📝 What This Document Is 📂

This filing is a comprehensive Form 20-F, which is an annual report that multinational foreign private companies file with the U.S. Securities and Exchange Commission (SEC). Think of it as the company’s "year in review" for investors. It is meant to give a detailed look at the company's structure, financial health, and business operations across multiple years (2023, 2024, and 2025).

Because this is an annual report, it includes highly technical accounting rules, detailed footnotes, and disclosures about risks and assets. The goal is not just to list numbers, but to explain how those numbers were calculated and what they mean for the business's stability and future direction.

👉 Key takeaway: This document is extremely detailed and heavily focused on accounting transparency, meaning nearly every single number and methodology used must be disclosed to regulators.

🏢 What The Company Does 🏦

Shinhan Financial Group Co Ltd (SHG) is a massive financial conglomerate. In simple terms, it operates across the entire spectrum of finance, including banking, insurance, asset management, and investment services. It is one of South Korea’s largest financial groups, maintaining a vast domestic and international footprint.

The Group's business model is diversified, allowing it to earn money from multiple sources: lending (banks), protecting against risks (insurance), managing investments (asset management), and various financial transactions (securitizations, derivatives).

👉 Why it matters: The size and diversity of its operations mean that if one segment of the economy slows down (like real estate), other segments (like credit cards or commercial lending) might keep the group stable, but they also expose it to multiple types of risks.

💸 Key Accounting & Financial Changes ⚙️

Since the filing is so detailed on accounting methodologies, this section focuses on how the company accounted for its complex changes across the years ending December 31, 2023, 2024, and 2025.

• Corporate Restructuring: The Group has undergone name changes and liquidations. Shinhan AITAS Co., Ltd. changed its name to Shinhan Fund Partners Co., Ltd. on April 3, 2023, and Shinhan AI Co., Ltd. was liquidated in the year ended December 31, 2024.
• Valuation Gains/Losses: During the year ended December 31, 2025, the Group included a disposal gain of W 2,652 million from an in-kind contribution when acquiring shares of Finflow.
• Accounting Expertise: The filing confirms that the group applies the equity method accounting to associates, even if ownership percentages are less than 20% but they can exercise significant influence, or if the ownership is more than 50% but they lack control over day-to-day operations.

👉 Why it matters: Accounting rules can make numbers look different year-to-year. These disclosures ensure that readers understand if a change in a subsidiary's name or a liquidation is an operational event or simply a bookkeeping adjustment.

⚠️ Impairment Losses and Risk Assessments 📉

The Group must regularly test its major holdings for signs of value loss (impairment). The filing highlights two significant goodwill impairment losses due to macroeconomic pressures.

• Vietnam Securities Market Decline: Shinhan Securities Vietnam Co., Ltd. recognized an impairment loss of W 1,298 million. This loss was attributed to the decline in the Vietnamese stock market, which was driven by global high interest rates and economic recessions.
• Real Estate Market Decline: Shinhan Asset Trust Co., Ltd. recognized a larger impairment loss of W 23,215 million. This loss is explicitly linked to the deterioration of the business environment caused by slow movement in the real estate and construction sectors.

Additionally, the Group reports multiple risk metrics under the Basel III standard, including:

• Interest Rate Risk (IRRBB): This measures the change in expected cash flows due to interest rate fluctuations.
• Foreign Exchange Risk: This accounts for the risk associated with different currencies (USD, EUR, JPY, CNY, etc.).
• Credit Spread Risk: This measures the risk associated with the credit quality of the loans and investments.

👉 Why it matters: These impairment losses signal that the group's major operating units are feeling the impact of specific, sector-wide downturns (real estate, local market slowdowns) and must write down the value of their investments accordingly.

🏦 Current Financial Position & Debt 💰

The filing offers a snapshot of the Group's liabilities and assets, highlighting its international reach and commitment structure.

• Customer Deposits: As of December 31, 2024, restricted deposits for customer claims (trusts) amounted to W 1,731,224 million. By December 31, 2025, this figure increased significantly to W 2,965,469 million.
• International Presence: The balance sheet accounts disclose multiple international operations, including structured financing and assets/liabilities denominated in currencies like USD, JPY, CNY, and EUR, confirming its global market activities.
• Uncollected Loans: The amount of uncollected loans currently in recovery (principal and interest) was W 10,682,802 million as of December 31, 2025.

👉 Why it matters: The massive increase in restricted deposits over a year shows the growing volume of money the Group is holding in trust for its customers, signaling high trust and transactional activity.

💼 Massive Investment Portfolio: Associates and Holdings 🌳

The filing dedicates extensive space to list its numerous associate companies. This list includes more than 100 different entries, ranging from local private equity funds to global real estate trusts.

• Scope of Investments: These associates cover diverse sectors, including infrastructure (e.g., ShinhanGlobalHealthcareFund, AssociatesNHamundiGlobalInfra), technology (AssociatesShinhanAlbatrossTechInvestmentFund), and real estate (AssociatesMasternGeneralPrivateRealEstateInvestmentTrustNo.189).
• Investment Strategy: The sheer volume and variety of these investments signal a deeply diversified, global strategy. The Group is not confined to traditional banking but actively participates in venture capital, specialized infrastructure, and property assets worldwide.

👉 Why it matters: This proves the Group is a major, highly decentralized investment player. While diversification can cushion losses, it also means the Group’s financial health depends on hundreds of smaller, external companies.

⚖️ Legal and Litigation Reserves 🛡️

The Group provides specific updates regarding legal challenges, which is crucial for investors assessing potential future liabilities.

• Lawsuits and Provisions: The Group reported litigation provisions of approximately W 40,100 million as of the end of the reporting period.
• Resolution of Lawsuits: While there were five cases pending in the court of first instance (claim amount: W 169,930 million) and four cases pending in the court of second instance (claim amount: W 91,700 million) at the end of the reporting period, the filing noted that subsequent to that time, all cases were concluded through separate settlements.

👉 Why it matters: Large litigation provisions represent potential cash drains. The fact that most active, large-scale lawsuits were settled after the reporting date suggests that the immediate legal threat to the Group has been mitigated.

📈 Financial Instruments and Markets 📈

This section details the technical nature of the Group's balance sheet, covering derivatives, foreign exchange risks, and financial assets.

• Derivatives and Hedging: The Group utilizes complex financial instruments like interest rate swaps (involving CD, SOFR, Euribor, etc.) and currency forwards to hedge risk. Hedging effectiveness measures the difference between changes in the value of the hedging instrument and the items it is protecting.
• Fair Value Accounting: Many assets are reported at Fair Value Through Profit or Loss (FVTPL). This means their book value changes based on current market rates.
• Foreign Currency Risk: The Group tracks net foreign currency exposure (e.g., in EUR, USD, CNY, JPY) to show how changes in exchange rates could impact the group’s financial standing.

👉 Why it matters: Banking is highly mathematical. These disclosures are the financial equivalent of showing the engine under the hood—it shows the sophisticated tools (derivatives) used to manage massive amounts of currency and interest rate risk.

🤝 Share Structure and Corporate Governance 👑

The Group’s governance involves key actions related to its shares and shareholder relations.

• Share Conversion: The filing noted that 17,482,000 convertible preferred shares, issued on May 1, 2019, were converted into common shares at a 1:1 ratio on May 1, 2023.
• Dividends: The dividend rates per ordinary share increased substantially across the years: W2,100 (2023), W2,160 (2024), and W2,590 (2025). The annual dividend is expected to be resolved at the general meeting of shareholders on March 26, 2026.
• Record Date: The record date for the 2025 annual dividend was set for February 20, 2026.

👉 Why it matters: Increasing dividends show management’s confidence in future profitability and commitment to return capital to shareholders. The conversion details explain how the outstanding share count changes over time.

🌐 International Scope and Markets 🗺️

The Group’s operations are not limited to Korea. The filing repeatedly references various foreign markets and currencies, confirming its global scope.

• Geographic Footprint: The financials detail assets and liabilities linked to markets like Japan (JPY), China (CNY), Germany (DE), the UK (GB), Vietnam (VN), the US (USD), and others.
• Creditworthiness: The Group tracks its internal credit ratings for different operational segments (e.g., InternalCreditRatingOfBelowBBBPlusMember).

👉 Why it matters: Operating across multiple, volatile economies means the Group must constantly hedge and adjust for geopolitical and currency risks, which is reflected in the complexity of its financial reporting.

🗓️ Key Dates and Contacts 📞

For investors looking to follow up, the filing provided specific dates regarding corporate actions and contact information.

• Key Event: The proposed dividend is scheduled to be resolved at the general meeting of shareholders on March 26, 2026.
• Contact Information: (No specific contact email/phone was provided, but the filing is structured to guide the reader to the relevant legal and corporate sections.)

🧠 The Analogy

Investing in Shinhan Financial Group is like managing a massive, complex global cruise ship. The main engine (the core banking business) is steady, but the ship has hundreds of specialized departments—a wing for tropical real estate, a wing for high-tech venture capital, a wing for international goods shipping, and a wing for insuring against hurricanes. The 20-F filing is the manifest that lists every single department, every single investment, and every single liability, detailing whether the current global storms (like inflation or interest rate spikes) are impacting the cargo or the structure itself.

🧩 Final Takeaway

SHG is a massive, deeply diversified financial conglomerate that has successfully navigated significant market downturns (notably in real estate and Vietnam). While it faced major goodwill impairments, the Group’s expanding deposit base and continuous dividend increases signal strong underlying health and global capital commitment.