SFG Consolidated FY23
SFG Consolidated FY23
AND SUBSIDIARIES
Page
ICFR Operating Status Report for Consolidation Purposes by CEO and IAM 321
152, Teheran-ro, Gangnam-gu, Seoul 06236
(Yeoksam-dong, Gangnam Finance Center 27th Floor)
Republic of Korea
Opinion
We have audited the consolidated financial statements of Shinhan Financial Group Co., Ltd. and its
subsidiaries (“the Group”), which comprise the consolidated statement of financial position as of December
31, 2023, the consolidated statements of comprehensive income, changes in equity and cash flows for the
year then ended, and notes, comprising material accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as of December 31, 2023, and its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with Korean
International Financial Reporting Standards (“K-IFRS”).
We have also audited, in accordance with Korean Standards on Auditing (KSAs), the Group’s Internal
Control over Financial Reporting (“ICFR”) as of December 31, 2023 based on the criteria established in
Conceptual Framework for Designing and Operating Internal Control over Financial Reporting issued by
the Operating Committee of Internal Control over Financial Reporting in the Republic of Korea, and our
report dated March 4, 2024 expressed an unmodified opinion on the effectiveness of the Group’s internal
control over financial reporting.
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allowances on an individual basis for individually significant corporate loans which are credit impaired and
for those which have experienced a SICR and demonstrate certain other high risk indicators (for example,
debt restructuring).
The individual assessment involves judgment by the Group in estimating the future cash flows expected
from collateral. The allowance for credit losses for other loans are measured on a collective basis. For these
loans, the Group measures ECL based on its estimates of the Probability of Default (PD), the Loss Given
Default (LGD) and the Exposure at Default (EAD) as well as the impact of Forward-Looking Information
(FLI). When measuring allowance for credit losses, PD estimated considering various factors such as
collateral, product and borrower type, credit rating, loan size, recovering period, etc. and LGD per recovery
type are applied. For corporate loans measured on a collective basis, one of the relevant inputs for
determining PD is the internal credit risk rating of the borrower. The internal credit risk rating of the
borrower is defined by the Group using quantitative and qualitative factors. The evaluation of the qualitative
factors involves a high level of judgment by the Group.
We identified the following risks in accordance with the assessment of the allowance for credit losses for
loans as a key audit matter, considering likelihood of error, management judgement, and risk of material
misstatement;
Risks that (i) the analysis of the qualitative factors in determining the internal credit risk ratings
of the corporate loans to be collectively assessed for ELC is inappropriate; (ii) the calculation of
12 month and lifetime PD, the calculation of LGD, and the evaluation if FLI incorporated in the
measurement of collective ECL is inappropriate due to fraud or error
The following are the primary audit procedures we performed to address this key audit matter.
We evaluated the design and tested the operating effectiveness of certain internal controls related
to: (i) the validation of the models used to determine the inputs to the collective ECL calculation
and the impact of FLI; (ii) the assessment of qualitative factors in the process of determining the
internal credit risk rating of the loans; (iii) the completeness and accuracy of quantitative data used
in the credit risk ratings.
We involved credit risk professionals with specialized skills, industry knowledge and relevant
experience who assisted in: (i) evaluating the methodology and key judgments used in determining
the PD and LGD parameters; (ii) evaluating how FLI was incorporated in the collective ECL
model; and (iii) recalculating forward-looking PD and LGD on a sample basis.
We evaluated on a sample basis whether, for the corporate loans with ECL measured on a
collective basis, Group policy was applied in the internal credit risk rating process.
(2) Internally measured fair value of level 3 derivatives, and level 3 derivative-linked securities
As discussed in Notes 5.(e) to the consolidated financial statements, the Group classifies financial
instruments measured at fair value using valuation techniques where one or more significant inputs are not
based on observable market data as level 3 in the fair value hierarchy.
Those financial instruments measured at fair value classified as level 3 include derivatives and derivative-
linked securities both held and issued by Shinhan Securities Co., Ltd. (a subsidiary of the Group), of which
fair value is measured by the internally developed valuation models. The fair value of such derivative assets
and liabilities as of December 31, 2023 was KRW 629,223 million and KRW 785,312 million, respectively.
Also, the fair value of such derivative-linked securities held (presented as ‘financial assets at fair value
through profit or loss – debt securities’) and issued (presented as ‘financial liabilities designated at fair
value through profit or loss’) as of December 31, 2023 was KRW 66,866 million and KRW 6,725,252
million, respectively. In order to measure the fair value of these financial instruments, the Group uses
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valuation models such as discounted cash flow models and option models. These models use various inputs
and assumptions, depending on the nature of the financial instruments.
We identified the following risk in accordance with the measurement of fair value of the derivatives and
derivative-linked securities as a key audit matter considering the level of judgement;
Risk that the models’ significant inputs which are not directly observable in financial markets and
related assumptions (such as volatility of underlying assets, correlations, regression coefficients,
discount rates, etc.) are inappropriate
The following are the primary audit procedures we performed to address this key audit matter.
We evaluated the design and tested the operating effectiveness of certain internal controls related
to the measurement of fair value of the derivatives and derivative-linked securities. This included
controls related to the development and application of the significant unobservable inputs and
assumptions used in the measurement of fair values.
We involved valuation professionals with specialized skills and knowledge, who assisted in (i)
evaluating unobservable inputs on a selection of the derivatives and derivative-linked securities;
and (ii) developing unobservable inputs independently for a selection of the derivatives and
derivative-linked securities and comparing the resulting fair value estimates to the Group’s fair
value measurements.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with K-IFRS, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
The engagement partner on the audit resulting in this independent auditors’ report is Min-Seon Chae.
This report is effective as of March 4, 2024, the audit report date. Certain subsequent events or
circumstances, which may occur between the audit report date and the time of reading this report, could
have a material impact on the accompanying consolidated financial statements and notes thereto.
Accordingly, the readers of the audit report should understand that the above audit report has not been
updated to reflect the impact of such subsequent events or circumstances, if any.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Financial Position
As of December 31, 2023, December 31, 2022 and January 1, 2022
Assets
Cash and due from banks at
amortized cost 5, 9, 13, 20 W 34,629,251 30,050,840 29,049,341
Financial assets at fair value
through profit or loss 5, 10, 20 71,216,564 61,508,281 68,161,348
Derivative assets 5, 11 4,711,421 6,460,652 3,800,158
Securities at fair value through
other comprehensive income 5, 12, 20 90,311,979 85,469,161 90,893,467
Securities at amortized cost 5, 12, 20 35,686,487 33,371,198 26,164,942
Loans at amortized cost 5, 13, 20 411,739,562 407,898,972 384,810,774
Property and equipment, net 14, 19, 20 3,972,304 4,011,097 4,046,164
Intangible assets 15 6,217,946 5,807,836 5,644,782
Investments in associates 16 2,692,031 2,904,474 2,913,745
Current tax receivable 30,590 26,307 15,159
Deferred tax assets 44 153,719 915,369 131,257
Investment property 17 257,806 363,108 675,391
Net defined benefit assets 26 114,378 456,838 33,429
Insurance contract assets 28 10,654 - -
Reinsurance contract assets 28 88,353 88,772 -
Other assets 5, 13, 18 29,925,844 25,071,114 25,480,156
Assets held for sale 36,444 29,211 44,409
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Financial Position (Continued)
As of December 31, 2023, December 31, 2022 and January 1, 2022
Equity 32
Capital stock 2,969,641 2,969,641 2,969,641
Hybrid bonds 4,001,731 4,196,968 3,334,531
Capital surplus 12,094,968 12,095,043 12,095,043
Capital adjustments (658,664) (582,859) (664,429)
Accumulated other
comprehensive loss (1,074,453) (1,910,750) (905,223)
Retained earnings 36,387,314 33,963,799 31,139,115
Total equity attributable to
equity holders of
Shinhan Financial Group Co.,
Ltd. 53,720,537 50,731,842 47,968,678
Non-controlling interests 2,601,328 2,691,716 2,247,272
Total equity 56,321,865 53,423,558 50,215,950
Since K-IFRS 1117 “Insurance contracts” was first applied from January 1, 2023, the Group restated the
consolidated statements of financial position as of December 31, 2022 and January 1, 2022 in accordance with K-
IFRS 1001 “Financial statement presentation”. See accompanying notes to the consolidated financial statements.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2023 and 2022
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Continued)
For the years ended December 31, 2023 and 2022
(In millions of won, except earnings per share data) Note 2023 2022
Since K-IFRS 1117 “Insurance contracts” was first applied from January 1, 2023, the Group restated the
consolidated statements of comprehensive income for the year ended December 31, 2022 in accordance with K-IFRS
1001 “Financial statement presentation”. See accompanying notes to the consolidated financial statements.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2022
(In millions of won) Equity attributable to equity holders of Shinhan Financial Group Co., Ltd.
Accumulated
other compre- Non-
Capital Hybrid Capital Capital hensive income Retained controlling
stock bonds surplus adjustments (loss) earnings Sub-total interests Total
Balance at January 1, 2022 W 2,969,641 3,334,531 12,095,043 (664,429) (984,936) 30,541,300 47,291,150 2,247,272 49,538,422
Adjustment on initial application of K-IFRS 1117 (Note 52) - - - - 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 47,968,678 2,247,272 50,215,950
Profit for the year - - - - - 4,665,643 4,665,643 89,871 4,755,514
Other comprehensive income (loss), net of income tax:
Loss on valuation and disposal of securities at fair value
through other comprehensive income - - - - (5,918,084) - (5,918,084) (3,586) (5,921,670)
Equity in other comprehensive loss of associates - - - - (15,763) - (15,763) - (15,763)
Foreign currency translation adjustments for foreign
operations - - - - 12,936 - 12,936 1,796 14,732
Net change in unrealized fair value of cash flow hedges - - - - (70,264) - (70,264) - (70,264)
Net finance income on insurance contract assets (liabilities) - - - - 4,705,903 - 4,705,903 - 4,705,903
Net finance income on reinsurance contract assets
(liabilities) - - - - 34,045 - 34,045 - 34,045
Remeasurements of the net defined benefit liabilities
(assets) - - - - 251,131 - 251,131 860 251,991
Changes in own credit risk on financial liabilities
designated at fair value through profit or loss - - - - (4,749) - (4,749) - (4,749)
Total other comprehensive loss - - - - (1,004,845) - (1,004,845) (930) (1,005,775)
Total comprehensive income (loss) - - - - (1,004,845) 4,665,643 3,660,798 88,941 3,749,739
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity (Continued)
For the years ended December 31, 2023
(In millions of won) Equity attributable to equity holders of Shinhan Financial Group Co., Ltd.
Accumulated
other compre- Non-
Capital Hybrid Capital Capital hensive income Retained controlling
stock bonds surplus adjustments (loss) earnings Sub-total interests Total
Balance at January 1, 2023 W 2,969,641 4,196,968 12,095,043 (582,859) (1,910,750) 33,963,799 50,731,842 2,691,716 53,423,558
Profit for the year - - - - - 4,368,035 4,368,035 109,965 4,478,000
Other comprehensive income (loss), net of income tax:
Loss on valuation and disposal of securities at fair value
through other comprehensive income - - - - 3,163,334 - 3,163,334 4,328 3,167,662
Equity in other comprehensive loss of associates - - - - 7,156 - 7,156 - 7,156
Foreign currency translation adjustments for foreign
operations - - - - (6,234) - (6,234) (11) (6,245)
Net change in unrealized fair value of cash flow hedges - - - - 61,280 - 61,280 - 61,280
Net finance loss on insurance contract assets (liabilities) - - - - (2,172,458) - (2,172,458) - (2,172,458)
Net finance loss on reinsurance contract assets (liabilities) - - - - (20,772) - (20,772) - (20,772)
Remeasurements of the net defined benefit liabilities
(assets) - - - - (200,335) - (200,335) (522) (200,857)
Changes in own credit risk on financial liabilities
designated at fair value through profit or loss - - - - 8,623 - 8,623 - 8,623
Total other comprehensive income - - - - 840,594 - 840,594 3,795 844,389
Total comprehensive income (loss) - - - - 840,594 4,368,035 5,208,629 113,760 5,322,389
Since K-IFRS 1117 “Insurance contracts” was first applied from January 1, 2023, the Group restated the consolidated statements of changes in equity for the year ended December
31, 2022 in accordance with K-IFRS 1001 “Financial statement presentation”. See accompanying notes to the consolidated financial statements.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2023 and 2022
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 2023 and 2022
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 2023 and 2022
Effect of exchange rate changes on cash and cash equivalents held (15,361) (58,955)
Increase (decrease) in cash and cash equivalents 6,002,938 (171,727)
Since K-IFRS 1117 “Insurance contracts” was first applied from January 1, 2023, the Group restated the consolidated
statements of cash flows for the year ended December 31, 2022 and January 1, 2022 in accordance with K-IFRS 1001
“Financial statement presentation”. See accompanying notes to the consolidated financial statements.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 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:
Shinhan Financial Group Co., Ltd. (the “Shinhan Financial Group” or the “Company”), the controlling company, is
incorporated on September 1, 2001 for the main purposes of controlling, managing and funding Shinhan Bank,
Shinhan Securities Co., Ltd., Shinhan Capital Co., Ltd. and Shinhan BNP Asset Management Co., Ltd. by way of
share transfers. The total capital stock amounted to W1,461,721 million. Also, Shinhan Financial Group’s shares
have been listed on the Korea Exchange since September 10, 2001 and Shinhan Financial Group’s American
Depositary Shares have been registered with the Securities and Exchange Commission (SEC) and listed on the New
York Stock Exchange since September 16, 2003.
(b) Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of December 31, 2023 and
2022 are as follows:
Date of Ownership (%)
financial December December
Investor Investee (*1) Location information 31, 2023 31, 2022
Shinhan Financial
Group Co., Ltd. Shinhan Bank Korea December 31 100.0 100.0
〃 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. (*3) 〃 〃 100.0 100.0
〃 Shinhan Venture Investment Co., Ltd. 〃 〃 100.0 100.0
Shinhan EZ General Insurance Co.,
〃 〃 〃
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
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(b) Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of December 31, 2023 and
2022 are as follows (continued):
(*1) Subsidiaries such as trust, beneficiary certificate, special purpose company, partnerships and private equity fund
which are not actually operating their own business are excluded.
(*2) Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners on April 3, 2023.
(*3) The major assets were sold to Shinhan Bank, a subsidiary company, in January 2024, and the liquidation process
is in progress.
(*4) Shinhan CubeOn Co., Ltd. has changed its name to Shinhan LifeCare Co., Ltd. on December 29, 2023.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Consolidated
Category structured entities Description
Trust Shinhan Bank (including A trust is consolidated when the Group as a trustee is exposed to
development trust) and significant variable returns, if principle or interest amounts of the
17 others entrusted properties falls below guaranteed amount, the Group
should compensate it, and the Group has the ability to affect those
returns.
Asset-Backed Tiger Eyes 3 Co., Ltd. An entity for asset backed securitization is consolidated when the
Securitization and 224 others Group has sole decision-making authority to dispose assets or
change the conditions of the assets, and the Group is substantially
exposed to, or has rights to significant variable returns by
providing credit enhancement and purchases of subordinated
securities.
Structured SHPE Holdings One Co., An entity established for structured financing relating to real
Financing Ltd. estate, shipping, or mergers and acquisitions is consolidated,
when the Group has the greatest credit to the entity, has sole
decision-making authority of these Entities due to the entities
default, and is substantially exposed to, or has rights to significant
variable returns.
Investment Fund One Shinhan Future's An investment fund is consolidated, when the Group manages or
Fund and 165 others invests assets of the investment funds on behalf of other investors
as a collective investor or a business executive, or has the ability
to dismiss the manager of the investment funds, and is
substantially exposed to, or has rights to, the significant variable
returns.
(*) The Group provides ABCP purchase agreements and others of W8,616,163 million for the purpose of credit
enhancement of structured companies.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
2. Basis of preparation
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 financial statements have been condensed, restructured and
translated into English from the Korean language financial statements.
Certain information attached to the Korean language financial statements, but not required for a fair presentation of
the Group's financial position, financial performance or cash flows, is not presented in the accompanying consolidated
financial statements.
The consolidated financial statements of the Group were authorized for issue by the Board of Directors on February
8, 2024. and the consolidated financial statements will be submitted for approval to the stockholders’ meeting to be
held on March 26, 2024.
The consolidated financial statements have been prepared on the historical cost basis, except for the following material
items in the consolidated statement of financial position:
The respective financial statements of the Group entities are prepared in the functional currency of the economic
environment in which each individual company of group entities operate. These consolidated financial statements are
presented and reported in Korean won, which is the controlling company’s functional and presentation currency.
The preparation of the consolidated 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, income and expenses. If the estimates and assumptions based on management's best judgment as of
December 31, 2023 are different from the actual environment, these estimates and actual results may be different.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in any future periods affected.
Information about critical judgments in applying accounting policies that have a significant effect on the amounts
recognized in the consolidated financial statements and information about assumptions and estimation uncertainties
that might have a significant risk of resulting in a material adjustment within the next financial year are described in
Note 4.
In preparing these consolidated financial statements, the significant judgments made by management in applying the
Group’s accounting policies and the key sources of estimation uncertainties are the same as those that applied to the
consolidated financial statements as of and for the year ended December 31, 2022 except as explained below.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The Group has newly applied the following accounting policies upon preparation of the annual consolidated financial
statements from the beginning on January 1, 2023.
The main characteristics of K-IFRS 1117 are recognition of insurance revenue on an accrual basis, measurement of
insurance contract liabilities based on fulfilment cash flows, and presentation of insurance contracts income or
expenses, separately from investment income or expenses.
As a result, insurance liabilities for each group of insurance contracts on the reporting date are measured as an estimate
of future cash flows (reflecting policy loans, cash flows related to options and guarantees, the time value of money,
etc.), risk adjustment and insurance margin.
The contractual service margin represents 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 onerous group
of insurance contracts and recognized in loss immediately. For contracts without direct participation features, the
Group adjusts the contractual service margin for the changes in fulfilment cash flows relating to future service,
measured at the discount rates determined on initial recognition, but does not adjust the contractual service margin for
effects of the time value of money, financial risk, and changes therein.
On the other hand, reinsurance contracts refer to insurance contracts issued by reinsurance companies to compensate
for claims arising from the underlying insurance contracts issued by other insurance companies. A group of
reinsurance contracts also applies a consistent assumption with the group of underlying insurance contracts when
estimating the present value of future cash flows for the group of underlying insurance contracts.
② 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, contractual service 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.
③ 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 thereof related from a group of insurance contracts, is recognized either profit
or loss or other comprehensive income during the period.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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 52.
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 amendments do 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 exercise price that is adjusted depending on the issuer’s share price change is
classified as financial liabilities. The amendments do 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 amendments do not have a significant impact on the consolidated financial
statements.
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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Under the Global Minimum Corporate Tax Act, effective from 2024, the Group may be required to pay additional
taxes on the difference between the effective tax rate and the minimum tax rate of 15% for each unit of jurisdiction in
which each constituent company belongs. The Group believes that it will be subject to the Global Minimum Corporate
Tax Act, but it does not affect current income tax costs as of the end of the reporting period because Korea's global
minimum tax-related tax law will take effect on January 1, 2024. The Group also applies the temporary exception to
deferred tax in K-IFRS No. 1012, which does not recognize deferred tax assets and liabilities related to the Global
Minimum Corporate Tax Act and does not disclose information related to deferred tax.
vi) 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.
21
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Material accounting policies applied by the Group upon the preparation of consolidated financial statements under
K-IFRS are described below, and consolidated financial statements for the year ended December 31, 2023 and
comparative periods were prepared using the same accounting policy, except for changes in accounting policy
described in the Note 2.
The Group has divided the segments based on internal reports reviewed periodically by the top sales decision maker
to make decisions about the resources allocated to the segments and evaluate their performance. There are six
reporting segments as described in Note 8. The reporting segments are operated separately according to the nature
of the goods and services provided and the organizational structure of the Group.
The segment reported to the Chief Executive Officer (“CEO”) includes items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
It is the CEO’s responsibility to evaluate the resources to be distributed to the business and the performance of the
business, and to make strategic decisions.
i) Subsidiaries
If an entity of the Group uses accounting policies other than those adopted in the consolidated financial statements
for the same transactions and events in similar circumstances, appropriate adjustments are made to its financial
statements in preparing the consolidated financial statements.
The Group establishes or invests in various structured entities. Considering the terms and conditions of the
arrangement in which the structured entity was established, the entity is included in the consolidated entities if it is
determined that the Group obtains gains and losses from the operations thereof, and the Group has the ability to direct
the activities of the entity that can most significantly affect these gains and losses. The Group does not recognize any
non-controlling interests as equity in relation to structured entities in the consolidated statements of financial position
since the non-controlling interests in these entities are recognized as liabilities of the Group.
Intra-group balances, transactions, and any unrealized income and expenses arising from intra-group transactions are
eliminated in preparing the consolidated financial statements. Unrealized intra-group losses are recognized as
expense if intra-group losses indicate an impairment that requires recognition in the consolidated financial statements.
Non-controlling interests in a subsidiary are accounted for separately from the parent’s ownership interests in a
subsidiary. Each component of net profit or loss and other comprehensive income is attributed to the owners of the
parent and non-controlling interest holders, even when the non-controlling interests balance is reduced to below zero.
22
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
i) Business combinations
A business combination is accounted for by applying the acquisition method, unless it is a combination involving
entities or businesses under common control.
Each identifiable asset or liability is measured at its acquisition-date fair value except for below:
- Leases are required to be classified based on the contractual terms and other factors
- Only those contingent liabilities assumed in a business combination that are a present obligation and can be
measured reliably are recognized
- Deferred tax assets or liabilities are recognized and measured in accordance with K-IFRS No.1012, ‘Income Taxes’
- Employee benefit arrangements are recognized and measured in accordance with K-IFRS No.1019, ‘Employee
Benefits’
- Compensation assets are recognized and measured on the same basis as the items subject to compensation
- Reacquired rights are measured in accordance with special provisions
- Liabilities or equity instruments related to share-based payment transactions are measured in accordance with the
method in K-IFRS No.1102, ‘Share-based Payment’
- Non-current assets held for sale are measured at fair value less costs to sell in accordance with K-IFRS No.1105,
‘Non-current Assets Held for Sale and Discontinued Operations’
As of the acquisition date, non-controlling interests in the acquired are measured as the non-controlling interests'
proportionate share of the acquirer’s identifiable net assets.
23
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of
the voting power of another entity.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The investment in an associate and a joint venture is initially recognized at cost, and the carrying amount is increased
or decreased to recognize the Group’s share of the profit or loss and changes in the investments of the associate and
the joint venture after the date of acquisition. Intra-group balances and transactions, and any unrealized income and
expenses arising from intra-group transactions, are eliminated the Group's stake in preparing the consolidated
financial statements. Unrealized losses are also being derecognized unless the transaction provides evidence of an
impairment of the transferred assets.
If an associate or a joint venture uses accounting policies different from those of the Group for transactions and
events in similar circumstances, appropriate adjustments are made to its financial statements in applying the equity
method.
When the carrying amount of that interest, including any long-term investments, is reduced to nil, the recognition of
further losses is discontinued except to the extent that the Group has an obligation or has to make payments on behalf
of the investee for further losses.
The Group classifies cash balances, call deposits and highly liquid investment assets with original maturities of three
months or less from the acquisition date that are easily converted into a fixed amount of cash, and are subject to an
insignificant risk of changes in their fair value as cash and cash equivalents.
24
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Financial assets are recognized in the consolidated statement of financial position when the Group becomes a party
to the contract. In addition, a standardized purchase or sale (a purchase or sale of a financial asset under a contract
whose terms require delivery of the asset within the time frame established generally by regulation or convention in
the market concerned) is recognized on the trade date.
Financial assets can be irrevocably designated as measured at FVTPL despite of classification standards stated below,
if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise from measuring
assets or liabilities or recognizing the gains or losses on them on different bases. However, once the financial assets
are designated at FVTPL, it is irrevocable.
For the equity instruments that are not held for short-term trading, at initial recognition, the Group may make an
irrevocable election to present subsequent changes in fair value in other comprehensive income. Equity instruments
that are not classified as financial assets at Fair Value through Other Comprehensive Income (“FVOCI”) are classified
as financial assets at FVTPL.
The Group subsequently measures all equity investments at fair value. Valuation gains or losses of the equity
instruments that are classified as financial assets at FVOCI previously recognized as other comprehensive income is
not reclassified as profit or loss on recognition. The Group recognizes dividends in profit or loss when the Group’s
right to receive payments of the dividend is established.
Valuation gains or losses due to changes in fair value of the financial assets at FVTPL are recognized in the
consolidated statement of comprehensive income gains or losses on financial assets at FVTPL. Impairment loss
(reversal) on equity instruments at FVOCI is not recognized separately.
Subsequent measurement of debt instruments depends on the Group’s business model in which the asset is managed
and the contractual cash flow characteristics of the asset. Debt instruments are classified as financial assets at
amortized cost, at FVOCI, or at FVTPL. Debt instruments are reclassified only when the Group’s business model
changes.
Assets that are held within a business model whose objective is to hold assets to collect contractual cash flows where
those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss
on a financial asset measured at amortized cost that is not subject to a hedging relationship is recognized in profit or
loss when the financial asset is derecognized or impaired. Interest income on the effective interest method is included
in the ‘Interest income’ in the consolidated statement of comprehensive income.
25
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Assets that are held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets and, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVOCI. Other than (reversal of) impairment losses, interest income, foreign exchange differences, gains
or losses of the financial assets at FVOCI are recognized as other comprehensive income in equity. On removal,
gains or losses accumulated in other comprehensive income are reclassified to profit or loss. The interest income on
the effective interest method is included in the ‘Interest income’ in the consolidated statement of comprehensive
income. Foreign exchange differences and impairment losses are included in the ‘Net foreign currency transaction
gain’ and ‘Provision for credit losses allowance’ in the consolidated statement of comprehensive income, respectively.
Debt securities other than financial assets at amortized costs or FVOCI are classified at FVTPL. Unless hedge
accounting is applied, gains or losses from financial assets at FVTPL are recognized as profit or loss and are included
in ‘Net gain (loss) on financial assets at fair value through profit or loss’ in the consolidated statement of
comprehensive income.
Financial assets with embedded derivatives are classified regarding the entire hybrid contract, and the embedded
derivatives are not separately recognized. The entire hybrid contract is considered when it is determined whether the
contractual cash flows represent solely payments of principal and interest.
26
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair
value, and changes therein are accounted for as described below.
i) Hedge accounting
The Group holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to
manage interest rate risk and foreign exchange risk. The Group designated derivatives as hedging instruments to
hedge the risk of changes in the fair value of assets, liabilities or firm commitments (a fair value hedge) and foreign
currency risk of highly probable forecasted transactions or firm commitments (a cash flow hedge).
On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s)
and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction. In
addition, this document describes the hedging instrument, hedged item, and the method of evaluating the effect of
the hedging instrument offsetting changes in the fair value or cash flow of the hedged item due to the hedged risk at
the initiation of the hedging relationship and in subsequent periods.
Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit
or loss. The gain or loss from remeasuring the hedging instrument at fair value for a derivative hedging instrument
and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss in the same line
item of the separate statement of comprehensive income.
The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or
exercised, or if the hedge no longer meets the criteria. Any adjustment arising from G/L on the hedged item attributable
to the hedged risk is amortized to profit or loss from the date the hedge accounting is discontinued.
When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with
a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective
portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and
presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is
recognized immediately in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised,
or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on
the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the
periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur,
then the balance in other comprehensive income is recognized immediately in profit or loss.
The portion of the change in fair value of a financial instrument designated as a hedging instrument that meets the
requirements for hedge accounting for a net investment in a foreign operation is recognized in other comprehensive
income and the ineffective portion of the hedge is recognized in profit or loss. The portion recognized as other
comprehensive income that is effective as a hedge is recognized in the statement of comprehensive income as a result
of reclassification adjustments in accordance with K-IFRS No. 1021, "Effect of Changes in Foreign Exchange Rates"
at the time of disposing of its overseas operations or disposing of a portion of its overseas operations to profit or loss.
27
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
All derivatives except those designated as hedging instruments and are effective in hedging are measured at fair value.
Changes in the fair value of other derivative financial instrument not designated as a hedging instrument are
recognized immediately in profit or loss.
Any difference between the fair value of over the counter derivatives at initial recognition and the amount that would
be determined at that date using a valuation technique in a situation in which the valuation is dependent on
unobservable parameters is not recognized in profit or loss but is deferred, and the deferred gains and losses on initial
transaction are depreciated on a straight-line basis over the life of the instrument or the remainder is recognized in
profit or loss immediately when the fair value becomes observable.
Except for financial assets measured at fair value through profit or loss, financial assets measured at amortized cost
and financial assets measured at fair value through other comprehensive income are assessed for expected credit
losses at the end of each reporting period and recognized as loss allowance. Financial assets migrate through the
following three stages based on the change in credit risk since initial recognition and allowance for credit loss for
the financial assets are measured at the 12-month expected credit losses (“ECL”) or the lifetime ECL, depending on
the stage.
The Group, meanwhile, only recognizes the cumulative changes in lifetime expected credit losses since the initial
recognition as an allowance for credit loss for purchased or originated credit-impaired financial assets.
The total period refers to the expected life span of the financial instrument up to the contract expiration date.
28
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The Group reflects forward-looking information when measuring expected credit losses. Assuming that the
measurement factor of expected credit losses has a certain correlation with economic fluctuations, the expected credit
losses are calculated by reflecting forward-looking information through modeling between macroeconomic variables
and measurement factors.
The expected credit loss of amortized financial assets is measured as the difference between the present value of the
cash flows expected to be received and the cash flow to be received in accordance with loan agreements. For this
purpose, the Group calculates expected cash flows for individually significant financial assets. For financial assets
that are not individually significant, the Group collectively measures the expected credit losses thereof with similar
credit risk characteristics.
Expected credit losses are deducted from financial assets at amortized cost using ACL, which are written off along
with the assets if the assets are not recoverable. The allowance for credit loss is increased when the written-off loan
receivables are subsequently collected, and the changes in the allowance for credit loss are recognized in profit or loss.
The calculation of expected credit loss of financial assets at FVOCI is the same as for financial assets measured at
amortized cost, but changes in allowance for credit loss are recognized in other comprehensive income. In the case of
disposal and redemption of financial assets at FVOCI, the allowance for credit loss is reclassified from other
comprehensive income to profit or loss and recognized in profit or loss.
Land is not depreciated. Other property and equipment are depreciated on a straight-line basis over the estimated
useful lives for the acquisition cost after deduction of the residual value. The estimated useful lives for the current and
comparative periods are as follows:
29
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization
and accumulated impairment losses.
Amortization of intangible assets except for goodwill is calculated on a straight-line basis over the estimated useful
lives of intangible assets as shown below, from the date that they are available for use. The residual value of intangible
assets is zero. However, if there are no foreseeable limits to the periods over which certain intangible assets are
expected to be available for use, they are determined to have indefinite useful lives and are not amortized.
An investment property is initially recognized at cost including any directly attributable expenditure. Subsequent to
initial recognition, the asset is measured at cost less accumulated depreciation and accumulated impairment losses, if
any.
The depreciation method and the estimated useful lives for the current and comparative periods are as follows:
30
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(l) Leases
The Group leases various tangible assets, such as real estate and vehicles, and each of the lease contract is negotiated
individually and includes a variety of terms and conditions. There are no other restrictions imposed by the lease
contracts, but the lease assets cannot be provided as collaterals for borrowings.
At the commencement date of the lease, the Group recognizes the right-of-use assets and the lease liabilities. Each
lease payment is allocated to payment for the principal portion of the lease liability and financial costs. The Group
recognizes in profit or loss the amount calculated to produce a constant periodic rate of interest on the lease liability
balance for each period as financial costs. Right-of-use assets are depreciated using a straight-line method from the
commencement date over the lease term.
If internal rate of return from in the lease is readily determined, the lease payments are discounted by the rate; if the
rate is not readily determined, the lessee’s incremental borrowing rate is used.
Lease payments related to short-term leases or low-value assets are recognized as current expenses over the lease term
using the straight-line method. A short-term lease is a lease that has a lease term of 12 months or less, and the low-
value assets lease is a lease of which the underlying asset value is not more than W6 million.
Additional considerations for the Group when accounting for lessees include:
Extension and termination options are included in a number of real estate lease contracts of the Group. In determining
the lease term, management considers all relevant facts and circumstances that create an economic incentive not to
exercise the options. The periods covered by, a) an option to extend the lease if the lessee is reasonably certain to
exercise that option, or b) an option to terminate the lease if the lessee is reasonably certain not to exercise that option,
is included when determining the lease term. The Group reassesses whether the Group is reasonably certain to exercise
the extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a
significant change in circumstances that is within the control of the lessee, and affects whether the lessee is reasonably
certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option
previously included in its determination of the lease term.
31
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The Group leases out to lessee various tangible assets, including vehicles under operating and finance lease contracts,
and each of the lease contract is negotiated individually and includes a variety of terms and conditions. The risk
management method for all rights held by the Group in the underlying assets includes repurchase agreements, residual
value guarantees, etc.
① Finance leases
The Group recognizes them as a receivable at an amount equal to the net investment in the lease, and the difference
from the carrying amount of the leasing asset as of the commencement date is recognized as profit or loss from disposal
of the lease asset. In addition, interest income is recognized by applying the effective interest method for the amount
of the Group's net investment in finance leases. Lease-related direct costs are included in the initial recognition of
financial lease receivables and are accounted for in a way that reduces the revenue for the lease term.
② Operating leases
The Group recognizes the lease payments as income on straight-line basis, and adds the lease initial direct costs
incurred during negotiation and contract phase of the operating lease to the carrying amount of the underlying asset.
In addition, the depreciation policy of operating lease assets is consistent with the Group’s depreciation policy of other
similar assets.
32
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The carrying amounts of the Group’s non-financial assets, other than assets arising from employee benefits, deferred
tax assets and non-current assets held for sale, are reviewed at the end of the reporting period to determine whether
there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of
whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable
amount to their carrying amount.
The Group estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual
recoverable amount of an asset, then the Group estimates the recoverable amount of cash-generating unit (“CGU”).
The recoverable amount of an asset or a CGU is the greater of its value in use and its fair value less costs to sell. The
value in use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset or the CGU for which estimated future cash flows have not been adjusted,
to the estimated future cash flows expected to be generated by the asset or the CGU.
An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount.
Impairment losses are recognized in profit or loss.
Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergies
arising from the goodwill acquired. Any impairment identified at the CGU level will first reduce the carrying amount
of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis.
Impairment losses of goodwill cannot be reversed in the subsequent period. For other assets than goodwill, at the
end of each reporting period, the Group reviews whether there is any indication that the impairment loss for those
assets that was previously recognized no longer exists or has decreased, and reverses the impairment loss only if
there is a change in the estimate used to determine the recoverable amount after the recognition of the impairment
loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss shall not exceed the
carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been
recognised for the asset in prior years.
The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes
a party to the contractual provisions of the financial liability in accordance with the substance of the contractual
arrangement and the definitions of financial liabilities.
Transaction costs on the financial liabilities at FVTPL are recognized in profit or loss as incurred.
Financial liabilities can be irrevocably designated as measured at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise from measuring assets or liabilities or recognizing the
gains and losses on them on different bases, or a group of financial instruments is managed and its performance is
evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. The
amount of change in the fair value of the financial liabilities designated at FVTPL that is attributable to changes in
the credit risk of that liabilities shall be presented in other comprehensive income.
Since initial recognition, financial liabilities at FVTPL are measured at fair value, and changes in the fair value are
recognized as profit or loss.
33
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as
other financial liabilities, and other financial liabilities include deposits, borrowings, debt securities and etc. At the
date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly
attributable to the acquisition. Subsequent to initial recognition, other financial liabilities are measured at amortized
cost using the effective interest method.
The Group derecognizes a financial liability from the consolidated statement of financial position when it is
extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).
The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary
economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of
foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign
currency differences are recognized in other comprehensive income.
i) Hybrid bonds
The Group classifies an issued financial instrument, or its component parts, as a financial liability or an equity
instrument depending on the substance of the contractual arrangement of such financial instrument. Hybrid bonds
where the Group has an unconditional right to avoid delivering cash or another financial asset to settle a contractual
obligation are classified as an equity instrument and presented in equity. Hybrid bonds issued by subsidiaries of the
Group are classified as non-controlling interests according to this classification criteria. In addition, distributions paid
are treated as net income attributable to non-controlling interests in the consolidated statement of comprehensive
income.
The effect of changes in ownership interests in subsidiaries that do not lose control over the equity attributable to
owners of the parent is included in capital adjustments.
34
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the
period in which the employees render the related service. When an employee has rendered service to the Group during
an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be
paid in exchange for that service.
The Group’s net obligation in respect of other long-term employee benefits that are not expected to be settled wholly
before 12 months after the end of the annual reporting period in which the employees render the related service, is the
amount of future benefit that employees have earned in return for their service in the current and prior periods. That
benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in
which they arise.
For the year ended December 31, 2023, defined benefit liabilities related to the defined benefit plan are recognized by
deducting the fair value of external reserve from the present value of the defined benefit plan debt.
Defined benefit liabilities are calculated annually by independent actuaries using the predicted unit credit method. If
the net present value of the defined benefit obligation less the fair value of the plan assets is an asset then the present
value of the economic benefits available to the entity in the form of a refund from the plan or a reduction in future
contributions to the plan.
(r) Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching
the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at
the present value of the expected future cash flows.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
the provision is reversed.
Provisions shall be used only for expenditures for which the provisions are originally recognized.
35
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
A financial guarantee contract is a contract that requires the Group to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or
modified terms of a debt instrument.
Financial guarantee contracts are recognized initially at their fair value, and the initial fair value is amortized over the
life of the financial guarantee contract.
After initial recognition, financial guarantee contracts are measured at the higher of:
- Loss allowance in accordance with K-IFRS No.1109, ‘Financial Instruments’
- The amount initially recognized less, when appropriate, the cumulative amount of income recognized in
accordance with the principles of K-IFRS No.1115, ‘Revenue from Contracts with Customers’
The Group classifies the insurance contract issued as an insurance contract when assuming significant insurance risk
from the policyholder, regardless of its legal form. It is classified as an insurance contract if, based on present value,
there is a potential loss exposure and if, under any commercially plausible scenario, significant additional payments
(determined on a present value basis) would be required to the policyholder. The assessment of assuming significant
insurance risk is performed for each contract at the time of issuance. For reinsurance contracts, they are classified as
insurance contracts when transferring significant insurance risk to the reinsurer. Additionally, contracts with
discretionary participation features are also classified as insurance contracts.
ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)
① Accounting unit
The Group identifies insurance contract portfolios by integrating insurance contracts that are exposed to similar risks
and managed together based on coverage, currency, and interest rate types. The Group divides a portfolio of insurance
contracts issued into the following groups of insurance contracts based on similarity of profitability. However, for
insurance contracts applying the premium allocation approach, it assumes that there is onerous insurance contract (or
net loss contract for reinsurance contracts held) at the initial recognition unless evidence suggests otherwise.
The Group does not include contracts with a difference in issuance dates exceeding one year in the same group of
insurance contracts issued, and it does not reassess the composition of the group subsequently.
36
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)(continued)
The Group shall recognize a group of insurance contracts it issues from the earliest of the following:
- The beginning of the coverage period of the group of contracts;
- The date when the first payment from a policyholder in the group becomes due (If there is no contractual payment
due date, the time the first premium is received is considered that date); and
- For a group of onerous contracts, when the group becomes onerous.
The Group recognizes a group of reinsurance contracts held at the beginning of the coverage period of the group of
insurance contracts held. However, in the case of proportional reinsurance, if the group of underlying contracts is a
group of onerous contract and the group of reinsurance contracts held is concluded at or before the time when the
group of underlying contracts is recognized, the Group recognizes a group of reinsurance contracts held at the earlier
of the beginning of the coverage period of the group of reinsurance contracts held or the recognition time of the group
of underlying insurance contracts which is the onerous contract for the current year. In addition, in the case of
proportional reinsurance, the Group recognizes the group of reinsurance contracts held at the time of initial recognition
of the group of underlying insurance contracts, if the initial recognition time of the group of underlying insurance
contracts is later than the beginning of the coverage period of the group of reinsurance contracts held.
③ Measurement of insurance liabilities (assets) and reinsurance assets (liabilities) under the general model
At the time of initial recognition, the Group measures a group of insurance contracts issued as the sum of fulfillment
cash flows (estimates of future cash flows, adjustments to the time value of money related to financial risks to future
cash flows, and risk adjustments to non-financial risks) and contractual service margin, and subsequently, as the sum
of The liability for remaining coverage or assets (fulfillment cash flow and contractual service margin) and incurred
accident liabilities or assets (fulfillment cash flow). The liability for remaining coverage includes the obligation to
investigate and pay reasonable insurance benefits according to the current insurance contract for insurance events that
have not yet occurred, the obligation to pay amounts related to insurance contract services that have not yet been
provided, the obligation to pay amounts related to insurance contract services that have not yet been provided, and
represents the obligation to pay investment elements and other amounts that have not been transferred to incurred
liability. The liability for incurred claims comprises the obligation to investigate insurance events that have already
occurred and pay reasonable insurance premiums and other incurred insurance costs, the obligation to pay amounts
related to insurance contract services already provided, and obligation to pay investment elements and other amounts
not related to insurance contract services and not included in the liability for remaining coverage.
37
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)(continued)
③ Measurement of insurance liabilities (assets) and reinsurance assets (liabilities) under the general model(continued)
Cash flows within the boundary of the contract include premiums from policyholders, claims and benefits payable to
policyholders (including payments linked to underlying items), insurance claim handling expenses, undivided options
and guarantees-related cash flows, insurance acquisition cash flows directly attributable to the contract or its portfolio,
fixed/variable indirect expenses directly attributable to fulfilling the insurance contract, costs related to investment
activities and the provision of investment return services/investment-related services, insurance policy loans, etc; and
excludes investment income or future insurance-related cash flows, product development expenses, and training
expenses not directly attributable to the insurance contract portfolio.
The substantive obligations to provide insurance contract services (or the substantive right to receive insurance
contract services for a group of reinsurance contracts held) ends when there is the practical ability to reassess the risks
of the particular policyholder or the risks of the portfolio of insurance contracts(the risk transferred to reinsurance
company for a group of reinsurance contracts held), and, as a result, to fully reflect such risks in pricing or settlement;
during the reassessment of portfolio pricing, the risks related to periods after the reassessment date is not considered.
The Group reassesses the boundary of the contract at the end of each reporting period to reflect changes in
circumstances affecting substantive rights and obligations.
The Group identifies and distinguishes the effects of discretionary cash flow variations, which pertain to amounts or
timing of cash flows subject to discretion, and the effects of changes in assumptions related to financial risks on the
recognition, separately. Any impact of changes in discretion on recognition is adjusted in contractual service margin.
The Group considers any adjustment rate applied to the disclosed benchmark rate as discretionary when applying the
disclosed interest rate to payments to policyholders.
38
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)(continued)
③ Measurement of insurance liabilities (assets) and reinsurance assets (liabilities) under the general model(continued)
- Discount rate
The Group measures the time value of money using a discount rate that reflects the cash flow and liquidity
characteristics of insurance contracts while being consistent with current observable market prices and then adjusts
future cash flow estimates. To do this, the Group calculates a risk-free interest rate term structure using the Smith-
Wilson interpolation method, incorporating yields on government bonds with maturities observed in the market up
to the longest term available, along with initial convergence periods and long-term forward interest rates. Liquidity
premiums are then added to determine deterministic scenarios. The liquidity premium is derived by multiplying an
adjustment ratio to the difference between the risk spread of the representative insurance industry portfolio and the
credit risk spread. Additionally, the Group generates 1,000 stochastic scenarios based on this deterministic scenario,
reflecting convergence speed parameters and volatility parameters. Deterministic and stochastic scenarios for foreign
currencies are calculated separately from scenarios for Korean Won, taking into account the characteristics of each
currency.
ⅰ) The amount of fulfillment cash flows expected at initial recognition date for the group of insurance contracts issued.
ⅱ) All cash flows already incurred from contracts within the group at the initial recognition date.
ⅲ) The insurance acquisition cash flows allocated to the group at the initial recognition date.
ⅳ) Other assets or liabilities recognized previously for cash flows associated with the group at the initial recognition
date.
39
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)(continued)
③ Measurement of insurance liabilities (assets) and reinsurance assets (liabilities) under the general model(continued)
In the case of a reinsurance contracts held, the net cost or net gain on purchasing a group of the reinsurance contracts
held is recognized as contractual service margin. However, if the net cost of purchasing reinsurance coverage is
related to costs incurred prior to purchasing a group of reinsurance contracts held, it is recognized in profit or loss.
The Group adjusts the current contractual service margin at the end of the reporting period by adding the following
amounts to the base amount:
ⅰ) Impact of newly added contracts to the current group of insurance contracts issued.
ⅱ) Accrued interest on the carrying amount of the contractual service margin, measured at the discount rate
determined at initial recognition.
ⅲ) Changes in future service-related fulfilment cash flows (excluding recognition and recovery elements of losses).
ⅳ) Effects of currency exchange differences on the contractual service margin.
ⅴ) Amounts recognized in the current period's profit or loss due to the transfer of insurance contract services during
the period.
In a group of onerous contracts, there is no contractual service margin, and the measurement of the group consists
entirely of the fulfilment cash flows. Any portion at the initial recognition date in the group of onerous contract that
is expected to result in a net outflow or exceeds the carrying amount of the contractual service margin subsequently
is considered a loss component of that group and recognized as a loss in the current period. After recognizing the
loss component, the Group systematically allocates subsequent fluctuations in the remaining insurance liability
fulfilment cash flows between the loss component and the liability for remaining coverage, excluding the loss
component, based on established criteria. However, subsequent decreases in cash flows related to future services are
allocated only to the loss component until it is fully exhausted and recognized in the current period. Any excess
beyond the loss component's exhaustion is then recognized as contractual service margin again.
40
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)(continued)
③ Measurement of insurance liabilities (assets) and reinsurance assets (liabilities) under the general model(continued)
In the case of a group of reinsurance contracts held, when a loss component is recognized in the group of the
underlying insurance contracts, the Group calculates the loss recovery component of the group of the reinsurance
contracts held by multiplying the expected recovery ratio for claims under the group of the underlying insurance
contracts by the loss component attributed to those claims. This loss recovery component is then used to adjust assets
for the remaining coverage of the reinsurance group and to adjust the contractual service margin (or directly adjust
the remaining insurance liability if the premium allocation approach is applied) for recognition of the current period's
profit or loss. The loss recovery component is adjusted to reflect fluctuations in the loss component of the group of
the underlying insurance contracts within the range that does not exceed the loss component's carrying amount for
the group of the underlying insurance contracts.
The Group applies the variable fee approach to measure insurance liabilities (assets) for insurance contracts with direct
participation features that meet the following criteria at inception. The Group provides investment-related services at
the commencement of the insurance contract, and the insurance contract has direct participation features. The Group
does not reassess the fulfillment of these criteria unless there is a contract modification. The variable fee approach is
not applied to reinsurance contracts held.
i) the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying
items
ii) the entity expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the
underlying items
iii) the entity expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary
with the change in fair value of the underlying items
In the variable fee approach, it is clear that the obligation to pay an amount equal to the fair value of the underlying
items, deducted by the variable fee, constitutes the liability to the policyholder. The variable fee is the company's
share of the fair value of the underlying items minus fulfillment cash flows, which do not vary depending on the
performance of the underlying items. Fluctuations in the obligation to pay an amount equal to the fair value of the
underlying items are not adjusted in the contractual service margin. However, adjustments are made in the contractual
service margin for the portion of the fair value of the underlying items attributable to the company and the changes
in the fulfilment cash flows not subject to variations based on the performance of the underlying items.
The Group measures the present value of cash flows at the initial recognition date and at the end of the reporting
period using the same general model. The contractual service margin is calculated by adjusting the base amount with
the following amounts.
i) The effect of new contracts added to the current group of insurance contracts issued.
ii) Changes in the portion of the fair value of underlying items attributable to the entity (excluding recognition and
reversal of loss components).
iii) Changes in the fulfilment cash flows related to future services (excluding recognition and reversal of loss
components).
iv) The effect of exchange rate fluctuations on contractual service margins.
v) Amounts recognized in the current period's profit or loss due to the transfer of insurance contract services during
the period.
41
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
ii) Recognition and measurement of insurance liabilities (assets) and reinsurance assets (liabilities)(continued)
⑤ Insurance liabilities (assets) and reinsurance assets (liabilities) measured under the premium allocation approach.
At the inception of a group of insurance contracts issued, if there is a reasonable expectation that the measurement of
liabilities for remaining coverage under premium allocation approach does not differ materially from the one under
the general model, and if the coverage period for all contracts within the group of insurance contracts issued is one
year or less, the insurance liabilities (assets) are measured using the premium allocation approach, which is a
simplified method compared to the general model.
The Group measures the liabilities (assets) for remaining coverage at the initial recognition by deducting from the
cash received as premiums (or reinsurance premiums paid for reinsurance contracts held), the amount of insurance
acquisition cash flows not immediately recognized as expenses (including amounts removed from assets).
Subsequently, it determines the carrying amount by adding or subtracting the following amounts from the initial
amount:
ⅰ) Premiums received during the reporting period. (reinsurance premiums paid for reinsurance contracts held)
ⅱ) Insurance acquisition cash flows not recognized as expenses and amortization of those insurance acquisition cash
flows
ⅲ) Adjustments related to significant financial components
ⅳ) Amount recognized in profit or loss for the reporting period due to providing insurance contract services.
v) Investment components paid (received for reinsurance contracts held) or transferred to the liability for incurred
claims.
The Group does not adjust the carrying amount of the remaining insurance liabilities at the initial recognition date if
the coverage period of each contract within the group of insurance contracts issued does not exceed one year, in order
to reflect the time value of money and the financial risk effect. Additionally, acquisition cash flows are recognized as
expenses when they occur. However, if circumstances indicate that the group of insurance contracts issued incurs
losses, the Group performs impairment tests. If the fulfilment cash flows exceed the carrying amount of the remaining
insurance liabilities, the difference is recognized as a loss in the current period, is also recognized as increase of the
liabilities for remaining coverage.
Unlike the existing accounting practices under K-IFRS 1104, the requirement is not enough to disclose the potential
obligations from participating insurances, which leads to the conflict from ‘objective of financial under ‘conceptual
framework’. Considering the conflict may cause users of financial statements misunderstood, the Group measures the
liability in accordance with the Article 4-1-2 of the Enforcement Rules for Insurance Business Supervision regarding
future potential obligations expected to arise from valuation gains and losses on unrealized assets as of the end of the
reporting period.
42
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
① Recognition of insurance revenue in general model and variable fee approach model
Insurance revenue is measured as the amount expected to be received in exchange for providing insurance contract
services for a group of insurance contracts issued. It consists of the sum of changes in the liabilities for remaining
coverage as following and insurance acquisition cash flows:
ⅰ) Insurance service expenses incurred during the period, measured at the amount estimated at the inception date
(excluding transaction-related taxes collected on behalf of third parties, allocated amounts to loss components,
insurance acquisition costs, investment components repaid to policyholders even if an insured event does not occur,
and the executed loan from insurance contracts).
ⅱ) Changes in the risk adjustment for non-financial risks (excluding allocated amounts to loss components and
changes related to future services).
ⅲ) Contractual service margin recognized in the current period as profit or loss (contractual service margin allocated
to current coverage units among all coverage units calculated considering the quantity of benefits payments and the
expected duration for coverage within the group of insurance contracts issued, and the frequency and severity of
occurrence of insured events.
ⅳ) Other amounts such as experience adjustments on premiums collected for current or past services.
The Group determines insurance revenue related to insurance acquisition cash flows by allocating the portion of the
premiums that related to recovering those cash flows to each reporting period in a systematic way on the basis of the
passage of time; also, recognizes the same amount as insurance service expenses.
Under the premium allocation approach, insurance revenue is recognized by allocating the expected premium income
(excluding investment components) for services provided over each period on the basis of the passage of time.
However, if the expected pattern of release of risk during the coverage period differs significantly from the passage
of time, the expected premium income is calculated on the basis of expected timing of incurred insurance service
expenses.
The insurance service expenses incurred as a result of issuing the group of insurance contracts issued consist of the
following.
ⅰ) Increase in the liabilities for incurred claims and changes in the fulfilment cash flows related to premiums and
expenses (excluding repayment of investment components).
ⅱ) Amortization of insurance acquisition cash flows (the same amount is recognized as insurance revenue and
insurance service expenses).
ⅲ) Changes in loss components recognized for the first time in onerous groups of contracts and loss components
related to future services.
43
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
④ Recognition of reinsurance revenue and reinsurance service expenses for the group of reinsurance contracts held.
The revenue and expenses arising from the group of reinsurance contracts held is recognized by adopting the method
of recognizing insurance service expenses and insurance revenue of the group of underlying insurance contracts,
with adjustments made to reflect the characteristics of reinsurance contracts held (revenue being the amount
recovered from reinsurers and expenses being the allocated portion of premiums paid to reinsurers).
The Group derecognises the original contract and recognizes the modified contract as a new contract when the
insurance contract terms are changed and specific criteria are met. If the contract modification does not meet such
criteria, the effect of the contract modification is accounted for as changes in estimated fulfilment cash flows. There
were no instances during the current and prior periods where the original contract was removed and the modified
contract was recognized as a new contract. When an insurance contract is extinguished (due to expiration, fulfilment,
or cancellation of obligations stated in the insurance contract), the Group removes the insurance contract, adjusts the
estimated fulfilment cash flows and contractual service margin related to the removed contract within the group of
insurance contracts issued, and reflects the removed contract in the number of coverage units of the group of
insurance contracts issued.
ⅴ) Change in accounting treatment of accounting estimates measured in the interim financial statements
The Group has adopted an accounting policy of not changing the accounting treatment of accounting estimates
measured in interim financial statements when preparing subsequent interim financial statements and annual
financial statements.
44
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
ⅵ) Presentation
The Group separately presents the book value of insurance contract portfolio, which is an asset, the book value of
the insurance contract portfolio, which is a liability, the reinsurance contract portfolio held, which is an asset, and
the reinsurance contract portfolio held, which is a liability, respectively, in the consolidated statement of financial
position. Furthermore, it distinguishes between insurance revenue and reinsurance service expenses, as well as
insurance service expenses and reinsurance revenue, without offsetting them against each other in the statement of
comprehensive income.
The Group includes the time value of money and the effects of financial risks, as well as their fluctuations, in
insurance finance income (expenses). The Group has chosen an accounting policy to differentiate between insurance
finance income (expenses) for the period as either recognized in the current income or in other comprehensive income.
For insurance groups where changes in assumptions related to financial risks significantly impact policyholder
benefits, the effective interest rate method is applied. For other insurance groups, the effective interest rate
determined at initial recognition is used to calculate insurance finance income (expenses) recognized in the current
period. In cases where the variable fee approach is applied to insurance groups holding underlying items, the amount
recognized as insurance finance income (expenses) in the current period is determined to eliminate accounting
mismatches with the underlying items and recognized in the current income.
Under K-IFRS 1117, insurance companies are required to identify, recognize, and measure the group of insurance
contracts issued (using the retrospective approach) as if they had always applied K-IFRS 1117 before the transition
date. However, if this method is impractical, they may choose to apply the modified retrospective approach or the
fair value approach. However, for the group of insurance contracts issued with certain direct participation features,
even if they meet the criteria for applying the retrospective approach, the fair value approach may be applied.
The Group has applied the modified retrospective approach to the group of insurance contracts issued within three
years prior to the transition date (January 1, 2022, the beginning of the annual reporting period preceding the initial
application date of K-IFRS 1117 'Insurance Contracts'), covering contracts issued from 2019 to 2021, as well as to
the group of insurance contracts acquired through business combinations (date of business combination: January 1,
2019) applying the general model. For other group of insurance contracts issued and reinsurance contracts held, the
fair value approach has been adopted. Additionally, the Group adjusted the existing carrying amounts based on
historical cost to the current fulfilment value assessment.
The modified retrospective approach aims to achieve results very close to those of fully retrospective application,
utilizing reasonable and supportable information without excessive costs or efforts. The fair value approach involves
evaluating the group of insurance contracts issued using fair value measurements, as per K-IFRS 1113 ‘Fair Value
Measurement’. When applying the fair value approach, items such as contractual service margins for remaining
coverage are determined based on the difference between the fair value of the group of insurance contracts issued at
the transition date and the fulfilment cash flows.
45
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The Group’s revenues are recognized using five-step revenue recognition model as follows:
① ‘Identifying the contract’ → ② ‘Identifying performance obligations’ → ③ ‘Determining the transaction price’ →
④ ‘Allocating the transaction price to performance obligations’ → ⑤ ‘Recognizing the revenue by satisfying
performance obligations’.
Interest income and expense are recognized in profit or loss using the effective interest method.
The recognition of revenue for financial service fees depends on the purposes for which the fees are assessed and the
basis of accounting for any associated financial instrument.
① Fees that are an integral part of the effective interest rate of a financial instrument
Such fees are generally treated as an adjustment to the effective interest rate. Such fees may include compensation for
activities such as evaluating the borrower’s financial condition, evaluating and recording guarantees, collateral and
other security arrangements, preparing and processing documents, closing the transaction and the origination fees
received on issuing financial liabilities. However, when the financial instrument is measured at fair value with the
change in fair value recognized in profit or loss, the fees are recognized as revenue when the instrument is initially
recognized.
Fees and commission income, including investment management fees, sales commission, and account servicing fees,
are recognized as the related services are provided.
The fees that are earned on the execution of a significant act including commission on the allotment of shares or other
securities to a client, placement fee for arranging a loan between a borrower and an investor and sales commission,
are recognized as revenue when the significant act has been completed.
Dividend income is recognized when the shareholder’s right to receive payment is established. Dividend income is
categorized on the classification of equity instruments.
46
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The fair value of the consideration received or receivable in exchange for the initial transaction is allocated to the
reward points ("points") and the remainder of the fee income. The Group provides compensation in various forms
such as payment discounts and free gifts. The consideration to be allocated to the points is estimated based on the fair
value of the monetary benefits to be provided in consideration of the expected recovery rate of points awarded in
accordance with the customer loyalty program and the expected time of recovery. The consideration allocated to the
points is recognized as a consideration to be paid to the customer and deducted from Fees and commission income.
The Group applies a consolidated tax method based on a consolidated tax base and a domestic corporation (hereinafter
referred to as the "Consolidated Entity Corporation ") that is fully controlled by the consolidated parent company and
the consolidated tax base.
The Group evaluates the feasibility of temporary differences, taking into account the future taxable income of
individual companies and consolidated groups, respectively. The change in deferred tax assets (liabilities) was
recognized as expense (income), except for the amount associated with items directly added to the equity account.
For additional temporary differences in subsidiaries, associates, and joint venture investment interests, the Group
may control the timing of the disappearance of temporary differences. All deferred tax liabilities are recognised
except in cases where temporary differences are unlikely to dissipate in the foreseeable future. Deferred tax assets
arising from deductible temporary differences are likely to be extinguished in the foreseeable future. In addition, it
is recognised when taxable income is likely to be used for temporary differences.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period. The carrying amount of
deferred tax assets is reduced when it is no longer likely that sufficient taxable income will be generated to use
benefits from deferred tax assets.
Tax uncertainties arise from a claim of reassessment or refund of tax that the Group made, or tax investigation etc.,
due to complexity of transactions or the differences between the Group’s tax policy and authority’s interpretation. In
accordance with K-IFRS 2123, the Group recognizes tax assets when anticipating tax refund on the tax paid due to
tax authorities imposing, and tax liabilities when anticipating tax payment due to tax investigations, etc. In addition,
the amount expected to be paid as a result of the tax investigation is recognized as the tax liability.
47
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The Group accounts for trust accounts separately from its bank accounts under the Financial Investment Services
and Capital Markets Act No. 114 and thus the trust accounts are not included in the accompanying consolidated
financial statements. In this regard, the funds lent to the trust account are counted as trust account loans and loans
borrowed from the trust account as other accounting accounts (non-payment of the trust account). In accordance with
the Financial Investment Business Regulations, trust remuneration is acquired in connection with the operation,
management, and disposal of trust property, and it is counted as the operating profit of trust business.
(y) New standards and amendments not yet adopted by the Group
The following new accounting standards and amendments have been published that are not mandatory for annual
periods beginning after January 1, 2023, and have not been early adopted by the Group. The Group did not early
adopt the following new standards and amendments when preparing consolidated financial statements.
i) K-IFRS No. 1001 ‘Presentation of Financial Statements’ amended - Classification of Liabilities as Current or
Non-current and Borrowing Covenants for Non-current Liabilities
These amendments, issued in 2020 and 2022, clarify the requirements for the classification of liabilities as current or
non-current and require disclosure of information about non-current liabilities that have future borrowing covenants
with which they must comply. These amendments are scheduled to take effect from the first fiscal year beginning
after January 1, 2024, and the Group does not expect these amendments to have a significant impact on the
consolidated financial statements.
ii) K-IFRS No. 1007 ‘Cash Flow Statement’ and K-IFRS No. 1107 ‘Financial Instruments: Disclosures’ Supplier
Finance Agreement
These amendments require disclosure of notes on supplier finance arrangements to help users of consolidated financial
statements understand the impact of supplier finance arrangements on the entity’s debt, cash flow and degree of
exposure to liquidity risk. These amendments will be applied from fiscal years beginning on or after January 1, 2024,
and the Group does not expect this amendment to have a significant impact on the consolidated financial statements.
iii) The following new and amended standards are not expected to have a significant impact on the consolidated entity.
- Lease liabilities arising from sale and leaseback transactions (K-IFRS No. 1116 ‘Lease’)
- Crypto assets disclosure (K-IFRS No. 1001 ‘Financial Statements Presentation’)
48
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The preparation of financial statements requires the Group to make estimates and assumptions concerning the future.
Management also needs to exercise judgment in applying the Group’s accounting policies. Estimates and
assumptions are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting
estimates will, by definition, seldom equal the related actual results, it can contain a significant risk of causing a
material adjustment. The estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amount of assets and liabilities within the next financial year are discussed below.
The Group reviews the goodwill annually in accordance with the accounting policy in Note 3. The recoverable
amount of the cash-generating unit (group) is determined based on the value-in-use calculation. These calculations
are based on estimates.
The Group is subject to tax laws from various countries. In the normal course of business, there are various types of
transactions and different accounting methods that may add uncertainties to the decision of the final income taxes.
The Group has recognized current and deferred taxes that reflect tax consequences based on the best estimates in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and
liabilities. However, actual income taxes in the future may not be identical to the recognized deferred tax assets and
liabilities, and this difference can affect current and deferred tax at the period when the final tax effect is determined.
The fair values of financial instruments (e.g. over-the-counter derivatives) which are not actively traded in the market
are determined by using valuation techniques. The Group determines valuation techniques and assumptions based on
significant market conditions at the end of each reporting period. Diverse valuation techniques are used to determine
the fair value of financial instruments, from generic valuation techniques to internally developed valuation models
that incorporate various types of assumptions and variables.
(d) Allowance for credit loss, guarantees and unused loan commitments
The Group determines and recognizes allowances for losses on debt securities, loans and other receivables measured
at amortized cost or FVOCI, and recognizes provisions for guarantees and unused loan commitments through
impairment testing. The accuracy of allowances and provisions for credit losses are determined by the estimation of
expected cash flows for individually assessed allowances, and methodology and assumptions used for collectively
assessed allowances and provisions for groups of loans, guarantees and unused loan commitments.
(e) Insurance contract assets (liabilities) and reinsurance contract assets (liabilities)
The Group calculates the present value of the future cash flows of the remaining benefit liabilities and incurred claims
liabilities for measurement purposes. This involves estimating the neutral present value of future cash flows,
considering the time value of money, adjusting for financial risks associated with future cash flows, and making risk
adjustments for non-financial risks. The measurement of the present value of these cash flows is determined by
estimating relevant market variables, assessing uncertainties regarding the amounts and timing of future cash flows,
considering actuarial and economic assumptions, and other risks.
The Group calculates the profit earned during the period from the provision of insurance contract services based on
the number of insurance units of the group of insurance contracts issued. The number of insurance units of the group
of insurance contracts issued are determined by the quantitative units of insurance services provided under individual
contracts and the expected duration.
49
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(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.
- 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.
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.
50
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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.
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.
Risk capital refers to the capital required to compensate for the potential loss (risk) if it is actually realized. Risk cap
ital management refers to the management of the risk assets considering its risk appetite, which is a datum point on t
he level of risk burden compared to available capital, so as to maintain the risk capital at an appropriate level. The G
roup and subsidiaries establish and operate a risk planning process to reflect the risk plan in advance when establishi
ng financial and business plans for risk capital management, and establish a risk limit management system to control
risk to an appropriate level.
51
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
② Risk Monitoring
In order to proactively manage risks by periodically identifying risk factors that can affect the group's business
environment, the Group has established a multi-dimensional risk monitoring system. Each subsidiary is required to
report to the Group on key issues that affect risk management at the group level. The Group prepares weekly, monthly
and occasional monitoring reports to report to Group management including the CRO.
In addition, the Risk Dashboard is operated to derive abnormal symptoms through three-dimensional monitoring of
major portfolios, increased risks, and external environmental changes of assets for each subsidiary. If necessary, the
Group takes preemptive risk management to establish and implement countermeasures.
③ Risk Reviewing
When conducting new product, new business and major policy changes, risk factors are reviewed by using a pre-
defined checklist to prevent indiscriminate promotion of business that is not easy to judge risk and to support rational
decision making. The subsidiary's risk management department conducts a preliminary review and post-monitoring
process on products, services, and projects to be pursued in the business division. In case of matters that are linked
or jointly promoted with other subsidiaries, the risk reviews are carried out after prior-consultation with the risk
management department of the Group.
④ Risk Management
The Group maintains a group wide risk management system to detect the signals of any risk crisis preemptively and,
in the event of a crisis actually happening, to respond on a timely, efficient and flexible basis so as to ensure the
Group’s survival as a going concern. Each subsidiary maintains crisis planning for four levels of contingencies, namely,
‘cautious’, ‘alert’, ‘imminent crisis’ and ‘crisis’ determination of which is made based on quantitative and qualitative
monitoring and consequence analysis, and upon the happening of any such contingency, is required to respond
according to a prescribed contingency plan. At the controlling company level, the Group maintains and installs crisis
detection and response system which is applied consistently group-wide, and upon the happening of any contingency
at two or more subsidiary level, the Group directly takes charge of the situation so that the Group manages it on a
concerted group wide basis.
52
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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 Chief Risk Officer (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 information of personal information Shinhan Bank's internal
information and external credit information, and the corporate customers are evaluated by considering financial and
non-financial items such as industrial risk, operating risk, and management risk. The evaluated credit rating is used
for credit approval, limit management, pricing, credit loss provisioning, etc., and is the basis for credit risk
management. The credit evaluation system is divided into an evaluation system for retail customers, a SOHO
evaluation system, and an evaluation system for corporate customers. It is subdivided and refined by each model to
reflect the Basel III requirements. The corporate credit decision is based on a collective decision-making system,
making objective and prudent decisions. In the case of a general credit of loans, the credit is approved based on the
consultation between branch'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 systems (CSS) based on objective
statistical methods and bank credit policies.
Shinhan Bank operates a regular monitoring system for the regular management of individual loans. The loan officers
and RM 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.
53
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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 chairperson, and is composed of the heads of
each business division and supporting division, and the heads of related departments. Apart from the RMC, a credit
committee in charge of monitoring corporate credits and other important credits over a certain amount has been
established to separate credit policy decisions from credit monitoring.
Shinhan Card’s credit rating system is divided into ASS (Application Scoring System) and BSS (Behavior Scoring
System). Unless a customer 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, an application of AS 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.
At the end of each reporting period, the Group assesses whether the credit risk on a financial instrument has increased
significantly since initial recognition. When making the assessment, the Group uses the change in the risk of a default
occurring over the expected life of the financial instrument instead of the change in the amount of expected credit
losses.
To make the assessment, the Group compares the risk of a default occurring on the financial instrument as at the
reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and
considers reasonable and supportable information, that is available without undue cost or effort, and is indicative of
significant increases in credit risk since initial recognition. Information includes the default experience data held by
the Group and analysis by an internal credit rating expert.
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.
Internal credit risk rating is the main variable inputs 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.
54
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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:
Significant change in credit ratings Significant change in credit ratings Significant change in credit ratings
Continued past due more than 30 Continued past due more than 30 Continued past due more than 7
days days days (personal card)
Loan classification of Loan classification of Loan classification of
precautionary or below precautionary or below precautionary or below
Borrower with early warning Borrower with early warning Specific delinquent pool segment
signals signals
Negative net assets Specific pool segment
Adverse audit opinion or Collective loans for housing for
disclaimer of opinion which the constructors are
insolvent
Interest coverage ratio below 1 for Loans with identified indicators for
a consecutive period of three significant increases in other
years or negative cash flows credit risk
from operating activities for a
consecutive period of two years
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.
- As a result of applying the judgment criteria, there should be no excessively frequent movement between the 12-
month expected credit loss accumulation target and the entire period expected credit loss accumulation target.
55
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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.
The Group considers a financial asset to be in default if it meets one or more of the following conditions:
The Group uses the following indicators when determining whether a borrower is in default:
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.
56
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The Group reflects future forward-looking information presented by a group of internal experts based on various
information when measuring expected credit losses. The Group utilizes economic forecasts disclosed by domestic
and foreign research institutes, governments, and public institutions to predict forward-looking information.
The Group reflects future macroeconomic conditions anticipated from a neutral standpoint that is free from bias in
measuring expected credit losses. Expected credit losses in this respect reflect conditions that are most likely to
occur and are based on the same assumptions that the Group used in its business plan and management strategy.
The Group analyzed the data experienced in the past, derived correlations between major macroeconomic variables
and credit risks required for predicting credit risk and credit loss for each portfolio, and then reflected future forecast
information through regression estimation. To reflect the economic uncertainty of domestic and international
situation, the Group has reviewed the 3 scenarios of upside, central and downside to reflect the final forward-looking
information. For the years ended December 31, 2023 and 2022, macroeconomic variables used by the Group are as
follows for each scenario.
② Central scenario
Correlation 2024 (*2),(*3)
between 2023.4Q
Major variables (*1) credit risks (*2),(*3) 1Q 2Q 3Q 4Q
GDP growth rate
(YoY %) (-) 1.5 1.6 1.4 1.5 1.8
Private consumption
index (YoY %) (-) 0.9 0.7 1.2 1.4 2.0
Facility investment
growth rate (YoY %) (-) (7.5) (2.0) (1.7) 2.4 3.9
Consumer price index
growth rate (%) (+) 3.4 2.8 2.8 2.5 2.1
Balance on current
account (100 million
dollars) (-) 130.0 70.0 80.0 110.0 140.0
Government bond 3y
yields (%) - 3.7 3.6 3.6 3.5 3.3
57
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
③ Downside scenario
④ Worst scenario
Correlation
Major variables (*1) between credit risks Economic Crisis for 1 year (*4)
GDP growth rate (YoY %) (-) (5.1)
Private consumption index (YoY %) (-) (11.9)
Facility investment growth rate (YoY %) (-) (38.6)
Consumer price index growth rate (%) (+) 7.5
Balance on current account (100 million
dollars) (-) 401.1
Government bond 3y yields (%) - 6.7
(*1) As a result of examining the correlation between each variable, Shinhan Bank applied the GDP growth rate and
private consumption index increase rate, etc. as the major variables to reflect the final forward-looking information,
while, Shinhan Card applied the private consumption rate and CPI increase rate, etc. as the major variables. In addition
to the table above, the Group has selected unemployment rate and KOSPI forecasts.
(*2) Considering the default forecast period, the Group reflected the future economic outlook.
(*3) The macroeconomic outlook figures are estimated by the Group for the purpose of calculating expected credit
losses based on information from domestic and foreign research institutes. Therefore, it could be different from other
institutions' estimates.
(*4) Shinhan Bank and Jeju Bank reviewed and reflected the Worst scenario (during the foreign exchange crisis) in
addition to the three scenarios of Upside, Central and Downside.
58
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
① Upside scenario
② Central scenario
59
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
③ Downside scenario
④ Worst scenario
Correlation
Major variables (*1) between credit risks Economic Crisis for 1 year (*4)
GDP growth rate (YoY %) (-) (5.1)
Private consumption index (YoY %) (-) (11.9)
Facility investment growth rate (YoY %) (-) (38.6)
Consumer price index growth rate (%) (+) 7.5
Balance on current account (100 million
dollars) (-) 401.1
Government bond 3y yields (%) - 4.4
(*1) As a result of examining the correlation between each variable, Shinhan Bank applied the GDP growth rate and
private consumption index increase rate, etc. as the major variables to reflect the final forward-looking information,
while, Shinhan Card applied the GDP growth rate, facility investment change rate, and current account balance, etc.
as the major variables. In addition to the table above, the Group has selected unemployment rate and KOSPI forecasts.
(*2) Considering the default forecast period, the Group reflected the future economic outlook.
(*3) The macroeconomic outlook figures are estimated by the Group for the purpose of calculating expected credit
losses based on information from domestic and foreign research institutes. Therefore, it could be different from other
institutions' estimates.
(*4) Shinhan Bank and Jeju Bank reviewed and reflected the Worst scenario (during the foreign exchange crisis) in
addition to the three scenarios of Upside, Central and Downside.
60
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The predicted correlations between the macroeconomic variables and the risk of default, used by the Group, are
derived based on long-term data over the past ten years.
The recent historical default rate is an important reference when estimating the default rate in consideration of the
future economic outlook. Despite the economic contraction caused by the COVID-19 since 2020, the historical
default rate of the Group's has remained stable because of various government support in response to the COVID-
19. The Group manages the credit risk through classifying borrowers in moratorium of interest payments and
moratorium of repayment that is one of the financial relief programs into Stage2 to reflect the impact of potential
insolvency. In addition, credit risk is managed through additional expected loss assessments for non-retail and retail
SOHO loans of borrowers holding the relevant loans, extended maturity loans and estimated loss loans from financial
support programs.
The Group has considered multiple economic scenarios in applying forward-looking information to measure the
expected credit losses. Assuming a 100% weighting of Upside, Central, Downside and Worst scenarios, the
sensitivity to the Group's provision for expected credit loss is not significant.
61
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
These variables have been estimated from historical experience data by using the statistical techniques developed
internally by the Group and have been adjusted to reflect forward-looking information.
Estimates of PD over a specified period are estimated by reflecting characteristics of counterparties and their
exposure, based on a statistical model at a specific point of time. The Group uses its own information to develop a
statistical credit assessment model used for the estimation, and additional information observed in the market is
considered for some portfolios such as a group of large corporates. When a counterparty or exposure is concentrated
in specific grades, the method of measuring PD for those grades would be adjusted, and the PD by grade is estimated
by considering contract expiration of the exposure.
LGD refers to the expected loss if a borrower defaults. The Group calculates LGD based on the experience recovery
rate measured from past default exposures. The model for measuring LGD is developed to reflect type of collateral,
seniority of collateral, type of borrower, and cost of recovery. In particular, LGD for retail loan products uses loan
to value (LTV) as a key variable. The recovery rate reflected in the LGD calculation is based on the present value of
recovery amount, discounted at the effective interest rate.
EAD refers to the expected exposure at the time of default. The Group derives EAD reflecting a rate at which the
current exposure is expected to be used additionally up to the point of default within the contractual limit. EAD of
financial assets is equal to the total carrying amount of the asset, and EAD of loan commitments or financial
guarantee contracts is calculated as the sum of the amount expected to be used in the future.
In measuring expected credit losses on financial assets, the Group uses the contractual maturity as the period subject
to expected credit loss measurement. The contractual maturity is computed taking into account the extension right
held by the borrower.
Risk factors of PD, LGD and EAD are collectively estimated according to the following criteria:
- Type of products
- Internal credit risk rating
- Type of collateral
- Loan to value (“LTV”)
- Industry that the borrower belongs to
- Location of the borrower or collateral
- Days of delinquency
The criteria classifying groups is periodically reviewed to maintain homogeneity of the group and adjusted if
necessary. The Group uses external benchmark information to supplement internal information for a particular
portfolio that did not have sufficient internal data accumulated from the past experience.
62
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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.
Exposure to credit risk is the exposure related to due from banks, loans, investments in debt securities, derivative
transactions, off-balance sheet accounts such as loan commitment. The exposures of due from banks and loans are
classified into government, bank, corporation or retail based on the exposure classification criteria of BASEL III
credit risk weights, and the net carrying amount, excluding provisions, is presented as the maximum amount that
can be exposed by credit risk.
The Group’s maximum exposure to credit risk without taking into account of any collateral held or other credit
enhancements as of December 31, 2023 and 2022 is as follows:
Due from banks and loans at fair value through profit or loss (*3):
Banks 238,740 135,214
Corporations 1,550,565 2,280,081
1,789,305 2,415,295
(*1) The maximum exposure amounts for due from banks, loans, securities at amortized cost and other financial
assets at amortized cost are recorded as net of allowances.
(*2) Other financial assets mainly comprise of accounts receivable, accrued income, deposits, domestic exchange
settlement debit and suspense payments.
(*3) Classified as similar credit risk group based on calculation of the BIS ratio under new Basel Capital Accord
(Basel III).
63
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
iii) The maximum amount of exposure to credit risk by type of collateral as of December 31, 2023 and 2022 is as
follows:
64
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Details of impaired financial assets due to credit risk as of December 31, 2023 and 2022 are as follows:
(*) Credit loss allowance recognized as other comprehensive income of securities at fair value through other comprehensive income amounted to W 42,477 million as of December
31, 2023.
65
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Details of impaired financial assets due to credit risk as of December 31, 2023 and 2022 are as follows (continued):
(*) Credit loss allowance recognized as other comprehensive income of securities at fair value through other comprehensive income amounted to W 40,614 million as of December
31, 2022.
66
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Credit risk exposures per credit grade of off-balance items as of December 31, 2023 and 2022 are as follows:
vi) Credit qualities are classified based on the internal credit rating as follows:
Government/Public OECD sovereign credit rating of 6 or OECD sovereign credit rating of below
agency/Central bank above 6
Banks and Corporations Internal credit rating of BBB+ or Internal credit rating of below BBB+
(Including credit card bond) above
Card receivables Behavior scoring system of 7 grade or Behavior scoring system of below 7
(Individuals) above grade
67
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Credit risk exposures per credit quality of derivative assets as of December 31, 2023 and 2022 are as follows:
(*) Credit risk per credit quality of derivative assets is classified based on the internal credit ratings.
68
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Securities measured at FVTPL 61,136,722 2,439,313 379,357 100,113 29,247 11,066 25,267 1,454,713 65,575,798
Securities at FVOCI 79,391,621 4,699,809 280,127 445,201 38,468 51,473 707,921 3,022,380 88,637,000
Securities at amortized cost 33,542,302 203,265 - 565,286 - 654,073 110,463 611,098 35,686,487
568,541,737 15,615,954 1,520,499 13,443,166 1,431,385 10,167,184 7,216,044 17,947,884 635,883,853
Off-balance accounts
Guarantees 16,993,719 155,883 7,607 55,086 15,639 197,031 595,236 354,086 18,374,287
Loan commitments and
other liabilities related to credit 200,907,271 1,465,839 226,423 461,892 93,295 1,972,723 2,315,614 4,635,813 212,078,870
W 217,900,990 1,621,722 234,030 516,978 108,934 2,169,754 2,910,850 4,989,899 230,453,157
(*) The following accounts are the net carrying amount less provision for doubtful accounts.
69
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Securities measured at FVTPL 51,579,115 2,017,278 252,390 58,344 23,610 31,952 16,469 1,256,115 55,235,273
Securities at FVOCI 76,225,925 3,832,670 193,598 348,240 34,065 92,940 710,375 2,358,762 83,796,575
Securities at amortized cost 31,678,234 200,475 - 214,653 - 726,476 110,884 440,476 33,371,198
544,201,421 13,677,454 1,753,200 12,435,390 1,268,999 9,638,877 9,904,339 17,583,993 610,463,673
Off-balance accounts
Guarantees 16,426,498 118,951 23,481 47,805 44,203 329,904 1,015,543 220,161 18,226,546
Loan commitments and
other liabilities related to credit 194,470,275 1,312,830 317,335 550,116 42,230 1,816,773 2,548,483 4,430,783 205,488,825
W 210,896,773 1,431,781 340,816 597,921 86,433 2,146,677 3,564,026 4,650,944 223,715,371
(*) The following accounts are the net carrying amount less provision for doubtful accounts.
70
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
An analysis of concentration by industry sector of financial instrument, net of allowance, as of and December 31, 2023 and 2022 is as follows:
(*) The composition details by industry are net book value less allowances.
71
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
An analysis of concentration by industry sector of financial instrument, net of allowance, as of and December 31, 2023 and 2022 is as follows:
(*) The composition details by industry are net book value less allowances.
72
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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.
The basic principle of market risk management in the trading sector is to maintain the maximum possible loss due to
market risk within a certain level. To this end, the Group sets and operates VaR limits, investment limits, position
limits, sensitivity limits, and loss limits from the portfolio to individual desks. These limits are managed daily by the
department in charge of risk management, independent from the operating department.
Trading positions refer to all transactions for holding purposes such as short-term resale, profit seeking through short-
term price fluctuations, risk-free arbitrage, and risk hedging. Trading positions refer to securities, foreign exchange
positions, and derivative financial instruments held for the purpose of obtaining short-term trading gains. As a method
of measuring market risk, VaR (Value at Risk) is typical, and it is a statistical measurement of the potential maximum
loss that can occur due to changes in market conditions. VaR calculates the standard method market risk using the
Group Market Risk Measurement System, and Shinhan Bank calculates the standard method market risk using its
own model market risk calculation system. Shinhan Financial Investment uses its own market risk calculation system
to calculate historical simulation VaR and the group market risk system to calculate standard method market risk.
Stress tests are conducted to supplement risk measurement by statistical methods and to manage losses that may arise
from rapid changes in the economic environment.
Shinhan Bank measures the risk of trading account products by applying market risk standard methods. The trading
account calculates market risk if it is for holding purposes such as short-term resale, profit seeking through short-
term price fluctuations, risk-free arbitrage, and risk hedging. The standard method is a risk calculation method
proposed by Basel Board of Banking Supervisors (BCBS) of Bank for International Settlements (BIS), Korea has
reflected the Basel 3 standards of market risk sector to the detailed regulations on supervision of bank business from
FY23 and followed these regulations. The standard method of the Basel 3 standards is the method to calculate and
add up sensitivity risk, bankruptcy risk, and residual risk. Sensitivity risk measures delta, vega, and coverage of
general interest rates, credit spreads, stocks, general products, and foreign exchange. Delta refers to the change in
product value due to changes in the price of the underlying asset, and vega refers to the change in product value due
to changes in the volatility of the underlying asset. Coverage is defined as a loss that exceeds the delta risk in the
event of an upward or downward shock to the underlying asset. Sensitivity risk is designed to measure both linear
and non-linear risks of factors affecting value fluctuations regardless of the characteristics of the product. Default
risk measures the discrete default risk of the underlying asset that cannot be captured in sensitivity risk. Complete
offsetting between purchase and sale exposures of the same borrower is possible. Residual risk is a concept that
calculates additional risk because sensitivity risk and default risk are not accurately measured when there is a special
profit/loss structure or the underlying asset is special.
Trading position data is automatically interfaced into management system, and the system conducts VaR
measurement and manages the limit. In addition, Shinhan Bank sets loss limit, sensitivity limit, investment limit,
stress limit, etc. for Trading Department and desks, and monitors daily.
73
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Shinhan Securities measures daily market risk by applying historical simulation VaR method of 99.9% confidence
level-based VaR. It also measures market risk standard methods to ensure consistent market risk management at the
group level. Historical simulation VaR method does not require assumption on a particular distribution since the
method derives scenarios directly from historical market data, and measures non-linear products, such as options, in
details. In addition to the VaR limit, Shinhan Securities sets and manages issuance and transaction limit, and stop-
loss limit for each department.
Until the previous year, market risk was calculated using the standard method of the Basel 2 standards stipulated in
<Appendix 3-2> of the Detailed Regulations on Supervision of Bank Business. However, from the current year, the
detailed regulations on supervision of bank business have been revised and the Group calculated market risk by using
the standard method of the Basel 3 standards.
An analysis of the Group’s requisite capital in light of the market risk for trading positions as of and for the years
ended December 31, 2023 and 2022 based on the standard guidelines for risk management promulgated by the
Financial Supervisory Service, is as follows:
Default risk
Non-Securitisations W 37,808 37,808 37,808 37,808
Securitisations
(Excluding CTP) 162,599 162,599 162,599 162,599
Securitisations (CTP) 71 71 71 71
W 200,478 200,478 200,478 200,478
Residual risk 7,654 7,654 7,654 7,654
W 1,745,944 1,829,827 1,662,057 1,817,469
(*1) GIRR (General Interest Rate Risk) : General interest rate risk, a concept that measures the risk of loss due to
changes in the risk-free interest rate. In general, if the maturity is long and the value changes fluctuates a lot due to
interest rate changes, the risk value is calculated to be large.
(*2) CSR (Credit Spread Risk) : Credit spread risk, a concept that measures the risk of value fluctuations as credit
spreads fluctuate independently of the risk-free interest rate for products with inherent credit risk.
74
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Default Risk
Non-Securitisations W 105,604 113,798 88,899 107,695
Securitisations
(Excluding CTP) 59,721 64,795 55,054 59,549
W 165,325 175,923 146,003 167,244
Residual Risk 2,063 2,175 1,719 1,719
W 947,456 992,483 898,320 944,807
75
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
76
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The analyses of Shinhan Card’s requisite capital in light of the market risk for trading positions as of and for the
years ended December 31, 2023 and 2022, based on the standard guidelines for risk management promulgated by
the Financial Supervisory Service, are as follows:
The VaR details for trading positions of Shinhan Securities as of and for the years ended December 31, 2023 and
2022 are as follows:
77
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The VaR details for trading positions of Shinhan Life Insurance as of and for the years ended December 31, 2023
and 2022 are as follows:
(*) The market risk exposure for performance dividend-type assets held is W 5,346,730 million as of December 31,
2023, and the minimum guaranteed risk amount that could result in an impact on the Group calculated using the
internal shock scenario method as of the end of the reporting period is W 228,451 million as of December 31, 2023.
(*) The market risk exposure for performance dividend-type assets held is W 5,061,839 million as of December 31,
2022, and the minimum guaranteed risk amount that could result in an impact on the Group calculated using the
internal shock scenario method as of the end of the reporting period is W 366,776 million as of December 31, 2022.
78
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii-1) Principle
Interest rate risk refers to the possibility of a decrease in net interest income or in net asset value that occurs when
interest rates fluctuate unfavorably from the Group's financial position. The Group manages changes in net interest
income or net asset value that occur due to changes in interest rates by early predicting the factors of interest rate risk
fluctuation related to the Group's net interest income and net asset value through the interest rate risk management.
ii-2) Managements
Shinhan Financial Group's major financial subsidiaries manage interest rate risks independently by the risk
management organization and the treasury department, and have internal regulations on interest rate risk
management strategies, procedures, organization, measurement, and major assumptions.
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 behavior models and diversifying interest rate shocks. The interest rate VaR
scenario based IRRBB measures ① parallel up shock ② parallel down shock ③ steepener shock ④ flattener shock
⑤ short rate up shock ⑥ short rate down shock. By the parallel up shock and parallel down shock, the interest rate
EaR scenario measures the scenario value with the largest loss as interest rate risk. Under the existing BIS standard
framework, ± 200bp parallel shock scenario is applied to all currency. However, as the shock width is set differently
by currency and period, interest rate risk is measured significantly by the IRRBB (e.g. (KRW) Parallel ± 300bp,
Short Term ± 400bp, Long Term ± 200bp, (USD) Parallel ± 200bp, Short Term ± 300bp, Long Term ± 150bp). In
the IRRBB method, the existing interest rate VaR and the interest rate EaR are expressed as △ 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.
79
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The details of interest rate VaR and EaR for major subsidiaries for as of December 31, 2023 and 2022 are as follows:
(*1) △EVE is the change in economic value of equity capital that can arise from changes in interest rates that affect
the present value of assets, liabilities and off-balance sheet items by using the Basel III standard based IRRBB method.
(*2) △NII is the change in net interest income that can occur over the next year due to changes in interest rates by
using the Basel III standard based IRRBB method.
80
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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.
Foreign currency denominated assets and liabilities as of December 31, 2023 and 2022 are as follows:
Liabilities:
Deposits W 22,790,616 14,562,435 1,535,925 4,152,363 12,428,069 55,469,408
Financial liabilities at
FVTPL 362,642 - - - 422,861 785,503
Derivative liabilities 841,175 2 35,679 591 94,701 972,148
Borrowings 9,670,444 1,392,637 208,335 115,798 1,284,046 12,671,260
Debt securities issued 10,916,488 337,684 713,295 - 1,258,257 13,225,724
Financial liabilities
designated at FVTPL 909,250 3,188 - - - 912,438
Other financial liabilities 6,844,891 183,500 769,928 777,986 805,002 9,381,307
W 52,335,506 16,479,446 3,263,162 5,046,738 16,292,936 93,417,788
81
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Foreign currency denominated assets and liabilities as of December 31, 2023 and 2022 are as follows (continued):
Liabilities:
Deposits W 25,719,297 11,812,723 1,633,007 5,035,481 11,769,661 55,970,169
Financial liabilities at
FVTPL 10,038 - - - 422,006 432,044
Derivative liabilities 1,345,476 1,899 59,206 3,074 77,662 1,487,317
Borrowings 9,976,462 1,349,529 182,926 85,862 1,226,389 12,821,168
Debt securities issued 10,774,062 352,677 675,600 108,864 1,495,991 13,407,194
Financial liabilities
designated at FVTPL 1,077,789 - - - - 1,077,789
Other financial liabilities 4,287,930 259,683 621,770 889,138 1,525,377 7,583,898
W 53,191,054 13,776,511 3,172,509 6,122,419 16,517,086 92,779,579
82
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 particular, after the bankruptcy of Silicon Valley Bank, the Group have been strengthening its ability to respond
to liquidity crises by conducting crisis situation analysis using bank run scenarios for banks and savings bank
subsidiaries and establishing and inspecting emergency procurement plans accordingly.
In addition, in order to pre-emptively and comprehensively manage liquidity risk, the Group measures and monitors
liquidity risk management using various indices, including the ‘limit management index’, ‘early warning index’ and
‘monitoring index’.
Shinhan Bank applies the following basic principles for liquidity risk management:
Shinhan Card sets and operates a level that can withstand a 3-month credit crunch for end-of-month liquidity. The
Group defines and manages the level of ‘cautious’, ‘alert’, ‘imminent crisis’, and ‘crisis’ and risk for the real liquidity
gap ratio, liquidity buffer ratio, and ABS weight compared to borrowings which are major indicators related to
liquidity risk. A contingency plan has been established to prepare for a crisis.
83
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The details of the composition of non-derivative financial instruments and derivative financial instruments by remaining period are as of December 31, 2023 and 2022 are as follows:
December 31, 2023 (*1)
Less than 1~3 3~6 6 months 1~5 More than
1 month months months ~ 1 year years 5 years Total
Non-derivative financial instruments:
Assets:
Cash and due from banks at amortized cost W 31,107,629 734,193 83,972 159,377 189,601 2,560,084 34,834,856
Due from banks at fair value through profit
or loss - - - - - 30,743 30,743
Loans at fair value through profit or loss 308,740 421,193 85,467 9,739 923,364 76,062 1,824,565
Loans at amortized cost 37,692,048 50,813,677 65,503,264 96,981,341 130,306,477 101,012,508 482,309,315
Securities at fair value through profit or
loss 38,919,131 1,642,951 682,000 559,767 7,258,255 20,304,519 69,366,623
Securities at fair value through other
comprehensive income 42,256,944 445,463 539,255 2,336,017 14,033,768 30,785,721 90,397,168
Securities at amortized cost 899,355 3,258,092 1,964,229 4,323,906 21,357,255 7,573,653 39,376,490
Other financial assets 22,148,927 393,344 128,067 324,305 384,541 1,866,191 25,245,375
W 173,332,774 57,708,913 68,986,254 104,694,452 174,453,261 164,209,481 743,385,135
Liabilities:
Deposits (*2) W 204,353,639 49,995,140 43,382,707 65,673,174 24,930,159 2,931,998 391,266,817
Financial liabilities at fair value through
profit or loss 410,381 358 586 1,202 6,816 1,449,634 1,868,977
Borrowings 19,310,777 5,678,981 6,166,750 9,811,684 14,182,221 5,170,111 60,320,524
Debt securities issued 4,496,200 7,218,255 7,931,732 18,000,681 45,961,768 3,734,554 87,343,190
Financial liabilities designated at fair
value through profit or loss 309,713 1,252,877 1,774,016 1,821,666 1,324,185 1,356,579 7,839,036
Investment contract liabilities 245,353 110,050 67,039 423,484 726,759 - 1,572,685
Other financial liabilities 39,957,559 219,656 394,997 252,445 1,637,763 808,731 43,271,151
W 269,083,622 64,475,317 59,717,827 95,984,336 88,769,671 15,451,607 593,482,380
Off balance (*3):
Guarantee contracts W 18,374,287 - - - - - 18,374,287
Other liabilities related to loan
commitments 212,078,870 - - - - - 212,078,870
W 230,453,157 - - - - - 230,453,157
84
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The details of the composition of non-derivative financial instruments and derivative financial instruments by remaining period are as of December 31, 2023 and 2022 are as follows
(continued):
December 31, 2022 (*1)
Less than 1~3 3~6 6 months 1~5 More than 5
1 month months months ~ 1 year years years Total
Non-derivative financial instruments:
Assets:
Cash and due from banks at amortized cost W 25,535,924 1,038,410 530,121 1,812,917 158,893 1,111,663 30,187,928
Due from banks at fair value through profit or
loss - - - - - 26,116 26,116
Loans at fair value through profit or loss 424,585 858,019 58,705 141,706 735,426 329,636 2,548,077
Loans at amortized cost 40,128,332 50,154,981 62,225,328 95,147,376 134,775,595 83,422,609 465,854,221
Securities at fair value through profit or loss 42,309,917 135,169 460,708 522,176 4,242,650 11,413,859 59,084,479
Securities at fair value through other
comprehensive income 53,852,989 1,725,111 589,944 1,194,842 9,096,740 19,025,169 85,484,795
Securities at amortized cost 479,464 1,820,022 1,164,164 4,908,796 22,790,254 6,385,745 37,548,445
Other financial assets 17,803,851 85,593 59,249 344,924 338,045 1,796,898 20,428,560
W 180,535,062 55,817,305 65,088,219 104,072,737 172,137,603 123,511,695 701,162,621
Liabilities:
Deposits (*2) W 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 27,603,371 104,887 132,284 286,956 1,037,388 113,755 29,278,641
W 256,488,586 56,682,148 57,308,271 98,342,829 76,380,515 18,015,460 563,217,809
Off balance (*3):
Guarantee contracts W 18,226,546 - - - - - 18,226,546
Other liabilities related to loan commitments 205,488,825 - - - - - 205,488,825
W 223,715,371 - - - - - 223,715,371
85
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(*1) These amounts include cash flows of principal and interest on financial assets and financial liabilities.
(*2) Demand deposits amounting to W 151,177,041 million and W157,446,276 million as of December 31, 2023
and 2022 are included in the ‘Less than 1 month’ category, respectively.
(*3) Though guarantees, loan agreements, and other credit offerings provided by the Group exist, if the counterparty
requests a payment, the Group should fulfill the obligation immediately.
The fair values of financial instruments being traded in an active market are determined by the published market
prices of each period end. The published market prices of financial instruments being held by the Group are based
on the trading agencies’ notifications.
If the market for a financial instrument is not active, such as OTC (Over The Counter market) derivatives, fair value
is determined either by using a valuation technique or independent third-party valuation service. The Group uses its
judgment to select a variety of methods and make rational assumptions that are mainly based on market conditions
existing at the end of each reporting period.
The fair value of financial instruments is determined using valuation techniques; a method of using recent transactions
between independent parties with reasonable judgment and willingness to trade, a method of referring to the current
fair value of other financial instruments that are substantially identical, discounted cash flow model and option pricing
models. For example, the fair value of an interest rate swap is calculated as the present value of the expected future
cash flows, and the fair value of foreign exchange forwarding contract is calculated by applying the public forward
exchange rate at the end of the reporting period.
The Group classifies and discloses fair value of financial instruments into the following three-level hierarchy:
Level 1: Financial instruments measured at quoted prices from active markets are classified as fair value level
1.
Level 2: Financial instruments measured using valuation techniques where all significant inputs are observable
market data are classified as level 2.
Level 3: Financial instruments measured using valuation techniques where one or more significant inputs are
not based on observable market data are classified as level 3.
86
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
i-1) The fair value hierarchy of financial instruments presented at their fair values in the statements of financial
position as of December 31, 2023 and 2022 are as follows:
December 31, 2023
Level 1 Level 2 Level 3(*3) Total
Financial assets:
Due from banks measured at FVTPL W - 30,743 - 30,743
Loans at FVTPL (*1) - 515,564 1,242,998 1,758,562
Securities at FVTPL:
Debt securities and other securities (*2) 11,248,555 39,736,457 14,487,080 65,472,092
Equity securities 2,253,651 - 1,597,810 3,851,461
Gold/silver deposits 103,706 - - 103,706
13,605,912 39,736,457 16,084,890 69,427,259
Derivative assets:
Trading 117,929 3,709,058 632,213 4,459,200
Hedging - 252,221 - 252,221
117,929 3,961,279 632,213 4,711,421
Securities measured at FVOCI:
Debt securities 39,111,078 49,525,922 - 88,637,000
Equity securities 725,796 - 949,183 1,674,979
39,836,874 49,525,922 949,183 90,311,979
W 53,560,715 93,769,965 18,909,284 166,239,964
Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold W 1,449,634 - - 1,449,634
Gold/silver deposits 419,343 - - 419,343
1,868,977 - - 1,868,977
Financial liabilities designated at fair value
through profit or loss:
Derivatives-combined securities (*2) - 816,643 6,725,252 7,541,895
Debt securities issued - 254,832 - 254,832
- 1,071,475 6,725,252 7,796,727
Derivative liabilities:
Trading 46,578 3,369,771 783,587 4,199,936
Hedging - 614,285 224,195 838,480
46,578 3,984,056 1,007,782 5,038,416
W 1,915,555 5,055,531 7,733,034 14,704,120
(*1) Of the Financial assets at FVTPL invested by the Group, P-note’s valuation of amount related to Lime Asset
Management is W 92 billion. As of December 31, 2023, in this regard, international disputes are under way, the Group
has estimated its fair value based on financial information within the recent audit report of underlying assets since it
doesn’t have fair market value observable through active trading markets. Accounting estimates and assumptions used
in preparing consolidated financial statements may lead to adjustment in response to changes in uncertainty, such as
information and market conditions available in the future. In addition, the ultimate impact on the business, financial
condition, performance, and liquidity of the Group is unpredictable.
(*2) Financial instruments (Beneficiary certificates: W 143.5 billion and derivatives-combined securities: W 143.5
billion) related to GEN2 Partners asset management were delayed in repurchase for the year ended December 31,
2020. The Group estimated fair value using the net asset value based on the most recent data available for the
repurchase suspension fund. Since then, it has an uncertainty in measuring fair value due to market conditions.
(*3) Shinhan Securities Co., Ltd.' level 3 over-the-counter derivatives is recognized W 66,866 million in financial
assets measured at fair value through profit or loss, W 6,725,252 million in financial liabilities designated at fair value
through profit or loss, W 629,223 million in derivative assets, and W 785,312 million in derivative liabilities. The fair
value of over-the-counter derivatives classified as level 3 above is measured using Shinhan Securities Co., Ltd.’s
internal valuation model.
87
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
i-1) The fair value hierarchy of financial instruments presented at their fair values in the statements of financial
position as of December 31, 2023 and 2022 are as follows (continued):
December 31, 2022
Level 1 Level 2 Level 3(*3) Total
Financial assets:
Due from banks measured at FVTPL W - 26,116 - 26,116
Loans at FVTPL (*1) - 957,543 1,431,637 2,389,180
Securities at FVTPL:
Debt securities and other securities (*2) 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
W 49,874,166 87,006,318 16,557,610 153,438,094
Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold W 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 (*2) - 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
W 1,395,779 7,084,124 8,742,190 17,222,093
(*1) Of the Financial assets at FVTPL invested by the Group, P-note’s valuation of amount related to Lime Asset
Management is W 133.8 billion. As of December 31, 2022, in this regard, international disputes are under way, the
Group has estimated its fair value based on financial information within the recent audit report of underlying assets
since it doesn’t have fair market value observable through active trading markets. Accounting estimates and
assumptions used in preparing consolidated financial statements may lead to adjustment in response to changes in
uncertainty, such as information and market conditions available in the future. In addition, the ultimate impact on the
business, financial condition, performance, and liquidity of the Group is unpredictable.
(*2) Financial instruments (Beneficiary certificates: W 221.7 billion and derivatives-combined securities: W 221.7
billion) related to GEN2 Partners asset management were delayed in repurchase for the year ended December 31,
2022. The Group estimated fair value using the net asset value based on the most recent data available for the
repurchase suspension fund. Since then, it has an uncertainty in measuring fair value due to market conditions.
(*3) Shinhan Securities Co., Ltd.’s level 3 over-the-counter derivatives is recognized W 75,925 million in financial
assets measured at fair value through profit or loss, W 7,930,909 million in financial liabilities designated at fair value
through profit or loss, W 526,868 million in derivative assets, and W 468,028 million in derivative liabilities. The fair
value of over-the-counter derivatives classified as level 3 above is measured using Shinhan Securities Co., Ltd.’s
internal valuation model.
88
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 amounts of financial instruments
classified as Level 3 for the years ended December 31, 2023 and 2022 are as follows:
89
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 amounts of financial instruments
classified as Level 3 for the years ended December 31, 2023 and 2022 are as follows (continued):
(*1) Recognized profit or loss of the changes in carrying amount of financial instruments classified as Level 3 for
the years ended December 31, 2023 and 2022 are included in the accounts of the statements of comprehensive income,
of which the amounts and the related accounts are as follows:
90
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
i-2) Changes in carrying amounts of financial instruments classified as Level 3 for the years ended December 31,
2023 and 2022 are as follows (continued):
(*2) Movements between levels occur as the availability of observable market data for the financial instrument in
question changes. The Group recognizes changes in levels at the end of the reporting period when the event or change
in circumstances that gives rise to the movement between levels occurs.
91
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
i-3-1) Valuation techniques and inputs used in measuring the fair value of financial instruments classified as level 2
as of December 31, 2023 and 2022 are as follows:
(*) Option models applied to measure fair value include the Black-Scholes model and Hull-White model, and
methods such as Monte Carlo simulation are applied to some products depending on the product type.
92
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 December 31, 2023 and 2022 are as follows (continued):
(*) Option models applied to measure fair value include the Black-Scholes model and Hull-White model, and
methods such as Monte Carlo simulation are applied to some products depending on the product type.
93
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 December 31, 2023 and 2022 are as follows:
94
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 December 31, 2023 and 2022 are as follows (continued):
(*1) Option model that the Group uses in derivative valuation includes Black-Scholes model, Hull-White model,
Monte Carlo simulation, etc.
(*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.
95
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 December 31, 2023 and 2022 are as follows (continued):
96
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 December 31, 2023 and 2022 are as follows (continued):
(*1) Option model that the Group uses in derivative valuation includes Black-Scholes model, Hull-White model,
Monte Carlo simulation, etc.
(*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.
97
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
For level 3 fair value measurement, changing one or more of the unobservable inputs used to reasonably possible
alternative assumptions would have the following effects on profit or loss, or other comprehensive income as of
December 31, 2023 and 2022.
(*1) Fair value changes are calculated by increasing or decreasing the volatility of the underlying asset (-10~10%p)
or correlations (-10~10%p), a significant unobservable input.
(*2) Fair value changes are calculated by increasing or decreasing the growth rate and discount rate, which are a
significant unobservable input, from -1%p to 1%p.
98
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii-1) The method of measuring the fair value of financial instruments measured at amortized cost is as follows:
Cash and The carrying amount and the fair value for cash are identical and most of deposits are
due from banks floating interest rate deposits or next day deposits of a short-term instrument. For this
reason, the carrying amount approximates fair value.
Loans The fair value of the loans is measured by discounting the expected cash flow at the
market interest rate and credit risk of the borrower.
Securities An external professional evaluation agency is used to calculate the valuation amount
using the market information. The agency calculates the fair value based on active
market prices, and DCF model is used to calculate the fair value if there is no quoted
price.
Deposits and borrowings The carrying amount and the fair value for demand deposits, cash management
account deposits, call money as short-term instrument are identical. The fair value of
others is measured by discounting the contractual cash flow at the market interest rate
that takes into account the residual risk.
Debt securities issued Where available, the fair value of deposits and borrowings is based on the published
price quotations in an active market. In case there is no data for an active market price,
it is measured by discounting the contractual cash flow at the market interest rate that
takes into account the residual risk.
Investment contract liabilities The book value of retirement pension contract reserves as prescribed by the Insurance
Business Act and Insurance Business Supervision Regulations was used as a proxy for
fair value because of the difficulty of calculating reliable expected cash flows.
Other financial assets and The carrying amount is measured at fair value for short-term and suspense accounts,
other financial liabilities 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.
99
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii-2) The carrying amount and the fair value of financial instruments measured at amortized cost as of December 31,
2023 and 2022 are as follows:
100
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii-3) The fair value hierarchy of financial assets and liabilities which are not measured at their fair values in the
statements of financial position but with their fair value disclosed as of December 31, 2023 and 2022 are as follows:
101
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii-3) The fair value hierarchy of financial assets and liabilities which are not measured at their fair values in the
statements of financial position but with their fair value disclosed as of December 31, 2023 and 2022 are as follows
(continued):
102
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii-4) Valuation techniques and inputs used in the fair value measurements categorized within Level 2 and Level 3 for
fair value disclosures, which are not recognized at fair value, as at December 31, 2023 and 2022, are as follows:
(*) Valuation techniques and inputs are not disclosed when the carrying amount is a reasonable approximation of
fair value.
103
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii-4) Valuation techniques and inputs used in the fair value measurements categorized within Level 2 and Level 3 for
fair value disclosures, which are not recognized at fair value, as at December 31, 2023 and 2022, are as follows
(continued) :
(*) Valuation techniques and inputs are not disclosed when the carrying amount is a reasonable approximation of
fair value.
iii) Changes in gains or losses on valuation at the transaction date for the years ended December 31, 2023 and 2022,
are as follows:
104
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 5.(e) Measurement of fair value.
The carrying amounts of each category of financial assets and financial liabilities as of December 31, 2023 and 2022
is as follows:
December 31, 2023
Derivatives held
FVTPL FVOCI Amortized cost for hedging Total
Assets:
Cash and due from
banks at amortized
cost W - - 34,629,251 - 34,629,251
Due from banks at
fair value through
profit or loss 30,743 - - - 30,743
Securities at fair value
through profit or
loss 69,427,259 - - - 69,427,259
Derivatives assets 4,459,200 - - 252,221 4,711,421
Loans at fair value
through profit or
loss 1,758,562 - - - 1,758,562
Loans at amortized
cost - - 411,739,562 - 411,739,562
Securities at fair value
through other
comprehensive
income - 90,311,979 - - 90,311,979
Securities at
amortized cost - - 35,686,487 - 35,686,487
Others - - 26,880,554 - 26,880,554
W 75,675,764 90,311,979 508,935,854 252,221 675,175,818
105
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The carrying amounts of each category of financial assets and financial liabilities as of December 31, 2023 and 2022
is as follows (continued):
106
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Among the Group’s sale of repurchase bonds, followings are the details of financial instruments that do not qualify
for derecognition because the Group sold under repurchase agreement at a fixed price as of December 31, 2023 and
2022:
December 31, 2023 December 31, 2022
Transferred asset:
Securities at FVTPL W 11,042,486 7,461,978
Securities at FVOCI 1,286,990 1,335,548
Securities at amortized cost 3,622,838 258,579
W 15,952,314 9,056,105
Associated liabilities:
Bonds sold under repurchase agreements W 17,312,576 9,544,536
② Securities loaned
If the securities owned by the Group are loaned, the ownership of the securities is transferred, but is required to be
returned at the end of the loan period. Therefore, the Group continues to recognize the entire securities loaned as it
holds most of the risks and compensation of the securities.
December December
Borrowers
31, 2023 31, 2022
Korea Securities Finance Corp.,
Government bonds W 15,340,768 12,876,660 Korea Securities Depository, etc.
Korea Securities Finance Corp.,
Financial institutions bonds 398,252 422,166 Korea Securities Depository, etc.
Corporation bonds 221,435 210,258 BNP Paribas Securities Corp.
Meritz Securities co., Ltd.,
Equity securities 48,004 73,169 HI Investment & Securities co., Ltd., etc.
Beneficiary certificate 40,890 29,850 Korea Securities Depository
W 16,049,349 13,612,103
107
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The Group uses the securitization of financial assets as a means of financing and to transfer risk. Generally, these
securitization transactions result in the transfer of contractual cash flows to the debt securities holders issued from the
financial asset portfolio. The Group recognizes debt securities issued without derecognition of assets under individual
agreements, partially recognizes assets to the extent of the Group’s level of involvement in assets, or recognizes rights
and obligations arising from the derecognition and transfer of assets as separate assets and liabilities. The Group
derecognizes the entire asset only if it transfers contractual rights to the cash flows of financial assets or if it holds
contractual rights but bears contractual obligations to pay cash flows to the other party without significant delays or
reinvestment and transfers most of the risks and benefits of ownership (e.g., credit risk, interest rate risk, prepayment
risk, etc.). For the years ended December 31, 2023 and 2022, the carrying amount of financial assets related to
securitization transactions that have neither been transferred nor derecognized are W 10,950,727 million and W
11,429,250 million, respectively; the carrying amounts of related liabilities are W 6,634,887 million and W 6,366,125
million, respectively.
There are no financial instruments which qualify for derecognition and in which the Group has continuing
involvements as of December 31, 2023, and 2022.
108
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2023 and 2022 are as follows:
109
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2023 and 2022 are as follows (continued):
(*1) The Group has certain derivative transactions subject to the ISDA (International Derivatives Swaps and Dealers Association) agreement. According to the ISDA agreement, when credit events (e.g.
default) of counterparties occur, all derivative agreements are terminated and set off. At the time of termination, the parties to the transaction will offset the amount of payment or payment to each other,
and one party will pay the other party a single amount will be paid to the other party.
(*2) Resale and repurchase agreement, securities borrowing and lending agreement are also similar to ISDA agreement with respect to enforceable netting agreements.
(*3) The Group has legally enforceable right to set off and settles financial assets and liabilities on a net basis under normal business terms. Therefore, domestic exchanges settlement receivables (payables)
are recorded on a net basis in the consolidated statements of financial position.
(*4) It is an account that deals with bonds and liabilities based on the settlement of listed stocks traded in the market. The Group currently has a legally enforceable right to set off the recognized amounts
and intends to settle on a net basis. Therefore, the net amount is presented in the consolidated statement of financial position. The offset amount of related bonds and liabilities based on the settlement of
over-the-counter derivatives in-house payment by Central Clearing System is included.
(*5) As of December 31, 2023, the total amount of financial liabilities includes W 7,541,895 million of ELS (equity-linked securities) products and of DLS (derivative linked securities) products. In the
course of this transaction, the Group has provided collateral for some transactions. The financial instruments provided as collateral of W 365,074 million are included in the related instruments not offset
in the statement of financial position.
110
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2023 and 2022 are as follows: (continued)
111
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2023 and 2022 are as follows (continued):
(*1) The Group has certain derivative transactions subject to the ISDA (International Derivatives Swaps and Dealers Association) agreement. According to the ISDA agreement, when credit events (e.g.
default) of counterparties occur, all derivative agreements are terminated and set off. At the time of termination, the parties to the transaction will offset the amount of payment or payment to each other,
and one party will pay the other party a single amount will be paid to the other party.
(*2) Resale and repurchase agreement, securities borrowing and lending agreement are also similar to ISDA agreement with respect to enforceable netting agreements.
(*3) The Group has legally enforceable right to set off and settles financial assets and liabilities on a net basis under normal business terms. Therefore, domestic exchanges settlement receivables (payables)
are recorded on a net basis in the consolidated statements of financial position.
(*4) It is an account that deals with bonds and liabilities based on the settlement of listed stocks traded in the market. The Group currently has a legally enforceable right to set off the recognized amounts
and intends to settle on a net basis. Therefore, the net amount is presented in the consolidated statement of financial position. The offset amount of related bonds and liabilities based on the settlement of
over-the-counter derivatives in-house payment by Central Clearing System is included.
(*5) As of December 31, 2022, the total amount of financial liabilities includes W 8,320,041 million of ELS (equity-linked securities) products and of DLS (derivative linked securities) products. In the
course of this transaction, the Group has provided collateral for some transactions. The financial instruments provided as collateral of W 432,228 million are included in the related instruments not offset
in the statement of financial position. The total amount of financial liabilities recognized as of December 31, 2022 is W 1,934,547 million for transactions with the other party with collective offset contracts
or similar arrangements.
112
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The criteria for capital adequacy to be complied with by the Group are 8.0%. In addition, the minimum regulatory
BIS capital ratio, which should be maintained additionally to increase the ability to absorb losses, has been raised to
up to 14% as the capital regulation based on the Basel III standard is enforced from 2016. This is based on the addition
of capital conservation capital (2.5%p) and domestic system-critical banks (D-SIB) capital (1.0%p) and economic
response capital (2.5%p) to the existing lowest common equity capital ratio, and economic response capital can be
charged up to 2.5%p during credit expansion period. As of December 31, 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.
The capital ratio of the Group based on Basel III is as of December 31, 2023 and 2022 are as follows:
(*) As of December 31, 2023, the Group maintains an appropriate capital adequacy ratio in accordance with the BIS
capital regulation system. As of December 31, 2023, the capital adequacy ratio is the provisional value.
113
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
6. Insurance Risk
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd.
Insurance risk is the likelihood that insured events occur and the uncertainty of the total amount and timing of claims
for the insured events occurred. The main risk covered by insurance contracts is the risk that the actual claim or benefit
payment will exceed the accumulated insurance liability. This risk can occur for the following reasons:
① Frequency risk: a possibility that the number of occurrences of the insured event is different from the expected
number
② Severity risk: a possibility that the cost of an incident may be different from the expected cost level
By experience, when there is more similar insurance or they are more diversified, the less likely it is that abnormal
effects from some contracts will occur. Shinhan Life Insurance Co., Ltd. takes this into account when underwriting
contracts and strives to form a sufficiently large and diversified group of contracts.
Insurance risk includes a lack of risk diversification and relates to geographical location and the nature of the
policyholder as well as to the diversification of risk forms or sizes.
If the insurance contract covers death, a catastrophe affects the frequency the most and can affect the frequency of
death earlier than expected due to a wide range of causes such as eating habits, smoking, and exercise habits, etc. And
if the coverage is survival, medical technology and social conditions can increase the survival rate. The frequency
may also be affected by excessive concentration in residential areas of policy holders.
Insurance accidents in life insurance include not only the death of the insured but also survival, disability and
hospitalization.
Shinhan Life Insurance Co., Ltd. basically classifies the Shinhan Life Insurance Co., Ltd 's insurance products into
individual insurance and group insurance according to the policyholder. Group insurance means a contract under
which the insured belongs to a group of a certain size or larger and in which the policyholder is the representative of
the Group or organization. The group insurance can be divided into savings and protections. Protection insurance
means insurance in which the sum of benefits paid for survival at the base age does not exceed the premium already
paid; savings insurance is defined as insurance, except for protection insurance, in which the sum of benefits paid for
survival exceeds the premium already paid. Individual insurance can be classified into death insurance in which the
insured's death is insured, survival insurance in which the life is insured for a certain period of time, and endowment
insurance in which life insurance and survival insurance are mixed.
Life insurance products can also be divided into guaranteed fixed rates, floating rates, interest accreted rate linked ,
and variable types by the applying term structures of interest types.
In the guaranteed fixed interest type, since the expected rate does not change from the time the policyholder enters
into the contract to the end of the insurance period, Shinhan Life Insurance Co., Ltd assumes the interest rate risk if
the asset management return rate or market interest rate is lower than the expected rate. Floating interest rate type
divides the net insurance premium into the guaranteed portion and the reserve portion; the guaranteed portion is
applied with the predetermined expected rate, and the reserve portion changes based on the reserve rate for policy
reserve according to asset management return rate, which makes partial hedge to interest rate risk, but the Group
assumes some interest rate risk from the changes of asset management return rate, etc. since the minimum reserve rate
for policy reserve is predetermined.
Shinhan Life Insurance Co., Ltd uses acquisition strategies and reinsurance strategies to manage insurance risk of
uncertainties of the total amount and timing of insurance claims paid due to insured events.
114
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
① Acceptance strategy
Acceptance strategy means diversifying the type of risk or the level of claims from that are accepted insurance policies.
For example, Shinhan Life Insurance Co., Ltd can balance mortality and survival risks. In addition, the selection of
policyholders through regular health check-ups is one of the major acceptance strategies.
② Reinsurance strategy
The risk of reinsurance contracts held to Shinhan Life Insurance Co., Ltd is based on the accepted insurance contracts,
which can be the total amount of risk or risk per contract on a per capita basis or per contract basis. In principle, the
reinsurance method provides the risk premium excess reinsurance, but other methods may be used within the scope
of the relevant laws as required. The degree of reinsurance held by Shinhan Life Insurance Co., Ltd shall be determined
by considering the Shinhan Life Insurance Co., Ltd 's assets, contract conditions, risk level, and technology for
selecting the contract.
Insurance risk can also be affected by the policyholder's right to terminate the contract or exercise annuity conversion
rights to reduce or not pay the full premium. As a result, insurance risks may be affected by the policyholder's actions
and decisions. Shinhan Life Insurance Co., Ltd 's insurance risk can be estimated on the assumption that the
policyholder is reasonable. For example, a person who is worse than a person in good health would have less intention
of terminating insurance that covers death. These factors are also reflected in the assumptions about Shinhan Life
Insurance Co., Ltd 's insurance liabilities.
.
115
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
Unlike other financial instruments, life insurance companies' insurance policies have the characteristics of long-term
contracts, which can be exposed to insurance risk that may arise due to an increase in actual claim payments than the
risk rate determined at the time of development of the product and interest rate risk that may arise due to differences
in interest rates and maturities between insurance liabilities and asset management.
The purpose of the Shinhan Life Insurance Co., Ltd’s risk management is to generate long-term stable growth and
profits by proactively preventing and systematically managing the various risks that may arise in the course of
management activities, reflecting these uncertain financial environments and the characteristics of life insurance
products with long-term attributes.
Shinhan Life Insurance Co., Ltd divides insurance risks arising from life insurance contracts into six sub-risks: death
risk, longevity risk, disability/disease risk, cancellation risk, operating expense risk, and catastrophe risk. The risk
amount for each sub-risk is measured on assets and liabilities that may directly or indirectly cause loss to Shinhan Life
Insurance Co., Ltd in the event of changes in actuarial assumptions, and is calculated based on the net asset value
through the shock scenario method or risk coefficient method for each sub-risk.
The shock scenario method, one of the insurance risk measurement methods, is a method of calculating the amount
of change in net asset value when applying a scenario in which the basic assumptions used for market valuation of
assets or liabilities change. On the other hand, the risk coefficient method is a method that calculates the amount by
multiplying a specific exposure by a specified risk coefficient, and is suitable for risk amounts that have short maturity
or do not have large changes in net asset value during market valuation. In addition, Shinhan Life Insurance Co., Ltd
calculates the life insurance risk amount considering the diversification effect by adding the risk amount calculated
for each sub-risk, reflecting the correlation coefficient between the sub-risks.
Shinhan Life Insurance Co., Ltd measures the statutory minimum level of capital based on the life insurance risk
amount and manages it within the allowable range. For this purpose, Shinhan Life Insurance Co., Ltd establishes basic
principles of risk management and establishes and implements regulations and management systems to implement
them. In addition, the Group supports decision-making related to various risks through the Risk Management
Committee and risk management organization, and prepare risk management procedures to identify and manage risks
in a timely manner.
In general, risk management procedures are to recognize exposed risks, measure their size, set acceptable limits,
monitor them regularly to report to management, and efficiently control and manage risks in case they exceed their
limits.
116
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
K-ICS is an equity capital system that precisely evaluates risk and financial soundness by evaluating the assets and
liabilities of insurance companies to market so that they can be applied under the financial statements prepared in
accordance with K-IFRS 1117 on insurance contracts. To maintain consistency in mark-to-market valuation and ensure
consistency with international capital regulations, the supervisory authorities introduced K-ICS based on mark-to-
market valuation, which improves the quality of insurance companies' capital by calculating available and required
capital in line with economic substance. This is a system designed to encourage improvement and strengthen risk
management.
With the introduction of K-ICS, the supervisory authorities have established standards for preparing a financial
position statement based on soundness supervision standards to separately calculate assets and liabilities that meet the
purpose of supervision and at the same time substantially reflect the risks of insurance companies. In the K-ICS, the
available capital, or solvency amount, is measured based on the basic capital and supplementary capital classified by
the loss absorption capacity of the net asset amount in the statement of financial position based on soundness
supervision standards evaluated at market price, and there are some restrictions on loss compensation. Supplementary
capital, defined as having, can be reflected in the solvency amount up to 50% of the required capital. In addition, the
required capital under the K-ICS, that is, the solvency standard amount, refers to the amount of potential losses that
may occur in the insurance company over the next year. Specifically, the K-ICS divides the risks exposed due to
insurance contract underwriting and asset management into five risks: life and long-term non-life insurance risk,
general non-life insurance risk, market risk, credit risk, and operational risk. Under the 99.5% confidence level, the
solvency standard amount is required to be measured by calculating the maximum loss that can occur over the next
year using the shock scenario method.
Under the K-ICS, the risk-based capital ratio is calculated by dividing the solvency amount by the solvency standard
amount. If the insurance company's solvency ratio is less than 100%, it indicates that the solvency standard amount
measured by the potential loss amount cannot be covered with capital, which means that the insurance company's
capital soundness has become poor, and the supervisory authority must comply with the Insurance Business
Supervision Regulations. Accordingly, insurance companies with a solvency ratio of less than 100% are required to
take timely corrective actions such as management improvement recommendations, management improvement
requests, or management improvement orders. As such, the new solvency system is a system in which the supervisory
authorities seek to protect policyholders by supervising the capital adequacy and risk management capabilities of
insurance companies.
117
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
Investment contracts that include insurance contracts and discretionary participation feature may be exposed to
financial risks although it is an insurance liability, and the form of exposure is as follows:
① Credit risk
Credit risk refers to the risk of loss resulting from the borrower's failure to repay a loan or meet contractual obligations.
Shinhan Life Insurance Co., Ltd.'s reinsurance assets are exposed to credit risk as assets that may incur losses if the
reinsurer defaults at the time of receipt of the claims and receivables.
Interest rate risk means the risk that arises when Shinhan Life Insurance Co., Ltd.'s financial position fluctuates
unfavorably due to the effect of interest rates on assets and liabilities. Shinhan Life Insurance Co., Ltd. manages
matched assets and liabilities for each portfolio to minimize the impact of mismatches between assets and liabilities
caused by interest rate fluctuations, thus reducing the risk.
③ Liquidity risk
Liquidity risk refers to the risk that assets and liabilities are subject to inconsistency or failure to respond to unexpected
cash outflows. Therefore, future cash outflows from investment contracts, including insurance liabilities which
account for most of Shinhan Life Insurance Co., Ltd.'s liabilities and discretionary participation features, are factors
used to determine the level of risk associated with Shinhan Life Insurance Co., Ltd. 's liquidity.
The purpose of Shinhan Life Insurance Co., Ltd. 's management of liquidity risk is to maintain sufficient liquidity to
prepare for repayments arising from insurance contracts under normal circumstances or when market shocks occur.
Shinhan Life Insurance Co., Ltd.'s main liquidity risk management methods are as follows:
- Regularly inspect and manage the amount of insurance payments and liquid assets
- Maintain and manage a portfolio comprised of assets that can be relatively easily liquidated in preparation for
unexpected disruptions in financing.
- Monitoring liquidity ratios by running liquidity stress tests
- Establishment of asset liability management strategy considering insurance contract liability cash flow
④ Market risk
Market risk refers to the risk of loss arising when Shinhan Life Insurance Co., Ltd.'s financial position fluctuates
unfavourably due to adverse price fluctuations such as stock prices and exchange rates. Shinhan Life Insurance Co.,
Ltd. carries out insurance contract transactions denominated in foreign currencies and is therefore exposed to exchange
rate fluctuations. Exposure to exchange rate fluctuations is managed through foreign exchange forward contracts and
interest rate swaps between different currencies.
The concentration of insurance risks by region as of December 31, 2023 and December 31, 2022 are as follow:
118
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
① The concentration of insurance risks by region as of December 31, 2023 and December 31, 2022 are as follow:
The amount of foreign currency insurance liabilities as of December 31, 2023 and December 31, 2022 are as follow:
The impact of changes in major assumptions on insurance contract liabilities (assets) as of December 31, 2023 and
December 31, 2022 are as follow:
119
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
The amount of the reinsurance contracts held, which is an asset according to risk level, as of December 31, 2023 and
December 31, 2022 are as follow:
120
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
The impact of exposure to interest rate risk and interest rate changes on profit and loss and capital as of December 31,
2023 and December 31, 2022 are as follow:
(*1) It is the total amount of financial assets measured at fair value through profit or loss, financial assets measured at fair value
through other comprehensive income, and derivative assets (liabilities).
(*2) It is the total amount excluding the contractual service margin from the remaining coverage elements of insurance contract
liabilities and reinsurance contract assets (liabilities).
100 bp Decrease
Insurance contract (*1) - (4,382,646) - (3,533,390)
Reinsurance contract (*1) - (17,723) - (22,266)
Financial assets (*2) 37,574 4,258,875 42,894 3,662,687
(*1) This is the impact on capital (before tax) due to changes in expected cash flows of insurance and reinsurance contracts,
excluding variable annuities/savings.
(*2) Calculated for assets related to insurance contracts excluding variable annuities/savings. The profit and loss effect is the change
in financial assets recognized at fair value through profit or loss, and the capital effect is the change in financial assets measured at
fair value through other comprehensive income.
121
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
The maturity amount of undiscounted remaining contractual cash flows as of December 31, 2023 and December 31,
2022 are as follow. This amount does not include matters relating to remaining coverage liabilities (insurance contracts
and reinsurance contracts) measured under the premium allocation approach.
Variable insurance:
Cash Inflow 582,036 485,566 412,870 350,176 297,209 3,160,998 5,288,855
Cash Outflow (943,282) (836,548) (764,049) (711,324) (641,963) (10,096,136) (13,993,302)
(361,246) (350,982) (351,179) (361,148) (344,754) (6,935,138) (8,704,447)
(750,943) (912,381) (721,670) (1,217,633) (1,506,206) (87,991,482) (93,100,315)
Reinsurance contract
Cash Inflow 203,944 204,852 204,904 204,760 205,383 7,421,755 8,445,598
Cash Outflow (225,690) (225,630) (224,694) (222,873) (221,054) (7,686,228) (8,806,169)
(21,746) (20,778) (19,790) (18,113) (15,671) (264,473) (360,571)
Total (including variable
W
insurance) (772,689) (933,159) (741,460) (1,235,746) (1,521,877) (88,255,955) (93,460,886)
Total (excluding variable
insurance) (411,443) (582,177) (390,281) (874,598) (1,177,123) (81,320,817) (84,756,439)
122
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Overview of the insurance risk – Shinhan Life Insurance Co., Ltd. (continued)
Variable insurance:
Cash Inflow 695,405 568,606 474,576 404,462 342,486 2,714,283 5,199,818
Cash Outflow (955,446) (865,504) (787,418) (739,126) (679,610) (10,192,545) (14,219,649)
(260,041) (296,898) (312,842) (334,664) (337,124) (7,478,262) (9,019,831)
(932,429) (665,519) (1,108,106) (987,261) (1,339,082) (92,483,529) (97,515,926)
Reinsurance contract
Cash Inflow 209,601 210,135 211,431 212,533 213,221 7,427,708 8,484,629
Cash Outflow (230,689) (230,889) (231,351) (232,019) (231,403) (7,769,737) (8,926,088)
(21,088) (20,754) (19,920) (19,486) (18,182) (342,029) (441,459)
Total (including variable
W
insurance) (953,517) (686,273) (1,128,026) (1,006,747) (1,357,264) (92,825,558) (97,957,385)
Total (excluding variable
insurance) (693,476) (389,375) (815,184) (672,083) (1,020,140) (85,347,296) (88,937,554)
As of December 31, 2023 and 2022, the amount to be paid upon request by the contractor of insurance contracts issued
by Shinhan Life Insurance Co., Ltd. is W 52,560,005 million and W 52,379,537 million.
123
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Overview of the insurance risk – Shinhan EZ General Insurance Co., Ltd.
Insurance risk is defined as the risk that arises in connection with the underwriting of insurance contracts and payment
of claims, which are the unique tasks of an insurance company, and is managed by dividing it into long-term non-life
insurance risk and general non-life insurance risk. Long-term non-life insurance risk refers to the risk of loss due to
risk factors that may arise in a long-term non-life insurance contract and is divided and measured into death risk,
longevity risk, disability/disease risk, property/other risk, operating expense risk, project cost risk, and catastrophe
risk. General non-life insurance risk refers to the risk of loss due to risk factors that may arise in general non-life
insurance contracts, and is measured by dividing it into insurance price risk, reserve risk, and catastrophe risk.
124
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Overview of the insurance risk – Shinhan EZ General Insurance Co., Ltd. (continued)
125
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
7. Investment in subsidiaries
(a) The summarized financial information of the controlling company and the Group’s major subsidiaries as of
December 31, 2023 and 2022 is as follows:
(*1) The consolidated financial statements of the consolidated subsidiaries are based on consolidated financial
statements, if applicable.
(*2) Trusts, beneficiary certificates, securitization special limited liability companies, associates and private equity
investment specialists that are not actually operating their own business are excluded.
(*3) Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners Co., Ltd. on April 3, 2023.
126
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) The summarized income information of the controlling company and the Group’s major subsidiaries for the years ended December 31, 2023 and 2022 is as follows:
127
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) The summarized income information of the controlling company and the Group’s major subsidiaries for the years ended December 31, 2023 and 2022 is as follows (continued):
(*1) The consolidated financial statements of the consolidated subsidiaries are based on consolidated financial statements, if applicable.
(*2) Trusts, beneficiary certificates, securitization special limited liability companies, associates and private equity investment specialists that are not actually operating their own
business are excluded.
(*3) This amount includes non-controlling interests.
(*4) On July 28, 2022, the Company disposed 100% of shares to Shinhan Card Co., Ltd. The amount as of December 31, 2022 is revenue, net income (loss) and total comprehensive
income before the disposal of Shinhan Card Co., Ltd.
(*5) Shinhan AITAS Co., Ltd. has changed its name to Shinhan Fund Partners Co., Ltd. on April 3, 2023.
(*6) For the acquired company, the amount is from the consolidated statements of comprehensive income for the period after the acquisition point.
128
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Change in consolidated subsidiaries for the year ended December 31, 2022 are as follows:
Company Description
Included Shinhan EZ General Insurance Co., Ltd. Newly acquired subsidiary
Shinhan Alternative Investment Extinguished due to merger with
Excluded
Management Inc. Shinhan Asset Management Co., Ltd.
(*) Subsidiaries such as trust, beneficiary certificate, corporate restructuring fund and private equity fund which are
not actually operating their own business are excluded.
129
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
8. Operating segments
The general descriptions by operating segments as of December 31, 2023 are as follows:
Segment Description
(*) Until the previous year, the Group had disclosed related information using the life insurance sales segment as a
reporting segment. However, as the internal reporting method for the chief operating decision maker was changed to
the insurance industry standard, from the current period, the life insurance and non-life insurance sales segment has
been disclosed. The segments are integrated and redefined as the insurance segment and announced. Accordingly, the
reporting segment information for the previous year was restated.
130
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) The following tables provide information of income and expense for each operating segment for the years ended December 31, 2023 and 2022:
131
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) The following tables provide information of income and expense for each operating segment for the years ended December 31, 2023 and 2022 (continued):
132
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Interest gains and losses from segment external customers and cross-sector interest gains and losses for the years ended December 31, 2023 and 2022 are as follows:
(*) Consolidated adjustment to net interest income from external customers is from the securities and others which were measured in fair values as a part of business combination accounting.
133
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) The following tables provide information of net fees and commission income (expense) of each operating segment for the years ended December 31, 2023 and 2022.
134
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The following table provides information of income from external consumers by geographical area for the years
ended December 31, 2023 and 2022.
The following table provides information of non-current assets by geographical area as of December 31, 2023 and
2022.
(*) Non-current assets comprise property and equipment, intangible assets and investment properties.
135
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Cash and due from banks at amortized cost as of December 31, 2023 and 2022 are as follows:
(b) Restricted due from banks in accordance with Related Regulation or Acts as of December 31, 2023 and 2022
are as follows:
136
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Financial assets at fair value through profit or loss as of December 31, 2023 and 2022 are as follows:
Equity instruments:
Stocks 3,732,637 3,739,343
Equity investment 8,093 38,515
Others 110,731 79,854
3,851,461 3,857,712
W 69,323,553 59,017,016
Other:
Loans at FVTPL W 1,758,562 2,389,180
Due from banks at fair value 30,743 26,116
Gold/silver deposits 103,706 75,969
W 71,216,564 61,508,281
(*) As of December 31, 2023 and 2022, restricted reserve for claims of customers’ deposits (trusts) are W 1,841,473
million and W 1,705,724 million, respectively.
137
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
11. Derivatives
(a) The notional amounts of derivatives outstanding as of December 31, 2023 and 2022 are as follows:
Equity related:
Over the counter:
Equity swaps and forwards 4,100,836 4,008,263
Equity options 3,552,337 878,122
7,653,173 4,886,385
Exchange traded:
Equity futures 2,764,186 3,317,515
Equity options 240,603 1,444,098
3,004,789 4,761,613
10,657,962 9,647,998
Commodity related:
Over the counter:
Commodity swaps and forwards 1,034,225 898,332
Commodity options 8,000 8,000
1,042,225 906,332
Exchange traded:
Commodity futures and options 93,004 75,770
1,135,229 982,102
Hedge:
Currency forwards 2,142,233 1,249,589
Currency swaps 4,448,030 4,677,553
Interest rate forwards and swaps 12,469,580 16,475,525
19,059,843 22,402,667
W 367,022,470 346,050,594
(*) The notional amounts of derivatives outstanding that will be settled in the ‘Central Counter Party (CCP)’ system.
138
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Fair values of derivative instruments as of December 31, 2023 and 2022 are as follows:
139
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Gain or loss on valuation of derivatives for the years ended December 31, 2023 and 2022 are as follows:
Equity related:
Over the counter:
Equity swap and forwards (19,934) (192,888)
Equity options (159,324) 3,360
(179,258) (189,528)
Exchange traded:
Equity futures 50,009 (69,200)
Equity options (13,929) (27,932)
36,080 (97,132)
(143,178) (286,660)
Commodity related:
Over the counter:
Commodity swaps and forwards 37,027 (148,591)
Commodity options 1,516 5,840
38,543 (142,751)
Exchange traded:
Commodity futures 1,484 2,058
40,027 (140,693)
140
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
i) Gains and losses on fair value hedged items and hedging instruments attributable to the hedged ineffectiveness for the years ended December 31, 2023 and 2022 are as follows:
(*1) The related account categories are presented as interest rate swap assets / liabilities and currency swap assets / liabilities.
(*2) The hedge ineffectiveness is the difference between gains and losses on hedged items and hedging instruments.
141
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii) Due to the ineffectiveness of hedge of cash flow risk and hedge of net investment in foreign operations during the year, the amounts recognized in the income statement and other
comprehensive income are as follows:
(*1) The related account categories are presented as interest rate swap assets / liabilities and currency swap assets / liabilities, currency forwards assets / liabilities and borrowings.
(*2) The hedge ineffectiveness is the difference between gains and losses on hedged items and hedging instruments.
142
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity
The Group transacts with derivative financial instruments to hedge its interest rate risk, currency risk and stock price fluctuation risk arising from the assets and liabilities of the Group.
The Group applies the fair value hedge accounting for the changes in the market interest rates, foreign exchange rates and stock price of the Korean won structured notes, foreign
currency generated financial debentures, Korean won structured deposits, foreign currency investment receivables and beneficiary securities in foreign currency; and cash flow hedge
accounting for forward interest rate, interest rate swaps, forward currency and currency swaps to hedge cash flow risk due to interest rates and foreign exchange rates of the Korean
won debt, foreign currency debt, foreign currency structured deposits, the Korean won bonds and foreign currency bonds, etc. In addition, in order to hedge the exchange rate risk of
the net investment in overseas business, the Group applies the net investment hedge accounting for foreign operations using currency forward and non-derivative financial instruments.
ii) Nominal amounts and average hedge ratios for hedging instruments as of December 31, 2023 and 2022 are as follows:
(*1) Interest rate swaps consist of 3M CD, USD SOFR, 3M Euribor, and 3M AUD Bond.
(*2) The average exchange rates of net investment hedge instruments are USD/KRW 1,235.14, JPY/KRW 9.46, EUR/KRW 1,358.46, GBP/KRW 1,547.81, AUD/KRW 865.53,
CAD/KRW 921.27, CNY/KRW 177.98, SEK/KRW 126.18.
143
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity
ii) Nominal amounts and average hedge ratios for hedging instruments as of December 31, 2023 and 2022 are as follows (continued):
(*1) Interest rate swaps consist of 3M CD, USD SOFR, 3M USD Libor, 3M Euribor, and 3M AUD Bond.
(*2) The average exchange rates of net investment hedge instruments are USD/KRW 1,195.32, JPY/KRW 10.13, EUR/KRW 1,336.97, GBP/KRW 1,484.42, AUD/KRW 812.44,
CAD/KRW 948.79, SGD/KRW 859.87, CNY/KRW 190.96, SEK/KRW 125.49.
144
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity (continued)
iii) Effect of derivatives on statement financial position, statement of comprehensive income, statement of changes in equity
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forward assets / liabilities, etc.
145
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity (continued)
iii) Effect of derivatives on statement financial position, statement of comprehensive income, statement of changes in equity (continued)
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forward assets / liabilities, etc.
146
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity (continued)
iv) Effect of hedging items on statement financial position, statement of comprehensive income, statement of changes in equity
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forwards, etc.
147
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity (continued)
iv) Effect of hedging items on statement financial position, statement of comprehensive income, statement of changes in equity (continued)
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forwards.
148
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The revised Standard requires exceptions to the analysis of future information in relation to the application of hedge accounting, while uncertainty exists due to movements of the
interest rate index reform. The exception assumes that the interest rate indicators for the hedged item and hedging instruments do not change due to the effect of the interest rate index
reform when assessing whether the expected cash flows that comply with existing interest rate indicators 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 KRW CD interest rate will be replaced by a KOFR (Korea Overnight Financing Repo Rate). The Group has assumed that in this hedging relationship, the spread changed on the
basis of KOFR would be similar to the spread included in the interest rate swap and forward used as the hedging instrument after LIBOR rate is suspended. The Group does not assume
any changes in other conditions.
149
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
12. 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 December 31, 2023 and 2022 are as follows:
(*) The Group designated the equity securities as securities at FVOCI as the regulation requires the Group to hold, etc.
150
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
12. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(b) Changes in carrying amount of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2023 and 2022
are as follows:
(*) Included the effects from changes in purchase, disposal, repayment, valuation, changes in foreign exchange rate and amortization of fair value adjustments recognized through
business combination accountings and the others.
151
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
12. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(b) Changes in carrying amount of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2023 and 2022
are as follows (continued):
(*) Included the effects from changes in purchase, disposal, repayment, valuation, changes in foreign exchange rate and amortization of fair value adjustments recognized through
business combination accountings and the others.
152
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
12. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(c) Changes in allowance for credit loss of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2023
and 2022 are as follows:
(*) Included the effects from changes in debt restructuring, investment conversion, foreign exchange rate and the others.
153
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
12. 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 years ended December 31, 2023 and 2022 are as follows:
(*) The issuers of those securities have exercised the early redemption options and the others.
(e) Income or loss on equity securities at fair value through other comprehensive income
i) The Group recognizes dividends, amounting to W 60,139 million and W 32,700 million, related to equity securities
at fair value through other comprehensive income for the years ended December 31, 2023 and 2022, respectively.
ii) The details of disposal of equity securities designated at fair value through other comprehensive income for the
years ended December 31, 2023 and 2022 are as follows:
(*) The reason for the disposal is the disposal of stocks acquired by investment conversion.
154
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Loans at amortized cost for configuration by customer as of December 31, 2023 and 2022 are as follows:
155
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in carrying amount of loans at amortized cost, etc. as of December 31, 2023 and 2022 are as follows:
(*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 W 9,964,573 million, which is written off as of December 31, 2023.
156
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in carrying amount of loans at amortized cost, etc. as of December 31, 2023 and 2022 are as follows
(continued):
ii) Due from banks at amortized cost and other financial assets
(*) The amount is due to execution, collection, debt restructuring, investment conversion, exchange rate fluctuation,
etc.
157
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in carrying amount of loans at amortized cost, etc. as of December 31, 2023 and 2022 are as follows (continued):
(*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 W 10,613,730 million, which is written off as of December 31, 2022.
158
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in carrying amount of loans at amortized cost, etc. as of December 31, 2023 and 2022 are as follows
(continued):
ii) Due from banks at amortized cost and other financial assets (continued)
(*) The amount is due to execution, collection, debt restructuring, investment conversion, exchange rate fluctuation,
etc.
159
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2023 and 2022 are as follows:
(*) Other changes are due to debt restructuring, investment conversion and changes in foreign exchange rate, etc.
160
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2023
and 2022 are as follows (continued):
ii) Due from banks at amortized cost and other financial assets
(*) Other changes are due to debt restructuring, investment conversion and changes in foreign exchange rate, etc.
161
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2023 and 2022 are as follows (continued):
(*) Other changes are due to debt restructuring, investment conversion and changes in foreign exchange rate, etc.
162
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2023
and 2022 are as follows (continued):
ii) Due from banks at amortized cost and other financial assets
(*) Other changes are due to debt restructuring, investment conversion and changes in foreign exchange rate, etc.
(d) Changes in deferred loan origination costs for the years ended December 31, 2023 and 2022 are as follows:
163
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Details of property and equipment as of December 31, 2023 and 2022 are as follows:
(b) Changes in property and equipment for the years ended December 31, 2023 and 2022 are as follows:
164
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in property and equipment for the years ended December 31, 2023 and 2022 are as follows (continued):
(c) Insured assets and liability insurance as of December 31, 2023 are as follows:
(*) Aside from the insurance mentioned above, the Group has entered into car insurance, medical insurance,
property insurance, and employee accident insurance.
165
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Details of intangible assets as of December 31, 2023 and 2022 are as follows:
(b) Changes in intangible assets for the years ended December 31, 2023 and 2022 are as follows:
(*1) Goodwill impairment incurred from the cash-generating unit of security sector at PT Shinhan Sekuritas Indonesia
and life insurance sector at Shinhan Financial Plus Co., Ltd. As a result of the impairment test for goodwill of PT
Shinhan Sekuritas Indonesia, the Group recognized an impairment loss amounting to W 1,842 million for the carrying
amount exceeding the recoverable amount of the CGU. This is due to the decrease in recoverable amounts (W 2,934
million decrease comparing to the previous year) due to continuing high price index and domestic foreign economic
turndown mainly from the prolongation of the Ukraine crisis, global high interest rates, etc. In addition, as a result of
the impairment test for goodwill of Shinhan Financial Plus Co., Ltd., the Group recognized an impairment loss
amounting to W 3,560 million for the carrying amount exceeding the recoverable amount of the CGU. This is due to
the decrease in recoverable amounts (W 9,750 million decrease comparing to the previous year) due to the
underperformance from the cash-generating unit and the reflection of the future outlook. The amount of impairment
loss recognized is included in the non-operating expenses, of the consolidated statement of comprehensive income.
(*2) Included in general administrative expense, other operating income (expense), and insurance service expense of
the consolidated statements of comprehensive income.
166
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in intangible assets for the years ended December 31, 2023 and 2022 are as follows (continued):
(*1) Goodwill impairment incurred from the cash-generating unit of security sector at PT Shinhan Sekuritas Indonesia.
As a result of the impairment test for goodwill of PT Shinhan Sekuritas Indonesia, the Group recognized an
impairment loss amounting to W 2,258 million for the carrying amount exceeding the recoverable amount of the CGU.
This is due to the decrease in recoverable amounts (W 1,569 million decrease comparing to the previous year) due to
continuing high price index and domestic foreign economic turndown mainly from the prolongation of the Ukraine
crisis, global high interest rates, etc. The amount of impairment loss recognized is included in the non-operating
expenses, of the consolidated statement of comprehensive income.
(*2) Included in general administrative expense, other operating income (expense) and insurance service expense of
the consolidated statements of comprehensive income.
167
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Goodwill
i) Goodwill allocated in the Group’s CGUs as of December 31, 2023 and 2022 is as follows:
ii) Changes in goodwill for the years ended December 31, 2023 and 2022 are as follows:
(*) Other changes are due to effects of changes in foreign exchange rate.
The recoverable amounts of each CGU are evaluated based on their respective value in use.
The discounted cash flow method (DCF) is applied when evaluating the recoverable amounts based on value in use,
considering the characteristics of each unit or group of CGU. However, the CGU of life insurance applied an actuarial
enterprise valuation methodology based on probabilistically expected cash flows in consideration of the
characteristics of the insurance business.
- Projection period
When evaluating the value in use, 5.5 years of cash flow estimates are used in projection and the value thereafter is
reflected as terminal value. However, 99 years of cash flow estimates for Shinhan Life Insurance Co., Ltd. is applied
and the present value of the future cash flows thereafter is not applied as it is not significant.
168
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The required rates of return expected by shareholders are applied to the discount rates. It is calculated in consideration
of which comprises a risk-free interest rate, a market risk premium and systemic risk (beta factor). In addition, terminal
growth rate is estimated based on inflation rate. However, for the life insurance CGU, since its cost of risk is reflected
at future cash flows, the current discount rates based on the interest rate term structure of risk-free government bonds
that reflects only the time value of money was applied.
Discount rates before tax and terminal growth rates applied to each CGU are as follows:
In case of the life insurance CGU, a term structure discount rate of 4.34% to 4.80% was applied for each future
period corresponding to future cash flows for 99 years.
Key assumptions used in the discounted cash flow calculations of CGUs (other than life insurance components) are
as follows:
Key assumptions used in the discounted cash flow calculations of life insurance (Shinhan Life Insurance) components
are as follows:
Key assumptions
Consumer price index growth rate (Bank of Korea) (%) 2.00
Risk-based confidence level (%) 99.50
v) Total recoverable amount and total carrying amount of CGUs to which goodwill has been allocated, are as follows:
Amount
Total recoverable amount W 58,700,974
Total carrying amount (*) 52,013,046
W 6,687,928
(*) It is the carrying amount after reflecting the impairment loss in the securities and life insurance sector.
169
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investments in associates as of December 31, 2023 and 2022 are as follows:
Ownership (%)
Reporting December December
Investees Country date 31, 2023 31, 2022
BNP Paribas Cardif Life Insurance (*1),(*7) Korea September 30 14.99 14.99
Partners 4th Growth Investment Fund (*4) Korea - 25.00 25.00
KTB Newlake Global Healthcare PEF (*5) Korea - 7.36 20.57
Shinhan-Neoplux Energy Newbiz Fund Korea December 31 31.66 31.66
Shinhan-Albatross tech investment Fund (*1) Korea November 30 50.00 50.00
KCGI-SingA330-A Private Special Asset Investment Trust Korea December 31 23.89 23.89
VOGO Debt Strategy Qualified IV Private Korea December 31 20.00 20.00
Shinhan-Midas Donga Secondary Fund Korea December 31 50.00 50.00
ShinHan – Soo Young Entrepreneur Investment Fund No.1 Korea December 31 24.00 24.00
Shinhan Praxis K-Growth Global Private Equity Fund (*7) Korea December 31 14.15 14.15
Kiwoom Milestone Professional Private Real Estate Trust 19 Korea December 31 50.00 50.00
Shinhan Global Healthcare Fund 1 (*7) Korea December 31 4.41 4.41
KB NA Hickory Private Special Asset Fund Korea December 31 37.50 37.50
Koramco Europe Core Private Placement Real Estate Fund No.2-2 Korea December 31 44.02 44.02
Hermes Private Investment Equity Fund (*4) Korea - 29.17 29.17
KDBC-Midas Dong-A Global contents Fund Korea December 31 23.26 23.26
Shinhan-Nvestor Liquidity Solution Fund Korea December 31 24.92 24.92
Shinhan AIM FoF Fund 1-A Korea December 31 25.00 25.00
IGIS Global Credit Fund 150-1 Korea December 31 25.00 25.00
Partner One Value up I Private Equity Fund (*4) Korea - 27.91 27.91
Genesis No.1 Private Equity Fund (*5) Korea - - 22.80
Korea Omega Project Fund III Korea December 31 23.53 23.53
Genesis North America Power Company No.1 PEF Korea December 31 43.84 39.11
SH MAIN Professional Investment Type Private Mixed Asset
Investment Trust No.3 Korea December 31 23.33 23.33
KOREA FINANCE SECURITY CO., LTD (*1),(*7) Korea September 30 14.91 14.91
MIEL CO.,LTD. (*2) Korea December 31 28.77 28.77
AIP Transportation Specialized Privately Placed Fund Trust #1 Korea December 31 35.73 35.73
Kiwoom-Shinhan Innovation Fund I Korea December 31 50.00 50.00
170
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investments in associates as of December 31, 2023 and 2022 are as follows (continued):
Ownership (%)
Reporting December December
Investees Country date 31, 2023 31, 2022
Midas Asset Global CRE Debt Private Fund No.6 Korea December 31 40.10 41.16
Samchully Midstream Private Placement Special Asset Fund 5-4 Korea December 31 42.92 42.92
SH Senior Loan Professional Investment Type Private Mixed Asset
Investment Trust No.3 Korea December 31 20.00 20.00
NH-Amundi Global Infrastructure Trust 14 Korea December 31 30.00 30.00
Jarvis Memorial Private Investment Trust 1 (*5) Korea - - 99.01
Vestas Qualified Investors Private Real Estate Fund Investment
Trust No.37 (*6) Korea December 31 60.00 60.00
Milestone Private Real Estate Fund 3 Korea December 31 32.06 32.06
Nomura-Rifa Private Real Estate Investment Trust 31 Korea December 31 31.31 31.31
SH Senior Loan Professional Investment Type Private Mixed Asset
Investment Trust No.2 Korea December 31 21.27 21.27
T&F 2019 bearing Private Equity Fund Specializing in Start-up and
Venture Business (*4) Korea - 28.25 28.25
FuturePlay-Shinhan TechInnovation Fund 1 Korea December 31 50.00 50.00
Stonebridge Corporate 1st Fund Korea December 31 44.12 44.12
Vogo Realty Partners Private Real Estate Fund V Korea December 31 21.64 21.64
Korea Credit Bureau (*1),(*7) Korea September 30 9.00 9.00
Goduck Gangil1 PFV Co., Ltd. (*1),(*7) Korea September 30 1.04 1.04
SBC PFV Co., Ltd. (*1),(*8) Korea September 30 25.00 25.00
NH-amundi global infra private fund 16 Korea December 31 50.00 50.00
IMM Global Private Equity Fund (*4) Korea - 33.00 33.00
SH BNCT Professional Investment Type Private Special Asset
Investment Trust (*9) Korea December 31 72.50 72.50
Deutsche Global Professional Investment Type Private Real Estate
Investment Trust No. 24 (*6) Korea December 31 52.28 52.28
Sparklabs-Shinhan Opportunity Fund 1 Korea December 31 49.50 49.50
BNW Tech-Innovation Private Equity Fund (*4) Korea - 29.85 29.85
IGIS Real-estate Private Investment Trust No.33 Korea December 31 40.86 40.86
WWG Global Real Estate Investment Trust no.4 (*5) Korea - - 29.55
Goduck Gangil10 PFV Co., Ltd. (*1),(*7) Korea September 30 19.90 19.90
Fidelis Global Private Real Estate Trust No.2 (*6) Korea December 31 79.63 79.70
171
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investments in associates as of December 31, 2023 and 2022 are as follows (continued):
Ownership (%)
Reporting December December
Investees Country date 31, 2023 31, 2022
AIP EURO PRIVATE REAL ESTATE TRUST No. 12 Korea December 31 28.70 28.70
Shinhan Healthcare Fund 2 (*7) Korea December 31 13.68 13.68
Shinhan AIM Real Estate Fund No.2 Korea December 31 30.00 30.00
Shinhan AIM Real Estate Fund No.1 Korea December 31 21.01 21.01
SH Daegu Green Power Cogeneration System Professional Investment Type
Private Special Asset Investment Trust Korea December 31 22.02 22.02
SH Sangju YC Expressway Professional Investment Type Private Special
Asset Investment Trust Korea December 31 29.19 29.19
SH Global Infrastructure Professional Investment Type Private Special Asset
Investment Trust No.7-2 (*6) Korea December 31 71.43 71.43
Korea Omega-Shinhan Project Fund I Korea December 31 50.00 50.00
Samsung SRA Real Estate Professional Private 45 Korea December 31 25.00 25.00
IBK Global New Renewable Energy Special Asset Professional Private2 Korea December 31 28.98 28.98
VS Cornerstone Fund Korea December 31 41.18 41.18
Aone Mezzanine Opportunity Professional Private (*5) Korea - - 64.41
NH-Amundi US Infrastructure Private Fund2 Korea December 31 25.91 25.91
SH Japan Photovoltaic Private Special Asset Investment Trust No.2 Korea December 31 30.00 30.00
Kakao-Shinhan 1st TNYT Fund Korea December 31 48.62 48.62
Pacific Private Placement Real Estate Fund No.40 Korea December 31 24.73 24.73
Mastern Private Real Estate Loan Fund No.2 Korea December 31 33.57 33.57
LB Scotland Amazon Fulfillment Center Fund 29 (*6) Korea December 31 70.14 70.14
JR AMC Hungary Budapest Office Fund 16 Korea December 31 32.57 32.57
EDNCENTRAL Co.,Ltd. (*7) Korea December 31 13.47 13.47
Future-Creation Neoplux Venture Capital Fund (*3) Korea December 31 16.25 16.25
Gyeonggi-Neoplux Superman Fund Korea December 31 21.76 21.76
NewWave 6th Fund Korea December 31 30.00 30.00
172
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investments in associates as of December 31, 2023 and 2022 are as follows (continued):
Ownership (%)
Reporting December December
Investees Country date 31, 2023 31, 2022
Neoplux No.3 Private Equity Fund (*3) Korea December 31 10.00 10.00
PCC Amberstone Private Equity Fund I Korea December 31 21.67 21.67
KIAMCO POWERLOAN TRUST 4TH Korea December 31 47.37 47.37
Mastern Opportunity Seeking Real Estate Fund II Korea December 31 22.22 20.00
AION ELFIS PROFESSIONAL PRIVATE 1 (*5) Korea - - 20.00
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture
Business(*5) Korea - - 29.68
Neoplux Market-Frontier Secondary Fund (*3) Korea December 31 19.74 19.74
Harvest Private Equity Fund II Korea December 31 22.06 22.06
Synergy Green New Deal 1st New Technology Business Investment Fund Korea December 31 28.17 28.17
KIAMCO Vietnam Solar Special Asset Private Investment Trust Korea December 31 50.00 50.00
SHINHAN-NEO Core Industrial Technology Fund Korea December 31 49.75 49.75
SHBNPP Green New Deal Energy Professional Investment Type Private
Special Asset Investment Trust No.2 Korea December 31 30.00 30.00
SIMONE Mezzanine Fund No.3 Korea December 31 28.78 28.97
Eum Private Equity Fund No.7 Korea December 31 21.00 21.00
Kiwoom Hero No.4 Private Equity Fund Korea December 31 21.05 21.05
Vogo Canister Professional Trust Private Fund I Korea December 31 36.74 36.27
SW-S Fund (*5) Korea - - 30.30
CL Buyout 1st PEF (*5) Korea - - 21.43
Timefolio The Venture-V second Korea December 31 20.73 20.73
Newlake Growth Capital Partners2 PEF (*4) Korea - 29.91 29.91
Shinhan Smilegate Global PEF I (*7) Korea December 31 14.21 14.21
Genesis Eco No.1 PEF Korea December 31 29.00 29.00
SHINHAN-NEO Market-Frontier 2nd Fund Korea December 31 42.70 42.70
NH-Synergy Core Industrial New Technology Fund Korea December 31 36.93 36.93
J& Moorim Jade Investment Fund Korea December 31 24.89 24.89
Helios-KDBC Digital Contents 1st Korea December 31 23.26 23.26
Ulmus SHC innovation investment fund Korea December 31 24.04 24.04
Mirae Asset Partners X Private Equity Fund (*4) Korea - 35.71 35.71
T Core Industrial Technology 1st Venture PEF Korea December 31 31.47 31.47
Curious Finale Corporate Recovery Private Equity Fund (*5) Korea - - 27.78
Fine Value POST IPO No.5 Private Equity Fund Korea December 31 40.00 40.00
TI First Property Private Investment Trust 1 Korea December 31 40.00 40.00
MPLUS Professional Private Real Estate Fund 25 Korea December 31 41.67 41.67
IBKC Global Contents Investment Fund Korea December 31 24.39 24.39
173
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investments in associates as of December 31, 2023 and 2022 are as follows (continued):
Ownership (%)
Reporting December December
Investees Country date 31, 2023 31, 2022
Premier Luminous Private Equity Fund (*5) Korea - - 25.12
Hanyang-Meritz 1 Fund Korea December 31 22.58 22.58
Kiwoom-Shinhan Innovation Fund 2 Korea December 31 42.86 42.86
ETRI Holdings-Shinhan 1st Unicorn Fund Korea December 31 50.00 50.00
Maple Mobility Fund (*4) Korea - 20.18 20.18
SJ ESG Innovative Growth Fund Korea December 31 28.57 28.57
AVES 1st Corporate Recovery Private Equity Fund (*6) Korea December 31 76.19 76.19
JS Shinhan Private Equity Fund (*3) Korea December 31 3.85 3.85
NH Kyobo AI Solution Investment Fund (*5) Korea - - 26.09
Daishin Newgen New Technology Investment Fund 1st (*6) Korea December 31 50.60 50.60
META ESG Private Equity Fund I Korea December 31 27.40 27.40
SWFV FUND-1 (*5) Korea - - 40.25
PHAROS DK FUND Korea December 31 24.24 24.14
Shinhan VC tomorrow venture fund 1 Korea December 31 39.62 39.62
Highland 2021-8 Fund (*5) Korea - - 32.67
H-IOTA Fund Korea December 31 24.81 24.81
Stonebridge-Shinhan Unicorn Secondary Fund Korea December 31 26.01 17.57
Tres-Yujin Trust Korea December 31 50.00 50.00
Shinhan-Time mezzanine blind Fund Korea December 31 50.00 50.00
Capstone REITs No.26 Korea December 31 50.00 50.00
JB Incheon-Bucheon REITS No.54 Korea December 31 39.31 39.31
Hankook Smart Real Asset Investment Trust No.3 Korea December 31 33.33 33.33
JB Hwaseong-Hadong REITs No.53 Korea December 31 31.03 31.03
KB Oaktree Trust No.3 Korea December 31 33.33 33.33
Daehan No.36 Office Asset Management Company Korea December 31 48.05 48.05
Rhinos Premier Mezzanine Private Investment Fund No.1 Korea December 31 27.93 27.93
SH Real Estate Loan Investment Type Private Real Estate Investment Trust
No.2 Korea December 31 29.73 29.73
Shinhan JigaeNamsan Road Private Special Asset Investment Trust Korea December 31 24.85 24.85
SKS-Yozma Fund No.1 Korea December 31 29.85 29.85
IBKC-METIS Global Contents Investment Fund (*5) Korea - - 36.36
Keistone Unicorn Private Equity Fund (*4) Korea - 28.00 28.00
KB Distribution Private Real Estate 3-1 Korea December 31 37.50 37.50
Pacific Private Investment Trust No.49-1 (*6) Korea December 31 79.28 79.28
KIWOOM Real estate private placement fund for normal investors No. 31
(*6) Korea December 31 60.00 60.00
RIFA Real estate private placement fund for normal investoes No. 51 Korea December 31 40.00 40.00
Fivetree general private equity fund No.15 Korea December 31 49.98 49.98
Shinhan-Kunicorn first Fund Korea December 31 38.31 38.31
Harvest Fund No.3 (*4) Korea - 44.67 44.67
Shinhan-Quantum Startup Fund Korea December 31 49.18 49.18
Shinhan Simone Fund Ⅰ Korea December 31 38.46 38.46
Korea Investment develop seed Trust No.1 Korea December 31 40.00 40.00
Tiger Green alpha Trust No.29 (*6) Korea December 31 95.24 95.24
STIC ALT Global II Private Equity Fund Korea December 31 21.74 21.74
NH-Brain EV Fund Korea December 31 25.00 25.00
DDI LVC Master Real Estate Investment Trust Co., Ltd. (*1),(*7) Korea September 30 15.00 15.00
Leverent-Frontier 4th Venture PEF Korea December 31 23.89 23.89
Find-Green New Deal 2nd Equity Fund Korea December 31 22.57 22.57
ShinhanFitrin 1st Technology Business Investment Association (*3) Korea December 31 16.17 16.17
PARATUS No.3 Private Equity Fund (*4) Korea - 25.64 25.64
Golden Route 2nd Startup Venture Specialized Private Equity Fund (*4) Korea - 22.73 22.73
Koramco Private Real Estate Fund 143 Korea December 31 30.30 30.30
Korea Investment Top Mezzanine Private Real Esate Trust No.1 Korea December 31 22.22 22.22
LB YoungNam Logistics Private Trust No.40 Korea December 31 25.00 25.00
Shinhan-Cognitive Start-up Fund L.P. Korea December 31 32.77 32.74
IGEN2022 No.1 private Equity Fund (*4) Korea - 27.95 27.95
Cornerstone J&M Fund I Korea December 31 26.67 26.67
174
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investments in associates as of December 31, 2023 and 2022 are as follows (continued):
Ownership (%)
Reporting December December
Investees Country date 31, 2023 31, 2022
Logisvalley Shinhan REIT Co.,Ltd. (*1) Korea September 30 20.27 20.27
DA Value-Honest New Technology Investment Fund 1 Korea December 31 23.66 23.66
KDB Investment Global Healthcare Private Equity Fund I (*4) Korea - 24.14 24.14
Shinhan-Ji and Tec Smart Innovation Fund Korea December 31 50.00 50.00
Shinhan-Gene and New Normal First Mover Venture Investment Equity
Fund 1st Korea December 31 50.00 50.00
Korea Investment Green Newdeal Infra Trust No.1 Korea December 31 27.97 27.97
BTS 2nd Private Equity Fund (*1) Korea November 30 26.00 26.00
Shinhan Global Active REIT Co.Ltd Korea December 31 20.37 20.37
NH-J&-IBKC Label Technology Fund Korea December 31 27.81 27.81
Hanyang Time Mezzanine Fund Korea December 31 28.57 28.57
IMM Global Venture Opportunity, LP(*5) Korea - - 35.50
Shinhan-isquare Venture PEF 1 Korea December 31 40.00 40.00
Capstone Develop Frontier Trust Korea December 31 21.43 21.43
Nextrade Co., Ltd. (*7) Korea December 31 8.00 8.00
SH Sustainable Management ESG Short term Bond Security Feeder
Investment Trust No.1 (*10) Korea - 62.84 26.90
SH 1.5years Maturity Investment Type Security Investment Trust No.2 Korea December 31 29.10 29.00
Eventus-IBKC LIB Fund Korea December 31 21.88 21.88
NH-Daishin-Kyobo healthcare 1 Fund (*4) Korea - 25.00 25.00
IBKC-Behigh Fund 1st Korea December 31 29.73 29.73
Nautic Green Innovation ESG Co-investment No.1 Private Equity Fund (*4) Korea - 24.10 24.10
ON No.1 Private Equity Fund Korea December 31 28.57 28.57
Digital New Deal Kappa Private Equity Fund Korea December 31 24.75 30.12
IBKCJS New Technology Fund No.1 Korea December 31 29.41 -
DS-Shinhan-JBWoori New Media New Technology Investment Fund No.1 Korea December 31 20.83 -
VOGO Debt Strategy General Private Real Estate Investment Trust No. 18 Korea December 31 28.57 -
Koramco IPO LEITS Mezzanine General Private Investment Trust No. 38
(*6) Korea December 31 75.00 -
TogetherKorea Private Investment Trust No. 6 (*6) Korea December 31 99.98 -
TogetherKorea Private Investment Trust No. 7 (*6) Korea December 31 99.98 -
Kiwoom Core Industrial Technology Investment Fund No.3 Korea December 31 34.75 -
Penture K-Content Investment Fund Korea December 31 21.96 -
2023 Shinhan-JB Woori-Daeshin Listed Companies New Technology Fund Korea December 31 30.00 -
Hana Alternative Investment Kosmes PCBO General PEF No. 1 Korea December 31 37.04 -
Shinhan-timefolio Bio Development Investment Fund Korea December 31 48.39 -
Shinhan M&A-ESG Fund Korea December 31 23.33 -
Shinhan SM Office Value Add – Outsource Management Real Estate
Investment Co., Ltd. - Korea December 31 28.43 -
KDBC meta-enter New Technology investment fund Korea December 31 27.89 -
Shinhan Time Secondary Blind New Technology Investment Trust Korea December 31 47.50 -
Shinhan DS Secondary Investment Fund Korea December 31 40.00 -
Shinhan-openwater pre-IPO Investment Trust 1 Korea December 31 50.00 -
Shinhan-Eco Venture Fund 2nd Korea December 31 40.00 -
Heungkuk-Shinhan the1st Visionary Technology Investment Trust no. 1 Korea December 31 40.00 -
Hantoo Shinhan Lake K-beauty Technology Investment Trust Korea December 31 22.96 -
Shinhan HB Wellness 1st Investment Trust Korea December 31 48.54 -
Korea real Asset Fund No.3 Korea December 31 28.57 -
Igis Yongsan Office General PE Real Estate Inv. Trust No. 518 Korea December 31 31.49 -
Samsung-dunamu Innovative IT Technology Investment Trust No. 1 Korea December 31 22.99 -
Time Robotics New Technology Investment Trust Korea December 31 29.86 -
Ascent-welcome Tehcnology Investment Trust No.2 Korea December 31 27.65 -
Igis General PE Real Estate Investment Trust 517-1 (*6) Korea December 31 96.30 -
Consus Osansegyo No.2 Korea December 31 50.00 -
Mastern General Private Real Estate Investment Trust No.189(Type 1
Beneficiary Securities) Korea December 31 32.69 -
175
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investments in associates as of December 31, 2023 and 2022 are as follows (continued):
(*1) The most recent financial statements available are used for the equity method since the financial statements as of
December 31, 2023 are not available. Significant trades and events occurred within the period are properly reflected.
(*2) In the course of the rehabilitation process, the shares were acquired through investment conversion. Although
voting rights cannot be exercised during the rehabilitation process, normal voting rights are exercised because the
rehabilitation process was completed before December 31, 2023. Also, it has been reclassified into the investments in
associates.
(*3) As a managing partner, the Group has a significant influence over the investees.
(*4) As a limited partner, the Group does not have an ability to participate in policy-making processes to obtain
economic benefit from the investees that would allow the Group to control the entity.
(*5) Excluded from the investments in associates due to full or partial disposal of shares, or loss of significant influence.
(*6) Although the ownership percentages are more than 50%, the Group applies the equity method accounting as the
Group does not have an ability to participate in the financial and operating policy-making process.
(*7) Although the ownership percentages are less than 20%, the Group applies the equity method accounting since it
participates in policy-making processes and therefore can exercise significant influence on investees.
(*8) The rate of Group’s voting rights is 4.65%.
(*9) Although the Group has a significant influence with ownership percentage more than 50%, the contribution was
classified as investments in associates as the Group is not exposed to variable returns due to the payment guarantee
for the entire investment amount.
(*10) For the year ended December 31, 2023, it is incorporated into the consolidation target as the Group held control
due to increased equity ratio.
176
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows:
177
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
178
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
December 31, 2023
Equity Change in
Investment method other
Beginning and income comprehensive Impairment Ending
Investees balance dividend (loss) income loss balance
Fidelis Global Private Real Estate Trust
W
No.2 21,945 - (9,925) - (11,469) 551
AIP EURO PRIVATE REAL ESTATE
TRUST No. 12 48,427 (5,864) 6,056 - - 48,619
Shinhan Global Healthcare Fund 2 (*1) - - - - - -
Shinhan AIM Real Estate Fund No.2 25,243 - 1,435 - - 26,678
Shinhan AIM Real Estate Fund No.1 44,642 6,586 645 - - 51,873
SH Daegu Green Power Cogeneration
System Professional Investment Type
Private Special Asset Investment Trust 32,627 (916) 3,070 - - 34,781
SH Sangju YC Expressway Professional
Investment Type Private Special Asset
Investment Trust 19,296 3 754 - - 20,053
SH Global Infrastructure Professional
Investment Type Private Special Asset
Investment Trust No.7-2 24,598 (7,618) 536 - - 17,516
Korea Omega-Shinhan Project Fund I 10,022 - 1,608 - - 11,630
Samsung SRA Real Estate Professional
Private 45[FoFs] 21,650 8,487 1,295 - - 31,432
IBK Global New Renewable Energy
Special Asset Professional Private2 33,412 (2,303) 1,187 - - 32,296
VS Cornerstone Fund 3,335 - (55) - - 3,280
Aone Mezzanine Opportunity
Professional Private 5,009 (5,072) 63 - - -
NH-Amundi US Infrastructure Private
Fund2 31,941 (4,395) 2,179 - - 29,725
SH Japan Photovoltaic Private Special
Asset Investment Trust No.2 6,332 (4,360) 341 - - 2,313
Kakao-Shinhan 1st TNYT Fund 21,330 - (1,464) - - 19,866
Pacific Private Placement Real Estate
Fund No.40 11,622 (748) 750 - - 11,624
Mastern Private Real Estate Loan Fund
No.2 6,387 (3,679) 332 - - 3,040
LB Scotland Amazon Fulfillment Center
Fund 29 29,637 (1,753) 3,044 - - 30,928
JR AMC Hungary Budapest Office Fund
16 12,457 (773) 1,003 - - 12,687
EDNCENTRAL Co.,Ltd. (*1) - - - - - -
Future-Creation Neoplux Venture
Capital Fund 4,251 (889) (682) - - 2,680
Gyeonggi-Neoplux Superman Fund 5,467 - (411) - - 5,056
NewWave 6th Fund 13,540 - 176 - - 13,716
179
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
180
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
181
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
182
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
183
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
185
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
186
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
187
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
188
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
189
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
190
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in investments in associates for the years ended December 31, 2023 and 2022 are as follows
(continued):
(*1) The Group has stopped recognizing its equity method income or loss due to the carrying amount 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 Co., Ltd.
191
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as
follows:
192
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
193
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
194
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
195
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
196
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
197
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
198
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
(*) Excluded the financial information of associates that are not subject to equity method due to disposal or of which
the financial information is not available as of end of the year.
199
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
200
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
201
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
202
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
203
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
204
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
205
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The statement of financial information as of and for the years ended December 31, 2023 and 2022 are as follows
(continued):
(*) Excluded the financial information of associates that are not subject to equity method due to disposal or of which
the financial information is not available as of end of the year.
206
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows:
207
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
208
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
209
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
210
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amounts of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
211
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amounts of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
212
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amounts of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
213
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
214
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
215
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
216
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
217
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amount of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
218
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Reconciliation of the financial information to the carrying amounts of its interests in the associates as of December
31, 2023 and 2022 are as follows (continued):
219
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) The unrecognized equity method losses as of and for the years ended December 31, 2023 and 2022 are as follows:
220
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Investment properties as of December 31, 2023 and 2022 are as follows:
(b) Changes in investment properties for the years ended December 31, 2023 and 2022 are as follows:
(c) Income and expenses on investment property for the years ended December 31, 2023 and 2022 are as follows:
(d) The fair value of investment property as of December 31, 2023 and 2022 is as follows:
(*) Fair value of investment properties is estimated based in the recent market transaction conditions with an
independent third party and certain significant unobservable inputs. Accordingly, fair value of investment properties
is classified as level 3.
221
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
19. Leases
(a) Gross investment and present value of minimum lease payment of finance lease as of December 31, 2023 and
2022 are as follows:
(*) Interest income on finance lease receivables recognized for the year ended December 31, 2023 is W 108,514
million.
(*) Interest income on finance lease receivables recognized for the year ended December 31, 2022 is W64,679 million.
222
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Minimum lease payment receivable schedule for lease contracts of the Group as lessor as of December 31, 2023
and 2022 are as follows:
i) Finance lease
(c) Changes in operating lease assets for the years ended December 31, 2023 and 2022 are as follows:
223
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) The details of the right-of-use assets by the lessee’s underlying asset type as of December 31, 2023 and 2022 are
as follows:
(e) The details of the changes in the right-of-use assets for the years ended December 31, 2023 and 2022 are as follows:
(*) Included in general administrative expense, other operating income(expense) and insurance service expense of
the consolidated statements of comprehensive income.
224
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(f) The details of the maturity of the lease liability as of December 31, 2023 and 2022 are as follows:
(*) The above amounts are based on undiscounted cash flows, and have been classified at the earliest maturity that
the Group has the obligation to pay.
(g) The lease payments for low-value assets and short-term leases for the years ended December 31, 2023 and 2022
are as follows:
(*) The payments for leases with terms less than 1 month are included.
225
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Assets pledged as collateral as of December 31, 2023 and 2022 are as follows:
(*) The carrying amounts of assets pledged that the pledgees have the right to sell or re-pledge regardless of the
Group’s default as of December 31, 2023 and 2022 are W 16,345,580 million and W9,754,980 million, respectively.
(b) The fair value of collateral held that the Group has the right to sell or re-pledge regardless of the pledger’s default
as of December 31, 2023 and 2022 are as follows:
226
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
21. Deposits
227
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Financial liabilities at fair value through profit or loss as of December 31, 2023 and 2022 are as follows:
(a) Financial liabilities designated at fair value through profit or loss as of December 31, 2023 and 2022 are as follows:
(*) The Group designated the financial liabilities at the initial recognition (or subsequently) in accordance with paragraph
6.7.1 of K-IFRS No. 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
W 7,796,727 million as of December 31, 2023. Increase in values of the liability due to credit risk changes is W
4,011 million for the year ended December 31, 2023 and the accumulated changes in values are W(-)5,278 million
as of December 31, 2023.
(b) The difference between the carrying amount of financial liabilities designated at fair value through profit or loss
and the amount required to be paid at contractual maturity as of December 31, 2023 and 2022 are as follows:
228
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
24. Borrowings
229
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Debt securities issued as of December 31, 2023 and 2022 are as follows:
The Group has operated a defined benefit plan and calculates defined benefit obligations based on the employee's
pension compensation benefits and service period.
Defined benefit obligations and plan assets as of December 31, 2023 and 2022 are as follows:
(*) The asset for defined benefit obligation of W46,758 million as of December 31, 2023 is the net defined benefit
assets of W114,378 million less the net defined liabilities of W67,620 million. In addition, the asset for defined benefit
obligation of W442,174 million as of December 31, 2022 is the net defined benefit liabilities of W456,838 million
less the net defined assets of W14,664 million.
230
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in the present value of defined benefit obligation and plan assets for the years ended December 31,
2023 and 2022 are as follows:
231
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in the present value of defined benefit obligation and plan assets for the years ended December 31,
2023 and 2022 are as follows (continued):
(*) Profit and loss related to defined benefit plans are all included in the general administrative expense.
232
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The composition of plan assets as of December 31, 2023 and 2022 are as follows:
(d) Actuarial assumptions as of December 31, 2023 and 2022 are as follows:
As of December 31, 2023 and 2022, reasonably possible changes in one of the relevant actuarial assumptions, holding
other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
(f) The Group's estimated contribution is W 162,769 million as of December 31, 2024.
27. Provisions
(*) As of December 31, 2023 and 2022, the Group recognizes a provision of W 360,137 million and W 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, etc. As of December 31, 2023, the Group recognizes a provision of W 293,824 million
for vulnerable groups such as self-employed people, small business owners and institutions supporting vulnerable
groups, etc. in accordance with the “Banking financial support plan for people’s livelihood.”
233
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the years ended December 31, 2023 and 2022 are as follows:
(*) Others include effects of the provision from the new financial guarantee contracts measured at fair value, and the expired contracts, the change of discount rate and others.
234
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the years ended December 31, 2023 and 2022 are as follows (continued):
(*) Others include effects of the provision from the new financial guarantee contracts measured at fair value, and the expired contracts, the change of discount rate and others.
235
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Changes in provisions for the years ended December 31, 2023 and 2022 are as follows:
(*) Others include increase in provisions based on the present value, the effect of changes in discount rate over the
period and others.
(d) Asset retirement obligation liabilities represent the estimated cost to restore the existing leased properties which
is discounted to the present value using the appropriate discount rate at the end of the reporting period. Disbursements
of such costs are expected to incur at the end of lease contract. Such costs are reasonably estimated using the average
lease year and the average restoration expenses. The average lease year is calculated based on the past ten-year
historical data of the expired leases. The average restoration expense is calculated based on the actual costs incurred
for the past three years using the three-year average inflation rate.
(e) Allowance for guarantees and acceptances as of December 31, 2023 and 2022 are as follows:
236
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) The details of insurance contract liabilities as of December 31, 2023 and 2022 are as follow:
(*) As of December 31, 2023 and 2022, contractor's share adjustment amount is excluded W (-) 1,024 million and W (-) 1,616 million, respectively.
237
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) The assumptions and calculation basis for the current estimates of future cash flows applied to the holding contract as of December 31, 2023 and 2022 are as follow:
Loss rate 17.00 ~ 756.00 9.00~ 771.00 11.00 ~ 833.00 - Other than general mortality: Ratio of accident insurance
premium to on-level risk insurance premium by risk coverage and
elapsed period based on the last five years of experience statistics
- General mortality: Ratio of actual mortality rate to expected
mortality rate by risk coverage and elapsed period based on
empirical statistics from the past five years
Operating expense rate - - - Based on the Group's experience statistics for the past one year or
more, the business plan (budget) that reflects the future operating
expense policy is used as basic statistics to calculate proportional
unit costs such as conversion results, planner fees, number of
new/existing contracts, new/continuing insurance premiums, and
reserves.
Discount rate 3.75 ~ 4.80 4.38 ~ 5.17 1.55 ~ 4.95 Interest rate term structure based on Financial Supervisory Service
disclosure standards
Risk adjustment confidence 75.00 75.00 75.00 Under the assumption that the probability distribution of the
level for non-financial risks present value of future cash flows at each reporting time follows a
normal distribution, the portion where the 75% percentile exceeds
the probability-weighted average of the present value of future
cash flows is calculated as risk adjustment.
238
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) The assumptions and calculation basis for the current estimates of future cash flows applied to the holding contract as of December 31, 2023 and 2022 are as follow: (continued)
239
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) The assumptions and calculation basis for the current estimates of future cash flows applied to the holding contract as of December 31, 2023 and 2022 are as follow: (continued)
Assumption value (%)
December 31, 2023 December 31, 2022 Transition point Basis for calculation
Operating expense rate Contract conclusion cost: Contract conclusion cost: Contract conclusion cost: Using the Group's experience statistics for the year immediately
Variable cost (%) Variable cost (%) 4.99~13.16 Variable cost (%) 6.02~10.96 preceding the calculation (October 2022 - September 2023), the
11.73~2170.24 Fixed cost (won) 921~3,769 Fixed cost (won) 902~1,896 operating expense unit price was subdivided by workload and type
Fixed cost (won) of work on a portfolio basis, and calculated by applying the
44,653~68,795 variable cost/fixed ratio according to the operating expense
allocation standard.
Contract maintenance cost: Contract maintenance cost: Contract maintenance cost:
Variable cost (%) 31.73~36.37 Variable cost (%) 4.7~21.19 Variable cost (%) 2.4~22.56 Contract conclusion cost
Fixed cost (won) 2,220~2,538 Fixed cost (won) 0~2,004 Fixed cost (won) 0~1,655 - Variable cost: Distribution of contract variable cost compared to imported
insurance premium
Damage investigation cost (%) Damage investigation cost (%) Damage investigation cost - Fixed cost: Fixed cost distribution for contract conclusion compared to
11.65~14.30 8.38~26.9 (%) 20.7~30.7 the number of new contracts
Discount rate 4.55~4.80 4.71~4.95 1.546~4.95 Interest rate term structure based on Financial Supervisory Service
disclosure standards
Risk adjustment confidence 75.00 75.00 75.00 Under the assumption that the probability distribution of the
level for non-financial risks present value of future cash flows at each reporting time follows a
normal distribution, the portion where the 75% percentile exceeds
the probability-weighted average of the present value of future
cash flows is calculated as risk adjustment.
240
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The details of changes in the remaining coverage elements and occurrence elements of net insurance contract liabilities that did not apply the premium distribution for the years
ended December 31, 2023 and 2022 are as follows:
241
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The details of changes in the remaining coverage elements and occurrence elements of net insurance contract liabilities that did not apply the premium distribution approach for the
years ended December 31, 2023 and 2022 are as follow (continued)
242
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The details of changes in the remaining coverage elements and occurrence elements of net insurance contract liabilities that did not apply the premium distribution approach for the
years ended December 31, 2023 and 2022 are as follow (continued):
243
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) The details of changes in the remaining coverage elements and occurrence elements of net insurance contract liabilities that did not apply the premium distribution approach for the
years ended December 31, 2023 and 2022 are as follow (continued):
244
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) The changes in the remaining coverage elements and occurrence elements of net insurance contract liabilities applying the premium allocation approach for the years ended
December 31, 2023 and 2022 are as follow:
December 31, 2023
Accident factors that
Remaining coverage elements occur
Present value estimate Risk adjustment for
Excluding loss factors Loss factor of future cash flows non-financial risks Total
Beginning balance Insurance contract assets W - - - - -
Insurance contract liabilities 78,665 3,139 5,372 451 87,627
Net insurance contract liabilities 78,665 3,139 5,372 451 87,627
245
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) The changes in the remaining coverage elements and occurrence elements of net insurance contract liabilities applying the premium allocation approach for the years ended
December 31, 2023 and 2022 are as follow (continued):
December 31, 2022
Accident factors that
Remaining coverage elements occur
Present value estimate Risk adjustment for
Excluding loss factors Loss factor of future cash flows non-financial risks Total
Beginning balance Insurance contract assets W - - - - -
Insurance contract liabilities 219 - 348 23 590
Net insurance contract liabilities 219 - 348 23 590
246
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Changes by measurement element in net insurance contract liabilities without applying the premium allocation approach for the years ended December 31, 2023 and 2022 are as
follow:
247
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Changes by measurement element in net insurance contract liabilities without applying the premium allocation approach for the years ended December 31, 2023 and 2022 are as
follow (continued):
248
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Changes by measurement element in net insurance contract liabilities without applying the premium allocation approach as of December 31, 2023 and 2022 are as follow (continued):
249
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) Changes by measurement element in net insurance contract liabilities without applying the premium allocation approach for the years ended December 31, 2023 and 2022 are as
follow (continued):
250
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(f) Details of insurance contracts that did not apply the premium allocation approach recognized for the first time for the years ended December 31, 2023 and 2022 are as follow:
251
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(g) The amount expected to be recognized in profit or loss in the future as contractual service margin for insurance contracts that do not apply the premium distribution approach as of
December 31, 2023 and 2022 are as follow:
(h) The composition details and fair value amounts of basic items of insurance contracts with direct participation characteristics as of December 31, 2023 and 2022 are as follow:
(*) As of December 31, 2023 and 2022, the book value of financial assets (liabilities) of variable insurance is W 5,940,453 million and W 5,695,788 million.
252
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(i) The details of changes in the remaining coverage elements and occurrence elements of reinsurance contract assets (liabilities) for which the premium distribution approach was not
applied for the years ended December 31, 2023 and 2022 are as follow:
253
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(i) The details of changes in the remaining coverage elements and occurrence elements of reinsurance contract assets (liabilities) for which the premium distribution approach was not
applied for the years ended December 31, 2023 and 2022 are as follow (continued) :
254
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(i) The details of changes in the remaining coverage elements and occurrence elements of reinsurance contract assets (liabilities) for which the premium distribution approach was not
applied for the years ended December 31, 2023 and 2022 are as follow (continued) :
255
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(i) The details of changes in the remaining coverage elements and occurrence elements of reinsurance contract assets (liabilities) for which the premium distribution approach was not
applied for the years ended December 31, 2023 and 2022 are as follow (continued) :
256
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(j) Details of changes in the remaining coverage elements and occurrence elements of reinsurance contract assets (liabilities) applying the premium distribution approach for the years
ended December 31, 2023 and 2022 are as follow:
December 31, 2023
Remaining coverage elements Accident factors that occur
Excluding loss Present value estimate Risk adjustment for
recovery factors Loss recovery factor of future cash flows non-financial risks Total
Beginning balance Reinsurance contract assets W 26,901 75 2,659 120 29,755
Reinsurance contract liabilities - - (33) - (33)
Net reinsurance contract assets (liabilities) 26,901 75 2,626 120 29,722
Reinsurance revenue
Accrued reinsurance amount
- - 2,813 79 2,892
Changes in incident fulfillment cash flow - 1,194 318 (71) 1,441
Etc. 217 - - - 217
217 1,194 3,131 8 4,550
Reinsurance service expense (10,104) - - - (10,104)
Reinsurance finance income and expense Current profit or loss 915 - 27 3 945
Other comprehensive income - - 9 1 10
915 - 36 4 955
Cash flow for the period Reinsurance premium paid 3,716 - - - 3,716
Recovery of reinsurance proceeds and other
reinsurance profits - - (1,079) - (1,079)
Receipt of investment elements and recovery
of reinsurance premiums - - - - -
3,716 - (1,079) - 2,637
Other increase/decrease (1,733) (49) (489) (28) (2,299)
Ending balance Reinsurance contract assets 19,971 1,220 4,244 104 25,539
Reinsurance contract liabilities (59) - (19) - (78)
Net reinsurance contract assets (liabilities) W 19,912 1,220 4,225 104 25,461
257
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(j) Details of changes in the remaining coverage elements and occurrence elements of reinsurance contract assets (liabilities) applying the premium distribution approach for the years
ended December 31, 2023 and 2022 are as follow (continued):
Reinsurance revenue
Accrued reinsurance amount
- - 614 (8) 606
Changes in incident fulfillment cash flow - (65) 667 84 686
Etc. - - - - -
- (65) 1,281 76 1,292
Reinsurance service expense (1,582) - - - (1,582)
Reinsurance finance income and expense Current profit or loss 255 - (6) - 249
Other comprehensive income - - - - -
255 - (6) - 249
Cash flow for the period Reinsurance premium paid 14,052 - - - 14,052
Recovery of reinsurance proceeds and other
reinsurance profits - - (447) - (447)
Receipt of investment elements and recovery
of reinsurance premiums - - - - -
14,052 - (447) - 13,605
Business Combination 14,176 140 1,798 44 16,158
Ending balance Reinsurance contract assets 26,901 75 2,659 120 29,755
Reinsurance contract liabilities - - (33) - (33)
258
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(k) Changes by measurement element in reinsurance contract assets (liabilities) for which the premium distribution approach was not applied for the years ended December 31, 2023
and 2022 are as follow:
259
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(k) Changes by measurement element in reinsurance contract assets (liabilities) for which the premium distribution approach was not applied for the years ended December 31, 2023
and 2022 are as follow (continued) :
260
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(k) Changes by measurement element in reinsurance contract assets (liabilities) for which the premium distribution approach was not applied for the years ended December 31, 2023
and 2022 are as follow (continued):
261
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(k) Changes by measurement element in reinsurance contract assets (liabilities) for which the premium distribution approach was not applied for the years ended December 31, 2023
and 2022 are as follow (continued) :
262
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(l) Details of reinsurance contracts that did not apply the premium allocation approach recognized for the first time for the years ended December 31, 2023 and 2022 are as follow:
263
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(m) The amount of contractual service margin for reinsurance contracts that do not apply the premium allocation approach as of December 31, 2023 and 2022 is expected to be
recognized in profit or loss in the future as follows:
264
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(n) Details of insurance profits and losses for the years ended December 31, 2023 and 2022 are as follows:
265
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(n) Details of insurance profits and losses for the years ended December 31, 2023 and 2022 are as follows (continued):
Unapplied premium allocation approach Expected reinsurance amount - 41,537 7,324 48,861
Risk-adjusted change amount - 3,227 626 3,853
Contractual service margin amortization - 8,120 7,269 15,389
Etc. (*) - (247) 4,230 3,983
- 52,637 19,449 72,086
Premium allocation approach 5,375 - 4,729 10,104
Reinsurance service expense subtotal 5,375 52,637 24,178 82,190
W 636,704 271,674 205,237 1,113,615
266
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(n) Details of insurance profits and losses for the years ended December 31, 2023 and 2022 are as follows (continued):
267
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(n) Details of insurance profits and losses for the years ended December 31, 2023 and 2022 are as follows (continued):
Unapplied premium allocation approach Expected reinsurance amount - 39,103 1,949 41,052
Risk-adjusted change amount - 3,242 270 3,512
Contractual service margin amortization - 11,589 4,433 16,022
Etc. (*) - (504) 2,246 1,742
- 53,430 8,898 62,328
Premium allocation approach 1,582 - - 1,582
Reinsurance service expense subtotal 1,582 53,430 8,898 63,910
W 732,176 312,881 1,167 1,046,224
(*) Include amounts allocated to loss components, etc.
268
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Details of insurance finance income and expense for the years ended December 31, 2023 and 2022 are as follow:
(*) Finance income and expense recognized as other comprehensive income are before deducting corporate tax effects.
269
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Details of insurance finance income and expense for the years ended December 31, 2023 and 2022 are as follow (continued):
(*) Finance income and expense recognized as other comprehensive income are before deducting corporate tax effects.
270
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Details of investment contract liabilities as of December 31, 2023 and 2022 are as follow:
(*) As of December 31, 2023, the Group accounts for the lease liabilities as other liabilities. For the year ended
December 31, 2023, the amount of variable lease payments that are not included in the measurement of lease liabilities
is W 23,272 million, cash outflows from leases are W 293,240 million, and interest expense on lease liabilities is W
18,855 million. For the year ended December 31, 2022, the amount of variable lease payments that are not included
in the measurement of lease liabilities is W 12,337 million, cash outflows from leases are W 279,406 million, and
interest expense on lease liabilities is W 13,379 million
271
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
32. Equity
Capital surplus:
Share premium 11,352,744 11,352,819
Others 742,224 742,224
12,094,968 12,095,043
272
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won, except per share data)
i) Capital stock of the Group as of December 31, 2023 and 2022 are as follows:
(ii) The details of changes in the number of common shares outstanding as of December 31, 2023 and 2022 are as
follows:
(iii) The details of convertible preferred stock as of December 31, 2023 and 2022 are as follows:
December 31, 2023 December 31, 2022
Beginning balance 17,482,000 17,482,000
Decrease (*) (17,482,000) -
Ending balance - 17,482,000
(*) 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.
Hybrid bonds classified as other equity instruments as of December 31, 2023 and 2022 are as follows:
273
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won, except per share data)
The hybrid bonds above can be repaid early after 5 or 10 years from the date of issuance, and the controlling company
has an unconditional right to extend the maturity under the same condition or change them to perpetual bonds.
(i) Changes in capital adjustments for the years ended December 31, 2023 and 2022 are as follows:
(ii) Details of treasury stock acquisition for the years ended December 31, 2023 and 2022 are as follows:
(*) For the year ended December 31, 2023, the Group acquired treasury stocks for retirement, and the retirement of 3,676,470
shares, 4,243,281 shares, 2,842,929 shares and 2,744,718 shares was completed on March 28, 2023, June 16, 2023, August 31,
2023 and December 27, 2023, respectively. For the year ended December 31, 2022, treasury stocks were acquired for retirement,
and the retirement of 3,665,423 shares and 4,149,262 shares was completed on April 25, 2022 and November 23, 2022, respectively.
274
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Changes in accumulated other comprehensive income for the years ended December 31, 2023 and 2022 are as follows:
275
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Changes in accumulated other comprehensive income for the years ended December 31, 2023 and 2022 are as follows (continued):
276
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The appropriation of retained earnings for the years ended December 31, 2023 and 2022 are as follows:
(*) These statements of appropriation of retained earnings are based on the separate financial statements of Shinhan
Financial Group.
In accordance with Regulations for the Supervision of Financial Institutions, the Group reserves the difference
between allowance for credit losses by K-IFRS and that as required by the Regulations at the account of regulatory
reserve for loan losses in retained earnings.
i) Changes in regulatory reserve for loan losses including non-controlling interests as of December 31, 2023 and
2022 are as follows:
277
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won, except per share data)
ii) Profit attributable to equity holders of Shinhan Financial Group and earnings per share after factoring in
regulatory reserve for loan losses for the years ended December 31, 2023 and 2022 are as follows:
278
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won, except per share data)
33. Dividends
(a) The interim dividends paid for the years ended December 31, 2023 and 2022 are as follows:
June 30, 2023 (2nd Quarter) Common stock (W525 per share) W 272,129
September 30, 2023 (3rd Quarter) Common stock (W525 per share) W 270,636
W 817,122
(b) Details of dividends recognized as distributions to stockholders for the years ended December 31, 2023 and 2022
are as follows:
(*1) The current dividend(plan) will be decided on March 26, 2024. The amount of dividends was not recognized as
a distribution to the owner during the period.
(*2) Dividends on own shares held by the Group are excluded.
(*3) Excluding quarterly dividends, including quarterly dividends, dividends per share are KRW 2,100 and KRW
2,065 for the years ended December 31, 2023 and 2022, respectively, and dividend rate per share are 42.0% and
41.3%, for the years ended December 31, 2023 and 2022, respectively.
(*4) At the regular stockholders' general meeting on March 23, 2023, the Articles of Incorporation were revised to
allow the dividend base date to be determined by resolution of the Board of Directors, and the dividend base date for
the 2023 annual dividend is February 23, 2024.
279
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won, except per share data)
(c) The details of dividends paid by the Group related to the preferred stock issued for the years ended December 31,
2023 and 2022 are as follows:
(*) 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, and dividends were paid before conversion.
(d) Dividends for hybrid bond is calculated as follows for the years ended December 31, 2023 and 2022:
280
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Net interest income for the years ended December 31, 2023 and 2022 are as follows:
281
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Net fees and commission income for the years ended December 31, 2023 and 2022 are as follows:
(*) Among operating lease fees recognized for the years ended December 31, 2023 and 2022, there is no variable lease
fee income which does not vary by index or rate.
Dividend income for the years ended December 31, 2023 and 2022 are as follows:
282
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
37. Net gain (loss) on financial instruments measured at fair value through profit or loss
Net gain (loss) on financial instruments measured at fair value through profit or loss for the ended December 31,
2023 and 2022 are as follows:
283
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
38. Net gain (loss) on financial instruments designated at fair value through profit or loss
Net gain (loss) on financial instruments designated at fair value through profit or loss for the years ended December
31, 2023 and 2022 are as follows:
Reversal of (provision for) credit loss allowance on financial assets for the years ended December 31, 2023 and 2022
are as follows:
284
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
General and administrative expenses for the years ended December 31, 2023 and 2022 are as follows:
285
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won, except per share data)
Performance conditions Relative stock price linked (20.0%), management index (80.0%)
W 44,222, W 33,122,
W 37,387, W 37,081 and W
Fair value per share in Korean won (*) 38,156 for the expiration of W 40,150
exercising period from 2019
to 2023
(*) Based on performance-based stock compensation, the reference stock price (the arithmetic average of the
weighted average share price of transaction volume for the past two months, the past one month, and the past one
week from the day before the base date) of four years after the commencement of the grant year is paid in cash, and
the fair value of the reference stock price to be paid in the future is assessed as the closing price of the settlement.
286
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Share-based compensation costs for the years ended December 31, 2023 and 2022 are as follows:
(c) Accrued expenses recognized related to share-based payment transactions as of December 31, 2023 and 2022 are
as follows:
287
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Other operating income and other operating expense for the years ended December 31, 2023 and 2022 are as follows:
(*) Includes W 293,824 million for vulnerable groups such as self-employed people, small business owners and
institutions supporting vulnerable groups, etc. in accordance with the “Banking financial support plan for people’s
livelihood” for the year ended December 31, 2023.
288
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Other non-operating income and other non-operating expense for the years ended December 31, 2023 and 2022 are
as follows:
Investments in associates:
Gain on disposal 12,435 8,965
Reversal of impairment loss - 5,924
12,435 14,889
Others:
Rental income on investment property 24,472 33,366
Reversal of impairment losses on intangible asset 50 396
Gain from assets contributed - 4
Gain from bargain purchase - 12,349
Others 66,546 75,511
91,068 121,626
170,237 686,168
Investments in associates:
Loss on disposal 19,266 19,045
Impairment loss 15,583 7,529
34,849 26,574
Others:
Donations 100,201 67,558
Depreciation of investment properties 15,058 18,115
Impairment loss on property and equipment 1,409 -
Impairment loss on intangible assets 10,732 3,158
Write-off of intangible assets 446 1,822
Expenses on collection of special bonds 9,130 10,259
Others (*2) 252,289 215,842
389,265 316,754
431,215 346,803
(*1) Gain and loss on disposal of sale-and-leaseback are included in gain and loss on disposal of property and
equipment, gain and loss on disposal of investment property and gain on assets held for sale, respectively. Gain on
disposal of sale-and-leaseback for the years ended December 31, 2022 is W 443,780.
(*2) It includes W 51,948 million and W 168,020 million, respectively, for the years ended December 31, 2023 and
2022 of estimated claim for damages that are highly probable to be paid in case of customer losses expected due to
redemption delays of Lime CI funds, etc.
289
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Income tax expense for the years ended December 31, 2023 and 2022 are as follows:
(b) Income tax expense calculated by multiplying net income before tax with the tax rate for the years ended
December 31, 2023 and 2022 are as follows:
290
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Deferred tax expenses by origination and reversal of deferred assets and liabilities and temporary differences for
the years ended December 31, 2023 and 2022 are as follows:
(*1) Deferred tax assets from overseas subsidiaries are decreased by W 650 million due to foreign exchange rate
movements.
(*2) The Group does not recognize deferred tax assets and liabilities related to global minimum tax laws by applying
the temporary exception provision for deferred tax in K-IFRS No. 1012.
291
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Deferred tax expenses by origination and reversal of deferred assets and liabilities and temporary differences for
the years ended December 31, 2023 and 2022 are as follows (continued):
(*) Deferred tax assets from overseas subsidiaries are decreased by W 2,797 million due to foreign exchange rate
movements.
292
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(d) Deferred tax assets and liabilities that are directly charged or credited to equity for the years ended December 31,
2023 and 2022 are as follows:
293
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) The amount of deductible temporary differences that are not recognized as deferred tax assets as of December 31,
2023 and 2022 are as follows:
(*1) Shinhan EZ General Insurance Co., Ltd., a subsidiary of the Group, suffered a net loss for the current period, etc.
As of the end of 2023, deferred corporate tax assets were not recognized as it was determined that the temporary
difference to be deducted in excess of the temporary difference to be added and the tax loss were not feasible.
(*2) Shinhan AI Co., Ltd, a subsidiary of the Group, did not recognize deferred corporate tax assets for temporary
differences in consideration of liquidation in 2024.
(*3) The expiration date of unused carried tax losses not recognized as deferred tax assets as of the end of the reporting
period is as follows:
(f) The amount of temporary difference regarding investment in subsidiaries that are not recognized as deferred tax
liabilities as of December 31, 2023 and 2022 are as follows:
(g) The Group set off a deferred tax asset against a deferred tax liability of the same taxable entity if, and only if,
they relate to income taxes levied by the same taxation authority and the entity has a legally enforceable right to set
off current tax assets against current tax liabilities. Deferred tax assets and liabilities presented on a gross basis prior
to any offsetting as of December 31, 2023 and 2022 are as follows:
(h) As of the end of 2023, the Group is in the process of litigation for cases where tax uncertainty exists (claim amount:
W 30,590 million). The Group determined that there is a high probability of winning the case and reflected it as current
corporate tax assets and corporate tax expenses.
(i) The Group is reviewing the impact on the consolidated financial statements following the implementation of the
Global Minimum Tax Act. Due to the complexity of the application of the global minimum tax law, it is difficult to
reasonably estimate the impact on the consolidated financial statements, and the Group is estimating the impact with
a tax expert.
294
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won, except per share data)
(a) Basic and diluted earnings per share for the years ended December 31, 2023 and 2022 are as follows:
(*) The number of common shares outstanding is 512,759,471 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 13,507,398 shares and 7,814,685 shares of treasury stock acquired and canceled during the periods ended
December 31, 2023 and December 31, 2022.
(b) The calculation details of the weighted average number of ordinary shares for the years ended December 31, 2023
and 2022 are as follows:
295
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Guarantees, acceptances and credit commitments as of December 31, 2023 and 2022 are as follows:
(*) Unused credit commitments provided to the card customers are included, the amounts are W 90,832,893 million
for the year ended December 31, 2023 and W 90,452,012 million for the year ended December 31, 2022.
296
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
The Group’s pending lawsuits as a defendant as of December 31, 2023 are as follows:
Number Claim
Case of claim amount Description Status
The Plaintiff believes that the group of lenders The first trial is
including the Group unfairly sold two oil drilling ongoing as of
vessels that are the core assets for borrowers and December 31, 2023
Return of unjust
1 W 33,096 it caused losses to other bankrupt creditors of the
earning
borrower. Therefore, the Plaintiff filed a lawsuit
for damages.
753 W 731,573
As of the December 31, 2023, the Group has recorded W 31,371 million and W 3,594 million, respectively, as
provisions and incurred claims element 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.
297
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(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 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 of being involved in poor concealment and fraud of Lime
Fund while operating TRSs with Lime Fund, and a related prosecution investigation has been under way since then.
Institutional sanctions (banned from the sale of new private equity funds and etc. for six months) against the Group
was finalized by the Financial Services Commission on November 12, 2021.
In addition, the prosecution arrested and indicted the former director of Prime Brokerage Services for fraud charges
and violation of the Capital Market and Financial Investment Services Act. Finally, the former director of Prime
Brokerage Services was found guilty.
The prosecution indicted the Group and the former director of Prime Brokerage Services on January 22, 2021 for
violating ‘Financial Investment Services and Capital Markets Act’, and the Group was sentenced to a fine of W 50
million for neglection its duty of supervision. However, the Group believes that additional legal liability that may
arise in the future in relation to the above incident is not high.
Considering the board resolutions and the results of the Financial Supervisory Service's dispute settlement committee,
the Group has been completed or will be carried out the compensation and liquidity supply for some of the Lime Fund
sales in the future.
(d) The Group has sold Gen2 related trust instruments from May 2014 to November 2019. As of December 31, 2023,
approximately W420 billion, the entire outstanding balance, is suspended from redemption and delayed in repayment.
In accordance with a resolution of the Board of Directors on September 28, 2021, the Group has decided to pay 40%
of the investment principal to the customers who have agreed to the suspension of redemption and settle the amount
upon investment recovery. On August 29, 2023, the Board of Directors decided to proceed with privatization using
the post-settlement method. In addition, on December 8, 2023, the Board of Directors decided to privatize NH-UK
Peterborough Power Plant Trust and others through a post-settlement method.
298
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(e) The Group is responsible for the completion of construction when the contractor fails to fulfill its responsibilities.
In case the Group fails to fulfill its responsibility, it is in the process of a responsible-for-completion land trust project
(133 cases other than the new residential and commercial apartment project in Mugeo-dong Nam-gu, Ulsan (excluding
completed workplaces)) to compensate for damages incurred to the financial institutions, and for the period ended
December 31, 2023, the total PF commitment amount of PF loan financial institutions is W 3,284.2 billion on a
temporary basis, W 3,846.4 billion on a limit basis, and the total PF loans amounted to W 5,567.6 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 fulfill its responsibilities, and the scope of damages to be compensated by the Group may change
depending on the results of lawsuits that are in progress as of December 31, 2023 or that will proceed after the end of
the current period. As of December 31, 2022, 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 December 31, 2022. Meanwhile, the process of each business sites will be continuously monitored.
Meanwhile, the construction company’s responsibility for completion of a total of 56 land trust projects, including 9-
1 Sihwa MTV Bandalseom, Ansan-si, Gyeonggi-do, which the consolidated entity is in progress as of the end of the
current period, has not been fulfilled. The total PF commitment amount of PF loan financial institutions invested in
the relevant business site at the end of the current period is W 774.7 billion on a temporary basis and W 831.5 billion
on a limit basis, and the PF loan amount is W 1,520.2 billion.
In addition, the completion deadline for a total of 8 land trust projects, including the Sanho-dong multiplex in Masan
Happo-gu, Changwon-si, Gyeongsangnam-do, which the consolidated entity is in progress as of the end of the current
period, has passed. The total PF commitment amount of PF loan financial institutions invested in the relevant business
site at the end of the current period is W 166.1 billion on a temporary basis and W 149.6 billion on a limit basis, and
the PF loan amount is W 304 billion.
(f) An investigation by the Financial Supervisory Service regarding the sale of Equity Linked Trust (ELT) and an
investigation by the Fair Trade Commission regarding unfair collaborative practices by four commercial banks are in
progress, and the results cannot be predicted at this moment.
299
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Cash and cash equivalents in the consolidated statements of cash flows as of December 31, 2023 and 2022 are as
follows:
December 31, 2023 December 31, 2022
Cash and due from banks at amortized cost W 34,650,390 30,070,043
Adjustments:
Due from financial institutions with a maturity over three months from
date of acquisition (1,322,274) (1,956,179)
Restricted due from banks (2,911,232) (3,699,918)
(4,233,506) (5,656,097)
W 30,416,884 24,413,946
(b) Significant non-cash activities for the years ended December 31, 2023 and 2022 are as follows:
December 31, 2023 December 31, 2022
Transfers from construction-in-progress to property and equipment W 82,179 33,983
Transfers between property and equipment and investment property 16,678 9,554
Transfers between assets held for sale and property and equipment 2,442 101,757
Transfers between investment property and assets held for sale 6,057 83,664
Accounts payable for purchase of intangible assets, etc. 374,685 117,743
Transaction for right-of-use assets 299,672 293,590
300
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(c) Changes in assets and liabilities arising from financing activities for the years ended December 31, 2023 and 2022
are as follows:
December 31, 2023
Financial
Net Debt liabilities
Derivative securities Lease designated
liabilities Borrowings issued liabilities at FVTPL Total
Beginning balance W 531,934 49,279,175 77,288,783 623,339 47,327 127,770,558
Changes from cash
flows 79,563 8,153,087 3,865,582 (262,055) 209,969 12,046,146
Changes from
non-cash flows
Amortization of
discount on
borrowings and
debentures - (61,561) 33,295 18,855 - (9,411)
Changes in
foreign currency - 90,914 197,895 (4,331) 32 284,510
Other (253,480) (560,263) 176,170 238,106 (2,496) (401,963)
Ending balance W 358,017 56,901,352 81,561,725 613,914 254,832 139,689,840
301
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 No. 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, bond and debt balance between the Group and the related parties
are disclosed. For details of the subsidiaries and associates, refer to 'Note 16'.
(a) Balances with the related parties as of December 31, 2023 and 2022 are as follows:
302
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(a) Balances with the related parties as of December 31, 2023 and 2022 are as follows (continued):
(*1) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2023.
(*2) For the year ended December 31, 2023, it is incorporated into the consolidation target as the Group held control
due to increased equity ratio.
303
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Transactions with the related parties for the years ended December 31, 2023 and 2022 are as follows:
304
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Transactions with the related parties for the years ended December 31, 2023 and 2022 are as follows (continued):
305
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Transactions with the related parties for the years ended December 31, 2023 and 2022 are as follows (continued):
306
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Transactions with the related parties for the years ended December 31, 2023 and 2022 are as follows (continued):
(*1) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2022
(*2) It is incorporated into the consolidation target as the Group held control due to increased equity ratio and BNP
Paribas Cardif General Insurance, Ltd. has changed its name to Shinhan EZ General Insurance Co., Ltd for the
year ended December 31, 2022. The transaction amount for the year ended December 31, 2022 is the amount
before being incorporated into the consolidation target.
(*3) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2023.
(*4) It is incorporated into the consolidation target as the Group held control due to increased equity ratio for the
year ended December 31, 2023.
307
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
Key management personnel compensation for the years ended December 31, 2023 and 2022 are as follows:
(*) The expenses of share-based payment transactions are the renumeration expenses during the vesting period.
(d) The guarantees and purchase agreement provided between the related parties as of December 31, 2023 and 2022
are as follows:
Amount of guarantees
December 31, December 31,
Guarantor Guaranteed Parties 2023 2022 Account
Shinhan Bank BNP Paribas Cardif Life Insurance W 10,000 10,000 Unused loan limit
〃 Key Management Personnel 3,241 2,143 Unused loan limit
Shinhan Card BNP Paribas Cardif Life Insurance 895 883 Unused credit line
The Group Structured entities 326,830 296,118 Purchase agreement
W 340,966 309,144
(e) Details of collaterals provided by the related parties as of December 31, 2023 and 2022 are as follows:
308
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(f) Details of significant loan transactions with related parties as of December 31, 2023 and 2022 are as follows:
309
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 vehicles are established to buy assets from originators and issue asset-
securitization backed securities in order to facilitate the originators’ funding activities and enhance
their financial soundness. The Group is involved in the securitization vehicles by
purchasing (or committing to purchase) the asset-backed securities issued and/or
providing other forms of credit enhancement.
The Group does not consolidate a securitization vehicle if (i) the Group is unable to
make or approve decisions as to the modification of the terms and conditions of the
securities issued by such vehicle or disposal of such vehicles’ assets, (ii) (even if the
Group is so able) if the Group does not have the exclusive or primary power to do
so, or (iii) if the Group does not have exposure, or right, to a significant amount of
variable returns from such entity due to the purchase (or commitment to purchase)
of asset-backed securities so issued or subordinated obligations or by providing
other forms of credit support.
Structured financing Structured entities for project financing are established to raise funds and invest in
a specific project such as M&A (mergers and acquisitions), BTL (build-transfer-
lease), shipping finance, etc. The Group is involved in the structured entities by
originating loans, investing in equity, or providing credit enhancement.
Investment fund Investment fund means an investment trust, a PEF (private equity fund) or a
partnership which invests in a group of assets such as stocks or bonds by issuing a
type of beneficiary certificates to raise funds from the general public, and distributes
its income and capital gains to their investors. The Group manages assets by
investing in shares of investment fund or playing a role of an operator or a GP
(general partner) of investment fund, on behalf of other investors.
The size of unconsolidated structured entities as of December 31, 2023 and 2022 are as follows:
310
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
i) The carrying amounts of the assets and liabilities relating to its interests in unconsolidated structured entities as
of December 31, 2023 and 2022 are as follows:
311
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
ii) The maximum risk exposure of the Group relating to its interests in unconsolidated structured entities as of
December 31, 2023 and 2022 are as follows:
The controlling company decided to acquire and retire treasury stocks that worth W 150 billion through a resolution
of the Board of Directors on February 8, 2024, in order to enhance shareholder value.
The effective interest rate, not the carrying amount, 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 the end of the current term, the Group has completed most of its conversion and
replacement plans in relation to the discontinuation of LIBOR interest rate calculation and aims to conclude the
response plan in accordance with the response guidelines of the supervisory authorities.
312
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 contractual service
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.
1) To identify, recognize and measure each group of insurance contracts issued as if this Standard had always
applied;
1-1) To identify, recognize and measure any assets for insurance acquisition cash flows as if this Standard
had always applied (except that an entity is not required to apply the recoverability assessment before
the transition date);
2) To derecognize any existing balances that would not exist had this Standard always applied; and
3) 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.
313
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(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:
(*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 W 9,501,135
million and separate account liabilities amounted to W 9,834,894 million, respectively.
314
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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
Transition Classifica- Transition
date (Jan. tion due to date (Jan.
1, 2022) Separate Policy loan new 1, 2022)
under K- account excluded business under K-
Classification IFRS 1104 (*1) (*2) model IFRS 1117
Cash and due Financial assets
from banks at at amortized
amortized cost cost W 28,453,404 595,937 - - 29,049,341
Due from banks Financial assets
at fair value at fair value
through profit through profit
or loss or loss 34,262 - - - 34,262
Financial assets
Securities at fair
at fair value
value through
through profit
profit or loss
or loss 60,686,153 6,121,716 - (364,127) 66,443,742
Financial assets
Loans at fair
at fair value
value through
through profit
profit or loss
or loss 1,683,344 - - - 1,683,344
Securities at fair Financial assets
value through at fair value
other through other
comprehensive comprehensive
income income 64,838,323 2,035,462 - 24,019,681 90,893,466
Financial assets
Securities at
at amortized
amortized cost
cost 49,930,076 - - (23,765,134) 26,164,942
Financial assets
Loans at
at amortized
amortized cost
cost 389,137,156 768,256 (5,094,638) - 384,810,774
(*1) Consisted of the total of separate account and intercompany transactions that are eliminated.
(*2) Policy loans, which used to be recognized as separate assets under 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.
315
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
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 W 648,152,185 598,613,763 49,538,422
Elimination of carrying amount of K-IFRS 1104 items: -
Loans at amortized cost (policy 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) W 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)
W (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) 459,556 -
Tax effects from adjustments (27,990) (229,003)
Total of adjustments for transition date 79,713 597,815
Application of K-IFRS 1117 on January 1, 2022 (the transition date) W (905,223) 31,139,115
316
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Significant effects in the primary financial statements such as the financial position as of December 31, 2022 and
comprehensive income statement for the period ended December 31, 2022 under K-IFRS 1117 are as follows:
ii) The statement of comprehensive income for the period ended December 31, 2022
317
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(In millions of won)
(b) Significant effects in the primary financial statements such as the financial position as of December 31, 2022 and
comprehensive income statement for the period ended December 31, 2022 under K-IFRS 1117 are as follows
iii) The statement of cash flows for the period ended December 31, 2022
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152, Teheran-ro, Gangnam-gu, Seoul 06236
(Yeoksam-dong, Gangnam Finance Center 27th Floor)
Republic of Korea
We have audited the internal control over financial reporting (“ICFR”) for consolidation purposes of
Shinhan Financial Group Co., Ltd. and its subsidiaries (“the Group”) as of December 31, 2023 based on
the criteria established in the Conceptual Framework for Designing and Operating ICFR (“ICFR Design
and Operation Framework”) issued by the Operating Committee of Internal Control over Financial
Reporting in the Republic of Korea (the “ICFR Committee”).
In our opinion, the Group maintained, in all material respects, effective internal control over financial
reporting for consolidation purposes as of December 31, 2023, based on ICFR Design and Operation
Framework.
We have also audited, in accordance with Korean Standards on Auditing (KSAs), the consolidated financial
statements of the Group, which comprise the consolidated statement of financial position as of December
31, 2023, the consolidated statements of comprehensive income, changes in equity and cash flows for the
year then ended, and notes, comprising a summary of material accounting policies and other explanatory
information, and our report dated March 4, 2024 expressed an unmodified opinion on those consolidated
financial statements.
Basis for Opinion on Internal Control over Financial Reporting for Consolidation Purposes
We conducted our audit in accordance with KSAs. Our responsibilities under those standards are further
described in the Auditors’ Responsibilities for the Audit of the Internal Control over Financial Reporting
for Consolidation Purposes section of our report. We are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the internal control over financial reporting for
consolidation purposes in the Republic of Korea, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Internal Control over
Financial Reporting for Consolidation Purposes
The Group’s management is responsible for designing, operating and maintaining effective internal control
over financial reporting for consolidation purposes and for its assessment of the effectiveness of internal
control over financial reporting for consolidation purposes, included in the accompanying ‘ICFR Operating
Status Report for Consolidation Purposes by CEO and IAM.’
Those charged with governance are responsible for overseeing the Group’s internal control over financial
reporting for consolidation purposes.
Auditors’ Responsibilities for the Audit of the Internal Control over Financial Reporting for Consolidation
Purposes
Our responsibility is to express an opinion on the Group’s internal control over financial reporting for
consolidation purposes based on our audit. We conducted our audit in accordance with KSAs. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting for consolidation purposes was maintained in all material respects.
Auditors’ Responsibilities for the Audit of the Internal Control over Financial Reporting for Consolidation
Purposes
Our audit of internal control over financial reporting for consolidation purposes included obtaining an
understanding
Our of internal
responsibility control over
is to express financial
an opinion onreporting for consolidation
the Group’s purposes,
internal control assessingreporting
over financial the risk that
for
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal
consolidation purposes based on our audit. We conducted our audit in accordance with KSAs. Those
control based on the assessed risk.
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting for consolidation purposes was maintained in all material respects.
Definition and Limitations of Internal Control over Financial Reporting for Consolidation Purposes
Our audit of internal control over financial reporting for consolidation purposes included obtaining an
A company’s internal control over financial reporting for consolidation purposes is a process designed to
understanding of internal control over financial reporting for consolidation purposes, assessing the risk that
provide reasonable assurance regarding the reliability of financial reporting and the preparation of
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal
consolidated financial statements for external purposes in accordance with Korean International Financial
control based on the assessed risk.
Reporting Standards (“K-IFRS”). A company’s internal control over financial reporting for consolidation
purposes includes those policies and procedures that (1) pertain to the maintenance of records that, in
Definition and Limitations of Internal Control over Financial Reporting for Consolidation Purposes
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Group;
(2)company’s
A provide reasonable assurance
internal control over that transactions
financial reportingareforrecorded as necessary
consolidation purposestois permit preparation
a process designed ofto
consolidated financial statements in accordance with K-IFRS, and that receipts and
provide reasonable assurance regarding the reliability of financial reporting and the preparation expenditures of the
of
Group are being
consolidated made statements
financial only in accordance
for externalwithpurposes
authorizations of management
in accordance and directors
with Korean of the
International Group;
Financial
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
Reporting Standards (“K-IFRS”). A company’s internal control over financial reporting for consolidation acquisition,
use, or disposition
purposes of thepolicies
includes those Group’sand
assets that could
procedures thathave
(1) apertain
material effect
to the on the consolidated
maintenance of recordsfinancial
that, in
statements.
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Group;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
Because of its inherent limitations, internal control over financial reporting for consolidation purposes may
consolidated financial statements in accordance with K-IFRS, and that receipts and expenditures of the
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
Group are being made only in accordance with authorizations of management and directors of the Group;
are subject to the risk that controls may become inadequate because of changes in conditions, or that the
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
degree of compliance with the policies or procedures may deteriorate.
use, or disposition of the Group’s assets that could have a material effect on the consolidated financial
statements.
The engagement partner on the audit resulting in this independent auditors’ report is Min-Seon Chae.
Because of its inherent limitations, internal control over financial reporting for consolidation purposes may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the
KPMG Samjong Accounting Corp.
degree of compliance with the policies or procedures may deteriorate.
Seoul, Korea
The engagement partner on the audit resulting in this independent auditors’ report is Min-Seon Chae.
March 4, 2024
This report is effective as of March 4, 2024, the audit report date. Certain subsequent events or
circumstances, which may occur between the audit report date and the time of reading this report, could
KPMG Samjong Accounting Corp.
have a material impact on the internal control over financial reporting for consolidation purposes.
Accordingly,
Seoul, Korea the readers of the audit report should understand that the above audit report has not been
updated to reflect the impact of such subsequent events or circumstances, if any.
March 4, 2024
This report is effective as of March 4, 2024, the audit report date. Certain subsequent events or
circumstances, which may occur between the audit report date and the time of reading this report, could
have a material impact on the internal control over financial reporting for consolidation purposes.
Accordingly, the readers of the audit report should understand that the above audit report has not been
updated to reflect the impact of such subsequent events or circumstances, if any.
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