6-K 1 shg-6k_20180515.htm 6-K. FY2018 1Q BUSINESS REPORT shg-6k_20180515.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

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

Under the Securities Exchange Act of 1934

 

For the Month of May 2018

 

SHINHAN FINANCIAL GROUP CO., LTD.

(Translation of registrant's name into English)

 

20, Sejong-daero 9-gil, Jung-gu, Seoul 04513, Korea

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will

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

 

Form 20-F  √    Form 40-F      

 

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

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

 

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

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

 

Indicate by check mark whether the registrant by furnishing the

information contained in this form is also thereby furnishing the

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

Securities Exchange Act of 1934.

 

Yes        No___√___

 

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

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

Summary of FY2018 1Q Business Report

 

On May 15, 2018, Shinhan Financial Group (“SFG”) filed its FY2018 1Q Business Report (the “Business Report”) with the Financial Services Commission of Korea and the Korea Exchange pursuant to the Financial Investment Services and Capital Market Act of Korea. This is the summary of the Business Report translated into English. Non-material or previously disclosed information are omitted or abridged.

 

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

 

Table of Contents

 

1. Introduction of the Group

2. Business Results

3. Independent Auditor

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

5. Directors, Executive Officers and Employees

6. Related Party Transactions


2

1. Introduction of the Group

 

Company History in 2010 through 2018

 

 

▪

Jan. 2010 : Shinhan Data System became a direct subsidiary of SFG

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

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

 

▪

Dec. 2016 : Launched new integrated PT Bank Shinhan Indonesia

 

▪

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

 

▪

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

 


3

Principal Subsidiaries under Korean Law (as of Mar. 31, 2018)

 

Direct Subsidiaries

Subsidiaries

 

Ownership by SFG

Shinhan Bank

 

100.0%

Shinhan Card

 

100.0%

Shinhan Investment Corp.

 

100.0%

Shinhan Life Insurance

 

100.0%

Shinhan BNP Paribas Asset Management

 

65.0%

Shinhan Capital

 

100.0%

Jeju Bank 1)

 

68.9%

Shinhan Savings Bank 2)

 

100.0%

Shinhan Data System

 

100.0%

Shinhan AITAS 3)

 

99.8%

Shinhan Credit Information

 

100.0%

Shinhan Alternative Investment Management

 

100.0%

Shinhan REITs Management

 

100.0%

SHC Management 4)

 

100.0%

 

1)

Jeju Bank is currently listed on the Korea Exchange.

 

2)

On January 30, 2013, Yehanbyoul Savings Bank joined SFG as a direct subsidiary.

On April 1, 2013, Shinhan Savings Bank merged with Yehanbyoul Savings Bank, both of which were

direct subsidiaries of Shinhan Financial Group. As a result of the integration of the two savings banks,

the previous Shinhan Savings Bank has been liquidated and is thus no longer a subsidiary of Shinhan

Financial Group and instead, Yehanbyoul Savings Bank now exists under the name of “Shinhan Savings

Bank” as an existing legal entity constituting a member of Shinhan Financial Group.

 

3)

On November 30, 2012, Shinhan AITAS Co., Ltd. joined SFG as a direct subsidiary. Prior to November 30, 2012, Shinhan AITAS was an indirect subsidiary of SFG under Shinhan Bank, a wholly-owned bank subsidiary of SFG.

 

4)

Currently in liquidation proceedings


4

Indirect subsidiaries held through direct subsidiaries (as of Mar. 31, 2018)

Direct Subsidiaries

 

Indirect Subsidiaries

 

Ownership by the Parent

Shinhan Bank

 

Shinhan Asia Limited

 

100.0%

 

Shinhan Bank America

 

100.0%

 

Shinhan Bank Japan

 

100.0%

 

Shinhan Bank Europe

 

100.0%

 

Shinhan Bank Cambodia

 

97.5%

 

Shinhan Bank Kazakhstan

 

100.0%

 

Shinhan Bank China Limited

 

100.0%

 

Shinhan Bank Canada

 

100.0%

 

Shinhan Bank Vietnam

 

100.0%

 

 

Banco Shinhan de Mexico

 

100.0%

 

 

PT Bank Shinhan Indonesia

 

99.0%

Shinhan Card

 

LLP MFO Shinhan Finance

 

100.0%

 

PT. Shinhan Indo Finance

 

50.0%

 

Shinhan Microfinance Co., Ltd.

 

100.00%

Shinhan Investment Corp.

 

Shinhan Investment Corp. USA Inc.

 

100.0%

 

Shinhan Investment Corp. Asia Inc.

 

100.0%

 

Shinhan Securities Vietnam Co., Ltd

 

100.0%

 

PT Shinhan Sekuritas Indonesia

 

99.0%

 

KOFC Shinhan Frontier Champ 2010-4 PEF1)

 

8.5%

Shinhan Praxis K-Growth Global Private Equity Fund 2)

 

14.1%

Shinhan BNP Paribas Asset Management

 

Shinhan BNP Paribas Asset Management (Hong Kong) Limited

 

100.0%

Shinhan Alternative Investment Management

 

Shinhan NPS Private Equity Fund 1st 3)

 

5.0%

 

Shinhan Private Equity Fund 2nd 4)

 

2.2%

 

Shinhan-Stonebridge Petro Private Equity Fund 5)

 

0.6%

Shinhan REITs Management

 

Shinhan Alpha REIT Co., Ltd.

 

100.0%

1) Shinhan Financial Group and its subsidiaries currently own 34.6% of KOFC Shinhan Frontier Champ 2010-4
PEF Investment Corp.

2) Shinhan Financial Group and its subsidiaries currently own 18.9% of Shinhan Praxis K-Growth Global Private
Equity Fund.

3) Shinhan Financial Group and its subsidiaries currently own 36.7% of Shinhan NPS Private Equity Fund 1st.

4) Shinhan Financial Group and its subsidiaries currently own 32.6% of Shinhan Private Equity Fund 2nd.

5) Shinhan Financial Group and its subsidiaries currently own 1.8% of Shinhan-Stonebridge Petro Private Equity Fund.

 

Number of Shares (as of Mar. 31, 2018)

Types of Shares

 

Number of Shares

Common Shares

 

474,199,587

Total

 

474,199,587


5

2. Business Results

 

Operation Results                                             (KRW billion)

 

2018 1Q

(Jan. 1 ~ Mar. 31)

2017 1Q

(Jan. 1 ~ Mar. 31)

FY2017

(Jan. 1 ~ Dec. 31)

FY2016

(Jan. 1 ~ Dec. 31)

Operating income

1,175.8

1,298.3

3,828.7

3,108.6

Equity method income

13.6

-0.4

20.4

10.0

Other non-operating income

4.6

7.9

-52.8

51.8

Profit before income taxes

1,194.0

1,305.7

3,796.3

3,170.5

Income tax expense

325.0

298.5

848.1

345.6

Consolidated net income

869.0

1,007.3

2,948.1

2,824.9

Net income attributable to equity holders of the Group

857.5

997.1

2,917.7

2,774.8

Net income attributable to non-controlling interest

11.5

10.2

30.4

50.1

Notes :

▪

Some of the totals may not sum due to rounding.

6

Source and Use of Funds

 

Consolidated Basis

(KRW billion, %)

2018 1Q

FY2017

FY2016

Jan. 1 ~ Mar. 31

Jan. 1 ~ Dec. 31

Jan. 1 ~ Dec. 31

Average

Balance1)

Proportions

(%)

Interest

Paid

Interest

Rate

(%)

Average

Balance1)

Proportions

(%)

Interest

Paid

Interest

Rate

(%)

Average

Balance1)

Proportions

(%)

Interest

Paid

Interest

Rate

(%)

Source

Deposits

250,622.7

58.3

695.6

1.13

241,523.7

58.3

2,482.5

1.03

226,966.8

58.7

2,586.7

1.14

Borrowings

18,142.9

4.2

65.6

1.47

17,479.8

4.2

217.3

1.24

15,047.2

3.9

176.4

1.17

Debt Securities Issued

51,833.3

12.1

290.3

2.27

47,594.6

11.5

1,085.4

2.28

42,790.8

11.1

1,085.8

2.54

Other Liabilities

75,808.0

17.7

-

-

74,788.5

18.1

-

-

70,504.9

18.2

-

-

Total Liabilities

396,406.9

92.3

-

-

381,386.6

92.1

-

-

355,309.7

91.9

-

-

Total Stockholder's Equity

33,162.4

7.7

-

-

32,750.5

7.9

-

-

31,499.5

8.1

-

-

Total Liabilities & SE

429,569.3

100.0

-

-

414,137.1

100.0

-

-

386,809.3

100.0

-

-

Use

Cash & Due from Banks

20,876.6

4.9

41.3

0.80

21,609.4

5.2

167.8

0.78

20,933.1

5.4

185.5

0.89

Loans

276,901.7

64.5

2,604.3

3.81

266,195.4

64.3

9,681.4

3.64

252,132.2

65.2

9,244.0

3.67

  Loans in KRW

217,067.3

50.5

1,837.8

3.43

207,439.9

50.1

6,828.2

3.29

197,841.4

51.2

6,541.9

3.31

  Loans in Foreign Currency

18,125.4

4.2

172.2

3.85

16,841.6

4.1

583.2

3.46

14,936.7

3.9

482.2

3.23

  Credit Card Accounts

20,768.8

4.8

428.9

8.37

19,952.8

4.8

1,680.9

8.42

18,804.3

4.9

1,708.5

9.09

  Others

20,940.2

5.0

165.5

3.21

21,961.1

5.3

589.1

2.68

20,549.8

5.3

511.4

2.49

AFS Financial Assets

36,089.5

8.4

175.9

1.98

34,272.9

8.3

645.3

1.88

30,308.9

7.8

612.1

2.02

HTM Financial Assets

24,645.0

5.7

171.5

2.82

22,199.6

5.4

651.1

2.93

17,409.7

4.5

561.8

3.23

Other Assets

71,056.5

16.5

-

-

69,859.8

16.8

-

-

66,025.3

17.1

-

-

Total Assets

429,569.3

100.0

-

-

414,137.1

100.0

-

-

386,809.3

100.0

-

-

1) The “Average Balance” is the arithmetic mean of the ending balance of each quarter.

 

7

Other Financial Information

※ The main serial financial figures and indices for Mar. 31, 2018 listed herein may be subject to change.

 

1) Capital Adequacy

 

Consolidated BIS Ratio (Shinhan Financial Group)                               (KRW billion)

 

Mar. 31, 2018(e)

Dec. 31, 2017

Dec. 31, 2016

Aggregate Amount of Equity Capital (A)

31,261.3

30,713.5

29,786.5

Risk-Weighted Assets (B)

210,816.7

207,768.6

198,642.6

BIS Ratio (A/B)

14.83%

14.78%

15.00%

Note) based on Basel III

 

Capital Adequacy Ratios (Subsidiaries)                                                 (%)

Subsidiary

Capital Adequacy Ratio

Mar. 31, 2018(e)

Dec. 31, 2017

Dec. 31, 2016

Shinhan Bank

BIS Capital Adequacy Ratio

16.3

15.6

15.7

Shinhan Card

Adjusted Equity Capital Ratio

22.6

24.5

26.2

Shinhan Investment Corp.

Net Capital Ratio

518.6

706.4

892.0

Shinhan Life Insurance

Risk Based Capital Ratio

173.7

175.4

178.3

Shinhan BNP Paribas Asset Management

Equity Capital (KRW billion)

145.4

156.0

148.6

Minimum Capital Requirement (KRW billion)

25.2

23.5

24.0

Shinhan Capital

Adjusted Equity Capital Ratio

13.3

14.0

14.9

Jeju Bank

BIS Capital Adequacy Ratio

14.6

14.7

12.8

Shinhan Savings Bank

BIS Capital Adequacy Ratio

14.6

14.3

14.9


Notes :

 

▪

The BIS Capital Adequacy Ratio is computed in accordance with the guidelines issued by the FSS for commercial banks. Under these guidelines, commercial banks are required to maintain a minimum capital adequacy ratio of 8%.

 

▪

Basel III FIRB was applied in calculating Shinhan Bank’s BIS Capital Adequacy Ratio.

 

▪

Basel III TSA was applied in calculating Jeju Bank’s BIS Capital Adequacy Ratio.

 

▪

Basel I was applied in calculating Shinhan Savings Bank’s BIS Capital Adequacy Ratio.

 

▪

The Adjusted Equity Capital Ratio represents the ratio of total adjusted shareholder’s equity to total adjusted assets and is computed in accordance with the guidelines issued by FSS. Under these guidelines, Shinhan Card and Shinhan Capital are required to maintain a minimum adjusted equity capital ratio of 8%.

 

▪

Net Capital Ratio is computed in accordance with the guidelines issued by the FSS. Under these guidelines, Shinhan Investment Corporation is required to maintain a minimum net capital ratio of 100%.

 

▪

Under the guidelines issued by the FSS, Shinhan Life Insurance is required to maintain a minimum RBC ratio of 100%.

 

▪

Under the guidelines issued by the FSS, Shinhan BNP Paribas Asset Management is required to hold Equity Capital that exceeds the Minimum Capital Requirement.

8

2) Liquidity

 

Won Liquidity Ratio                                                                 (KRW billion, %)

Company

Mar. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Won Assets

Won Liabilities

Won Liquidity Ratio(%)

Won Assets

Won Liabilities

Won Liquidity Ratio(%)

Won Assets

Won Liabilities

Won Liquidity Ratio(%)

Shinhan Financial Group

1,886.0

940.4

200.5

309.8

131.6

235.3

198.8

134.8

147.5

Shinhan Card

15,363.5

4,530.0

339.0

15,768.6

4,236.0

372.3

14,722.9

4,069.1

361.8

Shinhan Investment Corp.

12,672.8

8,040.4

157.6

12,873.9

9,320.8

138.1

12,472.3

8,227.4

151.6

Shinhan Life Insurance

931.1

581.5

160.1

917.5

553.3

165.8

915.8

502.0

182.4

Shinhan Capital

913.9

574.1

159.2

768.9

560.4

137.2

684.5

521.2

131.3

Shinhan Savings Bank

349.2

194.0

180.0

308.0

213.3

144.4

169.8

138.7

122.4

Notes :

 

▪

Shinhan Financial Group: Due within 1 month

 

▪

Shinhan Life Insurance: (Won assets due within 3 months /3 months average of Claim payments )*100

 

▪

Shinhan Card, Shinhan Investment Corp., Shinhan Capital, and Shinhan Savings Bank : Due within 3 months

 

▪

Liquidity Ratio for Shinhan Bank and Jeju Bank have been replaced by Liquidity Coverage Ratio from Mar 31, 2015

to reflect the recent amendments to detailed regulations on supervision of banking business.

 

 

 

 

Liquidity Coverage Ratio                                                             (KRW billion, %)

Company

Mar. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

High Quality Liquid Assets

Net Cash Outflows

Liquidity Coverage Ratio(%)*

High Quality Liquid Assets

Net Cash Outflows

Liquidity Coverage Ratio(%)

High Quality Liquid Assets

Net Cash Outflows

Liquidity Coverage Ratio(%)

Shinhan Bank

47,657.7

46,321.9

102.9

46,813.9

49,493.3

94.7

35,961.9

37,257.5

96.7

Jeju Bank

557.0

453.3

123.3

560.3

476.0

117.9

563.2

401.9

142.6

* The “High quality liquid assets” and “Net cash outflows” are the arithmetic mean of the ending balance of every day.

 


9

Foreign Currency (FC) Liquidity Ratio                                       (USD millions, %)

Company

Mar. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

FC

Assets

FC Liabilities

FC Liquidity Ratio(%)

FC

Assets

FC Liabilities

FC Liquidity Ratio(%)

FC

Assets

FC

Liabilities

FC Liquidity Ratio(%)

Shinhan Financial Group

-

-

-

-

-

-

-

-

-

Shinhan Bank

-

-

-

49,850.7

46,790.4

106.5

39,631.1

35,968.5

110.2

Shinhan Investment Corp.

6,831.3

6,125.1

111.5

7,577.9

7,913.3

95.8

5,635.3

5,073.4

111.1

Shinhan Capital

110.5

0.4

28,206.0

99.8

0.3

29,325.2

80.3

1.1

7,333.0

Jeju Bank

51.6

43.5

118.5

43.2

37.9

114.1

13.3

10.7

124.7

Notes :

 

▪

Foreign currency liquidity ratios are computed with assets and liabilities due within 3 months.

 

▪

Shinhan Bank’s foreign currency liquidity ratio reflected securitization weight with the guidelines issued by the FSS.

 

▪

Shinhan Financial Group figures are based on the separate basis.

 

 

 

 

Foreign Currency (FC) Liquidity Coverage Ratio                                 (USD millions, %)

Company

2018 1Q

2017 4Q

2017 3Q

2017 2Q

2017 1Q

Jan. 1 ~ Mar. 31

Oct. 1 ~ Dec. 31

Jul. 1 ~ Sep. 30

Apr. 1 ~ Jun. 30

Jan. 1 ~ Mar. 31

Shinhan Bank

107.3

107.3

89.0

115.7

111.0

Notes :

 

▪

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

 


10

3) Asset Quality

 

SFG Consolidated Basis                                                          (KRW billion)

 

Mar. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Total Loans

277,785.5

274,719.1

259,772.6

Substandard & Below

1,804.8

1,734.1

1,927.6

Substandard & Below Ratio

0.65%

0.63%

0.74%

Non-Performing Loans

1,554.5

1,467.1

1,595.8

NPL Ratio

0.56%

0.53%

0.61%

Substandard & Below Coverage Ratio

163.60%

135.15%

125.99%

Loan Loss Allowance

2,952.5

2,343.6

2,428.7

Substandard & Below Loans

1,804.8

1,734.1

1,927.6

 

Separate Basis                                                                         (%)

 

Mar. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Substandard & Below Ratio

NPL Ratio

Substandard & Below Coverage Ratio

Substandard & Below Ratio

NPL Ratio

Substandard & Below Coverage Ratio

Substandard & Below Ratio

NPL Ratio

Substandard & Below Coverage Ratio 1)

Shinhan Financial Group

-

-

-

-

-

-

-

-

-

Shinhan Bank

0.57

0.52

140

0.55

0.49

114

0.65

0.56

96

Shinhan Card

1.16

0.68

272

1.06

0.61

238

1.16

0.76

271

Shinhan Investment Corp.

0.08

0.08

769

0.08

0.08

497

0.10

0.10

413

Shinhan Life Insurance

0.09

0.09

399

0.09

0.07

274

0.09

0.08

335

Shinhan Capital

1.25

1.55

161

1.33

1.60

129

2.61

2.93

94

Jeju Bank

0.98

0.98

56

1.09

0.80

41

1.24

0.93

35

Shinhan Savings Bank

3.68

3.17

79

3.86

2.98

62

5.42

3.45

53

 

 

4) Debt to Equity Ratios

 

Shinhan Financial Group (Separate Basis)                     (KRW billion)

 

Mar. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Debt

8,385.6

7,447.7

6,977.7

Equity

20,864.9

20,192.1

20,217.9

Debt to Equity Ratio

40.19%

36.88%

34.51%


11

Twenty Largest Exposures by Borrower                       

                         (KRW billion)

As of Mar. 31, 2018

Consolidated basis

Loans in Won

Loans in Foreign Currency

Securities

Guarantees and Acceptances

Others

Total Exposures

Ministry of Strategy & Finance

0.0

-

15,080.3

-

-

15,080.3

Bank of Korea

1,200.0

-

6,729.9

0.1

-

7,929.9

Korea Housing Finance Corporation

0.0

-

5,787.4

-

-

5,787.4

Korea Development Bank

13.4

-

5,028.1

-

-

5,041.5

Industrial Bank of Korea

647.2

117.3

2,323.7

-

-

3,088.3

Export-Import Bank of Korea

-

-

2,366.1

53.3

-

2,419.4

Korea Securities Finance Corporation

355.8

-

1,091.0

-

-

1,446.7

Korea Deposit Insurance Corporation

-

-

1,373.6

-

-

1,373.6

Kookmin Bank

520.5

74.7

719.3

0.1

-

1,314.6

Korea Investment & Securities Co.,Ltd.

1,245.3

-

40.0

-

-

1,285.3

Korea Land & Housing Corporation

0.0

-

1,199.0

-

-

1,199.0

NongHyup Bank

526.3

10.3

636.0

17.9

-

1,190.5

KEB Hana Bank

127.8

237.1

579.5

1.8

-

946.2

Small & medium Business Corporation

0.0

-

921.4

-

-

921.4

Woori Bank

59.9

13.6

843.6

-

-

917.1

Samsung Electronics Co., Ltd.

-

869.4

18.9

-

0.0

888.3

KB Securities Co., Ltd.

750.0

-

129.7

-

-

879.7

LG Electronics Inc.

89.9

62.6

223.4

420.1

-

796.0

Samsung Asset Management

-

-

633.4

-

-

633.4

Korea Electric Power Corporation

0.4

-

616.9

6.5

-

623.8

Total

5,536.6

1,384.9

46,341.1

499.7

0.0

53,762.3

Note) Some of the totals may not sum due to rounding


12

Exposure to ten Main Debtor Groups   

                                                                      (KRW billion)

As of Mar. 31, 2018

Consolidated basis

Loans in Won

Loans in Foreign Currency

Securities

Guarantees and Acceptances

Others

Total

Exposures

Samsung

624.6

1,369.3

1,300.0

835.0

0.0

4,128.9

Hyundai Motors

981.8

1,637.1

850.8

340.6

0.2

3,810.5

Lotte

182.8

726.9

965.1

410.2

0.1

2,285.1

LG

455.3

162.3

455.9

629.8

0.0

1,703.3

SK

334.0

300.5

515.4

403.2

0.0

1,553.2

Hyundai Heavy Industries

192.5

118.5

124.0

1,035.0

-

1,470.1

Hanwha

405.7

227.1

386.6

325.2

0.1

1,344.7

LS

110.7

422.1

167.6

476.7

-

1,177.0

GS

345.9

128.3

278.4

198.0

0.0

950.6

Hyosung

155.1

391.5

79.6

150.0

0.0

776.1

Total

3,788.4

5,483.6

5,123.4

4,803.8

0.4

19,199.7

Note) Some of the totals may not sum due to rounding

 

 

Loans, Due from banks and Securities Concentration by Industry

              (KRW billion)

As of Mar. 31, 2018

Consolidated basis

Total Exposures

Amount

Weight (%)

Finance and Insurance

83,922.6

21.4%

Manufacturing

45,876.4

11.7%

Retail and Wholesale

18,522.9

4.7%

Real Estate, Leasing and Service

26,703.1

6.8%

Construction

4,306.0

1.1%

Hotel and Restaurant

5,625.1

1.4%

Others

80,631.0

20.5%

Retail customers

126,970.4

32.3%

Total

392,557.6

100.0%

Note) Some of the totals may not sum due to rounding


13

Top Twenty Non-Performing Loans

(KRW billion)

Borrower

Industry

Gross Principal Outstanding

Substandard & Below

Allowance for Loan Losses

A

Manufacture of Cold Rolled, Drawn and Extruded Iron or Steel Products

109.0

109.0

94.7

B

Manufacture of Distilling Machinery, Heat exchange unit and Gas Generators

81.0

81.0

54.3

C

Manufacture of Plastic Products for Fabricating of Machine

49.0

49.0

36.0

D

Manufacture of Sections for Ships

42.0

39.7

26.6

E

Other Civil Engineering Construction

29.4

29.4

18.6

F

Building of Steel Ships

25.6

25.6

21.8

G

Building of Steel Ships

23.4

23.4

5.8

H

Manufacture of Sections for Ships

24.5

23.0

1.4

I

Building of Steel Ships

21.3

21.3

0.7

J

Construction of Highways, Streets and Roads

17.2

17.2

14.3

K

Apartment Building Construction

17.1

17.1

1.4

L

Apartment Building Construction

16.8

15.9

14.5

M

Manufacture of Tires and Tubes

15.7

15.7

15.6

N

Golf Course Operation

14.0

14.0

8.3

O

Wholesale of Non-Specialized Goods

12.4

12.4

12.4

P

Manufacture of Sections for Ships

11.4

11.4

5.7

Q

Golf Course Operation

11.4

11.4

0.0

R

Knitted and Crocheted Apparel

15.0

11.3

10.7

S

Development and Subdividing of Other Real Estate

8.2

8.2

0.0

T

Manufacture of Other Smelting, Refining and Alloys of Non-ferrous Metals

7.8

7.8

4.5

Total

552.4

543.9

347.3

Notes :

 

▪

Consolidated basis as of Mar. 31, 2018.

 

▪

Some of the totals may not sum due to rounding.


14

3. Independent Auditor

 

Audit Opinion for the last 3 years

 

2018 1Q

FY2017

FY2016

Audit Opinion

-

Unqualified

Unqualified

* For the first quarter of 2018, the independent accountant conducted a review for our financial statements instead of auditing them.

 

Compensation to the Independent Auditor for Audit and Review Services

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

 

Year

Auditor

Payment 1)
(KRW mil.)

Details

Working hours

FY2018

KPMG Samjong Accounting Corp.

715

(annualized basis)

Review/Audit of Financial Statements

1,251

Hours

KPMG Samjong Accounting Corp.

94

(annualized basis)

K-IFRS Report Package Audit for Shinhan Savings Bank

160

Hours

FY2017

KPMG Samjong Accounting Corp.

626

(annualized basis)

Review/Audit of Financial Statements

7,641

Hours

KPMG Samjong Accounting Corp.

78

(annualized basis)

K-IFRS Report Package Audit for Shinhan Savings Bank

896

Hours

KPMG Samjong Accounting Corp.

261

(annualized basis)

Non-statutory audit for  IFRS 9 adoption

2,896

Hours

FY2016

KPMG Samjong Accounting Corp.

581

(annualized basis)

Review/Audit of Financial Statements

7,512

Hours

KPMG Samjong Accounting Corp.

73

(annualized basis)

K-IFRS Report Package Audit for Shinhan Savings Bank

807

Hours

 

1)

Excluding value-added taxes.

 

* In addition to above mentioned description of fees for audit and review services, KPMG Samjong Accounting Corp. also provided services related to US listing and ICOFR audit in accordance with the standards of the PCAOB which we agreed to pay KRW1,582 million(excluding value-added taxes) for FY2018.

15

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

 

Major Shareholders1) of Shinhan Financial Group as of Mar. 31, 2018

Name

No. of Common Shares owned2)

Ownership%

National Pension Service

45,285,762

9.55%

BlackRock Fund Advisors3)

24,320,723

5.13%

1)

Shareholders who own beneficial ownership of 5% or more(common share basis).

2)

Based on the results of shareholder registry closing as of December 31, 2017

3)

Based on the large equity ownership discloser by BlackRock Fund Advisors with the Financial Supervisory Service on Oct. 20, 2016.

 

Share ownership of Employee Stock Ownership Association                         (Number of shares, %)

Share ownership

Beginning Balance
(Jan. 1, 2018)

Increase

Decrease

Ending Balance

(Mar. 31, 2018)

Ownership%

(Mar. 31, 2018)

Employee Stock Ownership

22,211,786

1,696,509

2,067,756

21,840,539

-

ESOA account

112,241

9,531

-

121,772

-

Total

22,324,027

1,706,040

2,067,756

21,962,311

4.63%

 

Common Share Traded on the Korea Exchange                                (KRW, number of shares)

 

Oct. 2017

Nov. 2017

Dec. 2017

Jan. 2018

Feb. 2018

Mar. 2018

Price per share

High

51,700

51,000

50,900

53,400

52,800

46,450

Low

49,400

47,000

47,100

49,400

46,950

44,550

Avg.

50,528

48,627

49,216

51,975

48,961

45,240

Trading Volume

13,809,751

25,517,108

20,070,809

20,854,613

19,046,534

22,990,451

Highest Daily Trading Volume

1,912,102

4,601,509

2,608,925

1,482,202

1,810,742

1,676,704

Lowest Daily Trading Volume

436,899

490,260

662,896

517,193

699,030

509,055

 

American Depositary Receipts traded on the New York Stock Exchange             (USD, number of shares)

 

Oct. 2017

Nov. 2017

Dec. 2017

Jan. 2018

Feb. 2018

Mar. 2018

Price per share

High

45.98

45.64

46.80

50.35

48.90

43.14

Low

43.60

43.12

43.58

46.80

42.79

40.55

Avg.

44.83

44.40

45.33

48.81

45.22

42.11

Trading Volume

1,586,103

1,915,151

1,320,204

2,156,133

1,768,605

2,057,739

Highest Daily Trading Volume

170,509

152,899

123,973

335,202

171,647

189,031

Lowest Daily Trading Volume

35,925

29,466

25,062

36,361

55,428

45,247

Note) 1 ADR = 1 Common Shares

16

5. Directors, Executive Officers and Employees

 

Directors and Executive Officers

 

1) Executive Director                                             (As of Mar. 31, 2018)

Name

Month and Year

of Birth

Position

Service Term

Cho Yong-byoung

June 1957

- Chairman of Shinhan Financial Group

- Board Steering Committee Chair

- Corporate Governance & CEO Recommendation Committee member

- Outside Director Recommendation Committee member

- Corporate Social Responsibility Committee member

3 years starting from March 23, 2017

 

 

17

2) Non-Executive Directors

Currently, 11 non-executive directors are in office, 10 of which outside directors who are nominated by our Outside Director Recommendation Committee and appointed pursuant to the approval of general shareholders’ meeting.

 

8 outside directors were appointed as board of directors at the 17th Annual General Meeting of Shareholders on March 22, 2018, of which 5 directors renewed their terms and 3 directors were newly appointed.

 

Our non-executive directors are as follows:                                     (As of Mar. 31, 2018)

Name

Month and Year

of Birth

Outside

Director

Sub-Committees

Service Term

Park Cheul

April 1946

O

Chairman of Board of Directors

Outside Director Recommendation Committee Chair

Corporate Governance & CEO Recommendation Committee member

Remuneration Committee member

Risk Management Committee member

4 years starting from March 25, 2015

Lee Manwoo

November 1954

O

Audit Committee Chair

Corporate Social Responsibility Committee member

Board Steering Committee member

5 years starting from March 26, 2014

Yuki Hirakawa

October 1960

O

Corporate Governance & CEO Recommendation Committee member

Corporate Social Responsibility Committee member

4 years starting from March 25, 2015

Philippe Avril

April 1960

O

Risk Management Committee member

Corporate Governance & CEO Recommendation Committee member

4 years starting from March 25, 2015

Lee Steven Sung-ryang

August 1955

O

Corporate Social Responsibility Committee Chair

Audit Committee member

Board Steering Committee member

3 years starting from March 24, 2016

Park Ansoon

January 1945

O

Outside Director Recommendation Committee member

Corporate Social Responsibility Committee member

Board Steering Committee member

2 years starting from March 23, 2017

Joo Jaeseong

January 1956

O

Risk Management Committee Chair

Audit Committee member

Remuneration Committee member

2 years starting from March 23, 2017

Kim Hwa-nam

December 1945

O

Corporate Governance & CEO Recommendation Committee member

2 years starting from March 22, 2018

Park Byoung-dae

September 1957

O

Corporate Governance & CEO Recommendation Committee Chair

Remuneration Committee Chair

Outside Director Recommendation Committee member

Audit Committee member

2 years starting from March 22, 2018

Choi Kyong-rok

May 1966

O

Outside Director Recommendation Committee member

Risk Management Committee member

Board Steering Committee member

2 years starting from March 22, 2018

Wi Sung-ho

June 1958

X

-

2 years starting from March 23, 2017

* Audit Committee Member Recommendation Committee consists of all the outside directors.

 

18

3) Executive Officers

In addition to the executive directors, we currently have the following executive officers:

(As of Mar 31, 2018)

Name

Month and Year

of Birth

Position

In charge of

Lee Dong-hwan

September 1959

Deputy President

- Group & Global Investment Banking Business
Department

Woo Young-woong

March 1960

Deputy President &

Chief Strategy Officer

- Strategic Planning Team

- Investor Relations Team

- Future Strategy Research Institute

- Digital Strategy Team

- One Shinhan Strategy Team

- Platform Marketing Team

Jin Okdong

February 1961

Deputy President

- Brand Strategy Team

- Management Support Team

- Human Resource Team

- Shinhan Culture & Leadership Center

- CSR Team

Kim Byeong-cheol

January 1962

Deputy President

- Global Markets & Securities Planning Office

Heo Young-taeg

August 1961

Deputy President

- Global Business Planning Office

Lee Chang-goo

January 1961

Deputy President

- Wealth Management Planning Office

Jang Dong-ki

January 1964

Executive Vice President

- Finance Management Team

- Accounting Team

- Global Business & Capital Market Team

Kim Im-geun

July 1963

Executive Director &

Chief Risk Officer

- Risk Management Team

- Risk Model Validation Team

- Credit Review Team

Lee Soonwoo

October 1962

Executive Director &

Compliance Officer

- Compliance Team

 

Compensation to Directors

 

1)

Total Amount Approved at the Meeting of Shareholders

(As of Mar. 31, 2018)

 

Total number of persons

Total amount approved

at shareholders’ meeting

(KRW millions)

Notes

Directors

(Outside directors)

12(10)

3,500

-

Note) Represents the aggregate amount for all directors(including outside directors). Excludes long-term incentives.

 

 


19

2) Total Amount Paid

(As of Mar. 31, 2018)

 

Total number of

Persons

Total Compensation

(KRW millions)

Average

Compensation

per person

(KRW millions)

Notes

Registered Directors

2

548

274

Excluding outside directors

Outside Directors

6

123

18

Excluding Audit committee members

Audit committee members or internal auditor

4

65

21

 

Total

12

736

61

 

Notes :

▪

Represents the total number of applicable persons as of Mar. 31, 2018.

▪

Under the Financial Supervisory Service’s standards for preparing corporate disclosure forms, which standards were amended in November 2013, we are required to disclose in our Business Report the individual annual compensation paid by us to our directors and auditors if such individual annual compensation is W500 million or greater.

 

Stock Options

(As of Mar. 31, 2018)

 

No. of

Granted Options (A)

No. of Exercised Options
(B)

No. of Cancelled Options
(C)

No. of Exercisable Options
(D = A – B – C)

Exercise Price
(KRW)

Granted in 2005

102,389

99,889

-

2,500

28,006

Granted in 2006

108,356

105,856

-

2,500

38,829

Granted in 2007

58,764

-

-

58,764

54,560

Granted in 2008

60,753

-

15,125

45,628

49,053

Total

330,262

205,745

15,125

109,392

-

Notes :

 

▪

The weighted-average exercise price of outstanding exercisable options as of Mar. 31, 2018 is KRW 51,297.

 

▪

The closing price of our common stock was KRW 45,700 on Mar. 31, 2018.

 

▪

As of Mar. 31, 2018, the exercise of 9,466 options granted in 2008 is temporarily suspended.

 

 

Employees                                                                (As of Mar. 31, 2018)

Gender

Number of Employees

Average length of Service

Total Salaries and wages

paid in 2018

(KRW million)

Average Payment

per person

(KRW million)

Male

123

2 yrs 4 mths

(13 yrs 3 mths) 1)

5,132

41

Female

26

4 yrs 4 mths

(10 yrs 5 mths) 1)

644

24

Total

149

2 yrs 8 mths

(13 yrs 2 mths) 1)

5,777

38

1) Average length of service including service within group subsidiaries

20

6. Related Party Transactions

 

Loans to Subsidiaries                                                 (KRW billion)

Subsidiary

Loan Type

Origination

Date

Maturity

Date

Lending

Rate

Beginning Balance

(Jan. 1, 2018)

Decrease

Increase

Ending Balance

(Mar. 31, 2018)

Shinhan Card

Loans in KRW

2016-01-26

2021-01-26

1.98%

150

-

-

150

Loans in KRW

2016-02-24

2021-02-24

1.84%

150

-

-

150

Loans in KRW

2017-03-22

2022-03-22

2.22%

150

-

-

150

Loans in KRW

2017-04-20

2022-04-20

2.21%

100

-

-

100

Loans in KRW

2017-05-12

2022-05-12

2.35%

50

-

-

50

Loans in KRW

2018-02-22

2023-02-22

2.90%

-

-

100

100

Shinhan Capital

Loans in KRW

2013-01-18

2018-01-18

3.18%

50

50

-

-

Loans in KRW

2013-09-05

2018-09-05

3.61%

80

-

-

80

Loans in KRW

2014-01-27

2019-01-27

3.60%

50

-

-

50

Loans in KRW

2016-03-16

2021-03-16

1.90%

50

-

-

50

Loans in KRW

2016-04-27

2019-04-27

1.63%

100

-

-

100

Loans in KRW

2017-03-22

2022-03-22

2.22%

50

-

-

50

Loans in KRW

2017-04-20

2022-04-20

2.21%

50

-

-

50

Loans in KRW

2017-05-12

2022-05-12

2.35%

50

-

-

50

Loans in KRW

2017-08-24

2022-08-24

2.37%

50

-

-

50

Loans in KRW

2018-01-22

2023-01-22

2.75%

-

-

50

50

Shinhan Alternative Investment Management

Loans in KRW

2017-11-22

2018-11-21

2.24%

5

-

-

5

Shinhan Savings Bank

Loans in KRW

2016-06-17

2021-06-17

1.61%

50

-

-

50

Loans in KRW

2017-06-23

2022-06-23

2.27%

50

-

-

50

Total

1,235

50

150

1,335

 

21

 

EXHIBIT INDEX

Exhibit No.

 

Description

99.1

 

Independent Auditors’ Review Report (Separate Financial Statements) of Shinhan Financial Group as of March 31, 2018

99.2

 

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of March 31, 2018

 

 

 


22

 

 

 

SIGNATURES

 

 

 

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

 

 

SHINHAN FINANCIAL GROUP CO., LTD.

 

Date: May 15, 2018

By: /s/ Woo Young-woong

Name: Woo Young-woong

Title: Chief Strategy Officer

 

 

 

 

23