan BNP Paribas Asset Management and it became our wholly-owned subsidiary (changed its legal name to Shinhan Asset Management) 3) Jeju Bank is currently listed on the Korea Exchange. 4) On January 30, 2013, Yehanbyoul Savings Bank joined SFG as a direct subsidiary. On April 1, 2013, Shinhan Savings Bank merged with Yehanbyoul Savings Bank, both of which were direct subsidiaries of Shinhan Financial Group. As a result of the integration of the two savings banks, the previous Shinhan Savings Bank has been liquidated and is thus no longer a subsidiary of Shinhan Financial Group and instead, Yehanbyoul Savings Bank now exists under the name of “Shinhan Savings Bank” as an existing legal entity constituting a member of Shinhan Financial Group. 5) The Group has acquired remaining shares of Asia Trust Co., Ltd during the period, and Asia Trust Co., Ltd became its wholly-owned subsidiary. Asia Trust Co., Ltd has changed its name to Shinhan Asset Trust Co., Ltd. 6) On November 30, 2012, Shinhan AITAS Co., Ltd. joined SFG as a direct subsidiary. Prior to November 30, 2012, Shinhan AITAS was an indirect subsidiary of SFG under Shinhan Bank, a wholly-owned bank subsidiary of SFG. On April 03, 2023, Shinhan AITAS changed its legal name to Shinhan Fund Partners. 7) On January 11, Neoplux changed its legal name to Shinhan Venture Investment. 8) On June 30, 2022, SFG acquired remaining 94.54% stake from BNP Paribas Cardiff and it became our wholly-owned subsidiary (changed its legal name to Shinhan EZ General Insurance) On November 03,2022, KT and Douzone Bizon acquired 9.9% and 5% shares of Shinhan EZ General Insurance, respectively.

Indirect subsidiaries held through direct subsidiaries (as of the reporting date)


Direct Subsidiaries	Indirect Subsidiaries	Ownership by the Parent
Shinhan Bank	Shinhan Bank America	100.0%
	Shinhan Bank Japan 5)	100.0%
	Shinhan Bank Europe	100.0%
	Shinhan Bank Cambodia	97.5%
	Shinhan Bank Kazakhstan	100.0%
	Shinhan Bank China Limited	100.0%
	Shinhan Bank Canada	100.0%
	Shinhan Bank Vietnam	100.0%
	Banco Shinhan de Mexico	99.99%
	PT Bank Shinhan Indonesia	99.0%
Shinhan Card	LLP MFO Shinhan Finance	100.0%
	PT. Shinhan Indo Finance	76.3%
	Shinhan Microfinance Co., Ltd.	100.0%
	Shinhan Vietnam Finance Co. Ltd.	100.0%
	Shinhan Credit Information Co.Ltd 6)	100.0%
Shinhan Securities	Shinhan Securities New York	100.0%
	Shinhan Securities Hong Kong	100.0%
	Shinhan Securities Vietnam Co., Ltd	100.0%
	PT Shinhan Sekuritas Indonesia	99.0%
	Shinhan Smilegate Global PEF1 4)	10.0%
	Shinhan SKS PEF	9.59%
	Shinhan Praxis K-Growth Global Private Equity Fund 2)	14.1%
Shinhan Life Insurance	Shinhan Financial Plus	100.0%
	Shinhan CubeOn Co., Ltd.	100.0%
	Shinhan Life Insurance Vietnam Limited Liability Company	100.0%
Shinhan Capital	Shinhan-We Venture Debt Fund	34.5%
Shinhan Asset Management	Shinhan Asset MGT HK, Limited	100.0%
	Shinhan Private Equity Fund 2nd 3)	66.3%
	JS Shinhan Private Equity Fund	0.06%
	Shinhan Nautic Private Equity Fund I	9.23%
Shinhan DS	Shinhan DS Vietnam Co. Limited	100.0%
Shinhan Venture Investment	Neoplux 3rd PEF	10.0%
1) Shinhan Financial Group and its subsidiaries currently own 18.9% in the aggregate. 2) Shinhan Financial Group and its subsidiaries currently own 96.74% in the aggregate. 3) Shinhan Financial Group and its subsidiaries currently own 14.21% in the aggregate. 4) SBJ Bank own 100% in the aggregate.

Credit Ratings (as of September 30, 2023)


Date	Types of Issuance	Credit Rating	Rating Company (Rating Range)
2022.01.18	Write-down Contingent Capital Securities	AA-	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.02.21	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.03.22	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.04.19	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.05.20	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.06.30	Commercial Paper	A1	Korea Rating(A1~D) / KIS Rating(A1~D) / NICE Investors Service(A1~D)
2022.06.30	Electronic Short-term Bond	A1	Korea Rating(A1~D) / KIS Rating(A1~D) / NICE Investors Service(A1~D)
2022.07.15	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.08.12	Write-down Contingent Capital Securities	AA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.10.17	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2022.11.08	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.01.16	Write-down Contingent Capital Securities	AA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.01.30	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.02.23	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.03.21	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.04.20	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.05.22	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.06.30	Write-down Contingent Capital Securities (Issue date: 13 July 2023)	AA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.06.30	Commercial Paper	A1	Korea Rating(A1~D) / KIS Rating(A1~D) / NICE Investors Service(A1~D)
2023.06.30	Electronic Short-term Bond	A1	Korea Rating(A1~D) / KIS Rating(A1~D) / NICE Investors Service(A1~D)
2023.07.19	Debentures	A	Standard & Poors (AAA~D)
2023.07.19	Debentures	A1	Moody’s(Aaa~C)
2023.08.25	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)
2023.09.19	Debentures	AAA	Korea Rating(AAA~D) / KIS Rating(AAA~D) / NICE Investors Service(AAA~D)

Number of Shares (as of September 30, 2023)


Types of Shares		Number of Shares
Number of shares authorized for issuance		1,000,000,000
Number of common shares issued (1)(2)(4)		515,504,189
Number of preferred shares issued (5)		-
Total outstanding shares		515,504,189
Treasury stocks (3)		6,352
Total outstanding shares with voting rights		515,497,837
(1) SFG issued 8,232,906 shares of common stock in relation to a comprehensive stock exchange between SFG and Orange Life Insurance on January 28, 2020. On June 1, 2020, SFG cancelled 5,035,658 treasury shares. On September 29, 2020, SFG had a paid-in capital increase and issued 39,130,000 common shares (third-party allocation). On December 30, 2020, SFG issued 72,719 shares of common stock in relation to a small-scale stock exchange between SFG and Neoplux. (2) For more information, please refer to SFG’s reports on Form 6-K furnished to the Securities and Exchange Commission on February 12, 2019 and April 30, 2019. (3) SFG acquired treasury stocks through the acquisition of fractional shares as a result of a stock exchange between SFG and Orange Life Insurance on January 28, 2020 and between SFG and Neoplux on December 30, 2020. (4) SFG canceled treasury shares of 3,665,423 on 25 April, 2022, 4,149,252 on 23 Nov, 2022, 3,676,470 on 38 March,2023, 4,243,381 on 16 June 2023 and 2,842,929 on 31 August,2023 after completion of share repurchase programs. Capital does not change due to the cancellation of acquired stocks within the range of dividend payable income. (5) 17,482,000 shares of Convertible Preferred Shares had automatically converted to common shares on 1 May 2023 upon the completion of conversion claim period.

Dividends


			(KRW million)
Items	3Q2023 (Jan. 1 ~ Sep. 30)	FY 2022 (Jan. 1 ~ Dec. 31)	FY 2021 (Jan. 1 ~ Dec. 31)
Par value per share (Won)	5,000	5,000	5,000
(Consolidated) Net Income	3,818,288	4,665,643	4,019,254
(Separate) Net Income	1,703,017	1,249,251	1,413,956
(Consolidated Earnings per share (Won)	7,057	8,498	7,308
Total Cash dividends	817,119	1,092,813	1,046,787
Total stock dividends	-	-	-
(Consolidated) Cash dividend payout ratio (%)	21.40	23.54	26.04
Cash dividend yield (%) – common shares	4.21	5.49	5.16
Cash dividend yield (%) – preferred shares	-	-	-
Stock dividend yield (%)	-	-	-
Cash dividend per share (Won)	1,575	2,065	1,960
Stock dividend per share	-	-	-
Note) Cash dividend payout ratio on a common share basis for 3Q 2023 is 21.40%.

2. Business Results

Operating Results


			(KRW billion)
	3Q2023 (Jan. 1 ~ Sep. 30)	FY 2022 (Jan. 1 ~ Dec. 31)		FY 2021 (Jan. 1 ~ Dec. 31)
Net interest income	8,031	10,597		10,769
Interest income	20,336	20,092		14,724
Interest expense	12,305	9,496		3,955
Net fees and commission income	1,965	2,418		2,675
Fees and commission income	3,088	3,884		4,140
Fees and commission expense	1,123	1,466		1,465
Net insurance income	533	1,849		-775
Insurance income	2,307	3,629		6,485
Insurance expense	1,774	1,780		7,260
Net gain(loss) on securities and FX trading/derivatives	1,857	-381		1,524
Provision for credit loss and impairment loss	-1,485	-1,318		-996
Net other operating income(expense)	-1,409	-1,616		-1,501
General and administrative expenses	4,296	5,644		5,743
Net operating income	5,196	5,906		5,952
Equity method income	96	122		159
Other non-operating income(expense), net	-116	339		-527
Profit before income taxes	5,176	6,367		5,584
Income tax expense	1,274	1,611		1,471
Consolidated net profit	3,902	4,756		4,113
Net profit attributable to equity holders of the Group	3,818	4,666		4,019
Net profit attributable to non-controlling interest	84	90		93
1) Some of the totals may not sum due to rounding. 2) Fiscal Year 2022 has been restated retrospectively to reflect newly applied K-IFRS no.1117 ‘Insurance Contract’ from 2023. Fiscal Year 2021 has not been restated.

Source and Use of Funds


Consolidated Basis (KRW billion, %)		3Q 2023				FY 2022				FY 2021
		Jan. 1 ~ Sep. 30				Jan. 1 ~ Dec. 31				Jan. 1 ~ Dec. 31
		Average Balance1)	Propor-tions (%)	Interest Paid	Interest Rate (%)	Average Balance1)	Propor-tions (%)	Interest Paid	Interest Rate (%)	Average Balance1)	Propor-tions (%)	Interest Paid	Interest Rate (%)
Source	Deposits	383,347.0	56.6	7,216.2	2.52	374,433.2	57.3	4,642.7	1.24	344,759.5	55.0	2,173.8	0.63
	Borrowings	38,258.7	5.7	952.9	3.33	34,678.8	5.3	669.3	1.93	29,458.2	4.7	247.8	0.84
	Debt Securities Issued	75,605.8	11.2	1,967.0	3.48	78,719.1	12.1	1,901.5	2.42	77,207.2	12.3	1,390.2	1.80
	Other Liabilities	124,269.5	18.3	-	-	113,498.0	17.4	-	-	127,835.4	20.3	-	-
	Total Liabilities	621,481.0	91.8	-	-	601,329.1	92.1	-	-	579,260.3	92.3	-	-
	Total Stockholder's Equity	55,416.3	8.2	-	-	51,819.8	7.9	-	-	48,104.0	7.7	-	-
	Total Liabilities & SE	676,897.3	100.0	-	-	653,148.9	100.0	-	-	627,364.3	100.0	-	-
Use	Cash & Due from Banks	34,924.4	5.2	427.2	1.64	29,660.1	4.5	282.9	0.95	30,080.8	4.8	87.1	0.29
	Loans	409,704.9	60.5	16,175.5	5.28	398,391.1	61.0	16,146.9	4.05	375,592.7	59.9	11,928.3	3.18
	Loans in KRW	316,604.4	46.8	11,931.6	5.04	308,197.4	47.2	11,760.0	3.82	293,331.7	46.8	8,503.5	2.90
	Loans in Foreign Currency	40,297.3	6.0	1,596.2	5.30	36,601.1	5.6	1,551.6	4.24	31,871.4	5.1	1,084.7	3.40
	Credit Card Accounts	27,934.3	4.1	1,600.3	7.66	27,229.1	4.2	1,979.3	7.27	24,642.6	3.9	1,890.8	7.67
	Others	24,868.9	3.6	1,047.4	5.63	26,363.5	4.0	856.0	3.25	25,747.0	4.1	449.3	1.75
	FVOCI Financial Assets	83,807.8	12.4	1,685.4	2.69	86,538.1	13.2	1,837.8	2.12	59,643.5	9.5	889.2	1.49
	AC Financial Assets	34,460.6	5.1	779.0	3.02	29,778.9	4.6	691.8	2.32	48,587.8	7.7	1,092.0	2.25
	Other Assets	113,999.6	16.8	-	-	108,780.7	16.7	-	-	113,459.5	18.1	-	-
	Total Assets	676,897.3	100.0	-	-	653,148.9	100.0	-	-	627,364.3	100.0	-	-

3. Other Financial Information

1) Capital Adequacy

Consolidated BIS Ratio (Shinhan Financial Group)


			(KRW billion)
	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Aggregate Amount of Equity Capital (A)	49,497.60	46,981.8	43,824.2
Risk-Weighted Assets (B)	317,263.90	291,542.6	270,692.2
BIS Ratio (A/B)	15.60%	16.11%	16.19%
Note: ▪ Calculated in accordance with Basel III ▪ The figures as of September 30, 2023 are preliminary

Capital Adequacy Ratios (Subsidiaries)


				(%)
Subsidiary	Capital Adequacy Ratio	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Shinhan Bank	BIS Capital Adequacy Ratio	18.2	17.8	18.2
Shinhan Card	Adjusted Equity Capital Ratio	19.1	18.6	18.9
Shinhan Securities	Net Capital Ratio	1,157.0	1,112.9	1,285.8
Shinhan Life Insurance	Risk Based Capital Ratio	213.8	267.7	284.7
Shinhan Capital	Adjusted Equity Capital Ratio	17.9	16.4	17.42
Shinhan Asset Management	Equity Capital (KRW billion)	224.4	213.3	202.5
Shinhan Asset Management	Minimum Capital Requirement (KRW billion)	47.8	46.8	31.1
Jeju Bank	BIS Capital Adequacy Ratio	17.0	16.4	17.2
Shinhan Savings Bank	BIS Capital Adequacy Ratio	16.1	14.4	12.4
Shinhan Asset Trust	Net Capital Ratio	996.5	1,107.7	1007.4
Shinhan EZ Gen. Insurance	Risk Based Capital Ratio	541.6	620.8	233.9
Notes : ▪ Basel III was applied in calculating Shinhan Bank and Jeju Bank’s BIS Capital Adequacy Ratio. ▪ Basel I was applied in calculating Shinhan Savings Bank’s BIS Capital Adequacy Ratio. ▪ Shinhan EZ General Insurance became SFG’s wholly-owned subsidiary on June 30, 2022. ▪ The figures as of September 30, 2023 are preliminary ▪ Shinhan Life and Shinhan EZ General Insurance upgraded its insurance risk measurement system in anticipation of a new regulatory solvency regime for insurance companies, the Korean-Insurance Capital Standard (the “K-ICS”). As of the date of submission of the 3Q report in 2023, the above payment capacity ratio is preliminary calculated, and the finally confirmed ratio will be amended and disclosed in Shinhan Life's 3Q 2023 business report and Shinhan EZ General Insurance's 3Q management disclosure.

▪

2) Liquidity

Won Liquidity Ratio


								(KRW billion, %)
Company	Sep. 30, 2023			Dec. 31, 2022			Dec. 31, 2021
Company	Won Assets	Won Liabilities	Won Liquidity Ratio(%)	Won Assets	Won Liabilities	Won Liquidity Ratio(%)	Won Assets		Won Liabilities	Won Liquidity Ratio(%)
Shinhan Financial Group	1,964.3	841.2	233.5	875.4	131.7	664.5	981.8		286.5	342.7
Shinhan Card	22,354.0	7,080.8	315.7	21,102.5	5,863.2	359.9	18,950.6		5,024.4	377.2
Shinhan Securities	21,527.5	17,652.2	122.0	19,341.7	13,867.7	139.5	18,798.1		13,153.0	142.9
Shinhan Life Insurance	16,719.5	1,669.1	1,001.7	21,822.0	1,616.3	1,350.1	2,292.4		1,336.6	171.5
Shinhan Capital	2,607.3	1,310.8	198.9	2,949.0	722.3	408.3	1,575.9		797.458	197.6
Shinhan Savings Bank	774.2	714.2	108.4	684.1	576.2	118.7	525.1		477.3	110.0
Shinhan Asset Trust	221.6	18.7	1,186.0	314.3	27.3	1151.2	243.0		42.5	571.7
Shinhan AI	25.0	0.7	37.9	30.3	0.8	36.9	29.5		1.5	19.3
Shinhan EZ General Insurance	106.9	1.4	7,876.0	83.5	1.7	4,918.8	19.3		1.0	1,977.5
Notes: ▪ Shinhan Financial Group: Due within 1 month ▪ Shinhan Life Insurance and Orange Life Insurance: (Won assets due within 3 months /3 months average of Claim payments )*100 ▪ Shinhan Card, Shinhan Securities, Shinhan Capital, and Shinhan Savings Bank : Due within 3 months ▪ Liquidity Ratio for Shinhan Bank and Jeju Bank have been replaced by Liquidity Coverage Ratio from Mar 31, 2015 to reflect the recent amendments to detailed regulations on supervision of banking business.

Liquidity Coverage Ratio


							(KRW billion, %)
Company	Sep. 30, 2023			Dec. 31, 2022			Dec. 31, 2021
Company	High Quality Liquid Assets	Net Cash Outflows	Liquidity Coverage Ratio(%)*	High Quality Liquid Assets	Net Cash Outflows	Liquidity Coverage Ratio(%)	High Quality Liquid Assets	Net Cash Outflows	Liquidity Coverage Ratio(%)
Shinhan Bank	84,126.2	82,497.1	102.0	82,709.0	83,705.6	98.8	68,922.6	78,444.5	87.9
Jeju Bank	972.6	797.7	122.6	915.4	823.3	111.8	803.9	748.9	108.4
Notes: ▪ Liquidity Coverage Ratios are the arithmetic mean of daily LCRs. ▪ Financial Services Commission temporarily eased the regulatory minimum from 100.0% to 85.0% by end of June, to 90.0% by end of September 2022, to 92.5% by end of June, 2023. After July 2023, the ratio will be gradually increased and normalized from the first quarter of 2024.

Foreign Currency (FC) Liquidity Ratio


							(USD millions, %)
Company	Sep. 30, 2023			Dec. 31, 2022			Dec. 31, 2021
Company	FC Assets	FC Liabilities	FC Liquidity Ratio(%)	FC Assets	FC Liabilities	FC Liquidity Ratio(%)	FC Assets	FC Liabilities	FC Liquidity Ratio(%)
Shinhan Financial Group	28.6	-	NA	65.0	9.9	655.7	94.9	9.9	958.0
Shinhan Securities	10,423.8	8,879.3	117.4	6,985.2	6,355.4	109.9	7,226.4	6,980.2	103.5
Shinhan Capital	56.0	1.2	4,859.2	79.6	0.4	18,859.5	96.7	0.4	23,033.1
Jeju Bank	12.9	3.2	408.2	13.8	14.3	96.9	27.6	25.5	108.0
Notes : ▪ Foreign currency liquidity ratios are computed with assets and liabilities due within 3 months. ▪ Shinhan Bank’s foreign currency liquidity ratio reflected securitization weight with the guidelines issued by the FSS. ▪ Shinhan Bank’s foreign currency liquidity ratio has been replaced by Foreign Liquidity Coverage Ratio.

Foreign Currency (FC) Liquidity Coverage Ratio


			(USD millions, %)
Company	2023 3Q	2022 4Q	2021 4Q
Company	Jan. 1 ~ Mar. 31	Jan. 1 ~ Dec. 31	Jan. 1 ~ Dec. 31
Shinhan Bank	144.1	141.1	112.6

Notes :

▪

Under the guidelines issued by the FSS, Shinhan Bank is required to hold a minimum requirement of foreign exchange debt in high-quality liquidity assets to withstand a 30-day net cash outflow in systemic risks.
The minimum requirement of the foreign currency liquidity coverage ratio was set at 60% in 2017, 70% in 2018 and was increased gradually to 80% in 2019.

▪

Financial Services Commission temporarily eased the regulatory minimum from 100.0% to 85.0% by end of June, to 90.0% by end of September 2022, to 92.5% by end of June, 2023. After July 2023, the ratio will be gradually increased and normalized from the first quarter of 2024.

▪

Foreign Currency Liquidity Coverage Ratio is calculated by daily average.

3) Asset Quality

SFG Consolidated Basis


(KRW billion)
	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Total Loans	415,072.5	412,421.1	393,049.4
Substandard & Below	2,620.0	2,122.9	1,741.0
Substandard & Below Ratio	0.63%	0.51%	0.44%
Non-Performing Loans	2,232.4	1,800.8	1,363.9
NPL Ratio	0.54%	0.44%	0.35%
Substandard & Below Coverage Ratio	159.70%	176.99%	182.50%
Loan Loss Allowance	4,184.2	3,757.4	3,177.3
Substandard & Below Loans	2,620.0	2,122.9	1,741.0

Separate Basis


(%)	Sep. 30 2023			Dec. 31 2022			Dec. 31 2021
(%)	Substandard & Below Ratio	NPL Ratio	Substandard & Below Coverage Ratio	Substandard & Below Ratio	NPL Ratio	Substandard & Below Coverage Ratio	Substandard & Below Ratio	NPL Ratio	Substandard & Below Coverage Ratio 1)
Shinhan Financial Group	-	-	-	-	-	-	-	-	-
Shinhan Bank	0.28	0.22	196	0.25	0.20	202	0.27	0.21	163
Shinhan Card	1.24	0.71	253	0.92	0.43	315	0.88	0.36	314
Shinhan Securites	11.17	11.17	60	10.16	10.16	57	4.83	4.83	98
Shinhan Life Insurance	0.19	0.18	456	0.06	0.06	357	0.07	0.07	286
Shinhan Capital	1.54	1.10	125	0.93	0.72	118	0.42	0.38	165
Jeju Bank	0.98	0.85	93	0.55	0.46	128	0.51	0.43	95
Shinhan Savings Bank	3.88	8.20	100	2.45	4.27	143	2.13	2.32	108
Shinhan Asset Trust	34.06	34.06	29	23.07	23.07	84	85.37	85.37	59

4) Debt to Equity Ratios

Shinhan Financial Group (Separate Basis)


(KRW billion)
	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Debt	11,781.10	10,779.8	10,410.5
Equity	26,549.40	26,676.5	26,405.4
Debt to Equity Ratio	44.37%	40.41%	39.43%

Twenty Largest Exposures by Borrower


(KRW billion)
As of Jun. 30, 2023 Consolidated basis	Loans in Won	Loans in Foreign Currency	Securities	Guarantees and Acceptances	Others	Total Exposures
Woori Bank	1,293.8	40.3	432.6	-	-	1,766.8
LG Display	388.2	833.8	186.2	350.2	-	1,758.4
Nong Hyup Bank	560.8	11.2	995.6	63.4	-	1,631.0
KEB Hana Bank	719.7	64.3	474.2	33.3	-	1,291.4
KB Bank	692.2	102.1	372.6	17.0	-	1,183.9
S-Oil	410.5	632.4	110.1	16.0	-	1,169.1
Samsung Heavy Industries Co.,Ltd	0.0	20.2	-	1,132.7	-	1,152.9
HD Hyundai Heavy Industries Co.,Ltd	72.0	47.2	33.7	994.7	-	1,147.6
National Agriculture Cooperative Federation	67.5	-	1,059.2	-	-	1,126.7
SK Hynix	500.0	201.7	309.2	7.7	-	1,018.6
KB Card	-	33.9	951.4	-	-	985.3
Mirae Asset Management	350.2	33.6	572.0	-	-	955.8
Korea Electric Power Corporation	0.4	-	833.5	99.2	-	933.0
Lotte Hotel	100.8	367.7	72.1	367.0	-	907.7
KT	0.7	-	774.9	45.3	-	820.8
Hyundai Steel	313.0	273.8	200.7	21.4	0.0	808.9
IBK Asset Management	-	-	774.7	-	-	774.7
Woori Card	-	-	737.1	33.9	-	771.0
Hyundai Card	30.2	62.8	599.8	62.6	-	755.4
Hana Card	-	-	738.9	-	-	738.9


Total	5,500.1	2,725.0	10,228.5	3,244.2	0.0	21,697.7
Note) Some of the totals may not sum due to rounding

Exposure to ten Main Debtor Groups


(KRW billion)
As of Jun. 30, 2023 Consolidated basis	Loans in Won	Loans in Foreign Currency	Securities	Guarantees and Acceptances	Others	Total Exposures
SK	1,355.4	883.7	2,107.7	537.4	0.0	4,884.1
Hyundai Motor Company	942.2	1,668.5	1,701.7	569.2	0.2	4,881.8
Samsung	303.8	1,369.3	1,228.7	1,938.3	0.0	4,840.1
Lotte	964.9	899.6	1,374.0	874.2	0.4	4,113.1
LG	860.1	1,012.6	967.2	535.0	0.0	3,374.7
Hyundai Heavy Industries	336.4	161.6	224.0	2,188.3	-	2,910.2
Hanwha	468.3	429.3	924.2	759.5	0.0	2,581.3
LS	282.9	878.3	203.1	823.5	0.3	2,188.2
Hyosung	261.6	770.4	14.6	250.7	0.0	1,297.3
KT	79.4	129.8	845.0	204.9	-	1,259.0
Total	5,855.1	8,203.0	9,590.0	8,680.9	1.0	32,329.9
Note) Some of the totals may not sum due to rounding

Top Twenty Non-Performing Loans


(KRW billion)
Borrower	Industry	Gross Principal Outstanding	Substandard & Below	Allowance for Loan Losses
A	Other financial service activities n.e.c.	149.9	149.9	48.2
B	Other financial service activities n.e.c.	125.5	125.5	125.5
C	Other financial service activities n.e.c.	56.5	56.5	56.5
D	Other financial investment businesses	44.1	44.1	4.4
E	Other financial service activities n.e.c.	41.0	41.0	2.1
F	Other financial service activities n.e.c.	40.1	40.1	27.2
G	Other financial service activities n.e.c.	26.9	26.9	26.9
H	Other financial service activities n.e.c.	26.4	26.4	0.6
I	Other financial investment businesses	20.4	20.4	0.6
J	Manufacture of sections for ships	22.6	20.3	20.6
K	Other financial investment businesses	20.0	20.0	14.4
L	Other financial service activities n.e.c.	19.0	19.0	0.8
M	Development and subdividing of non-residential buildings	18.0	18.0	2.5
N	Other financial service activities n.e.c.	17.3	17.3	13.0
O	Sea freight water transport	15.4	15.4	12.2
P	Other financial service activities n.e.c.	13.8	13.8	10.2
Q	Manufacture of pumps for liquids	14.3	13.3	1.4
R	Apartment building construction	13.1	13.1	4.6
S	Development and subdividing of residential buildings	12.1	12.1	3.4
T	Development and subdividing of non-residential buildings	10.1	10.1	0.0
Total		720.0	706.6	703.0
Notes : ▪ Consolidated basis as of Sep. 30, 2023 ▪ Some of the totals may not sum due to rounding.

4. Independent Auditor

Audit Opinion for the last 3 years


	3Q 2023	FY 2022	FY 2023
Independent Auditor	KPMG Samjong Accounting Corp.	PwC Samil Accounting Corp.	PwC Samil Accounting Corp.
Audit Opinion	Unqualified	Unqualified	Unqualified

Compensation to the Independent Auditor for Audit and Review Services

The following is a description of the fees for audit and review services performed by our independent auditor for the last three years in connection with our financial statements preparation.


Year	Auditor	Payment 1) (KRW mil.)	Details	Working hours
3Q 2023	KPMG Samjong Accounting Corp.	1,007 (annualized basis)	Review/Audit of Financial Statements	6,007 Hours
3Q 2023	KPMG Samjong Accounting Corp.	133 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	436 Hours
FY 2022	PwC Samil Accounting Corp.	987 (annualized basis)	Review/Audit of Financial Statements	9,235 Hours
FY 2022	PwC Samil Accounting Corp.	130 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	1,004 Hours
FY 2021	PwC Samil Accounting Corp.	958 (annualized basis)	Review/Audit of Financial Statements	9,283 Hours
	PwC Samil Accounting Corp.	126 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	1,078.5 Hours
	PwC Samil Accounting Corp.	73 (annualized basis)	Review Consolidation of Asia Trust	610.5 Hours
1) Excluding value-added taxes. * In addition to above mentioned description of fees for audit and review services, also provided services related to US listing and ICOFR audit in accordance with the standards of the PCAOB which we agreed to pay KRW 2,323 million(excluding value-added taxes) for FY2023.

5. Corporate Governance

Board of Directors and committees of the Board of Directors

According to new corporate disclosure rules for listed companies by FSC, Board of Directors and committees of the Board of Directors part is omitted from the quarterly report, please refer to the business report for FY2022 submitted on March 15, 2023 and 1H2023 submitted on August 14, 2023 for your references.

6. Major Shareholder and Market Price Information of our Common Shares and ADRs

Major Shareholders1) of Shinhan Financial Group as of Sep. 30, 2023


Name	No. of Common Shares owned	Ownership%2)
National Pension Service	40,069,462	7.77%
BlackRock Fund Advisors3)	29,063,012	5.64%
Employee Stock Ownership Association4)	26,548,291	5.15%
1) Shareholders who own beneficial ownership of 5% or more (common share basis). 2) Ownership is based on the total number of common shares issued, 515,504,189 shares. 3) Based on the large equity ownership discloser by BlackRock Fund Advisors with the Financial Supervisory Service on Sep. 27, 2018. 4) The number of stocks owned by Employee Stock Ownership Association is the sum of 26,470,928 shares owned in the Employee Stock Ownership accounts and 77,363 shares in the ESOA account.

Common Shares Traded on the Korea Exchange


						(KRW, number of shares)
		Apr. 2023	May. 2023	Jun. 2023	Jul. 2023	Aug. 2023	Sep. 2023
Price per share	High	35,900	35,750	35,700	35,150	35,950	38,000
	Low	34,300	34,550	33,850	32,500	34,550	35,450
	Avg.	35,123	35,070	34,771	33,731	35,182	36,516
Trading Volume		22,250,001	26,504,520	20,371,479	22,448,178	20,761,759	16,456,375
Highest Daily Trading Volume		2,038,028	5,709,393	1,931,552	2,264,210	1,828,015	2,449,194
Lowest Daily Trading Volume		728,126	671,463	588,962	563,437	482,222	388,661

American Depositary Receipts traded on the New York Stock Exchange


						(USD, number of shares)
		Apr. 2023	May. 2023	Jun. 2023	Jul. 2023	Aug. 2023	Sep. 2023
Price per share	High	27.11	26.99	27.74	27.62	27.91	28.49
	Low	26.14	25.69	25.85	25.13	25.63	26.29
	Avg.	26.57	26.35	26.96	26.46	26.67	27.34
Monthly Trading Volume		2,648,698	2,742,683	2,158,363	2,911,985	2,459,931	2,241,252
Highest Daily Trading Volume		208,687	255,015	209,094	276,638	218,887	180,615
Lowest Daily Trading Volume		68,074	76,250	72,118	75,883	69,195	62,485
Note) 1 ADR = 1 Common Shares

7. Directors, Executive Officers and Employees

Directors and Executive Officers

According to new corporate disclosure rules for listed companies by FSC, Directors and Executive Officers part is omitted from the quarterly report, please refer to the business report for FY2022 submitted on March 15, 2023 and 1H2023 submitted on August 14, 2023 for your references.

On June 30, 2023, Park Hyun Joo, vice president of Shinhan Bank, was newly appointed as an executive of Chief Consumer Protection Officer(CCPO), and the term of office is from July1st 2023 to December 31, 2023.


Name	Date of Birth	Position
Park Hyun Joo	April. 1965	Deputy President and Chief Consumer Protection Officer

Compensation to Directors

According to new corporate disclosure rules for listed companies by FSC, The Compensation to Directors part is omitted from the quarterly report, please refer to the business report for FY2022 submitted on March 15, 2023 and 1H2023 submitted on August 14, 2023 for your references.

Compensation to Non-registered directors

Stock Options

Employees

8. Related Party Transactions

Loans to Subsidiaries


(KRW billion)
Loans to Subsidiaries (in KRW bil.)	Type	Origination Date	Maturity Date	Lending Rate	Beginning Balance (Jan. 1, 2023)	Decrease	Increase	Others1)	Ending Balance (Mar. 31, 2023)
Shinhan Card	Loan	2018-02-22	2023-02-22	2.90%	100	100	-	-	-
	Loan	2019-04-18	2024-04-18	2.04%	100	-	-	-	100
	Loan	2019-04-18	2026-04-18	2.09%	100	-	-	-	100
	Loan	2019-10-22	2024-10-22	1.76%	40	-	-	-	40
	Loan	2019-10-22	2026-10-22	1.81%	60	-	-	-	60
	Loan	2020-09-17	2025-09-17	1.48%	200	-	-	-	200
	Loan	2020-10-29	2023-10-29	1.24%	150	-	-	-	150
	Loan	2020-10-29	2025-10-29	1.46%	150	-	-	-	150
	Loan	2021-02-18	2026-02-18	1.54%	150	-	-	-	150
	Loan	2021-02-24	2026-02-24	1.62%	150	-	-	-	150
	Loan	2021-11-11	2024-11-11	2.39%	170	-	-	-	170
	Loan	2021-11-11	2026-11-11	2.55%	10	-	-	-	10
	Loan	2022-04-20	2025-06-20	3.71%	100	-	-	-	100
	Loan	2022-07-18	2025-07-18	4.21%	100	-	-	-	100
	Loan	2022-07-18	2027-07-18	4.25%	100	-	-	-	100
	Loan	2023-04-21	2028-04-21	4.21%	-	-	100	-	100
	Loan	2019-11-19	2025-02-04	2.79%	507	-	-	31	538
	Loan	2021-05-26	2026-05-12	1.53%	38	-	-	2	40
	Financial assets at FVPL	2022-03-17	2052-03-17	4.01%	343	-	-	30	373
	Financial assets at FVPL	2023-02-14	2053-02-14	5.28%	-	-	300	-	300
Shinhan Securities	Loan	2019-11-19	2025-02-04	2.79%	114	-	-	7	121
	Loan	2020-08-20	2025-08-20	2.55%	630	-	-	38	668
	Financial assets at FVPL	2021-06-14	-	2.93%	285	-	-	35	320
Shinhan Capital	Loan	2019-02-01	2024-02-01	2.23%	50	-	-	-	50
	Loan	2019-05-24	2024-05-24	1.92%	20	-	-	-	20
	Loan	2020-04-10	2025-04-10	1.75%	200	-	-	-	200
	Loan	2020-12-23	2025-12-23	1.57%	160	-	-	-	160
	Loan	2021-03-16	2026-03-16	1.83%	150	-	-	-	150
	Loan	2021-05-13	2026-05-12	1.53%	253	-	-	17	270
	Financial assets at FVPL	2020-04-22	2050-04-22	3.56%	90	-	-	6	96
	Financial assets at FVPL	2021-07-28	2051-07-28	3.38%	128	-	-	5	133
Shinhan Savings Bank	Loan	2020-05-28	2025-05-28	1.52%	50	-	-	-	50
	Loan	2021-04-26	2026-04-26	1.85%	50	-	-	-	50
	Loan	2021-05-28	2026-05-28	1.99%	50	-	-	-	50


Shinhan DS	Loan	2022-02-03	2023-02-02	2.30%	20	20	-	-	-
Shinhan DS	Loan	2023-02-02	2024-02-01	3.86%	-	-	15	-	15
Shinhan Venture	Loan	2022-12-27	2023-03-27	4.38%	40	40	-	-	-
	Loan	2023-03-27	2023-06-26	3.81%	-	40	40	-	-
	Loan	2023-06-26	2023-10-26	4.08%	-	-	50	-	50
Total					4,858	200	505	171	5,334

9. Material Information after the reporting period

Announcement on Acquisition and Cancellation of Shares

In accordance with the resolution of the Board of Directors on October 25, 2023, the Group resolved to acquire and cancel the treasury shares within the profits available for dividends.

Number of Shares to be Acquired and Cancelled: 2,857,142 common shares

Estimated Acquisition and Cancellation Amount: KRW 100,000,000,000

Scheduled Acquisition Period: October 26, 2023 ~ January 25, 2024

Note) “Estimated Amount to be Cancelled” are calculated using the closing share price of common shares of SFG on October 24, 2023 (one day prior to this announcement). The actual number of shares to be cancelled is subject to change depending on share price fluctuation.

For more detailed information, please refer to the Independent Accountant’s Audit Report, which was reported on Form 6-K on October 25, 2023.

Announcement on Quarterly Cash Dividends

In accordance with the resolution of the Board of Directors on October 25, 2023, the Group resolved to pay quarterly cash dividends.

Total dividend amount to be paid: KRW 270,636,364,425 (KRW 525 per share)

The total number of shares subject to dividend is 515,497,837 shares, including class shares

Record date: September 30, 2023

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	Shinhan Financial Group Co., Ltd.
	(Registrant)

Date: November 14, 2023	By:	/s/ Lee Taekyung


	Name: Lee Taekyung
	Title: Chief Financial Officer

EX-99.1 2 ck0001263043-ex99_1.htm EX-99.1 EX-99.1

EX-99.1 Shinhan Financial Group Review Report for the 3Q of 2023 (Consolidated)

SHINHAN FINANCIAL GROUP CO., LTD.

AND SUBSIDIARIES

Consolidated Interim Financial Statements

September 30, 2023 and 2022

(Unaudited)

Contents


		Page

Report on Review of Interim Financial Statements		1

Consolidated Interim Statements of Financial Position		3

Consolidated Interim Statements of Comprehensive Income		4

Consolidated Interim Statements of Changes in Equity		7

Consolidated Interim Statements of Cash Flows		9

Notes to the Consolidated Interim Financial Statements		11

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

Shinhan Financial Group Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying consolidated interim financial statements of Shinhan Financial Group Co., Ltd. and its subsidiaries (collectively the “Group”), which comprise the consolidated interim statement of financial position as of September 30, 2023, the consolidated interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2023, and the consolidated interim statements of changes in equity and cash flows for the nine-month period ended September 30, 2023, and notes, comprising a summary of material accounting policy information and other explanatory information.

Management’s Responsibility

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Review Responsibility

Our responsibility is to issue a report on these consolidated interim financial statements based on our review.

We conducted our review in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS 1034 Interim Financial Reporting.

Other Matters

The procedures and practices utilized in the Republic of Korea to review such consolidated interim financial statements may differ from those generally accepted and applied in other countries.

The consolidated interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2022, and the consolidated interim statements of changes in equity and cash flows for the nine-month period ended September 30, 2022 were reviewed by another auditor, and their report thereon, dated November 14, 2022, expressed that nothing was found for them to believe those financial statements are not presented fairly, in all material respects, in accordance with K-IFRS 1034 Interim Financial Reporting. The financial statements that another auditor reviewed are those before reflecting the adjustments due to the adoption of K-IFRS 1117 Insurance Contracts, and etc. described in Note 3. The accompanying consolidated statements of comprehensive income for the three-month period and nine-month period ended September 30, 2022, and changes in equity and cash flows for the nine-month period ended September 30, 2022, presented for comparative purposes, are those after reflecting such adjustments.

The consolidated statement of financial position of the Group as of December 31, 2022, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended (not presented herein) were audited by another auditor in accordance with Korean Standards on Auditing, and their report thereon, dated March 6, 2023, expressed an unqualified opinion. The financial statements that another auditor reviewed are those before reflecting the adjustments due to the adoption of K-IFRS 1117 Insurance Contracts described in Note 3.

The accompanying consolidated statements of financial position of the Group as of December 31, 2022, presented for comparative purposes, are those after reflecting such adjustments.

As part of review procedures on the consolidated interim financial statements for the nine-month period ended September 30, 2023, we have reviewed the adjustments to the accompanying consolidated interim financial statements presented for comparative purposes. Based on our review, nothing has come to our attention that causes us to believe that such adjustments are not prepared, in all material respects, in accordance with K-IFRS 1034 Interim Financial Reporting. We were not engaged to audit, review, or apply any other procedures to the accompanying consolidated financial statements presented for comparative purposes, other than with respect to the adjustments, and accordingly, we do not express an audit opinion or any other form of assurance on the accompanying consolidated interim financial statements presented for comparative purposes taken as a whole.

KPMG Samjong Accounting Corp.

Seoul, Korea

November 14, 2023

This report is effective as of November 14, 2023, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position

As of September 30, 2023 and December 31, 2022


(In millions of Korean won)	Notes	September 30, 2023 (Unaudited)	December 31, 2022
Assets
Cash and due from banks at amortized cost	4, 7	35,888,889	30,050,840
Financial assets at fair value through profit or loss	4, 8	66,712,929	61,508,281
Derivative assets	4, 9	6,235,318	6,460,652
Securities at fair value through other comprehensive income	4, 10	86,388,117	85,469,161
Securities at amortized cost	4, 10	35,238,498	33,371,198
Loans at amortized cost	4, 11	411,354,717	407,898,972
Property and equipment, net		3,952,753	4,011,097
Intangible assets	12	6,235,855	5,807,836
Investments in associates	13	3,039,628	2,904,474
Current tax receivable		31,623	26,307
Deferred tax assets		144,160	915,369
Investment property		263,810	363,108
Net defined benefit assets	17	311,933	456,838
Insurance contract assets	19	3,373	-
Reinsurance contract assets	19	79,352	88,772
Other assets	4, 11	34,096,203	25,071,114
Assets held for sale		36,110	29,211
Total assets		690,013,268	664,433,230

Liabilities
Deposits	4	384,994,956	382,988,294
Financial liabilities at fair value through profit or loss	4, 14	1,731,737	1,146,110
Financial liabilities designated at fair value through profit or loss	4, 15	7,187,642	8,367,368
Derivative liabilities	4, 9	7,291,988	7,708,615
Borrowings	4	55,806,051	49,279,175
Debt securities issued	4, 16	77,181,740	77,288,783
Net defined benefit liabilities	17	52,195	14,664
Provisions	18	1,009,204	1,266,314
Current tax payable		327,513	702,143
Deferred tax liabilities		665,832	810,569
Insurance contract liabilities	19	44,448,225	45,904,773
Reinsurance contract liabilities	19	68,073	62,803
Investment contract liabilities		2,166,107	2,133,586
Other liabilities	4	50,665,379	33,336,475
Total liabilities		633,596,642	611,009,672

Equity	21
Capital stock		2,969,641	2,969,641
Hybrid bonds		4,001,731	4,196,968
Capital surplus		12,094,968	12,095,043
Capital adjustments		(658,470)	(582,859)
Accumulated other comprehensive loss		(1,043,520)	(1,910,750)
Retained earnings		36,251,890	33,963,799
Total equity attributable to equity holders of Shinhan Financial Group Co., Ltd.		53,616,240	50,731,842
Non-controlling interests		2,800,386	2,691,716
Total equity		56,416,626	53,423,558

Total liabilities and equity		690,013,268	664,433,230

See accompanying notes to the consolidated interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income

For the three-month and nine-month periods ended September 30, 2023 and 2022


		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)
(In millions of Korean won)	Notes	Three-month	Nine- month	Three-month	Nine- month
Interest income		7,028,499	20,336,162	5,205,434	13,929,227
Interest expense		(4,265,192)	(12,304,830)	(2,473,313)	(6,097,560)
Net interest income	22	2,763,307	8,031,332	2,732,121	7,831,667

Fees and commission income		1,092,040	3,087,731	928,951	2,985,896
Fees and commission expense		(379,999)	(1,122,962)	(385,406)	(1,079,582)
Net fees and commission income	23	712,041	1,964,769	543,545	1,906,314

Insurance income		737,324	2,150,250	684,775	2,030,862
Reinsurance income		10,123	33,379	11,935	27,447
Insurance service expenses		(455,966)	(1,356,978)	(446,473)	(1,266,047)
Reinsurance service expenses		(19,876)	(57,470)	(20,594)	(47,725)
Net insurance income	19	271,605	769,181	229,643	744,537

Insurance finance income		96,756	123,274	214,157	930,287
Insurance finance expense		5,499	(359,345)	(41,402)	(77,415)
Net insurance finance income (expense)	20	102,255	(236,071)	172,755	852,872

Dividend income		22,892	152,093	29,134	128,519
Net gain (loss) on financial instruments at fair value through profit or loss		(35,850)	1,575,319	(645,938)	(1,572,617)
Net gain (loss) on financial instruments designated at fair value through profit or loss		171,156	(267,637)	396,904	885,330
Net gain on foreign currency transaction		104,306	330,482	170,087	273,434
Net loss on disposal of financial securities at fair value through other comprehensive income	10	(17,756)	(31,315)	(24,702)	(43,017)
Net gain (loss) on disposal of securities at amortized cost	10	(1)	355	(4)	(59)
Provision for allowance for credit loss	24	(488,723)	(1,472,206)	(247,747)	(846,495)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position (Continued)

As of June 30, 2023 and December 31, 2022

(Unaudited)



General and administrative expenses	25	(1,497,534)	(4,296,382)	(1,303,573)	(3,872,360)
Other operating expenses, net		(403,565)	(1,323,554)	(328,478)	(962,700)

Operating income		1,704,133	5,196,366	1,723,747	5,325,425

Equity method income	13	28,165	95,499	46,365	79,655
Other non-operating expense (income), net		(141,916)	(116,304)	436,760	491,436
Profit before income taxes		1,590,382	5,175,561	2,206,872	5,896,516

Income tax expense	27	371,557	1,273,613	559,209	1,526,792
Profit for the period		1,218,825	3,901,948	1,647,663	4,369,724

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income (Continued)

For the three-month and nine-month periods ended September 30, 2023 and 2022


(In millions of Korean won, except earnings per share data)		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)
	Notes	Three- month	Nine- month	Three- month	Nine- month

Other comprehensive income (loss) for the period, net of income tax	21
Items that are or may be reclassified to profit or loss:
Valuation gain (loss) on securities at fair value through other comprehensive income		(741,022)	125,895	(1,588,819)	(6,768,513)
Equity in other comprehensive income (loss) of associates		505	6,659	(3,153)	(17,747)
Foreign currency translation adjustments for foreign operations		(9,624)	116,463	312,536	454,627
Net change in unrealized fair value of cash flow hedges		(18,708)	(26,008)	(12,350)	(75,672)
Net finance income on insurance contract assets (liabilities)		874,344	710,087	1,008,957	4,939,810
Net finance income (expense) on reinsurance contract assets (liabilities)		2,861	(970)	15,374	35,848
		108,356	932,126	(267,455)	(1,431,647)
Items that will never be reclassified to profit or loss:
Remeasurement of the net defined benefit liabilities (assets)		(275)	(36,889)	7,978	200,821
Equity in other comprehensive income of associates		-	-	-	6
Valuation gain (loss) on securities at fair value through other comprehensive income		43,827	(23,711)	(10,537)	60,787
Gain (loss) on disposal of securities at fair value through other comprehensive income		(704)	(1,964)	228	2,147
Changes in own credit risk on financial liabilities designated at fair value through profit of loss		296	1,179	(1,157)	(2,318)
		43,144	(61,385)	(3,488)	261,443
Total other comprehensive income (loss), net of income tax		151,500	870,741	(270,943)	(1,170,204)

Total comprehensive income for the period		1,370,325	4,772,689	1,376,720	3,199,520

Profit attributable to:
Equity holders of Shinhan Financial Group Co., Ltd.		1,192,065	3,818,288	1,624,413	4,306,773
Non-controlling interests		26,760	83,660	23,250	62,951
		1,218,825	3,901,948	1,647,663	4,369,724
Total comprehensive income attributable to:
Equity holders of Shinhan Financial Group Co., Ltd.		1,343,384	4,686,724	1,353,436	3,140,313
Non-controlling interests		26,941	85,965	23,284	59,207
		1,370,325	4,772,689	1,376,720	3,199,520

Earnings per share:	28
Basic and diluted earnings per share in Korean won		2,210	7,057	2,977	7,880

See accompanying notes to the consolidated interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity

For the nine-month period ended September 30, 2022


(In millions of Korean won)	September 30, 2022
	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		Non-controlling interests		Total
Balance at January 1, 2022		2,969,641		3,334,531		12,095,043		(664,429)		(984,936)		30,541,300		2,247,272		49,538,422
Adjustment on initial application of K-IFRS 1117 (Note 36)		-		-		-		-		79,713		597,815		-		677,528
Balance (restated) at January 1, 2022		2,969,641		3,334,531		12,095,043		(664,429)		(905,223)		31,139,115		2,247,272		50,215,950
Total comprehensive income
Profit for the period		-		-		-		-		-		4,306,773		62,951		4,369,724
Other comprehensive income, net of income tax:
Loss on valuation and disposal of securities at fair value through other comprehensive income		-		-		-		-		(6,700,699)		-		(4,880)		(6,705,579)
Equity in other comprehensive loss of associates		-		-		-		-		(17,741)		-		-		(17,741)
Foreign currency translation adjustments for foreign operations		-		-		-		-		453,832		-		795		454,627
Net change in unrealized fair value of cash flow hedges		-		-		-		-		(75,672)		-		-		(75,672)
Net finance income on insurance contract assets (liabilities)		-		-		-		-		4,939,810		-		-		4,939,810
Net finance income on reinsurance contract assets (liabilities)		-		-		-		-		35,848		-		-		35,848
Remeasurement of defined benefit liabilities (assets)		-		-		-		-		200,480		-		341		200,821
Changes in own credit risk on financial liabilities designated at fair value through profit or loss		-		-		-		-		(2,318)		-		-		(2,318)
Total other comprehensive loss		-		-		-		-		(1,166,460)		-		(3,744)		(1,170,204)
Total comprehensive income (loss)		-		-		-		-		(1,166,460)		4,306,773		59,207		3,199,520

Other changes in equity
Annual dividends		-		-		-		-		-		(747,705)		-		(747,705)
Quarterly dividends		-		-		-		-		-		(425,434)		-		(425,434)
Dividends to hybrid bonds		-		-		-		-		-		(117,058)		-		(117,058)
Issuance of hybrid bonds (Note 21)		-		997,120		-		-		-		-		-		997,120
Redemption of hybrid bonds (Note 21)		-		(134,683)		-		(317)		-		-		-		(135,000)
Acquisition of treasury stock (Note 21)		-		-		-		(150,000)		-		-		-		(150,000)
Retirement of treasury stock (Note 21)		-		-		-		150,000		-		(150,029)		-		(29)
Change in other capital adjustments		-		-		-		(237)		-		-		-		(237)
Change in other non-controlling interests		-		-		-		86,711		-		-		45,213		131,924
		-		862,437		-		86,157		-		(1,440,226)		45,213		(446,419)
Reclassification between OCI and retained earnings		-		-		-		-		(1,594)		1,594		-		-
Balance at September 30, 2022 (Unaudited)		2,969,641		4,196,968		12,095,043		(578,272)		(2,073,277)		34,007,256		2,351,692		52,969,051

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity (Continued)

For the nine-month period ended September 30, 2023


(In millions of Korean won)	September 30, 2023
	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	Non-controlling interests	Total
Balance at January 1, 2023	2,969,641	4,196,968	12,095,043	(582,859)	(1,910,750)	33,963,799	2,691,716	53,423,558
Total comprehensive income
Profit for the period	-	-	-	-	-	3,818,288	83,660	3,901,948
Other comprehensive income, net of income tax:
Gain on valuation and disposal of securities at fair value through other comprehensive income	-	-	-	-	98,640	-	1,580	100,220
Equity in other comprehensive income of associates	-	-	-	-	6,659	-	-	6,659
Foreign currency translation adjustments for foreign operations	-	-	-	-	115,659	-	804	116,463
Net change in unrealized fair value of cash flow hedges	-	-	-	-	(26,008)	-	-	(26,008)
Net finance loss on insurance contract assets (liabilities)	-	-	-	-	710,087	-	-	710,087
Net finance loss on reinsurance contract assets (liabilities)	-	-	-	-	(970)	-	-	(970)
Remeasurement of defined benefit liabilities (assets)	-	-	-	-	(36,810)	-	(79)	(36,889)
Changes in own credit risk on financial liabilities designated at fair value through profit or loss	-	-	-	-	1,179	-	-	1,179
Total other comprehensive income	-	-	-	-	868,436	-	2,305	870,741
Total comprehensive income	-	-	-	-	868,436	3,818,288	85,965	4,772,689

Other changes in equity
Annual dividends	-	-	-	-	-	(455,215)	-	(455,215)
Quarterly dividends	-	-	-	-	-	(546,486)	-	(546,486)
Dividends to hybrid bonds	-	-	-	-	-	(142,893)	-	(142,893)
Issuance of hybrid bonds (Note 21)	-	897,646	-	-	-	-	-	897,646
Redemption of hybrid bonds (Note 21)	-	(1,092,883)	-	(102,667)	-	-	-	(1,195,550)
Transfer of redemption loss of hybrid bonds to retained earnings	-	-	-	317	-	(317)	-	-
Acquisition of treasury stock (Note 21)	-	-	-	(385,947)	-	-	-	(385,947)
Retirement of treasury stock (Note 21)	-	-	-	385,947	-	(386,027)	-	(80)
Preferred stock converted to common stock	-	-	(75)	-	-	-	-	(75)
Change in other capital adjustments	-	-	-	27,165	-	(465)	-	26,700
Change in other non-controlling interests	-	-	-	(426)	-	-	22,705	22,279
	-	(195,237)	(75)	(75,611)	-	(1,531,403)	22,705	(1,779,621)
Reclassification between OCI and retained earnings	-	-	-	-	(1,206)	1,206	-	-
Balance at September 30, 2023 (Unaudited)	2,969,641	4,001,731	12,094,968	(658,470)	(1,043,520)	36,251,890	2,800,386	56,416,626

See accompanying notes to the consolidated interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows

For the nine-month periods ended September 30, 2023 and 2022


		Nine-month periods ended September 30
(In millions of Korean won)	Notes	2023 (Unaudited)	2022 (Unaudited)

Cash flows from operating activities
Profit before income taxes		3,901,948	4,369,724
Adjustments for:
Interest income	22	(20,336,162)	(13,929,227)
Interest expense	22	12,304,830	6,097,560
Dividend income		(152,093)	(128,519)
Income tax expense	27	1,273,613	1,526,792
Net fees and commission expense		233,691	99,265
Net insurance contract income		(769,180)	(744,537)
Net insurance finance expense (income)		236,071	(852,872)
Net gain (loss) on financial instruments at fair value through profit or loss		(716,782)	852,328
Net loss on derivatives		80,441	1,518,152
Net gain on foreign currency translation		(98,982)	(35,335)
Net gain on financial instruments designated at fair value through profit or loss		(116,818)	(1,058,782)
Net loss on disposal of securities at fair value through other comprehensive income	10	31,315	43,017
Provision for allowance for credit loss	24	1,472,206	846,495
Net gain (loss) on disposal of securities at amortized cost	10	(355)	59
Employee benefits	25	96,814	129,183
Depreciation and other amortization	25	874,166	729,206
Other operating expense		337,251	870,728
Equity method income	13	(95,499)	(79,655)
Other non-operating expense (income)		100,073	(538,069)
		(5,245,400)	(4,654,211)
Changes in assets and liabilities:
Due from banks at amortized cost		595,973	(1,256,376)
Securities at fair value through profit or loss		(3,436,312)	2,274,250
Loans at fair value through profit or loss		270,615	(197,881)
Financial instruments designated at fair value through profit or loss		(1,272,999)	(77,023)
Derivative instruments		(387,189)	328,008
Loans at amortized cost		(3,702,831)	(19,662,481)
Insurance contract assets		(1,105)	(20)
Reinsurance contract assets		9,393	(45,533)
Other assets		(9,923,629)	(4,163,799)
Deposits		1,715,803	11,173,574
Net defined benefit liabilities (assets)		45,590	(166,766)
Provisions		(399,296)	(51,784)
Insurance contract liabilities		(1,025,893)	(307,754)
Reinsurance contract liabilities		(20,249)	(202,857)
Investment contract liabilities		(49,581)	(307,140)
Other liabilities		14,759,318	11,019,034
		(2,822,392)	(1,644,548)

Income taxes paid		(1,476,343)	(1,510,797)
Interest received		19,331,142	13,379,209
Interest paid		(8,576,877)	(4,314,500)
Dividends received		173,564	113,647
Net cash inflow from operating activities		5,285,642	5,738,524

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows (Continued)

For the nine-month periods ended September 30, 2023 and 2022


		Nine-month periods ended September 30
(In millions of Korean won)	Notes	2023 (Unaudited)	2022 (Unaudited)

Cash flows from investing activities
Decrease in financial instruments at fair value through profit or loss		3,212,948	3,872,124
Acquisition of financial instruments at fair value through profit or loss		(4,227,464)	(3,956,103)
Decrease in financial securities at fair value through other comprehensive income		28,747,082	14,620,549
Acquisition of securities at fair value through other comprehensive income		(28,672,295)	(18,789,385)
Decrease in securities at amortized cost		2,983,775	4,263,646
Acquisition of securities at amortized cost		(4,722,342)	(9,151,502)
Proceeds from disposal of property and equipment		14,251	91,357
Acquisition of property and equipment		(174,766)	(202,571)
Proceeds from disposal of intangible assets		16,054	18,644
Acquisition of intangible assets		(351,331)	(445,246)
Proceeds from disposal of investments in associates		273,776	423,816
Acquisition of investments in associates		(323,748)	(574,887)
Proceeds from disposal of investment property		166,767	230,148
Acquisition of investment property		(4,324)	(3,589)
Disposal of assets held-for-sale		2,490	620,537
Change in other assets		9,430	(164,402)
Proceeds from settlement of hedging derivative financial instruments		19,608	12,120
Payment of settlement of hedging derivative financial instruments		(57,337)	(118,172)
Net cash flows from business combinations		-	(27,840)
Net cash outflow from investing activities		(3,087,426)	(9,280,756)

Cash flows from financing activities
Issuance of hybrid bonds		897,646	997,120
Redemption of hybrid bonds		(1,195,550)	(135,000)
Net change in borrowings		6,391,722	8,746,639
Proceeds from debt securities issued		31,593,197	32,670,998
Repayments of debt securities issued		(32,278,891)	(30,379,458)
Increase in financial liabilities designated at fair value through profit or loss		209,969	49,993
Changes in other liabilities		79,558	171,248
Dividends paid		(1,144,090)	(1,289,590)
Proceeds from settlement of hedging derivative financial instruments		1,492,007	1,702,826
Payment of settlement of hedging derivative financial instruments		(1,415,311)	(1,675,739)
Acquisition of treasury stock		(385,947)	(150,000)
Proceeds and costs from retirement of treasury stock		(80)	(29)
Increase(decrease) in non-controlling interests		21,865	28,105
Redemption of lease liabilities		(185,346)	(209,996)
Conversion costs for preferred stock to common stock		(75)	-
Net cash inflow from financing activities		4,080,674	10,527,117

Effect of exchange rate changes on cash and cash equivalents held		46,052	192,461
Increase in cash and cash equivalents		6,324,942	7,177,346

Cash and cash equivalents at the beginning of the period	30	24,413,946	24,585,673

Cash and cash equivalents at the end of the period	30	30,738,888	31,763,019

See accompanying notes to the consolidated interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

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 “Group”), 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 September 30, 2023 and December 31, 2022 are as follows:


			Date of financial information	Ownership (%)
Investor	Investee (*1)	Location	Date of financial information		September 30, 2023		December 31, 2022
Shinhan Financial Group Co., Ltd.	Shinhan Bank	Korea	September 30	100.0		100.0
〃	Shinhan Card Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan Securities Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan Life Insurance Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan Capital Co., Ltd.	〃	〃	100.0		100.0
〃	Jeju Bank	〃	〃	75.3		75.3
〃	Shinhan Asset Management Co., Ltd.	〃	〃	100.0		100.0
〃	SHC Management Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan DS	〃	〃	100.0		100.0
〃	Shinhan Savings Bank	〃	〃	100.0		100.0
〃	Shinhan Asset Trust Co. Ltd	〃	〃	100.0		100.0
〃	Shinhan Fund Partners Co., Ltd.(*2)	〃	〃	99.8		99.8
〃	Shinhan REITs Management Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan AI Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan Venture Investment Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan EZ General Insurance, Ltd.	〃	〃	85.1		85.1
Shinhan Bank	Shinhan Bank America	USA	〃	100.0		100.0
〃	Shinhan Bank Europe GmbH	Germany	〃	100.0		100.0
〃	Shinhan Bank Cambodia	Cambodia	〃	97.5		97.5
〃	Shinhan Bank Kazakhstan Limited	Kazakhstan	〃	100.0		100.0
〃	Shinhan Bank Canada	Canada	〃	100.0		100.0
〃	Shinhan Bank (China) Limited	China	〃	100.0		100.0
〃	Shinhan Bank Japan	Japan	〃	100.0		100.0
〃	Shinhan Bank Vietnam Ltd.	Vietnam	〃	100.0		100.0
〃	Banco Shinhan de Mexico	Mexico	〃	99.9		99.9
〃	PT Bank Shinhan Indonesia	Indonesia	〃	99.0		99.0
Shinhan Bank Japan	SBJDNX	Japan	〃	100.0		100.0

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

1. Reporting entity (continued)

(b) Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of September 30, 2023 and December 31, 2022 are as follows (continued):


			Date of financial information	Ownership (%)
Investor	Investee (*1)	Location	Date of financial information		September 30, 2023		December 31, 2022
Shinhan Card Co., Ltd.	Shinhan Credit Information Co., Ltd.	Korea	September 30	100.0		100.0
〃	LLP MFO Shinhan Finance	Kazakhstan	〃	100.0		100.0
〃	PT. Shinhan Indo Finance	Indonesia	〃	76.3		76.3
〃	Shinhan Microfinance Co., Ltd.	Myanmar	〃	100.0		100.0
〃	Shinhan Vietnam Finance Co., Ltd.	Vietnam	〃	100.0		100.0
Shinhan Securities Co., Ltd.	Shinhan Securities America Inc.	USA	〃	100.0		100.0
〃	Shinhan Securities Asia Ltd.	Hong Kong	〃	100.0		100.0
〃	SHINHAN SECURITIES VIETNAM CO., LTD.	Vietnam	〃	100.0		100.0
〃	PT. Shinhan Sekuritas Indonesia	Indonesia	〃	99.0		99.0
PT Shinhan Sekuritas Indonesia	PT. Shinhan Asset Management Indonesia	Indonesia	〃	75.0		75.0
Shinhan Life Insurance Co., Ltd.	Shinhan Financial Plus	Korea	〃	100.0		100.0
〃	Shinhan CubeOn Co., Ltd.	〃	〃	100.0		100.0
〃	Shinhan Life Insurance Vietnam Co., Ltd.	Vietnam	〃	100.0		100.0
Shinhan Asset Management Co., Ltd.	SHINHAN ASSET MGT HK, LIMITED	Hong Kong	〃	100.0		100.0
Shinhan DS	SHINHAN DS VIETNAM CO., LTD.	Vietnam	〃	100.0		100.0

(*1) Subsidiaries such as trust, beneficiary certificate, securitization special purpose companies and private equity funds which are not actually operating their own business are excluded.

(*2) Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners on April 3, 2023.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

1. Reporting entity (continued)

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 variable returns, in which the Group has to compensate for the loss if principle or interest amount of the entrusted properties falls below guaranteed amount, and when the Group has the ability to affect those returns.
Asset-backed securitization	MPC Yulchon Green I and 237 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 when the Group is exposed to or has rights to related variable returns by providing credit enhancement and purchases of subordinated securities.
Structured financing	SHPE Holdings One Co., Ltd.	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 exposed to or has rights to related variable returns.
Investment fund	One Shinhan Future's Fund and 162 others	An investment fund is consolidated when the Group manages or invests in assets of the investment funds on behalf of other investors as a collective investor or a business executive, has the ability to dismiss the manager of the investment funds, and is exposed to or has rights to the variable returns.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

1. Reporting entity (continued)

(d) Summarized financial information of the subsidiaries

i) The summarized financial information of the controlling company and the Group’s major consolidated subsidiaries as of September 30, 2023 and December 31, 2022 is as follows:


	September 30, 2023			December 31, 2022
Investees (1)(2)	Asset balance	Liability balance	Equity balance	Asset balance	Liability balance	Equity balance
Shinhan Financial Group (Separate)	38,330,527	11,781,103	26,549,424	37,456,314	10,779,765	26,676,549
Shinhan Bank	510,769,914	477,738,241	33,031,673	491,981,392	460,814,132	31,167,260
Shinhan Card Co., Ltd.	44,463,439	36,525,331	7,938,108	43,050,321	35,591,567	7,458,754
Shinhan Securities Co., Ltd.	48,531,347	43,065,327	5,466,020	43,821,577	38,479,027	5,342,550
Shinhan Life Insurance Co., Ltd.	56,286,584	47,603,603	8,682,981	56,501,131	48,380,592	8,120,539
Shinhan Capital Co., Ltd.	13,200,386	10,978,917	2,221,469	13,035,892	11,048,996	1,986,896
Jeju Bank	7,119,014	6,583,200	535,814	7,320,304	6,798,450	521,854
Shinhan Asset Management Co., Ltd.	342,814	99,350	243,464	319,511	88,519	230,992
SHC Management Co., Ltd.	9,983	-	9,983	9,746	-	9,746
Shinhan DS	122,437	68,493	53,944	107,366	59,833	47,533
Shinhan Savings Bank	3,218,113	2,871,325	346,788	3,043,506	2,723,713	319,793
Shinhan Asset Trust Co., Ltd.	461,124	80,226	380,898	435,815	110,981	324,834
Shinhan Fund Partners (*3)	105,936	19,130	86,806	94,725	10,147	84,578
Shinhan REITs Management Co., Ltd.	67,571	8,140	59,431	58,610	5,559	53,051
Shinhan AI Co., Ltd.	39,259	2,497	36,762	41,431	2,264	39,167
Shinhan Venture Investment Co., Ltd.	154,912	74,652	80,260	140,310	63,309	77,001
Shinhan EZ General Insurance, Ltd.	236,490	105,246	131,244	222,980	86,145	136,835

(*1) The summarized financial statements of the consolidated subsidiaries are based on consolidated financial statements, if applicable.

(*2) Subsidiaries such as trust, beneficiary certificate, securitization special purpose companies and private equity funds which are not actually operating their own business are excluded.

(*3) Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners on April 3, 2023.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

1. Reporting entity (continued)

ii) The nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023			September 30, 2022
Investees (1),(2)	Operating income	Net income (loss) (*3)	Com- prehensive income (loss) (*3)	Operating income	Net income (*3)	Com- prehensive income (loss) (*3)
Shinhan Financial Group (Separate)	2,137,290	1,703,017	1,702,248	1,996,514	1,345,758	1,346,836
Shinhan Bank	30,975,662	2,599,275	2,985,649	35,298,159	2,593,042	2,020,136
Shinhan Card Co., Ltd.	4,108,511	470,104	458,120	4,005,746	589,322	607,213
Shinhan Investment Corp.	7,745,380	223,351	230,410	9,534,534	570,295	630,844
Shinhan Life Insurance Co., Ltd.	4,866,675	427,624	732,803	5,532,420	370,392	(484,656)
Shinhan Capital Co., Ltd.	907,097	292,863	289,389	767,588	282,447	288,789
Jeju Bank	273,267	13,115	19,408	193,002	16,977	(1,294)
Shinhan Credit Information Co., Ltd. (*4)	-	-	-	20,705	1,029	1,450
Shinhan Asset Management Co., Ltd.	102,954	19,481	19,473	162,443	40,919	40,791
SHC Management Co., Ltd.	-	237	237	-	60	60
Shinhan DS	227,795	7,906	6,412	200,201	7,035	7,709
Shinhan Savings Bank	207,275	26,992	26,991	177,627	31,098	31,465
Shinhan Asset Trust Co., Ltd.	113,415	56,288	56,064	115,487	55,026	55,564
Shinhan Fund Partners (*5)	46,656	8,286	8,286	41,455	6,688	6,688
Shinhan REITs Management Co., Ltd.	16,418	6,386	6,380	8,544	2,336	2,336
Shinhan AI Co., Ltd.	7,835	(2,391)	(2,405)	8,537	(466)	(477)
Shinhan Venture Investment Co, Ltd.	18,860	3,231	3,258	17,067	4,221	4,314
Shinhan EZ General Insurance, Ltd. (*6)	29,526	(5,221)	(5,591)	7,076	(4,360)	(4,314)

(*1) The summarized financial statements of the consolidated subsidiaries are based on consolidated financial statements, if applicable.

(*2) Subsidiaries such as trust, beneficiary certificate, securitization special purpose companies and private equity funds which are not actually operating their own business are excluded.

(*3) It includes non-controlling interests.

(*4) 100% of shares were sold to Shinhan Card Co., Ltd. on July 28, 2022. The operating income, net income, comprehensive income for the nine-month period ended September 30, 2022 are before the acquisition.

(*5) Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners on April 3, 2023.

(*6) The amounts are based on the statement of comprehensive income after the acquisition.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

2. Basis of preparation

(a) Statement of compliance

The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS). The accompanying consolidated interim financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The consolidated interim financial statements of the Group are prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”). These consolidated interim financial statements are prepared under K-IFRS 1034, ‘Interim Financial Reporting’ and contains less information than required in the annual consolidated financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as of and for the year ended December 31, 2022.

(b) Use of estimates and judgments

The preparation of the consolidated interim financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, incomes and expenses. When estimates and assumptions based on management's judgment as of the end of the interim reporting period differ from the actual circumstances, the related actual results may differ from these estimates.

Estimates and underlying assumptions about estimates are continually reviewed, and changes in accounting estimates are recognized for the period in which the estimates are changed and the period to be affected in the future. Income tax expense in the interim period is measured by applying the expected annual income tax rate, i.e. the estimated average annual effective income tax rate.

In preparing the consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2022 except for the method of estimation used to determine the income tax expense for the interim period.

Adoption of K-IFRS 1117 ‘Insurance Contracts’

The Group applied K-IFRS 1117 ‘Insurance Contracts’ on accounting periods beginning on 1 January 2023. This Standard replaces K-IFRS 1104 ‘Insurance Contracts’.

The accompanying consolidated interim financial statements are restated in accordance with K-IFRS 1117. In addition, the consolidated financial position as of January 1, 2022 (the transition date), which is not disclosed, is retrospectively restated.

K-IFRS 1117 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 treatment 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 insurance contract margins for separate non-financial risks. The effects of K-IFRS 1117 on financial statements are as follows:

Recognition, measurement, and presentation of insurance contracts

Based on K-IFRS 1117, insurance revenue in each reporting period represents the changes in the liabilities for remaining coverage that relate to services for which the Group expects to receive consideration and a systematic allocation of premiums that relate to recovering insurance acquisition cash flows.

Investment components (including insurance contract loans) are excluded from insurance revenue and insurance service costs. Under K-IFRS 1104, premiums paid for each payment method under the insurance contract were recognized as revenue.

The Group decided to subdivide insurance finance income or expenses into profit or loss and other comprehensive income, and present net insurance income separately consisting of insurance revenue and insurance service expenses.

The Group uses the premium allocation approach, a simplified methodology, for measurement of certain types of insurance contracts. Measurement of the liability for remaining coverage under the premium allocation approach is similar to the accounting treatment under K-IFRS 1104. However, the Group estimates liabilities for incurred claims under the premium allocation

2. Basis of preparation (continued)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(b) Use of estimates and judgments (continued)

approach based on the time value of money and the effect of financial risk of future cash flows, and risk adjustments for non-financial risk separately, if the cash flows are expected to be paid more than one year from the date of the incurred claim.

Insurance acquisition cash flows generally include the present value of estimated future cash flows from insurance contracts. For insurance acquisition cash flows from insurance contracts with a coverage period of less than one year under the premium allocation approach, the Group chose to recognize those in profit or loss. Under K-IFRS 1104, all acquisition costs were separated from the related insurance contracts and recognized as separate assets (deferred acquisition costs).

The profit or loss of the reinsurance contract held is presented separately from the profit or loss of the insurance contract issued.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

3. Material accounting policies

(a) The Group applies the same accounting policies applied as when preparing the annual consolidated financial statements for the year ended December 31, 2022, except for the following amendments that has been applied for the first time since January 1, 2023 and as described in Note 2. (b).

i) Amendments to K-IFRS 1117 ‘Insurance Contracts’

The main characteristics of K-IFRS 1117 are recognition of insurance contracts revenue on an accrual basis, measurement of insurance contract liabilities using discounted probability-weighted current estimates of future cash flows, and presentation of insurance contracts income or expenses, separately from investment income or expenses.

① Measurement of insurance contract liabilities using discounted probability-weighted current estimates of future cash flows

The group identifies a portfolio of insurance contracts consisting of contracts that are exposed to similar risks and are managed together, and then separates the group of insurance contracts into similar profitable contracts within the portfolio. It then estimates cash flows expected to occur within the boundaries of the insurance contract for each group of insurance contracts and measures the insurance liability at current estimates of future cash flows expected to occur in the performance of the contract, reflecting the assumptions and risks on the reporting date.

As a result, insurance liabilities for each set of insurance contracts as of the end of the reporting period are measured as an estimate of future cash flows (reflecting insurance contract loans, cash flows related to options and guarantees, the time value of money, etc.), risk adjustment and insurance margin.

Insurance contract margins represent unrealized gains that will be recognized in the future as insurance services are provided, and the negative (-) insurance margin is not to be recognized, but rather it is classified as a group of loss contracts and recognized in profit or loss immediately. In the case of insurance contracts without direct participation features, changes in cash flow related to future services are adjusted in the insurance contract margin using a discount rate at initial recognition, and the time value, financial risk, and effect of changes are not adjusted in the insurance contract margin.

On the other hand, reinsurance contracts refer to insurance contracts issued by reinsurance companies to compensate for claims arising from original insurance contracts issued by other insurance companies. A set of insurance contracts also applies a consistent assumption with the original set of insurance contracts when estimating the present value of future cash flows for the set of insurance contracts.

Recognition of insurance revenue on an accrual basis

For insurance revenue, it is recognized during the accounting year on an accrual basis, with measurement of insurance contracts with recognition of profit over the period that services are provided. Insurance revenue recognized for the current period is an estimated amount at the beginning of the period, including premiums and expenses, changes in risk adjustment, insurance contract margin for services provided to the policyholder. Insurance revenue related to insurance acquisition cash flows recognized as a systematic allocation of the premium portion related to the collection of insurance acquisition cash flows. Any investment component (the amount an insurance contract requires the entity to repay to a policyholder in all circumstances, regardless of whether an insured event occurs) is excluded from insurance revenue.

Presentation of insurance income or expense

The group chose an accounting policy that separates insurance revenue and insurance income or expense including insurance service expense for presentation. Insurance finance income or expense, includes the time value of money, financial risks, and the change effects related to the group of insurance contracts, is recognized either profit or loss or other comprehensive income during the period as the accounting policy of the Group.

Accounting policy for transition and the transition effects

Based on the transition provisions of K-IFRS 1117, each group of insurance contracts shall be identified, recognized, and measured (full retrospective approach) as if this Standard had been applied. If the full retrospective approach is impractical, the Group can apply either the modified retrospective approach or the fair value approach to contracts. However, for insurance contracts with direct participation features that meet certain requirements, the fair value approach can be applied even if the full retrospective method is practical.

The Group applied either the modified retrospective approach or the fair value approach to contracts if the full retrospective application is impractical. For insurance contracts with direct participation features that meet certain requirements, the Group applied the fair value approach.

The effects on the date of transition and the date of the initial application of the key changes in the Group’s financial statements resulting from its adoption of K-IFRS 1117 are disclosed in Note 36.

3. Material accounting policies (continued)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

ii) Amendments to K-IFRS 1001 'Presentation of Financial Statements' –Disclosure of Accounting Policies

The amendments define material accounting policy information and require disclosure of material accounting policy information. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.

iii) Amendments to K-IFRS 1001 'Presentation of Financial Statements'– Disclosure of gains or losses on valuation of financial liabilities with variable exercise price

The amendments require disclosure of the carrying amount of financial liabilities and the related gain or loss, if all or part of financial instruments with variable exercise price as the contractual term are classified as financial liabilities. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.

iv) Amendments to K-IFRS 1008 ‘Accounting Policies, Changes in Accounting Estimates and Errors’– Definition of Accounting Estimates

The amendments define accounting estimates and clarify the way to distinguish changes in accounting policies from changes in accounting estimates. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.

v) Amendments to K-IFRS 1012 ‘Income Taxes’- Deferred Tax related to Assets and Liabilities arising from a Single Transaction

The amendments add a requirement to the initial recognition exemption by requiring entities to recognize the deferred tax on transactions that give rise to equal amounts of taxable and deductible temporary differences. The amendments will not have a significant impact on the consolidated financial statements.

vi) K-IFRS 1007, ‘Statements of Cash flows’ – Cash and cash equivalents

The Group did not classify deposits with restrictions under relevant regulations, such as reserve deposits, as cash and cash equivalents. However, in accordance with the IFRS Interpretation Committee's agenda decision in April 2022 ‘Demand Deposits with Restrictions on Use arising from a Contract with a Third Party’ and the response to K-IFRS inquiry in December 2022 stating 'whether the reserve deposit should be classified as cash and cash equivalents', the Group reclassified the reserve deposits corresponding to demand deposits as cash and cash equivalents retroactively. The impact of this change in accounting policy is as follows:

Impact on consolidated statements of cash flows


	September 30, 2022	Adjustment	September 30, 2022 (after adjustment)
Cash flows from operating activities	(2,007,217)	7,322,692	5,315,475
Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies	177,937	10,723	188,660
Cash and cash equivalents at the beginning of the period	13,083,885	11,019,558	24,103,443
Cash and cash equivalents at the end of the period	12,892,285	18,352,973	31,245,258

(b) The following new accounting amendments are published but are not mandatory as of September 30, 2023.

i) Amendments to K-IFRS 1001 ‘Presentation of Financial Statements’ amended - Classification of Liabilities as Current or Non-current

The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the expectations of management. Also, the settlement of liability includes the transfer of the entity’s own equity instruments, however, it would be excluded if an option to settle them by the entity’s own equity instruments if compound financial instruments is met the definition of equity instruments and recognized separately from the liability. The amendments should be applied for annual periods beginning on or after January 1, 2024, and earlier application is permitted. The Group currently reviews the effects of the amendments on its financial statements.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management

(a) Overview

Shinhan Financial Group Co., Ltd. (collectively the “Group”) manages various risks that may be arisen by each 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.

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 trend.

- 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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(a) Overview (continued)

ii) Risk management organization (continued)

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 Group.

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

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 exceptions to the limits

Make decisions on approval of the FSS's internal rating law for non-retail and retail credit rating systems

Matters concerning risk disclosure policy

Analysis of crisis situation and 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.

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

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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(a) Overview (continued)

iii) Group Risk Management System (continued)

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 expansion 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.

③ Risk review

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.

④ Risk management

The Group maintains a group-wide risk management system to detect the signals of any risk crisis and to respond on a timely, efficient and flexible basis in the event of a crisis happening, so as to ensure the Group’s survival as a going concern. Each subsidiary maintains crisis planning for four levels of contingencies, namely, 'caution’, ‘alert’, ‘imminent crisis’ and ‘crisis’. Such contingency levels are determined based on quantitative and qualitative monitoring and consequence analysis, and upon the happening of any such contingency, each subsidiary 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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(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 is facing. 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 balance sheets, 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 CRO, the Chief Credit Officer (CCO), the head of the business group, and the head of the risk management department, and 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 credit supervision, and 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 the personal information, the 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 customers, a SOHO evaluation system, and an evaluation system for corporate customers. It is subdivided and refined by each model to reflect the Basel 3 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’s RM (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 Deliberation Committee, the highest decision-making body of the loan, reviews for important loans such as large loans. Credits for retail customers are monitored by an automated credit scoring system (CSS) based on objective statistical methods and bank credit policies.

The Bank operates a regular monitoring system for the regular management of individual loans. The loan officers and RM 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 requested of an adjustment. In accordance with these procedures, the corporate customers are classified as an early warning company, an observation company, and a normal company, and then are managed differently according to the management guidelines for each risk stage, thereby preventing the 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 the party, industry, country, etc.

Shinhan Card's basic policy on credit risk is determined by the Risk Management Committee. The Risk Management Committee consists of the Risk Management Officer (CRO) as the chairman, the head of each business division and supporting division, and the head of the related departments. Apart from the RMC, the credit committee in charge of monitoring corporate credits and other important credits over a certain amount has been established to credit policy decisions, separate from credit monitoring.

Shinhan Card’s credit rating system is divided into ASS(Application Scoring System) and BSS(Behavior Scoring System). Unless a customer fall under “rejections due to policy” (such circumstances include delinquency of other credit card companies) and his/her credit rating is above a certain rate, his/her application scoring is approved. There is a separate screening criterion for credit card customers, who has maintained its relationship with Shinhan Financial Group for a long-term and has 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 utilizes it to monitor members and monitor portfolio risk.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(b) Credit 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 default over the expected life of the financial instrument instead of the change in the amount of expected credit losses.

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 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.

i-1-1) 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.

i-1-2) Measuring term structure of probability of default

Internal credit risk rating is 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 analyses.

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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(b) Credit risk (continued)

i) Techniques, assumptions, and input variables used to measure impairment (continued)

i-1-3) 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 precautionary or below
Borrower with early warning signals	Borrower with early warning signals	Specific pool segment
Negative net assets	Specific pool segment
Adverse audit opinion or disclaimer of opinion	Collective loans for housing for which the constructors are insolvent
Interest coverage ratio below 1 for three consecutive years or negative cash flows from operating activities for two consecutive 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 a specific portfolio 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 the grace period granted to the borrower.

The Group regularly reviews the criteria for determining if there have been significant increases 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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(b) Credit risk (continued)

i) Techniques, assumptions, and input variables used to measure impairment (continued)

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.

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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(b) Credit risk (continued)

i) Techniques, assumptions and input variables used to measure impairment (continued)

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 identified the key macroeconomic variables needed to forecast credit risk and credit losses for each portfolio by analyzing data obtained from past experience and drew correlations across credit risk for each variable. To reflect the prolonged COVID-19 and internal and external economic uncertainties, the Group reviewed not only the existing 3 scenarios (‘upside’, ‘central’, and ‘downside’) but also an additional scenario, the ‘worst’ scenario for final forward-looking information.


Major macroeconomic variables		Correlation between credit risks

GDP growth rate (YoY%)		(-)
Private consumption index growth rate (YoY %)		(-)
Index of equipment investment growth rate (YoY %)		(-)
Consumer price index growth rate (%)		(+)
Balance on current account (100 million dollars)		(-)

The predicted correlations between the macroeconomic variables and the risk of default used by the Group are derived based on the data from the past more than ten years. The Group estimated the probability of default rate and the loss given default, using the changed forward-looking information on major variables such as GDP growth rate and consumer price index growth rate, etc.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

4. Financial risk management (continued)

(b) Credit risk (continued)

i) Techniques, assumptions, and input variables used to measure impairment (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 default. 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 value 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 considering 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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

i) Techniques, assumptions and input variables used to measure impairment (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 value, 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 September 30, 2023 and December 31, 2022 is as follows:


	September 30, 2023	December 31, 2022
Due from banks and loans at amortized cost(1),(3):
Banks	18,515,793	20,184,517
Retail	175,384,006	178,488,924
Government/Public sector/Central bank	21,811,091	15,481,390
Corporations	201,543,034	193,567,313
Card receivables	26,831,892	27,375,162
	444,085,816	435,097,306

Due from banks and loans at fair value through profit or loss(*3):
Banks	118,825	135,214
Corporations	2,068,185	2,280,081
	2,187,010	2,415,295

Securities at fair value through profit or loss	57,166,699	51,502,760
Securities at fair value through other comprehensive income	84,661,827	83,796,575
Securities at amortized cost(*1)	35,238,498	33,371,198
Derivative assets	6,235,295	6,460,515
Other financial assets(1),(2)	31,042,346	21,704,046
Guarantee contracts	18,486,129	18,226,546
Loan commitments and other credit liabilities	214,006,039	205,488,825
	893,109,659	858,063,066

(*1) The maximum exposure amount of due from banks and loans at amortized cost, securities at amortized cost and other financial assets are recorded as net of allowances.

(*2) Other financial assets mainly consist of receivables, accrued income, secured deposits, prepayment and uncollected domestic exchange settlement.

(*3) Classified as similar credit risk group based on calculation of the BIS ratio under new Basel Capital Accord (Basel III).

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

iii) Impairment information by credit risk of financial assets

Details of impaired financial assets due to credit risk as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	12-month expected loss		Lifetime expected 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	15,649,109	2,414,464	472,118	76	-	18,535,767	(19,974)	18,515,793	39,192
Retail	155,931,415	6,940,640	9,192,524	3,162,228	994,404	176,221,211	(837,205)	175,384,006	119,837,238
Government/Public sector /Central bank	20,442,385	1,297,949	75,200	4,248	-	21,819,782	(8,691)	21,811,091	2,500
Corporations	114,670,258	46,901,726	17,075,734	23,816,235	1,166,665	203,630,618	(2,087,584)	201,543,034	110,364,019
Card receivables	20,634,983	2,701,993	1,390,259	2,601,883	624,984	27,954,102	(1,122,210)	26,831,892	12,679
	327,328,150	60,256,772	28,205,835	29,584,670	2,786,053	448,161,480	(4,075,664)	444,085,816	230,255,628
Securities at fair value through other comprehensive income (*)	75,030,831	9,521,815	-	109,181	-	84,661,827	-	84,661,827	-
Securities at amortized cost	32,741,924	2,502,095	-	7,811	-	35,251,830	(13,332)	35,238,498	-
	435,100,905	72,280,682	28,205,835	29,701,662	2,786,053	568,075,137	(4,088,996)	563,986,141	230,255,628

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

iii) Impairment information by credit risk of financial assets (continued)

Details of impaired financial assets due to credit risk as of September 30, 2023 and December 31, 2022 are as follows (continued):


	December 31, 2022
	12-month expected credit loss		Lifetime 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	15,965,893	4,130,763	111,593	177	-	20,208,426	(23,909)	20,184,517	42,418
Retail	160,840,816	6,846,625	8,544,051	2,340,393	704,302	179,276,187	(787,263)	178,488,924	124,229,150
Government/Public sector/ Central bank	14,401,434	1,071,236	15,755	557	-	15,488,982	(7,592)	15,481,390	10,162
Corporations	116,848,133	47,287,302	12,582,994	17,780,729	880,845	195,380,003	(1,812,690)	193,567,313	104,988,250
Card receivables	20,858,888	2,727,744	1,671,259	2,662,353	493,480	28,413,724	(1,038,562)	27,375,162	12,589
	328,915,164	62,063,670	22,925,652	22,784,209	2,078,627	438,767,322	(3,670,016)	435,097,306	229,282,569
Securities at fair value through other comprehensive income(*)	74,623,066	9,106,311	-	67,198	-	83,796,575	-	83,796,575	-
Securities at amortized cost	31,727,910	1,643,689	-	10,515	-	33,382,114	(10,916)	33,371,198	-
	435,266,140	72,813,670	22,925,652	22,861,922	2,078,627	555,946,011	(3,680,932)	552,265,079	229,282,569

(*) Credit loss allowance recognized as other comprehensive income of securities at fair value through other comprehensive income amounted to 35,800 million and 40,614 million as of September 30, 2023 and December 31, 2022.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

iv) Credit risk exposures per credit grade of off-balance items

Credit risk exposures per credit grade of off-balance items as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Grade 1	Grade 2	Impaired	Total
Financial guarantee:
12-month expected credit loss	14,577,652	2,989,403	-	17,567,055
Lifetime expected credit loss	710,047	207,344	-	917,391
Impaired	-	-	1,683	1,683
	15,287,699	3,196,747	1,683	18,486,129
Loan commitment and other credit line:
12-month expected credit loss	183,347,591	19,317,005	-	202,664,596
Lifetime expected credit loss	8,296,459	3,039,696	-	11,336,155
Impaired	-	-	5,288	5,288
	191,644,050	22,356,701	5,288	214,006,039
	206,931,749	25,553,448	6,971	232,492,168


	December 31, 2022
	Grade 1	Grade 2	Impaired	Total
Financial guarantee:
12-month expected credit loss	14,262,990	3,314,584	-	17,577,574
Lifetime expected credit loss	386,159	164,400	-	550,559
Impaired	-	-	98,413	98,413
	14,649,149	3,478,984	98,413	18,226,546
Loan commitment and other credit line:
12-month expected credit loss	178,765,686	17,418,916	-	196,184,602
Lifetime expected credit loss	6,287,658	3,011,715	-	9,299,373
Impaired	-	-	4,850	4,850
	185,053,344	20,430,631	4,850	205,488,825
	199,702,493	23,909,615	103,263	223,715,371

v) 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 sector/Central bank	OECD sovereign credit rating of 6 or above	OECD sovereign credit rating of below 6
Banks and Corporations (including card receivables)	Internal credit rating of BBB+ or above	Internal credit rating of below BBB+
Card receivables (individuals)	Behavior scoring system of grade 7 or above	Behavior scoring system of below grade 7

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

vi) Concentration by industry sector

An analysis of concentration by industry sector of financial instrument as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
Classification(*)	Finance and insurance	Manu -facturing	Retail and wholesale	Real estate and business	Construction service	Hospitality and restaurant	Other	Retail customers	Total
Due from banks and loans at amortized cost
Banks	18,014,308	-	-	-	-	-	501,485	-	18,515,793
Retail	-	-	-	-	-	-	-	175,384,006	175,384,006
Government/Public sector/Central bank	21,688,530	-	-	2,500	-	-	120,061	-	21,811,091
Corporations	16,188,510	58,926,857	23,659,708	47,238,422	4,698,702	6,927,690	43,903,145	-	201,543,034
Card receivables	53,743	298,890	295,183	67,232	50,263	24,104	1,102,488	24,939,989	26,831,892
	55,945,091	59,225,747	23,954,891	47,308,154	4,748,965	6,951,794	45,627,179	200,323,995	444,085,816
Due from banks and loans at FVTPL
Banks	29,705	-	-	-	-	-	89,120	-	118,825
Corporations	1,063,816	519,166	155,857	107,023	36,000	-	186,323	-	2,068,185
	1,093,521	519,166	155,857	107,023	36,000	-	275,443	-	2,187,010
Securities at fair value through profit or loss	32,021,973	2,749,965	1,060,900	1,240,865	256,950	61,163	19,774,883	-	57,166,699
Securities at fair value through other comprehensive income	28,356,683	2,994,171	823,464	1,650,673	1,912,807	50,448	48,873,581	-	84,661,827
Securities at amortized cost	11,632,865	9,955	-	274,929	284,071	-	23,036,678	-	35,238,498
	129,050,133	65,499,004	25,995,112	50,581,644	7,238,793	7,063,405	137,587,764	200,323,995	623,339,850
Off-balance accounts
Guarantees	2,571,327	8,726,033	3,622,371	119,587	174,777	62,924	2,929,530	279,580	18,486,129
Loan commitments and other liabilities related to credit	18,914,378	33,232,532	10,688,014	4,267,847	2,424,214	421,993	17,187,356	126,869,705	214,006,039
	21,485,705	41,958,565	14,310,385	4,387,434	2,598,991	484,917	20,116,886	127,149,285	232,492,168

(*) The concentration details by industry are net book value less allowances.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

vi) Concentration by industry sector (continued)

An analysis of concentration by industry sector of financial instrument as of September 30, 2023 and December 31, 2022 are as follows (continued):


	December 31, 2022
Classification(*)	Finance and insurance	Manu -facturing	Retail and wholesale	Real estate and business	Construction service	Hospitality and restaurant	Other	Retail customers	Total
Due from banks and loans at amortized cost
Banks	19,532,863	-	-	-	29,979	-	621,675	-	20,184,517
Retail	-	-	-	-	-	-	-	178,488,924	178,488,924
Government/Public sector/Central bank	15,422,776	-	-	1,296	-	-	57,318	-	15,481,390
Corporations	16,639,141	57,871,357	22,984,739	45,509,574	4,595,604	6,619,476	39,347,422	-	193,567,313
Card receivables	47,835	276,473	266,220	49,060	51,113	31,333	1,084,143	25,568,985	27,375,162
	51,642,615	58,147,830	23,250,959	45,559,930	4,676,696	6,650,809	41,110,558	204,057,909	435,097,306
Due from banks and loans at FVTPL
Banks	26,115	-	-	69,533	-	-	39,566	-	135,214
Corporations	1,287,647	615,693	94,393	154,329	68,460	-	59,559	-	2,280,081
	1,313,762	615,693	94,393	223,862	68,460	-	99,125	-	2,415,295
Securities at fair value through profit or loss	29,391,874	1,962,916	1,018,407	1,044,165	247,657	89,394	17,748,347	-	51,502,760
Securities at fair value through other comprehensive income	29,352,584	3,077,810	698,295	1,494,691	1,772,839	38,704	47,361,652	-	83,796,575
Securities at amortized cost	10,508,828	9,931	-	278,757	293,930	-	22,279,752	-	33,371,198
	122,209,663	63,814,180	25,062,054	48,601,405	7,059,582	6,778,907	128,599,434	204,057,909	606,183,134
Off-balance accounts
Guarantees	2,444,168	8,998,689	3,403,653	115,912	224,439	112,755	2,576,924	350,006	18,226,546
Loan commitments and other liabilities related to credit	17,871,585	28,414,045	10,535,492	4,106,282	2,275,112	462,976	15,682,906	126,140,427	205,488,825
	20,315,753	37,412,734	13,939,145	4,222,194	2,499,551	575,731	18,259,830	126,490,433	223,715,371

(*) The concentration details by industry are net book value less allowances.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

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 holding for short-term resale, arbitrage through short-term price changes, risk-free arbitrage, and risk hedging. Securities, foreign exchange position, and derivatives are included mainly as trading position. 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 and Shinhan Financial Investment use their own internal model market risk calculation system.

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 linear products, such as stocks and bonds, as well as non-linear products, such as options by applying the market risk standard method. Trading position data such as transactions holding for short-term resale, arbitrage through short-term price changes, risk-free arbitrage, risk hedging is automatically interfaced into measurement system. The system conducts VaR measurement and manages the limit. In addition, Shinhan Bank sets loss limit, sensitivity limit, investment limit, stress limit, etc. for the trading department and desks, and monitors daily.

Shinhan Investment measures daily market risk by applying historical simulation VaR method of 99.9% confidence level-based VaR. 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, the Shinhan Investment sets and manages issuance and transaction limits and stop-loss limit for each department.

4. Financial risk management (continued)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

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 net interest income or changes in 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.

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.

The precision of risk management system differs by each subsidiary. Interest rate VaR and interest rate EaR are measured by internal method or IRRBB (Interest Rate Risk in The Banking Book), and interest rate risk limits are set and monitored based on the interest rate VaR. In accordance with the amendments in Regulations for Supervision of Financial Holding Companies, the Group measures the interest rate risk using the Basel III based IRRBB, which measures the interest rate risk more precisely than the existing BIS standard framework by segmenting maturities of interest rates, reflecting customer behaviour 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 VaR 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. ((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 △ EVE (Economic Value of Equity) and △ 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.

4. Financial risk management (continued)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

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. Dealers in the S&T Center manage Shinhan Bank’s overall position within the set limits through spot trading, forward contracts, currency options, futures and swaps and foreign exchange swaps. 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.

(d) Liquidity risk

Liquidity risk refers to the risk of unexpected losses (such as the disposal of assets abnormal pricing, the procurement of high interest rates, 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 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 pre-emptively 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; 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 caution, anxiety and risk for the real-life liquidity gap ratio, liquidity buffer ratio, and ABS weight compared to borrowings which are major indicators related to liquidity risk. A contingency plan has been established to prepare for a crisis.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Liquidity risk (continued)

The details of the composition of non-derivative financial liabilities and derivative financial instruments by remaining period are as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
Classifications(*1)	Less than 1 month	1~3 months	3~6 months	6 months ~ 1 year	1~5 years	More than 5 years	Total
Non-derivative financial liabilities:
Liabilities:
Deposits(*2)	207,220,497	61,358,117	46,673,851	52,599,360	23,432,731	1,907,291	393,191,847
Financial liabilities at fair value through profit or loss	1,734,278	-	-	-	-	-	1,734,278
Borrowings	16,213,123	5,325,041	5,060,835	8,371,665	11,710,893	11,790,419	58,471,976
Debt securities issued	6,308,888	7,538,096	6,628,151	14,192,524	43,719,521	4,250,228	82,637,408
Financial liabilities designated at fair value through profit of loss	351,152	1,346,769	689,512	1,356,004	2,234,992	1,272,406	7,250,835
Investment contract liabilities	44,384	1,284,330	311,394	103,504	422,495	-	2,166,107
Other financial liabilities	42,948,660	130,185	78,226	336,753	1,718,977	105,379	45,318,180
	274,820,982	76,982,538	59,441,969	76,959,810	83,239,609	19,325,723	590,770,631
Off-balance(*3):
Guarantee contracts	18,486,129	-	-	-	-	-	18,486,129
Other liabilities related to loan commitments	214,006,039	-	-	-	-	-	214,006,039
	232,492,168	-	-	-	-	-	232,492,168

Derivatives:
Derivatives	(178,592)	(101,222)	(128,589)	(254,696)	(1,588,173)	(82,975)	(2,334,247)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Liquidity risk (continued)

The details of the composition of non-derivative financial liabilities and derivative financial instruments by remaining period are as of September 30, 2023 and December 31, 2022 are as follows (continued):


	December 31, 2022
Classifications(*1)	Less than 1 month	1~3 months	3~6 months	6 months ~ 1 year	1~5 years	More than 5 years	Total
Non-derivative financial liabilities:
Liabilities:
Deposits(*2)	210,877,656	42,661,824	41,864,404	71,259,303	21,141,919	2,627,394	390,432,500
Financial liabilities at fair value through profit or loss	1,148,899	-	-	-	-	-	1,148,899
Borrowings	11,960,133	4,760,388	4,798,388	7,249,539	12,298,388	9,024,107	50,090,943
Debt securities issued	4,563,916	8,368,614	9,646,088	16,486,221	37,534,713	5,157,377	81,756,929
Financial liabilities designated at fair value through profit or loss	276,430	725,909	706,117	1,511,517	4,063,511	1,092,827	8,376,311
Investment contract liabilities	58,181	60,526	160,990	1,549,293	304,596	-	2,133,586
Other financial liabilities	27,576,529	104,887	132,284	286,956	1,037,388	113,755	29,251,799
	256,461,744	56,682,148	57,308,271	98,342,829	76,380,515	18,015,460	563,190,967
Off-balance(*3):
Guarantee contracts	18,226,546	-	-	-	-	-	18,226,546
Other liabilities related to loan commitments	205,488,825	-	-	-	-	-	205,488,825
	223,715,371	-	-	-	-	-	223,715,371

Derivatives:
Derivatives	(384,185)	8,881	(7,088)	(220,644)	(1,219,403)	(24,069)	(1,846,508)

(*1) These amounts include cash flows of principal and interest on financial liabilities.

(*2) Demand deposits amounted to 151,135,873 million and 157,446,276 million as of September 30, 2023 and December 31, 2022 are included in the ‘Less than 1 month’ category, respectively.

(*3) Usually, a maturity date exists for guarantees, loan agreements, and other credit offerings provided by the Group. However, if the counterparty requests a payment, the payment must be performed immediately; hence, it is classified as the “earliest sections that can be performed”.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(e) Capital risk management

The criteria for capital adequacy to be complied with by the Group are 8.0% or more of the total equity capital ratio. 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-Systemically Important Banks(D-SIB) capital (1.0%p) and economic response capital (2.5%p) to the existing lowest common equity capital ratio, and economic response capital can be charged up to 2.5%p during credit expansion period. As of September 30, 2023, the minimum regulatory BIS capital ratio to be observed is 11.5%, which is the standard for applying capital conservation capital (2.5%p), D-SIB capital (1.0%p), and economic response capital (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.

As of September 30, 2023, the Group maintains an appropriate capital adequacy ratio in accordance with the BIS Equity Capital Regulation System.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) 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 such as 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 or 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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (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 September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Level 1	Level 2	Level 3	Total
Financial assets
Due from banks measured at FVTPL	-	29,705	-	29,705
Loans at FVTPL	-	764,149	1,393,156	2,157,305
Securities at FVTPL:
Debt securities and other securities	10,790,342	36,154,039	13,840,566	60,784,947
Equity securities	2,044,370	-	1,595,440	3,639,810
Gold/silver deposits	101,162	-	-	101,162
	12,935,874	36,154,039	15,436,006	64,525,919
Derivative assets:
Trading	109,597	5,229,401	558,391	5,897,389
Hedging	-	337,929	-	337,929
	109,597	5,567,330	558,391	6,235,318
Securities measured at FVOCI:
Debt securities	37,658,999	47,002,828	-	84,661,827
Equity securities	695,647	-	1,030,643	1,726,290
	38,354,646	47,002,828	1,030,643	86,388,117
	51,400,117	89,518,051	18,418,196	159,336,364
Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold	1,319,924	-	-	1,319,924
Gold/silver deposits	411,813	-	-	411,813
	1,731,737	-	-	1,731,737
Financial liabilities designated at fair value through profit or loss:
Derivatives-combined securities	-	2,175,559	4,778,136	6,953,695
Debt securities issued	-	233,947	-	233,947
	-	2,409,506	4,778,136	7,187,642
Derivative liabilities:
Trading	118,584	4,999,637	836,875	5,955,096
Hedging	-	1,013,230	323,662	1,336,892
	118,584	6,012,867	1,160,537	7,291,988
	1,850,321	8,422,373	5,938,673	16,211,367

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-1) The fair value hierarchy of financial instruments presented at their fair values in the statements of financial position as of September 30, 2023 and December 31, 2022 are as follows (continued):


	December 31, 2022
	Level 1	Level 2	Level 3	Total
Financial assets:
Due from banks measured at FVTPL	-	26,116	-	26,116
Loans at FVTPL	-	957,543	1,431,637	2,389,180
Securities at FVTPL:
Debt securities and other securities	8,660,224	34,783,829	11,715,251	55,159,304
Equity securities	1,952,419	5,044	1,900,249	3,857,712
Gold/silver deposits	75,969	-	-	75,969
	10,688,612	34,788,873	13,615,500	59,092,985
Derivative assets:
Trading	47,687	5,585,517	529,144	6,162,348
Hedging	-	298,304	-	298,304
	47,687	5,883,821	529,144	6,460,652
Securities measured at FVOCI:
Debt securities	38,446,610	45,349,965	-	83,796,575
Equity securities	691,257	-	981,329	1,672,586
	39,137,867	45,349,965	981,329	85,469,161
	49,874,166	87,006,318	16,557,610	153,438,094
Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold	724,104	-	-	724,104
Gold/silver deposits	422,006	-	-	422,006
	1,146,110	-	-	1,146,110
Financial liabilities designated at fair value through profit or loss:
Derivatives-combined securities	-	389,132	7,930,909	8,320,041
Debt securities issued	-	47,327	-	47,327
	-	436,459	7,930,909	8,367,368
Derivative liabilities:
Trading	249,669	5,809,597	467,522	6,526,788
Hedging	-	838,068	343,759	1,181,827
	249,669	6,647,665	811,281	7,708,615
	1,395,779	7,084,124	8,742,190	17,222,093

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-2) Classification of financial instruments as fair value level 3

The Group uses the evaluation 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 values of financial instruments classified as Level 3 for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 are as follows:


	September 30, 2023
	Financial asset at fair value through profit or loss	Securities at fair value through other comprehensive income 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	15,047,137	981,329	(7,930,909)	61,622	(343,759)
Recognized in total comprehensive income for the period:	254,789	(5,798)	(132,380)	(154,231)	20,097
Recognized in profit (loss) for the period (*1)	255,633	-	(132,855)	(154,231)	20,097
Recognized in other comprehensive income (loss) for the period	(844)	(5,798)	475	-	-
Purchase	4,956,257	55,083	-	(180,547)	-
Issuance	-	-	(3,430,281)	-	-
Settlement	(3,463,777)	-	5,470,384	(5,328)	-
Transfer to level 3(*2)	91,718	29	-	-	-
Transfer from level 3(*2)	(56,962)	-	1,245,050	-	-
Ending balance	16,829,162	1,030,643	(4,778,136)	(278,484)	(323,662)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-2) Classification of financial instruments as fair value level 3 (continued)


	December 31, 2022
	Financial asset at fair value through profit or loss	Securities at fair value through other comprehensive income 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	12,934,419	725,232	(7,622,525)	374,686	(182,749)
Recognized in total comprehensive income for the year:
Recognized in profit (loss) for the year(*1)	(123,983)	-	633,415	(484,756)	(161,010)
Recognized in other comprehensive income (loss) for the year	(336)	(9,629)	(5,919)	-	-
	(124,319)	(9,629)	627,496	(484,756)	(161,010)
Purchase	5,779,999	276,636	-	190,380	-
Issuance	-	-	(6,030,787)	-	-
Settlement	(3,486,410)	(10,910)	5,094,907	(18,763)	-
Transfer to level 3(*2)	173,636	-	-	-	-
Transfer from level 3(*2)	(230,188)	-	-	75	-
Ending balance	15,047,137	981,329	(7,930,909)	61,622	(343,759)

(*1) Recognized profit or loss of the changes in carrying value of financial instruments classified as Level 3 for the nine-month periods ended September 30, 2023 and for the year ended December 31, 2022 is included in the accounts of the statements of comprehensive income, of which the amounts and the related accounts are as follows:


	September 30, 2023
	Amounts recognized in profit or loss	Recognized profit or loss from the financial instruments held as of September 30
Net gain on financial assets at fair value through profit or loss	101,402	120,396
Net loss on financial liabilities designated at fair value through profit or loss	(132,855)	114,358
Net other operating income	20,097	20,097
	(11,356)	254,851

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)


	December 31, 2022
	Amounts recognized in profit or loss	Recognized profit or loss from the financial instruments held as of December 31
Net loss on financial assets at fair value through profit or loss	(608,739)	(607,708)
Net gain on financial liabilities designated at fair value through profit or loss	633,415	762,342
Other operating expenses	(161,010)	(161,010)
	(136,334)	(6,376)

(*2) The investment securities transferred to Level 3 as the availability of observable market data changed due to reasons such as suspension of trading, and the derivative instruments transferred to Level 3 as the availability of observable market data changed due to reasons such as changes in the valuation.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-3) Valuation techniques and significant inputs not observable in markets

i-3-1) Valuation techniques and inputs used in measuring the fair value of financial instruments classified as level 2 as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
Type of financial instrument	Valuation technique	Carrying Value	Significant inputs
Assets
Financial assets at fair value through profit or loss
Debt securities	Discounted cash flow (“DCF”), Net asset value (“NAV”), option model(*)	36,947,893	Discount rate, interest rate, stock price, etc.
Derivative assets
Trading	Option model(*), Implied forward rate calculation method, DCF	5,229,401	Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc.
Hedging		337,929
		5,567,330
Securities at fair value through other comprehensive income
Debt securities	DCF, option model(*)	47,002,828	Discount rate, interest rate, etc.
		89,518,051
Liabilities
Financial liabilities designated at fair value through profit or loss
Debt securities issued	Option model(*)	233,947	Discount rate, volatility
Complex financial instruments	Option model(*)	2,175,559	Discount rate
		2,409,506
Derivative liabilities
Trading	Option model(*), Implied forward rate calculation method, DCF	4,999,637	Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc.
Hedging		1,013,230
		6,012,867
		8,422,373

(*) Option model that the Group uses in valuation includes Black-Scholes model, Hull-White model, etc. Depending on the instrument type, methods such as Monte Carlo simulation are applied to some products.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-3) Valuation techniques and significant inputs not observable in markets (continued)

i-3-1) Valuation techniques and inputs used in measuring the fair value of financial instruments classified as level 2 as of September 30, 2023 and December 31, 2022 are as follows (continued):


	December 31, 2022
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(*)	35,767,488	Discount rate, interest rate, stock price, etc.
Equity securities	NAV	5,044	Price of underlying assets such as stocks, bonds, etc.
		35,772,532
Derivative assets
Trading	Option model(*), Implied forward interest rate, DCF	5,585,517	Discount rate, foreign exchange rate, volatility, stock price and commodity index, etc.
Hedging	Option model(*), Implied forward interest rate, DCF	298,304
		5,883,821
Securities at fair value through other comprehensive income
Debt securities	DCF, Option model(*)	45,349,965	Interest rate, discount, etc.
		87,006,318
Liabilities
Financial liabilities designated at fair value through profit or loss
Debt securities issued	Option model(*)	47,327	Discount rate, volatility
Compound financial instruments	Option model(*)	389,132	Discount rate
		436,459
Derivative liabilities
Trading	Option model(*), Implied forward rate calculation method, DCF	5,809,597	Discount rate, foreign exchange rate, volatility, stock price and commodity index, etc.
Hedging		838,068
		6,647,665
		7,084,124

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-3) Valuation techniques and significant inputs not observable in markets (continued)

i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
Type of financial instrument	Valuation technique	Carrying value(*2)	Significant unobservable inputs	Range
Financial assets
Financial assets at fair value through profit or loss
Debt securities	DCF, NAV, Option model(*1), Income approach	15,233,722	The volatility of the underlying asset, Discount rate, Correlations, Growth rate, and Liquidation value	0.60%~74.50% 1.90%~27.79% 19.52%~90.00% 0.00% 0.00%
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis, cost method	1,595,440	The volatility of the underlying asset, Discount rate, Correlations, Growth rate, and interest rates	20.30%~29.20% 5.20%~29.20% 11.90%~65.90% 0.00% 0.56%~0.96%
		16,829,162
Derivative assets
Equity and foreign exchange related	Option model(*1)	71,422	The volatility of the underlying asset, and Correlations	7.50%~82.70% -42.40%~85.20%
Interest rates related	Option model(*1)	60,795	The volatility of the underlying asset, and Correlations	0.60%~1.00% 55.90%~77.80%
Credit and commodity related	Option model(*1)	426,174	The volatility of the underlying asset, Correlations and Hazard rate	34.60%~54.90% 99.8%~99.9% 0.10%~4.30%
		558,391
Securities at fair value through other comprehensive income
	DCF, NAV, Option model(*1), Comparable company analysis	1,030,643	The volatility of the underlying asset, Discount rate, Growth rate and interest rates	5.17%~27.21% 6.19%~21.01% -1.00%~1.00% 0.59%~10.85%
		18,418,196

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-3) Valuation techniques and significant inputs not observable in markets (continued)


	September 30, 2023
Type of financial instrument	Valuation technique	Carrying value(*2)	Significant unobservable inputs	Range
Financial liabilities
Financial liabilities designated at fair value through profit or loss
Equity related	Option model(*1)	4,778,136	The volatility of the underlying asset, and Correlations	0.20%~82.70% -42.40%~85.20%
Derivative liabilities
Equity and foreign exchange related	Option model(*1)	352,493	The volatility of the underlying asset, and Correlations	5.30%~82.70% 5.40%~87.40%
Interest rates related	Option model(*1)	654,024	The volatility of the underlying asset, Regression coefficient, and Correlations	0.20%~1.12% 0.00%~1.96% 23.30%~90.34%
Credit and commodity related	Option model(*1)	154,020	The volatility of the underlying asset, Correlations, and Hazard rate	0.20%~25.00% -11.60% ~77.80% 0.10%~4.30%
		1,160,537
		5,938,673

(*1) Option model that the Group uses in valuation includes Black-Scholes model, Hull-White model, etc. Depending on the instrument type, methods such as Monte Carlo simulation are applied to some products.

(*2) There is no disclosure for valuation techniques and input variables related to items where the carrying amount is recognized as a reasonable approximation of fair value and the carrying amount is disclosed at fair value.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-3) Valuation techniques and significant inputs not observable in markets (continued)


	December 31, 2022
Type of financial instrument	Valuation technique	Carrying value(*2)	Significant unobservable inputs	Range
Financial assets
Financial asset at fair value through profit or loss
Debt securities	DCF, NAV, Option model(*1), Income approach	13,146,888	The volatility of the underlying asset, Discount rate, Correlations, Growth rate, and Liquidation value	0.60%~68.10% 2.92%~38.87% 15.94%~90.00% 0.00% 0.00%
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis, Transaction case price, Cost method	1,900,249	The volatility of the underlying asset, Discount rate and Correlations	20.50%~25.30% 5.59%~15.18% 11.90%~66.00%
		15,047,137
Derivative assets
Equity and foreign exchange related	Option model(*1)	54,541	The volatility of the underlying asset and Correlations	4.89%~84.40% 7.30%~72.30%
Interest rates related	Option model(*1)	51,025	The volatility of the underlying asset and Correlations	0.60%~1.10% 76.60%~78.90%
Credit and commodity related	Option model(*1)	423,578	The volatility of the underlying asset, Correlations and Hazard Rate	42.20%~55.90% 99.9% 1.20%~3.60%
		529,144
Securities at fair value through other comprehensive income
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis	981,329	The volatility of the underlying asset, Discount rate, Growth rate and interest rates	28.62% 9.08%~19.14% 0.00%~2.00% 0.56%~11.42%
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis	981,329		28.62% 9.08%~19.14% 0.00%~2.00% 0.56%~11.42%
		16,557,610

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-3) Valuation techniques and significant inputs not observable in markets (continued)


	December 31, 2022
Type of financial instrument	Valuation technique	Carrying value(*2)	Significant unobservable inputs	Range
Financial liabilities
Financial liabilities designated at fair value through profit or loss
Equity related	Option model(*1)	7,930,909	The volatility of the underlying asset Correlations	0.20%~84.40% -44.20%~86.30%
Derivative liabilities
Equity and foreign exchange related	Option model(*1)	13,841	The volatility of the underlying asset, and Correlations	4.89%~84.40% -42.30%~87.60%
Interest rates related	Option model(*1)	642,123	The volatility of the underlying asset, Regression coefficient and Correlations	0.20%~1.10% 0.00%~1.46% 23.60%~90.34%
Credit and commodity related	Option model(*1)	155,317	The volatility of the underlying asset, Correlations and Hazard Rate	0.20%~45.70% 23.60%~78.90% 1.20%~2.90%
		811,281
		8,742,190

(*2) There is no disclosure for valuation techniques and input variables related to items where the carrying value is recognized as a reasonable approximation of fair value and the carrying value is disclosed at fair value.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-4) Sensitivity for changing in unobservable inputs

For level 3 fair value measurement, effect on profit (loss) followed by changing one or more of the unobservable inputs to reasonably possible alternative assumptions as of September 30, 2023 and December 31, 2022.


	September 30, 2023
	Favorable changes	Unfavorable changes
Financial assets:
Effects on profit or loss for the period(1)(2):
Financial assets at fair value through profit or loss	47,558	(44,023)
Derivative assets	19,863	(25,454)
Securities at fair value through other comprehensive income (*2)	46,126	(38,507)
	113,547	(107,984)
Financial liabilities:
Effects on profit or loss for the period(*1):
Financial liabilities designated at fair value through profit or loss	42,629	(36,963)
Derivative liabilities	21,962	(18,998)
	64,591	(55,961)


	December 31, 2022
	Favorable changes	Unfavorable changes
Financial assets:
Effects on profit or loss for the period(1)(2):
Financial assets at fair value through profit or loss	57,763	(51,803)
Derivative assets	12,499	(11,465)
Securities at fair value through other comprehensive income(*2)	49,262	(40,614)
	119,524	(103,882)
Financial liabilities:
Effects on profit or loss for the period(*1):
Financial liabilities designated at fair value through profit or loss	57,121	(60,525)
Derivative liabilities	16,388	(16,908)
	73,509	(77,433)

(*1) Fair value changes are calculated by increasing or decreasing the volatility of the underlying asset or correlations (-10~10%p), which is the major significant unobservable input.

(*2) Fair value changes are calculated by increasing or decreasing the growth rate and discount rate (-1~1%p), which are the major unobservable inputs.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (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 value 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 value 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 value 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 carrying value is used instead of fair value for reserve for retirement pension contracts in accordance with the Insurance Act and the Enforcement Rules of the Insurance Business Act, due to the difficulties with calculating expected cash flows.
Other financial assets and other financial liabilities		The carrying value 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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

ii) Financial instruments measured at amortized cost (continued)

ii-2) The carrying value and the fair value of financial instruments measured at amortized cost as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
	Carrying value	Fair value	Carrying value	Fair value
Assets:

Deposits measured at amortized cost	33,253,670	33,077,949	27,746,360	27,660,501

Loans measured at amortized cost	411,354,717	411,097,612	407,898,972	404,855,790

Securities measured at amortized cost:
Government bonds	22,342,078	21,069,107	21,523,230	20,215,099
Financial institution bonds	6,209,556	6,206,960	5,423,771	5,387,207
Corporation bonds	6,686,864	6,329,074	6,424,197	5,971,007
	35,238,498	33,605,141	33,371,198	31,573,313
Other financial assets	31,144,190	31,411,904	21,826,601	22,059,918
	510,991,075	509,192,606	490,843,131	486,149,522
Liabilities:
Deposit liabilities:
Demand deposits	151,135,874	151,135,874	157,446,276	157,446,276
Time deposits	205,285,293	205,171,126	196,265,911	195,886,583
Certificate of deposits	13,115,408	13,168,921	14,921,375	14,748,736
Issued bill deposits	7,539,155	7,538,447	6,631,858	6,631,276
CMA deposits	4,786,402	4,786,402	4,634,010	4,634,010
Others	3,132,824	3,132,682	3,088,864	3,088,542
	384,994,956	384,933,452	382,988,294	382,435,423
Borrowing debts:
Call-money	3,213,013	3,213,013	1,276,301	1,276,301
Bills sold	14,474	14,400	15,057	15,006
Bonds sold under repurchase agreements	13,686,884	13,686,884	9,544,536	9,544,536
Borrowings	38,891,680	38,536,249	38,443,281	37,602,027
	55,806,051	55,450,546	49,279,175	48,437,870
Debt securities issued:
Borrowings in Korean won	62,842,391	61,939,730	63,927,063	62,059,253
Borrowings in foreign currency	14,339,349	14,177,789	13,361,720	13,051,576
	77,181,740	76,117,519	77,288,783	75,110,829

Investment contract liabilities	2,166,107	2,166,107	2,133,586	2,133,586
Other financial liabilities	49,406,460	49,353,143	31,992,438	31,683,186
	569,555,314	568,020,767	543,682,276	539,800,894

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

ii) Financial instruments measured at amortized cost (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 disclosed at their fair value as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Level 1	Level 2	Level 3	Total
Assets:
Deposits measured at amortized cost	418,752	32,659,197	-	33,077,949

Loans measured at amortized cost	-	4,098,038	406,999,574	411,097,612

Securities measured at amortized cost:
Government bonds	9,993,358	11,075,749	-	21,069,107
Financial institution bonds	2,000,150	4,206,810	-	6,206,960
Corporation bonds	-	6,329,074	-	6,329,074
	11,993,508	21,611,633	-	33,605,141

Other financial assets	-	20,988,491	10,423,413	31,411,904
	12,412,260	79,357,359	417,422,987	509,192,606
Liabilities:
Deposit liabilities:
Demand deposits	-	151,135,874	-	151,135,874
Time deposits	-	-	205,171,126	205,171,126
Certificate of deposits	-	-	13,168,921	13,168,921
Issued bill deposits	-	-	7,538,447	7,538,447
CMA deposits	-	4,786,402	-	4,786,402
Others	-	3,091,097	41,585	3,132,682
	-	159,013,373	225,920,079	384,933,452
Borrowing debts:
Call-money	-	3,213,013	-	3,213,013
Bills sold	-	-	14,400	14,400
Bonds sold under repurchase agreements	-	-	13,686,884	13,686,884
Borrowings	-	64,312	38,471,937	38,536,249
	-	3,277,325	52,173,221	55,450,546
Debt securities issued:
Borrowings in Korean won	-	30,334,750	31,604,980	61,939,730
Borrowings in foreign currency	-	10,953,255	3,224,534	14,177,789
	-	41,288,005	34,829,514	76,117,519

Investment contract liabilities	-	-	2,166,107	2,166,107
Other financial liabilities	-	23,357,802	25,995,341	49,353,143
	-	226,936,505	341,084,262	568,020,767

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(f) Measurement of fair value (continued)

ii) Financial instruments measured at amortized cost (continued)


	December 31, 2022
	Level 1	Level 2	Level 3	Total
Assets:
Deposits measured at amortized cost	431,650	27,228,851	-	27,660,501

Loans measured at amortized cost	-	5,832,484	399,023,306	404,855,790

Securities measured at amortized cost:
Government bonds	9,109,801	11,105,298	-	20,215,099
Financial institution bonds	1,898,457	3,488,750	-	5,387,207
Corporation bonds	-	5,971,007	-	5,971,007
	11,008,258	20,565,055	-	31,573,313

Other financial assets	-	12,598,487	9,461,431	22,059,918
	11,439,908	66,224,877	408,484,737	486,149,522
Liabilities:
Deposit liabilities:
Demand deposits	-	157,446,276	-	157,446,276
Time deposits	-	-	195,886,583	195,886,583
Certificate of deposits	-	-	14,748,736	14,748,736
Issued bill deposits	-	-	6,631,276	6,631,276
CMA deposits	-	4,634,010	-	4,634,010
Others	-	3,035,338	53,204	3,088,542
	-	165,115,624	217,319,799	382,435,423
Borrowing debts:
Call-money	-	1,276,301	-	1,276,301
Bills sold	-	-	15,006	15,006
Bonds sold under repurchase agreements	-	-	9,544,536	9,544,536
Borrowings	-	19,922	37,582,105	37,602,027
	-	1,296,223	47,141,647	48,437,870
Debts:
Borrowings in Korean won	-	31,665,994	30,393,259	62,059,253
Borrowings in foreign currency	-	9,625,410	3,426,166	13,051,576
	-	41,291,404	33,819,425	75,110,829

Investment contract liabilities	-	-	2,133,586	2,133,586
Other financial liabilities	-	8,921,782	22,761,404	31,683,186
	-	216,625,033	323,175,861	539,800,894

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(g) Classification by categories of financial instruments

Financial assets and liabilities are measured at fair value or amortized cost. The financial instruments measured at fair value or amortized costs are measured in accordance with the Group’s valuation methodologies, which are described in Note 4(f) Measurement of fair value.

The carrying value of each category of financial assets and financial liabilities as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	FVTPL	FVOCI	Amortized cost	Derivatives held for hedging	Total
Assets:
Cash and due from banks at amortized cost	-	-	35,888,889	-	35,888,889
Due from banks at fair value through profit or loss	29,705	-	-	-	29,705
Securities at fair value through profit or loss	64,525,919	-	-	-	64,525,919
Derivatives assets	5,897,389	-	-	337,929	6,235,318
Loans at fair value through profit or loss	2,157,305	-	-	-	2,157,305
Loans at amortized cost	-	-	411,354,717	-	411,354,717
Securities at fair value through other comprehensive income	-	86,388,117	-	-	86,388,117
Securities at amortized cost	-	-	35,238,498	-	35,238,498
Others	-	-	31,144,190	-	31,144,190
	72,610,318	86,388,117	513,626,294	337,929	672,962,658

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(g) Classification by categories of financial instruments (continued)

The carrying value of each category of financial assets and financial liabilities as of September 30, 2023 and December 31, 2022 are as follows (continued):


	September 30, 2023
	FVTPL	FVTPL liabilities designated	Amortized cost	Derivatives held for hedging	Total
Liabilities:
Deposits	-	-	384,994,956	-	384,994,956
Financial liabilities at fair value through profit or loss	1,731,737	-	-	-	1,731,737
Financial liabilities designated at FVTPL	-	7,187,642	-	-	7,187,642
Derivatives liabilities	5,955,096	-	-	1,336,892	7,291,988
Borrowings	-	-	55,806,051	-	55,806,051
Debt securities issued	-	-	77,181,740	-	77,181,740
Investment contract liabilities	-	-	2,166,107	-	2,166,107
Others	-	-	49,406,460	-	49,406,460
	7,686,833	7,187,642	569,555,314	1,336,892	585,766,681

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(g) Classification by categories of financial instruments (continued)

The carrying value of each category of financial assets and financial liabilities as of September 30, 2023 and December 31, 2022 are as follows (continued):


	December 31, 2022
	FVTPL	FVOCI	Amortized cost	Derivatives held for hedging	Total
Assets:
Cash and due from banks at amortized cost	-	-	30,050,840	-	30,050,840
Due from banks at fair value through profit or loss	26,116	-	-	-	26,116
Securities at fair value through profit or loss	59,092,985	-	-	-	59,092,985
Derivatives assets	6,162,348	-	-	298,304	6,460,652
Loans at fair value through profit or loss	2,389,180	-	-	-	2,389,180
Loans at amortized cost	-	-	407,898,972	-	407,898,972
Securities at fair value through other comprehensive income	-	85,469,161	-	-	85,469,161
Securities at amortized cost	-	-	33,371,198	-	33,371,198
Others	-	-	21,826,601	-	21,826,601
	67,670,629	85,469,161	493,147,611	298,304	646,585,705

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(g) Classification by categories of financial instruments (continued)

The carrying value of each category of financial assets and financial liabilities as of September 30, 2023 and December 31, 2022 are as follows (continued):


	December 31, 2022
	FVTPL	FVTPL liabilities designated	Amortized cost	Derivatives held for hedging	Total
Liabilities:
Deposits	-	-	382,988,294	-	382,988,294
Financial liabilities at fair value through profit or loss	1,146,110	-	-	-	1,146,110
Financial liabilities designated at FVTPL	-	8,367,368	-	-	8,367,368
Derivatives liabilities	6,526,787	-	-	1,181,828	7,708,615
Borrowings	-	-	49,279,175	-	49,279,175
Debt securities issued	-	-	77,288,783	-	77,288,783
Investment contract liabilities	-	-	2,133,586	-	2,133,586
Others	-	-	31,992,438	-	31,992,438
	7,672,897	8,367,368	543,682,276	1,181,828	560,904,369

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

5. Change in subsidiaries

(a) Change in major consolidated subsidiaries for the year ended December 31, 2022 are as follows:


	Company	Description
Included	Shinhan EZ General Insurance, Ltd.	Newly acquired subsidiary
Excluded	Shinhan Alternative Investment Management Inc.	Dissolved due to merger with Shinhan Asset Management Co., Ltd

(*) Subsidiaries such as trust, beneficiary certificate, securitization special purpose companies and private equity funds which are not actually operating their own business are excluded.

6. Operating segments

(a) Segment information

The general descriptions by operating segments as of September 30, 2023 are as follows:


Segment		Description

Banking		Credit to customers, deposits from customers, and accompanying work
Credit card		Sales of credit cards, cash services, card loan services, installment financing, lease and accompanying work
Securities		Securities trading, consignment trading, underwriting and accompanying work
Life insurance		Life insurance business and accompanying work
Credit		Facility rental, new technology business financing and 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 businesses

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

6. Operating segments (continued)

(b) The following tables provide information of operating income(expense) and net profit(loss) for each operating segment for the nine-month periods ended September 30, 2023 and 2022.


	September 30, 2023
	Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment	Total
Net interest income (expense)	6,363,778	1,405,585	303,836	(153,861)	192,797	102,434	(183,237)	8,031,332
Net fees and commission income (expense)	567,072	694,015	378,132	(1,313)	13,926	294,995	17,942	1,964,769
Reversal of (provision for) allowance for credit loss	(620,932)	(639,517)	(76,262)	(7,564)	(76,470)	(51,822)	361	(1,472,206)
General and administrative expenses	(2,775,978)	(576,164)	(565,679)	(166,550)	(49,512)	(295,652)	133,153	(4,296,382)
Other operating income (expense)	(173,612)	(182,886)	309,428	918,887	249,312	269,389	(421,665)	968,853
Operating income	3,360,328	701,033	349,455	589,599	330,053	319,344	(453,446)	5,196,366
Equity method income (expense)	4,128	(995)	11,020	661	51,085	1,388	28,212	95,499
Income tax expense	786,629	159,937	77,925	152,208	85,391	61,843	(50,320)	1,273,613
Profit for the period	2,534,359	548,135	223,351	427,623	292,863	259,150	(383,533)	3,901,948
Controlling interest	2,534,174	547,143	223,422	427,623	292,863	259,150	(466,087)	3,818,288
Non-controlling interests	185	992	(71)	-	-	-	82,554	83,660


	September 30, 2022
	Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment	Total
Net interest income (expense)	6,142,418	1,353,739	327,274	(87,281)	196,716	105,523	(206,722)	7,831,667
Net fees and commission income (expense)	610,070	548,287	408,517	(1,330)	26,608	304,469	9,693	1,906,314
Reversal of (provision for) allowance for credit loss	(410,343)	(368,498)	(9,022)	(16,935)	7,713	(49,888)	478	(846,495)
General and administrative expenses	(2,518,609)	(559,904)	(511,917)	(103,727)	(45,623)	(283,737)	151,157	(3,872,360)
Other operating income (expense)	(389,359)	(199,945)	71,235	724,200	136,470	155,551	(191,853)	306,299
Operating income	3,434,177	773,679	286,087	514,927	321,884	231,918	(237,247)	5,325,425
Equity method income(expense)	7,352	7,749	22,331	(2,832)	56,127	3,391	(14,463)	79,655
Income tax expense	896,522	198,673	190,144	126,109	92,609	46,524	(23,789)	1,526,792
Profit for the period	2,539,623	659,718	570,295	370,392	282,447	194,949	(247,700)	4,369,724
Controlling interest	2,539,063	658,057	570,380	370,392	282,447	194,949	(308,515)	4,306,773
Non-controlling interests	560	1,661	(85)	-	-	-	60,815	62,951

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

6. Operating segments (continued)

(c) The following tables provide information of net interest income (expense) from external customers and internal transactions of each operating segment for the nine-month periods ended September 30, 2023 and 2022.


	September 30, 2023
	Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment(*)	Total
Net interest income (expense) from:
External customers (*)	6,367,982	1,458,355	311,204	(159,892)	204,184	37,736	(188,237)	8,031,332
Internal transactions	(4,204)	(52,770)	(7,368)	6,031	(11,387)	64,698	5,000	-
	6,363,778	1,405,585	303,836	(153,861)	192,797	102,434	(183,237)	8,031,332

(*) Consolidated adjustment to net interest income(expense) from external customers is from the securities and others which were measured at fair values as a part of business combination accounting.


	September 30, 2022
	Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment(*)	Total
Net interest income (expense) from:
External customers (*)	6,148,218	1,396,796	340,355	(88,767)	203,512	46,214	(214,661)	7,831,667
Internal transactions	(5,800)	(43,057)	(13,081)	1,486	(6,796)	59,309	7,939	-
	6,142,418	1,353,739	327,274	(87,281)	196,716	105,523	(206,722)	7,831,667

(*) Consolidated adjustment to net interest income(expense) from external customers is from the securities and others which were measured at fair values as a part of business combination accounting.

(d) The following tables provide information of net fees and commission income (expense) from external customers and internal transactions of each operating segment for the nine-month periods ended September 30, 2023 and 2022.


	September 30, 2023
	Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment	Total
Net fees and commission income (expense) from:
External customers	600,629	732,560	383,033	2,827	11,748	233,972	-	1,964,769
Internal transactions	(33,557)	(38,545)	(4,901)	(4,140)	2,178	61,023	17,942	-
	567,072	694,015	378,132	(1,313)	13,926	294,995	17,942	1,964,769


	September 30, 2022
	Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment	Total
Net fees and commission income (expense) from:
External customers	645,870	582,842	416,335	7,703	23,861	229,703	-	1,906,314
Internal transactions	(35,800)	(34,555)	(7,818)	(9,033)	2,747	74,766	9,693	-
	610,070	548,287	408,517	(1,330)	26,608	304,469	9,693	1,906,314

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

7. Cash and due from banks at amortized cost

Restricted due from banks in accordance with Related Regulations or Acts as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022	Related Regulations or Acts
Due from banks denominated in Korean won:
Reserve deposits	14,389,127	8,647,429	Article 55 of the Bank of Korea Act
Other deposits	1,966,250	2,216,899	Article 74 of the Capital Markets and Financial Investment Business Act, etc.
	16,355,377	10,864,328

Due from banks denominated in foreign currency	3,866,544	2,975,849	Articles of the Bank of Korea Act, New York State Banking Act, derivatives related, etc.
	20,221,921	13,840,177

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

8. Financial assets at fair value through profit or loss

(a) Financial assets at fair value through profit or loss as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Debt instruments:
Governments	6,727,079	5,961,610
Financial institutions	10,562,243	11,788,689
Corporations	10,012,908	7,826,772
Stocks with put option	627,099	359,795
Equity investment with put option	4,462,636	3,185,222
Beneficiary certificates	14,805,161	13,782,117
Commercial papers	6,617,611	4,939,927
CMA	3,887,458	3,850,613
Others(*)	3,082,752	3,464,559
	60,784,947	55,159,304

Equity instruments:
Stocks	3,522,605	3,739,343
Equity investment	8,441	38,515
Others	108,764	79,854
	3,639,810	3,857,712
	64,424,757	59,017,016
Others:
Loans	2,157,305	2,389,180
Due from banks	29,705	26,116
Gold/silver deposits	101,162	75,969
	66,712,929	61,508,281

(*) As of September 30, 2023 and December 31, 2022, restricted reserves for claims of customers’ deposits (trusts) are 1,744,352 million and 1,705,724 million, respectively.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

9. Derivatives

(a) The notional amounts of derivatives outstanding as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Foreign currency related:
Over the counter:
Currency forwards	170,575,171	129,544,881
Currency swaps	47,100,775	40,539,223
Currency options	1,611,129	1,327,752
	219,287,075	171,411,856
Exchange traded:
Currency futures	2,272,439	1,325,660
	221,559,514	172,737,516
Interest rates related:
Over the counter:
Interest rate forwards and swaps	41,711,136	37,170,647
Interest rate options	461,577	226,924
	42,172,713	37,397,571
Exchange traded:
Interest rate futures	2,834,597	2,924,135
Interest rate option	71,443	-
Interest rate swaps(*)	93,475,934	94,803,271
	96,381,974	97,727,406
	138,554,687	135,124,977
Credit related:
Over the counter:
Credit swaps	5,483,446	5,155,334

Equity related:
Over the counter:
Equity swaps and forwards	3,879,803	4,008,263
Equity options	3,183,915	878,122
	7,063,718	4,886,385
Exchange traded:
Equity futures	3,318,618	3,317,515
Equity options	695,613	1,444,098
	4,014,231	4,761,613
	11,077,949	9,647,998
Commodity related:
Over the counter:
Commodity swaps and forwards	1,163,585	898,332
Commodity options	8,000	8,000
	1,171,585	906,332
Exchange traded:
Commodity futures and options	85,617	75,770
	1,257,202	982,102
Hedge:
Currency forwards	2,052,028	1,249,589
Currency swaps	4,477,618	4,677,553
Interest rate forwards and swaps	14,152,863	16,475,525
	20,682,509	22,402,667
	398,615,307	346,050,594

(*) The notional amounts of derivatives outstanding to be settled in the ‘Central Counter Party (CCP)’ system.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

9. Derivatives (continued)

(b) Fair values of derivative instruments as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
	Assets	Liabilities	Assets	Liabilities
Foreign currency related:
Over the counter:
Currency forwards	2,460,146	1,987,408	3,089,759	2,838,793
Currency swaps	1,818,678	2,093,730	1,625,286	1,807,229
Currency options	17,682	18,279	14,776	13,603
	4,296,506	4,099,417	4,729,821	4,659,625
Exchange traded:
Currency futures	1,864	10	19	928
	4,298,370	4,099,427	4,729,840	4,660,553
Interest rates related:
Over the counter:
Interest rate forwards and swaps	912,565	1,183,892	772,513	1,062,772
Interest rate options	4,874	15,392	5,169	1,983
	917,439	1,199,284	777,682	1,064,755
Exchange traded:
Interest rate forwards	7,999	666	2,555	972
Interest rate futures	110	-	-	-
	8,109	666	2,555	972
	925,548	1,199,950	780,237	1,065,727
Credit related:
Over the counter:
Credit swaps	427,172	23,916	423,966	19,235

Equity related:
Over the counter:
Equity swap and forwards	136,758	290,037	169,504	393,810
Equity options	4,251	91,648	2,704	1,139
	141,009	381,685	172,208	394,949
Exchange traded:
Equity futures	73,789	34,658	31,051	101,622
Equity options	25,674	80,794	11,414	145,895
	99,463	115,452	42,465	247,517
	240,472	497,137	214,673	642,466
Commodity related:
Over the counter:
Commodity swaps and forwards	5,665	132,210	10,983	136,701
Commodity options	-	-	-	1,517
	5,665	132,210	10,983	138,218
Exchange traded:
Commodity futures and options	162	2,456	2,649	589
	5,827	134,666	13,632	138,807
Hedge:
Currency forwards	14,397	83,125	23,143	37,757
Currency swaps	200,721	84,416	158,297	75,070
Interest rate forwards and swaps	122,811	1,169,351	116,864	1,069,000
	337,929	1,336,892	298,304	1,181,827
	6,235,318	7,291,988	6,460,652	7,708,615

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

9. Derivatives (continued)

(c) Gain or loss on valuation of derivatives for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month		Three- month	Nine- month
Foreign currency related:
Over the counter:
Currency forwards	220,506	334,058		577,471	912,301
Currency swaps	(233,515)	(376,491)		(643,638)	(1,109,837)
Currency options	2,644	3,224		2,166	9,138
	(10,365)	(39,209)		(64,001)	(188,398)
Exchange traded:
Currency futures	1,658	1,900		(11,059)	(15,927)
	(8,707)	(37,309)		(75,060)	(204,325)
Interest rates related:
Over the counter:
Interest rate forwards and swaps	(2,682)	85,716		(71,118)	(378,096)
Interest rate options	(836)	(3,785)		(121)	1,524
	(3,518)	81,931		(71,239)	(376,572)
Exchange traded:
Interest rate futures, etc.	(2,332)	7,189		14,810	13,649
	(5,850)	89,120		(56,429)	(362,923)
Credit related:
Over the counter:
Credit swaps	(2,052)	(4,618)		(7,081)	(19,535)

Equity related:
Over the counter:
Equity swap and forwards	(101,512)	(55,858)		(232,472)	(368,723)
Equity options	(56,908)	(89,599)		(102,220)	(96,556)
	(158,420)	(145,457)		(334,692)	(465,279)
Exchange traded:
Equity futures	59,255	39,131		40,909	38,375
Equity options	(41,709)	(28,094)		(176,544)	(313,133)
	17,546	11,037		(135,635)	(274,758)
	(140,874)	(134,420)		(470,327)	(740,037)
Commodity related:
Over the counter:
Commodity swaps and forwards	1,276	7,565		(94,877)	(208,208)
Commodity options	13	1,516		1,440	5,991
	1,289	9,081		(93,437)	(202,217)
Exchange traded:
Commodity futures and options	(5,575)	(2,295)		(7,457)	10,885
	(4,286)	6,786		(100,894)	(191,332)
Hedge:	(118,387)	(51,946)		(186,485)	(791,465)
	(280,156)	(132,387)		(896,276)	(2,309,617)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

9. Derivatives (continued)

(d) Nominal amounts and average hedge ratio for hedging instruments as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 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 value	4,290,008	1,010,902	1,399,308	1,613,974	1,861,404	3,977,267	14,152,863
Average price condition (*1)	0.79%	1.88%	1.79%	1.42%	1.36%	0.77%	1.11%
Average hedge ratio	100%	100%	100%	100%	100%	100%	100%

Exchange risk(*2):
Nominal value	2,136,049	1,035,798	1,561,514	1,760,322	1,232,222	308,269	8,034,174
Average hedge ratio	100%	100%	100%	100%	100%	100%	100%

(*1) Interest rate swaps consist of 3M CD, 3M USD Libor, 3M Euribor, and 3M AUD Bond.

(*2) The average exchange rates of net investment hedge instruments are USD/KRW 1,223.97, JPY/KRW 9.46, EUR/KRW 1,352.17, GBP/KRW 1,542.84, AUD/KRW 864.65,CAD/KRW 921.27, CNY/KRW 177.98, and SEK/KRW 126.18 .


	December 31, 2022
	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	5,338,313	3,023,185	612,113	2,114,152	819,140	4,568,622	16,475,525
Average price condition (*1)	0.72%	0.82%	2.53%	1.52%	1.48%	0.68%	0.94%
Average hedge ratio	100%	100%	100%	100%	100%	100%	100%

Exchange risk(*2):
Nominal values	2,620,663	628,860	1,108,785	1,913,070	942,804	-	7,214,182
Average hedge ratio	100%	100%	100%	100%	100%	-	100%

(*1) Interest rate swaps consist of 3M CD, 3M USD Libor, 3M Euribor, and 3M AUD Bond.

(*2) The average exchange rates of net investment hedge instruments are USD/KRW 1,198.11, JPY/KRW 10.13,

EUR/KRW 1,336.97, GBP/KRW 1,484.00, AUD/KRW 812.44, CAD/KRW 948.79, SGD/KRW 859.87,

CNY/KRW 190.96, and SEK/KRW 125.49.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

9. Derivatives (continued)

(e) Hedge relationships affected by an interest rate benchmark reform

The revised Standard requires exception to the analysis of future information in relation to the application of hedge accounting, while uncertainty exists due to movements of the interest rate benchmark reform. The exception assumes that when assessing whether the expected cash flows that comply with existing interest rate benchmarks are highly probable, whether there is an economic relationship between the hedged item and the hedging instrument, and whether there is a high hedge effectiveness between the hedged item and the hedging instrument, the interest rate indicators that are based on the hedged item do not change due to the effect of the interest rate benchmark reform.

KRW CD interest rates will be replaced by Korea Overnight Financing Repo Rates(KOFR). The Group has assumed that in this hedging relationship, the spread which has changed based on Korea Overnight Financing Repo Rates would be similar to the spreads of interest rate swap used as the hedging instrument. Besides this, the Group did not make any assumption on further changes of conditions.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

10. Securities at fair value through other comprehensive income and securities at amortized cost

(a) Details of securities at FVOCI and securities at amortized cost as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Securities at FVOCI:
Debt securities:
Government bonds	42,516,599	40,995,316
Financial institutions bonds	19,563,345	20,539,199
Corporate bonds and others	22,581,883	22,262,060
	84,661,827	83,796,575
Equity securities(*):
Stocks	1,484,146	1,475,153
Equity investments	2,298	3,833
Others	239,846	193,600
	1,726,290	1,672,586
	86,388,117	85,469,161
Securities at amortized cost:
Debt securities:
Government bonds	22,342,078	21,523,230
Financial institutions bonds	6,209,556	5,423,771
Corporate bonds and others	6,686,864	6,424,197
	35,238,498	33,371,198
	121,626,615	118,840,359

(*) Equity securities listed in the table above are classified as securities measured at other comprehensive income, as the Group is holding the securities due to a policy requirement.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

10. Securities at fair value through other comprehensive income and securities at amortized cost (continued)

(b) Changes in carrying value of debt securities at fair value through other comprehensive income and securities at amortized cost for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Debt securities at fair value through other comprehensive income			Debt securities at amortized cost
	12-month expected credit loss	Lifetime expected credit loss	Total	12-month expected credit loss	Lifetime expected credit loss	Total

Beginning balance	83,729,377	67,198	83,796,575	33,371,599	10,515	33,382,114
Transfer (from) to 12-month expected credit loss	31,255	(31,255)	-	-	-	-
Transfer (from) to lifetime expected credit loss	(63,953)	63,953	-	-	-	-
Net increase and decrease(*)	855,967	9,285	865,252	1,872,420	(2,704)	1,869,716
Ending balance	84,552,646	109,181	84,661,827	35,244,019	7,811	35,251,830

(*) Included the effects from changes in purchase, disposal, repayment, changes in foreign exchange rate and amortization of fair value adjustments recognized through business combination accountings and others.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

10. Securities at fair value through other comprehensive income and securities at amortized cost (continued)


	December 31, 2022
	Debt securities at fair value through other comprehensive income			Debt securities at amortized cost
	12-month expected credit loss	Lifetime expected credit loss	Total	12-month expected credit loss	Lifetime expected credit loss	Total

Beginning balance	89,595,577	152,786	89,748,363	26,139,316	36,290	26,175,606
Transfer (from) to 12-month expected credit loss	61,740	(61,740)	-	18,544	(18,544)	-
Transfer (from) to lifetime expected credit loss	(23,619)	23,619	-	-	-	-
Net increase and decrease(*)	(5,929,126)	(47,467)	(5,976,593)	7,213,739	(7,231)	7,206,508
Business combination	24,805	-	24,805	-	-	-
Ending balance	83,729,377	67,198	83,796,575	33,371,599	10,515	33,382,114

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

10. 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 debt securities at amortized cost for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Debt securities at fair value through other comprehensive income			Debt securities at amortized cost
	12-month expected credit loss	Lifetime expected credit loss	Total	12-month expected credit loss	Lifetime expected credit loss	Total
Beginning allowance	40,501	113	40,614	10,759	157	10,916
Transfer (from) to 12-month expected credit loss	23	(23)	-	-	-	-
Transfer to lifetime expected credit loss	(122)	122	-	-	-	-
Provision (reversal)	(4,735)	612	(4,123)	1,869	(35)	1,834
Disposal and others(*)	(699)	8	(691)	571	11	582
Ending balance	34,968	832	35,800	13,199	133	13,332

(*) Included the effects from changes in foreign exchange rate, debt restructuring, investment conversion and others.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

10. Securities at fair value through other comprehensive income and securities at amortized cost (continued)


	December 31, 2022
	Debt securities at fair value through other comprehensive income			Debt securities at amortized cost
	12-month expected credit loss	Lifetime expected credit loss	Total	12-month expected credit loss	Lifetime expected credit loss	Total

Beginning balance	45,648	603	46,251	10,201	463	10,664
Transfer (from) to 12-month expected credit loss	166	(166)	-	203	(203)	-
Transfer (from) to lifetime expected credit loss	(20)	20	-	-	-	-
Provision (reversal)	(4,658)	(355)	(5,013)	632	(94)	538
Disposal and others(*)	(635)	11	(624)	(277)	(9)	(286)
Ending balance	40,501	113	40,614	10,759	157	10,916

(*) Included the effects from changes in foreign exchange rate, debt restructuring, investment conversion and others.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

10. Securities at fair value through other comprehensive income and securities at amortized cost (continued)

(d) Gain or loss on disposal of securities at fair value through other comprehensive income and securities at amortized cost for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three-month	Nine- month	Three-month	Nine- month
Gain on disposal of securities at FVOCI	7,383	47,298	11,714	18,519
Loss on disposal of securities at FVOCI	(25,139)	(78,613)	(36,416)	(61,536)
Gain on disposal of securities at amortized cost (*)	-	358	-	4
Loss on disposal of securities at amortized cost (*)	(1)	(3)	(4)	(63)
	(17,757)	(30,960)	(24,706)	(43,076)

(*) The disposal is due to the issuers’ early redemption options exercise.

(e) Gain or loss on equity securities at fair value through other comprehensive income

i) The Group recognizes dividends, amounting to 58,786 million and 30,554 million, related to equity securities at fair value through other comprehensive income for the nine-month periods ended September 30, 2023 and 2022, respectively.

ii) The details of the disposal of equity securities at fair value through other comprehensive income for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30,2023	September 30, 2022
	Stocks acquired by investment conversion (*)
Fair value at the date of disposal	32,402	32,034
Cumulative net loss (gain) at the time of disposal	(2,669)	2,647

(*) The disposal is due to the disposal of stocks acquired by investment conversion and others.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

11. Loans at amortized cost, etc.

(a) Loans measured at amortized cost for configuration by customers as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Retail loans	153,212,765	155,365,004
Corporate loans(*)	223,374,262	216,004,850
Public and other loans	4,224,112	3,788,040
Loans between banks	6,131,213	7,428,874
Credit card receivables	27,993,290	28,459,691
	414,935,642	411,046,459
Discount	(22,535)	(21,879)
Deferred loan origination costs	499,389	525,205
	415,412,496	411,549,785
Less: Allowance for credit loss	(4,057,779)	(3,650,813)
	411,354,717	407,898,972

(*) Included loans for solo proprietor business, etc.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

11. Loans at amortized cost, etc. (continued)

(b) Changes in carrying value of loans measured at amortized cost, etc. for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Loan at amortized cost			Due from banks at amortized cost and other financial assets
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total
Beginning balance	363,925,280	45,545,875	2,078,630	49,701,131	165,723	87,512	461,504,151
Transfer (from) to 12- month expected credit losses	10,500,436	(10,491,579)	(8,857)	24,669	(24,507)	(162)	-
Transfer (from) to lifetime expected credit losses	(22,386,049)	22,423,603	(37,554)	(90,862)	90,913	(51)	-
Transfer (from) to credit- impaired financial assets	(728,119)	(986,445)	1,714,564	(8,748)	(39,879)	48,627	-
Net increase and decrease(*1)	4,048,873	843,931	521,686	14,834,251	61,912	23,836	20,334,489
Write-off(*2)	-	-	(1,173,586)	-	-	(22,168)	(1,195,754)
Disposal	(63,032)	(6,367)	(308,794)	-	(5)	(742)	(378,940)
Ending balance	355,297,389	57,329,018	2,786,089	64,460,441	254,157	136,852	480,263,946

(*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 9,913,899 million, which is written off as of September 30, 2023.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

11. Loans at amortized cost, etc. (continued)

(b) Changes in the carrying value of loans measured at amortized cost, etc. for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
	Loan at amortized cost			Due from banks at amortized cost and other financial assets
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total
Beginning balance	344,305,633	41,815,125	1,857,110	48,154,690	104,650	79,094	436,316,302
Transfer (from) to 12- month expected credit losses	11,507,176	(11,490,569)	(16,607)	16,401	(16,309)	(92)	-
Transfer (from) to lifetime expected credit losses	(16,538,612)	16,584,703	(46,091)	(23,870)	23,985	(115)	-
Transfer (from) to credit- impaired financial assets	(591,684)	(804,853)	1,396,537	(10,008)	(3,654)	13,662	-
Net increase and decrease(*1)	25,259,669	(556,047)	212,198	1,482,975	57,051	21,722	26,477,568
Write-off(*2)	-	-	(1,106,922)	-	-	(25,636)	(1,132,558)
Disposal	(17,000)	(2,484)	(217,595)	-	-	(1,123)	(238,202)
Business combination	98	-	-	80,943	-	-	81,041
Ending balance	363,925,280	45,545,875	2,078,630	49,701,131	165,723	87,512	461,504,151

(*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 9,739,237 million, which is written off as of December 31, 2022.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

11. Loans at amortized cost, etc. (continued)

Changes in allowances for credit loss of loans at amortized cost, etc. for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Loan at amortized cost			Due from banks at amortized cost and other financial assets
	12-month expected credit loss	Life-time expected credit loss	Impaired financial asset	12-month expected credit loss	Life-time expected credit loss	Impaired financial asset	Total
Beginning balance	1,050,037	1,486,338	1,114,438	296,346	10,440	74,621	4,032,220
Transfer (from) to 12- month expected credit losses	146,137	(144,385)	(1,752)	377	(317)	(60)	-
Transfer (from) to lifetime expected credit losses	(121,574)	136,380	(14,806)	(32,349)	32,370	(21)	-
Transfer (from) to credit- impaired financial assets	(14,947)	(74,681)	89,628	(222)	(32,871)	33,093	-
Provision (reversal)	305,170	292,089	797,950	46,813	3,590	21,543	1,467,155
Write-off	-	-	(1,173,586)	-	-	(22,168)	(1,195,754)
Amortization of discount	-	-	(22,353)	-	-	-	(22,353)
Disposal	(36)	(321)	(65,833)	-	-	(145)	(66,335)
Collection	-	-	268,172	-	-	1,689	269,861
Others(*)	(123,653)	(179,391)	308,758	12,704	276	7,881	26,575
Ending balance	1,241,134	1,516,029	1,300,616	323,669	13,488	116,433	4,511,369

(*) Other changes are due to debt restructuring, investment conversion, changes in foreign exchange rates, etc.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

11. Loans at amortized cost, etc. (continued)


	December 31, 2022
	Loan at amortized cost			Due from banks at amortized cost and other financial assets
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total
Beginning balance	920,338	1,242,999	1,003,756	183,968	8,008	70,043	3,429,112
Transfer (from) to 12-month expected credit losses	134,553	(131,558)	(2,995)	315	(274)	(41)	-
Transfer (from) to lifetime expected credit losses	(86,906)	105,849	(18,943)	(740)	765	(25)	-
Transfer (from) to credit- impaired financial assets	(7,258)	(77,182)	84,440	(75)	(1,267)	1,342	-
Provision (reversal)	186,361	498,025	559,965	2,327	3,278	27,226	1,277,182
Write-off	-	-	(1,106,922)	-	-	(25,636)	(1,132,558)
Amortization of discount	-	-	(11,805)	-	-	-	(11,805)
Disposal	-	(33)	(33,616)	-	-	(61)	(33,710)
Collection	-	-	381,659	-	-	2,502	384,161
Others(*)	(97,051)	(151,762)	258,899	110,519	(70)	(729)	119,806
Business Combinations	-	-	-	32	-	-	32
Ending balance	1,050,037	1,486,338	1,114,438	296,346	10,440	74,621	4,032,220

(*) Other changes are due to debt restructuring, investment conversion, changes in foreign exchange rates, etc.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

12. Goodwill

(a) Goodwill allocated to the cash-generating units as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Bank	769,603	768,766
Credit Card	2,895,722	2,892,610
Securities	1,310	2,993
Life insurance	850,238	853,798
Others	165,735	165,735
	4,682,608	4,683,902

(b) Changes in goodwill for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Beginning balance	4,683,902	4,670,134
Impairment loss (*1)	(5,402)	(2,258)
Others (*2)	4,108	16,026
Ending balance	4,682,608	4,683,902

(*1) The impairment loss on goodwill for the nine-month period ended September 30, 2023 occurred in the securities sector of PT Shinhan Sekuritas Indonesia and in the life insurance sector of Shinhan Financial Plus. As a result of the impairment tests on the goodwill of PT Shinhan Sekuritas Indonesia, 1,842 million was recognized as an impairment loss, which is amounted to the carrying amounts exceeding the recoverable amount as the equity holder of the Group. This is due to a decrease in recoverable amount due to the prolonged Ukraine crisis, the global economy with high-interest rates and the economic downturn domestically and globally. The recoverable amount was decreased by 2,934 million compared to the previous year. In addition, as a result of the impairment tests of goodwill recognized by Shinhan Financial Plus, the carrying amount exceeding the recoverable amount of the cash-generating unit was amounted to 3,560 million as an impairment loss. The decrease by 9,750 million is due to a decrease in recoverable amounts. The impairment loss on the goodwill for the year period ended December 31, 2022 occurred in the securities sector of PT Shinhan Sekuritas Indonesia. 2,258 million was recognized as impairment loss. This is due to a decrease in recoverable amount due to the prolonged Ukraine crisis, the global economy with high-interest rates and the economic downturn domestically and globally. The impairment loss is included in the non-operating expense of the statement of consolidated comprehensive income.

(*2) It includes the effects from changes in foreign exchange rates.

For cash-generating units, recoverable amounts are assessed based on the value in use.

i) Basis for assessment

The discounted cash flow (DCF) method was used for measurement of the recoverable amounts based on the value in use, reflecting the characteristics of each financial institution. However, for a cash-generating unit of life insurance, the actuarial valuation approach based on the statistical expected cash flows was used.

ii) Estimated period of cash flows

As for the assessment of value in use, the estimated period is 5.5 years after the assessment base date and perpetual value was computed and reflected on its value after the estimated period.

However, for a cash-generating unit of life insurance, future cash flows are estimated over 99 years and the present value of future cash flows afterwards was not reflected as it was determined as insignificant.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

12. Goodwill (continued)

iii) Discount rate and perpetual growth rate

The discount rate was applied by calculating the cost of equity, the required rate of return of shareholders. The cost of equity was calculated based on the risk-free rate of return, market risk premium, and company's systematic risk (β). In addition, the perpetual growth rate was estimated based on inflation rates. As cash-generating units of life

insurance reflect the consideration for risk in future cash flows, the discount rate was applied based on the term structure of interest rate of risk-free government bonds reflecting only the time value of money.

The discount rates and perpetual growth rates used for the cash generating units are as follows:.


	Discount rates	Perpetual growth rates
Bank	6.7 ~ 13.3	0.0 ~ 2.0
Credit Card	8.9 ~ 14.1	1.0 ~ 2.0
Securities	13.1 ~ 14.2	2.0
Others	9.1 ~ 10.7	1.0

Life Insurance applied 4.34%~4.80%, term structure discount rate for each future period corresponding to 99 years of future cash flows.

iv) Primary index

iv-1) The primary indexes used to measure the recoverable amounts of cash-generating units except for life insurance are as follows:


	2023	2024	2025	2026	2027	2028
CPI Growth	3.0	1.4	1.8	1.5	1.4	1.4
Private Consumption Growth	1.9	2.4	2.6	2.5	2.8	2.8
Real GDP Growth	1.3	2.5	2.7	2.7	2.9	2.9

iv-2) Among the cash-generating units, the primary indexes used to measure the recoverable amount of life insurance are as follows:


		Rates (%)
Inflation rates (Bank of Korea)		2.0
Risk criteria reliability level		99.5

iv-3) The recoverable amount and the carrying amount of a group of the cash generating units are as follows:


		Amount
Recoverable amount		58,700,974
Carrying amount (*)		52,018,450
Difference		6,682,524

(*) For nine-month period ended September 30, 2023, the impairment loss incurred from the cash-generating units of Securities is deducted.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates

(a) Investments in associates as of September 30, 2023 and December 31, 2022 are as follows:


Investees	Country	Reporting date	Ownership (%)
Investees	Country	Reporting date			September 30, 2023	December 31, 2022
BNP Paribas Cardif Life Insurance (1),(2)	Korea	30-Jun	14.99	14.99
Partners 4th Growth Investment Fund (*1)	Korea	31-Aug	25.00	25.00
KTB Newlake Global Healthcare PEF (*6)	Korea	30-Sep	7.36	20.57
Shinhan-Neoplux Energy Newbiz Fund	Korea	30-Sep	31.66	31.66
Shinhan-Albatross Technology Investment Fund (*1)	Korea	31-Aug	50.00	50.00
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund	Korea	30-Sep	23.89	23.89
VOGO Debt Strategy Qualified IV Private	Korea	30-Sep	20.00	20.00
Shinhan-Midas Donga Secondary Fund	Korea	30-Sep	50.00	50.00
ShinHan – Soo Young Entrepreneur Investment Fund No.1	Korea	30-Sep	24.00	24.00
Shinhan Praxis K-Growth Global Private Equity Fund (*8)	Korea	30-Sep	14.15	14.15
Kiwoom Milestone Professional Private Real Estate Trust 19	Korea	30-Sep	50.00	50.00
Shinhan Global Healthcare Fund 1 (*8)	Korea	30-Sep	4.41	4.41
KB NA Hickory Private Special Asset Fund	Korea	30-Sep	37.50	37.50
Koramco Europe Core Private Placement Real Estate Fund No.2-2	Korea	30-Sep	44.02	44.02
Hermes Private Investment Equity Fund	Korea	30-Sep	29.17	29.17
KDBC-Midas Dong-A Global contents Fund	Korea	30-Sep	23.26	23.26
Shinhan-Nvestor Liquidity Solution Fund	Korea	30-Sep	24.92	24.92
Shinhan AIM FoF Fund 1-A	Korea	30-Sep	25.00	25.00
IGIS Global Credit Fund 150-1	Korea	30-Sep	25.00	25.00
Partner One Value up I Private Equity Fund	Korea	30-Sep	27.91	27.91
Genesis No.1 Private Equity Fund (*6)	Korea	30-Sep	-	22.80
Korea Omega Project Fund III	Korea	30-Sep	23.53	23.53
Genesis North America Power Company No.1 PEF	Korea	30-Sep	43.84	39.11
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3	Korea	30-Sep	23.33	23.33
Korea Finance Security (1),(8)	Korea	30-Jun	14.91	14.91
MIEL CO.,LTD. (1),(3)	Korea	31-Dec	28.77	28.77
AIP Transportation Specialized Privately Placed Fund Trust #1	Korea	30-Sep	35.73	35.73
Kiwoom-Shinhan Innovation Fund I	Korea	30-Sep	50.00	50.00
Midas Asset Global CRE Debt Private Fund No.6	Korea	30-Sep	41.16	41.16
Samchully Midstream Private Placement Special Asset Fund 5-4	Korea	30-Sep	42.92	42.92
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3	Korea	30-Sep	20.00	20.00
NH-Amundi Global Infrastructure Trust 14	Korea	30-Sep	30.00	30.00
Jarvis Memorial Private Investment Trust 1 (*6)	Korea	30-Sep	-	99.01

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(a) Investments in associates as of September 30, 2023 and December 31, 2022 are as follows (continued):


Investees	Country	Reporting date	Ownership (%)
Investees	Country	Reporting date			September 30, 2023	December 31, 2022
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 (*7)	Korea	30-Sep	60.00	60.00
Milestone Private Real Estate Fund 3	Korea	30-Sep	32.06	32.06
Nomura-Rifa Private Real Estate Investment Trust 31	Korea	30-Sep	31.31	31.31
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2	Korea	30-Sep	21.27	21.27
T&F 2019 bearing Private Equity Fund Specializing in Start-up and Venture Business	Korea	30-Sep	28.25	28.25
FuturePlay-Shinhan TechInnovation Fund 1	Korea	30-Sep	50.00	50.00
Stonebridge Corporate 1st Fund	Korea	30-Sep	44.12	44.12
Vogo Realty Partners Private Real Estate Fund V	Korea	30-Sep	21.64	21.64
Korea Credit Bureau (1),(8)	Korea	30-Jun	9.00	9.00
Goduck Gangil1 PFV Co., Ltd. (1),(8)	Korea	30-Jun	1.04	1.04
SBC PFV Co., Ltd. (1),(9)	Korea	30-Jun	25.00	25.00
NH-amundi global infra private fund 16	Korea	30-Sep	48.85	50.00
IMM Global Private Equity Fund	Korea	30-Sep	32.14	33.00
SH BNCT Professional Investment Type Private Special Asset Investment Trust (*10)	Korea	30-Sep	72.50	72.50
DWS Global Professional Investment Type Private Real Estate Investment Trust No. 24 (*7)	Korea	30-Sep	52.28	52.28
Sparklabs-Shinhan Opportunity Fund 1	Korea	30-Sep	49.50	49.50
BNW Tech-Innovation Private Equity Fund	Korea	30-Sep	29.85	29.85
IGIS Real-estate Private Investment Trust No.33	Korea	30-Sep	40.86	40.86
WWG Global Real Estate Investment Trust no.4 (*6)	Korea	30-Sep	-	29.55
Goduck Gangil10 PFV Co., Ltd. (1),(8)	Korea	30-Jun	19.90	19.90
Fidelis Global Private Real Estate Trust No.2 (*7)	Korea	30-Sep	79.63	79.70
AIP EURO PRIVATE REAL ESTATE TRUST No. 12	Korea	30-Sep	28.70	28.70
Shinhan Global Healthcare Fund 2(*8)	Korea	30-Sep	13.68	13.68
Shinhan AIM Real Estate Fund No.2	Korea	30-Sep	30.00	30.00
Shinhan AIM Real Estate Fund No.1	Korea	30-Sep	21.01	21.01
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust	Korea	30-Sep	22.02	22.02
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust	Korea	30-Sep	29.19	29.19
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2 (*7)	Korea	30-Sep	71.43	71.43

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(a) Investments in associates as of September 30, 2023 and December 31, 2022 are as follows:


Investees	Country	Reporting date	Ownership (%)
Investees	Country	Reporting date			September 30, 2023	December 31, 2022
Korea Omega-Shinhan Project Fund I	Korea	30-Sep	50.00	50.00
Samsung SRA Real Estate Professional Private 45	Korea	30-Sep	25.00	25.00
IBK Global New Renewable Energy Special Asset Professional Private2	Korea	30-Sep	28.98	28.98
VS Cornerstone Fund	Korea	30-Sep	41.18	41.18
Aone Mezzanine Opportunity Professional Private (*6)	Korea	30-Sep	-	64.41
NH-Amundi US Infrastructure Private Fund No.2	Korea	30-Sep	25.91	25.91
SH Japan Photovoltaic Private Special Asset Investment Trust No.2	Korea	30-Sep	30.00	30.00
Kakao-Shinhan 1st TNYT Fund	Korea	30-Sep	48.62	48.62
DS Gamechanger IT Private Equity Fund	Korea	30-Sep	36.14	36.14
Pacific Private Placement Real Estate Fund No.40	Korea	30-Sep	24.73	24.73
Mastern Private Real Estate Loan Fund No.2	Korea	30-Sep	33.57	33.57
LB Scotland Amazon Fulfillment Center Fund 29(*7)	Korea	30-Sep	70.14	70.14
JR AMC Hungary Budapest Office Fund 16	Korea	30-Sep	32.57	32.57
EDNCENTRAL Co.,Ltd.(*8)	Korea	30-Sep	13.47	13.47
Future-Creation Neoplux Venture Capital Fund (*4)	Korea	30-Sep	16.25	16.25
Gyeonggi-Neoplux Superman Fund	Korea	30-Sep	21.76	21.76
NewWave 6th Fund	Korea	30-Sep	30.00	30.00
Neoplux No.3 Private Equity Fund (*4)	Korea	30-Sep	10.00	10.00
PCC Amberstone Private Equity Fund I	Korea	30-Sep	21.67	21.67
KIAMCO POWERLOAN TRUST 4TH	Korea	30-Sep	47.37	47.37
Mastern Opportunity Seeking Real Estate Fund II	Korea	30-Sep	22.22	20.00
AION ELFIS PROFESSIONAL PRIVATE 1 (*6)	Korea	30-Sep	-	20.00
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business Private Equity Fund (*6)	Korea	30-Sep	-	29.68
Neoplux Market-Frontier Secondary Fund (*4)	Korea	30-Sep	19.74	19.74
Harvest Private Equity Fund II	Korea	30-Sep	22.06	22.06
Synergy Green New Deal 1st New Technology Business Investment Fund	Korea	30-Sep	28.17	28.17
KIAMCO Vietnam Solar Special Asset Private Investment Trust	Korea	30-Sep	50.00	50.00
SHINHAN-NEO Core Industrial Technology Fund	Korea	30-Sep	49.75	49.75
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2	Korea	30-Sep	30.00	30.00
SIMONE Mezzanine Fund No.3	Korea	30-Sep	49.98	28.97
Eum Private Equity Fund No.7	Korea	30-Sep	21.00	21.00

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(a) Investments in associates as of September 30, 2023 and December 31, 2022 are as follows (continued):


Investees	Country	Reporting date	Ownership (%)
Investees	Country	Reporting date			September 30, 2023	December 31, 2022
Kiwoom Hero No.4 Private Equity Fund	Korea	30-Sep	21.05	21.05
Vogo Canister Professional Trust Private Fund I	Korea	30-Sep	36.74	36.27
SW-S Fund	Korea	30-Sep	30.30	30.30
CL Buyout 1st PEF	Korea	30-Sep	21.43	21.43
Timefolio The Venture-V No.2	Korea	30-Sep	20.73	20.73
Newlake Growth Capital Partners2 PEF (*1)	Korea	30-Jun	29.91	29.91
Kiwoom Material Part Equipment New Technology Investment Fund 2nd	Korea	30-Sep	41.10	41.10
Shinhan Smilegate Global PEF I (*8)	Korea	30-Sep	14.21	14.21
Genesis Eco No.1 PEF	Korea	30-Sep	29.00	29.01
SHINHAN-NEO Market-Frontier 2nd Fund	Korea	30-Sep	42.70	42.70
NH-Synergy Core Industrial New Technology Fund	Korea	30-Sep	36.93	36.93
J& Moorim Jade Investment Fund	Korea	30-Sep	24.89	24.89
Helios-KDBC Digital Contents 1st	Korea	30-Sep	23.26	23.26
Ulmus SHC innovation investment fund	Korea	30-Sep	24.04	24.04
Mirae Asset Partners X Private Equity Fund	Korea	30-Sep	35.71	35.71
T Core Industrial Technology 1st Venture PEF	Korea	30-Sep	31.47	31.47
Curious Finale Corporate Recovery Private Equity Fund	Korea	30-Sep	27.78	27.78
Fine Value POST IPO No.5 Private Equity Fund	Korea	30-Sep	40.00	40.00
TI First Property Private Investment Trust 1	Korea	30-Sep	40.00	40.00
MPLUS Professional Private Real Estate Fund 25	Korea	30-Sep	41.67	41.67
IBKC Global Contents Investment Fund	Korea	30-Sep	24.39	24.39
Premier Luminous Private Equity Fund (*6)	Korea	30-Sep	-	25.12
Hanyang-Meritz 1 Fund	Korea	30-Sep	22.58	22.58
KCA New Development Sector No. 1 Private Equity Fund	Korea	30-Sep	26.98	26.98
Kiwoom-Shinhan Innovation Fund 2	Korea	30-Sep	42.86	42.86
ETRI Holdings-Shinhan 1st Unicorn Fund	Korea	30-Sep	50.00	50.00
Maple Mobility Fund	Korea	30-Sep	20.18	20.18
SJ ESG Innovative Growth Fund	Korea	30-Sep	28.57	28.57
AVES 1st Corporate Recovery Private Equity Fund (*5)	Korea	30-Sep	76.19	76.19
JS Shinhan Private Equity Fund (*4)	Korea	30-Sep	3.85	3.85
NH Kyobo AI Solution Investment Fund	Korea	30-Sep	26.09	26.09
Daishin Newgen New Technology Investment Fund 1st (*7)	Korea	30-Sep	50.60	50.60
META ESG Private Equity Fund I	Korea	30-Sep	27.40	27.40
SWFV FUND-1 (*6)	Korea	30-Sep	-	40.25

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(a) Investments in associates as of September 30, 2023 and December 31, 2022 are as follows (continued):


Investees	Country	Reporting date	Ownership (%)
Investees	Country	Reporting date			September 30, 2023	December 31, 2022
PHAROS DK FUND	Korea	30-Sep	24.24	24.14
Shinhan VC tomorrow investment fund 1 (*1)	Korea	31-Aug	39.62	39.62
Highland 2021-8 Fund (*6)	Korea	30-Sep	-	32.67
H-IOTA Fund	Korea	30-Sep	24.81	24.81
Stonebridge-Shinhan Unicorn Secondary Fund	Korea	30-Sep	26.01	17.57
Tres-Yujin Trust	Korea	30-Sep	50.00	50.00
Shinhan-Time mezzanine blind Fund	Korea	30-Sep	50.00	50.00
Capstone REITs No.26	Korea	30-Sep	50.00	50.00
JB Incheon-Bucheon REITS No.54	Korea	30-Sep	39.31	39.31
Hankook Smart Real Asset Investment Trust No.3	Korea	30-Sep	33.33	33.33
JB Hwaseong-Hadong REITs No.53	Korea	30-Sep	31.03	31.03
KB Oaktree Trust No.3	Korea	30-Sep	33.33	33.33
Daehan No.36 Office Asset Management Company	Korea	30-Sep	48.05	48.05
Rhinos Private Equity Fund 1st	Korea	30-Sep	27.93	27.93
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2	Korea	30-Sep	29.73	29.73
Shinhan JigaeNamsan Road Private Special Asset Investment Trust	Korea	30-Sep	24.85	24.85
SKS-Yozma Fund No.1	Korea	30-Sep	29.85	29.85
IBKC-METIS Global Contents Investment Fund	Korea	30-Sep	36.36	36.36
Keistone Unicorn Private Equity Fund	Korea	30-Sep	28.00	28.00
KB Distribution Private Real Estate 3-1	Korea	30-Sep	37.50	37.50
Pacific Private Investment Trust No.49-1 (*7)	Korea	30-Sep	79.28	79.28
KIWOOM Real estate private placement fund for normal investors No. 31 (*7)	Korea	30-Sep	60.00	60.00
RIFA Real estate private placement fund for normal investoes No. 51	Korea	30-Sep	40.00	40.00
Fivetree general private equity fund No.15	Korea	30-Sep	49.98	49.98
Shinhan-Kunicorn first Fund	Korea	30-Sep	38.31	38.31
Harvest Fund No.3	Korea	30-Sep	44.67	44.67
Shinhan Simone FundⅠ	Korea	30-Sep	38.46	38.46
Korea Investment develop seed Trust No.1	Korea	30-Sep	40.00	40.00
Tiger Green alpah Trust No.29 (*5)	Korea	30-Sep	95.24	95.24
STIC ALT Global II Private Equity Fund	Korea	30-Sep	21.74	21.74
NH-Brain EV Fund	Korea	30-Sep	25.00	25.00
DDI LVC Master Real Estate Investment Trust Co., Ltd. (1),(8)	Korea	30-Jun	15.00	15.00
Leverent-Frontier 4th Venture PEF	Korea	30-Sep	23.89	23.89
Fine Green New Deal 2 PEF	Korea	30-Sep	22.57	22.57
ShinhanFitrin 1st Technology Business Investment Association (*4)	Korea	30-Sep	16.17	16.17
PARATUS No.3 Private Equity Fund	Korea	30-Sep	25.64	25.64
Golden Route 2nd Startup Venture Specialized Private Equity Fund	Korea	30-Sep	22.73	22.73
Koramco Private Real Estate Fund 143	Korea	30-Sep	30.30	30.30
Korea Investment Top Mezzanine Private Real Esate Trust No.1	Korea	30-Sep	22.22	22.22
LB YoungNam Logistics Private Trust No.40	Korea	30-Sep	25.00	25.00
Shinhan-Cognitive Start-up Fund L.P.	Korea	30-Sep	32.77	32.74
IGEN2022 No.1 private Equity Fund	Korea	30-Sep	27.95	27.95
Cornerstone J&M Fund I	Korea	30-Sep	26.67	26.67
Logisvalley Shinhan REIT Co.,Ltd. (*1)	Korea	30-Jun	20.27	20.27
DA Value-Honest New Technology Investment Fund 1	Korea	30-Sep	23.66	23.66
KDB Investment Global Healthcare Private Equity Fund I	Korea	30-Sep	24.14	24.14
Shinhan-Ji and Tec Smart Innovation Fund	Korea	30-Sep	50.00	50.00
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st	Korea	30-Sep	50.00	50.00
Korea Investment Green Newdeal Infra Trust No.1	Korea	30-Sep	27.97	27.97
BTS 2nd Private Equity Fund (*1)	Korea	31-Aug	26.00	26.00
Shinhan Global Active REIT Co. Ltd.	Korea	30-Sep	20.37	20.37
NH-J&-IBKC Label Technology Fund	Korea	30-Sep	27.81	27.81

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(a) Investments in associates as of September 30, 2023 and December 31, 2022 are as follows (continued):


Investees	Country	Reporting date	Ownership (%)
Investees	Country	Reporting date			September 30, 2023	December 31, 2022
IMM Global Venture Opportunity, LP (*6)	Korea	30-Sep	15.98	35.50
Shinhan-isquare Venture PEF 1	Korea	30-Sep	40.00	40.00
Aurum Gold Rush ESG General Private Investment Trust No. 1	Korea	30-Sep	28.33	28.33
Capstone Develop Frontier Trust	Korea	30-Sep	21.43	21.43
Nextrade Co., Ltd. (*8)	Korea	30-Sep	8.00	8.00
SH Sustainable Management ESG Short term Bond Security Feeder Investment Trust No.1 (*11)	Korea	30-Sep	62.84	26.90
SH 1.5years Maturity Investment Type Security Investment Trust No.2	Korea	30-Sep	21.96	29.00
Eventus-IBKC LIB Fund	Korea	30-Sep	21.88	21.88
NH-Daishin-Kyobo healthcare 1 Fund	Korea	30-Sep	25.00	25.00
IBKC-Behigh Fund 1st	Korea	30-Sep	29.73	29.73
Nautic Green Innovation ESG Co-investment No.1 Private Equity Fund	Korea	30-Sep	24.10	24.10
ON No.1 Private Equity Fund	Korea	30-Sep	28.57	28.57
Digital New Deal Kappa Private Equity Fund	Korea	30-Sep	24.75	30.12
IBKCJS New Technology Fund No.1	Korea	30-Sep	29.41	-
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1	Korea	30-Sep	20.83	-
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18	Korea	30-Sep	28.57	-
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38 (*5)	Korea	30-Sep	75.00	-
TogetherKorea Private Investment Trust No. 6 (*7)	Korea	30-Sep	99.98	-
TogetherKorea Private Investment Trust No. 7 (*7)	Korea	30-Sep	99.98	-
Signature Young Adults House General Private Real Estate Development Investment No.1	Korea	30-Sep	45.28	-
Smart Bio Healthcare BNH5	Korea	30-Sep	21.30	-
Forward-NBH New Technology Investment Fund 1st	Korea	30-Sep	26.49	-
Kiwoom Core Industrial Technology Investment Fund No.3	Korea	30-Sep	34.75	-
VL ZIEGLER PEF No.2	Korea	30-Sep	29.33	-
Penture K-Content Investment Fund	Korea	30-Sep	21.96	-
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund	Korea	30-Sep	30.00	-
Hana Alternative Investment Kosmes PCBO General PEF No. 1	Korea	30-Sep	37.04	-
Shinhan-timefolio Bio Development Investment Fund	Korea	30-Sep	48.39	-
Shinhan SM Office Value Add – Outsource Management Real Estate Investment Co., Ltd. -	Korea	30-Sep	28.43	-
KDBC meta-enter New Technology investment fund	Korea	30-Sep	27.89	-
Hyundai motors Kosnet future growth venture investment fund	Korea	30-Sep	29.82	-
Shinhan Time Secondary Blind New Technology Investment Trust	Korea	30-Sep	47.50	-
Shinhan-openwater pre-IPO Investment Trust 1	Korea	30-Sep	50.00	-
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1	Korea	30-Sep	40.00	-
Hantoo Shinhan Lake K-beauty Technology Investment Trust	Korea	30-Sep	22.96	-
YP-axis Technology Investment Trust No. 1	Korea	30-Sep	22.61	-
Shinhan HB Wellness 1st Investment Trust	Korea	30-Sep	48.54	-
Timefolio Technology Innovation Trust 1 (*7)	Korea	30-Sep	51.72	-
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518	Korea	30-Sep	31.49	-
Kiwoom-time animation Technology Investment Trust	Korea	30-Sep	22.98	-
Samsung-dunamu Innovative IT Technology Investment Trust No. 1	Korea	30-Sep	22.99	-
Time Robotics New Technology Investment Trust	Korea	30-Sep	29.86	-
Ascent-welcome Tehcnology Investment Trust No.2	Korea	30-Sep	27.65	-
Igis General PE Real Estate Investment Trust 517-1 (*7)	Korea	30-Sep	96.30	-

(*1) The lastest financial statements are used for the equity method since the financial statements as of September 30, 2023 are not available. Significant trades and events occurred within the period are properly reflected.

(*2) The Group applies the equity method accounting as the Group has a significant influence on the investees through important business transactions.

(*3) In the course of the rehabilitation process, the shares were acquired through debt-equity swap. Although voting rights cannot be exercised during the rehabilitation process, normal voting rights are exercised because the rehabilitation process was completed before September 30, 2023. Also, it has been reclassified into the investments in associates.

(*4) As a managing partner, the Group has a significant influence over the investees.

(*5) 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.

(*6) Excluded from the investments in associates due to full or partial disposal of shares, or loss of significant influence.

(*7) 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.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

(*8) 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.

(*9) The rate of the Group’s voting rights is 4.65%.

(*10) Although the Group has a significant influence with an ownership percentage of 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.

(*11) The entity is included as subsidiaries for the period ended September 30, 2023, as the ownership percentage has increased.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehend-sive income	Impairment loss	Ending balance
BNP Paribas Cardif Life Insurance	30,169	-	1,176	7,623	-	38,968
Partners 4th Growth Investment Fund	13,542	-	(240)	-	-	13,302
KTB Newlake Global Healthcare PEF	4,309	(3,954)	(355)	-	-	-
Shinhan-Neoplux Energy Newbiz Fund	20,837	-	696	-	-	21,533
Shinhan-Albatross tech investment Fund	12,253	(1,500)	1,848	48	-	12,649
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund	4,232	-	315	-	-	4,547
VOGO Debt Strategy Qualified IV Private	6,085	376	276	-	-	6,737
Shinhan-Midas Donga Secondary Fund	4,431	-	(35)	-	-	4,396
ShinHan – Soo Young Entrepreneur Venture Investment Fund No.1	4,414	-	797	-	-	5,211
Shinhan Praxis K-Growth Global Private Equity Fund	3,691	-	-	-	-	3,691
Kiwoom Milestone Professional Private Real Estate Trust 19	3,961	-	(136)	-	(3,825)	-
Shinhan Global Healthcare Fund 1(*1)	-	-	-	-	-	-
KB NA Hickory Private Special Asset Fund	34,339	(9,806)	1,036	-	-	25,569
Koramco Europe Core Private Placement Real Estate Fund No.2-2	19,236	(919)	530	-	-	18,847
Hermes Private Investment Equity Fund	5,562	-	(1,025)	-	-	4,537
KDBC-Midas Dong-A Global contents Fund	4,277	-	6	-	-	4,283
Shinhan-Nvestor Liquidity Solution Fund	6,438	-	(29)	-	-	6,409
Shinhan AIM FoF Fund 1-A	10,110	(1,653)	871	-	-	9,328
IGIS Global Credit Fund 150-1	4,692	(473)	224	-	-	4,443
Partner One Value up I Private Equity Fund	5,144	-	(1,068)	-	-	4,076
Genesis No.1 Private Equity Fund	59,924	(59,916)	(8)	-	-	-
Korea Omega Project Fund III	3,674	-	15	-	-	3,689
Genesis North America Power Company No.1 PEF	8,118	(2,866)	1,472	-	-	6,724
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3	43,244	(10,595)	3,247	-	-	35,896
Korea Finance Security	2,411	-	(162)	1,004	-	3,253
MIEL CO.,LTD (*1)	-	-	-	-	-	-
AIP Transportation Specialized Privately Placed Fund Trust #1	44,821	782	1,463	-	-	47,066
Kiwoom-Shinhan Innovation Fund I	9,441	(1,425)	1,289	-	-	9,305

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	September 30, 2023
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehend-sive income	Impairment loss	Ending balance
Midas Asset Global CRE Debt Private Fund No.6	57,029	(4,551)	4,658	-	-	57,136
Samchully Midstream Private Placement Special Asset Fund 5-4	30,624	-	(1,549)	-	-	29,075
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3	24,492	(18,264)	980	-	-	7,208
NH-Amundi Global Infrastructure Trust 14	20,975	(3,026)	1,633	-	-	19,582
Jarvis Memorial Private Investment Trust 1	9,786	(10,641)	856	-	-	1
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37	33,357	937	1,886	-	-	36,180
Milestone Private Real Estate Fund 3	19,071	-	107	-	-	19,178
Nomura-Rifa Private Real Estate Investment Trust 31	7,364	-	(347)	-	-	7,017
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2	2,969	-	1,940	-	-	4,909
T&F 2019 bearing Private Equity Fund Specializing in Start-up and Venture Business	3,231	(318)	(59)	-	-	2,854
FuturePlay-Shinhan TechInnovation Fund 1	6,916	-	(384)	-	-	6,532
Stonebridge Corporate 1st Fund	3,622	-	173	-	-	3,795
Vogo Realty Partners Private Real Estate Fund V	10,915	(378)	285	-	-	10,822
Korea Credit Bureau	5,039	(90)	1,108	-	-	6,057
Goduck Gangil1 PFV Co., Ltd.	60	-	31	-	-	91
SBC PFV Co., Ltd.	28,468	-	(1,178)	-	-	27,290
NH-amundi global infra private fund 16	56,211	(4,049)	(679)	-	-	51,483
IMM Global Private Equity Fund	147,384	(23,549)	7,144	-	-	130,979
SH BNCT Professional Investment Type Private Special Asset Investment Trust	263,052	(24,164)	10,483	-	-	249,371
DWS Global Professional Investment Type Private Real Estate Investment Trust No. 24	22,683	(2,476)	1,802	-	-	22,009
Sparklabs-Shinhan Opportunity Fund 1	4,631	(1,137)	660	-	-	4,154
BNW Tech-Innovation Private Equity Fund	5,833	-	(61)	-	-	5,772
IGIS Real-estate Private Investment Trust No.33	14,552	(360)	791	-	-	14,983
WWG Global Real Estate Investment Trust no.4	10,331	(10,795)	464	-	-	-
Goduck Gangil10 PFV Co., Ltd.	3,236	-	1,304	-	-	4,540
Fidelis Global Private Real Estate Trust No.2	21,945	-	(9,925)	-	-	12,020
AIP EURO PRIVATE REAL ESTATE TRUST No. 12	48,427	(4,396)	4,760	-	-	48,791

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	September 30, 2023
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehend-sive income	Impairment loss	Ending balance
Shinhan Global Healthcare Fund 2 (*1)	-	-	-	-	-	-
Shinhan AIM Real Estate Fund No.2	25,243	-	2,144	-	-	27,387
Shinhan AIM Real Estate Fund No.1	44,642	6,586	(40)	-	-	51,188
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust	32,627	(685)	2,011	-	-	33,953
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust	19,296	-	561	-	-	19,857
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2	24,598	(7,638)	880	-	-	17,840
Korea Omega-Shinhan Project Fund I	10,022	-	1,932	-	-	11,954
Samsung SRA Real Estate Professional Private 45	21,650	9,392	832	-	-	31,874
IBK Global New Renewable Energy Special Asset Professional Private2	33,412	(1,035)	1,828	-	-	34,205
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	(2,901)	1,173	-	-	30,213
SH Japan Photovoltaic Private Special Asset Investment Trust No.2	6,332	(4,280)	285	-	-	2,337
Kakao-Shinhan 1st TNYT Fund	21,330	-	(748)	-	-	20,582
DS Gamechanger IT Private Equity Fund	2,847	-	376	-	-	3,223
Pacific Private Placement Real Estate Fund No.40	11,622	(371)	561	-	-	11,812
Mastern Private Real Estate Loan Fund No.2	6,387	(3,679)	290	-	-	2,998
LB Scotland Amazon Fulfillment Center Fund 29	29,637	(1,753)	1,865	-	-	29,749
JR AMC Hungary Budapest Office Fund 16	12,457	(407)	500	-	-	12,550
EDNCENTRAL Co., Ltd (*1)	-	-	-	-	-	-
Future-Creation Neoplux Venture Capital Fund	4,251	-	220	-	-	4,471
Gyeonggi-Neoplux Superman Fund	5,467	-	(438)	-	-	5,029
NewWave 6th Fund	13,540	-	(342)	-	-	13,198
Neoplux No.3 Private Equity Fund	20,454	(4)	(331)	-	-	20,119
PCC Amberstone Private Equity Fund I	18,785	(1,741)	333	-	-	17,377
KIAMCO POWERLOAN TRUST 4TH	43,524	(1,730)	2,644	-	-	44,438
Mastern Opportunity Seeking Real Estate Fund II	14,710	(773)	26	-	-	13,963
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	-	-	-
Neoplux Market-Frontier Secondary Fund	13,960	(2,834)	714	-	-	11,840
Harvest Private Equity Fund II	3,139	(26)	(102)	-	-	3,011
Synergy Green New Deal 1st New Technology Business Investment Fund	10,632	(109)	3,681	-	-	14,204

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	September 30, 2023
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehen-sive income	Impairment loss	Ending balance
KIAMCO Vietnam Solar Special Asset Private Investment Trust	6,727	-	388	-	-	7,115
SHINHAN-NEO Core Industrial Technology Fund	9,409	-	2,198	-	-	11,607
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2	25,024	(1,820)	721	-	-	23,925
SIMONE Mezzanine Fund No.3	3,017	(1,965)	122	-	-	1,174
Eum Private Equity Fund No.7	9,170	-	26	-	-	9,196
Kiwoom Hero No.4 Private Equity Fund	3,517	-	(195)	-	-	3,322
Vogo Canister Professional Trust Private Fund I	46,329	(1,437)	2,909	-	-	47,801
SW-S Fund	7,248	(2,872)	4,158	-	-	8,534
CL Buyout 1st PEF	12,842	852	1,710	-	-	15,404
Timefolio The Venture-V second	4,096	-	1,369	-	-	5,465
Newlake Growth Capital Partners2 PEF	12,496	(81)	(3)	-	-	12,412
Kiwoom Material Part Equipment New Technology Investment Fund 2nd	2,929	-	93	-	-	3,022
Shinhan Smilegate Global PEF I	3,771	-	180	-	-	3,951
Genesis Eco No.1 PEF	11,418	-	(199)	-	-	11,219
SHINHAN-NEO Market-Frontier 2nd Fund	34,420	4,270	(3,658)	-	-	35,032
NH-Synergy Core Industrial New Technology Fund	6,377	-	9	-	-	6,386
J& Moorim Jade Investment Fund	5,434	(275)	140	-	-	5,299
Helios-KDBC Digital Contents 1st	3,356	(1,457)	375	-	-	2,274
Ulmus SHC innovation investment fund	4,886	-	337	-	-	5,223
Mirae Asset Partners X Private Equity Fund	7,792	-	(51)	-	-	7,741
T Core Industrial Technology 1st Venture PEF	4,529	-	(248)	-	-	4,281
Curious Finale Corporate Recovery Private Equity Fund	3,591	(3,630)	65	-	-	26
Fine Value POST IPO No.5 Private Equity Fund	2,270	-	1,404	-	-	3,674
TI First Property Private Investment Trust 1	3,127	(203)	127	-	-	3,051
MPLUS Professional Private Real Estate Fund 25	4,231	-	(642)	-	-	3,589
IBKC Global Contents Investment Fund	4,552	-	69	-	-	4,621
Premier Luminous Private Equity Fund	8,966	(12,439)	3,473	-	-	-
Hanyang-Meritz 1 Fund	3,466	-	922	-	-	4,388
KCA New Development Sector No. 1 Private Equity Fund	2,874	(6,038)	6,561	-	-	3,397
Kiwoom-Shinhan Innovation Fund 2	11,271	(1,184)	403	-	-	10,490
ETRI Holdings-Shinhan 1st Unicorn Fund	1,895	1,500	(75)	-	-	3,320
Maple Mobility Fund	16,859	68	(790)	-	-	16,137
SJ ESG Innovative Growth Fund	4,197	-	-	-	-	4,197
AVES 1st Corporate Recovery Private Equity Fund	5,057	-	135	-	-	5,192
JS Shinhan Private Equity Fund	4,953	-	(5)	-	-	4,948
NH Kyobo AI Solution Investment Fund	3,288	(3,000)	1,047	-	-	1,335
Daishin Newgen New Technology Investment Fund 1st	5,704	-	(148)	-	-	5,556

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	September 30, 2023
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
META ESG Private Equity Fund I	5,857	-	(92)	-	-	5,765
SWFV FUND-1	9,128	(9,433)	305	-	-	-
PHAROS DK FUND	3,835	(1,413)	(32)	-	-	2,390
Shinhan VC tomorrow venture fund 1	26,926	18,226	(813)	-	-	44,339
Highland 2021-8 Fund	4,826	(5,366)	540	-	-	-
H-IOTA Fund	9,623	(239)	163	-	-	9,547
Stonebridge-Shinhan Unicorn Secondary Fund	6,082	2,924	(1,365)	-	-	7,641
Tres-Yujin Trust	10,004	-	(38)	-	-	9,966
Shinhan-Time mezzanine blind Fund	13,312	-	453	-	-	13,765
Capstone REITs No.26	3,852	(224)	(26)	-	-	3,602
JB Incheon-Bucheon REITS No.54	4,989	-	(8)	-	-	4,981
Hankook Smart Real Asset Investment Trust No.3	6,993	-	510	-	-	7,503
JB Hwaseong-Hadong REITs No.53	4,991	-	(6)	-	-	4,985
KB Oaktree Trust No.3	8,605	(604)	818	-	-	8,819
Daehan No.36 Office Asset Management Company	22,058	-	(625)	-	-	21,433
Rhinos Premier Mezzanine Investment Trust Fund 1	2,873	-	137	-	-	3,010
Shinhan Real Estate Loan General Private Real Estate No.2.	57,334	1,799	2,129	-	-	61,262
Shinhan JigaeNamsan Road Private Special Asset Investment Trust	40,571	499	1,335	-	-	42,405
SKS-Yozma Fund No.1	6,599	(4,140)	1,053	-	-	3,512
IBKC-METIS Global Contents Investment Fund	4,550	(927)	(579)	-	-	3,044
Keistone Unicorn Private Equity Fund	6,249	(3,377)	3,326	-	-	6,198
KB Distribution Private Real Estate 3-1	26,651	-	(679)	-	-	25,972
Pacific Private Investment Trust No.49-1	28,641	-	(1,129)	-	-	27,512
KIWOOM Real estate private placement fund for normal investors No. 31	8,558	-	526	-	-	9,084
RIFA Real estate private placement fund for normal investoes No. 51	5,726	-	350	-	-	6,076
Fivetree general private equity fund No.15	12,281	(489)	626	-	-	12,418
Shinhan-Kunicorn first Fund	9,831	-	(168)	-	-	9,663
Harvest Fund No.3	15,854	(893)	(3,344)	-	-	11,617
Shinhan Simone FundⅠ	4,796	-	48	-	-	4,844
Korea Investment develop seed Trust No.1	10,242	(901)	(47)	-	-	9,294
Tiger Green alpah Trust No.29	26,806	239	1,835	-	-	28,880
STIC ALT Global II Private Equity Fund	9,859	(218)	(109)	-	-	9,532
NH-Brain EV Fund	11,592	-	(844)	-	-	10,748
DDI LVC Master Real Estate Investment Trust Co., Ltd.	6,405	450	(211)	-	-	6,644
Leverent Frontier 4th Venture Investment Fund	2,964	-	1,696	-	-	4,660
Find-Green New Deal 2nd Equity Fund	4,508	-	(43)	-	-	4,465
ShinhanFitrin 1st Technology Business Investment Association	4,437	-	99	-	-	4,536
PARATUS No.3 Private Equity Fund	4,936	-	(49)	-	-	4,887
Golden Route 2nd Startup Venture Specialized Private Equity Fund	3,003	-	17	-	-	3,020
Koramco Private Real Estate Fund 143	3,030	3,636	1	-	-	6,667
Korea Investment Top Mezzanine Private Real Estate Trust No.1	9,885	(548)	895	-	-	10,232
LB YoungNam Logistics Private Trust No.40	9,748	(299)	517	-	-	9,966
Shinhan-Cognitive Start-up Fund L.P.	9,953	(5,052)	(479)	-	-	4,422

13. Investments in associates (continued)

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	September 30, 2023
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
IGEN2022 No.1 private Equity Fund	9,045	(405)	373	-	-	9,013
Cornerstone J&M Fund I	3,561	-	(61)	-	-	3,500
Logisvalley Shinhan REIT Co.,Ltd.	3,804	-	(154)	-	-	3,650
Cornerstone ENM No.1 Technology Fund	2,663	(45)	2,328	-	-	4,946
KDB Investment Global Healthcare Private Equity Fund I	34,468	-	(203)	-	-	34,265
Shinhan-Ji and Tec Smart Innovation Fund	2,587	5,200	(381)	-	-	7,406
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st	1,776	3,600	(156)	-	-	5,220
Korea Investment Green Newdeal Infra Trust No.1	5,714	(52)	18	-	-	5,680
BTS 2nd Private Equity Fund	3,772	2,860	(177)	-	-	6,455
Shinhan Global Active REIT Co.Ltd.	19,222	(49)	117	-	-	19,290
NH-J&-IBKC Label Technology Fund	9,866	-	(94)	-	-	9,772
IMM Global Venture Opportunity, LP	3,115	(3,115)	-	-	-	-
Shinhan-iSquare Venture PEF 1st	497	4,000	-221	-	-	4,276
Aurum Gold Rush ESG General Private Investment Trust No. 1	3,000	-	83	-	-	3,083
Capstone Develop Frontier Trust	6,857	-289	785	-	-	7,353
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	-	173	-	-	4,774
Eventus-IBKC LIB Fund	6,035	-	683	-	-	6,718
NH-Daishin-Kyobo healthcare 1 Fund	3,948	-	70	-	-	4,018
IBKC-Behigh Fund 1st	3,268	-	-33	-	-	3,235
Nautic Green Innovation ESG Co-investment No.1 Private Equity Fund	3,956	-	-57	-	-	3,899
ON No.1 Private Equity Fund	5,362	-	-21	-	-	5,341
Digital New Deal Kappa Private Equity Fund	4,946	-	-77	-	-	4,869
IBKCJS New Technology Fund No.1	-	5,000	4,634	-	-	9,634
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	-	11,334	676	-	-	12,010
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38	-	3,000	198	-	-	3,198

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	September 30, 2023
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
TogetherKorea Private Investment Trust No. 6	-	5,122	110	-	-	5,232
TogetherKorea Private Investment Trust No. 7	-	5,122	110	-	-	5,232
Signature Young Adults House General Private Real Estate Development Investment No.1	-	11,484	(531)	-	-	10,953
Smart Biohealthcare BNH No. 5	-	5,597	(149)	-	-	5,448
Forward-NBH New Technology Fund 1	-	4,000	385	-	-	4,385
Kiwoom Material Part Equipment New Technology Investment Fund No.3	-	4,000	205	-	-	4,205
VL ZIEGLER PEF No.3	-	22,000	(388)	-	-	21,612
Penture K-Content Investment Fund	-	6,000	(259)	-	-	5,741
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund	-	4,275	52	-	-	4,327
Hana Alternative Investment Kosmes PCBO General Private Equity Fund No. 1	-	4,872	107	-	-	4,979
Shinhan-timefolio Bio Development Investment Fund	-	6,000	(3)	-	-	5,997
Shinhan SM Office Value Add Real Estate Investment Trust Co. Ltd.	-	9,674	71	-	-	9,745
KDBC Meta-enter New Technology Investment Fund	-	7,000	(24)	-	-	6,976
Hyundai Motors Kosnet Future Growth Venture Investment Fund	-	3,400	(71)	-	-	3,329
Shinhan Time Secondary Blind New Technology Investment Trust	-	4,750	-	-	-	4,750
Shinhan-openwater pre-IPO Investment Trust 1	-	3,800	-	-	-	3,800
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1	-	3,200	(36)	-	-	3,164
Hantoo Shinhan Lake K-beauty Technology Investment Trust	-	10,000	(64)	-	-	9,936
YP-axis Technology Inv. Trust No. 1	-	5,000	(36)	-	-	4,964
Shinhan HB Wellness 1st Investment Trust	-	5,000	(11)	-	-	4,989
Timepolio Technology Innovation Trust 1	-	3,000	7	-	-	3,007
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518	-	23,900	(564)	-	-	23,336
Kiwoom-time animation Technology Investment Trust	-	6,000	(92)	-	-	5,908
Samsung-dunamu Innovative IT Technology Investment Trust No. 1	-	4,000	82	-	-	4,082
Time Robotics New Technology Investment Trust	-	4,000	(85)	-	-	3,915
Ascent-welcome Tehcnology Investment Trust No.2	-	9,010	35	-	-	9,045
Igis General PE Real Estate Investment Trust 517-1	-	52,000	-	-	-	52,000
Others	217,967	29,891	(3,171)	387	(161)	244,913
Total	2,904,474	34,579	95,499	9,062	(3,986)	3,039,628

(*1) The Group has stopped recognizing its equity method income or loss due to the carrying value of ‘0’ resulting from the investees’ cumulative loss.

(*2) Incorporated into the consolidation target as the Group holds control due to an ownership of increased shares during the nine-month period ended September 30, 2023.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
BNP Paribas Cardif Life Insurance	44,022	-	(1,774)	(12,079)	-	30,169
Songrim Partners	-	-	-	-	-	-
Partners 4th Growth Investment Fund	13,033	(1,714)	6,917	(4,694)	-	13,542
KTB Newlake Global Healthcare PEF	9,412	(5,832)	729	-	-	4,309
Shinhan-Neoplux Energy Newbiz Fund	16,032	(391)	5,196	-	-	20,837
Shinhan-Albatross tech investment Fund	10,389	(1,800)	3,792	(128)	-	12,253
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund	-	676	34	-	3,522	4,232
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund	-	1,471	-	-	255	1,726
VOGO Debt Strategy Qualified IV Private	7,179	(1,433)	339	-	-	6,085
Shinhan-Midas Donga Secondary Fund	3,951	(1,025)	1,505	-	-	4,431
ShinHan – Soo Young Entrepreneur Investment Fund No.1	4,226	-	188	-	-	4,414
Shinhan Praxis K-Growth Global Private Equity Fund	7,761	(8,512)	4,442	-	-	3,691
Kiwoom Milestone Professional Private Real Estate Trust 19	5,253	-	(150)	-	(1,142)	3,961
AIP EURO Green Private Real Estate Trust No.3	29,703	(29,008)	(695)	-	-	-
Shinhan Global Healthcare Fund 1 (*1)	-	-	-	-	-	-
KB NA Hickory Private Special Asset Fund	34,376	(1,545)	1,508	-	-	34,339
Koramco Europe Core Private Placement Real Estate Fund No.2-2	19,492	(464)	208	-	-	19,236
Shinhan EZ General Insurance, Co. Ltd. (*2)	3,354	(3,181)	(182)	9	-	-
Hermes Private Investment Equity Fund	9,782	-	(4,220)	-	-	5,562
KDBC-Midas Dong-A Global contents Fund	2,955	-	1,322	-	-	4,277
Shinhan-Nvestor Liquidity Solution Fund	5,338	700	400	-	-	6,438
Shinhan AIM FoF Fund 1-A	9,156	51	903	-	-	10,110
IGIS Global Credit Fund 150-1	5,402	(1,267)	557	-	-	4,692
Partner One Value up I Private Equity Fund	7,891	-	(2,747)	-	-	5,144
Genesis No.1 Private Equity Fund	55,533	408	3,983	-	-	59,924
Korea Omega Project Fund III	4,290	-	(616)	-	-	3,674
Soo Delivery Platform Growth Fund	5,873	(6,093)	220	-	-	-
Genesis North America Power Company No.1 PEF	13,736	(12,629)	7,011	-	-	8,118
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3	41,549	12,056	(10,361)	-	-	43,244
MIEL CO.,LTD. (*1)	-	-	-	-	-	-
AIP Transportation Specialized Privately Placed Fund Trust #1	34,688	5,527	4,606	-	-	44,821
E&Healthcare Investment Fund No.6	6,866	(3,190)	(3,079)	-	-	597
One Shinhan Global Fund 1	3,773	-	(1,183)	-	(642)	1,948

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
Investees	Beginning balance	Investment (disposal)vestment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
Kiwoom-Shinhan Innovation Fund I	11,731	(1,500)	(790)	-	-	9,441
Daishin-K&T New Technology Investment Fund	7,991	(7,430)	(561)	-	-	-
Midas Asset Global CRE Debt Private Fund No.6	48,305	5,873	2,851	-	-	57,029
Samchully Midstream Private Placement Special Asset Fund 5-4	27,471	5,033	(1,880)	-	-	30,624
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3	25,204	(912)	200	-	-	24,492
NH-Amundi Global Infrastructure Trust 14	18,301	1,714	960	-	-	20,975
Jarvis Memorial Private Investment Trust 1	10,109	(700)	377	-	-	9,786
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37	33,153	(22)	226	-	-	33,357
Milestone Private Real Estate Fund 3 (Derivative Type)	18,544	(201)	728	-	-	19,071
RIFA Real estate private placement fund for normal investors No. 31	7,902	(607)	69	-	-	7,364
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2	10,236	(5,292)	(1,975)	-	-	2,969
T&F 2019 bearing Private Equity Fund Specializing in Start-up and Venture Business	2,864	-	367	-	-	3,231
Cape IT Fund No.3	10,065	(10,580)	515	-	-	-
FuturePlay-Shinhan TechInnovation Fund 1	7,149	-	(233)	-	-	6,916
Stonebridge Corporate 1st Fund	2,964	-	658	-	-	3,622
Vogo Realty Partners Private Real Estate Fund V	10,766	(638)	787	-	-	10,915
Korea Credit Bureau	7,695	-	(2,656)	-	-	5,039
Goduck Gangil1 PFV Co., Ltd.	-	-	60	-	-	60
SBC PFV Co., Ltd.	29,586	-	(1,118)	-	-	28,468
NH-amundi global infra private fund 16	52,008	(15,362)	19,565	-	-	56,211
IMM Global Private Equity Fund	118,615	19,045	9,724	-	-	147,384
HANA Alternative Estate Professional Private122	29,489	(28,570)	(918)	-	-	1
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7	49,899	(50,540)	641	-	-	-
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust	282,199	(24,838)	5,691	-	-	263,052
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24	28,312	(6,937)	1,308	-	-	22,683
Sparklabs-Shinhan Opportunity Fund 1	4,640	(826)	817	-	-	4,631
BNW Tech-Innovation Private Equity Fund	5,881	-	(48)	-	-	5,833
IGIS Real-estate Private Investment Trust No.33	13,884	(715)	1,383	-	-	14,552
WWG Global Real Estate Investment Trust no.4	10,644	(659)	346	-	-	10,331
Goduck Gangil10 PFV Co., Ltd.	-	-	3,236	-	-	3,236

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):

100

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)


	December 31, 2022
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
Fidelis Global Private Real Estate Trust No.2	19,773	2,183	(11)	-	-	21,945
AIP EURO PRIVATE REAL ESTATE TRUST No. 12	49,217	(5,640)	4,850	-	-	48,427
Shinhan Global Healthcare Fund 2 (*1)	-	-	-	-	-	-
Pebblestone CGV Private Real Estate Trust No.1	13,710	(13,971)	261	-	-	-
SH Corporate Professional Investment Type Private Security Investment Trust No.45	173,955	(173,955)	-	-	-	-
Shinhan AIM Real Estate Fund No.2	23,275	3,346	(1,378)	-	-	25,243
Shinhan AIM Real Estate Fund No.1	44,312	(2,176)	2,506	-	-	44,642
SHBNPP Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust	32,948	(915)	594	-	-	32,627
SHBNPP Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust	20,550	6	(1,260)	-	-	19,296
SHBNPP Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2	18,855	5,114	629	-	-	24,598
Korea Omega-Shinhan Project Fund I	7,244	2,000	778	-	-	10,022
ST-Bonanja Food tech	3,359	(621)	(107)	-	-	2,631
Samsung SRA Real Estate Professional Private 45[FoFs]	12,880	5,279	3,491	-	-	21,650
IBK Global New Renewable Energy Special Asset Professional Private2	31,887	(2,516)	4,041	-	-	33,412
VS Cornerstone Fund	3,410	-	(75)	-	-	3,335
Aone Mezzanine Opportunity Professional Private	9,540	(5,084)	553	-	-	5,009
NH-Amundi US Infrastructure Private Fund No.2	27,024	2,446	2,471	-	-	31,941
KB Distribution Private Real Estate1	30,694	(30,694)	-	-	-	-
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No.2	13,016	(7,291)	607	-	-	6,332
Kakao-Shinhan 1st TNYT Fund	14,497	-	6,833	-	-	21,330
IMM Special Situation 1-2 PRIVATE EQUITY FUND	11,593	(8,690)	(300)	-	-	2,603
Pacific Private Placement Real Estate Fund No.40	11,598	(748)	772	-	-	11,622
Mastern Private Real Estate Loan Fund No.2	7,491	(1,359)	255	-	-	6,387
LB Scotland Amazon Fulfillment Center Fund 29	31,268	(2,189)	558	-	-	29,637
JR AMC Hungary Budapest Office Fund 16	12,140	(821)	1,138	-	-	12,457
EDNCENTRAL Co.,Ltd. (*1)	-	-	-	-	-	-
Future-Creation Neoplux Venture Capital Fund	3,017	-	1,234	-	-	4,251
Gyeonggi-Neoplux Superman Fund	7,878	(1,195)	(1,216)	-	-	5,467
NewWave 6th Fund	14,455	-	(915)	-	-	13,540
KTC-NP Growth Champ 2011-2 Private Equity Fund	3,990	(2,490)	(293)	-	-	1,207

101

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
Investees	Beginning balance	InvestmentInvestment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
Neoplux No.3 Private Equity Fund	22,601	(2)	(2,145)	-	-	20,454
PCC Amberstone Private Equity Fund I	22,790	(2,509)	(1,496)	-	-	18,785
KIAMCO POWERLOAN TRUST 4TH	45,301	(2,305)	528	-	-	43,524
Mastern Opportunity Seeking Real Estate Fund II	21,317	(6,457)	(150)	-	-	14,710
AION ELFIS PROFESSIONAL PRIVATE 1	4,422	232	(1,088)	-	-	3,566
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business	4,360	(1,732)	3,081	-	-	5,709
Neoplux Market-Frontier Secondary Fund	11,313	(653)	3,300	-	-	13,960
Harvest Private Equity Fund II	3,481	(159)	(183)	-	-	3,139
Synergy Green New Deal 1st New Technology Business Investment Fund	9,684	(146)	1,094	-	-	10,632
KAIM Real-estate Private Investment Trust 20	5,048	(4,176)	315	-	-	1,187
KIAMCO Vietnam Solar Special Asset Private Investment Trust	7,527	(2,019)	1,219	-	-	6,727
Daishin New Technology Investment Fund 5th	4,439	(844)	(1,165)	-	-	2,430
CSQUARE SNIPER PROFESSIONAL PRIVATE 10	3,247	(3,806)	559	-	-	-
Acurus Hyundai Investment Partners New Technology	4,714	(3,979)	(735)	-	-	-
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1	63,944	(60,279)	-	(3,665)	-	-
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2	63,944	(60,279)	-	(3,665)	-	-
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45	14,778	(14,778)	-	-	-	-
SHINHAN-NEO Core Industrial Technology Fund	5,691	3,960	(242)	-	-	9,409
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2	27,243	(2,559)	340	-	-	25,024
SIMONE Mezzanine Fund No.3	3,054	4	(41)	-	-	3,017
Eum Private Equity Fund No.7	7,873	(86)	1,383	-	-	9,170
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund	7,594	(4,870)	(2,724)	-	-	-
Kiwoom Hero No.4 Private Equity Fund	4,305	-	(788)	-	-	3,517
Vogo Canister Professional Trust Private Fund I	41,072	2,103	3,154	-	-	46,329
SW-S Fund	6,724	-	524	-	-	7,248
CL Buyout 1st PEF	13,791	273	(1,222)	-	-	12,842
Timefolio The Venture-V second	4,572	-	(476)	-	-	4,096

102

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
Newlake Growth Capital Partners2 PEF	12,921	(177)	(248)	-	-	12,496
Shinhan Smilegate Global PEF I	3,336	(1,828)	2,263	-	-	3,771
Fount Professional Investors Private Investment Trust No.3	5,197	(5,197)	-	-	-	-
Genesis Eco No.1 PEF	11,130	195	93	-	-	11,418
SHINHAN-NEO Market-Frontier 2nd Fund	24,606	8,540	1,274	-	-	34,420
NH-Synergy Core Industrial New Technology Fund	6,437	-	(60)	-	-	6,377
J& Moorim Jade Investment Fund	5,540	(385)	279	-	-	5,434
Helios-KDBC Digital Contents 1st	1,695	1,720	(59)	-	-	3,356
Ulmus SHC innovation investment fund	5,192	-	(306)	-	-	4,886
Mirae Asset Partners X Private Equity Fund	7,858	-	(66)	-	-	7,792
T Core Industrial Technology 1st Venture PEF	4,535	-	(6)	-	-	4,529
Curious Finale Corporate Recovery Private Equity Fund	3,690	(245)	146	-	-	3,591
TI First Property Private Investment Trust 1	3,055	(101)	173	-	-	3,127
MPLUS Professional Private Real Estate Fund 25	3,290	655	286	-	-	4,231
IBKC Global Contents Investment Fund	4,943	-	(391)	-	-	4,552
Nautic Smart No.6 Private Equity Fund	3,974	(3,752)	956	-	-	1,178
Premier Luminous Private Equity Fund	6,991	(2,314)	4,289	-	-	8,966
Hanyang-Meritz 1 Fund	3,483	-	(17)	-	-	3,466
KNT 2ND PRIVATE EQUITY FUND	4,157	(3,000)	(207)	-	-	950
Kiwoom-Shinhan Innovation Fund 2	2,677	9,000	(406)	-	-	11,271
Maple Mobility Fund	8,683	91	8,085	-	-	16,859
SJ ESG Innovative Growth Fund	2,998	-	1,199	-	-	4,197
AVES 1st Corporate Recovery Private Equity Fund	4,736	-	321	-	-	5,057
JS Shinhan Private Equity Fund	5,037	-	(84)	-	-	4,953
NH Kyobo AI Solution Investment Fund	2,973	-	315	-	-	3,288
Daishin Newgen New Technology Investment Fund 1st	12,169	(2,277)	(4,188)	-	-	5,704
META ESG Private Equity Fund I	5,677	-	180	-	-	5,857
SWFV FUND-1	9,646	-	(518)	-	-	9,128
PHAROS DK FUND	3,949	-	(114)	-	-	3,835
Shinhan VC tomorrow venture fund 1	9,042	18,226	(342)	-	-	26,926
Highland 2021-8 Fund	4,899	-	(73)	-	-	4,826
H-IOTA Fund	9,728	(88)	(17)	-	-	9,623
Stonebridge-Shinhan Unicorn Secondary Fund	2,074	4,160	(152)	-	-	6,082
Tres-Yujin Trust	9,995	(546)	555	-	-	10,004
Shinhan-Time mezzanine blind Fund	14,942	-	(1,630)	-	-	13,312
Capstone REITs No.26	4,395	(300)	(243)	-	-	3,852
JB Incheon-Bucheon REITS No.54	4,999	-	(10)	-	-	4,989
Hankook Smart Real Asset Investment Trust No.3	4,342	2,195	456	-	-	6,993
JB Hwaseong-Hadong REITs No.53	4,999	-	(8)	-	-	4,991
KB Oaktree Trust No.3	3,159	5,376	70	-	-	8,605

103

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
Investees	Beginning balance	Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
Daehan No.36 Office Asset Management Company	21,500	(635)	1,193	-	-	22,058
Rhinos Premier Mezzanine Private Investment Fund No.1	3,005	-	(132)	-	-	2,873
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2	19,903	35,762	1,669	-	-	57,334
Shinhan JigaeNamsan Road Private Special Asset Investment Trust	40,105	(795)	1,261	-	-	40,571
SKS-Yozma Fund No.1	5,945	-	654	-	-	6,599
IBKC-METIS Global Contents Investment Fund	4,000	-	550	-	-	4,550
Keistone Unicorn Private Equity Fund	6,300	-	(51)	-	-	6,249
KB Distribution Private Real Estate 3-1	-	24,000	2,651	-	-	26,651
Pacific Private Investment Trust No.49-1	-	28,000	641	-	-	28,641
KIWOOM Real estate private placement fund for normal investors No. 31	-	8,474	84	-	-	8,558
RIFA Real estate private placement fund for normal investoes No. 51	-	5,650	76	-	-	5,726
Fivetree general private equity fund No.15	-	11,995	286	-	-	12,281
Shinhan-Kunicorn first Fund	-	10,000	(169)	-	-	9,831
Harvest Fund No.3	-	13,000	2,854	-	-	15,854
Shinhan Simone Fund Ⅰ	-	5,000	(204)	-	-	4,796
Korea Investment develop seed Trust No.1	-	9,562	680	-	-	10,242
Tiger Green alpah Trust No.29	-	26,180	626	-	-	26,806
STIC ALT Global II Private Equity Fund	-	10,000	(141)	-	-	9,859
NH-Brain EV Fund	-	13,000	(1,408)	-	-	11,592
DDI LVC Master Real Estate Investment Trust Co., Ltd.	-	6,625	(220)	-	-	6,405
Find-Green New Deal 2nd Equity Fund	-	4,549	(41)	-	-	4,508
ShinhanFitrin 1st Technology Business Investment Association	-	4,850	(413)	-	-	4,437
PARATUS No.3 Private Equity Fund	-	5,000	(64)	-	-	4,936
Golden Route 2nd Startup Venture Specialized Private Equity Fund	-	3,000	3	-	-	3,003
Koramco Private Real Estate Fund 143	-	3,030	-	-	-	3,030
Korea Investment Top Mezzanine Private Real Estate Trust No.1	-	8,884	1,001	-	-	9,885
LB YoungNam Logistics Private Trust No.40	-	9,706	42	-	-	9,748
Shinhan-Cognitive Start-up Fund L.P.	-	9,200	753	-	-	9,953
IGEN2022 No.1 private Equity Fund	-	8,280	765	-	-	9,045
Cornerstone J&M Fund I	-	3,600	(39)	-	-	3,561
Logisvalley Shinhan REIT Co.,Ltd.	-	3,880	(60)	(16)	-	3,804
KDB Investment Global Healthcare Private Equity Fund I	-	35,000	(532)	-	-	34,468

104

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

13. Investments in associates (continued)

(b) Changes in investments in associates for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
Investees	Beginning balance	Investment Investment (disposal) and dividend	Equity method income (loss)	Change in other comprehensive income	Impairment loss	Ending balance
Korea Investment Green Newdeal Infra Trust No.1	-	5,734	(20)	-	-	5,714
BTS 2nd Private Equity Fund	-	3,934	(162)	-	-	3,772
Shinhan Global Active REIT Co.Ltd.	-	19,900	(678)	-	-	19,222
NH-J&-IBKC Label Technology Fund	-	9,976	(110)	-	-	9,866
IMM Global Venture Opportunity, LP	-	3,115	-	-	-	3,115
Capstone Develop Frontier Trust	-	6,857	-	-	-	6,857
Nextrade Co., Ltd.	-	9,700	-	-	-	9,700
SH Sustainable Management ESG Short term Bond Security Feeder Investment Trust No.1	-	3,000	11	-	-	3,011
SH 1.5years Maturity Investment Type Security Investment Trust No.2	-	4,600	1	-	-	4,601
Eventus-IBKC LIB Fund	-	7,000	(965)	-	-	6,035
NH-Daishin-Kyobo healthcare 1 Fund	-	4,000	(52)	-	-	3,948
IBKC-Behigh Fund 1st	-	3,300	(32)	-	-	3,268
Nautic Green Innovation ESG Co-investment No.1 Private Equity Fund	-	4,000	(44)	-	-	3,956
ON No.1 Private Equity Fund	-	6,000	(638)	-	-	5,362
Digital New Deal Kappa Private Equity Fund	-	5,000	(54)	-	-	4,946
Others	170,811	50,920	12,089	-	(3,598)	230,222
	2,913,745	(105,125)	121,697	(24,238)	(1,605)	2,904,474

(*1) The Group has stopped recognizing its equity method income or loss due to the carrying value of ‘0’ resulting from the investees’ cumulative loss.

(*2) For the year ended December 31, 2022, 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, Ltd.

105

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

14. Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Securities sold:
Stocks	469,621	278,341
Bonds	567,029	438,689
Others	283,274	7,074
	1,319,924	724,104
Gold/silver deposits	411,813	422,006
	1,731,737	1,146,110

15. Financial liabilities designated at fair value through profit or loss

(a) Financial liabilities designated at fair value through profit or loss as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022	Reason for designation
Equity-linked securities sold	5,025,860	5,437,434	Combined financial instrument
Securities sold with embedded derivatives	1,927,835	2,882,607	Combined financial instrument
Debt securities issued	233,947	47,327	Fair value measurement and management
	7,187,642	8,367,368

(*) The Group designated the financial liabilities at the initial recognition (or subsequently) in accordance with paragraph 6.7.1 of K-IFRS 1109 as financial liabilities at fair value through profit or loss.

Maximum credit risk exposure of the financial liabilities designated at fair value through profit or loss amounts to 7,187,642 million as of September 30, 2023. The increase in values of the liability due to credit risk changes is 474 million for the nine-month period ended September 30, 2023, and the accumulated change in values is negative 9,710 million as of September 30, 2023.

(b) The difference between the carrying value of financial liabilities designated at fair value through profit or loss and the amount required to be paid at contractual maturity as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Maturity payment	6,914,177	7,733,506
Carrying value	7,187,642	8,367,368
Difference	(273,465)	(633,862)

106

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

16. Debt securities issued

Debt securities issued as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
	Interest rate (%)	Amount	Interest rate (%)	Amount
Debt securities issued in Korean won:
Debt securities issued	0.00~7.50	60,296,106	0.05~9.00	61,038,481
Subordinated debt securities issued	2.20~5.20	2,926,405	2.20~4.17	3,275,225
Loss on fair value hedges	-	(338,919)	-	(348,700)
Discount on debt securities issued	-	(41,201)	-	(37,943)
		62,842,391		63,927,063
Debt securities issued in foreign currencies:
Debt securities issued	0.25~ 7.31	10,422,479	0.25~7.59	9,586,831
Subordinated debt securities issued	3.34~5.10	4,378,400	3.34~5.10	4,145,264
Loss on fair value hedges	-	(412,433)	-	(324,901)
Discount on debt securities issued	-	(49,097)	-	(45,474)
		14,339,349		13,361,720
		77,181,740		77,288,783

107

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

17. Defined benefits plans

The Group has operated a defined benefit plan and calculates defined benefit obligations based on the employee’s pension compensation benefits and service period.

(a) Defined benefit obligations and plan assets as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Present value of defined benefit obligations	1,987,058	1,934,643
Fair value of plan assets	(2,246,796)	(2,376,817)
Recognized liability (asset) for defined benefit plans (*)	(259,738)	(442,174)

(*) The asset for defined benefit plan of 259,738 million as of September 30, 2023 is the net defined benefit assets of 311,933 million less the net defined benefit liabilities of 52,195 million. In addition, the asset for defined benefit plan of 442,174 million as of December 31, 2022 is the net defined benefit assets of 456,838 million less the net defined benefit liabilities of 14,664 million.

(b) Profit or loss recognized for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three-month	Nine- month	Three- month	Nine- month
Current service costs	39,306	111,444	43,635	128,414
Net interest expense (income)	(9,757)	(27,211)	(1,559)	(4,739)
Past service costs	-	92	8,330	8,330
Settlement	-	5,397	(526)	(526)
	29,549	89,722	49,880	131,479

108

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

18. Provisions

(a) Provisions as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Asset retirement obligations	96,255	91,571
Expected loss related to litigation	31,428	29,238
Unused credit commitments	327,134	317,590
Guarantee contracts issued:	70,517	83,411
Financial guarantee contracts	47,588	55,828
Non-financial guarantee contracts	22,929	27,583
Others(*)	483,870	744,504
	1,009,204	1,266,314

(*) As of September 30, 2023 and December 31, 2022, the Group recognizes provision of 330,561 million and 574,013 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.

109

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

18. Provisions (continued)

(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 are as follows:


	September 30, 2023
	Unused credit commitments			Financial guaranteed contracts issued			Total
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total

Beginning balance	175,562	139,998	2,030	48,113	7,687	28	373,418
Transfer (from) to 12-month expected credit loss	65,470	(65,309)	(161)	4,447	(4,447)	-	-
Transfer (from) to lifetime expected credit loss	(13,793)	13,829	(36)	(4,708)	4,708	-	-
Transfer (from) to impaired financial asset	(599)	(1,916)	2,515	(139)	(125)	264	-
Provision (reversal)	(35,666)	44,408	(2,281)	(729)	1,604	4	7,340
Change in foreign exchange rates	2,725	358	-	922	356	1	4,362
Others(*)	-	-	-	(9,890)	(240)	(268)	(10,398)
Ending balance	193,699	131,368	2,067	38,016	9,543	29	374,722

(*) Others include effects of the provision from the new financial guaranteed contracts measured at fair value, and the expired contracts, and the change of discount rate.

110

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

18. Provisions (continued)

(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
	Unused credit commitments			Financial guaranteed contracts issued			Total
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total

Beginning balance	150,599	147,511	1,924	48,607	6,709	28	355,378
Transfer (from)to 12-month expected credit loss	68,226	(67,945)	(281)	2,680	(2,680)	-	-
Transfer (from)to lifetime expected credit loss	(10,794)	10,842	(48)	(3,715)	3,715	-	-
Transfer (from)to impaired financial asset	(316)	(1,274)	1,590	-	-	-	-
Provision (Reversal)	(30,042)	50,733	(1,155)	(972)	537	5	19,106
Change in foreign exchange rates	(2,068)	131	-	910	118	-	(909)
OtOthers(*)	(43)	-	-	603	(712)	(5)	(157)
Ending balance	175,562	139,998	2,030	48,113	7,687	28	373,418

(*) Others include effects of the provision from the new financial guaranteed contracts measured at fair value, and the expired contracts, and the change of discount rate.

111

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

19. Insurance contracts liabilities and others

(a) Insurance contract liabilities as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Insurance contract assets	3,373	-
Insurance contract liabilities	44,448,225	45,904,773
Net insurance contract liabilities	44,444,852	45,904,773
Reinsurance contract assets	79,352	88,772
Reinsurance contract liabilities	68,073	62,803
Net reinsurance contract assets	(11,279)	(25,969)

112

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

19. Insurance contracts liabilities and others (continued)

(b) Income or expenses on insurance contracts for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023
	Nine-month
	Modified retrospective approach	Fair value approach	Others	Total
Insurance contracts with no premium allocation approach
Expected premium and other expenses	595,104	519,918	60,124	1,175,146
Adjustment for change in risk	42,571	27,005	17,491	87,067
Amortization of contractual service margin	416,099	154,211	113,189	683,499
Collection of insurance acquisition cash flows	99,413	187	88,826	188,426
Others(*)	(13,873)	57	9,433	(4,383)
Sub-total	1,139,314	701,378	289,063	2,129,755
Premium allocation approach	20,216	-	279	20,495
Total insurance revenue	1,159,530	701,378	289,342	2,150,250
Insurance contracts with no premium allocation approach
Incurred premium and other expenses	579,362	435,679	69,357	1,084,398
Changes in fulfillment cash flows	2,193	54,346	2,472	59,011
Onerous contracts expense	19,193	6,967	10,942	37,102
Amortization of insurance acquisition cash flows	99,413	187	88,825	188,425
Others(*)	(9,409)	1,330	(26,443)	(34,522)
Sub-total	690,752	498,509	145,153	1,334,414
Premium allocation approach	21,896	-	668	22,564
Total insurance service expense	712,648	498,509	145,821	1,356,978
Insurance contracts with no premium allocation approach
Incurred premium for reinsurance	3	49,934	4,168	54,105
Changes in fulfillment cash flows	-	(21,142)	(978)	(22,120)
Others (*)	-	(2,164)	1,594	(570)
Sub-total	3	26,628	4,784	31,415
Premium allocation approach	1,964	-	-	1,964
Total reinsurance revenue	1,967	26,628	4,784	33,379
Insurance contracts with no premium allocation approach
Expected reinsurance premium	18	31,484	4,816	36,318
Adjustment for change in risk	-	2,465	423	2,888
Amortized contractual service margin	-	7,204	5,282	12,486
Others(*)	-	(507)	2,337	1,830
Sub-total	18	40,646	12,858	53,522
Premium allocation approach	3,948	-	-	3,948
Total reinsurance service expense	3,966	40,646	12,858	57,470
Total insurance income	444,883	188,851	135,447	769,181

(*) Others include allocation of loss components, etc.

113

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

19. Insurance contracts liabilities and others (continued)

(b) Income or expenses on insurance contracts for the nine-month periods ended September 30, 2023 and 2022 are as follows(continued):


	September 30, 2023
	Three-month
	Modified retrospective approach	Fair value approach	Others	Total
Insurance contracts with no premium allocation approach
Expected premium and other expenses	185,852	183,250	24,844	393,946
Adjustment for change in risk	12,986	9,409	6,915	29,310
Amortization of contractual service margin	129,465	56,835	51,169	237,469
Collection of insurance acquisition cash flows	30,771	166	34,408	65,345
Others(*)	(4,282)	(1)	8,607	4,324
Sub-total	354,792	249,659	125,943	730,394
Premium allocation approach	6,844	-	86	6,930
Total insurance revenue	361,636	249,659	126,029	737,324
Insurance contracts with no premium allocation approach
Incurred premium and other expenses	172,963	199,038	37,560	409,561
Changes in fulfillment cash flows	(6,359)	(19,889)	(380)	(26,628)
Onerous contracts expense	6,055	(589)	4,517	9,983
Amortization of insurance acquisition cash flows	30,771	166	34,407	65,344
Others(*)	(3,062)	435	(8,466)	(11,093)
Sub-total	200,368	179,161	67,638	447,167
Premium allocation approach	8,243	-	556	8,799
Total insurance service expense	208,611	179,161	68,194	455,966
Insurance contracts with no premium allocation approach
Incurred premium for reinsurance	3	16,086	2,193	18,282
Changes in fulfillment cash flows	-	(8,521)	(804)	(9,325)
Others (*)	-	(473)	218	(255)
Sub-total	3	7,092	1,607	8,702
Premium allocation approach	1,421	-	-	1,421
Total reinsurance revenue	1,424	7,092	1,607	10,123
Insurance contracts with no premium allocation approach
Expected reinsurance premium	18	10,057	2,106	12,181
Adjustment for change in risk	-	774	176	950
Amortized contractual service margin	-	1,954	2,058	4,012
Others(*)	-	510	533	1,043
Sub-total	18	13,295	4,873	18,186
Premium allocation approach	1,690	-	-	1,690
Total reinsurance service expense	1,708	13,295	4,873	19,876
Total insurance income	152,741	64,295	54,569	271,605

(*) Others include allocation of loss components, etc.

114

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

19. Insurance contracts liabilities and others (continued)

(b) Income or expenses on insurance for the nine-month periods ended September 30, 2023 and 2022 are as follows(continued):


	September 30, 2022
	Nine-month
	Modified retrospective approach	Fair value approach	Other	Total
Insurance contracts with no premium allocation approach
Expected insurance premium and other insurance service expense	584,025	511,877	11,975	1,107,877
Adjustment for change in risk	55,781	26,491	7,221	89,493
Amortization of insurance contract margin	491,073	150,393	31,186	672,652
Collection of insurance acquisition cash flows	127,093	164	24,376	151,633
Others (*)	4,540	(9)	(446)	4,085
Sub-total	1,262,512	688,916	74,312	2,025,740
Premium allocation approach	4,860	-	262	5,122
Total insurance revenue	1,267,372	688,916	74,574	2,030,862
Insurance contracts with no premium allocation approach
Incurred premium and other service expenses	583,179	434,055	26,258	1,043,492
Changes in fulfillment cash flows	6,680	10,952	9	17,641
Onerous contracts expense (reversal)	8,944	(347)	33,952	42,549
Amortization of insurance acquisition cash flows	127,093	164	24,377	151,634
Others (*)	15,607	2,814	(18,064)	357
Sub-total	741,503	447,638	66,532	1,255,673
Premium allocation approach	9,765	-	609	10,374
Total insurance service expense	751,268	447,638	67,141	1,266,047
Insurance contracts with no premium allocation approach
Incurred premium for reinsurance	-	45,353	988	46,341
Changes in fulfillment cash flows	-	(17,938)	519	(17,419)
Others (*)	-	(5,519)	2,564	(2,955)
Sub-total	-	21,896	4,071	25,967
Premium allocation approach	1,480	-	-	1,480
Total reinsurance revenue	1,480	21,896	4,071	27,447
Insurance contracts with no premium allocation approach
Expected reinsurance premium	-	29,446	1,396	30,842
Adjustment for change in risk	-	2,585	196	2,781
Amortized contractual service margin	-	10,044	3,648	13,692
Others (*)	-	(1,496)	1,163	(333)
Sub-total	-	40,579	6,403	46,982
Premium allocation approach	743	-	-	743
Total reinsurance service expense	743	40,579	6,403	47,725
Total insurance income	516,841	222,595	5,101	744,537

(*) Others include allocation of loss components, etc.

115

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

19. Insurance contracts liabilities and others (continued)

(b) Income or expenses on insurance for the nine-month periods ended September 30, 2023 and 2022 are as follows(continued):


	September 30, 2022
	Three-month
	Modified retrospective approach	Fair value approach	Other	Total
Insurance contracts with no premium allocation approach
Expected insurance premium and other insurance service expense	184,580	181,075	6,672	372,327
Adjustment for change in risk	15,431	10,860	3,584	29,875
Amortization of insurance contract margin	153,377	55,608	17,295	226,280
Collection of insurance acquisition cash flows	41,990	164	13,089	55,243
Others (*)	11,385	758	(16,044)	(3,901)
Sub-total	406,763	248,465	24,596	679,824
Premium allocation approach	4,860	-	91	4,951
Total insurance revenue	411,623	248,465	24,687	684,775
Insurance contracts with no premium allocation approach
Incurred premium and other service expenses	191,465	199,155	13,154	403,774
Changes in fulfillment cash flows	(5,542)	(36,162)	(31)	(41,735)
Onerous contracts expense (reversal)	4,658	(257)	14,204	18,605
Amortization of insurance acquisition cash flows	41,990	164	13,089	55,243
Others (*)	15,607	2,814	(18,064)	357
Sub-total	248,178	165,714	22,352	436,244
Premium allocation approach	9,765	-	464	10,229
Total insurance service expense	257,943	165,714	22,816	446,473
Insurance contracts with no premium allocation approach
Incurred premium for reinsurance	-	16,934	348	17,282
Changes in fulfillment cash flows	-	(6,659)	193	(6,466)
Others (*)	-	(1,155)	794	(361)
Sub-total	-	9,120	1,335	10,455
Premium allocation approach	1,480	-	-	1,480
Total reinsurance revenue	1,480	9,120	1,335	11,935
Insurance contracts with no premium allocation approach
Expected reinsurance premium	-	10,495	643	11,138
Adjustment for change in risk	-	859	82	941
Amortized contractual service margin	-	4,029	1,451	5,480
Others (*)	-	1,346	946	2,292
Sub-total	-	16,729	3,122	19,851
Premium allocation approach	743	-	-	743
Total reinsurance service expense	743	16,729	3,122	20,594
Total insurance income	154,417	75,142	84	229,643

(*) Others include allocation of loss components, etc.

116

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

20. Insurance finance income (expense)

Insurance finance income or expense for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three-month	Nine- month	Three-month	Nine- month
Insurance finance income
Insurance contract
Foreign exchange rate change effects	111	2,192	1,770	2,981
Discount rate change effects	-	-	(9)	(9)
Others	96,646	121,077	212,396	927,315
	96,757	123,269	214,157	930,287
Reinsurance contract
Discount rate change effects	(1)	5	-	-
	96,756	123,274	214,157	930,287
Insurance finance expense
Insurance contract
Foreign exchange rate change effects	6,653	19,363	36,548	65,671
Discount rate change effects	(2)	10	-	-
Others	(12,150)	339,972	4,854	11,744
	(5,499)	359,345	41,402	77,415
Insurance finance income (expense)	102,255	(236,071)	172,755	852,872

117

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

21. Equity

(a) Equity as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Capital stock:
Common stock (*)	2,695,586	2,608,176
Preferred stock (*)	274,055	361,465
	2,969,641	2,969,641

Hybrid bonds	4,001,731	4,196,968

Capital surplus:
Share premium	11,352,744	11,352,819
Others	742,224	742,224
	12,094,968	12,095,043

Capital adjustments	(658,470)	(582,859)

Accumulated other comprehensive income, net of tax:
Loss on financial assets at fair value through other comprehensive income	(6,569,327)	(6,669,931)
Equity in other comprehensive loss of associates	(1,467)	(8,126)
Foreign currency translation adjustments for foreign operations	3,376	(112,283)
Net loss from cash flow hedges	(122,396)	(96,388)
Remeasurement of defined benefit obligation	(128,803)	(91,993)
Changes in own credit risk on financial liabilities designated under fair value option	(7,146)	(5,155)
Net finance gain on insurance contract assets(liabilities)	5,749,168	5,039,081
Net finance gain on reinsurance contract assets(liabilities)	33,075	34,045
	(1,043,520)	(1,910,750)

Retained earnings	36,251,890	33,963,799

Non-controlling interests	2,800,386	2,691,716
	56,416,626	53,423,558

(*) 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.

118

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

21. Equity (continued)

(b) Hybrid bonds

Hybrid bonds classified as other equity instruments of September 30, 2023 and December 31, 2022 are as follows:


	Issue date	Maturity date	Interest rate (%)	September 30, 2023	December 31, 2022
Hybrid bonds in Korean won	June 25, 2015	June 25, 2045	4.38	199,455	199,455
	September 15, 2017	Perpetual bond	4.25	89,783	89,783
	April 13, 2018	Perpetual bond	-	-	134,678
	April 13, 2018	Perpetual bond	4.56	14,955	14,955
	August 29, 2018	Perpetual bond	-	-	398,679
	June 28, 2019	Perpetual bond	3.27	199,476	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	-
	July 13, 2023	Perpetual bond	5.40	498,815	-
Hybrid bonds in foreign currency	August 13, 2018	Perpetual bond	-	-	559,526
Hybrid bonds in foreign currency	May 12, 2021	Perpetual bond	2.88	556,007	556,007
				4,001,731	4,196,968

(*) For the nine-month period ended September 30, 2023, the deduction for capital related to hybrid bonds issued is 2,354 million.

The hybrid bonds listed above can be repaid early after 5 or 10 years from the date of issuance, and each bond is either a perpetual bond or a bond of which the Group has right to extend the maturity under the same condition.

119

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

21. Equity (continued)

Changes in accumulated other comprehensive income for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 are as follows:


	September 30, 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 (loss) of associates	Foreign currency translation adjustments for foreign operations	Net gain(loss) from cash flow hedges	Net finance gain on insurance contract assets (liabilities)	Net finance gain on insurance contract assets (liabilities)	Remeasurement of defined benefit liabilities (assets)	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	(6,786,650)	(8,135)	(112,283)	(96,388)	5,039,081	34,045	(91,993)	9	116,719	(5,155)	(1,910,750)
Net gain (loss) from current transactions:
Change due to fair value	(95,363)	9,062	-	-	955,477	(1,381)	-	-	(40,183)	474	828,086
Reclassification:
Change due to impairment or disposal	263,932	-	-	-	-	-	-	-	-	-	263,932
Effect of hedge accounting	-	-	-	(181,903)	-	-	-	-	-	-	(181,903)
Hedge	8,269	-	(47,929)	146,953	-	-	-	-	-	-	107,293
Effects from changes in foreign exchange rate	-	-	170,424	-	-	-	-	-	6,062	-	176,486
Remeasurement of defined benefit liabilities (assets)	-	-	-	-	-	-	(50,268)	-	-	-	(50,268)
Deferred income taxes	(50,943)	(2,403)	(6,032)	8,942	(245,390)	411	13,379	-	8,446	705	(272,885)
Transfer to other account	-	-	-	-	-	-	-	-	1,964	(3,170)	(1,206)
Non-controlling interests	(1,580)	-	(804)	-	-	-	79	-	-	-	(2,305)
Ending balance	(6,662,335)	(1,476)	3,376	(122,396)	5,749,168	33,075	(128,803)	9	93,008	(7,146)	(1,043,520)

21. Equity (continued)

120

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

Changes in accumulated other comprehensive income for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 are as follows (continued):


	December 31, 2022
		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 (loss) of associates	Foreign currency translation adjustments for foreign operations	Net gain(loss) from cash flow hedges	Net finance gain on insurance contract assets (liabilities)	Net finance gain on insurance contract assets (liabilities)	Remeasurement of defined benefit liabilities (assets)	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	(867,680)	7,623	(125,219)	(26,124)	333,178	-	(343,124)	(28)	117,967	(1,816)	(905,223)

Change due to fair value	(8,067,860)	(16,914)	-	-	6,398,056	46,320	-	9	10,880	(5,919)	(1,635,428)
Reclassification:
Change due to impairment or disposal	(37,142)	(7,333)	-	-	-	-	-	-	-	-	(44,475)
Effect of hedge accounting	-	-	-	(190,372)	-	-	-	-	-	-	(190,372)
Hedge	63,480	-	(25,793)	90,510	-	-	-	-	-	-	128,197
Effects from changes in foreign exchange rate	-	-	40,679	-	-	-	-	-	(823)	-	39,856
Remeasurement of defined benefit liabilities (assets)	-	-	-	-	-	-	348,248	-	-	-	348,248
Deferred income taxes	2,118,966	8,489	(154)	29,598	(1,692,153)	(12,275)	(96,257)	(14)	(9,171)	1,170	348,199
Transfer to other account	-	-	-	-	-	-	-	42	(2,134)	1,410	(682)
Non-controlling interests	3,586	-	(1,796)	-	-	-	(860)	-	-	-	930
Ending balance	(6,786,650)	(8,135)	(112,283)	(96,388)	5,039,081	34,045	(91,993)	9	116,719	(5,155)	(1,910,750)

121

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

21. Equity (continued)

(d) Regulatory reserve for loan losses

If the allowance for credit losses in accordance with K-IFRS falls short of the allowance for credit losses in accordance with Regulations for the Supervision of Financial Institutions, the Group reserves the difference between the two into regulatory reserve for loan losses for each accounting period.

i) Changes in regulatory reserve for loan losses including non-controlling interests as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Beginning balance	3,609,851	3,647,972
Planned provision (reversal) for regulatory reserve for loan losses	(152,161)	(38,121)
Ending balance	3,457,690	3,609,851

ii) Profit attributable to equity holders of Shinhan Financial Group and earnings per share after factoring in regulatory reserve for loan losses for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three-month	Nine- month
Profit attributable to equity holders of Shinhan Financial Group	1,192,065	3,818,288	1,624,413	4,306,773
Provision for regulatory reserve for loan losses	(21,906)	153,153	(70,988)	(12,782)
Profit attributable to equity holders of Shinhan Financial Group adjusted for regulatory reserve	1,170,159	3,971,441	1,553,425	4,293,991
Basic and diluted earnings per share adjusted for regulatory reserve in Korean won(*)	2,169	7,351	2,844	7,856

(*) Dividends for hybrid bonds are deducted.

122

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

21. Equity (continued)

(e) Treasury stock

Changes in treasury stock for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
	Number of shares	Carrying value	Number of shares	Carrying value
Beginning balance	6,352	227	6,352	227
Acquisition	10,762,680	385,947	7,814,685	300,000
Retirement	(10,762,680)	(385,947)	(7,814,685)	(300,000)
Ending balance	6,352	227	6,352	227

(*) The controlling company acquired treasury stocks for the purpose of retirement during the period ended September 30, 2023 and retired 3,676,470 shares, 4,243,281shares, and 2,842,929 shares on March 28, 2023, June 16, 2023, and August 31, 2023, respectively. During 2022, the controlling company acquired treasury stocks for the purpose of retirement and retired 3,665,423 shares and 4,149,262 shares on April 25, 2022 and November 23, 2022, respectively.

(f) Dividends

i) Quarterly dividends paid by the controlling company for the nine-month period ended September 30, 2023 are as follows:


		Record date		Total dividends
Common stock ( 525 per share)	March 31, 2023 (1Q)			265,179
Convertible preferred stock ( 525 per share)	March 31, 2023 (1Q)			9,178
				274,357
Common stock ( 525 per share)			June 30, 2023 (2Q)	272,129
				546,486

ii) By resolutions of the 22nd general meeting of stockholders, the annual dividends declared to be paid by the controlling company to the shareholders of the Company in respect of the year ended December 31, 2022 are as follows:


		Total dividends
Common stock (865 per share)		440,093
Convertible preferred stock (865 per share)		15,122
		455,215

123

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

22. Net interest income

Net interest income for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Interest income:
Cash and due from banks at amortized cost	144,844	426,830	68,997	142,134
Deposit at FVTPL	-	349	366	956
Securities at FVTPL	354,763	995,281	238,648	632,975
Securities at FVOCI	617,441	1,696,338	482,435	1,332,997
Securities at amortized cost	283,966	779,048	181,057	470,561
Loans at amortized cost	5,512,649	16,064,450	4,166,560	11,147,300
Loans at FVTPL	21,818	88,465	14,189	51,401
Insurance finance interest income	57,202	180,214	29,743	87,956
Others	35,816	105,187	23,439	62,947
	7,028,499	20,336,162	5,205,434	13,929,227
Interest expense:
Deposits	2,542,906	7,216,243	1,184,029	2,758,264
Interests on financial liabilities measured at FVTPL	3,303	6,489	517	774
Borrowings	451,624	1,376,450	272,988	583,583
Debt securities issued	694,715	1,967,041	506,620	1,284,567
Insurance finance interest expenses	476,067	1,457,157	451,216	1,327,624
Others	96,577	281,450	57,943	142,748
	4,265,192	12,304,830	2,473,313	6,097,560

Net interest income	2,763,307	8,031,332	2,732,121	7,831,667

23. Net fees and commission income

Net fees and commission income for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three-month	Nine- month	Three- month	Nine- month
Fees and commission income:
Credit placement fees	19,909	60,114	15,792	54,987
Commission received as electronic charge receipt	35,908	109,126	37,186	110,583
Brokerage fees	110,457	303,437	76,604	268,273
Commission received as agency	34,592	98,987	25,209	91,888
Investment banking fees	27,855	105,730	36,009	201,681
Commission received in foreign exchange activities	74,243	216,306	76,098	220,989
Trust management fees	74,645	226,489	74,791	235,046
Credit card fees	375,762	999,559	296,373	932,582
Operating lease fees	153,441	444,167	124,714	343,029
Others	185,228	523,816	166,175	526,838
	1,092,040	3,087,731	928,951	2,985,896
Fees and commission expense:
Credit-related fee	10,384	32,512	8,866	27,274
Credit card fees	233,271	690,385	233,003	661,071
Others	136,344	400,065	143,537	391,237
	379,999	1,122,962	385,406	1,079,582

Net fees and commission income	712,041	1,964,769	543,545	1,906,314

124

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

24. Provision for (reversal of) allowance for credit loss

Provision for (reversal of) allowance for credit loss on financial assets for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three-month	Nine- month	Three-month	Nine- month
Allowance provided:
Loans at amortized cost	(456,525)	(1,395,209)	(232,506)	(794,899)
Other financial assets at amortized cost	(24,499)	(71,946)	(8,811)	(26,531)
Unused credit line and financial guarantee	(359)	(7,340)	(7,062)	(29,941)
Securities at amortized cost	133	(1,834)	-	-
	(481,250)	(1,476,329)	(248,379)	(851,371)
Allowance reversed:
Securities at fair value through other comprehensive income	(7,473)	4,123	1,186	4,858
Securities at amortized cost	-	-	(554)	18
	(7,473)	4,123	632	4,876
	(488,723)	(1,472,206)	(247,747)	(846,495)

25. General and administrative expenses

General and administrative expenses for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three-month	Nine-month	Three-month	Nine-month
Employee benefits:
Salaries	793,287	2,422,058	747,519	2,284,331
Severance benefits:	35,728	109,557	47,956	141,197
Defined contribution	8,746	27,112	8,619	26,461
Defined benefit	26,982	82,445	39,337	114,736
Termination benefits	75,343	111,960	(437)	327
Entertainment	10,596	29,760	12,171	31,313
Depreciation	129,751	378,705	111,106	345,583
Amortization	57,567	166,642	48,234	131,930
Taxes and utility bills	55,983	184,802	45,624	153,070
Advertising	69,826	184,295	80,425	199,544
Research	4,220	15,650	4,630	14,561
Others	265,233	692,953	206,345	570,504
	1,497,534	4,296,382	1,303,573	3,872,360

125

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

26. Share-based payments

(a) Performance shares granted as of September 30, 2023 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 as of September 30, 2023	216,820	2,662,216

Fair value per share in Korean won (*)	44,222, 33,122, 37,387 and 37,081 for the expiration of exercising period from 2019 to 2022	35,600

(*) 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 month, the past one month, and the past one week) of four years after the commencement of the grant year is paid in cash, and the fair value of the reference stock to be paid in the future is assessed as the closing price of the settlement.

(b) Share-based compensation costs for the nine-month periods ended September 30, 2023 and 2022 are as follows:

126

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

26. Share-based payments (continued)

27. Income tax expense

Income tax expense for the nine-month periods ended September 30, 2023 and 2022 are as follows:


		September 30, 2023		September 30, 2022
		Three-month	Nine- month	Three-month	Nine- month
Current income tax expense		344,567	917,774	584,918	1,340,446
Temporary differences		87,887	627,249	(262,184)	(461,532)
Income tax recognized in other comprehensive income		(60,897)	(271,410)	236,475	647,878
Income tax expenses		371,557	1,273,613	559,209	1,526,792

Effective tax rate	%	23.36	24.61	25.34	25.89

127

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

28. Earnings per share

Basic and diluted earnings per share for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three-month	Nine- month
Profit attributable to equity holders of Shinhan Financial Group	1,192,065	3,818,288	1,624,413	4,306,773
Less:
Dividends to hybrid bonds	(50,939)	(142,893)	(44,815)	(117,058)
Net profit available for common stock	1,141,126	3,675,395	1,579,598	4,189,715

Weighted average number of common stocks outstanding (*)	516,761,098	520,828,602	530,409,779	531,694,283

Basic and diluted earnings per share in Korean won	2,210	7,057	2,977	7,880

(*) The number of common shares outstanding is 515,504,189 shares. The above weighted-average stocks are calculated by reflecting 17,482,000 shares of convertible preferred shares issued on May 1, 2019 and then converted into common shares on May 1, 2023 and changes in treasury stocks issued during the periods ended September 30, 2023 and September 30, 2022.

128

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

29. Commitments and contingencies

(a) Guarantees, acceptances and credit commitments as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Guarantees and purchase agreements:
Outstanding guarantees	12,266,204	12,154,088
Contingent guarantees	4,519,737	4,565,829
ABS and ABCP purchase agreements	1,691,652	1,496,604
	18,477,593	18,216,521
Commitments to extend credit:
Loan commitments in Korean won	86,491,777	83,451,887
Loan commitments in foreign currency	29,258,679	25,052,284
Other agreements (*)	98,255,583	96,984,654
	214,006,039	205,488,825
Endorsed bills:
Secured endorsed bills	8,536	10,025
Unsecured endorsed bills	10,499,653	7,046,806
	10,508,189	7,056,831
	242,991,821	230,762,177

(*) Unused credit commitments provided to the card customers are 91,892,142 million for the nine-month period ended September 30, 2023 and 90,452,012 million for the year ended December 31, 2022.

(b) Legal contingencies

As of September 30, 2023, the Group is involved with 734 pending lawsuits as a defendant with total litigation fee of 673,737 million.

As of September 30, 2023, the Group has recorded 31,428 million and 3,189 million, respectively, as provisions and incurred claims of insurance contract liabilities for litigations, etc., which have been decided to lose at 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 a cancellation 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 poor concealment and fraud of Lime Fund while operating TRSs with Lime Fund, and a related prosecution investigation has been underway since then.

Institutional sanctions (banned from the sale of new private equity funds for nine months) against the Group were 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.

129

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

29. Commitments and contingencies (continued)

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’. The Group was fined 50 million for relaxing its supervision obligation. It is expected that the criminal trial will determine whether the Group is legally responsible or not. Hence, the Group has determined the present obligation that the Group may be liable for the charge of involvement in the fraud is not significant.

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 September 30, 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.

(e) The Group is responsible for the completion of construction when the contractor fails to fulfil its responsibilities. In case the Group fails to fulfil its responsibility, it is in the process of a responsible-for-completion land trust project (144 cases other than the new residential and commercial apartment project in Jongno-gu, Seoul (excluding completed workplaces)) to compensate for damages incurred to the financial institutions, and for the period ended September 30, 2023, the total PF loans amounted to 6,098.5 billion. The amount of claim for damages of the Group is determined after identifying whether it is a damage caused by the Group’s failure to fulfil its responsibilities. As of September 30, 2023, the risk of the Group to bear the responsibility to complete the project is low, and the loss cannot be reliably measured, hence this was not reflected in the financial statements for the period ended September 30, 2023. Meanwhile, the process of each business sites will be continuously monitored.

30. Statement of cash flows

Cash and cash equivalents in the consolidated statements of cash flows as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Cash and due from banks at amortized cost	35,906,774	30,070,043
Adjustments:
Due from financial institutions with maturity over three months from date of acquisition	(1,954,069)	(1,956,179)
Restricted due from banks	(3,213,817)	(3,699,918)
	(5,167,886)	(5,656,097)
	30,738,888	24,413,946

130

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

31. 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 K-IFRS 1024, 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, receivable balance and payable balance between the Group and the related parties are disclosed. For details of the associates and joint ventures, refer to ‘Note 13’

(a) Balances with the related parties as of September 30, 2023 and December 31, 2022 are as follows:


Related party	Account	September 30, 2023	December 31, 2022
Investments in associates:
BNP Paribas Cardif Life Insurance	Other assets	31	38
〃	Credit card loans	111	117
〃	ACL	(1)	-
〃	Deposits	6,836	18,745
〃	Unused credit commitments	2	1
Partners 4th Growth Investment Fund	Deposits	3,900	742
Incorporated association Finance Saving Information Center	Deposits	7	2
Nomura-Rifa Private Real Estate Investment Trust No.19	Loans	11,566	11,880
〃	Other assets	49	44
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3	Other assets	310	427
Korea Finance Security	Deposits	138	415
Hermes Private Investment Equity Fund	Deposits	198	218
Korea Credit Bureau	Deposits	6	721
Goduck Gangil1 PFV Co., Ltd	Loans	2,325	6,825
〃	ACL	(10)	(20)
〃	Deposits	4	3
SBC PFV Co., Ltd	Deposits	5,184	21,163
Sprott Global Renewable Private Equity Fund I	Deposits	31	100
Goduck Gangil10 PFV Co., Ltd	Loans	1,900	3,100
〃	ACL	(8)	(9)
〃	Deposits	35,735	26,880
Shinhan Global Healthcare Investment Fund 2	Deposits	1	1
IMM Special Situation 1-2 PRIVATE EQUITY FUND	Deposits	67	151
Future-Creation Neoplux Venture Capital Fund	Accounts receivable	318	3,949
Neoplux Market-Frontier Secondary Fund	Accounts receivable	466	904
Gyeonggi-Neoplux Superman Fund	Accounts receivable	1,046	623
Shinhan-Neoplux Energy Newbiz Fund	Accounts receivable	1,675	978
SHINHAN-NEO Core Industrial Technology Fund	Accounts receivable	124	124
KTC-NP Growth Champ 2011-2 Private Equity Fund (*1)	Accounts receivable	-	2,675

131

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

31. Related parties (continued)

(a) Balances with the related parties as of September 30, 2023 and December 31, 2022 are as follows (continued):


Related party	Account	September 30, 2023	December 31, 2022
Investments in associates (continued):
Neoplux No.3 Private Equity Fund	Accounts receivable	5,192	3,190
NV Station Private Equity Fund	Deposits	2	21
Korea Digital Asset Custody	Deposits	580	153
SW-S Fund	Deposits	309	112
Shinhan Smilegate Global PEF I	Unearned revenue	26	9
WaveTechnology co.Ltd	Deposits	67	41
SHINHAN-NEO Market-Frontier 2nd Fund	Accounts receivable	1,194	513
iPIXEL Co.,Ltd.	Deposits	99	225
CJL No.1 Private Equity Fund	Deposits	348	603
NewWave 6th Fund	Accounts receivable	733	849
Nova New Technology Investment Fund No.1	Deposits	248	215
DS Power Semicon Private Equity Fund	Deposits	70	100
Genesis No.1 Private Equity Fund (*1)	Deposits	-	19
DDI LVC Master Real Estate Investment Trust Co., Ltd.	Deposits	972	59
Newlake Growth Capital Partners2 PEF	Deposits	291	353
Logisvalley Shinhan REIT Co., Ltd.	Loans	33,000	43,000
〃	ACL	(33)	(28)
〃	Accounts receivable	89	81
〃	Accrued income	41	-
〃	Deposits	2,204	1,421
Shinhan-Albatross tech investment Fund	Deposits	1,573	3,402
Shinhan Global Active REIT Co. Ltd	Deposits	2,137	393
Shinhan VC tomorrow venture fund 1	Accounts receivable	850	850
SH Sustainable Management ESG Short term Bond Security Feeder Investment Trust No.1 (*2)	Accrued income	-	1
SH Global Net Zero Solution Security Investment Trust	Accrued income	2	2
SH 1.5years Maturity Investment Type Security Investment Trust No.2	Accrued income	4	-
SEOKWANG T&I	Deposits	1	1
Shinhan Time 1st Investment fund	Deposits	151	238
DeepBlue No.1 Private Equity Fund	Deposits	-	400
Shinhan-Cognitive Start-up Fund L.P.	Unearned revenue	113	-
IMM Global Private Equity Fund	Deposits	12	-
NH-J&-IBKC Label Technology Fund	Deposits	343	-
Shinhan-JW Mezzanin New Technology Fund 1st	Unearned revenue	20	-
Shinhan M&A-ESG Investment fund	Accounts receivable	285	-
K REITS Infra Real Estate	Accrued income	7	-
MAN Global Strategy Bond(H)	Accrued income	1	-
Key management personnel and their immediate relatives:	Loans	5,802	6,561
	Assets	67,069	86,674
	Liabilities	61,675	76,907

(*1) Excluded from the associates due to disposal and liquidation for the nine-month period ended September 30, 2023.

(*2) Incorporated into the consolidation scope as the Group holds control due to an ownership of increased shares during the nine-month period ended September 30, 2023.

132

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

31. Related parties (continued)

(b) Transactions with the related parties for the nine-month periods ended September 30, 2023 and 2022 are as follows:


Related party	Account	September 30, 2023		September 30, 2022
		Three- month	Nine- month	Three- month	Nine- month
Investments in associates:
BNP Paribas Cardif Life Insurance	Fees and commission income	2,607	3,823	439	1,491
〃	Provision for credit losses allowance	-	(2)	-	-
〃	Interest expense	(2)	(51)	(3)	(18)
〃	General administrative expense	-	-	(1)	(1)
Shinhan Praxis K-Growth Global PEF	Fees and commission income	-	-	42	42
Shinhan EZ General Insurance, Ltd. (*2)	Fees and commission income	-	-	-	2
〃	Interest expense	-	-	-	(1)
〃	Reversal of credit losses allowance	-	-	-	5
Partners 4th Growth Investment Fund	Interest expense	(2)	(4)	-	(12)
Shinhan-Albatross Technology Investment Fund	Fees and commission income	-	115	-	146
〃	Interest expense	-	(2)	(2)	(5)
Shinhan-Midas Donga Secondary Fund	Fees and commission income	-	-	41	89
Shinhan-Nvestor Liquidity Solution Fund	Fees and commission income	-	173	-	181
Shinhan-PS Investment Fund No.1	Fees and commission income	-	15	5	15
Nomura-Rifa Private Real Estate Investment Trust No.19	Interest income	151	416	131	390
SH MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3	Fees and commission income	310	952	400	1,123
KOREA FINANCE SECURITY	Fees and commission income	1	3	2	5
ShinHan – Soo Young Entrepreneur Investment Fund No.1	Fees and commission income	-	139	-	140
Shinhan-Rhinos 1 Fund(*1)	Fees and commission income	-	-	-	61
Kiwoom-Shinhan Innovation Fund I	Fees and commission income	-	140	-	118
One Shinhan Global Fund 1	Fees and commission income	-	-	32	95
FuturePlay-Shinhan TechInnovation Fund 1	Fees and commission income	-	56	57	170
Korea Credit Bureau	Fees and commission income	3	11	3	10
Goduck Gangil1 PFV Co., Ltd.	Interest income	24	132	95	308
〃	Reversal of (provision for) credit losses allowance	(1)	10	7	31
SBC PFV Co., Ltd.	Fees and commission income	-	-	500	500
〃	Interest expense	(2)	(10)	(4)	(17)
Goduck Gangil10 PFV Co., Ltd.	Interest income	14	57	38	139
〃	Interest expense	(99)	(448)	(188)	(505)
〃	Reversal of credit losses allowance	-	1	3	11
Korea Omega Project Fund I	Fees and commission income	40	123	46	135
Sparklabs-Shinhan Opportunity Fund 1	Fees and commission income	5	39	51	151
EDNCENTRAL Co.,Ltd.	Interest income	-	-	-	267
〃	Fees and commission income	-	-	-	3,212
Kakao-Shinhan 1st TNYT Fund	Fees and commission income	96	289	96	289
Future-Creation Neoplux Venture Capital Fund	Interest income	19	66	-	-
〃	Fees and commission income	-	-	-	54
Neoplux Market-Frontier Secondary Fund	Fees and commission income	85	466	228	687
Gyeonggi-Neoplux Superman Fund	Fees and commission income	126	423	155	474
Shinhan-Neoplux Energy Newbiz Fund	Fees and commission income	221	698	246	739
NewWave 6th Fund	Fees and commission income	244	733	247	770

133

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

31. Related parties (continued)

(b) Transactions with the related parties for the nine-month periods ended September 30, 2023 and 2022 are as follows (continued):


Related party	Account	September 30, 2023		September 30, 2022
		Three- month	Nine- month	Three- month	Nine- month
Investments in associates (continued):
SHINHAN-NEO Core Industrial Technology Fund	Fees and commission income	124	373	124	373
KTC-NP Growth Champ 2011-2 Private Equity Fund (*3)	Interest income	-	36	-	-
Neoplux No.3 Private Equity Fund	Fees and commission income	675	2,002	734	2,457
Shinhan Smilegate Global PEF I	Fees and commission income	-	-	-	49
SHINHAN-NEO Market-Frontier 2nd Fund	Fees and commission income	401	1,194	513	1,538
SWK-Shinhan New Technology Investment Fund 1st	Fees and commission income	16	46	15	61
Ulmus SHC innovation inv. fund	Fees and commission income	22	68	24	70
iPIXEL Co.,Ltd.	Interest income	-	-	-	1
CJL No.1 Private Equity Fund	Interest expense	(3)	(8)	(3)	(5)
Leverent-Shinhan Vista New Technology Investment Fund	Fees and commission income	40	80	-	-
Kiwoom-Shinhan Innovation Fund 2	Fees and commission income	68	204	70	209
ETRI Holdings-Shinhan 1st Unicorn Fund	Fees and commission income	25	75	50	75
Shinhan-Time mezzanine blind Fund	Fees and commission income	75	150	-	-
Shinhan VC tomorrow venture fund 1	Fees and commission income	850	2,550	850	2,550
JS Shinhan Private Equity Fund	Fees and commission income	151	449	138	436
Stonebridge-Shinhan Unicorn Secondary Fund	Fees and commission income	148	444	148	443
Shinhan-Kunicorn first Fund	Fees and commission income	-	232	-	261
Shinhan-Quantum Startup Fund	Fees and commission income	38	114	38	87
Shinhan Simone FundⅠ	Fees and commission income	-	78	-	78
Shinhan Whitrin New Tech Fund	Fees and commission income	21	64	22	37
DDI LVC Master Real Estate Investment Trust Co., Ltd.	Interest expense	(1)	(1)	-	(1)
Logisvalley Shinhan REIT Co.,Ltd.	Interest income	429	1,412	501	517
〃	Fees and commission income	41	122	17	17
〃	Interest expense	-	(1)	-	-
〃	Reversal of (provision for) credit losses allowance	-	(4)	-	(29)
Shinhan Dev Healthcare Investment Fund Ⅰ	Fees and commission income	19	58	19	47
Shinhan-Cognitive Start-up Fund L.P.	Fees and commission income	61	128	-	192
Global Commerce New Technology Investment Fund	Fees and commission income	8	30	2	2
Shinhan-HGI Entities with social responsibility Investment Fund	Fees and commission income	16	47	12	12
Shinhan WWG Energy Fund New Technology Investment Fund	Fees and commission income	11	34	11	11
IGIS Shinhan Tech. Investment Trust 1	Fees and commission income	36	36	36	36
Shinhan-Ji and Tec Smart Innovation Fund	Fees and commission income	65	195	16	16
Global Net Zero Solution Security Investment Trust	Fees and commission income	19	58	-	-
SH 1.5years Maturity Investment Type Security Investment Trust No.2	Fees and commission income	4	12	-	-

134

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

31. Related parties (continued)

(b) Transactions with the related parties for the nine-month periods ended September 30, 2023 and 2022 are as follows (continued):


Related party	Account	September 30, 2023		September 30, 2022
		Three- month	Nine- month	Three- month	Nine- month
Investments in associates (continued):
Shinhan Global Active REIT Co. Ltd	Interest expense	(1)	(2)	-	-
DeepBlue No.1 Private Equity Fund	Interest expense	-	(8)	-	-
Shinhan Time 1st Investment fund	Fees and commission income	-	26	-	-
Shinhan SGC ESG Investment Fund 1st	Fees and commission income	29	86	-	-
Shinhan-iSquare Venture PEF 1st	Fees and commission income	25	75	-	-
Shinhan-Gene and New Normal First Mover Venture Investment Equity Fund 1st	Fees and commission income	-	42	-	-
DS-Shinhan-JBWoori New Media New Tehcnology Investment Fund No.1	Fees and commission income	-	216	-	-
NH-J&-IBKC Label Technology Fund	Interest expense	(3)	(10)	-	-
Bonanza-Shinhan GIB Innovative Semiconductor Investment Fund	Fees and commission income	-	55	-	-
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund	Fees and commission income	54	59	-	-
Shinhan M&A ESG Investment Fund	Fees and commission income	285	441	-	-
Shinhan-JW Mezzanine No. 1	Fees and commission income	33	33	-	-
K REITS Infra Real estate	Fees and commission income	25	25	-	-
MAN Global Strategy Bond(H)	Fees and commission income	2	2	-	-
Shinhan time secondary blind new technology investment trust	Fees and commission income	20	20	-	-
Shinhan-openwater pre-IPO Investment Trust 1	Fees and commission income	36	36	-	-
Shinhan-CJ Technology Innovation Fund No. 1	Fees and commission income	38	38	-	-
Shinhan-Eco Venture Investment Trust No. 2	Fees and commission income	24	24	-	-
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1	Fees and commission income	87	87	-	-
Hantoo Shinhan Lake K-beauty Technology Investment Trust	Fees and commission income	94	94	-	-
Shinhan HB Wellness 1st Investment Trust	Fees and commission income	16	16	-	-
Shinhan JN Wave Technology Investment Trust	Fees and commission income	2	2	-	-

Key management personnel and their close family members	Interest income	51	185	55	142
		8,016	20,182	6,058	20,973

(*1) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2022.

(*2) For the year ended December 31, 2022, it is incorporated into the consolidation scope as the Group held control due to an increased equity ratio. BNP Paribas Cardif General Insurance, Ltd. has changed its name to Shinhan EZ General Insurance, Ltd. The amount for the nine-month period ended September 30, 2022 is recorded before Shinhan EZ General Insurance, Ltd. was included into the Group’s consolidation scope.

(*3) Excluded from the associates due to disposal and liquidation for the nine-month period ended September 30, 2023.

135

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

31. Related parties (continued)

Key management personnel compensation for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three-month	Nine- month
Short-term employee benefits	6,206	19,197	4,775	18,056
Severance benefits	178	573	252	627
Share-based payments(*)	2,672	6,361	365	6,431
	9,056	26,131	5,392	25,114

(*) Share-based payments refer to the remuneration expenses during the vesting period.

(d) The guarantees and purchase agreement provided between the related parties as of September 30, 2023 and December 31, 2022 are as follows:


		Amount of guarantees
Guarantor	Guaranteed Parties	September 30, 2023	December 31, 2022	Account
Shinhan Bank	BNP Paribas Cardif Life Insurance	10,000	10,000	Unused loan limit
〃	Key Management Personnel	3,222	2,143	Unused loan limit
Shinhan Card	BNP Paribas Cardif Life Insurance	889	883	Unused credit card limit
The Group	Structured entities	267,079	296,118	Purchase agreement
		281,190	309,144

(e) Details of collaterals provided by the related parties as of September 30, 2023 and December 31, 2022 are as follows:


			Amount of assets pledged
Provided to	Provided by	Pledged assets	September 30, 2023	December 31, 2022
Shinhan Bank	BNP Paribas Cardif Life Insurance	Government bonds	12,400	12,400
	iPIXEL Co.,Ltd.	Electronic credit guarantee	-	190
	Logisvalley Shinhan REIT Co.,Ltd.	Collateral trust	39,600	51,600
	Key Management Personnel	Real estate properties	9,540	8,073
		Deposits and etc.	1,358	1,306
		Guarantee	2,753	3,092
			13,651	12,471
			65,651	76,661

136

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

31. Related parties (continued)

(f) Details of significant loan transactions with related parties for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


		September 30, 2023
Classification	Company	Beginning balance	Loan	Recover	Others(*)	Ending balance
Investments in associates	Nomura-Rifa Private Real Estate Investment Trust No.19	11,880	-	-	(314)	11,566
	Goduck Gangil1 PFV Co., Ltd.	6,825	-	(4,500)	-	2,325
	Goduck Gangil10 PFV Co., Ltd.	3,100	-	(1,200)	-	1,900
	Logisvalley Shinhan REIT Co.,Ltd.	43,000	33,000	(43,000)	-	33,000
Key Management Personnel		6,563	3,046	(3,805)	-	5,804
Total		71,368	36,046	(52,505)	(314)	54,595

(*) The effect on changes in credit loss allowance is included.


		December 31, 2022
Classification	Company	Beginning balance	Loan	Recover	Others(*)	Ending balance
Investments in associates	Nomura-Rifa Private Real Estate Investment Trust No.19	11,880	-	-	-	11,880
	EDNCENTRAL Co..,Ltd.	19,739	-	(20,000)	261	-
	Goduck Gangil1 PFV Co., Ltd.	12,000	-	(5,175)	-	6,825
	Goduck Gangil10 PFV Co., Ltd.	7,600	-	(4,500)	-	3,100
	iPIXEL Co.,Ltd.	55	-	-	(55)	-
	Logisvalley Shinhan REIT Co.,Ltd.	-	43,000	-	-	43,000
Kay Management Personnel		6,150	4,590	(4,177)	-	6,563
Total		57,424	47,590	(33,852)	206	71,368

(*) The effect on changes in credit loss allowance is included.

137

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

32. 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 able to do such) 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 September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Total assets:
Asset-backed securitization	201,520,304	238,433,221
Structured financing	375,112,752	343,752,303
Investment fund	382,677,514	353,910,099
	959,310,570	936,095,623

138

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

32. Interests in unconsolidated structured entities (continued)

(b) The nature of risks related to interests in unconsolidated structured entities

i) The carrying value of the assets and liabilities relating to its interests in unconsolidated structured entities as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Assets-backed securitization	Structured financing	Investment fund	Total
Assets under consolidated financial statements:
Loans measured at fair value through profit or loss	9,119	283,339	237	292,695
Loan at amortized cost	1,233,450	16,686,434	165,792	18,085,676
Securities measured at fair value through profit or loss	4,336,096	242,638	13,705,599	18,284,333
Derivative assets	442	-	50,575	51,017
Securities at fair value through OCI	3,906,384	189,671	-	4,096,055
Securities at amortized cost	4,528,122	-	3,573	4,531,695
Other assets	6,983	65,925	3,765	76,673
	14,020,596	17,468,007	13,929,541	45,418,144
Liabilities under consolidated financial statements:
Derivative liabilities	17,227	628	-	17,855
Other liabilities	762	8,798	20	9,580
	17,989	9,426	20	27,435


	December 31, 2022
	Assets-backed securitization	Structured financing	Investment fund	Total
Assets under consolidated financial statements:
Loans measured at fair value through profit or loss	9,269	693,630	498	703,397
Loan at amortized cost	869,478	15,725,255	183,263	16,777,996
Securities measured at fair value through profit or loss	2,504,857	254,680	14,114,719	16,874,256
Derivative assets	4,432	-	-	4,432
Securities measured at fair value through OCI	1,919,283	179,714	-	2,098,997
Securities at amortized cost	6,894,241	-	-	6,894,241
Other assets	4,337	44,448	41,588	90,373
	12,205,897	16,897,727	14,340,068	43,443,692
Liabilities under consolidated financial statements:
Derivative liabilities	24,902	91	-	24,993
Other liabilities	788	18,840	100	19,728
	25,690	18,931	100	44,721

139

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

32. Interests in unconsolidated structured entities (continued)

(b) The nature of risks related to interests in unconsolidated structured entities (continued)

ii) The maximum risk exposure of the Group relating to its interests in unconsolidated structured entities as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Assets-backed securitization	Structured financing	Investment fund	Total
Assets held	14,020,596	17,468,007	13,929,541	45,418,144
Purchase agreements	1,039,143	40,710	2,382,241	3,462,094
Loan commitments	518,426	936,375	-	1,454,801
Guarantees	-	283,600	-	283,600
Others	-	388,914	-	388,914
	15,578,165	19,117,606	16,311,782	51,007,553


	December 31, 2022
	Assets-backed securitization	Structured financing	Investment fund	Total
Assets held	12,205,897	16,897,727	14,340,068	43,443,692
Purchase agreements	1,014,702	104,773	2,271,063	3,390,538
Loan commitments	419,039	988,331	-	1,407,370
Guarantees	15,000	80,000	-	95,000
Others	-	103,039	-	103,039
	13,654,638	18,173,870	16,611,131	48,439,639

140

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

33. Events after the reporting period

(a) Quarterly dividend resolution

The Company decided to pay a quarterly dividend of 525 per share for common stock by a resolution of the board of directors on October 25, 2023. The total amount of dividends is 270,636 million, and the dividend base date is September 30, 2023.

(b) Treasury stock retirement

To enhance the shareholders’ value, the Group made a decision on the acquisition and retirement of treasury stock amounted to 100 billion based on the resolution of the board of directors on October 25, 2023.

141

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

34. Uncertainty due to changes in domestic and global economic conditions

The rapid spread of the COVID-19 is negatively affecting the global economy. The Group uses forward-looking information to estimate expected credit losses in accordance with K-IFRS 1109 ‘Financial Instruments’ and the default rate and the loss given default were re-estimated and reflected in the measurement of expected credit loss allowance using the changed forward-looking information on GDP growth rate and private consumption growth rate, which are major variables for calculating the default rate. The Group will continue to monitor the impact of the COVID-19 and the external and internal economic uncertainties on the economy.

Risk exposures by major consolidated subsidiaries due to COVID-19 are as follows, and figures may significantly vary for industries that are highly affected by future economic conditions:

(a) Shinhan Bank


	September 30, 2023
	Airlift passenger	Lodging	Oil/petroleum refinery	Art-related	Movie theater	Clothing manufacturing	Travel	Total
Loans at amortized cost	202,042	3,339,639	1,786,096	232,156	71,259	2,170,567	47,860	7,849,619
Securities at fair value through profit or loss	-	-	9,939	-	-	-	-	9,939
Securities at fair value through other comprehensive income	116,703	19,248	230,487	-	-	21,549	-	387,987
Securities at amortized cost	60,005	-	-	-	-	-	-	60,005
Off-balance accounts	604,782	228,911	3,001,063	10,614	98,749	1,076,681	31,482	5,052,282
	983,532	3,587,798	5,027,585	242,770	170,008	3,268,797	79,342	13,359,832


	December 31, 2022
	Airlift passenger	Lodging	Oil/petroleum refinery	Art-related	Movie theater	Clothing manufacturing	Travel	Total
Loans at amortized cost	154,076	3,281,340	1,217,228	209,652	76,982	2,160,803	56,719	7,156,800
Securities at fair value through other comprehensive income	123,875	18,416	211,000	-	-	14,776	-	368,067
Securities at amortized cost	59,997	-	-	-	-	-	-	59,997
Off-balance accounts	435,399	254,076	2,731,899	8,500	76,817	1,162,054	36,784	4,705,529
	773,347	3,553,832	4,160,127	218,152	153,799	3,337,633	93,503	12,290,393

142

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

34. Uncertainty due to changes in domestic and global economic conditions (continued)

(b) Shinhan Card Co., Ltd.


	September 30, 2023
	Retails
	Credit sales	Short term card loan		Long term card loan	Total
Loans at amortized cost	376,481	107,384		323,852	807,717
Total limit	653,521				653,521
	December 31, 2022
	Retails
	Credit sales	Short term card loan		Long term card loan	Total
Loans at amortized cost	439,882	187,652		424,445	1,051,979
Total limit	870,572		-		870,572


	September 30, 2023
	Airlift passenger	Lodging	Art-related	Movie theater	Travel	Bus rental	Bath services	Training facilities	Total
Loans at amortized cost	-	310,827	4,931	216	11,470	8,471	9,081	5,506	350,502
Off-balance accounts	-	7,386	213	-	837	383	300	14	9,133
	-	318,213	5,144	216	12,307	8,854	9,381	5,520	359,635


	December 31, 2022
	Airlift passenger	Lodging	Art-related	Movie theater	Travel	Bus rental	Bath services	Training facilities	Total
Loans at amortized cost	-	303,118	4,752	226	11,299	8,152	9,064	5,438	342,049
Off-balance accounts	1	6,107	173	4	841	384	339	4	7,853
	1	309,225	4,925	230	12,140	8,536	9,403	5,442	349,902

As of September 30, 2023 and December 31, 2022, the exposures of the loans applied for moratorium of interest payments and moratorium of repayment in installments by Shinhan Bank and Jeju Bank are as follows:

(a) Shinhan Bank


	September 30, 2023	December 31, 2022
Moratorium of interest payments	101,113	165,442
Moratorium of repayment in installments	728,723	1,105,481
Moratorium of interest payments and moratorium of repayment in installments	44,847	66,218
Extension of maturity date	5,901,317	7,528,585
	6,776,000	8,865,726

(b) Jeju Bank


	September 30, 2023	December 31, 2022
Moratorium of interest payments	1,283	-
Moratorium of repayment in installments	385,790	351,129
	387,073	351,129

143

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

35. LIBOR Interest rates

The effective interest rate, not the carrying value, is adjusted when replacing the interest rate index of a financial instrument measured at amortized cost in relation to the reform of the interest rate index. It includes exceptions, such as allowing hedge accounting to continue uninterrupted even if an interest rate indicator replacement occurs in a hedging relationship. As of September 30, 2023, the Group has finalized most of transition and replacement plans regarding the suspension of LIBOR rate calculations and aims to follow the plan according to the regulatory guidelines.

144

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

36. Adoption of K-IFRS 1117 ‘Insurance Contracts’

The Group begins to apply K-IFRS 1117 ‘Insurance Contracts’ on accounting periods beginning on 1 January 2023. The prior year’s financial statements were retrospectively restated in accordance with the transition requirement of this Standard. This Standard replaces K-IFRS 1104 ‘Insurance Contracts’. K-IFRS 1117 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 insurance contract margins for separate non-financial risks.

The Group applied a retrospective application as described below in accordance with K-IFRS 1117 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 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 K-IFRS 1117. For the financial instruments, their classification and measurement changed in accordance with the transition requirement of K-IFRS 1117, the Group prepared the statement of financial position at the date of initial application of K-IFRS 1117 by adjusting the classification and measurement of financial assets removed between the transition date of K-IFRS 1117 and the initial application date in order to present comparative information as if K-IFRS 1109 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 K-IFRS 1104, are combined with the Group’s general account and presented as related assets, liabilities, incomes, and expenses under K-IFRS 1117 with the elimination of intra-group transactions between the general account and the separate account.

145

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

36. Adoption of K-IFRS 1117 ‘Insurance Contracts’ (continued)

(a) Significant effects in the financial statement at the transition date, January 1, 2022 under K-IFRS 1117 are as follows:

i) Significant effects in the financial position at the transition date, January 1, 2022 under K-IFRS 1117 are as follows:


	Amount (A) (*1)		Amount (B) (*2)	Increase (B-A)
Assets:		Assets:
Cash and due from banks at amortized cost	28,453,404	Cash and due from banks at amortized cost	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
	648,152,185		641,864,522	(6,287,663)
Liabilities:		Liabilities:
Deposits	364,896,675	Deposits	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	-	Reinsurance contract liabilities	281,763
Investment contract liabilities	-	Investment contract liabilities	2,953,698
Other liabilities (*3)	56,067,163	Other liabilities	46,447,117
	598,613,763		591,648,572	(6,965,191)

Equity	49,538,422	Equity	50,215,950	677,528

(*1) Prepared in accordance with K-IFRS 1109 ‘financial instruments’, K-IFRS 1104 ‘Insurance Contracts’, and Enforcement Rules of the Insurance Business Act. (Application of the overlay approach under K-IFRS 1104 to financial assets related to insurance contracts)

(*2) Prepared in accordance with K-IFRS 1109 ‘financial instruments’ and K-IFRS 1117 ‘Insurance Contracts’ (changed business model is applied to financial assets related to insurance contracts under K-IFRS 1117)

(*3) Other assets and other liabilities under K-IFRS 1104 include separate account assets amounted to 9,501,135 million and separate account liabilities amounted to 9,834,894 million, respectively.

146

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

36. Adoption of K-IFRS 1117 ‘Insurance Contracts’ (continued)

ii) Classification of financial assets (derivatives excluded) on January 1, 2022 as the transition date in accordance with K-IFRS 1117 is as follows:


	January 1,2022
	Classification	Transition date (Jan. 1, 2022) under K-IFRS 1104	Separate account (*1)	Insurance contract loan excluded (*2)	Classifica-tion due to new business model	Transition date (Jan. 1, 2022) under K-IFRS 1117
Cash and due from banks at amortized cost	Financial assets at amortized cost	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) Insurance contract loans, which used to be recognized as separate assets under K-IFRS 1104 ‘Insurance Contracts’ and Enforcement Rules of the Insurance Business Act., are measured as part of insurance contracts in accordance with K-IFRS 1117.

147

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

36. Adoption of K-IFRS 1117 ‘Insurance Contracts’ (continued)

iii) Significant adjustments to assets, liabilities and equity under K-IFRS 1117 on January 1, 2022 as the transition date are as follows:



	January 1, 2022
	Assets	Liabilities	Equity
Application of K-IFRS 1104 on January 1, 2022	648,152,185	598,613,763	49,538,422
Elimination of carrying value of K-IFRS 1104 items:		-
Loans at amortized cost (insurance contract loans)	(5,094,638)	-	(5,094,638)
Unamortized acquisition cost	(954,949)	-	(954,949)
Insurance contract liabilities	-	(61,187,386)	61,187,386
Intercompany transactions with separate account for the consolidation presentation	45,458	44,919	539
Others (*)	(161,677)	(124,117)	(37,560)
Application of K-IFRS 1117:
Reclassification of financial assets	(109,579)	-	(109,579)
Recognition of insurance contract liabilities	-	53,774,915	(53,774,915)
Recognition of reinsurance contract liabilities	-	281,763	(281,763)
Tax effects from adjustments	(12,278)	244,715	(256,993)
Total of adjustments for transition date	(6,287,663)	(6,965,191)	677,528
Application of K-IFRS 1117 on January 1, 2022 (the transition date)	641,864,522	591,648,572	50,215,950

(*) Consisted of elimination of accounts receivable (payable) and others that are measured as part of insurance contracts under K-IFRS 1117.

iv) Significant adjustments to accumulated other comprehensive income (loss) and retained earnings as part of the statement of changes in equity under K-IFRS 1117 on January 1, 2022 as the transition date are as follows:


	January 1, 2022
	Accumulated other comprehensive income (loss)	Retained earnings
Application of K-IFRS 1104 on January 1, 2022 (the transition date)	(984,936)	30,541,300
Recognition of net difference from initial application of K-IFRS 1117	(42,601)	627,174
Elimination of financial assets at fair value through profit or loss (overlay approach)	(209,645)	209,645
Reclassification of financial instruments under K-IFRS 1117	(99,607)	(10,001)
Recognition of net insurance finance income from insurance contract assets (liabilities)	459,555	-
Tax effects from adjustments	(27,990)	(229,003)
Total of adjustments for transition date	79,712	597,815
Application of K-IFRS 1117 on January 1, 2022 (the transition date)	(905,224)	31,139,115

148

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

36. Adoption of K-IFRS 1117 ‘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 nine-month period ended September 30, 2023 under K-IFRS 1117 are as follows:

i) The statement of financial position as of December 31, 2022



	Amount under K-IFRS 1104	Adjustment for K-IFRS 1117	Amount under K-IFRS 1117
Assets
Cash and due from banks at amortized cost	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	51,130,422	2,293,136	53,423,558

ii) The statement of comprehensive income for the nine-month period ended September 30, 2023



	Amount under K-IFRS 1104	Adjustment for K-IFRS 1117	Amount under K-IFRS 1117
Operating income
Net interest income	9,217,054	(1,385,387)	7,831,667
Net fees and commission income	2,021,970	(115,656)	1,906,314
Net insurance income (expense)	(712,421)	1,456,958	744,537
Net insurance finance income	-	852,872	852,872
Other operating expenses	(5,188,552)	(821,413)	(6,009,965)
	5,338,051	(12,626)	5,325,425
Equity method income	79,655	-	79,655
Other non-operating income, net	491,667	(231)	491,436
Profit before income taxes	5,909,373	(12,857)	5,896,516
Income tax expense	(1,531,050)	4,258	(1,526,792)
Profit for the period	4,378,323	(8,599)	4,369,724
Other comprehensive loss for the period, net of income tax	(2,619,006)	1,448,802	(1,170,204)
Total comprehensive income for the period	1,759,317	1,440,203	3,199,520

149

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

September 30, 2023 and 2022(Unaudited), and December 31, 2022

(In millions of Korean won)

36. Adoption of K-IFRS 1117 ‘Insurance Contracts’ (continued)

iii) The statement of cash flows for the nine-month period ended September 30, 2023



	Amount under K-IFRS 1104	Adjustment for K-IFRS 1117	Amount under K-IFRS 1117
Cash flows from operating activities	5,315,475	423,049	5,738,524
Cash flows from investing activities	(9,289,338)	8,582	(9,280,756)
Cash flows from financing activities	10,927,018	(399,901)	10,527,117
Effect of exchange rate changes on cash and cash equivalents held	188,660	3,801	192,461
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 (*)	31,245,258	517,761	31,763,019

(*) Reserve for demand deposits are included in cash and cash equivalents though restricted under relevant regulations.

150

EX-99.2 3 ck0001263043-ex99_2.htm EX-99.2 EX-99.2

EX-99.2 Shinhan Financial Group Review Report for the 3Q of 2023 (Seperate)

SHINHAN FINANCIAL GROUP CO., LTD.

Separate Interim Financial Statements

September 30, 2023 and 2022

(Unaudited)

Contents


		Page

Report on Review of Interim Financial Statements		1

Separate Interim Statements of Financial Position		3

Separate Interim Statements of Comprehensive Income		4

Separate Interim Statements of Changes in Equity		5

Separate Interim Statements of Cash Flows		6

Notes to the Separate Interim Financial Statements		8

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

Shinhan Financial Group Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying separate interim financial statements of Shinhan Financial Group Co., Ltd. (the “Company”), which comprise the separate interim statement of financial position as of September 30, 2023, the separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2023, and the separate interim statements of changes in equity and cash flows for the nine-month period ended September 30, 2023, and notes, comprising a summary of material accounting policy information and other explanatory information.

Management's Responsibility

Management is responsible for the preparation and fair presentation of these separate interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Review Responsibility

Our responsibility is to issue a report on these separate interim financial statements based on our review.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying separate interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

Other Matters

The procedures and practices utilized in the Republic of Korea to review such separate interim financial statements may differ from those generally accepted and applied in other countries.

The accompanying separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2022, and the separate interim statements of changes in equity and cash flows for the nine-month period ended September 30, 2022, were reviewed by another auditor and their report thereon, dated November 14, 2022, expressed that nothing was found for them to believe those financial statements are not presented fairly, in all material respects, in accordance with K-IFRS No. 1034 Interim Financial Reporting.

The separate statement of financial position of the Company as of December 31, 2022, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended (not presented herein) were audited by another auditor in accordance with Korean Standards on Auditing and their report thereon, dated March 6, 2023, expressed an unqualified opinion. The accompanying separate statement of financial position of the Company as of December 31, 2022, presented for comparative purposes, is consistent, in all material respects, with the audited separate statement of financial position from which it has been derived.

KPMG Samjong Accounting Corp.

November 14, 2023

Seoul, Korea

This report is effective as of November 14, 2023, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

SHINHAN FINANCIAL GROUP CO., LTD.

Separate Interim Statements of Financial Position

As of September 30, 2023 and December 31, 2022


(In millions of Korean won)	Notes	September 30, 2023 (Unaudited)	December 31, 2022

Assets
Cash and due from banks at amortized cost	4, 5, 24	20	2,187
Financial assets at fair value through profit or loss	4, 6, 24	2,735,814	1,778,475
Loans at amortized cost	4, 7, 24	4,109,353	4,009,467
Property and equipment	24	7,212	5,820
Intangible assets	24	5,719	5,591
Investments in subsidiaries	8	30,730,353	30,730,364
Net defined benefit assets	11	-	1,746
Deferred tax assets		-	18,311
Other assets	4, 7, 24	742,057	904,353
Total assets		38,330,528	37,456,314

Liabilities
Borrowings	4, 9, 23	64,664	20,000
Debt securities issued	4, 10, 23, 24	10,930,932	9,815,457
Net defined benefit liabilities	11	687	-
Deferred tax liabilities		3,810	-
Other liabilities	4, 24	781,011	944,308
Total liabilities		11,781,104	10,779,765

Equity	12
Capital stock		2,969,641	2,969,641
Hybrid bonds		4,001,731	4,196,968
Capital surplus		11,350,744	11,350,819
Capital adjustments		(148,464)	(46,114)
Accumulated other comprehensive loss		(5,980)	(5,210)
Retained earnings		8,381,752	8,210,445
Total equity		26,549,424	26,676,549
Total liabilities and equity		38,330,528	37,456,314

See accompanying notes to the separate interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Separate Interim Statements of Comprehensive Income

For the three-month and nine-month periods ended September 30, 2023 and 2022


(In millions of Korean won, except earnings per share data)	Notes	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)
		Three-month	Nine- month	Three- month	Nine- month

Interest income	21, 24	23,471	69,012	22,752	63,950
Interest expense	24	(75,424)	(206,318)	(57,684)	(161,165)
Net interest expense	13	(51,953)	(137,306)	(34,932)	(97,215)

Fees and commission income	21, 24	17,382	52,140	18,680	52,762
Fees and commission expense	24	(39)	(396)	(293)	(454)
Net fees and commission income	14	17,343	51,744	18,387	52,308

Dividend income	15, 21, 24	12,659	1,773,089	8,704	1,461,953
Net gain (loss) on financial instruments at fair value through profit or loss	21	19,868	103,748	(39,178)	(128,036)
Net foreign currency transaction gain		3,451	25,748	77,780	138,429
Reversal of (provision for) credit loss allowance	16, 21	(142)	1,294	(653)	163
General and administrative expense	17, 24	(30,783)	(93,128)	(31,755)	(93,462)

Operating income (expense)		(29,557)	1,725,189	(1,647)	1,334,140

Non-operating income		533	218	4,197	4,116

Profit (loss) before income taxes		(29,024)	1,725,407	2,550	1,338,256

Income tax expense (benefit)	19	(1,718)	22,390	7,422	(7,502)
Profit (loss) for the period		(27,306)	1,703,017	(4,872)	1,345,758

Other comprehensive income (loss) for the period, net of income tax Items that will not be reclassified to profit or loss:
Remeasurements of the defined benefit liabilities (assets)		-	(770)	-	1,078
Total comprehensive income (loss) for the period		(27,306)	1,702,247	(4,872)	1,346,836

Basic and diluted earnings (loss) per share in Korean won	20	(151)	2,995	(94)	2,311

See accompanying notes to the separate interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Separate Interim Statements of Changes in Equity

For the nine-month periods ended September 30, 2023 and 2022


(In millions of Korean won)	Capital stock	Hybrid bonds	Capital surplus	Capital adjust-ments	Accumulated other comprehen-sive loss	Retained earnings	Total
Balance at January 1, 2022	2,969,641	3,334,531	11,350,819	(45,797)	(7,253)	8,803,435	26,405,376
Total comprehensive income for the period:
Profit for the period	-	-	-	-	-	1,345,758	1,345,758
Other comprehensive income	-	-	-	-	1,078	-	1,078
	-	-	-	-	1,078	1,345,758	1,346,836
Transactions with owners:
Annual dividends	-	-	-	-	-	(747,705)	(747,705)
Quarterly dividends	-	-	-	-	-	(425,434)	(425,434)
Dividends to hybrid bonds	-	-	-	-	-	(117,058)	(117,058)
Redemption of hybrid bonds	-	(134,683)	-	(317)	-	-	(135,000)
Issuance of hybrid bonds	-	997,120	-	-	-	-	997,120
Acquisition of treasury stock	-	-	-	(150,300)	-	-	(150,300)
Retirement of treasury stock	-	-	-	150,300	-	(150,329)	(29)
	-	862,437	-	(317)	-	(1,440,526)	(578,406)
Balance at September 30, 2022 (Unaudited)	2,969,641	4,196,968	11,350,819	(46,114)	(6,175)	8,708,667	27,173,806

Balance at January 1, 2023	2,969,641	4,196,968	11,350,819	(46,114)	(5,210)	8,210,445	26,676,549
Total comprehensive income for the period:
Profit for the period	-	-	-	-	-	1,703,017	1,703,017
Other comprehensive loss	-	-	-	-	(770)	-	(770)
	-	-	-	-	(770)	1,703,017	1,702,247
Transactions with owners:
Annual dividends	-	-	-	-	-	(455,215)	(455,215)
Quarterly dividends	-	-	-	-	-	(546,486)	(546,486)
Dividends to hybrid bonds	-	-	-	-	-	(142,893)	(142,893)
Redemption of hybrid bonds	-	(1,092,883)	-	(102,667)	-	-	(1,195,550)
Transfer of redemption loss of hybrid bonds to retained earnings	-	-	-	317	-	(317)	-
Issuance of hybrid bonds	-	897,646	-	-	-	-	897,646
Acquisition of treasury stock	-	-	-	(386,719)	-	-	(386,719)
Retirement of treasury stock	-	-	-	386,719	-	(386,799)	(80)
Preferred stock converted to common stock	-	-	(75)	-	-	-	(75)
	-	(195,237)	(75)	(102,350)	-	(1,531,710)	(1,829,372)
Balance at September 30, 2023 (Unaudited)	2,969,641	4,001,731	11,350,744	(148,464)	(5,980)	8,381,752	26,549,424

See accompanying notes to the separate interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Separate Interim Statements of Cash Flows

For the nine-month periods ended September 30, 2023 and 2022


		Nine-month periods ended September 30
(In millions of Korean won)	Notes	2023 (Unaudited)	2022 (Unaudited)

Cash flows from operating activities
Profit for the period		1,703,017	1,345,758
Adjustments for:
Interest income	13, 21	(69,012)	(63,950)
Interest expense	13	206,318	161,165
Dividend income	15, 21	(1,773,089)	(1,461,953)
Income tax benefit (expense)	19	22,390	(7,502)
Net gain (loss) on financial instruments at fair value through profit or loss		(78,184)	139,545
Reversal of credit loss allowance	16, 21	(1,294)	(163)
Employee benefits		3,811	3,732
Depreciation and amortization	17	2,901	2,405
Net foreign currency translation gain		(4,253)	(128,299)
Non-operating expense (income)		4	(4,834)
		(1,690,408)	(1,359,854)
Changes in assets and liabilities:
Due from banks		-	41,000
Financial instruments at fair value through profit or loss		(561,147)	(364,299)
Other assets		(424)	446
Net defined benefit liabilities (assets)		(25)	1,671
Other liabilities		(8,238)	(3,901)
		(569,834)	(325,083)

Interest received		73,545	69,514
Interest paid		(198,940)	(161,890)
Dividends received		1,768,431	1,459,078
Income tax paid (refund)		515	(1,532)
Net cash provided by operating activities		1,086,326	1,025,991

Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss		(300,000)	(400,000)
Lending of loans at amortized cost		(203,361)	(420,000)
Collection of loans at amortized cost		200,000	450,000
Acquisition of property and equipment		(1,947)	(2,535)
Acquisition of intangible assets		(205)	-
Increase in other assets		(1,440)	(864)
Decrease in other assets		1,112	990
Acquisition of investments in subsidiaries		11	(310,175)
Disposal of assets held-for-sale		-	20,354
Net cash used in investing activities		(305,830)	(662,230)

SHINHAN FINANCIAL GROUP CO., LTD.

Separate Interim Statements of Cash Flows (Continued)

For the nine-month periods ended September 30, 2023 and 2022


		Nine-month periods ended September 30
(In millions of Korean won)	Notes	2023 (Unaudited)	2022 (Unaudited)

Cash flows from financing activities
Issuance of hybrid bonds		897,646	997,120
Redemption of hybrid bonds		(1,195,550)	(135,000)
Issuance of debt securities		2,153,339	1,637,479
Repayments of debt securities issued		(1,149,626)	(1,446,000)
Increase in borrowings		163,763	20,000
Decrease in borrowings		(120,000)	-
Conversion costs for preferred stock to common stock		(75)	-
Dividends paid		(1,144,090)	(1,289,590)
Acquisition of treasury stock		(386,719)	(150,300)
Retirement costs for treasury stock		(81)	(29)
Repayments of leased liabilities		(1,272)	(1,259)
Net cash used in financing activities		(782,665)	(367,579)

Effect on the exchange rate changes of cash equivalents in foreign currency		-	2

Net decrease in cash and cash equivalents		(2,169)	(3,816)

Cash and cash equivalents at the beginning of the period	23	2,186	3,961

Cash and cash equivalents at the end of the period	23	17	145

See accompanying notes to the separate interim financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

1. Reporting entity

Shinhan Financial Group Co., Ltd. (hereinafter referred to as "the Company") was established on September 1, 2001 for the main business purposes such as control and management of companies operating in the financial industry, and financial support for subsidiaries. In addition, the stocks were listed on the Korea Exchange on September 10, 2001, and the Company was registered with the Securities and Exchange Commission (SEC) on September 16, 2003, and on the same date, ADS (American Depositary Shares) was listed on the New York Stock Exchange (NYSE).

2. Basis of preparation

(a)

Statement of compliance

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS). The accompanying separate interim financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”), as prescribed in the Act on External Audit of Stock Companies of the Republic of Korea. These separate interim financial statements were prepared in accordance with K-IFRS No.1034, ‘Interim Financial Reporting’ as part of the period covered by the Company’s K-IFRS annual financial statements and contain less information than required in the annual separate financial statements. Selective comments include a description of transactions or events that are significant in understanding the changes in the financial position and management performance of the Company that occurred after December 31, 2022.

The separate interim financial statements of the Company are separate financial statements prepared in accordance with K-IFRS No. 1027 ‘Separate Financial Statements’, in which the controlling company, investors in associates or joint ventures account for their investments on the basis of direct equity investments, not on the investee’s reported performance and net assets.

(b) Use of estimates and judgments

The preparation of the separate interim financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, incomes and expenses. If the estimates and assumptions based on management's judgment as of the end of the interim reporting period differ from the actual circumstances, the related actual results may differ from these estimates.

In preparing the separate interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the separate financial statements as of and for the year ended December 31, 2022 except for the method of estimation used to determine the income tax expense for the interim period.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

3. Significant accounting policies

(a) The Company applies the same accounting policies applied as when preparing the annual separate financial statements for the year ended December 31, 2022, except for the following amendments that have been applied for the first time since January 1, 2023 and as described in Note 2(b).

i) Amendments to K-IFRS No. 1001 'Presentation of Financial Statements' –Disclosure of Accounting Policies

The amendments define material accounting policy information and require disclosure of material accounting policy information. The Company expects that the amendments will not have a significant impact on the separate financial statements.

ii) Amendments to K-IFRS No. 1001 'Presentation of Financial Statements'– Disclosure of profit or loss on assessment of financial liability with exercise price adjusting term

The amendments require disclosure of the carrying amount of financial liabilities and the related gain or loss, if all or part of financial instruments with the adjustable exercise price are classified as financial liabilities. The Company expects that the amendments will not have a significant impact on the separate financial statements.

iii) Amendments to K-IFRS No. 1008 ‘Accounting Policies, Changes in Accounting Estimates and Errors’– Definition of Accounting Estimates

The amendments define accounting estimates and clarify the way to distinguish changes in accounting policies from changes in accounting estimates. The Company expects that the amendments will not have a significant impact on the separate financial statements.

iv) Amendments to K-IFRS No. 1012 ‘Income Taxes’- Deferred Tax related to Assets and Liabilities arising from a Single Transaction

(b)

The following new accounting amendments are enacted and published but are not mandatory as of September 30, 2023.

i) Amendments to K-IFRS 1001 ‘Presentation of Financial Statements’ amended - Classification of Liabilities as Current or Non- current

The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the expectations of management. Also, the settlement of liability includes the transfer of the entity’s own equity instruments, however, it would be excluded if an option to settle them by the entity’s own equity instruments if compound financial instruments is met the definition of equity instruments and recognized separately from the liability. The amendments should be applied for annual periods beginning on or after January 1, 2024, and earlier application is permitted. The Company currently reviews the effects of the amendments on its financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

4. Financial risk management

(a) Overview

As a financial services provider, Shinhan Financial Group Co., Ltd. and its subsidiaries (hereinafter referred to as the “Group”) are exposed to various risks that may occur in each business area, and the main risks are credit risk, market risk, interest rate risk and liquidity risk. These risks are recognized, measured, controlled and reported in accordance with the basic risk management policies established by the controlling company and each subsidiary.

i) Risk management organization

The Group's basic policies and strategies for risk management are established by the Risk Management Committee (hereinafter referred to as the “Group Risk Management Committee”) within the board of directors of the controlling company. The Group's Chief Risk Management Officer (CRO) assists the Group Risk Management Committee and discusses risk policies and strategies of the group and each subsidiary through the Group Risk Council, which consists of each subsidiary's Chief Risk Management Officer. Subsidiaries implement the group's risk policies and strategies through risk management committees, risk-related working committees, and risk management organizations for each company, and consistently establish and implement detailed risk policies and strategies for subsidiaries. The risk management team of the controlling company performs the risk management and supervision by assisting the Group's Chief Risk Manager.

Shinhan Financial Group has a hierarchical limit system to manage the group's risks at an appropriate level. The Group Risk Management Committee sets the risk limits that can be borne by the group and each subsidiary, and the risk management committees and management level risk groups of each subsidiary establish and manage detailed risk limits by types of risk, departments, desks, and products.

ii) Risk management framework

ii-1) 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, which is a datum point on the level of risk burden compared to available capital. As part of the Group’s risk capital management, the Group has adopted and maintains various risk planning processes and reflects such risk planning in the Group’s business and financial planning. The Group also has adopted and maintains a risk limit management system to ensure that risks in the Group’s business do not exceed prescribed limits.

ii-2) Risk monitoring

The Group proactively, preemptively, and periodically reviews risks that may impact our overall operations through a multidimensional risk monitoring system. Currently, each subsidiary is required to report to the Company any factors that could have a material impact on the group-wide risk management, and the Company reports to the Group’s Chief Risk Officer and other members of the Group’s senior management the results of risk monitoring on a weekly, monthly and on an ad hoc basis as needed.

In addition, the Group performs preemptive risk management through a “risk dashboard system” under which the Group closely monitors any increase in asset size, risk levels and sensitivity to external factors with respect to the major asset portfolios of each subsidiary, and to the extent such monitoring yields any warning signals, the Group promptly analyze the causes and, if necessary, formulates and implements actions in response to these warning signals.

ii-3) Risk review

The risk management departments of all subsidiaries are required to review in advance on matters relating to the adoption of new financial transactions, relating to the entry into new business concerning investment and capital increase, and relating to the settlement and change of limits. Through these reviews, risk factors are reviewed in advance, reckless promotion of business that may not easily detect risk factors are barred, and reasonable decision-making is supported.

4. Financial risk management (continued)

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(a) Overview (continued)

The risk management departments of all 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 controlling company level prior to making any independent risk reviews.

ii-4) Crisis management

The Group maintains a group-wide risk management system to detect the signals of any risk crisis and to respond on a timely, efficient and flexible basis in the event of a crisis actually happening, so as to ensure the Group’s survival as a going concern. Each subsidiary maintains crisis planning for four levels of contingencies, namely, “caution”, “alert”, “imminent crisis” and “crisis”. Such contingency levels are determined based on quantitative and qualitative monitoring and consequence analysis, and upon the occurrence of any such contingency, each subsidiary is required to respond according to a prescribed contingency plan. At the controlling company level, the Company maintains and installs crisis detection and response system which is applied consistently group-wide, and upon the occurrence of any contingency at two or more subsidiary level, the Company directly takes charge of the situation so that the Company manages it on a concerted group-wide basis.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

4. Financial risk management (continued)

(b) Credit risk

i) Credit risk management

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. The Company’s credit risk management encompasses all areas of credit that may result in potential economic loss, including not just transactions that are recorded on balance sheets, but also off-balance-sheet transactions such as guarantees, loan commitments and derivative transactions.

< 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 Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company uses the change in the risk of default over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company 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 indicative of significant increases in credit risk since initial recognition.

i-1-1) Measuring the risk of default

The Company 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.

i-1-2) Measuring term structure of probability of default

Internal credit rate is a key input variable for determining term structure of probability of default. The Company 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 Company uses information obtained from external credit rating agencies when performing these analyses. The Company 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.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

4. Financial risk management (continued)

(b) Credit risk (continued)

i) Credit risk management (continued)

i-1-3) Significant increases in credit risk

The Company 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.

i-2) Risk of default

The Company considers a financial asset to be in default if it meets one or more of the following conditions:

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

- if the Company judges that it is not possible to recover principal and interest without enforcing the collateral on a financial asset

The Company uses 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 the Company, the number of days past due per payment obligation. However, in the case of a specific portfolio, the Company uses the number of days past due for each financial instrument)

- internal data and external data

The definition of default applied by the Company 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 incurred and the extent thereof may vary.

i-3) Reflection of forward-looking information

The Company reflects forward-looking information presented by internal experts based on a variety of information when measuring expected credit losses. For the purpose of estimating this forward-looking information, the Company utilizes the economic outlook published by domestic and overseas research institutes or government and public agencies.

The Company identified the key macroeconomic variables needed to forecast credit risk and credit losses for each portfolio by analyzing data obtained from past experience and drew correlations across credit risk for each variable. After that, the Company reflected the forward-looking information through regression estimation. To reflect internal and external economic uncertainty, the Company reviewed the worst scenario in addition to the 3 scenarios of upside, central and downside to reflect the final forward-looking information.


Key macroeconomic variables		Correlation with credit risk
GDP growth rate (YoY %)		(-)
Private consumption index growth rate (YoY %)		(-)
Index of equipment investment growth rate (YoY %)		(-)
Consumer price index growth rate (%)		(+)
Balance on current account ($0.1 billion)		(-)

The predicted correlations between the macroeconomic variables and the risk of default used by the Company are derived based on the data from the past more than ten years.

4. Financial risk management (continued)

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(b) Credit risk (continued)

i) Credit risk management (continued)

i-4) 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 Shinhan Bank and have been adjusted to reflect forward-looking information.

LGD refers to the expected loss if a borrower defaults. The Company 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 Company 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 Company 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 for classifying groups are periodically reviewed to maintain the homogeneity of the group and adjusted if necessary. The Company uses external benchmark information to supplement internal information for a particular portfolio that did not have sufficient internal data accumulated from past experience.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

i) Credit risk management (continued)

i-5) Write-off of financial assets

The Company writes off a portion of or entire loan or debt security for which the Company does not expect to receive its principal and interest. In general, the Company writes off the balance 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 Company and is carried out with the approval of the Financial Supervisory Service, if necessary. The Company may continue to exercise its right of collection under its own recovery policy even after the write-off of financial assets.

ii) The Company’s maximum exposure to credit risk without taking into account of any collateral held or other credit enhancements as of September 30, 2023 and December 31, 2022 are as follows:


		September 30, 2023	December 31, 2022
Due from banks and loans at amortized cost(*1):	Banks	20	2,187
	Corporations	4,109,353	4,009,467
		4,109,373	4,011,654
Financial assets at fair value through profit or loss		1,512,923	932,091
Other financial assets at amortized cost (1)(2)		740,093	902,881
		6,362,389	5,846,626

(*1) The maximum exposure amounts for due from banks, loans and other financial assets at amortized cost are measured as net of allowances.

(*2) It is comprised of accounts receivable, accrued income and guarantee deposits.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(b) Credit risk (continued)

iii) Information of financial assets by credit risk

Financial assets by credit risk as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	12-month ECL	Lifetime ECL	Gross amount	Allowance	Total, net
Due from banks and loans at amortized cost (*):
Banks	20	-	20	-	20
Corporations	4,111,280	-	4,111,280	(1,927)	4,109,353
	4,111,300	-	4,111,300	(1,927)	4,109,373
Other financial assets at amortized cost	740,316	-	740,316	(223)	740,093
	4,851,616	-	4,851,616	(2,150)	4,849,466


	December 31, 2022
	12-month ECL	Lifetime ECL	Gross amount	Allowance	Total, net
Due from banks and loans at amortized cost (*):
Banks	2,189	-	2,189	(2)	2,187
Corporations	4,012,304	-	4,012,304	(2,837)	4,009,467
	4,014,493	-	4,014,493	(2,839)	4,011,654
Other financial assets at amortized cost	903,486	-	903,486	(605)	902,881
	4,917,979	-	4,917,979	(3,444)	4,914,535

(*) The credit quality of due from banks and loans is divided into Prime and Normal. The credit quality of due from banks and loans as of September 30, 2023 and December 31, 2022 was classified as Prime. The distinction between grade Prime and Normal is as follows:


Type of borrower		Corporations and banks
Grade: 1. Prime		Internal credit rating of BBB+ or above
Grade: 2. Normal		Internal credit rating of below BBB+

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

According to the Financial Holding Companies Act, the Company manages liquidity so that the total amount of assets with a residual maturity of less than one month exceeds the total amount of liabilities with a residual maturity of less than one month as of the end of each month.

Contractual maturities for non-derivative financial liabilities as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Less than 1 month	1 ~ 3 months	3 ~ 6 months	6 months ~ 1 year	1 ~ 5 years	More than 5 years	Total
Non-derivative financial liabilities (*)
Borrowings	50,000	-	15,000	-	-	-	65,000
Debt securities issued	502,261	120,014	332,179	1,356,192	8,474,440	1,222,737	12,007,823
Other financial liabilities	53,780	2,077	1,058	408,695	713	-	466,323
	606,041	122,091	348,237	1,764,887	8,475,153	1,222,737	12,539,146
	December 31, 2022
	Less than 1 month	1 ~ 3 months	3 ~ 6 months	6 months ~ 1 year	1 ~ 5 years	More than 5 years	Total
Non-derivative financial liabilities (*)
Borrowings	-	20,000	-	-	-	-	20,000
Debt securities issued	118,327	410,000	521,135	850,040	7,128,979	1,625,108	10,653,589
Other financial liabilities	24,039	6,602	131,488	1,079	107,906	-	271,114
	142,366	436,602	652,623	851,119	7,236,885	1,625,108	10,944,703

(*) The amounts include both principal and interest cash flows of financial liabilities.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Measurement of the fair value of financial instruments

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 Company 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 Company uses its judgement 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 such as a method of using recent transactions between independent parties with reasonable judgement and willingness to trade or 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.

The Company 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.

i) Financial instruments measured at fair value

i-1) The fair value hierarchy of financial assets which are presented at their fair value in the statements of financial position as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Level 1	Level 2	Level 3	Total
Assets
Financial assets measured at fair value through profit or loss	-	1,512,923	1,222,891	2,735,814


	December 31, 2022
	Level 1	Level 2	Level 3	Total
Assets
Financial assets measured at fair value through profit or loss	-	932,091	846,384	1,778,475

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Measurement of the fair value of financial instruments (continued)

i) Financial instruments measured at fair value (continued)

i-2) Changes in level 3 of the fair value hierarchy

- Changes in level 3 of the fair value hierarchy for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Financial assets measured
	at FVTPL
Beginning balance	846,384
Recognized in profit or loss	76,507
Purchases	300,000
Ending balance	1,222,891

	December 31, 2022
	Financial assets measured	Net derivative instruments
	at FVTPL	held for trading
Beginning balance	564,387	11,670
Recognized in profit or loss	(118,003)	10,578
Purchases	400,000	-
Payment	-	(22,248)
Ending balance	846,384	-

i-3) Valuation techniques and input variables unobservable in markets

i-3-1) The valuation techniques and the fair value measurement input variables of financial instruments classified as level 2 as of September 30, 2023 and December 31, 2022 are as follows:


	Classification	Valuation techniques	Type	Book value	Inputs
2023	Financial assets measured at FVTPL	Net asset valuation approach	Beneficiary certificates	1,512,923	Prices of underlying assets such as stocks, bonds and exchange rates
2022	Financial assets measured at FVTPL	Net asset valuation approach	Beneficiary certificates	932,091	Prices of underlying assets such as stocks, bonds and exchange rates

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Measurement of the fair value of financial instruments (continued)

i-3-2) Information about valuation techniques and significant unobservable inputs in measuring financial instruments categorized as level 3 as of September 30, 2023 and December 31, 2022 are as follows:

September 30, 2023

Valuation
technique

Type of financial instrument

Book value

Significant
unobservable
input

Range of estimates for unobservable input

Financial assets

Financial assets measured
at FVTPL

Option model(*)

Hybrid bonds

1,222,891

Volatility of
interest rate

0.56%~1.37%

(*) It is calculated by applying the Hull-White model.

December 31, 2022

Valuation
technique

Type of financial instrument

Book value

Significant
unobservable
input

Range of estimates for unobservable input

Financial assets

Financial assets measured
at FVTPL

Option model(*)

Hybrid bonds

846,384

Volatility of
interest rate 
 

0.72%~1.47%

(*) It is calculated by applying the Hull-White model.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Measurement of the fair value of financial instruments (continued)

i) Financial instruments measured at fair value (continued)

i-4) Sensitivity to changes in unobservable input variables

- For level 3 fair value measurement, effect on profit (loss) followed by changing one or more of the unobservable inputs to reasonably possible alternative assumptions as of September 30, 2023 and December 31, 2022 are as follows:


		September 30, 2023
Type of financial instrument		Profit (loss) for the year
Type of financial instrument			Favorable change	Unfavorable change
Financial assets measured at FVTPL(*)	Financial assets at fair value through profit or loss	867	(1,039)

(*) Based on 10% increase or decrease on interest rate volatility, which is the major unobservable input.


		December 31, 2022
Type of financial instrument		Profit (loss) for the year
Type of financial instrument			Favorable change	Unfavorable change
Financial assets measured at FVTPL(*)	Financial assets at fair value through profit or loss	989	(1,149)

(*) Based on 10% increase or decrease on interest rate volatility, which is the major unobservable input.

ii) The financial instruments measured at amortized cost

ii-1) The methods of measuring the fair value of financial instruments measured at amortized cost are as follows:


Type		Measurement methods of fair value
Due from banks		The carrying amount and the fair value for cash are identical and most of deposits are floating interest rate deposit or the next day deposit of a short-term instrument. For this reason, the carrying value 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, etc.
Borrowings and debt securities issued		The fair value of borrowings and debt securities issued 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.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Measurement of the fair value of financial instruments (continued)

ii) The financial instruments measured at amortized cost (continued)

ii-2) The carrying value and fair value of the financial instruments measured at amortized cost as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
	Carrying value	Fair value	Carrying value	Fair value
Assets:
Due from banks at amortized cost	20	20	2,187	2,187
Loans at amortized cost	4,109,353	3,955,232	4,009,467	3,676,855
Other financial assets	740,093	740,093	902,881	902,881
	4,849,466	4,695,345	4,914,535	4,581,923
Liabilities:
Borrowings	64,664	64,311	20,000	19,922
Debt securities issued	10,930,932	10,561,631	9,815,457	9,196,089
Other financial liabilities	512,007	512,007	314,613	314,613
	11,507,603	11,137,949	10,150,070	9,530,624

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 disclosed at their fair values as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Level 1	Level 2	Level 3	Total
Assets:
Due from banks at amortized cost	17	3	-	20
Loans at amortized cost	-	-	3,955,232	3,955,232
Other financial assets	-	-	740,093	740,093
	17	3	4,695,325	4,695,345
Liabilities:
Borrowings	-	64,311	-	64,311
Debt securities issued	-	10,561,631	-	10,561,631
Other financial liabilities	-	-	512,007	512,007
	-	10,625,942	512,007	11,137,949


	December 31, 2022
	Level 1	Level 2	Level 3	Total
Assets:
Due from banks at amortized cost	2,184	3	-	2,187
Loans at amortized cost	-	-	3,676,855	3,676,855
Other financial assets	-	-	902,881	902,881
	2,184	3	4,579,736	4,581,923
Liabilities:
Borrowings	-	19,922	-	19,922
Debt securities issued	-	9,196,089	-	9,196,089
Other financial liabilities	-	-	314,613	314,613
	-	9,216,011	314,613	9,530,624

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(d) Measurement of the fair value of financial instruments (continued)

ii) The financial instruments measured at amortized cost (continued)

ii-4) Information on valuation technique and inputs used as of September 30, 2023 and December 31, 2022 in measuring financial instruments not measured at fair value classified as level 2 or 3 are as follows:


	September 30, 2023
	Valuation technique	Fair value	Inputs
Assets:
Due from banks at amortized cost	-	3	-
Loans at amortized cost	DCF	3,955,232	Discount rate Exchange rate
Other financial assets	DCF	740,093	Discount rate Exchange rate
		4,695,328
Liabilities:
Borrowings	DCF	64,311	Discount rate
Debt securities issued	DCF	10,561,631	Discount rate Exchange rate
Other financial liabilities	DCF	512,007	Discount rate Exchange rate
		11,137,949


	December 31, 2022
	Valuation technique	Fair value	Inputs
Assets:
Due from banks at amortized cost	-	3	-
Loans at amortized cost	DCF	3,676,855	Discount rate Exchange rate
Other financial assets	DCF	902,881	Discount rate Exchange rate
		4,579,739
Liabilities:
Borrowings	DCF	19,922	Discount rate
Debt securities issued	DCF	9,196,089	Discount rate Exchange rate
Other financial liabilities	DCF	314,613	Discount rate Exchange rate
		9,530,624

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

4. Financial risk management (continued)

(e) Classification by categories of financial instruments

Financial assets and liabilities are measured at fair value or amortized cost. The carrying amounts of each category of financial assets and financial liabilities as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023
	Financial assets measured at fair value through profit or loss	Financial assets measured at amortized cost	Financial liabilities measured at amortized cost
Assets:
Cash and due from banks at amortized cost	-	20	-
Financial assets at fair value through profit or loss	2,735,814	-	-
Loans at amortized cost	-	4,109,353	-
Other financial assets at amortized cost	-	740,093	-
	2,735,814	4,849,466	-
Liabilities:
Borrowings	-	-	64,664
Debt securities issued	-	-	10,930,932
Other financial liabilities	-	-	512,007
	-	-	11,507,603
	December 31, 2022
	Financial assets measured at fair value through profit or loss	Financial assets measured at amortized cost	Financial liabilities measured at amortized cost
Assets:
Cash and due from banks at amortized cost	-	2,187	-
Financial assets at fair value through profit or loss	1,778,475	-	-
Loans at amortized cost	-	4,009,467	-
Other financial assets at amortized cost	-	902,881	-
	1,778,475	4,914,535	-
Liabilities:
Borrowings	-	-	20,000
Debt securities issued	-	-	9,815,457
Other financial liabilities	-	-	314,613
	-	-	10,150,070

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

5. Restricted due from banks

Guaranteed deposits on bank accounts that are subject to restriction as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Overdraft deposit	3	3

6. Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Beneficiary certificates
Beneficiary certificates in Korean won	1,479,368	862,693
Beneficiary certificates in foreign currency	33,555	69,398
	1,512,923	932,091
Hybrid bonds
Hybrid bonds in Korean won	902,852	561,078
Hybrid bonds in foreign currency	320,039	285,306
	1,222,891	846,384
	2,735,814	1,778,475

7. Loans measured at amortized cost

(a) Loans measured at amortized cost as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Corporate loans – working capital	4,111,280	4,012,304
Less: allowance	(1,927)	(2,837)
	4,109,353	4,009,467

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

7. Financial assets at amortized cost (continued)

(b) Changes in financial assets at amortized cost and other assets for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Loans at amortized cost			Due from banks at amortized cost & other financial assets
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total

Beginning balance	4,012,304	-	-	905,675	-	-	4,917,979
Transfer to 12-month expected credit loss	-	-	-	-	-	-	-
Transfer to lifetime expected credit loss	-	-	-	-	-	-	-
Transfer to impaired financial asset	-	-	-	-	-	-	-
Origination	205,000	-	-	-	-	-	205,000
Collection	(200,000)	-	-	-	-	-	(200,000)
Others (*)	93,976	-	-	(165,339)	-	-	(71,363)
Ending balance	4,111,280	-	-	740,336	-	-	4,851,616

(*) Other changes are due to changes in dividends receivables of subsidiaries, changes in consolidated tax receivables, changes in accrued income, changes in foreign exchange rate, etc.


	December 31, 2022
	Loans at amortized cost			Due from banks at amortized cost & other financial assets
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total

Beginning balance	3,980,753	-	-	843,202	-	-	4,823,955
Transfer to 12-month expected credit loss	-	-	-	-	-	-	-
Transfer to lifetime expected credit loss	-	-	-	-	-	-	-
Transfer to impaired financial asset	-	-	-	-	-	-	-
Origination	500,000	-	-	-	-	-	500,000
Collection	(568,000)	-	-	-	-	-	(568,000)
Others (*)	99,551	-	-	62,473	-	-	162,024
Ending balance	4,012,304	-	-	905,675	-	-	4,917,979

(*) Other changes are due to changes in dividends receivables of subsidiaries, changes in consolidated tax receivables, changes in accrued income, changes in foreign exchange rate, etc.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

7. Financial assets at amortized cost (continued)

(c) Changes in credit loss allowance of in financial assets at amortized cost and other assets for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Loans at amortized cost			Due from banks at amortized cost & other financial assets
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total

Beginning allowance	2,837	-	-	607	-	-	3,444
Transfer to 12-month expected credit loss	-	-	-	-	-	-	-
Transfer to lifetime expected credit loss	-	-	-	-	-	-	-
Transfer to impaired financial asset	-	-	-	-	-	-	-
Reversal of allowance	(910)	-	-	(384)	-	-	(1,294)
Ending allowance	1,927	-	-	223	-	-	2,150


	December 31, 2022
	Loans at amortized cost			Due from banks at amortized cost & other financial assets
	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	Total

Beginning allowance	4,694	-	-	832	-	-	5,526
Transfer to 12-month expected credit loss	-	-	-	-	-	-	-
Transfer to lifetime expected credit loss	-	-	-	-	-	-	-
Transfer to impaired financial asset	-	-	-	-	-	-	-
Reversal of allowance	(1,857)	-	-	(225)	-	-	(2,082)
Ending allowance	2,837	-	-	607	-	-	3,444

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

8. Investments in subsidiaries

Investments in subsidiaries as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
Investees	Ownership percentage (%)	Carrying value	Ownership percentage (%)	Carrying value
Shinhan Bank	100.0	13,617,579	100.0	13,617,579
Shinhan Card Co., Ltd.	100.0	7,919,672	100.0	7,919,672
Shinhan Securities Co., Ltd.	100.0	3,001,420	100.0	3,001,420
Shinhan Life Insurance Co., Ltd.	100.0	4,204,533	100.0	4,204,544
Shinhan Capital Co., Ltd.	100.0	558,921	100.0	558,921
Shinhan Asset Management Co., Ltd.	100.0	326,206	100.0	326,206
Jeju Bank	75.3	179,643	75.3	179,643
Shinhan Savings Bank	100.0	157,065	100.0	157,065
Shinhan Asset Trust Co. Ltd.	100.0	429,491	100.0	429,491
Shinhan DS	100.0	23,026	100.0	23,026
Shinhan Fund Partners Co., Ltd. (*)	99.8	50,092	99.8	50,092
Shinhan REITs Management Co., Ltd.	100.0	30,000	100.0	30,000
Shinhan AI Co., Ltd.	100.0	42,000	100.0	42,000
Shinhan Venture Investment Co., Ltd.	100.0	75,840	100.0	75,840
Shinhan EZ General Insurance, Ltd.	85.1	106,210	85.1	106,210
SHC Management Co., Ltd.	100.0	8,655	100.0	8,655
		30,730,353		30,730,364

(*) On April 3, 2023, Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners Co., Ltd.

9. Borrowings

Borrowings as of September 30, 2023 and December 31, 2022 are as follows:


			September 30, 2023		December 31, 2022
	Lender	Period	Interest rate (%)	Amount	Interest rate (%)	Amount
Borrowings in Korean won	Daol Investment & Securities Co., Ltd.	2022.02.03 ~2023.02.02	2.25	-	2.25	20,000
	Kiwoom Securities Co., Ltd.	2023.02.02 ~2024.02.01	3.79	14,807	-	-
	Hanyang Securities Co., Ltd.	2023.06.26 ~2023.10.26	4.01	49,857	-	-
				64,664		20,000

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

10. Debt securities issued

Debt securities issued as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
	Interest rate (%)	Amount	Interest rate (%)	Amount
Debt securities issued in Korean won:
Debt securities issued	1.17 ~ 6.17	8,930,000	1.17 ~ 6.17	8,560,000
Discount		(7,332)		(7,289)
		8,922,668		8,552,711

Debt securities issued in foreign currency:
Debt securities issued	1.37 ~ 5.04	1,344,800	1.37	633,650
Subordinated debt securities issued	3.34	672,400	3.34	633,650
Discount		(8,936)		(4,554)
		2,008,264		1,262,746
		10,930,932		9,815,457

11. Net defined benefit liabilities (assets)

(a) Defined benefit assets & liabilities

Defined benefit obligations and plan assets as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Present value of defined benefit obligations	24,152	20,586
Fair value of plan assets	(23,465)	(22,332)
Net defined benefit liabilities (assets)	687	(1,746)

(b) Profit or loss recognized for the nine-month periods ended September 30, 2023 and 2022 are as follows:


c	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Current service costs	499	1,496	606	1,819
Net interest income (expense)	(25)	(75)	13	39
	474	1,421	619	1,858

(*) Profit or loss arising from defined benefit plans is included in general and administrative expenses.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

12. Equity

(a) Equity as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Capital stock
Common stock	2,695,586	2,608,176
Preferred stock (*1)	274,055	361,465
	2,969,641	2,969,641

Hybrid bonds	4,001,731	4,196,968

Capital surplus
Share premium	11,350,744	11,350,819

Capital adjustments	(148,464)	(46,114)

Accumulated other comprehensive loss	(5,980)	(5,210)
Retained earnings
Legal reserve (*2)	2,698,360	2,573,435
Regulatory reserve for loan losses	21,078	18,524
Other legal reserves	2,000	2,000
Unappropriated retained earnings	5,660,314	5,616,486
	8,381,752	8,210,445
	26,549,424	26,676,549

(*1) On May 1, 2023, 17,482,000 shares of convertible preferred stock issued on May 1, 2019 were converted to common stock at a conversion ratio of 1:1.

(*2) As of September 30, 2023, the legal reserve is restricted for the dividend to stockholders by law or legislation. According to Article 53 of the Financial Holding Companies Act, the Company is required to appropriate a legal reserve in an amount equal to at least 10% of cash dividends for each accounting period until the reserve equals 100% of stated capital. Such legal reserve shall be used either to reduce a deficit or to transfer capital.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

12. Equity (continued)

(b) Hybrid bonds

Hybrid bonds classified as other equity instruments as of September 30, 2023 and December 31, 2022 are as follows:


	Issue date	Maturity date	Interest rate (%)	September 30, 2023	December 31, 2022
Hybrid bonds in Korean won	June 25, 2015	June 25, 2045	4.38	199,455	199,455
	September 15, 2017	Perpetual bond	4.25	89,783	89,783
	April 13, 2018	Perpetual bond	-	-	134,678
	April 13, 2018	Perpetual bond	4.56	14,955	14,955
	August 29, 2018	Perpetual bond	-	-	398,679
	June 28, 2019	Perpetual bond	3.27	199,476	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	-
	July 13, 2023	Perpetual bond	5.40	498,815	-
Hybrid bonds in foreign currency	August 13, 2018	Perpetual bond	-	-	559,526
	May 12, 2021	Perpetual bond	2.88	556,007	556,007
				4,001,731	4,196,968

(*) For the nine-month period ended September 30, 2023, the deduction for capital related to hybrid bond issued is 2,354 million.

The Company can make early redemption for the above bonds, after 5 or 10 years from the issue date, and it has the rights to extend the maturity under the same condition.

Changes in accumulated capital adjustments for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Beginning balance	(46,114)	(45,797)
Loss on repayment of hybrid bonds	(102,667)	(317)
Decrease in retained earnings (loss on repayment of hybrid bonds)	317	-
Acquisition of treasury stock	(386,719)	(300,600)
Retirement of treasury stock	386,719	300,600
Ending balance	(148,464)	(46,114)

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

12. Equity (continued)

(d) Changes in accumulated other comprehensive loss for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023	December 31, 2022
Beginning balance	(5,210)	(7,253)
Remeasurement of net defined benefit liabilities (assets)	(1,037)	2,916
Tax effect	267	(873)
Ending balance	(5,980)	(5,210)

(e) Regulatory reserve for loan losses

i) Changes in regulatory reserve for loan losses as of September 30, 2023 and December 31, 2022 are as follows


	September 30, 2023	December 31, 2022
Beginning balance	21,078	18,524
Planned regulatory reserve for loan losses	966	2,554
Ending balance	22,044	21,078

ii) Profit for the period and earnings per share after adjusted for regulatory reserve for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023	September 30, 2022
Profit for the period	1,703,017	1,345,758
Provision for regulatory reserve for loan losses	(966)	(1,118)
Profit for the period adjusted for regulatory reserve	1,702,051	1,344,640
Basic and diluted earnings per share in Korean won adjusted for regulatory reserve (*)	2,994	2,309

(*) Dividends for hybrid bonds are deducted.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

(f) Treasury stock

Changes in treasury stock for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Beginning balance	Acquisition (*)	Retirement (*)	Ending balance
Number of shares	6,352	10,762,680	(10,762,680)	6,352
Carrying value	227	386,719	(386,719)	227

(*) During the period the Company acquired treasury stocks for the purpose of retirement and retired 3,676,470 shares, 4,243,281 shares, and 2,842,929 shares on March 28, 2023, June 16, 2023, and August 31, 2023, respectively.


	December 31, 2022
	Beginning balance	Acquisition (*)	Retirement (*)	Ending balance
Number of shares	6,352	7,814,685	(7,814,685)	6,352
Carrying value	227	300,600	(300,600)	227

(*) During the period, the Company acquired treasury stocks for the purpose of retirement and retired 3,665,423 shares and 4,149,262 shares on April 25, 2022 and November 23, 2022, respectively.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

13. Net interest expense

Net interest expense for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Interest income:
Cash and due from banks at amortized cost	28	204	52	109
Loans at amortized cost	23,313	68,427	22,646	63,662
Others	130	381	54	179
	23,471	69,012	22,752	63,950
Interest expense:
Borrowings	(648)	(1,014)	(114)	(295)
Debt securities issued	(74,757)	(205,243)	(57,560)	(160,837)
Others	(19)	(61)	(10)	(33)
	(75,424)	(206,318)	(57,684)	(161,165)
Net interest expense	(51,953)	(137,306)	(34,932)	(97,215)

14. Net fees and commission income

Net fees and commission income for the nine-month periods ended September 30, 2023 and 2022 are as follows:


c	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Fees and commission income:
Royalty	17,375	52,126	18,676	52,750
Others	7	14	4	12
	17,382	52,140	18,680	52,762
Fees and commission expense:
Others	(39)	(396)	(293)	(454)
Net fees and commission income:	17,343	51,744	18,387	52,308

15. Dividend income

Dividend income for the nine-month periods ended September 30, 2023 and 2022 are as follows:


c	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Dividends from subsidiaries	-	1,736,958	-	1,439,500
Dividends from hybrid bonds	12,659	36,131	8,704	22,453
	12,659	1,773,089	8,704	1,461,953

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

16. Provision for (reversal of) credit losses allowance

Provision for (reversal of) credit losses allowance for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Provision for (reversal of) credit losses allowance	142	(1,294)	653	(163)

17. General and administrative expenses

General and administrative expenses for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three-month	Nine-month	Three-month	Nine-month
Salaries:
Salary expenses and bonuses	10,618	33,021	9,632	31,844
Severance benefits	474	1,421	619	1,858
Rent	327	792	258	684
Lease	653	828	65	177
Entertainment	541	1,630	672	1,860
Depreciation	975	2,831	806	2,368
Amortization	27	70	13	37
Taxes and dues	151	726	264	721
Advertising	12,072	35,634	13,209	33,532
Others	4,945	16,175	6,217	20,381
	30,783	93,128	31,755	93,462

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

18. Share-based payments

(a) Performance shares granted as of September 30, 2023 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 as of September 30, 2023	216,820	2,662,216

Fair value per share in Korean won (*)	44,222 for Dec. 31, 2019 33,122 for Dec. 31, 2020 37,387 for Dec. 31, 2021 37,081 for Dec. 31, 2022	35,600

(*) 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 previous one month, and the past one week) of four years after the commencement of the grant year is paid in cash, and the fair value of the reference stock to be paid in the future is assessed as the closing price of the settlement.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

18. Share-based payments (continued)

(b) Share-based compensation costs

Based on the share-based payment arrangements held by the Company, the share-based compensation costs for the nine-month periods ended September 30, 2023 and 2022 are as follows:

In accordance with the share-based compensation agreements by the Company, accrued expenses as of September 30, 2023 and December 31, 2022 are as follows.

(*) As of September 30, 2023, the Company recognized accounts receivable from the subsidiaries for the amount of 89,376 million, which was payable to employees of the subsidiaries.

(*) As of December 31, 2022, the Company recognized accounts receivable from the subsidiaries for the amount of 91,469 million, which was payable to employees of the subsidiaries.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won, except per share data)

19. Income taxes

Income tax expense (benefit) for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Current income tax expense	2	2	-	-
Temporary differences	(1,720)	22,121	7,422	(7,093)
Income tax recognized directly in equity	-	267	-	(409)
Income tax expense (benefit)	(1,718)	22,390	7,422	(7,502)

20. Earnings (loss) per share

Basic and diluted earnings (loss) per share for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Net profit (loss) for the period	(27,306)	1,703,017	(4,872)	1,345,758
Less:
Dividends to hybrid bonds	(50,939)	(142,893)	(44,815)	(117,058)
Net profit (loss) available for common stock	(78,245)	1,560,124	(49,687)	1,228,700

Weighted average number of common stocks outstanding (*)	516,761,098	520,828,602	530,409,779	531,694,283
Basic and diluted earnings (loss) per share in Korean won	(151)	2,995	(94)	2,311

(*) The number of common shares issued by the Company is 515,504,189 shares. The above weighted average number of common stocks outstanding is calculated by reflecting treasury stocks (10,762,680 shares and 7,814,685 shares for periods ended September 31, 2023 and December 31, 2022, respectively) that are retired and 17,482,000 common stocks converted on May 1, 2023 from preferred stock that were issued on May 1, 2019.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

21. Operating income

Operating income for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three- month	Nine- month
Dividend income	12,659	1,773,089	8,704	1,461,953
Fees and commission income	17,382	52,140	18,680	52,762
Interest income	23,471	69,012	22,752	63,950
Gain on financial assets at fair value through profit or loss	19,868	103,748	8,408	29,269
Gain on foreign currency transaction	66,735	138,007	219,747	388,580
Reversal of (provision for) credit loss allowance	(142)	1,294	(653)	163
	139,973	2,137,290	277,638	1,996,677

22. Commitments and contingencies

(a) As of September 30, 2023, the Company has borrowing limit agreements for 100 billion with Korea Development Bank, 200 billion with KB Bank, and 200 billion with Hana Bank and there is no amount executed. As of December 31, 2022, the Company has borrowing limit agreements for 100 billion with Korea Development Bank and there is no amount executed.

(b) As of September 30, 2023, the Company has a lawsuit ( 64 million) filed as a defendant. Though the result is not expected to affect the financial statements significantly, an additional loss may incur.

23. Statement of cash flows

(a) Cash and cash equivalents in the separate statements of cash flows as of September 30, 2023 and December 31, 2022 are as follows:

September 30, 2023

December 31, 2022

Due from financial institutions with a maturity less 
than three months from date of acquisition

17

2,186

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

23. Statement of cash flows (continued)

(b) Changes in liabilities arising from financing activities for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023
	Borrowings	Debentures	Lease liabilities	Total
Balance at January 1, 2023	20,000	9,815,457	979	9,836,436
Changes from cash flows	43,763	1,003,713	(1,272)	1,046,204
Changes from non-cash flows:
Amortization of discount on debentures	901	3,496	62	4,459
Foreign currency difference	-	108,266	-	108,266
Other changes	-	-	1,854	1,854
Balance at September 30, 2023	64,664	10,930,932	1,623	10,997,219


	September 30, 2022
	Borrowings	Debentures	Lease liabilities	Total
Balance at January 1, 2022	-	9,559,553	1,903	9,561,456
Changes from cash flows	20,000	191,479	(1,259)	210,220
Changes from non-cash flows:
Amortization of discount on debentures	-	2,837	33	2,870
Foreign currency difference	-	248,358	-	248,358
Other changes	-	-	685	685
Balance at September 30, 2022	20,000	10,002,227	1,362	10,023,589

24. Related party transactions

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

The Company defines subsidiaries, key managements and their families as a range of related parties in accordance with K-IFRS No.1024, and discloses the amount of transactions between the Company and related parties and the balance of receivables and payables. For details of subsidiaries, refer to 'Note 8'.

(a) Significant transactions with the related parties for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	Account	September 30, 2023		September 30, 2022
	Account	Three- month	Nine- month	Three- month	Nine- month
Revenue:
Shinhan Bank	Interest income	131	382	56	181
〃	Fees and commission income	10,421	31,262	10,421	31,262
〃	Dividend income	-	1,157,105	-	900,000
〃	Reversal of (provision for) credit losses	(7)	234	-	-
Shinhan Card Co., Ltd.	Interest income	13,428	39,191	12,788	34,897
〃	Fees and commission income	3,563	10,688	3,563	10,687
〃	Dividend income	7,977	278,689	3,932	346,177
〃	Reversal of (provision for) credit losses	(56)	545	-	-
〃	Other non-operating income (*1)	86	86	4,893	4,979
Shinhan Securities Co., Ltd.	Interest income	5,011	15,005	5,100	14,467
〃	Fees and commission income	1,276	3,829	1,276	3,829
〃	Dividend income	2,517	107,600	2,589	107,424
〃	Reversal of (provision for) credit losses	(50)	255	(230)	58
Shinhan Life Insurance Co., Ltd.	Fees and commission income	1,184	3,552	2,484	4,176
〃	Dividend income	-	162,257	-	-
〃	Reversal of (provision for) credit losses	(1)	2	-	-
Shinhan Capital Co., Ltd.	Interest income	3,571	10,673	3,588	10,564
〃	Fees and commission income	473	1,417	473	1,417
〃	Dividend income	2,164	51,964	2,183	47,682
〃	Reversal of (provision for) credit losses	(18)	208	-	-
Jeju Bank	Fees and commission income	58	173	58	173
〃	Dividend income	-	2,420	-	2,420
〃	Reversal of credit losses	-	1	-	-
Shinhan Credit Information Co., Ltd. (*2)	Fees and commission income	-	-	-	2
Shinhan Asset Management Co., Ltd.	Interest income	-	-	135	402
〃	Fees and commission income	97	291	97	291
〃	Dividend income	-	7,000	-	53,000
〃	Reversal of (provision for) credit losses	-	2	(30)	237
Shinhan DS	Interest income	146	423	116	345
〃	Fees and commission income	8	19	7	17
〃	Reversal of (provision for) credit losses	(1)	8	-	-

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)


Shinhan Fund Partners Co., Ltd. (*3)	Fees and commission income	33	98	33	98
〃	Dividend income	-	6,054	-	5,251
Shinhan Savings Bank	Interest income	671	2,009	670	2,546
〃	Fees and commission income	88	266	90	267
〃	Reversal of (provision for) credit losses	(4)	42	-	-

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

24. Related party transactions (continued)

(a) Significant transactions with the related parties for the nine-month periods ended September 30, 2023 and 2022 are as follows (continued):


	Account		September 30, 2023			September 30, 2022
				Three- month	Nine- month		Three- month	Nine- month
Revenue:
Shinhan REITs Management Co., Ltd.		Fees and commission income		21	63		21	63
Shinhan Asset Trust Co., Ltd.		Fees and commission income		141	423		141	423
〃		Reversal of credit losses		-	-		-	1
Shinhan Venture Investment Co., Ltd.		Interest income		514	1,329		299	548
〃		Fees and commission income		20	59		20	59
〃		Reversal of (provision for) credit losses		(1)	5		324	338
				53,461	1,895,629		55,097	1,584,281

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

24. Related party transactions (continued)

(a) Significant transactions with the related parties for the nine-month periods ended September 30, 2023 and 2022 are as follows (continued):


Related party	Account	September 30, 2023		September 30, 2022
Related party	Account	Three- month	Nine- month	Three- month	Nine- month
Expense:
Shinhan Bank	Interest expenses	(267)	28	3	12
〃	General and administrative expenses	611	1,098	308	941
〃	Provision for credit losses	-	-	25	75
Shinhan Card Co., Ltd.	Interest expenses	1	6	-	2
〃	General and administrative expenses	28	149	16	48
〃	Provision for (reversal of) credit losses	-	-	(136)	324
Shinhan Securities Co., Ltd.	Interest expenses	42	113	43	128
〃	Fees and commission expense (*4)	380	1,212	180	876
〃	General and administrative expenses	26	65	7	7
Shinhan Life Insurance Co., Ltd.	Interest expenses	220	653	436	658
〃	Provision for credit losses	-	-	-	1
Shinhan Capital Co., Ltd.	Provision for (reversal of) credit losses	-	-	(18)	111
Shinhan DS	General and administrative expenses	562	1,425	471	1,210
〃	Provision for (reversal of) credit losses	-	-	(3)	55
Shinhan Savings Bank	Provision for credit losses	-	-	1	223
Shinhan Asset Trust Co. Ltd.	Provision for credit losses	-	5	-	-
Shinhan REITs Management Co., Ltd.	Provision for credit losses	1	1	2	5
Shinhan A.I. Co. Ltd.	General and administrative expenses	10	30	10	30
〃	Provision for credit losses	-	-	2	3
		1,614	4,785	1,347	4,709

(*1) Other non-operating income for 2022 includes disposal gains from the sale of Shinhan Credit Information. 20,354 million was received from Shinhan Card Co., Ltd. for this transaction.

(*2) On July 28, 2022, the entire shares of Shinhan Credit Information Co., Ltd. was sold to Shinhan Card., Ltd., and the transaction above occurred prior to the sale.

(*3) On April 3, 2023, Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners Co., Ltd.

(*4) It consists of commissions paid for acquisitions of hybrid bonds and trading commissions paid for retirement of treasury stock. It was directly deducted from the equity.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

24. Related party transactions (continued)

(b) Significant balances with the related parties as of September 30, 2023 and December 31, 2022 are as follows:


Creditor	Debtor	Account	September 30, 2023	December 31, 2022
Assets:
Shinhan Financial Group Co., Ltd.	Shinhan Bank	Cash and due from banks	20	2,187
〃	〃	Property and equipment	354	-
〃	〃	Other assets	222,303	481,007
〃	Shinhan Card Co., Ltd.	Financial assets at fair value through profit or loss (*1)	673,685	342,959
〃	〃	Loans	2,258,264	2,224,939
〃	〃	Reserve for loan losses	(1,058)	(1,573)
〃	〃	Property and equipment	180	122
〃	〃	Other assets	96,522	105,364
〃	Shinhan Securities Co., Ltd.	Financial assets at fair value through profit or loss (*2)	320,039	285,306
〃	〃	Loans	789,398	743,905
〃	〃	Reserve for loan losses	(370)	(526)
〃	〃	Property and equipment	97	-
〃	〃	Other assets	74,948	188,626
〃	Shinhan Life Insurance Co., Ltd.	Other assets	8,121	8,348
〃	Shinhan Capital Co., Ltd.	Financial assets at fair value through profit or loss (*3)	229,168	218,119
〃	〃	Loans	848,960	833,460
〃	〃	Reserve for loan losses	(398)	(589)
〃	〃	Other assets	51,039	56,859
〃	Shinhan Asset Management Co., Ltd.	Other assets	5,857	6,462
〃	Jeju Bank	Other assets	2,463	2,681
〃	Shinhan DS	Loans	14,803	20,000
〃	〃	Reserve for loan losses	(7)	(14)
〃	〃	Property and equipment	432	585
〃	〃	Intangible assets	58	-
〃	〃	Other assets	4,708	3,590
〃	Shinhan Fund Partners Co., Ltd. (*4)	Other assets	754	878

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

24. Related party transactions (continued)

(b) Significant balances with the related parties September 30, 2023 and December 31, 2022 are as follows (continued):


Creditor	Debtor	Account	September 30, 2023	December 31, 2022
Assets:
〃	Shinhan Savings Bank	Loans	150,000	150,000
〃	〃	Reserve for loan losses	(70)	(106)
〃	〃	Other assets	6,341	12,433
〃	Shinhan Asset Trust Co. Ltd.	Other assets	11,809	891
〃	Shinhan REITs Management Co., Ltd.	Other assets	2,119	545
〃	Shinhan A.I. Co., Ltd.	Other assets	298	267
〃	Shinhan Venture Investment Co., Ltd.	Loans	49,855	40,000
〃	〃	Reserve for loan losses	(23)	(28)
〃	〃	Other assets	1,108	154
〃	Shinhan EZ General Insurance, Ltd.	Other assets	64	26
			5,821,841	5,726,877
Liabilities:
Shinhan Bank	Shinhan Financial Group Co., Ltd.	Other liabilities	40,563	1,814
Shinhan Card Co., Ltd.	〃	Other liabilities	22,253	22,348
Shinhan Securities Co., Ltd.	〃	Other liabilities	182,016	31
Shinhan Life Insurance Co., Ltd.	〃	Debt security issued in Korean won	30,000	30,000
〃	〃	Other liabilities	95,785	115,629
Shinhan Capital Co., Ltd.	〃	Other liabilities	2	1
Shinhan DS	〃	Other liabilities	256	186
Shinhan Savings Bank	〃	Other liabilities	2,915	45
Shinhan A.I. Co., Ltd.	〃	Other liabilities	117	123
Shinhan Venture Investment Co., Ltd.	〃	Other liabilities	4	1,222
			373,911	171,399

(*1) The balance arises from the purchase of hybrid bonds, and it includes a gain of 30,726 million and a loss of 57,041 million on financial assets at fair value through profit or loss for the period ended September 30, 2023 and for the year ended December 31, 2022, respectively.

(*2) The balance arises from the purchase of hybrid bonds, and it includes a gain of 17,286 million and a loss of 53,786 million on financial assets at fair value through profit or loss for the period ended September 30, 2023 and for the year ended December 31, 2022, respectively.

(*3) The balance arises from the purchase of hybrid bonds, and it includes a gain of 11,049 million and a loss of 29,063 million on financial assets at fair value through profit or loss for the period ended September 30, 2023 and for the year ended December 31, 2022, respectively.

(*4) On April 3, 2023, Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners Co., Ltd.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

24. Related party transactions (continued)

(c) Right-of-use assets and lease liabilities recognized through lease transactions with related parties as of September 30, 2023 and December 31, 2022 are as follows:


Related parties	September 30, 2023	December 31, 2022
Right-of-use assets
Shinhan Bank	354	-
Shinhan Card Co., Ltd.	180	122
Shinhan Securities Co., Ltd.	97	-
	631	122

Lease liabilities
Shinhan Bank	232	-
Shinhan Card Co., Ltd.	199	135
Shinhan Securities Co., Ltd.	98	-
	529	135

(d) Financing transaction

Major financing transactions with related parties for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 are as follows:


	September 30, 2023
	Beginning balance	Lending	Purchases (*1)	Collection	Others (*2)	Ending balance
Shinhan Card Co., Ltd.	2,567,898	100,000	300,000	(100,000)	64,051	2,931,949
Shinhan Securities Co., Ltd.	1,029,211	-	-	-	80,226	1,109,437
Shinhan Capital Co., Ltd.	1,051,580	-	-	-	26,549	1,078,129
Shinhan Savings Bank	150,000	-	-	-	-	150,000
Shinhan DS	20,000	15,000	-	(20,000)	(197)	14,803
Shinhan Venture Investment Co., Ltd.	40,000	90,000	-	(80,000)	(145)	49,855
	4,858,689	205,000	300,000	(200,000)	170,484	5,334,173

(*1) It includes an acquisition of hybrid bonds, issued by the subsidiary, for the amount of 90,000 million from Shinhan Securities Co., Ltd., the underwriter.

(*2) Other transactions include financial asset assessment, foreign currency translation, etc.


	December 31, 2022
	Beginning balance	Lending	Purchases (*1)	Collection	Others (*2)	Ending balance
Shinhan Card Co., Ltd.	2,189,765	300,000	400,000	(300,000)	(21,867)	2,567,898
Shinhan Securities Co., Ltd.	1,013,093	-	-	-	16,118	1,029,211
Shinhan Capital Co., Ltd.	1,064,283	-	-	-	(12,703)	1,051,580
Shinhan Asset Management Co., Ltd. (*3)	38,000	-	-	(38,000)	-	-
Shinhan Savings Bank	200,000	-	-	(50,000)	-	150,000
Shinhan DS	24,000	20,000	-	(24,000)	-	20,000
Shinhan Venture Investment Co., Ltd.	16,000	180,000	-	(156,000)	-	40,000
	4,545,141	500,000	400,000	(568,000)	(18,452)	4,858,689

(*1) It includes an acquisition of hybrid bonds, issued by the subsidiary, for the amount of 190,000 million from Shinhan Securities Co., Ltd., the underwriter.

(*2) Other transactions include financial asset assessment, foreign currency translation, etc.

(*3) It is the lending balance with Shinhan Alternative Investment Management Inc. before the merger.

24. Related party transactions (continued)

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to the Separate Interim Financial Statements

September 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won)

(e) Management Compensation

Compensation for key management for the nine-month periods ended September 30, 2023 and 2022 are as follows:


	September 30, 2023		September 30, 2022
	Three- month	Nine- month	Three-month	Nine- month
Short-term employee benefits	1,695	4,847	1,590	5,672
Severance benefits	40	118	46	139
Share-based payment expenses (*)	835	2,081	22	1,613
	2,570	7,046	1,658	7,424

(*) Expenses recognized during the vesting period under the agreement on share-based payments.

(f) Shinhan Securities Co., Ltd., a subsidiary, acquired debt securities and hybrid bonds of 360 billion and 358 billion issued by the Company for the nine-month periods ended September 30, 2023 and 2022, respectively.

(g) As of September 30, 2023, 4 billion is the agreed limit for credit card use that is provided by Shinhan Card Co., Ltd., a subsidiary of the Company.

25. Events after the reporting period

(a) Quarterly dividend resolution

The Company decided to pay a quarterly dividend of 525 per share for common stock based on the resolution of the board of directors on October 25, 2023. The total amount of dividends is 270,636 million, and the dividend base date is September 30, 2023.

(b) Treasury stock acquisition and retirement

To enhance the shareholders’ value, the Company made a decision on the acquisition and retirement of treasury stock amounted to 100 billion based on the resolution of the board of directors on October 25, 2023.

26. Uncertainty due to changes in domestic and global economic conditions

The rapid spread of the COVID-19 is negatively affecting the global economy. The Company uses forward-looking information to estimate expected credit losses in accordance with K-IFRS No.1109 ‘Financial Instruments’, and there have been significant changes in forward-looking information due to the spread of the COVID-19 virus. The estimated probability of default and the estimated loss given default are re-estimated using changed forward-looking information on GDP growth rate, private consumption index growth rate, etc., which are major variables for calculating the default rate. The Company will continue to monitor the domestic and global economic uncertainty and the impact of the COVID-19 on the economy.