Exhibit 99.2

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of June 30, 2022

SHINHAN FINANCIAL GROUP CO., LTD.

AND SUBSIDIARIES

Consolidated Interim Financial Statements

June 30, 2022 and 2021

(Unaudited)

Contents

	Page
Report on Review of Interim Financial Statements	1
Consolidated Interim Statements of Financial Position	3
Consolidated Interim Statements of Comprehensive Income	4
Consolidated Interim Statements of Changes in Equity	6
Consolidated Interim Statements of Cash Flows	8
Notes to the Consolidated Interim Financial Statements	10

Report on Review of Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of

Shinhan Financial Group Co.,Ltd.

Reviewed Financial Statements

We have reviewed the accompanying consolidated interim financial statements of Shinhan Financial Group Co.,Ltd. and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position of the Group as at June 30, 2022, and the related consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2022 and 2021, and consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2022 and 2021, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe the accompanying consolidated interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS No. 1034 Interim Financial Reporting.

Emphasis of Matter

Without qualifying our conclusion, we draw attention to Note 33 of the financial statements. As explained in Note 33, the rapid spread of the COVID-19 has had a negative impact on the global economy, which can result in an increase in expected credit losses, potential impairment of assets, and negatively affecting the Group's ability to generate revenue. 

Other Matters

We have audited the consolidated statement of financial position of the Group as at December 31, 2021, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 15, 2022(March 3, 2022, except for emphasis of matter in relation to restatement of the consolidated financial statements). The consolidated statement of financial position as at December 31, 2021, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2021.

Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries.

/s/ Samil PricewaterhouseCoopers

August 16, 2022

Seoul, Korea

This report is effective as of August 16, 2022, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Financial Position

As of June 30, 2022 and December 31, 2021

(In millions of won)	Note		June 30, 2022 (Unaudited)	December 31, 2021
Assets
Cash and due from banks at amortized cost	4, 7	W	30,590,456	28,453,404
Financial assets at fair value through profit or loss	4, 8		61,398,243	62,403,759
Derivative assets	4, 9		6,645,209	3,799,189
Securities at fair value through other comprehensive income	4, 10		66,500,057	64,838,323
Securities at amortized cost	4, 10		52,594,142	49,930,076
Loans at amortized cost	4, 11		405,995,885	389,137,156
Property and equipment			3,969,536	4,046,164
Intangible assets			5,737,190	5,644,782
Investments in associates	12		2,734,114	2,913,745
Current tax receivable			22,710	15,159
Deferred tax assets			606,967	134,854
Investment property			339,556	675,391
Defined benefit assets	16		472,081	142,020
Other assets	4, 11		45,405,867	35,973,754
Assets held for sale			214,247	44,409
Total assets		W	683,226,260	648,152,185
Liabilities
Deposits	4	W	373,856,715	364,896,675
Financial liabilities at fair value through profit or loss	4, 13		1,317,981	1,369,225
Financial liabilities designated at fair value through profit or loss	4, 14		7,402,049	8,023,870
Derivative liabilities	4, 9		7,726,444	3,586,564
Borrowings	4		50,442,724	43,167,065
Debt securities issued	4, 15		80,806,552	80,149,363
Defined benefit liabilities	16		32,161	51,204
Provisions	17		1,161,799	1,166,856
Current tax payable			535,429	702,660
Deferred tax liabilities			23,273	175,947
Liabilities under insurance contracts	18		54,781,670	54,333,498
Other liabilities	4		55,440,452	40,990,836
Liabilities held for sale			715	-
Total liabilities		W	633,527,964	598,613,763
Equity	19
Capital stock			2,969,641	2,969,641
Hybrid bonds			3,932,822	3,334,531
Capital surplus			12,095,043	12,095,043
Capital adjustments			(577,977)	(664,429)
Accumulated other comprehensive loss			(3,153,587)	(984,936)
Retained earnings			32,083,332	30,541,300
Total equity attributable to equity holders of Shinhan Financial Group Co., Ltd.			47,349,274	47,291,150
Non-controlling interests			2,349,022	2,247,272
Total equity		W	49,698,296	49,538,422
Total liabilities and equity		W	683,226,260	648,152,185

See accompanying notes to the consolidated interim financial statements.

3

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income

For the three-month and six-month periods ended June 30, 2022 and 2021

(In millions of Korean won)			June 30, 2022 (Unaudited)		June 30, 2021 (Unaudited)
	Note		Three-month	Six-month	Three-month		Six- month
Interest income
Financial assets at fair value through other comprehensive income and at amortized cost		W	4,376,839	8,329,738	3,425,504		6,776,381
Financial assets at fair value through profit or loss			198,738	407,430	177,612	349,421
			4,575,577	8,737,168	3,603,116	7,125,802
Interest expense			(1,468,483)	(2,720,943)	(928,644)	(1,894,977)
Net interest income	20		3,107,094	6,016,225	2,674,472	5,230,825
Fees and commission income			1,081,931	2,174,434	1,101,042	2,125,458
Fees and commission expense			(386,853)	(735,506)	(378,413)	(721,370)
Net fees and commission income	21		695,078	1,438,928	722,629	1,404,088
Insurance income			1,516,730	3,050,386	1,635,895	3,333,517
Insurance expenses			(1,775,230)	(3,499,933)	(1,810,817)	(3,664,475)
Net insurance expense	18		(258,500)	(449,547)	(174,922)	(330,958)
Dividend income			51,870	88,571	50,957	86,230
Net gain (loss) on financial instruments at fair value through profit or loss			(75,161)	(163,165)	364,248	856,462
Net gain (loss) on financial instruments at fair value through profit or loss (overlay approach)	8		109,800	201,472	(17,440)	50,481
Net gain (loss) on financial instruments designated at fair value through profit or loss			245,728	488,426	(82,701)	(260,379)
Net gain (loss) on foreign currency transaction			(69,523)	27,246	70,213	43,828
Net gain (loss) on disposal of securitiesat fair value through other comprehensive income	10		(15,479)	(18,228)	23,057	60,920
Net loss on disposal of securities at amortized cost	10		(49)	(90)	(119)	(131)
Provision for allowance for credit loss	22		(350,504)	(599,043)	(170,713)	(350,767)
General and administrative expenses	23		(1,392,027)	(2,716,353)	(1,356,912)	(2,635,921)
Other operating expenses, net			(299,126)	(659,290)	(409,252)	(778,782)
Operating income			1,749,201	3,655,152	1,693,517	3,375,896
Equity method income	12		15,662	33,290	53,498	66,137
Other non-operating income (expense), net			47,679	55,184	(17,975)	(67,661)
Profit before income taxes			1,812,542	3,743,626	1,729,040	3,374,372
Income tax expense	25		472,632	983,112	451,105	878,496
Profit for the period		W	1,339,910	2,760,514	1,277,935	2,495,876

See accompanying notes to the consolidated interim financial statements.

9

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Comprehensive Income (Continued)

For the three-month and six-month periods ended June 30, 2022 and 2021

(In millions of won, except earnings per share)			June 30, 2022 (Unaudited)				June 30, 2021 (Unaudited)
	Note		Three-month		Six -month		Three-month		Six -month
Other comprehensive income for the period, net of income tax	19	W	(984,812)		(2,167,963)		(72,460)		(472,556)
Items that are or may be reclassified to profit or loss:
Loss on securities at fair value through other comprehensive income			(1,170,647)		(2,255,478)		(151,086)		(587,990)
Gain(loss) on financial instruments at fair value through profit or loss (overlay approach)			(78,665)		(135,999)		18,810		(28,745)
Equity in other comprehensive income (loss) of associates			(3,254)		(14,594)		(1,683)		1,694
Foreign currency translation adjustments for foreign operations			111,709		142,091		1,826		86,232
Net change in unrealized fair value of cash flow hedges			(35,837)		(63,365)		6,833		14,756
Other comprehensive loss of separate account			(53,835)		(105,549)		(7,945)		(21,030)
			(1,230,529)		(2,432,894)		(133,245)		(535,083)
Items that will not be reclassified to profit or loss:
Remeasurements of the defined benefit liability			191,025		192,843		49,889		49,486
Equity in other comprehensive loss of associates			(2)		6		-		(2)
Valuation gain on securities at fair value through other comprehensive income			54,482		71,324		27,766		39,083
Gain (loss) on disposal of securitiesat fair value through other comprehensive income			1,639		1,919		(14,405)		(23,881)
Changes in own credit risk on financial liabilities designated at fair value through profit of loss			(1,427)		(1,161)		(2,465)		(2,159)
			245,717		264,931		60,785		62,527
Total comprehensive income for the period		W	355,098		592,551		1,205,475		2,023,320
Profit attributable to:
Equity holders of Shinhan Financial Group Co., Ltd.		W	1,320,429		2,720,813		1,251,841		2,443,779
Non-controlling interests			19,481		39,701		26,094		52,097
		W	1,339,910		2,760,514		1,277,935		2,495,876
Total comprehensive income attributable to:
Equity holders of Shinhan Financial Group Co., Ltd.		W	336,918		556,628		1,179,578		1,972,275
Non-controlling interests			18,180		35,923		25,897		51,045
		W	355,098		592,551		1,205,475		2,023,320
Earnings per share:	26
Basic and diluted earnings per share in Korean won		W	2,423		4,975		2,307		4,480

See accompanying notes to the consolidated interim financial statements.

5

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity

For the six-month period ended June 30, 2021

(In millions of won)		June 30, 2021
		Equity attributable to equity holders of Shinhan Financial Group Co., Ltd.
		Capital stock	Hybrid bonds	Capital surplus	Capital adjustments	Accumulated other compre-hensive income(loss)	Retained earnings	Sub-total	Non-controlling interests	Total
Balance at January 1, 2021	W	2,969,641	2,179,934	12,234,939	(687,935)	(404,181)	27,777,169	44,069,567	2,287,291	46,356,858
Total comprehensive income for the period
Profit for the period		-	-	-	-	-	2,443,779	2,443,779	52,097	2,495,876
Other comprehensive income (loss), net of income tax:
Loss on valuation and disposal of securities at fair value through other comprehensive income		-	-	-	-	(571,344)	-	(571,344)	(1,444)	(572,788)
Loss on financial instruments at fair value through profit or loss (overlay approach)		-	-	-	-	(28,745)	-	(28,745)	-	(28,745)
Equity in other comprehensive income of associates		-	-	-	-	1,692	-	1,692	-	1,692
Foreign currency translation adjustments for foreign operations		-	-	-	-	86,211	-	86,211	21	86,232
Net change in unrealized fair value of cash flow hedges		-	-	-	-	14,756	-	14,756	-	14,756
Other comprehensive loss of separate account		-	-	-	-	(21,030)	-	(21,030)	-	(21,030)
Remeasurements of defined benefit plans		-	-	-	-	49,115	-	49,115	371	49,486
Changes in own credit risk on financial liabilities designated at fair value through profit or loss		-	-	-	-	(2,159)	-	(2,159)	-	(2,159)
Total other comprehensive loss		-	-	-	-	(471,504)	-	(471,504)	(1,052)	(472,556)
Total comprehensive income (loss)		-	-	-	-	(471,504)	2,443,779	1,972,275	51,045	2,023,320
Other changes in equity
Dividends		-	-	-	-	-	(803,838)	(803,838)	-	(803,838)
Dividends to hybrid bonds		-	-	-	-	-	(51,287)	(51,287)	-	(51,287)
Issuance of hybrid bonds (Note 19)		-	1,154,597	-	-	-	-	1,154,597	-	1,154,597
Acquisition of treasury stock (Note 19)		-	-	-	(79)	-	-	(79)	-	(79)
Disposal of treasury stock (Note 19)		-	-	-	23,589	-	-	23,589	-	23,589
Change in other capital adjustments		-	-	(105)	(338)	-	(174)	(617)	-	(617)
Change in other non-controlling interests		-	-	(139,791)	-	-	-	(139,791)	(96,360)	(236,151)
		-	1,154,597	(139,896)	23,172	-	(855,299)	182,574	(96,360)	86,214
Reclassification between OCI and retained earnings		-	-	-	-	27,910	(27,910)	-	-	-
Balance at June 30, 2021(Unaudited)	W	2,969,641	3,334,531	12,095,043	(664,763)	(847,775)	29,337,739	46,224,416	2,241,976	48,466,392

See accompanying notes to the consolidated interim financial statements.

6

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity (Continued)

For the six-month period ended June 30, 2022

(In millions of won)		June 30, 2022
		Equity attributable to equity holders of Shinhan Financial Group Co., Ltd.
		Capital stock	Hybrid bonds	Capital surplus	Capital adjustments	Accumulated other compre-hensive income(loss)	Retained earnings	Sub-total	Non-controlling interests	Total
Balance at January 1, 2022	W	2,969,641	3,334,531	12,095,043	(664,429)	(984,936)	30,541,300	47,291,150	2,247,272	49,538,422
Total comprehensive income
Profit for the period		-	-	-	-	-	2,720,813	2,720,813	39,701	2,760,514
Other comprehensive income, net of income tax:
Loss on valuation and disposal of securities at fair value through other comprehensive income		-	-	-	-	(2,178,017)	-	(2,178,017)	(4,218)	(2,182,235)
Loss on financial instruments at fair value through profit or loss (overlay approach)		-	-	-	-	(135,999)	-	(135,999)	-	(135,999)
Equity in other comprehensive loss of associates		-	-	-	-	(14,588)	-	(14,588)	-	(14,588)
Foreign currency translation adjustments for foreign operations		-	-	-	-	141,989	-	141,989	102	142,091
Net change in unrealized fair value of cash flow hedges		-	-	-	-	(63,365)	-	(63,365)	-	(63,365)
Other comprehensive loss of separate account		-	-	-	-	(105,549)	-	(105,549)	-	(105,549)
Remeasurements of defined benefit plans		-	-	-	-	192,505	-	192,505	338	192,843
Changes in own credit risk on financial liabilities designated at fair value through profit or loss		-	-	-	-	(1,161)	-	(1,161)	-	(1,161)
Total other comprehensive loss		-	-	-	-	(2,164,185)	-	(2,164,185)	(3,778)	(2,167,963)
Total comprehensive income (loss)		-	-	-	-	(2,164,185)	2,720,813	556,628	35,923	592,551
Other changes in equity
Dividends		-	-	-	-	-	(747,705)	(747,705)	-	(747,705)
Quarterly Dividends		-	-	-	-	-	(213,270)	(213,270)	-	(213,270)
Dividends to hybrid bonds		-	-	-	-	-	(72,243)	(72,243)	-	(72,243)
Issuance of hybrid bonds (Note 19)		-	598,291	-	-	-	-	598,291	-	598,291
Acquisition of treasury stock (Note 19)		-	-	-	(150,000)	-	-	(150,000)	-	(150,000)
Disposal of treasury stock (Note 19)		-	-	-	150,000	-	(150,029)	(29)	-	(29)
Change in other capital adjustments		-	-	-	(259)	-	-	(259)	-	(259)
Change in other non-controlling interests		-	-	-	86,711	-	-	86,711	65,827	152,538
		-	598,291	-	86,452	-	(1,183,247)	(498,504)	65,827	(432,677)
Reclassification between OCI and retained earnings		-	-	-	-	(4,466)	4,466	-	-	-
Balance at June 30, 2022(Unaudited)	W	2,969,641	3,932,822	12,095,043	(577,977)	(3,153,587)	32,083,332	47,349,274	2,349,022	49,698,296

See accompanying notes to the consolidated interim financial statement

7

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows

For the six-month periods ended June 30, 2022 and 2021

			Six-month period ended June 30
(In millions of Korean won)	Note		2022 (Unaudited)		2021 (Unaudited)
Cash flows from operating activities
Profit before income taxes		W	3,743,626		3,374,372
Adjustments for:
Interest income	20		(8,737,168)		(7,125,802)
Interest expense	20		2,720,943		1,894,977
Dividend income			(88,571)		(86,230)
Net fees and commission expense			64,278		103,134
Net insurance expense			330,906		667,863
Net loss (gain) on financial instruments at fair value through profit or loss			218,025		(51,957)
Net loss (gain) on derivatives			813,835		(188,315)
Net gain on financial instruments at fair value through profit or loss (overlay approach)			(201,472)		(50,481)
Net loss (gain) on foreign currency translation			(9,983)		89,513
Net gain on financial instruments designated at fair value through profit or loss			(620,381)		(135,177)
Net loss (gain) on disposal of securities at fair value through other comprehensive income	10		18,228		(60,920)
Net loss on disposal of financial assets at amortized cost	10		90		131
Net provision for allowance for credit loss	22		599,043		350,767
Employee benefits			93,101		111,030
Depreciation and amortization	23		505,750		429,570
Other operating income			363,409		205,921
Equity method income, net	12		(33,290)		(66,137)
Other non-operating (income)expense, net			(78,709)		48,904
			(4,041,966),		(3,863,209)
Changes in assets and liabilities:
Due from banks at amortized cost			(2,510,073)		8,979,421
Securities at fair value through profit or loss			1,490,058		(1,347,748)
Due from banks at fair value through profit or loss			-		30,000
Loans at fair value through profit or loss			(164,702)		303,233
Financial instruments designated at fair value through profit or loss			(51,441)		(551,395)
Derivative instruments			(201,696)		(482,314)
Loans at amortized cost			(14,658,519)		(18,561,433)
Other assets			(11,069,247)		(6,356,519)
Deposits			8,560,235		18,033,674
Net defined benefit liability			(166,028)		(53,694)
Provisions			(22,957)		(3,691)
Other liabilities			14,934,487		(371,415)
			(3,859,883)		(381,881)
Income tax paid			(954,359)		(607,788)
Interest received			8,567,810		6,986,265
Interest paid			(2,600,566)		(2,018,768)
Dividends received			64,838		72,204
Net cash inflow from operating activities		W	919,500		3,561,195

See accompanying notes to the consolidated interim financial statements.

8

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows (Continued)

For the six-month periods ended June 30, 2022 and 2021

			Six-month period ended June 30
(In millions of Korean won)	Note		2022 (Unaudited)	2021 (Unaudited)
Cash flows from investing activities
Decrease in financial instruments at fair value through profit or loss		W	2,364,413	2,165,516
Increase in financial instruments at fair value through profit or loss			(3,076,916)	(3,154,298)
Proceeds from disposal of securities at fair value through other comprehensive income			9,505,659	20,986,254
Acquisition of securities at fair value through other comprehensive income			(13,884,372)	(23,077,901)
Proceeds from disposal of securities at amortized cost			2,855,493	2,731,801
Acquisition of securities at amortized cost			(5,302,665)	(3,463,446)
Proceeds from disposal of property and equipment			88,053	12,960
Acquisition of property and equipment			(135,900)	(109,778)
Proceeds from disposal of intangible assets			12,363	6,738
Acquisition of intangible assets			(316,241)	(213,216)
Proceeds from disposal of investments in associates			288,112	181,847
Acquisition of investments in associates			(427,482)	(303,992)
Proceeds from disposal of investments in associates			230,148	12
Acquisition of investment property			(2,232)	(1,300)
Disposition of assets held-for-sale			20,016	46,081
Increase in other assets			(69,488)	(118,474)
Proceeds from settlement of hedging derivative financial instruments for financial assets			11,843	38,853
Payment of settlement of hedging derivative financial instruments for financial assets			(48,162)	(11,568)
Business combination			(27,505)	-
Net cash outflow from investing activities		W	(7,914,863)	(4,283,911)
Cash flows from financing activities
Issuance of hybrid bonds		W	598,291	1,154,597
Net increase in borrowings			6,810,398	413,885
Proceeds from debt securities issued			18,976,455	13,604,014
Repayments of debt securities issued			(18,792,401)	(11,574,245)
Increase in financial liabilities designated at FVTPL			49,993	-
Increase in other liabilities			88,616	28,904
Dividends paid			(1,032,715)	(854,703)
Proceeds from settlement of hedging derivative financial instruments			969,470	703,200
Payment of settlement of hedging derivative financial instruments			(945,637)	(689,811)
Decrease in non-controlling interests			(298,953)	(162,543)
Acquisition of treasury stock			(150,000)	(79)
Disposition and redemption of treasury stock			(29)	23,589
Redemption of lease liabilities			(142,978)	(138,471)
Payment of stock issuance costs			-	(105)
Net cash inflow from financing activities			6,130,510	2,508,232
Effect of exchange rate changes on cash and cash equivalents			91,309	45,641
Increase (decrease) in cash and cash equivalents			(773,544)	1,831,157
Cash and cash equivalents at the beginning of the period	28		13,083,885	8,962,982
Cash and cash equivalents at the end of the period	28	W	12,310,341	10,794,139

See accompanying notes to the consolidated interim financial statements.

9

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

1.  Reporting entity

Shinhan Financial Group Co., Ltd., the controlling company, and its subsidiaries included in consolidation (collectively the “Group”) are summarized as follows:

(a) Controlling company

Shinhan Financial Group Co., Ltd. (the “Shinhan Financial Group” or the “Company”), the controlling company, is incorporated on September 1, 2001 for the main purposes of controlling, managing and funding Shinhan Bank, Shinhan Securities Co., Ltd., Shinhan Capital Co., Ltd. and Shinhan BNP Asset Management Co., Ltd. by way of share transfers. The total capital stock amounted to 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 listed on the New York Stock Exchange since September 16, 2003.

(b) Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of June 30, 2022 and December 31, 2021 are as follows:

			Date of financial information	Ownership (%)
Investor	Investee(*1)	Location		June 30, 2022	December 31, 2021
Shinhan Financial Group Co., Ltd.	Shinhan Bank	Korea	June 30	100.0	100.0
〃	Shinhan Card Co., Ltd.	〃	〃	100.0	100.0
〃	Shinhan Investment Corp.	〃	〃	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 Credit Information Co., Ltd.(*2)	〃	〃	100.0	100.0
〃	Shinhan Alternative Investment Management Inc.(*3)	〃	〃	-	100.0
〃	Shinhan Asset Management Co., Ltd.(*3)	〃	〃	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.(*4)	〃	〃	100.0	60.0
〃	Shinhan AITAS Co., Ltd.	〃	〃	99.8	99.8
〃	Shinhan REITs Management Co., Ltd.	〃	〃	100.0	100.0
〃	Shinhan AI Co., Ltd.	〃	〃	100.0	100.0
〃	Shinhan Venture Investment Co., Ltd.	〃	〃	100.0	100.0
	Shinhan EZ General Insurance, Ltd.(*5)	〃	〃	100.0	-
Shinhan Bank	Shinhan Bank America	USA	〃	100.0	100.0
〃	Shinhan Bank Europe GmbH	Germany	〃	100.0	100.0
〃	Shinhan Bank Cambodia	Cambodia	〃	97.5	97.5
〃	Shinhan Bank Kazakhstan Limited	Kazakhstan	〃	100.0	100.0
〃	Shinhan Bank Canada	Canada	〃	100.0	100.0
〃	Shinhan Bank (China) Limited	China	〃	100.0	100.0
〃	Shinhan Bank Japan	Japan	〃	100.0	100.0
〃	Shinhan Bank Vietnam Ltd.	Vietnam	〃	100.0	100.0
〃	Banco Shinhan de Mexico	Mexico	〃	99.9	99.9
〃	PT Bank Shinhan Indonesia	Indonesia	〃	99.0	99.0
Shinhan Bank Japan	SBJDNX	Japan	〃	100.0	100.0
Shinhan Card Co., Ltd.	LLP MFO Shinhan Finance	Kazakhstan	〃	100.0	100.0
〃	PT. Shinhan Indo Finance	Indonesia	〃	50.0 +1 share	50.0 +1 share
〃	Shinhan Microfinance Co., Ltd.	Myanmar	〃	100.0	100.0
〃	Shinhan Vietnam Finance Co., Ltd.	Vietnam	〃	100.0	100.0

10

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

1.  Reporting entity (continued)

(b) Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of June 30, 2022 and December 31, 2021 are as follows (continued):

			Date of financial information	Ownership (%)
Investor	Investee(*1)	Location		June 30, 2022	December 31, 2021
Shinhan Investment Corp.	Shinhan Investment Corp. USA Inc.	USA	June 30	100.0	100.0
〃	Shinhan Investment Corp. Asia Ltd.	Hong Kong	〃	100.0	100.0
〃	SHINHAN SECURITIES VIETNAM CO., LTD.	Vietnam	〃	100.0	100.0
〃	PT. Shinhan Sekuritas Indonesia	Indonesia	〃	99.0	99.0
PT Shinhan Sekuritas Indonesia	PT. Shinhan Asset Management Indonesia	〃	〃	75.0	75.0
Shinhan Life Insurance Co., Ltd.	Shinhan Financial Plus Co., Ltd.	Korea	〃	100.0	100.0
	Shinhan CubeOn Co., Ltd.	〃		100.0	100.0
〃	Shinhan Life Insurance Vietnam Co., Ltd.	Vietnam	〃	100.0	100.0
Shinhan Asset Management Co., Ltd.	Shinhan ASSET MGT HK Ltd.	Hong Kong	〃	100.0	100.0
Shinhan DS	SHINHAN DS VIETNAM CO., LTD.	Vietnam	〃	100.0	100.0

(*1) Subsidiaries such as trust, beneficiary certificate, corporate restructuring fund and private equity fund which are not actually operating their own business are excluded.

(*2) On July 28, 2022, the Group disposed 100% of shares to Shinhan Card.

(*3) Shinhan Asset Management Co., Ltd. and Shinhan Alternative Investment Management Inc. have merged on January 5, 2022 to form a holding company named Shinhan Asset Management Co., Ltd.

(*4) The Group has acquired remaining shares of Asia Trust Co., Ltd during the period, and Asia Trust Co., Ltd became its wholly-owned subsidiary. Asia Trust Co., Ltd has changed its name to Shinhan Asset Trust Co., Ltd.

(*5) The Group has acquired additional 94.54 % of shares of BNP Paribas Cardif Life Insurance Ltd (5.46% of shares of Shinhan Life Insurance Co., Ltd.) during the period, and became its wholly-owned subsidiary. BNP Paribas Cardif Life Insurance, Ltd has changed its name to Shinhan EZ General Insurance, Ltd.

11

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

1.  Reporting entity (continued)

(c) Consolidated structured entities

Consolidated structured entities are as follows:

Category	Consolidated structured entities	Description
Trust	Trusts managed by Shinhan Bank (including development trust) and 17 others	A trust is consolidated when the Group as a trustee is exposed to variable returns, if principle or interest amounts of the entrusted properties falls below guaranteed amount, the Group should compensate it, and the Group has the ability to affect those returns.
Asset-Backed Securitization	MPC Yulchon Green I and 238 others	An entity for asset backed securitization is consolidated when the Group has sole decision-making authority to dispose assets or change the conditions of the assets, and the Group is exposed to, or has rights to related variable returns by providing credit enhancement and purchases of subordinated securities.
Structured Financing	SHPE Holdings One Co., Ltd.	An entity established for structured financing relating to real estate, shipping, or mergers and acquisitions is consolidated, when the Group has the greatest credit to the entity, has sole decision-making authority of these Entities due to the entities default, and is exposed to, or has rights to related variable returns.
Investment Fund	KoFC Shinhan Frontier Champ 2010-4 PEF and 146 others	An investment fund is consolidated, when the Group manages or invests assets of the investment funds on behalf of other investors as a collective investor or a business executive, or has the ability to dismiss the manager of the investment funds, and is exposed to, or has rights to, the variable returns.

12

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

1.  Reporting entity (continued)

(d) Summarized financial information of the subsidiaries

i) The summarized balance sheet of the controlling company and the Group’s major consolidated subsidiaries as of June 30, 2022 and December 31, 2021 are as follows:

Summarized balance sheet		June 30, 2022						December 31, 2021
Name of entity(*1)(*2)		Total assets		Total liabilities		Total equities		Total assets	Total liabilities	Total equities
Shinhan Financial Group (Separate)	W	37,309,600		10,137,771		27,171,829		36,815,893	10,410,517	26,405,376
Shinhan Bank		494,617,996		465,060,517		29,557,479		467,435,213	438,199,575	29,235,638
Shinhan Card Co., Ltd.		41,764,560		34,539,986		7,224,574		38,472,228	31,737,225	6,735,003
Shinhan Investment Corp.		47,851,842		42,701,142		5,150,700		44,446,803	39,421,314	5,025,489
Shinhan Life Insurance Co., Ltd.		68,515,369		64,765,654		3,749,715		70,535,556	65,382,992	5,152,564
Shinhan Capital Co., Ltd.		12,834,712		10,944,159		1,890,553		10,921,698	9,189,041	1,732,657
Jeju Bank		7,160,118		6,653,928		506,190		6,944,214	6,428,269	515,945
Shinhan Credit Information Co., Ltd.		30,849		10,358		20,491		31,377	12,334	19,043
Shinhan Alternative Investment Management Inc.(*3)		-		-		-		114,973	70,449	44,524
Shinhan Asset Management Co., Ltd.(*3)		397,666		162,882		234,784		242,760	40,181	202,579
SHC Management Co., Ltd.		9,663		-		9,663		9,636	-	9,636
Shinhan DS		99,192		55,741		43,451		92,591	52,804	39,787
Shinhan Savings Bank		3,130,418		2,826,805		303,613		2,644,942	2,413,176	231,766
Shinhan Asset Trust Co., Ltd.		395,040		103,549		291,491		373,488	122,890	250,598
Shinhan AITAS Co., Ltd.		88,993		9,291		79,702		90,116	9,786	80,330
Shinhan REITs Management Co., Ltd.		61,198		6,984		54,214		63,026	10,584	52,442
Shinhan AI Co., Ltd.		43,176		1,627		41,549		44,031	2,563	41,468
Shinhan Venture Investment Co., Ltd.		125,921		46,607		79,314		98,914	23,331	75,583
Shinhan EZ General Insurance, Ltd.		154,186		98,066		56,120		-	-	-

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

(*2) Trusts, beneficiary certificates, securitization-specialized limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.

(*3) Shinhan Asset Management Co., Ltd. and Shinhan Alternative Investment Management Inc. merged on January 5, 2022. The company name after the merger is Shinhan Asset Management Co., Ltd.

13

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

1.  Reporting entity (continued)

ii) The summarized statement of comprehensive income of the controlling company and the Group’s major consolidated subsidiaries for the six-month periods ended June 30, 2022 and 2021 are as follows:

Statement of comprehensive income		June 30, 2022					June 30, 2021
Name of entity(*1)(*2)		Revenue		Net Income (*3)		Total com-prehensive income (loss)(*3)	Revenue		Net income (loss)(*3)		Total com-prehensive income (loss)(*3)
Shinhan Financial Group (separate)	W	1,708,460		1,350,630		1,351,709	1,700,999		1,486,038		1,486,191
Shinhan Bank		19,004,865		1,683,432		1,057,284	11,209,775		1,371,083		1,269,624
Shinhan Card Co., Ltd.		2,473,253		413,527		431,924	2,126,887		367,712		402,114
Shinhan Investment Corp.		5,840,154		188,998		229,610	4,185,166		322,809		344,179
Shinhan Life Insurance Co., Ltd.		4,629,586		277,525		(1,397,408)	2,632,214		92,225		(49,953)
Orange Life Insurance Co., Ltd.(*4)		-		-		-	2,112,353		216,826		(96,157)
Shinhan Capital Co., Ltd.		537,421		203,647		205,349	178,748		131,340		131,107
Jeju Bank		121,828		10,226		(5,473)	98,555		14,063		9,814
Shinhan Credit Information Co., Ltd.		20,705		1,029		1,450	21,337		1,132		1,172
Shinhan Alternative Investment Management Inc.(*5)		-		-		-	10,207		2,617		2,617
Shinhan Asset Management Co., Ltd.(*5)		139,909		40,880		40,695	54,710		18,427		18,459
SHC Management Co., Ltd.		-		26		26	25		(9)		(9)
Shinhan DS		126,923		3,451		3,665	107,169		3,311		4,102
Shinhan Savings Bank		115,544		21,715		21,916	73,635		14,040		13,857
Shinhan Asset Trust Co., Ltd.		76,944		40,498		40,893	68,690		35,011		34,995
Shinhan AITAS Co., Ltd.		27,778		4,628		4,628	25,996		4,761		4,761
Shinhan REITs Management Co., Ltd.		6,136		1,774		1,773	5,923		4,631		4,631
Shinhan AI Co., Ltd.		6,122		87		81	5,908		340		335
Shinhan Venture Investment Co., Ltd.		12,480		3,637		3,637	14,095		6,199		6,131

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

(*2) Trusts, beneficiary certificates, securitization-specialized limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.

(*3) It includes non-controlling interest.

(*4) The amount as of June 30, 2021 is revenue, net income (loss) and total comprehensive income for the six months prior to the merger with Shinhan Life Insurance Co., Ltd.

(*5) Shinhan Asset Management Co., Ltd. and Shinhan Alternative Investment Management Inc. merged on January 5, 2022. The company name after the merger is Shinhan Asset Management Co., Ltd.

14

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

2. Basis of preparation

(a) Statement of compliance

The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS). The accompanying consolidated 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.

These consolidated interim financial statements of the Group are prepared as part of the period covered by the Group’s K-IFRS annual financial statements. They are prepared under K-IFRS No.1034, ‘Interim Financial Reporting’, do not include all of the disclosures required for full annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as of and for the year ended December 31, 2021.

(b) Use of estimates and judgments

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

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

In preparing these consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were, except for the method of estimation used to determine the income tax expense for the interim period, the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2021.

15

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

3. Significant accounting policies

(a) The Group applies the same accounting policies applied as when preparing the annual consolidated financial statements for the year ended December 31, 2021, except for the following amendments that has been applied for the first time since January 1, 2022 and as described in Note 2. (b).

i) K-IFRS No. 1103 'Business combination' amended – Reference to the Conceptual Framework

The amendments update a reference of definition of assets and liabilities to be recognized in a business combination in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korea IFRS 1037 ‘Provisions, Contingent Liabilities and Contingent Assets’, and Korean IFRS 2121 ‘Levies’. The amendments also clarify that contingent assets should not be recognized at the acquisition date. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.

(ii) K-IFRS No. 1016 ‘Property, Plant and Equipment ' amended – Proceeds before the intended use

The amendments require the entity to recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss, and prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.

(iii) K-IFRS No. 1037, ‘Provisions, Contingent Liabilities and Contingent Assets’ amended - Onerous Contracts: Cost of Fulfilling a Contract

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.

iv) Annual Improvements to K-IFRSs 2018-2020 Cycle

For Annual Improvements to K-IFRSs 2018-2020 Cycle, the amendments will take effect for annual periods beginning after January 1, 2022 and are permitted for early application. The Group expects that the amendments will not have a significant impact on the cconsolidated financial statements.

- K-IFRS No.1101, ‘‘First-time Adoption of K-IFRS’-First-time adopter subsidiaries

- K-IFRS No.1109, ‘Financial Instruments’ -10% test-related fee for financial liabilities removal

- K-IFRS No.1041, ‘Agriculture’ - Fair value measurement

(b) The following new accounting standards and amendments have been published that are not mandatory for June 30, 2022 reporting periods and have not been early adopted by the Group.

i) K-IFRS No.1117 ‘Insurance Contracts’

K-IFRS No. 1117 ‘Insurance Contracts’ enacted on April 23, 2021 will be applied for annual periods beginning on or after January 1, 2023. The standard will replace K-IFRS No. 1104 ‘Insurance Contracts’ which is the current standard.

The main features of K-IFRS No. 1117 include measurement of the current value of insurance liabilities, recognition of insurance revenue on an accrual basis, and separate presentation of investment income from insurance performance. Under K-IFRS No. 1104, insurance liability was measured using historical information (e.g., interest rates at sale, etc.). In addition, when the entity receives the premium, it recognizes the premium received as an insurance revenue on a cash basis and there is no obligation to present insurance and investment income or expense separately. On the contrary, K-IFRS No. 1117 measures insurance liability at its present value by using updated discount rates which reflect current market-based information (i.e. at the reporting date) such as assumptions and risks. An insurance revenue is recognized on an accrual basis, reflecting the services provided to the policyholder by the insurance company for each accounting periods. Moreover, insurance finance income or expenses and the investment income or expenses will be presented separately.

16

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

3.  Significant accounting policies (continued)

i) K-IFRS No.1117 ‘Insurance Contracts’(continued)

(b) The following new accounting standards and amendments have been published that are not mandatory for annual periods beginning after June 30, 2022 and have not been early adopted by the Group. (continued)

If the Group applies K-IFRS No. 1117 in preparation of financial statements, significant differences with current financial statements may arise due to the following reasons. These differences do not include all of the future differences and they may be changed depending on further analysis.

① Evaluation of insurance liabilities

According to K-IFRS No. 1117, the Group estimates all cash flows under the insurance contract and measure insurance liabilities by using discount rates that reflect assumptions and risks at the reporting point.

Specifically, the Group identifies a portfolio of insurance contract that comprises contracts subject to similar risks and managed together, and then, classifies groups of insurance contracts within a portfolio by contracts with similar profitability. The Group measures a group of insurance contracts at the total of estimates of future cash flows (reflecting cash flows related to insurance contracts and the time value of money), risk adjustment and contractual service margin. With the application of K-IFRS No. 1117, contractual service margin account has been newly introduced. The contractual service margin presents the unearned profit the Group will recognize as it provides services in the future.

Reinsurance contract is an insurance contract issued by one entity (the reinsurer) to compensate another entity for claims arising from one or more insurance contracts issued by that another entity (underlying insurance contracts). When estimating present value of future cash flows arising from reinsurance contracts, the Group would use assumptions consistent with those it uses for the underlying contracts.

② Recognition and measurement of financial performance

According to K-IFRS No. 1117, insurance revenue is recognized on an accrual basis including services (insurance coverage) provided to the policyholder for each fiscal year. Investment components (such as refunds due to termination/maturity) repaid to a policyholder even if an insured event does not occur, are excluded from insurance revenue, and insurance financial income or expense and the investment income or expense are presented separately to enable users of the information to understand the sources of income or expenses.

The Group includes in insurance finance income or expense the group of insurance contracts related time value of money and financial risk, and the effect of changes in the time value of money and financial risk. The Group makes an accounting policy choice as to whether to disaggregate insurance finance income or expenses for the period between profit or loss and other comprehensive income.

③ Accounting policies related to conversion

According to K-IFRS No. 1117, the Group shall adjust the existing cost-based valuation to the current valuation by applying a fully retroactive approach, modified retroactive approach or fair value approach on groups of insurance contracts issued before the transition date (January 1, 2022, the beginning of the annual reporting period immediately preceding the date of initial application).

In principle, the Group shall identify, recognize, and measure each group of insurance contracts as if K-IFRS No. 1117 has always applied, but if this approach is impracticable, the Group may choose to apply either the modified retroactive approach or fair value approach. However, the fair value approach may be applied for groups of insurance contracts with direct participation features that meet certain requirements even if the fully retroactive method is applicable.

17

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

3.  Significant accounting policies (continued)

i) K-IFRS No.1117 ‘Insurance Contracts’(continued)

(b) The following new accounting standards and amendments have been published that are not mandatory for annual periods beginning after March 31, 2022 and have not been early adopted by the Group. (continued)

③ Accounting policies related to conversion (continued)

The objective of the modified approach is to achieve the closest outcome to retrospective application possible using reasonable and supportable information available without undue cost or effort. The fair value approach is an approach of assessing a group of insurance contracts using fair value assessments, etc. in accordance with K-IFRS No. 1113 ‘Fair Value Measurement’. To apply the fair value approach, the Group shall determine the contractual service margin or loss component of the liability for remaining coverage at the transition date as the difference between the fair value of a group of insurance contracts and the fulfilment cash flows measured at that date.

④ Preparing for the application

As part of preparation for integration of life insurance sector in 2021, the Group has completed setting up actuarial assumptions and models and insurance liability settlement system. Before 2023, when the standard is first applied, the Group is planning to continue fostering and reinforcing additional professionals and will constantly promote advancement, including improvements on system stability and verification of the consistency of data output. Also, the Group will overhaul and establish an Internal Control of Financial Reporting that goes along with the dynamic accounting environment in order to prepare and disclose reliable accounting information.

The application of K-IFRS No. 1117 will not only result to a change in accounting standards, but will also affect insurance product development, sales strategies, and long-term management strategies. Therefore, with the aim of re-establishment of the overall business management system, the Group will continue to provide training to the employees and report to the management the status and implementation plan of K-IFRS No. 1117.

⑤ Financial impact assessment

As the implementation of K-IFRS No. 1117 results to changes in the valuation of liabilities, revenue recognition, etc., the Group believes that the impact of this standard on the financial statements will be significant. The Group is determining the impacts on the consolidated financial statements due to the application of the standard. However, in practice, it is difficult to provide reasonable estimates of the impact on future financial statements. As of June 30, 2022, the Group has an insurance contract liability of W60,814,423 million, calculated in accordance with K-IFRS No.1104 ‘Insurance contracts’.

18

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management

(a) Overview

Shinhan Financial Group Co., Ltd. (collectively the “Group”) manages various risks that may be arisen by each business sector and the major risks to which the Group is exposed include credit risk, market risk, interest rate risk, and liquidity risk. These risks are recognized, measured, controlled and reported in accordance with risk management guidelines established at the controlling company level and at the subsidiary level.

i) Risk management principles

The risk management principles of the Group are as follows:

- All business activities take into account the balance of risks and profits within a predetermined risk trend.

- The controlling company shall present the Group Risk Management Model Standards and supervise their compliance, and have responsibility and authority for group-level monitoring.

- Operate a risk-related decision-making system that enhances management's involvement.

- Organize and operate risk management organizations independent of the business sector.

- Operate a performance management system that clearly considers risks when making business decisions.

- Aim for preemptive and practical risk management functions.

- Share a cautious view to prepare for possible deterioration of the situation.

ii) Risk management organization

The basic policies and strategies for risk management of the Group are established by the Risk Management Committee (collectively the "Group Risk Management Committee") within the controlling company's Board of Directors. The Group's Chief Risk Management Officer (CRO) assists the Group Risk Management Committee and consults the risk policies and strategies of the group and each subsidiary through the Group Risk Council, which includes the Chief Risk Management Officer of each subsidiary. The subsidiary implements the risk policies and strategies of the Group through each company's risk management committee, risk-related committee, and risk management organization, and consistently establishes and implements the detailed risk policies and strategies of the subsidiary. The risk management team of the controlling company assists the Group's chief risk management officer for risk management and supervision.

Shinhan Financial Group has a hierarchical limit system to manage the risks of the Group to an appropriate level. The Group Risk Management Committee sets the risk limits that can be assumed by the Group and its subsidiaries, while the Risk Management Committee and the Committee of each subsidiary set and manage detailed risk limits by risk, department, desk and product types.

19

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(a) Overview (continued)

ii) Risk management organization (continued)

① Group Risk Management Committee

The Group established the risk management system for the Group and each of its subsidiaries, and comprehensively manages group risk-related matters such as establishing risk policies, limits, and approvals. The Committee consists of directors of the Group.

The resolution of the Committee is as follows:

-Establish risk management basic policy in line with management strategy

-Determine the level of risk that can be assumed by the Group and each subsidiary

-Approve appropriate investment limit or loss allowance limit

-Enact and amend the Group Risk Management Regulations and the Group Risk Council Regulations

-Matters concerning risk management organization structure and division of duties

-Matters concerning the operation of the risk management system;

-Matters concerning the establishment of various limits and approval of limits

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

-Matters concerning risk disclosure policy

-Analysis of crisis situation, related capital management plan and financing plan

-Matters deemed necessary by the board of directors

-Materials required by external regulations such as the Financial Services Commission and other regulations and guidelines

-Matters deemed necessary by the Chairman

The resolution of the Group Risk Management Committee is reported to the Board of Directors.

② Group Risk Management Council

In order to maintain the Group's risk policy and strategy consistently, the Group decides what is necessary to discuss the risks of the Group and to carry out the policies set by the Group Risk Management Committee. The members are chaired by the group's risk management officer and consist of the risk management officers of major subsidiaries.

iii) Group Risk Management System

① Management of the risk capital

Risk capital refers to the capital required to compensate for the potential loss (risk) if it is actually realized. Risk capital management refers to the management of the risk assets considering its risk appetite, which is a datum point on the level of risk burden compared to available capital, so as to maintain the risk capital at an appropriate level. The Group and subsidiaries establish and operate a risk planning process to reflect the risk plan in advance when establishing financial and business plans for risk capital management and establish a risk limit management system to control risk to an appropriate level.
 

20

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(a) Overview (continued)

iii) Group Risk Management System (continued)

② Risk Monitoring

In order to proactively manage risks by periodically identifying risk factors that can affect the group's business environment, the Group has established a multi-dimensional risk monitoring system. Each subsidiary is required to report to the Group on key issues that affect risk management at the group level. The Group prepares weekly, monthly and occasional monitoring reports to report to Group management including the CRO.

In addition, the Risk DashBoard is operated to derive abnormal symptoms through three-dimensional monitoring of major portfolios, increased risks, and external environmental changes (news) 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 three levels of contingencies, namely, ‘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.

21

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(b) Credit risk

Credit risk is the risk of potential economic loss that may be caused if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and is the largest risk which the Group is facing. The Group’s credit risk management encompasses all areas of credit that may result in potential economic loss, including not just transactions that are recorded on balance sheets, but also off-balance-sheet transactions such as guarantees, loan commitments and derivative transactions.

Shinhan Bank's basic policy on credit risk management is determined by the Risk Policy Committee. The Risk Policy Committee consists of the chairman of the CRO, the Chief Credit Officer (CCO), the head of the business group, and the head of the risk management department, and decides the credit risk management plan and the direction of the loan policy for the entire bank. Apart from the Risk Policy Committee, the Credit Review Committee is established to separate credit monitoring, such as large loans and limit approval, and the CCO is composed of the chairman, the head of the group in charge of the credit-related business group, the head of the credit planning department to enhance the soundness 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 the bank's internal information and external credit information, and the corporate customers are evaluated by considering financial and non-financial items such as industrial risk, operating risk, and management risk. The evaluated credit rating is used for credit approval, limit management, pricing, credit loss provisioning, etc., and is the basis for credit risk management. The credit evaluation system is divided into an evaluation system for retail customers, a SOHO evaluation system, and an evaluation system for corporate customers. It is subdivided and refined by each model to reflect the Basel 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 the credit officer of the branch and the headquarters’ Review Committee. 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.

Credits for corporate customers are performed by the loan officers and reviewers of branch offices by automatically searching for anticipated insolvent companies among business loan partners, and the credit department independent of the business sector evaluates the adequacy of the result of the loan review 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. 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 group, and to prepare for the credit risk caused by biased exposure to specific sectors, the Group sets and manages exposure limits for each sector by the party, industry, country, etc.

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

Shinhan Card's credit scoring system is divided into ASS (Application Scoring System) and BSS (Behavior Scoring System). For applications that meet the eligibility criteria for card issuance, the card will be issued only if the AS credit rating is above the standard. The company's internal information, CB company's external information, and personal information on the application are used to calculate the AS credit rating. The BS, which is recalculated monthly, predicts the delinquency probability of cardholders, and utilizes it to monitor members and monitor portfolio risk.

22

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(b) Credit risk(continued)

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

i-1) Determining significant increases in credit risk since initial recognition

At the end of each reporting period, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses.

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.

i-1-1) Measuring the risk of default

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

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

Internal credit risk rating is a key variable input to determine the term structure of probability 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.

23

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(b) Credit risk (continued)

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

i-1-3) Significant increases in credit risk

The Group uses the indicators defined as per portfolio to determine the significant increase in credit risk and such indicators generally consist of changes in the risk of default estimated from changes in the internal credit risk rating, qualitative factors, days of delinquency, and others. The method used to determine whether credit risk of financial instruments has significantly increased after the initial recognitions is summarized as follows:

Corporate exposures	Retail exposures	Card exposures
Significant change in credit ratings	Significant change in credit ratings	Significant change in credit ratings
Continued past due more than 30 days	Continued past due more than 30 days	Continued past due more than 7 days(personal card)
Loan classification of and below precautionary	Loan classification of and below precautionary	Loan classification of and below precautionary
Borrower with early warning signals	Borrower with early warning signals	Specific pool segment
Negative net assets	Specific pool segment
Adverse audit opinion or disclaimer of opinion	Collective loans for housing for which the constructors are insolvent
Interest coverage ratio below 1 for a consecutive period of three years or negative cash flows from operating activities for a consecutive period of two years	Loans with identified indicators for significant increases in other credit risk
Loans with identified indicators for significant increases in other credit risk

The Group assumes that the credit risk of the financial instrument has been increased significantly since initial recognition if a specific exposure is past due more than 30 days (except, for 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.

24

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(b) Credit risk (continued)

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

i-2) Modified financial assets

If the contractual cash flows on a financial asset have been modified through renegotiation and the financial asset is not derecognized, the Group assesses whether there has been a significant increase in the credit risk of the financial instrument by comparing the risk of a default occurring at initial recognition based on the original, unmodified contractual terms and the risk of a default occurring at the reporting date based on the modified contractual terms.

The Group may adjust the contractual cash flows of loans to customers who are in financial difficulties in order to manage the risk of default and enhance the collectability (hereinafter referred to as ‘debt restructuring’). These adjustments generally involve extension of maturity, changes in interest payment schedule, and changes in other contractual terms.

Debt restructuring is a qualitative indicator of a significant increase in credit risk and the Group recognizes lifetime expected credit losses for the exposure expected to be the subject of such adjustments. If a borrower faithfully makes payments of contractual cash flows that are modified in accordance with the debt restructuring or if the borrower's internal credit rating has recovered to the level prior to the recognition of the lifetime expected credit losses, the Group recognizes the 12-month expected credit losses for that exposure again.

i-3) Risk of default

The Group considers a financial asset to be in default if it meets one or more of the following conditions:

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

- If the Group judges that it is not possible to recover principal and interest without enforcing the collateral on a financial asset

The Group uses the following indicators when determining whether a borrower is in default:

- Qualitative factors (e.g. breach of contractual terms),

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

- Internal observation data and external data

The definition of default applied by the Group generally conforms to the definition of default defined for regulatory capital management purposes; however, depending on the situations, the information used to determine whether a default has incurred and the extent thereof may vary.

25

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(b) Credit risk (continued)

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

i-4) Reflection of forward-looking information

The Group reflects future forward-looking information presented by a group of internal experts based on various information when measuring expected credit losses. The Group utilizes economic forecasts disclosed by domestic and foreign research institutes, governments, and public institutions to predict forward-looking information.

The Group 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 COVID-19 economic situation, the Group has reviewed the 3 scenarios of upside, central and downside including the worst scenario to reflect the final forward-looking information.

Key macroeconomic variables	Correlation with credit risk
3Y Corporate bonds	Positive
GDP growth rate	Negative
Consumer price fluctuation rate	Positive

The predicted correlations between the macroeconomic variables and the risk of default, used by the Group, are derived based on data from the past ten years.

The default rate forecast applied in estimating allowance for expected credit loss for the period ended June 30, 2022 was re-estimated using changed forward-looking information on Corporate bond’s rate of return, GDP growth rate and Consumer price fluctuation rate, which were major variables for calculating the default rate.

26

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

4.  Financial risk management (continued)

(b) Credit risk (continued)

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

i-5) Measurement of expected credit losses

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

- Probability of default (“PD”)

- Loss given default (“LGD”)

- Exposure at default (“EAD”)

These variables have been estimated from historical experience data by using the statistical techniques developed internally by the Group and have been adjusted to reflect forward-looking information.

Estimates of PD over a specified period are estimated by reflecting characteristics of counterparties and their exposure, based on a statistical model at a specific point of time. The Group uses its own information to develop a statistical credit assessment model used for the estimation, and 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 used amount previously withdrawn and 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.

27

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(b) Credit risk (continued)

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

i-6) Write-off of financial assets

The Group writes off a portion of or entire loan or debt security that is not expected to receive its principal and interest. In general, the Group conducts write-off when it is deemed that the borrower has no sufficient resources or income to repay the principal and interest. Such determination on write-off is carried out in accordance with the internal rules of the Group and is carried out with the approval of an external institution, if necessary. Apart from write-off, the Group may continue to exercise its right of collection under its own recovery policy even after the write-off of financial assets.

ii) Maximum exposure to credit risk

Exposure to credit risk is the exposure related to due from banks, loans, investments in debt securities, derivative transactions, off-balance sheet accounts such as loan commitment. The exposures of due from banks and loans are classified into government, bank, corporation or retail based on the exposure classification criteria of BASEL III credit risk weights, and the net carrying amount, excluding provisions, is presented as the maximum amount that can be exposed by credit risk.

The Group’s maximum exposure to credit risk as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Due from banks and loans at amortized cost (*1)(*3):
Banks	W	17,633,935	14,166,508
Retail		185,445,508	186,358,002
Government/Public sector/Central bank		18,834,465	15,251,465
Corporations		185,624,178	172,527,573
Card receivable		26,691,151	25,065,621
		434,229,237	413,369,169
Due from banks and loans at fair value through profit or loss(*3):
Banks		119,659	34,262
Corporations		1,744,631	1,683,344
		1,864,290	1,717,606
Securities at fair value through profit or loss		56,964,842	58,310,838
Securities at fair value through other comprehensive income		64,801,465	63,806,919
Securities at amortized cost(*1)		52,594,142	49,930,076
Derivative assets		6,645,209	3,799,189
Other financial assets(*1)(*2)		32,359,003	23,238,932
Financial guarantee contracts		18,730,458	16,745,707
Loan commitments and other credit liabilities		201,745,892	193,853,866
	W	869,934,538	824,772,302

(*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 receivables, accrued income, secured deposits, prepayment, and uncollected domestic exchange settlement.

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

28

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(b) Credit risk (continued)

iii) Impairment information by credit risk of financial assets

Details of impaired financial assets due to credit risk as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		12-month expected loss				Lifetime expected loss						Total		Allowances		Net		Mitigation of credit risk   due to collateral
		Grade 1		Grade 2		Grade 1		Grade 2		Impaired
Due from banks and loans at amortized cost:
Banks	W	13,339,915		4,180,700		132,539		280		-		17,653,434		(19,499)		17,633,935		41,182
Retail		168,936,297		7,036,662		7,477,040		2,102,027		623,233		186,175,259		(729,751)		185,445,508		130,455,609
Government/Public sector /Central bank		17,327,989		1,496,921		17,083		262		-		18,842,255		(7,790)		18,834,465		9,000
Corporations		111,878,906		45,727,908		12,166,865		16,772,290		844,596		187,390,565		(1,766,387)		185,624,178		100,281,059
Card receivable		20,071,586		2,698,164		1,990,587		2,426,004		436,194		27,622,535		(931,384)		26,691,151		11,391
		331,554,693		61,140,355		21,784,114		21,300,863		1,904,023		437,684,048		(3,454,811)		434,229,237		230,798,241
Securities at fair value through other comprehensive income(*)		55,721,057		8,967,472		-		112,936		-		64,801,465		-		64,801,465		-
Securities at amortized cost		51,055,179		1,522,547		-		32,103		-		52,609,829		(15,687)		52,594,142		-
	W	438,330,929		71,630,374		21,784,114		21,445,902		1,904,023		555,095,342		(3,470,498)		551,624,844		230,798,241

29

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(b) Credit risk (continued)

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

Details of impaired financial assets due to credit risk as of June 30, 2022 and December 31, 2021 are as follows (continued):

		December 31, 2021
		12-month expected loss				Lifetime expected loss						Total		Allowances		Net		Mitigation of credit risk   due to collateral
		Grade 1		Grade 2		Grade 1		Grade 2		Impaired
Due from banks and loans at amortized cost:
Banks	W	10,793,973		3,278,144		112,254		434		-		14,184,805		(18,297)		14,166,508		133,618
Retail		169,313,467		7,015,361		7,900,192		2,127,173		581,534		186,937,727		(579,725)		186,358,002		126,988,030
Government/Public sector /Central bank		14,531,532		710,527		17,433		257		-		15,259,749		(8,284)		15,251,465		9,000
Corporations		101,866,101		44,060,819		10,743,965		16,702,928		853,977		174,227,790		(1,700,217)		172,527,573		93,682,859
Card receivable		18,793,517		2,541,833		1,829,837		2,350,634		428,068		25,943,889		(878,268)		25,065,621		8,774
		315,298,590		57,606,684		20,603,681		21,181,426		1,863,579		416,553,960		(3,184,791)		413,369,169		220,822,281
Securities at fair value through other comprehensive income(*)		56,176,008		7,478,125		-		152,786		-		63,806,919		-		63,806,919		-
Securities at amortized cost		48,305,398		1,605,335		-		36,290		-		49,947,023		(16,947)		49,930,076		-
	W	419,779,996		66,690,144		20,603,681		21,370,502		1,863,579		530,307,902		(3,201,738)		527,106,164		220,822,281

(*) Credit loss allowance recognized as other comprehensive income of securities at fair value through other comprehensive income amounted to W 34,633 million and W 37,486 million as of June 30, 2022 and December 31, 2021.    

30

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(b) Credit risk (continued)

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

Credit risk exposures per credit grade of off-balance items as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		Grade 1		Grade 2		Impaired		Total
Financial guarantee:
12-month expected credit loss	W	14,519,273		3,359,696		-		17,878,969
Lifetime expected credit loss		508,442		242,156		-		750,598
Impaired financial asset		-		-		100,891		100,891
		15,027,715		3,601,852		100,891		18,730,458
Loan commitment and other credit line
12-month expected credit loss		166,692,490		24,309,615		-		191,002,105
Lifetime expected credit loss		7,883,420		2,855,511		-		10,738,931
Impaired financial asset		-		-		4,856		4,856
		174,575,910		27,165,126		4,856		201,745,892
	W	189,603,625		30,766,978		105,747		220,476,350

		December 31, 2021
		Grade 1		Grade 2		Impaired		Total
Financial guarantee:
12-month expected credit loss	W	12,671,376		3,434,615		-		16,105,991
Lifetime expected credit loss		342,224		205,179		-		547,403
Impaired financial asset		-		-		92,313		92,313
		13,013,600		3,639,794		92,313		16,745,707
Loan commitment and other credit line
12-month expected credit loss		160,307,100		23,370,613		-		183,677,713
Lifetime expected credit loss		7,406,324		2,759,057		-		10,165,381
Impaired financial asset		-		-		10,772		10,772
		167,713,424		26,129,670		10,772		193,853,866
	W	180,727,024		29,769,464		103,085		210,599,573

v) Credit qualities are classified based on the internal credit rating as follows:

Type of Borrower	Grade 1	Grade 2
Individuals	Probability of default below 2.25% for each pool	Probability of default 2.25% or above for each pool
Government/Public sector/Central bank	OECD sovereign credit rating of 6 or above	OECD sovereign credit rating of below 6
Banks and Corporations (including card receivables)	Internal credit rating of BBB+ or above	Internal credit rating of below BBB+
Card receivables (Individuals)	Behavior scoring system of 7 grade or above	Behavior scoring system of below 7 grade

31

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(b) Credit risk (continued)

vi) Concentration by industry sector

An analysis of concentration by industry sector of financial instrument, net of allowance, as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
Classification(*)		Finance and insurance		Manu -facturing		Retail and wholesale		Real estate and business		Construction service		Lodging and Restaurant		Other		Retail customers		Total
Due from banks and loans at amortized cost:
Banks	W	17,230,446		-		-		-		-		-		403,489		-		17,633,935
Retail		-		-		-		-		-		-		-		185,445,508		185,445,508
Government/Public sector/Central bank		18,797,766		-		-		1,796		-		-		34,903		-		18,834,465
Corporations		12,904,096		57,593,353		23,317,180		44,118,214		4,185,094		6,533,648		36,972,593		-		185,624,178
Card receivable		64,014		272,817		221,609		46,589		47,694		31,600		977,272		25,029,556		26,691,151
		48,996,322		57,866,170		23,538,789		44,166,599		4,232,788		6,565,248		38,388,257		210,475,064		434,229,237
Due from banks and loans at FVTPL
Banks		30,187		-		-		-		-		-		89,472		-		119,659
Corporations		1,185,985		171,754		5,517		204,803		120,000		438		56,134		-		1,744,631
		1,216,172		171,754		5,517		204,803		120,000		438		145,606		-		1,864,290
Securities at fair value through profit or loss		33,655,094		3,782,223		1,563,443		872,138		338,060		92,260		16,661,624		-		56,964,842
Securities at fair value through other comprehensive income		27,329,027		3,118,332		582,669		808,124		1,091,419		30,232		31,841,662		-		64,801,465
Securities at amortized cost		11,510,684		-		-		1,084,458		1,274,252		-		38,724,748		-		52,594,142
		122,707,299		64,938,479		25,690,418		47,136,122		7,056,519		6,688,178		125,761,897		210,475,064		610,453,976
Off-balance accounts
Guarantees		2,592,088		9,230,942		3,788,470		282,296		243,487		125,953		2,465,809		1,413		18,730,458
Loan commitments and other liabilities related to credit		17,078,132		29,199,061		9,621,147		4,182,754		2,164,620		522,166		15,698,140		123,279,872		201,745,892
	W	19,670,220		38,430,003		13,409,617		4,465,050		2,408,107		648,119		18,163,949		123,281,285		220,476,350

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

32

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(b) Credit risk (continued)

vi) Concentration by industry sector (continued)

An analysis of concentration by industry sector of financial instrument, net of allowance, as of June 30, 2022 and December 31, 2021 are as follows (continued):

		December 31, 2021
Classification(*)		Finance and insurance		Manu -facturing		Retail and wholesale		Real estate and business		Construction service		Lodging and Restaurant		Other		Retail customers		Total
Due from banks and loans at amortized cost:
Banks	W	13,447,829		-		-		-		-		-		718,679		-		14,166,508
Retail		-		-		-		-		-		-		-		186,358,002		186,358,002
Government/Public sector/Central bank		15,216,403		-		-		1,797		-		-		33,265		-		15,251,465
Corporations		13,384,083		53,134,572		21,167,564		41,106,836		3,727,338		6,544,166		33,463,014		-		172,527,573
Card receivable		51,123		252,973		228,900		46,896		45,568		29,713		1,899,301		22,511,147		25,065,621
		42,099,438		53,387,545		21,396,464		41,155,529		3,772,906		6,573,879		36,114,259		208,869,149		413,369,169
Due from banks and loans at FVTPL
Banks		34,262		-		-		-		-		-		-		-		34,262
Corporations		986,736		492,598		15,107		78,753		22,537		2,637		84,976		-		1,683,344
		1,020,998		492,598		15,107		78,753		22,537		2,637		84,976		-		1,717,606
Securities at fair value through profit or loss		33,769,892		3,248,846		1,169,038		773,687		299,972		152,341		18,897,062		-		58,310,838
Securities at fair value through other comprehensive income		27,034,695		3,529,756		523,631		775,967		1,144,998		30,928		30,766,944		-		63,806,919
Securities at amortized cost		10,309,318		-		-		1,074,393		1,249,070		-		37,297,295		-		49,930,076
		114,234,341		60,658,745		23,104,240		43,858,329		6,489,483		6,759,785		123,160,536		208,869,149		587,134,608
Off-balance accounts
Guarantees		2,308,627		8,124,340		3,469,001		350,591		207,691		151,653		2,132,267		1,537		16,745,707
Loan commitments and other liabilities related to credit		15,445,541		25,389,003		8,908,201		3,676,457		2,213,871		499,633		20,404,848		117,316,312		193,853,866
	W	17,754,168		33,513,343		12,377,202		4,027,048		2,421,562		651,286		22,537,115		117,317,849		210,599,573

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

33

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(c) Market risk

i) Market risk management from trading positions

i-1) Concept of Market risk

Market risk is defined as the risk of loss of trading account position of financial institutions due to changes on market price, such as interest rates, exchange rates and stock prices, etc. and is divided into general market risks and individual risks. A general market risk refers to a loss from price variability caused by events affecting the market as a whole, such as interest rates, exchange rates and stock prices; and an individual risk refers to a loss from price variability related to individual events of securities issuer, such as bonds and stocks.

i-2) Market risk Management Method

The basic principle of market risk management in the trading sector is to maintain the maximum possible loss due to market risk within a certain level. To this end, the Group sets and operates VaR limits, investment limits, position limits, sensitivity limits, and loss limits from the portfolio to individual desks. These limits are managed daily by the department in charge of risk management, independent from the operating department.

Trading positions refer to 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 (TRMS), and Shinhan Bank and Shinhan Financial Investment use their own internal model market risk calculation system.

Stress tests are conducted to supplement risk measurement by statistical methods and to manage losses that may arise from rapid changes in the economic environment.

Shinhan Bank measures the market risk of linear products, such as stocks and bonds, as well as non-linear products, such as options by applying historical simulation method of 99% confidence level-based VaR. Trading position data is automatically interfaced into measurement system, and the system conducts VaR measurement and manages the limit. In addition, the Bank sets loss limit, sensitivity limit, investment limit, stress limit, etc. for Trading Department and desks, and monitors daily.

Shinhan Investment measures daily market risk by applying historical simulation VaR method of 99.9% confidence level-based VaR. Historical simulation VaR method does not require assumption on a particular distribution since the method derives scenarios directly from historical market data, and measures non-linear products, such as options, in details. In addition to the VaR limit, the Shinhan Investment sets and manages issuance and transaction limit, and stop-loss limit for each department.

34

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(c) Market risk (continued)

ii) Interest rate risk management from non-trading positions

ii-1) Principle

Interest rate risk refers to the possibility of a decrease in net interest income or in net asset value that occurs when interest rates fluctuate unfavorably from the Group's financial position. The Group manages net interest income or changes in net asset value that occur due to changes in interest rates by early predicting the factors of interest rate risk fluctuation related to the Group's net interest income and net asset value through the interest rate risk management.

ii-2) Managements

Shinhan Financial Group's major financial subsidiaries manage interest rate risks independently by the risk management organization and the treasury department, and have internal regulations on interest rate risk management strategies, procedures, organization, measurement, and major assumptions.

One of the key indicators of managing interest rate risk is the Earnings at Risk (EaR) from an earning perspective and the Value at Risk (VaR) from an economic value perspective. Interest rate VaR represents the maximum anticipated loss in a net present value calculation, whereas interest rate EaR represents the maximum anticipated loss in a net earnings calculation for the immediately, in each case, as a result of negative movements in interest rates.

The precision of risk management system differs by each subsidiary. Interest rate VaR and interest rate EaR are measured by internal method or IRRBB (Interest Rate Risk In The Banking Book), and interest rate risk limits are set and monitored based on the interest rate VaR. In accordance with the amendments in Regulations for Supervision of Financial Holding Companies, the Group measures the interest rate risk using the Basel III based IRRBB, which measures the interest rate risk more precisely than the existing BIS standard framework by segmenting maturities of interest rates, reflecting customer behaviour models and diversifying interest rate shocks. The interest rate VaR scenario based IRRBB measures ① parallel up shock ② parallel down shock ③ steepener shock ④ flattener shock ⑤ short rate up shock ⑥ short rate down shock. By the parallel up shock and parallel down shock, the interest rate VaR scenario measures the scenario value with the largest loss as interest rate risk. Under the existing BIS standard framework, ± 200bp parallel shock scenario is applied to all currency. However, as the shock width is set differently by currency and period, interest rate risk is measured significantly by the IRRBB. ((KRW) Parallel ± 300bp, Short Term ± 400bp, Long Term ± 200bp, (USD) Parallel ± 200bp, Short Term ± 300bp, Long Term ± 150bp) In the IRRBB method, the existing interest rate VaR and the interest rate EaR are expressed as △ EVE (Economic Value of Equity) and △ NII (Net Interest Income), respectively.

Since impacts of each subsidiary on changes of interest rates are differentiated by portfolios, the Group is preparing to respond proactively while monitoring the financial market and regulatory environment, and making efforts to hedge or reduce interest rate risk. In addition, the subsidiaries conduct the crisis analysis on changes in market interest rates and report it to management and the Group.

In particular, through its ALM (Asset and Liability Management) system, Shinhan Bank measures and manages its interest rate risk based on various analytical measures such as interest rate gap, duration gap and NPV (Net Present Value) and NII (Net Interest Income) simulations, and monitors on a monthly basis its interest rate VaR limits, interest rate EaR (Earnings at Risk) limits and interest rate gap ratio limits.

35

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(c) Market risk (continued)

iii) Foreign exchange risk

Exposure to foreign exchange risk can be defined as the difference (net position) between assets and liabilities presented in foreign currency, including derivative financial instruments linked to foreign exchange rate. Foreign exchange risk is a factor that causes market risk of the trading position and is managed by the Group under the market risk management system.

The management of Shinhan Bank’s foreign exchange position is centralized at the S&T Center. Dealers in the S&T Center manage Shinhan Bank’s overall position within the set limits through spot trading, forward contracts, currency options, futures and swaps and foreign exchange swaps. Shinhan Bank sets a limit for net open positions by currency and the limits for currencies other than the U.S. dollars (USD), Japanese yen (JPY), Euros (EUR) and Chinese yuan (CNY) are set in order to minimize exposures from the other foreign exchange trading.

(d) Liquidity risk

Liquidity risk refers to the risk of unexpected losses (such as the disposal of assets abnormal pricing, the procurement of high interest rates, etc.) or insolvency due to inconsistency in funding periods between assets and liabilities or a sudden outflow of funds.

Each subsidiary seeks to minimize liquidity risk through early detection of risk factors related to the sourcing and managing of funding that may cause volatility in liquidity and by ensuring that it maintains an appropriate level of liquidity through systematic management. At the Group level, the Group manages liquidity risk by conducting monthly stress tests that compare liquidity requirements under normal situations against those under three types of stress situations, namely, the group-specific internal crisis, crisis in the external market and a combination of internal and external crisis. Therefore, the Group is checking the liquidity side for abnormalities in preparation for the usual crisis.

In addition, in order to pre-emptively and comprehensively manage liquidity risk, the Group measures and monitors liquidity risk management using various indices, including the ‘limit management index’, ‘early warning index’ and ‘monitoring index’.

Shinhan Bank applies the following basic principles for liquidity risk management:

- Raise funding in sufficient amounts, at the optimal time at reasonable costs;  

- Maintain risk at appropriate levels and preemptively manage them through a prescribed risk limit system and an early warning signal detection system;

- Secure stable sources of revenue and minimize actual losses by implementing an effective asset-liability management system based on diversified sources of funding with varying maturities;

- Monitor and manage daily and intra-daily liquidity positions and risk exposures for timely payment and settlement of financial obligations due under both normal and crisis situations;

- Conduct periodic contingency analysis in anticipation of any potential liquidity crisis and establish and implement emergency plans in case of a crisis actually happening; and

- Consider liquidity-related costs, benefits of and risks in determining the pricing of the Group’s products and services, employee performance evaluations and approval of launching of new products and services.

Shinhan Card sets and operates a level that can withstand a 3-month credit crunch for end-of-month liquidity. The Group defines and manages the level of caution, anxiety and risk for the real-life liquidity gap ratio, liquidity buffer ratio, and ABS weight compared to borrowings. A contingency plan has been established to prepare for a crisis.

36

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(d) Liquidity risk (continued)

The details of the composition of non-derivative financial liabilities and derivative financial instruments by remaining period are as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
Classification(*1)		Less than   1 month		1~3 Months		3~6 Months		6 months ~ 1 year		1~5 years		More than 5 years		Total
Non-derivative financial instruments:
Liabilities:
Deposits (*2)	W	218,725,183		47,779,594		45,080,241		46,856,109		16,875,838		1,992,049		377,309,014
Financial liabilities at FVTPL		1,320,259		-		-		-		-		-		1,320,259
Borrowings		11,915,153		5,329,593		5,369,894		7,156,890		17,453,210		4,091,385		51,316,125
Debt securities issued		6,993,555		7,796,268		10,070,740		16,070,673		38,059,434		5,791,126		84,781,796
Financial liabilities designated at FVTPL		373,361		166,002		1,242,452		263,371		4,193,497		1,171,042		7,409,725
Other financial liabilities		41,919,685		129,270		204,215		161,271		912,073		249,181		43,575,695
	W	281,247,196		61,200,727		61,967,542		70,508,314		77,494,052		13,294,783		565,712,614
Off balance(*3):
Guarantee contracts	W	18,730,458		-		-		-		-		-		18,730,458
Other liabilities related to loan commitments		201,745,892		-		-		-		-		-		201,745,892
	W	220,476,350		-		-		-		-		-		220,476,350
Derivatives:
Derivatives	W	(358,510)		(23,130)		32,851		52,753		(424,343)		38,012		(682,367)

37

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(d) Liquidity risk (continued)

The details of the composition of non-derivative financial liabilities and derivative financial instruments by remaining period are as of June 30, 2022 and December 31, 2021 are as follows (continued):

		December 31, 2021
Classifications (*1)		Less than   1 month(*3)	1~3 months	3~6 months	6 months ~ 1 year	1~5 years	More than 5 years	Total
Non-derivative financial instruments:
Liabilities:
Deposits(*2)	W	212,378,477	36,147,003	40,879,482	59,303,450	17,046,796	2,589,696	368,344,904
Financial liabilities at fair value through profit or loss		1,371,503	-	-	-	-	-	1,371,503
Borrowings		13,159,909	3,928,317	3,643,545	5,171,542	14,168,441	3,649,507	43,721,261
Debt securities issued		4,833,061	7,033,973	7,257,291	17,537,101	41,799,782	5,334,848	83,796,056
Financial liabilities designated at fair value through profit or loss		332,597	294,931	586,682	1,298,402	4,165,201	1,346,057	8,023,870
Other financial liabilities		26,754,163	175,952	136,110	568,997	579,871	159,352	28,374,445
	W	258,829,710	47,580,176	52,503,110	83,879,492	77,760,091	13,079,460	533,632,039
Off balance(*3):
Guarantee contracts	W	16,745,707	-	-	-	-	-	16,745,707
Other liabilities related to loan commitments		193,853,866	-	-	-	-	-	193,853,866
	W	210,599,573	-	-	-	-	-	210,599,573
Derivatives:
Derivatives	W	380,609	23,508	11,867	23,099	(363,034)	47,464	123,513

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

(*2) Demand deposits amounting to W176,551,532 million and W172,107,724 million as of June 30, 2022 and December 31, 2021 are included in the ‘Less than 1 month’ category, respectively.

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

38

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(e) Capital risk management

The criteria for capital adequacy to be complied with by the Group are 8.0%. In addition, the minimum regulatory BIS capital ratio, which should be maintained additionally to increase the ability to absorb losses, has been raised to up to 14% as the capital regulation based on the Basel III standard is enforced from 2016. This is based on the addition of capital conservation capital (2.5%p) and Domestic-Systemically Important Banks(D-SIB) capital (1.0%p) and economic response capital (2.5%p) to the existing lowest common equity capital ratio, and economic response capital can be charged up to 2.5%p during credit expansion period. As of June 30, 2022, the minimum regulatory BIS capital ratio to be observed is 11.5%, which is the standard for applying capital conservation capital (2.5%p), D-SIB capital (1.0%p), and economic response capital (0%p).

Basel III capital ratio is the concept of 'International Agreement on the Measurement and Standards of Equity Capital' of the Basel Bank Supervisory Commission of BIS (International Settlement Bank). It is calculated as '(common stock capital (after deduction of deductions) + other basic capital + supplementary capital) ÷ ​​risk weighted assets'.

The capital of common stock can be the first to make up for the loss of the financial holding company. The capital of common stock consists of capital stock, capital reserve, retained earnings and other, which will not be redeemed until the liquidation and will be redeemed at the last during the liquidation. Other basic capital consists of capital securities that meet certain requirements as capital of permanent nature. Complementary capital is capital that can compensate for losses of financial holding companies during liquidation, and consists of capital securities, etc. that meet certain requirements. The deduction items are those held by the Group as assets or capital items, but do not contribute to the ability to absorb losses. Unless otherwise noted, it will be deducted from common stock capital.

As of June 30, 2022, the Group maintains an appropriate capital adequacy ratio in accordance with the BIS Equity Capital Regulation System.

39

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value

The fair values of financial instruments being traded in an active market are determined by the published market prices of each period end. The published market prices of financial instruments being held by the Group are based on the trading agencies’ notifications. If the market for a financial instrument is not active, such as OTC (Over The Counter market) derivatives, fair value is determined either by using a valuation technique or independent third-party valuation service.

The Group uses its judgment to select a variety of methods and make rational assumptions that are mainly based on market conditions existing at the end of each reporting period. The fair value of financial instruments is determined using valuation techniques; 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.

40

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value

i-1) The fair value hierarchy of financial instruments presented at their fair values in the statements of financial position as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		Level 1	Level 2	Level 3	Total
Financial assets
Due from banks measured at FVTPL	W	-	30,186	-	30,186
Loans at FVTPL		-	214,259	1,619,844	1,834,103
Securities at FVTPL:
Debt securities and other securities		4,330,345	40,959,444	11,601,043	56,890,832
Equity securities		668,093	742	1,900,277	2,569,112
Gold/silver deposits		74,010	-	-	74,010
		5,072,448	40,960,186	13,501,320	59,533,954
Derivative assets:
Trading		81,946	5,698,115	559,499	6,339,560
Hedging		-	305,649	-	305,649
		81,946	6,003,764	559,499	6,645,209
Securities measured at FVOCI:
Debt securities		26,550,110	38,251,355	-	64,801,465
Equity securities		753,336	-	945,256	1,698,592
		27,303,446	38,251,355	945,256	66,500,057
	W	32,457,840	85,459,750	16,625,919	134,543,509
Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold	W	794,749	-	-	794,749
Gold/silver deposits		523,232	-	-	523,232
		1,317,981	-	-	1,317,981
Financial liabilities designated at fair value through profit or loss:
Derivatives-combined securities		-	511,742	6,890,307	7,402,049
Derivative liabilities:
Trading		347,744	6,006,555	317,703	6,672,002
Hedging		-	684,309	370,133	1,054,442
		347,744	6,690,864	687,836	7,726,444
	W	1,665,725	7,202,606	7,578,143	16,446,474

41

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-1) The fair value hierarchy of financial instruments presented at their fair values in the statements of financial position as of June 30, 2022 and December 31, 2021 are as follows (continued):

		December 31, 2021
		Level 1	Level 2	Level 3	Total
Financial assets
Due from banks measured at FVTPL	W	-	-	34,262	34,262
Loans at FVTPL		-	790,510	892,834	1,683,344
Securities at FVTPL:
Debt securities and other securities		7,250,389	40,396,692	10,580,066	58,227,147
Equity securities		942,433	107,416	1,325,466	2,375,315
Gold/silver deposits		83,691	-	-	83,691
		8,276,513	40,504,108	11,905,532	60,686,153
Derivative assets:
Trading		11,542	3,033,965	528,619	3,574,126
Hedging		-	225,063	-	225,063
		11,542	3,259,028	528,619	3,799,189
Securities measured at FVOCI:
Debt securities		24,951,761	38,855,158	-	63,806,919
Equity securities		257,947	48,225	725,232	1,031,404
		25,209,708	38,903,383	725,232	64,838,323
	W	33,497,763	83,457,029	14,086,479	131,041,271
Financial liabilities:
Financial liabilities measured at FVTPL:
Securities sold	W	787,767	-	-	787,767
Gold/silver deposits		581,458	-	-	581,458
		1,369,225	-	-	1,369,225
Financial liabilities designated at fair value through profit or loss:
Derivatives-combined securities		-	401,345	7,622,525	8,023,870
Derivative liabilities:
Trading		191,061	2,862,761	153,933	3,207,755
Hedging		-	196,060	182,749	378,809
		191,061	3,058,821	336,682	3,586,564
	W	1,560,286	3,460,166	7,959,207	12,979,659

42

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

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

The Group uses the evaluationvaluefromevaluatorswho arequalifiedand externalindependentto determinethefairvalueforGroup’sassets at the end of each reporting period. Changes in carrying values of financial instruments classified as Level 3 for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows:

		June 30, 2022
		Financial asset at fair value through profit or loss		Securities at fair value through other comprehensive profit or loss		Financial liabilities designated at fair value through profit or loss		Derivative assets and liabilities, net
								Held for trading	Held for hedging
Beginning balance	W	12,832,628		725,232		(7,622,525)		374,686	(182,749)
Recognized in total comprehensive income for the year:
Recognized in profit (loss) for the period(*1)		385,974		-		445,108		(367,243)	(187,384)
Recognized in other comprehensive income (loss) for the period		(76,900)		67,678		(2,568)		-	-
		309,074		67,678		442,540		(367,243)	(187,384)
Purchase		4,022,423		163,237		-		230,518	-
Issue		-		-		(2,260,142)		-	-
Settlement		(2,007,483)		(10,891)		2,549,820		(6,585)	-
Transfer to level3(*2)		128,455		-		-		10,350	-
Transfer from level3(*2)		(163,933)		-		-		70	-
Ending balance	W	15,121,164		945,256		(6,890,307)		241,796	(370,133)

43

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-2) Financial instruments classified as Level 3 (continued)

The Group uses the evaluationvaluefromevaluatorswho arequalifiedand externalindependentto determinethefairvalueforGroup’sassets at the end of each reporting period. Changes in carrying values of financial instruments classified as Level 3 for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
		Financial asset at fair value through profit or loss		Securities at fair value through other comprehensive profit or loss		Financial liabilities designated at fair value through profit or loss		Derivative assets and liabilities, net
								Held for trading	Held for hedging
Beginning balance	W	10,925,715		717,408		(8,141,504)		321,499	(102,024)
Recognized in total comprehensive income for the year:
Recognized in profit (loss) for the year(*1)		271,065		448		(273,536)		348,046	(80,725)
Recognized in other comprehensive income (loss) for the year		38,566		24,672		(1,526)		-	-
		309,631		25,120		(275,062)		348,046	(80,725)
Purchase		4,792,810		21,440		-		4,394	-
Issue		-		-		(8,488,977)		-	-
Settlement		(3,498,968)		(38,736)		9,283,018		(299,633)	-
Reclassification(*3)		(9,641)		-		-		-	-
Transfer to level3(*2)		507,984		-		-		446	-
Transfer from level3(*2)		(194,903)		-		-		(66)	-
Ending balance	W	12,832,628		725,232		(7,622,525)		374,686	(182,749)

(*1) Recognized profit or loss of the changes in carrying value of financial instruments classified as Level 3 for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are included in the accounts of the statements of comprehensive income, of which the amounts and the related accounts are as follows:

		June 30, 2022
		Amounts recognized in profit or loss		Recognized profit or loss from the financial instruments held as of June 30
Net gain (loss) on financial assets at fair value through profit or loss	W	18,731		(135,103)
Net gain on financial liabilities designated at fair value through profit or loss		445,108		534,601
Net gain on securities at fair value through other comprehensive income		-		-
Other operating expenses		(187,384)		(187,384)
	W	276,455		212,114

44

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-2) Financial instruments classified as Level 3 (continued)

The Group uses the evaluated values obtained by the external independent and qualified evaluators or internal evaluation models to determine the fair value of assets of the Group at the end of each reporting period. Changes in carrying values of financial instruments classified as Level 3 for the six-month period ended June 30, 2022 and the year ended December 31, 2021 are as follows (continued):

(*1) Recognized profit or loss of the changes in carrying value of financial instruments classified as Level 3 for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are included in the accounts of the statements of comprehensive income, of which the amounts and the related accounts are as follows (continued):

		December 31, 2021
		Amounts recognized in profit or loss	Recognized profit or loss from the financial instruments held as of December 31
Net gain on financial assets at fair value through profit or loss	W	619,111	322,974
Net gain (loss) on financial liabilities designated at fair value through profit or loss		(273,536)	186,003
Net gain on securities at fair value through other comprehensive income		448	-
Other operating expenses		(80,725)	(83,669)
	W	265,298	425,308

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

(*3) It has been replaced by investment in associates.

45

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-3) Valuation techniques and significantinputsnot observablein markets

i-3-1) Valuation techniques and inputs used in measuring the fair value of financial instruments classified as level 2 as of June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022
Type of financial instrument	Valuation technique		Carrying Value	Significant inputs
Assets
Financial asset at fair value through profit or loss
Debt securities	DCF, NAV	W	41,203,889	Discount rate, interest rate, stock price, etc.
Equity securities	NAV		742	Price of underlying assets such as stocks, bonds, etc.
			41,204,631
Derivative assets
Trading	Option model, Implied forward interest rate, DCF		5,698,115	Discount rate, foreign exchange rate, volatility,stock price, and commodity index, etc.
Hedging			305,649
			6,003,764
Securities at fair value through other comprehensive income
Debt securities	DCF		38,251,355	Discount rate, interest rate, price of underlying assets, etc.
		W	85,459,750
Liabilities
Financial liabilities designated at fair value through profit or loss
Complex financial instruments	Option model	W	511,742	Discount rate, volatility, stock price index
Derivative liabilities
Trading	Option model, DCF		6,006,555	Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc.
Hedging			684,309
			6,690,864
		W	7,202,606

46

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

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

i-3-1) Valuation techniques and inputs used in measuring the fair value of financial instruments classified as level 2 as of June 30, 2022 and December 31, 2021 are as follows (continued):

	December 31, 2021
Type of financial instrument	Valuation technique		Carrying value	Significant inputs
Assets
Financial asset at fair value through profit or loss
Debt securities	DCF	W	41,187,202	Discount rate, interest rate, stock price, and etc.
Equity securities	NAV		107,416	Price of underlying assets such as stocks, bonds, etc.
			41,294,618
Derivative assets
Trading	Option model, Implied forward  interest rate, DCF		3,033,965	Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc.
Hedging			225,063
			3,259,028
Securities at fair value through other comprehensive income
Debt securities	DCF		38,855,158	Interest rate, discount rate and price of underlying assets such as stock, bonds, etc.
Equity securities	NAV		48,225
			38,903,383
		W	83,457,029
Liabilities
Financial liabilities designated at fair value through profit or loss
Compound financial instruments	Option model	W	401,345	Discount rate
Derivative liabilities
Trading	Option model, DCF		2,862,761	Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc.
Hedging			196,060
			3,058,821
		W	3,460,166

47

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

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

i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022
Type of financial instrument	Valuation technique		Carrying value(*2)	Significant unobservable inputs	Range
Financial assets
Financial asset at fair value through profit or loss
Debt securities	DCF, NAV, Option model(*1), Comparable company analysis	W	13,220,887	The volatility of the underlying asset, Discount rate, Correlations	0.66%~67.41% 1.76%~27.71% 27.94%~56.13%
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis		1,900,277	The volatility of the underlying asset, Discount rate, Correlations	21.00%~29.03% 5.35%~14.59% 12.00%~66.00%
			15,121,164
Derivative assets
Equity and foreign exchange related	Option model(*1)		55,525	The volatility of the underlying asset, and Correlations	5.60%~53.00% 12.00%~91.00%
Interest rates related	Option model(*1)		55,089	The volatility of the underlying asset, Correlations, and Discount rate	0.50%~0.70% 78.00%~80.00% 1.95%
Credit and commodity related	Option model(*1)		448,885	The volatility of the underlying asset, and Hazard Rate	4.00%~42.20% 0.55%~3.58%
			559,499
Securities at fair value through other comprehensive income
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis		945,256	The volatility of the underlying asset, Discount rate, Growth rate and Volatility	28.25%  6.77%~17.65%  0.00%~2.00%  0.66%~1.15%
		W	16,625,919

48

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

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

i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of June 30, 2022 and December 31, 2021 are as follows (continued):

	June 30, 2022
Type of financial instrument	Valuation technique		Carrying value(*2)	Significant unobservable inputs	Range
Financial liabilities
Financial liabilities designated at fair value through profit or loss
Equity related	Option model(*1)	W	6,890,307	The volatility of the underlying asset, and Correlations	0.20%~85.70% -42.00%~91.00%
Derivative liabilities
Equity and foreign     exchange related	Option model(*1)		8,939	The volatility of the underlying asset, and Correlations	5.61%~86.00% -42.00%~87.00%
Interest rates related	Option model(*1)		651,049	The volatility of the underlying asset, Regression coefficient, and Correlations	0.20%~0.90% 0.00%~1.08% 24.00%~90.34%
Credit and commodity related	Option model(*1)		27,848	Hazard Rate	1.03%~11.80%
			687,836
		W	7,578,143

(*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.

49

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

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

i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of June 30, 2022 and December 31, 2021 are as follows (continued):

	December 31, 2021
Type of financial instrument	Valuation technique		Carrying value(*2)	Significant unobservable inputs	Range
Financial assets
Financial asset at fair value through profit or loss
Debt securities	DCF, NAV, Option model(*1), Comparable company analysis	W	11,507,162	The volatility of the underlying asset, Discount rate, Correlations, and Growth rate	19.48%~72.69%  0.07%~27.30%  23.17%~58.47% 0.00%~1.00%
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis		1,325,466	The volatility of the underlying asset, Discount rate, Correlations, and Growth rate	16.00%~32.00%  5.45%~16.35%  00.00%~54.00%  1.00%
			12,832,628
Derivative assets
Equity and foreign exchange related	Option model(*1)		28,783	The volatility of the underlying asset, and Correlations	2.29%~50.00% -5.00%~91.00%
Interest rates related	Option model(*1)		6,029	The volatility of the underlying asset, Correlations, and Discount rate	0.70%  80.00%~82.00%  1.11%~1.83%
Credit and commodity related	Option model(*1)		493,807	The volatility of the underlying asset, and Hazard Rate	0.70%~4.70%   5.17%~93.69%
			528,619
Securities at fair value through other comprehensive income
Equity securities	DCF, NAV, Option model(*1), Comparable company analysis		725,232	The volatility of the underlying asset, Discount rate, and Growth rate	25.49% 9.80%~22.79% 0.00%~2.00%
		W	14,086,479

50

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

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

i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of June 30, 2022 and December 31, 2021 are as follows (continued):

	December 31, 2021
Type of financial instrument	Valuation technique		Carrying value(*2)	Significant unobservable inputs	Range
Financial liabilities
Financial liabilities designated at fair value through profit or loss
Equity related	Option model(*1)	W	7,622,525	The volatility of the underlying asset, and Correlations	0.50%~94.90% -12.00%~88.00%
Derivative liabilities
Equity and foreign       change related	Option model(*1)		13,214	The volatility of the underlying asset, and Correlations	2.29%~42.00%  -5.00%~91.00%
Interest rates related	Option model(*1)		258,364	The volatility of the underlying asset, Regression coefficient, and Correlations	0.46%~0.78%  0.00%~0.54%  0.00%~90.34%
Credit and commodity related	Option model(*1)		65,104	The volatility of the underlying asset, and Hazard Rate	1.90%~94.90%  5.17%~100.79%
			336,682
		W	7,959,207

(*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.

51

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

i) Financial instruments measured at fair value (continued)

i-4) Sensitivityforchangingin unobservableinputs

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 June 30, 2022 and December 31, 2021.

		June 30, 2022
		Favorable changes		Unfavorable changes
Financial assets:
Effects on profit or loss for the period(*1)(*2):
Financial asset at fair value through profit or loss	W	44,859		(40,133)
Derivative assets		14,941		(13,210)
Securities at fair value through other comprehensive income(*2)		52,803		(38,445)
	W	112,603		(91,788)
Financial liabilities:
Effects on profit or loss for the period(*1):
Financial liabilities designated at fair value through profit or loss	W	76,267		(70,999)
Derivative liabilities		49,362		(46,345)
	W	125,629		(117,344)

		December 31, 2021
		Favorable changes	Unfavorable changes
Financial assets:
Effects on profit or loss for the period(*1)(*2):
Financial asset at fair value through profit or loss	W	39,084	(43,072)
Derivative assets		16,893	(11,809)
Securities at fair value through other comprehensive income(*2)		38,865	(38,210)
	W	94,842	(93,091)
Financial liabilities:
Effects on profit or loss for the period(*1):
Financial liabilities designated at fair value through profit or loss	W	45,493	(50,845)
Derivative liabilities		25,326	(23,486)
	W	70,819	(74,331)

(*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 growth rate and discount rate (-1~1%p), a significant unobservable input.

52

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

ii) Financial instruments measured at amortized cost

ii-1) The method of measuring the fair value of financial instruments measured at amortized cost is as follows:

Type	Measurement methods of fair value
Cash and due from banks	The carrying amount and the fair value for cash are identical and most of deposits are floating interest rate deposits or next day deposits of a short-term instrument. For this reason, the carrying value approximates fair value.
Loans	The fair value of the loans is measured by discounting the expected cash flow at the market interest rate and credit risk of the borrower.
Securities	An external professional evaluation agency is used to calculate the valuation amount using the market information. The agency calculates the fair value based on active market prices, and DCF model is used to calculate the fair value if there is no quoted price.
Deposits and borrowings	The carrying 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.
Other financial assets and other financial liabilities	The carrying amounts are measured at fair value for short-term and suspense accounts, such as spot exchange, inter-bank fund transfer, and domestic exchange of payments, and for the remaining financial instruments, the present value is calculated by discounting the contractual cash flows at a discount rate which considered residual risk at the market interest rate.

53

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

ii) Financial instruments measured at amortized cost (continued)

ii-2) The carrying value and the fair value of financial instruments measured at amortized cost as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022				December 31, 2021
		Carrying value		Fair value		Carrying value		Fair value
Assets:
Deposits measured at amortized cost	W	28,233,352		28,169,779		24,232,013		24,216,932
Loans measured at amortized cost
Retails		157,331,886		155,578,854		159,090,991		159,262,881
Corporations		212,534,948		211,141,189		197,356,011		198,053,452
Public and other funding loans		4,215,385		4,203,492		3,795,225		3,812,717
Loans between banks		5,222,272		5,201,408		3,844,227		3,839,726
Credit card		26,691,394		27,049,767		25,050,702		25,438,046
		405,995,885		403,174,710		389,137,156		390,406,822
Securities measured at amortized cost
Government bonds		36,025,251		31,861,672		34,679,301		34,377,110
Financial institution bonds		4,184,908		4,033,628		3,423,536		3,477,834
Corporate bonds		12,383,983		11,113,346		11,827,239		11,750,467
		52,594,142		47,008,646		49,930,076		49,605,411
Other financial assets		32,359,003		32,523,542		23,238,932		23,389,209
	W	519,182,382		510,876,677		486,538,177		487,618,374
Liabilities: Deposit liabilities:
Demand deposits	W	176,551,531		176,551,531		172,107,724		172,107,724
Time deposits		165,569,685		164,929,983		161,498,901		161,301,409
Certificate of deposit		16,824,218		16,858,680		16,576,536		16,606,894
Issued bill deposit		6,805,377		6,805,053		5,818,001		5,817,844
CMA deposits		4,458,563		4,458,563		5,246,478		5,246,478
Other		3,647,341		3,646,935		3,649,035		3,648,983
		373,856,715		373,250,745		364,896,675		364,729,332
Borrowing debts:
Call-money		1,766,688		1,766,688		1,534,611		1,534,611
Bills sold		11,383		11,353		9,032		9,019
Bonds sold under repurchase agreements		10,131,719		10,131,719		10,709,115		10,709,115
Borrowings		38,532,934		37,806,117		30,914,307		30,803,417
		50,442,724		49,715,877		43,167,065		43,056,162
Debts:
Borrowings in Korean won		68,311,726		66,765,672		69,288,982		69,081,140
Borrowings in foreign currency		12,494,826		12,456,486		10,860,381		11,076,757
		80,806,552		79,222,158		80,149,363		80,157,897
Other financial liabilities		45,215,197		45,439,383		29,880,879		29,872,186
	W	550,321,188		547,628,163		518,093,982		517,815,577

54

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

ii) Financial instruments measured at amortized cost (continued)

ii-3) The fair value hierarchy of financial assets and liabilities which are not measured at their fair values in the statements of financial position but with their fair value disclosed as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		Level 1	Level 2	Level 3		Total
Assets:
Deposits measured at amortized cost	W	310,274	27,859,505	-		28,169,779
Loans measured at amortized cost
Retails		-	-	155,578,854		155,578,854
Corporations		-	-	211,141,189		211,141,189
Public and other funding loans		-	-	4,203,492		4,203,492
Loans between banks		-	3,952,514	1,248,894		5,201,408
Credit card		-	-	27,049,767		27,049,767
		-	3,952,514	399,222,196		403,174,710
Securities measured at amortized cost:
Government bonds		21,209,254	10,652,418	-		31,861,672
Financial institution bonds		565,076	3,468,552	-		4,033,628
Debentures		-	11,113,346	-		11,113,346
		21,774,330	25,234,316	-		47,008,646
Other financial assets		-	23,069,037	9,454,505		32,523,542
	W	22,084,604	80,115,372	408,676,701		510,876,677
Liabilities Deposit liabilities:
Demand deposits	W	-	176,551,531	-		176,551,531
Time deposits		-	-	164,929,983		164,929,983
Certificate of deposit		-	-	16,858,680		16,858,680
Issued bill deposit		-	-	6,805,053		6,805,053
CMA deposits		-	4,458,563	-		4,458,563
Other		-	3,550,652	96,283		3,646,935
		-	184,560,746	188,689,999		373,250,745
Borrowing debts:
Call-money		-	1,766,688	-		1,766,688
Bills sold		-	-	11,353		11,353
Bonds sold under repurchase agreements		-	-	10,131,719		10,131,719
Borrowings		-	19,628	37,786,489		37,806,117
		-	1,786,316	47,929,561		49,715,877
Debts:
Borrowings in won		-	33,859,294	32,906,378		66,765,672
Borrowings in foreign currency		-	9,331,469	3,125,017		12,456,486
		-	43,190,763	36,031,395		79,222,158
Other financial liabilities		-	21,932,950	23,506,433		45,439,383
	W	-	251,470,775	296,157,388		547,628,163

55

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(f) Measurement of fair value (continued)

ii) Financial instruments measured at amortized cost (continued)

ii-3) The fair value hierarchy of financial assets and liabilities which are not measured at their fair values in the statements of financial position but with their fair value disclosed as of June 30, 2022 and December 31, 2021 are as follows:

		December 31, 2021
		Level 1	Level 2	Level 3	Total
Assets:
Deposits measured at amortized cost	W	252,474	23,964,458	-	24,216,932
Loans measured at amortized cost
Retails		-	-	159,262,881	159,262,881
Corporations		-	-	198,053,452	198,053,452
Public and other funding loans		-	-	3,812,717	3,812,717
Loans between banks		-	2,387,533	1,452,193	3,839,726
Credit card		-	-	25,438,046	25,438,046
		-	2,387,533	388,019,289	390,406,822
Securities measured at amortized cost:
Government bonds		23,045,322	11,331,788	-	34,377,110
Financial institution bonds		698,105	2,779,729	-	3,477,834
Debentures		-	11,662,046	88,421	11,750,467
		23,743,427	25,773,563	88,421	49,605,411
Other financial assets		-	14,200,356	9,188,853	23,389,209
	W	23,995,901	66,325,910	397,296,563	487,618,374
Liabilities Deposit liabilities:
Demand deposits	W	-	172,107,724	-	172,107,724
Time deposits		-	-	161,301,409	161,301,409
Certificate of deposit		-	-	16,606,894	16,606,894
Issued bill deposit		-	-	5,817,844	5,817,844
CMA deposits		-	5,246,478	-	5,246,478
Other		-	3,553,942	95,041	3,648,983
		-	180,908,144	183,821,188	364,729,332
Borrowing debts:
Call-money		-	1,534,611	-	1,534,611
Bills sold		-	-	9,019	9,019
Bonds sold under repurchase agreements		-	-	10,709,115	10,709,115
Borrowings		-	-	30,803,417	30,803,417
		-	1,534,611	41,521,551	43,056,162
Debts:
Borrowings in won		-	38,474,804	30,606,336	69,081,140
Borrowings in foreign currency		-	7,956,414	3,120,343	11,076,757
		-	46,431,218	33,726,679	80,157,897
Other financial liabilities		-	9,413,875	20,458,311	29,872,186
	W	-	238,287,848	279,527,729	517,815,577

56

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

(g) Classification by categories of financial instruments

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

The carrying amounts of each category of financial assets and financial liabilities as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		FVTPL		FVOCI		Amortized cost		Derivatives held for hedging		Total
Assets:
Cash and due from banks at amortized cost	W	-		-		30,590,456		-		30,590,456
Due from banks at fair value through profit or loss		30,186		-		-		-		30,186
Securities at fair value through profit or loss		59,533,954		-		-		-		59,533,954
Derivatives assets		6,339,560		-		-		305,649		6,645,209
Loans at fair value through profit or loss		1,834,103		-		-		-		1,834,103
Loans at amortized cost		-		-		405,995,885		-		405,995,885
Securities at fair value through other comprehensive income		-		66,500,057		-		-		66,500,057
Securities at amortized cost		-		-		52,594,142		-		52,594,142
Other		-		-		32,359,003		-		32,359,003
	W	67,737,803		66,500,057		521,539,486		305,649		656,082,995

57

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

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

The carrying amounts of each category of financial assets and financial liabilities as of June 30, 2022 and December 31, 2021 are as follows (continued):

		June 30, 2022
		FVTPL		FVTPL liabilities designated		Financial liabilities measured at amortized cost		Derivatives held for hedging		Total
Liabilities:
Deposits	W	-		-		373,856,715		-		373,856,715
Financial liabilities at fair value through profit or loss		1,317,981		-		-		-		1,317,981
Financial liabilities designated at FVTPL		-		7,402,049		-		-		7,402,049
Derivatives liabilities		6,672,002		-		-		1,054,442		7,726,444
Borrowings		-		-		50,442,724		-		50,442,724
Debt securities issued		-		-		80,806,552		-		80,806,552
Other		-		-		45,215,197		-		45,215,197
	W	7,989,983		7,402,049		550,321,188		1,054,442		566,767,662

58

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

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

The carrying amounts of each category of financial assets and financial liabilities as of June 30, 2022 and December 31, 2021 are as follows (continued):

		December 31, 2021
		FVTPL	FVOCI	Amortized cost	Derivatives held for hedging	Total
Assets:
Cash and due from banks at amortized cost	W	-	-	28,453,404	-	28,453,404
Due from banks at fair value through profit or loss		34,262	-	-	-	34,262
Securities at fair value through profit or loss		60,686,153	-	-	-	60,686,153
Derivatives assets		3,574,126	-	-	225,063	3,799,189
Loans at fair value through profit or loss		1,683,344	-	-	-	1,683,344
Loans at amortized cost		-	-	389,137,156	-	389,137,156
Securities at fair value through other comprehensive income		-	64,838,323	-	-	64,838,323
Securities at amortized cost		-	-	49,930,076	-	49,930,076
Other		-	-	23,238,932	-	23,238,932
	W	65,977,885	64,838,323	490,759,568	225,063	621,800,839

59

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

4.  Financial risk management (continued)

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

The carrying amounts of each category of financial assets and financial liabilities as of June 30, 2022 and December 31, 2021 are as follows (continued):

		December 31, 2021
		FVTPL	FVTPL liabilities designated	Financial liabilities measured at amortized cost	Derivatives held for hedging	Total
Liabilities:
Deposits	W	-	-	364,896,675	-	364,896,675
Financial liabilities at fair value through profit or loss		1,369,225	-	-	-	1,369,225
Financial liabilities designated at FVTPL		-	8,023,870	-	-	8,023,870
Derivatives liabilities		3,207,755	-	-	378,809	3,586,564
Borrowings		-	-	43,167,065	-	43,167,065
Debt securities issued		-	-	80,149,363	-	80,149,363
Other		-	-	29,880,879	-	29,880,879
	W	4,576,980	8,023,870	518,093,982	378,809	531,073,641

60

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

5. Change in subsidiaries

(a) Change in consolidated subsidiaries for the six-month period ended June 30, 2022 are as follows:

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

(*) Trusts, beneficiary certificates, securitization-specialized limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.

(b) Change in consolidated subsidiaries for the year ended December 31, 2021 are as follows:

	Company	Description
Included	Shinhan Life Insurance Vietnam Co., Ltd.	Newly acquired subsidiary
Included	Shinhan CubeOn Co., Ltd.	Newly acquired subsidiary
Excluded	Orange Life Insurance Co., Ltd.	Extinguished due to merger with Shinhan Life Insurance Co., Ltd.

(*) Trusts, beneficiary certificates, securitization-specialized limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.

6. Operating segments

(a) Segment information

The general descriptions by operating segments as of June 30, 2022 are as follows:

Segment	Description
Banking	Credit to customers, lending to and receiving deposits from customers, and their accompanying work
Credit card	Sales of credit cards, cash services, card loan services, installment financing, lease, etc and their accompanying work
Securities	Securities trading, consignment trading, underwriting and their accompanying work
Life insurance	Life insurance business and its accompanying work
Credit	Facility rental, new technology business financing, others and their accompanying work
Others	Business segments that do not belong to the above segments, such as real estate trust, investment advisory services, venture business and other remaining business

61

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

6. Operating segments (continued)

(b) The following tables provide information of operating income(expense) and net profit(loss) for each operating segment for the six-month periods ended June 30, 2022 and 2021.

		June 30, 2022
		Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment	Total
Net interest income	W	3,962,965	906,509	225,565	813,284	130,640	70,132	(92,870)	6,016,225
Net fees and commission income		427,292	383,247	316,334	77,031	18,536	208,679	7,809	1,438,928
Reversal of (provision for) allowance for credit loss		(313,813)	(257,953)	(6,120)	(12,111)	24,489	(32,762)	(773)	(599,043)
General and administrative expenses		(1,668,640)	(365,562)	(348,702)	(202,063)	(30,477)	(191,257)	90,348	(2,716,353)
Other income (expense), net		(184,220)	(118,071)	50,461	(289,119)	94,564	54,173	(92,393)	(484,605)
Operating income		2,223,584	548,170	237,538	387,022	237,752	108,965	(87,879)	3,655,152
Equity method income (loss)		171	(397)	14,369	(2,195)	32,559	3,365	(14,582)	33,290
Income tax expense		578,258	159,027	62,618	98,834	65,105	28,207	(8,937)	983,112
Profit for the period	W	1,647,769	459,416	188,998	277,525	203,647	86,019	(102,860)	2,760,514
Controlling interest	W	1,647,382	458,595	189,074	277,525	203,647	86,019	(141,429)	2,720,813
Non-controlling interests		387	821	(76)	-	-	-	38,569	39,701

		June 30, 2021
		Banking		Credit card		Securities		Life insurance	Credit	Others	Consolidation adjustment	Total
Net interest income	W	3,226,390		896,925		279,105		798,054	103,571	22,939	(96,159)	5,230,825
Net fees and commission income		416,269		312,876		316,232		145,267	15,068	196,948	1,428	1,404,088
Reversal of (provision for) allowance for credit loss		(124,975)		(210,726)		7,643		(3,241)	(4,789)	(16,583)	1,904	(350,767)
General and administrative expenses		(1,575,261)		(358,399)		(342,379)		(236,717)	(27,952)	(168,129)	72,916	(2,635,921)
Other income (expense), net		(121,304)		(87,179)		140,752		(277,196)	80,782	101,002	(109,186)	(272,329)
Operating income		1,821,119		553,497		401,353		426,167	166,680	136,177	(129,097)	3,375,896
Equity method income (loss)		15,850		(275)		33,339		(491)	11,925	8,005	(2,216)	66,137
Income tax expense		446,411		147,343		102,895		105,678	46,427	34,112	(4,370)	878,496
Profit for the period	W	1,338,372		414,486		322,809		309,051	131,340	109,219	(129,401)	2,495,876
Controlling interest	W	1,338,172		413,958		322,879		309,051	131,340	109,218	(180,839)	2,443,779
Non-controlling interests		200		528		(70)		-	-	1	51,438	52,097

62

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

6. Operating segments (continued)

(c) The following tables provide information of interest gains and losses from segment external customers and cross-sector interest gains and losses for the six-month periods ended June 30, 2022 and 2021.

		June 30, 2022
		Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment(*)	Total
Net interest income from:
External customers (*)	W	3,966,232	936,235	236,345	812,535	135,143	32,067	(102,332)	6,016,225
Internal transactions		(3,267)	(29,726)	(10,780)	749	(4,503)	38,065	9,462	-
	W	3,962,965	906,509	225,565	813,284	130,640	70,132	(92,870)	6,016,225

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

		June 30, 2021
		Banking		Credit card		Securities		Life insurance		Credit		Others		Consolidation adjustment(*)		Total
Net interest income from:
External customers (*)	W	3,226,876		923,581		287,468		797,155		107,746		(9,150)		(102,851)		5,230,825
Internal transactions		(486)		(26,656)		(8,363)		899		(4,175)		32,089		6,692		-
	W	3,226,390		896,925		279,105		798,054		103,571		22,939		(96,159)		5,230,825

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

(d) The following tables provide information commissiongainsand lossesfromsegmentexternalcustomersand cross-sectorcommissiongainsand losses for the six-month periods ended June 30, 2022 and 2021.

		June 30, 2022
		Banking	Credit card	Securities	Life insurance	Credit	Others	Consolidation adjustment	Total
Net fees and commission income from:
External customers	W	450,708	411,477	322,752	82,356	16,932	154,703	-	1,438,928
Cross-sector transactions		(23,416)	(28,230)	(6,418)	(5,325)	1,604	53,976	7,809	-
	W	427,292	383,247	316,334	77,031	18,536	208,679	7,809	1,438,928

		June 30, 2021
		Banking		Credit card		Securities		Life insurance		Credit		Others		Consolidation adjustment		Total
Net fees and commission income from:
External customers	W	437,922		336,459		322,834		150,637		15,667		140,569		-		1,404,088
Internal transactions		(21,653)		(23,583)		(6,602)		(5,370)		(599)		56,379		1,428		-
	W	416,269		312,876		316,232		145,267		15,068		196,948		1,428		1,404,088

63

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

7. Cash and due from banks at amortized cost

Restricted due from banks in accordance with Related Regulations or Acts as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021	Related Regulations or Acts
Due from banks denominated in Korean won:
Reserve deposits	W	11,291,709	9,851,064	Article 55 of the Bank of Korea Act
Other		2,323,410	1,174,670	Article 28 and 70 of the Bank of Korea Act, Article 74 of the Capital Markets and Financial Investment Business Act, etc.
		13,615,119	11,025,734
Due from banks denominated in foreign currency		3,226,461	2,870,908	Articles of the Bank of Korea Act, New York State Banking Act, derivatives, etc.
	W	16,841,580	13,896,642

64

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

8. Financial assets at fair value through profit or loss

(a) Financial assets at fair value through profit or loss as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Debt instruments:
Governments	W	4,044,593	3,961,045
Financial institutions		11,822,883	13,449,550
Corporations		9,734,471	9,618,302
Stocks with put option		772,807	627,275
Equity investment with put option		3,075,600	2,625,297
Beneficiary certificates		12,615,492	13,386,212
Commercial papers		7,866,388	7,042,045
CMA		3,148,214	3,591,822
Others(*)		3,810,384	3,925,599
		56,890,832	58,227,147
Equity instruments:
Stocks		2,354,346	2,182,829
Equity investment		35,231	12,962
Others		179,535	179,524
		2,569,112	2,375,315
		59,459,944	60,602,462
Other:
Loans at fair value		1,834,103	1,683,344
Due from banks at fair value		30,186	34,262
Gold/silver deposits		74,010	83,691
	W	61,398,243	62,403,759

(*) As of June 30, 2022 and December 31, 2021, restricted reserve for claims of customers’ deposits (trusts) are W2,074,358 million and W2,080,626 million respectively.

65

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

8.  Financial assets at fair value through profit or loss (continued)

(b) Financial assets to which overlay approach are applied in accordance with K-IFRS No. 1109 ‘Financial Instruments’ and K-IFRS No. 1104 ‘Insurance Contracts’ as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Due from banks at fair value through profit or loss	W	30,186	34,262
Securities at fair value through profit or loss		4,571,293	4,903,275
	W	4,601,479	4,937,537

A financial asset is eligible for designation for the overlay approach, if it is measured at fair value through profit or loss applying K-IFRS No. 1109 but would not have been measured at fair value through profit or loss in its entirety applying K-IFRS No. 1039; and it is not held in respect of an activity that is not associated with contracts within the scope of K-IFRS No. 1104.

The reclassified amounts between profit or loss and other comprehensive income due to the overlay approach for the six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022
		Profit or loss				Reclassification into other comprehensive income(*)
		By K-IFRS 1109		By K-IFRS 1039		Amount		Tax effect
Net gain (loss) on evaluation of financial assets at fair value through profit or loss	W	(55,489)		65,925		(121,414)		33,389
Net gain (loss) on disposal of financial assets at fair value through profit or loss		25,428		105,486		(80,058)		22,015
	W	(30,061)		171,411		(201,472)		55,404

(*) The amount of the policyholders’ equity adjustment for the reclassification of other comprehensive income is W10,069 million for the six-month period ended June 30, 2022.

.

		June 30, 2021
		Profit or loss		Reclassification into other comprehensive income(*)
		By K-IFRS 1109	By K-IFRS 1039	Amount	Tax effect
Net gain (loss) on evaluation of financial assets at fair value through profit or loss	W	20,646	(1,268)	21,914	(5,986)
Net gain (loss) on disposal of financial assets at fair value through profit or loss		5,397	77,768	(72,371)	25,439
Net gain (loss) on foreign currency conversion of financial assets at fair value through profit or loss		(14)	-	(14)	4
Net gain (loss) on foreign currency transaction of financial assets at fair value through profit or loss		(10)	-	(10)	3
	W	26,019	76,500	(50,481)	19,460

(*) The amount of the policyholders’ equity adjustment for the reclassification of other comprehensive income is W2,276 million for the six-month period ended June 30, 2021.

66

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

9. Derivatives

(a) The notional amounts of derivatives outstanding as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Foreign currency related:
Over the counter:
Currency forwards	W	133,660,370	146,169,864
Currency swaps		41,673,153	36,548,884
Currency options		2,455,091	2,270,594
		177,788,614	184,989,342
Exchange traded:
Currency futures		792,403	641,104
		178,581,017	185,630,446
Interest rates related:
Over the counter:
Interest rate forwards and swaps		37,331,105	35,518,719
Interest rate options		201,038	258,460
		37,532,143	35,777,179
Exchange traded:
Interest rate futures		1,008,558	3,293,821
Interest rate options		53,171	54,890
Interest rate swaps(*)		87,260,045	72,898,275
		88,321,774	76,246,986
		125,853,917	112,024,165
Credit related:
Over the counter:
Credit swaps		5,312,996	4,737,329
Equity related:
Over the counter:
Equity swaps and forwards		3,489,661	2,073,995
Equity options		744,323	677,824
		4,233,984	2,751,819
Exchange traded:
Equity futures		825,144	1,678,070
Equity options		1,004,087	3,298,673
		1,829,231	4,976,743
		6,063,215	7,728,562
Commodity related:
Over the counter:
Commodity swaps and forwards		945,660	789,930
Commodity options		8,000	11,500
		953,660	801,430
Exchange traded:
Commodity futures and options		24,456	158,550
		978,116	959,980
Hedge:
Currency forwards		1,146,594	1,279,598
Currency swaps		3,929,358	3,726,939
Interest rate forwards and swaps		10,794,191	8,695,960
		15,870,143	13,702,497
	W	332,659,404	324,782,979

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

67

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

9. Derivatives (continued)

(b) Fair values of derivative instruments as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022			December 31, 2021
		Assets		Liabilities	Assets	Liabilities
Foreign currency related:
Over the counter:
Currency forwards	W	3,253,503		2,534,301	2,183,315	1,797,419
Currency swaps		1,840,774		2,408,048	651,292	748,302
Currency options		32,674		29,189	12,218	11,591
		5,126,951		4,971,538	2,846,825	2,557,312
Exchange traded:
Currency futures		518		17	12	210
		5,127,469		4,971,555	2,846,837	2,557,522
Interest rates related:
Over the counter:
Interest rate swaps and forwards		553,594		916,449	166,855	303,227
Interest rate options		6,026		1,764	3,748	611
		559,620		918,213	170,603	303,838
Exchange traded:
Interest rate futures		3,804		6,422	1,701	1,828
Interest rate options		707		-	83	-
		4,511		6,422	1,784	1,828
		564,131		924,635	172,387	305,666
Credit related:
Over the counter:
Credit swaps		448,828		27,848	493,829	65,103
Equity related:
Over the counter:
Equity swap and forwards		120,533		299,513	28,803	69,880
Equity options		383		1,080	3,884	8,671
		120,916		300,593	32,687	78,551
Exchange traded:
Equity futures		42,930		55,454	817	19,903
Equity options		13,253		283,204	6,324	167,237
		56,183		338,658	7,141	187,140
		177,099		639,251	39,828	265,691
Commodity related:
Over the counter:
Commodity swaps and forwards		590		102,895	18,557	3,149
Commodity options		-		2,805	-	8,406
		590		105,700	18,557	11,555
Exchange traded:
Commodity futures and options		21,443		3,013	2,688	2,218
		22,033		108,713	21,245	13,773
Hedge:
Currency forwards		-		78,732	106	46,139
Currency swaps		206,128		101,703	63,560	79,407
Interest rate forwards and swaps		99,521		874,007	161,397	253,263
		305,649		1,054,442	225,063	378,809
	W	6,645,209		7,726,444	3,799,189	3,586,564

68

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

9. Derivatives (continued)

(c) Gain or loss on valuation of derivatives for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022			June 30, 2021
		Three- month		Six- month	Three- month	Six- month
Foreign currency related:
Over the counter:
Currency forwards	W	274,890		334,830	(40,899)	184,667
Currency swaps		(379,016)		(465,779)	8,460	(103,020)
Currency options		5,888		6,972	978	1,146
		(98,238)		(123,977)	(31,461)	82,793
Exchange traded:
Currency futures		(557)		181	(596)	255
		(98,795)		(123,796)	(32,057)	83,048
Interest rates related:
Over the counter:
Interest rate forwards and swaps		(185,832)		(306,978)	(16,972)	(86,027)
Interest rate options		(86)		1,645	129	626
		(185,918)		(305,333)	(16,843)	(85,401)
Exchange traded:
Interest rate futures, etc.		(25,639)		(2,200)	(3,876)	(2,537)
		(211,557)		(307,533)	(20,719)	(87,938)
Credit related:
Over the counter:
Credit swaps		(990)		(12,454)	97,002	133,321
Equity related:
Over the counter:
Equity swap and forwards		(74,882)		(136,251)	(34,409)	(16,741)
Equity options		1,526		5,664	2,160	5,010
		(73,356)		(130,587)	(32,249)	(11,731)
Exchange traded:
Equity futures		5,184		(12,524)	2,299	723
Equity options		(46,054)		(136,589)	(100,901)	60,085
		(40,870)		(149,113)	(98,602)	60,808
		(114,226)		(279,700)	(130,851)	49,077
Commodity related:
Over the counter:
Commodity swaps and forwards		(64,672)		(113,331)	14,545	11,032
Commodity options		1,562		4,551	(68)	(68)
		(63,110)		(108,780)	14,477	10,964
Exchange traded:
Commodity futures and options		21,128		18,428	12,738	(157)
		(41,982)		(90,352)	27,215	10,807
Hedge:		(228,881)		(602,449)	14,603	(119,152)
	W	(696,431)		(1,416,284)	(44,807)	69,163

69

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

9. Derivatives (continued)

(d) Nominal amounts and average hedge ratio for hedging instruments as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		Less than 1 year		1~2 years		2~3 years		3~4 years		4~5 years		More than 5 years		Total
Interest risk:
Nominal values:	W	573,272		1,798,295		803,669		1,477,714		952,809		5,188,432		10,794,191
Average price condition(*1):		4.06%		0.53%		0.20%		1.64%		0.71%		0.11%		0.66%
Average hedge ratio:		100%		100%		100%		100%		100%		100%		100%
Exchange risk:(*2)
Nominal values:		2,060,780		1,523,345		735,633		965,782		1,064,432		33,058		6,383,030
Average hedge ratio:		100%		100%		100%		100%		100%		100%		100%

(*1) The basic interest rate of the interest rate swaps consist of 3M CD, 3M USD Libor, 3M Euribor, and 3M AUD Bond.

(*2) The average exchange rates conditions of hedging instruments are USD/KRW 1,196.22, JPY/KRW 10.53, EUR/KRW 1,232.14, GBP/KRW 1,590.81, AUD/KRW 904.52, CAD/KRW 948.79, SGD/KRW 859.87, CNY/KRW 190.96, SEK/KRW 130.83.

		December 31, 2021
		Less than 1 year	1~2 years	2~3 years	3~4 years	4~5 years	More than 5 years	Total
Interest risk:
Nominal values:	W	693,057	1,256,392	641,413	158,833	1,589,729	4,356,536	8,695,960
Average price condition(*1):		0.88%	1.21%	1.30%	1.00%	1.00%	0.66%	0.87%
Average hedge ratio:		100%	100%	100%	100%	100%	100%	100%
Exchange risk:(*2)
Nominal values:		2,328,042	2,164,591	568,991	699,433	480,878	22,525	6,264,460
Average hedge ratio:		100%	100%	100%	100%	100%	100%	100%

(*1) The basic interest rate of the interest rate swaps consist of 3M CD, 3M USD Libor, 3M Euribor, and 3M AUD Bond.

(*2) The average exchange rates of net investment hedge instruments are USD/KRW 1,143.95, JPY/KRW 10.53,

EUR/KRW 1,288.52, GBP/KRW 1,484.00, AUD/KRW 817.06, CAD/KRW 868.95, SGD/KRW 859.87,

CNY/KRW 174.40, SEK/KRW 124.85

70

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

9.  Derivatives (continued)

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

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 benchmark reform. The exception assumes that when assessing whether the expected cash flows that comply with existing interest rate benchmarks are highly probable, whether there is an economic relationship between the hedged item and the hedging instrument, and whether there is a high hedge effectiveness between the hedged item and the hedging instrument, the interest rate benchmarks that are based on the hedged item do not change due to the effect of the interest rate benchmark reform. The carrying amount of hedged item and the nominal amount of the hedging instrument related to the interest rate benchmark exposed to the hedging relationship due to the Group's reform of the interest rate benchmark as of June 30, 2022 is as follows:

		June 30, 2022
Interest rate benchmark		Carrying amount of hedged item, Assets		Carrying amount of hedged item, Liabilities		Nominal amount of hedging instrument
KRW 3M CD(*1)	W	-		3,636,230		3,790,000
USD 1M LIBOR(*2)		-		263,311		263,752
USD 3M LIBOR(*1),(*2)		337,765		3,847,142		4,317,934
EURIBOR 3M		8,666		269,481		280,810
	W	346,431		8,016,164		8,652,496

		December 31, 2021
Interest rate benchmark		Carrying amount of hedged item, Assets		Carrying amount of hedged item, Liabilities		Nominal amount of hedging instrument
KRW 3M CD(*1)	W	-		2,509,045		2,580,000
USD 1M LIBOR(*2)		-		241,192		241,842
USD 3M LIBOR(*1),(*2)		539,197		3,589,452		4,187,018
EURIBOR 1M		-		220,992		221,050
EURIBOR 3M		25,094		267,830		293,972
	W	564,291		6,828,511		7,523,882

(*1) Include nominal amount of the hedging instrument related to the Constant Maturity Swap (CMS) calculated based on the CD and LIBOR rate.

(*2) The instruments that will be matured before the end of June 30, 2023 are excluded when LIBOR interest rate calculation is discontinued.

The USD LIBOR interest rate will be replaced by SOFR (Secured Overnight Financing Rate) based on actual transactions. In Korea, the "RP interest rate on government bonds and monetary stabilization securities" was finally selected as RFR (the risk-free reference rate). The Group assumed that in this hedging relationship, the spreads of changing to the replacement interest rate after the discontinuation of the LIBOR interest rate would be similar to the spreads of interest rate swap and interest rate forward used as the hedging instrument. Besides this, the Group did not make assumptions on further changes of conditions.

71

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

(a) Details of securities at FVOCI and securities at amortized cost as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Securities at fair value through other comprehensive income:
Debt securities:
Government bonds	W	27,442,933	25,687,070
Financial institutions bonds		20,555,140	19,702,292
Corporate bonds and others		16,803,392	18,417,557
		64,801,465	63,806,919
Equity securities(*):
Stocks		1,602,635	922,579
Equity investments		3,108	4,118
Others		92,849	104,707
		1,698,592	1,031,404
		66,500,057	64,838,323
Securities at amortized cost:
Debt securities:
Government bonds		36,025,251	34,679,301
Financial institutions bonds		4,184,908	3,423,536
Corporate bonds and others		12,383,983	11,827,239
		52,594,142	49,930,076
	W	119,094,199	114,768,399

(*) Equity securities in the above table are classified as equity securities designated as other comprehensive income through fair value items, and other comprehensive income - fair value options were exercised for the purpose of holding as required by the policy.

72

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

(b) Changes in carrying value of debtsecurities at fair value through other comprehensive income and securities at amortized cost for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows:

		June 30, 2022
		Securities at fair value through other comprehensive income						Securities at amortized cost
		12-month expected credit loss		Lifetime expected credit loss		Total		12-month expected credit loss		Lifetime expected credit loss		Total
Beginning balance	W	63,654,133		152,786		63,806,919		49,910,733		36,290		49,947,023
Transfer to (from)12-month expected credit loss		38,759		(38,759)		-		3,370		(3,370)		-
Transfer to (from) lifetime expected credit loss		(23,619)		23,619		-		-		-		-
Net increase and decrease (*)		994,451		(24,710)		969,741		2,663,623		(817)		2,662,806
Business combination		24,805		-		24,805		-		-		-
Ending balance	W	64,688,529		112,936		64,801,465		52,577,726		32,103		52,609,829

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

73

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

(b) Changes in carrying value of debtsecurities at fair value through other comprehensive income and securities at amortized cost for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
		Securities at fair value through other comprehensive income						Securities at amortized cost
		12-month expected credit loss		Lifetime expected credit loss		Total		12-month expected credit loss		Lifetime expected credit loss		Total
Beginning balance	W	57,142,298		267,135		57,409,433		47,293,109		-		47,293,109
Transfer to (from) 12-month expected credit loss		51,055		(51,055)		-		-		-		-
Transfer to (from) lifetime expected credit loss		(35,665)		35,665		-		(35,505)		35,505		-		-		(35,505)		35,505		-
Transfer to impaired financial asset
Net increase and decrease(*)		6,496,445		(98,959)		6,397,486		2,653,129		785		2,653,914
Ending balance	W	63,654,133		152,786		63,806,919		49,910,733		36,290		49,947,023

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

74

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

(c) Changes in allowance for credit loss of debtsecurities at fair value through other comprehensive income and debt securities at amortized cost for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows:

		June 30, 2022
		Securities at fair value through other comprehensive income						Securities at amortized cost
		12-month expected credit loss		Lifetime expected credit loss		Total		12-month expected credit loss		Lifetime expected credit loss		Total
Beginning allowance	W	36,883		603		37,486		16,484		463		16,947
Transfer to (from) 12-month expected credit loss		298		(298)		-		14		(14)		-
Transfer to lifetime expected credit loss		(20)		20		-		-		-		-
Reversal		(2,329)		(187)		(2,516)		(1,375)		(65)		(1,440)
Disposal and others(*)		(349)		12		(337)		183		(3)		180
Ending allowance	W	34,483		150		34,633		15,306		381		15,687

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

75

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

(c) Changes in allowance for credit loss of debtsecurities at fair value through other comprehensive income and debt securities at amortized cost for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
		Securities at fair value through other comprehensive income							Securities at amortized cost
		12-month expected credit loss			Lifetime expected credit loss		Total		12-month expected credit loss		Lifetime expected credit loss		Total
Beginning allowance	W	22,493			678		23,171		10,486		-		10,486
Transfer to (from) 12-months expected credit loss		33		(33)			-		-		-		-
Transfer to (from) lifetime expected credit loss		(63)			63		-		(216)		216		-
Provision (reversal)		19,722			(25)		19,697		5,065		240		5,305
Disposal and others(*)		(5,302)			(80)		(5,382)		1,149		7		1,156
Ending allowance	W	36,883			603		37,486		16,484		463		16,947

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

76

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

(d) Gain or loss on disposal of securities at fair value through other comprehensive income and securities at amortized cost for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022		June 30, 2021
		Three-month	Six- month	Three-month	Six- month
Gain on disposal of securities at FVOCI	W	1,345	6,732	30,696	85,329
Loss on disposal of securities at FVOCI		(16,824)	(24,960)	(7,639)	(24,409)
Gain on disposal of securities at amortized cost (*)		1	4	5	8
Loss on disposal of securities at amortized cost (*)		(50)	(94)	(124)	(139)
		(15,528)	(18,318)	22,938	60,789

(*) The issuersof thosesecuritieshave exercisedtheearlyredemptionoptions.

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

The Group recognizes dividends, amounting to W20,992 million and W19,848 million, related to equity securities at fair value through other comprehensive income for the six-month periods ended June 30, 2022 and 2021, respectively.

The details of disposal of equity securities at fair value through other comprehensive income for the six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022	June 30, 2021
Fair value at the date of disposal	W	31,951	47,506
Cumulative net gain(loss) at the time of disposal		2,647	(34,131)

(*) The reason of disposal of equity securities at fair value through other comprehensive income is the disposal of investment conversion equity securities, etc.

77

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

11.  Loans at amortized cost, etc.

(a) Loans at amortized cost for configuration by customer as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Retail loans	W	157,396,876	159,006,999
Corporate loans		215,044,488	199,465,807
Public and other loans		3,591,812	3,468,917
Loans between banks		5,229,232	3,849,565
Credit card receivables		27,675,781	25,999,576
		408,938,189	391,790,864
Discount		(25,787)	(30,001)
Deferred loan origination costs		521,362	543,361
		409,433,764	392,304,224
Less: Allowance for credit loss		(3,437,879)	(3,167,068)
	W	405,995,885	389,137,156

78

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

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

(b) Changes in carrying value of loans at amortized cost, etc. for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows:

		June 30, 2022
		Loans at amortized cost			Other financial assets			Total
		12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset
Beginning balance	W	348,625,542	41,814,976	1,863,706	47,549,159	104,650	79,094	440,037,127
Transfer to (from) 12-month expected credit loss		9,793,409	(9,783,269)	(10,140)	13,954	(13,871)	(83)	-
Transfer to (from) lifetime expected credit loss		(11,830,945)	11,866,732	(35,787)	(18,199)	18,288	(89)	-
Transfer to (from) impaired financial asset		(310,438)	(537,712)	848,150	(1,620)	(3,474)	5,094	-
Net increase and decrease(*1)		18,233,280	(281,618)	(158,871)	13,070,564	8,249	13,666	30,885,270
Charge off(*2)		-	-	(480,839)	-	-	(10,495)	(491,334)
Disposal		(60,217)	(224)	(122,069)	-	-	(836)	(183,346)
Business combination		98	-	-	89,794	-	-	89,892
Ending balance	W	364,450,729	43,078,885	1,904,150	60,703,652	113,842	86,351	470,337,609

(*1) The amount is due to execution, collection, debt restructuring, debt-equity swap, change in exchange rate, etc.

(*2) The amount of uncollected loans currently in recovery (principal and interest) is W9,671,833 million, which is written off as of June 30, 2022.

79

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

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

(b) Changes in carrying value of loans at amortized cost, etc. for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows: (continued)

		December 31, 2021
		Loans at amortized cost							Other financial assets							Total
		12-month expected credit loss		Lifetime expected credit loss		Impaired financial asset			12-month expected credit loss		Lifetime expected credit loss		Impaired financial asset
Beginning balance	W	318,229,085		39,042,439		2,010,961			51,881,798		99,899		57,658			411,321,840
Transfer to (from) 12-month expected credit loss		10,201,376		(10,120,411)		(80,965)			13,111		(13,079)		(32)		-	-
Transfer to (from) lifetime expected credit loss		(13,888,362)		13,944,727		(56,365)			(29,026)		29,048		(22)		-	-
Transfer to (from) impaired financial asset		(536,764)		(614,407)		1,151,171			(1,049)		(11,797)		12,846		-	-
Net increase and decrease(*1)		34,704,640		(436,468)		178,820			(4,315,675)		580		37,428			30,169,325
Charge off(*2)		-		-		(1,147,612)			-		-		(27,929)			(1,175,541)
Disposal		(84,433)		(904)		(192,304)			-		(1)		(855)			(278,497)
Ending balance	W	348,625,542		41,814,976		1,863,706			47,549,159		104,650		79,094			440,037,127

(*1) The amount is due to execution, collection, debt restructuring, debt-equity swap, change in exchange rate, etc.

(*2) The amount of uncollected loans currently in recovery (principal and interest) is W10,613,730 million, which is written off as of December 31, 2021.

80

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

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

(c) Changes in allowances for credit loss

Changes in allowances for credit loss of loans at amortized cost, etc. for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows:

		June 30, 2022
		Loans at amortized cost			Other financial assets			Total
		12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset	12-month expected credit loss	Lifetime expected credit loss	Impaired financial asset
Beginning allowance	W	919,211	1,242,999	1,004,858	183,908	8,008	70,043	3,429,027
Transfer to (from) 12-month expected credit loss		119,620	(118,010)	(1,610)	235	(192)	(43)	-
Transfer to (from) lifetime expected credit loss		(70,467)	82,637	(12,170)	(565)	596	(31)	-
Transfer to (from) impaired financial asset		(5,334)	(47,952)	53,286	(61)	(1,262)	1,323	-
Provision		55,463	280,931	226,748	2,504	1,166	13,293	580,105
Charge off		-	-	(480,839)	-	-	(10,495)	(491,334)
Amortization of discount		-	-	(5,407)	-	-	-	(5,407)
Disposal		-	(2)	(24,473)	-	-	(49)	(24,524)
Collection		-	-	192,921	-	-	1,241	194,162
Others (*)		(9,463)	(80,634)	115,566	40,974	203	679	67,325
Business combination		-	-	-	16	-	-	16
Ending allowance	W	1,009,030	1,359,969	1,068,880	227,011	8,519	75,961	3,749,370

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

81

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

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

(c) Changes in allowances for credit loss (continued)

Changes in allowances for credit loss of loans at amortized cost, etc. for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
		Loans at amortized cost					Other financial assets					Total
		12-month expected credit loss		Lifetime expected credit loss		Impaired financial asset	12-month expected credit loss		Lifetime expected credit loss		Impaired financial asset
Beginning allowance	W	932,990		1,135,185		992,791	35,691		8,281		48,930	3,153,868
Transfer to (from) 12-month expected credit loss		132,093		(125,714)		(6,379)	241		(230)		(11)	-
Transfer to (from) lifetime expected credit loss		(78,963)		100,124		(21,161)	(284)		288		(4)	-
Transfer to (from) impaired financial asset		(6,043)		(57,083)		63,126	(290)		(2,012)		2,302	-
Provision		17,048		335,577		554,445	8,555		1,426		42,181	959,232
Charge off		-		-		(1,147,612)	-		-		(27,929)	(1,175,541)
Amortization of discount		-		-		(9,572)	-		-		-	(9,572)
Disposal		(6)		(1)		(28,146)	-		-		(40)	(28,193)
Collection		-		-		388,079	-		-		2,357	390,436
Others (*)		(77,908)		(145,089)		219,287	139,995		255		2,257	138,797
Ending balance	W	919,211		1,242,999		1,004,858	183,908		8,008		70,043	3,429,027

(*) The amount is due to debt restructuring, debt-equity swap, and foreign exchange rate change, etc.

82

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates

(a) Investments in associates as of June 30, 2022 and December 31, 2021 are as follows:

Investees	Country	Reporting date	Ownership (%)
			June 30, 2022	December 31, 2021
BNP Paribas Cardif Life Insurance(*1)(*2)	Korea	March 31	14.99	14.99
Songrim Partners(*3)(*4)	Korea	December 31	35.34	35.34
Partners 4th Growth Investment Fund(*1)	Korea	March 31	25.00	25.00
KTB Newlake Global Healthcare PEF	Korea	June 30	28.56	30.00
Shinhan-Neoplux Energy Newbiz Fund(*5)	Korea	June 30	31.66	31.66
Shinhan-Albatross tech investment Fund(*5)	Korea	June 30	50.00	50.00
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund	Korea	June 30	23.89	23.89
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund	Korea	June 30	20.16	20.16
VOGO Debt Strategy Qualified IV Private	Korea	June 30	20.00	20.00
Shinhan-Midas Donga Secondary Fund(*6)	Korea	June 30	50.00	50.00
ShinHan – Soo Young Entrepreneur Investment Fund No.1	Korea	June 30	24.00	24.00
Shinhan Praxis K-Growth Global Private Equity Fund(*9)	Korea	June 30	18.87	18.87
Kiwoom Milestone Professional Private Real Estate Trust 19	Korea	June 30	50.00	50.00
AIP EURO Green Private Real Estate Trust No.3	Korea	June 30	21.28	21.28
Shinhan Global Healthcare Fund 1(*9)	Korea	June 30	4.41	4.41
KB NA Hickory Private Special Asset Fund	Korea	June 30	37.50	37.50
Koramco Europe Core Private Placement Real Estate Fund No.2-2	Korea	June 30	44.02	44.02
Shinhan EZ General Insurance, Ltd.(*12)	Korea	June 30	100.00	5.46
Hermes Private Investment Equity Fund	Korea	June 30	29.17	29.17
KDBC Midas Dong-A Global Contents Fund	Korea	June 30	23.26	23.26
Shinhan-Nvestor Liquidity Solution Fund	Korea	June 30	24.92	24.92
Shinhan AIM FoF Fund 1a	Korea	June 30	25.00	25.00
IGIS Global Credit Fund 150-1	Korea	June 30	25.00	25.00
Partner One Value up I Private Equity Fund	Korea	June 30	27.91	27.91
Genesis No.1 Private Equity Fund	Korea	June 30	22.80	22.80
Korea Omega Project  Fund III	Korea	June 30	23.53	23.53
Soo Delivery Platform Growth Fund(*7)	Korea	-	-	30.00
Genesis North America Power Company No.1 PEF	Korea	June 30	43.84	40.03
Shinan MAIN Private Mixed Asset No.3	Korea	June 30	23.33	23.33
MIEL CO.,LTD.(*3)(*4)	Korea	December 31	28.77	28.77
AIP Transportation Specialized Privately Placed Fund Trust #1	Korea	June 30	35.73	35.73
E&Healthcare Investment Fund No.6	Korea	June 30	21.05	21.05
One Shinhan Global Fund 1(*5)	Korea	June 30	20.24	20.56
Kiwoom-Shinhan Innovation Fund I(*6)	Korea	June 30	50.00	50.00
Daishin-K&T New Technology Investment Fund	Korea	June 30	31.25	31.25
Midas Asset Global CRE Debt Private Fund No.6	Korea	June 30	41.16	41.16
Samchully Midstream Private Placement Special Asset Fund 5-4	Korea	June 30	42.92	42.92
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3	Korea	June 30	20.00	20.00
NH-Amundi Global Infrastructure Trust 14	Korea	June 30	30.00	30.00
Jarvis Memorial Private Investment Trust 1(*6)	Korea	June 30	99.01	99.01
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37(*8)	Korea	June 30	60.00	60.00
Milestone Private Real Estate Fund 3 (Derivative Type)	Korea	June 30	32.06	32.06
RIFA Real estate private placement fund for normal investors No. 31	Korea	June 30	31.31	31.31
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2	Korea	June 30	21.27	21.27
Cape IT Fund No.3	Korea	June 30	32.89	32.89
FuturePlay-Shinhan TechInnovation Fund 1(*6)	Korea	June 30	50.00	50.00
Stonebridge Corporate 1st Fund	Korea	June 30	44.12	44.12
Vogo Realty Partners Private Real Estate Fund V	Korea	June 30	21.64	21.64
Korea Credit Bureau(*1)(*9)	Korea	March 31	9.00	9.00
Goduck Gangil1 PFV Co., Ltd.(*1)(*9)	Korea	March 31	1.04	1.04
SBC PFV Co., Ltd.(*1)(*10)	Korea	March 31	25.00	25.00
NH-amundi global infra private fund 16	Korea	June 30	50.00	50.00
IMM Global Private Equity Fund	Korea	June 30	33.00	33.00
HANA Alternative Estate Professional Private122(*8)	Korea	June 30	74.02	74.02
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7(*7)	Korea	-	-	45.96

83

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(a) Investments in associates as of June 30, 2022 and December 31, 2021 are as follows (continued):

Investees	Country	Reporting date	Ownership (%)
			June 30, 2022	December 31, 2021
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust(*11)	Korea	June 30	72.50	72.50
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24(*8)	Korea	June 30	52.28	52.28
Sparklabs-Shinhan Opportunity Fund 1	Korea	June 30	49.50	49.50
BNW Tech-Innovation Private Equity Fund	Korea	June 30	29.85	29.85
IGIS Real-estate Private Investment Trust No.33	Korea	June 30	40.86	40.86
WWG Global Real Estate Investment Trust no.4	Korea	June 30	29.55	29.55
Goduck Gangil10 PFV Co., Ltd(*1)(*9)	Korea	March 31	19.90	19.90
Fidelis Global Private Real Estate Trust No.2(*8)	Korea	June 30	79.18	78.26
AIP EURO PRIVATE REAL ESTATE TRUST No. 12(2)	Korea	June 30	28.70	28.70
Shinhan Global Healthcare Fund 2(*9)	Korea	June 30	13.68	13.68
Pebblestone CGV Private Real Estate Trust No.1	Korea	June 30	48.53	48.53
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.45(*7)	Korea	-	-	43.65
Shinhan AIM Real Estate Fund No.2	Korea	June 30	30.00	30.00
Shinhan AIM Real Estate Fund No.1	Korea	June 30	21.01	21.01
SHBNPP Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust	Korea	June 30	22.02	22.02
SHBNPP Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust	Korea	June 30	29.19	29.19
SHBNPP Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2(USD)(*8)	Korea	June 30	71.43	71.43
Korea Omega-Shinhan Project Fund I(*6)	Korea	June 30	50.00	50.00
ST-Bonanja Food tech	Korea	June 30	38.83	38.83
Samsung SRA Real Estate Professional Private 45[FoFs]	Korea	June 30	25.00	25.00
IBK Global New Renewable Energy Special Asset Professional Private2	Korea	June 30	28.98	28.98
VS Cornerstone Fund	Korea	June 30	41.18	41.18
Aone Mezzanine Opportunity Professional Private (*8)	Korea	June 30	64.41	66.09
NH-Amundi US Infrastructure Private Fund2	Korea	June 30	25.91	25.91
KB Distribution Private Real Estate1(*7)	Korea	-	-	62.00
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No.2	Korea	June 30	30.00	30.00
Kakao-Shinhan 1st TNYT Fund	Korea	June 30	48.62	48.62
IMM Special Situation 1-2 PRIVATE EQUITY FUND	Korea	June 30	20.00	20.00
SJ-DAEKYO APRIL BIO VENTURE FUND	Korea	June 30	33.33	33.33
Pacific Private Placement Real Estate Fund No.40	Korea	June 30	24.73	24.73
Mastern Private Real Estate Loan Fund No.2	Korea	June 30	33.57	33.57
LB Scotland Amazon Fulfillment Center Fund 29(*8)	Korea	June 30	70.14	70.14
JR AMC Hungary Budapest Office Fund 16	Korea	June 30	32.57	32.57
EDNCENTRAL Co.,Ltd.(*9)	Korea	June 30	13.47	19.87
Future-Creation Neoplux Venture Capital Fund(*5)	Korea	June 30	16.25	16.25
Gyeonggi-Neoplux Superman Fund(*5)	Korea	June 30	21.76	21.76
NewWave 6th Fund(*5)	Korea	June 30	30.00	30.00
KTC-NP Growth Champ 2011-2 Private Equity Fund(*5)	Korea	June 30	5.56	5.56
Neoplux No.3 Private Equity Fund(*5)	Korea	June 30	10.00	10.00
PCC Amberstone Private Equity Fund I	Korea	June 30	21.67	21.67
KIAMCO POWERLOAN TRUST 4TH	Korea	June 30	47.37	47.37
Mastern Opportunity Seeking Real Estate Fund II	Korea	June 30	20.00	20.00
AION ELFIS PROFESSIONAL PRIVATE 1	Korea	June 30	20.00	20.00
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business	Korea	June 30	29.68	29.68
Neoplux Market-Frontier Secondary Fund(*5)	Korea	June 30	19.74	19.74
Harvest Private Equity Fund II	Korea	June 30	22.06	22.06
Synergy Green New Deal 1st New Technology Business Investment Fund	Korea	June 30	28.17	28.17
KAIM Real-estate Private Investment Trust 20	Korea	June 30	38.46	38.46
KIAMCO Vietnam Solar Special Asset Private Investment Trust(*6)	Korea	June 30	50.00	50.00
Daishin New Technology Investment Fund 5th	Korea	June 30	23.44	23.44
CSQUARE SNIPER PROFESSIONAL PRIVATE 10(*7)	Korea	-	-	62.50
Acurus Hyundai Investment Partners New Technology(*7)	Korea	-	-	26.79

84

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(a) Investments in associates as of June 30, 2022 and December 31, 2021 are as follows (continued):

Investees	Country	Reporting date	Ownership (%)
			June 30, 2022	December 31, 2021
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1(*7)	Korea	-	-	97.10
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2(*7)	Korea	-	-	97.10
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45(*7)	Korea	-	-	25.00
SHINHAN-NEO Core Industrial Technology Fund(*5)	Korea	June 30	49.75	49.75
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2	Korea	June 30	30.00	30.00
SIMONE Mezzanine Fund No.3	Korea	June 30	29.38	29.38
Eum Private Equity Fund No.7	Korea	June 30	21.00	21.00
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund	Korea	June 30	25.00	25.00
Kiwoom Hero No.4 Private Equity Fund	Korea	June 30	21.05	21.05
Vogo Canister Professional Trust Private Fund I	Korea	June 30	36.26	36.53
POSCO New Technology Investment Fund No.2	Korea	June 30	20.83	20.83
SW-S Fund	Korea	June 30	30.30	30.30
CL Buyout 1st PEF	Korea	June 30	21.43	21.43
Timefolio The Venture-V second	Korea	June 30	20.73	20.73
Newlake Growth Capital Partners2 PEF	Korea	June 30	29.91	29.91
Kiwoom Materials, Parts and Equipment 2 New Technology Business Investment Fund	Korea	June 30	41.10	41.10
Shinhan Smilegate Global PEF I(*9)	Korea	June 30	14.21	14.21
Fount Professional Investors Private Investment Trust No.3(*7)	Korea	-	-	49.98
Genesis Eco No.1 PEF	Korea	June 30	29.01	29.01
SHINHAN-NEO Market-Frontier 2nd Fund(*5)	Korea	June 30	42.70	42.70
NH-Synergy Core Industrial New Technology Fund	Korea	June 30	36.93	36.93
J& Moorim Jade Investment Fund	Korea	June 30	24.89	24.89
Ulmus SHC innovation investment fund	Korea	June 30	24.04	24.04
Mirae Asset Partners X Private Equity Fund	Korea	June 30	35.71	35.71
T Core Industrial Technology 1st Venture PEF	Korea	June 30	31.47	31.47
Curious Finale Corporate Recovery Private Equity Fund	Korea	June 30	27.78	27.78
TI First Property Private Investment Trust 1	Korea	June 30	40.00	40.00
MPLUS Professional Private Real Estate Fund 25	Korea	June 30	41.67	41.67
IBKC Global Contents Investment Fund	Korea	June 30	24.39	24.39
Nautic Smart No.6 Private Equity Fund	Korea	June 30	37.74	37.74
Premier Luminous Private Equity Fund	Korea	June 30	27.78	27.78
Hanyang-Meritz 1 Fund	Korea	June 30	22.58	22.58
KNT 2ND PRIVATE EQUITY FUND	Korea	June 30	21.74	21.74
A-STONE PROJECT FUND NO.2	Korea	June 30	32.26	32.26
Kiwoom-Shinhan Innovation Fund 2	Korea	June 30	42.86	42.86
Maple Mobility Fund	Korea	June 30	20.18	20.18
AVES 1st Corporate Recovery Private Equity Fund(*6)	Korea	June 30	76.19	76.19
JS Shinhan Private Equity Fund(*5)	Korea	June 30	3.85	3.85
Daishin Newgen New Technology Investment Fund 1st(*8)	Korea	June 30	50.60	50.60
META ESG Private Equity Fund I	Korea	June 30	27.40	27.40
SWFV FUND-1	Korea	June 30	40.25	40.25
PHAROS DK FUND	Korea	June 30	24.24	24.24
Shinhan VC tomorrow venture fund 1(*5)	Korea	June 30	39.62	39.62
Highland 2021-8 Fund	Korea	June 30	32.67	32.67
Medicii 2021-3 Fund	Korea	June 30	24.81	24.81
Stonebridge Corporate 1st Fund (*5)	Korea	June 30	19.92	19.92
Tres-Yujin Trust(*6)	Korea	June 30	50.00	50.00
Shinhan-Time mezzanine blind Fund(*6)	Korea	June 30	50.00	50.00
Capstone REITs No.26(*6)	Korea	June 30	50.00	50.00
JB Incheon-Bucheon REITS No.54	Korea	June 30	39.31	39.31
Hankook Smart Real Asset Investment Trust No.3	Korea	June 30	33.33	33.33
JB Hwaseong-Hadong REITs No.53	Korea	June 30	31.03	31.03

85

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(a) Investments in associates as of June 30, 2022 and December 31, 2021 are as follows (continued):

Investees	Country	Reporting date	Ownership (%)
			June 30, 2022	December 31, 2021
KB Oaktree Trust No.3	Korea	June 30	33.33	33.33
Daehan No.36 Office Asset Management Company	Korea	June 30	48.05	48.05
Rhinos Premier Mezzanine Private Investment Fund No.1	Korea	June 30	27.93	27.93
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2	Korea	June 30	29.73	29.73
Shinhan JigaeNamsan Road Private Special Asset Investment Trust	Korea	June 30	24.85	24.85
SKS-Yozma Fund No.1	Korea	June 30	29.85	29.85
IBKC-METIS Global Contents Investment Fund	Korea	June 30	36.36	36.36
Keistone Unicorn Private Equity Fund	Korea	June 30	28.00	28.00
KB Distribution Private Real Estate 3-1	Korea	June 30	37.50	-
Pacific Private Investment Trust No.49-1(*8)	Korea	June 30	74.47	-
KIWOOM Real estate private placement fund for normal investors No. 31(*8)	Korea	June 30	60.00	-
RIFA Real estate private placement fund for normal investoes No. 51	Korea	June 30	40.00	-
Fivetree general private equity fund No.15	Korea	June 30	49.98	-
Shinhan-Kunicorn first Fund	Korea	June 30	38.31	-
Harvest Fund No.3	Korea	June 30	44.67	-
Korea Investment develop seed Trust No.1	Korea	June 30	40.00	-
Tiger Green alpah Trust No.29(*6)	Korea	June 30	95.24	-
STIC ALT Global II Private Equity Fund	Korea	June 30	21.74	-
NH-Brain EV Fund	Korea	June 30	25.00	-
DDI LVC Master Real Estate Investment Trust Co., Ltd.(*1)(*9)	Korea	March 31	15.00	-
Find-Green New Deal 2nd Equity Fund	Korea	June 30	22.57	-
ShinhanFitrin 1st Technology Business Investment Association(*5)	Korea	June 30	16.17	-
PARATUS No.3 Private Equity Fund	Korea	June 30	28.57	-
Koramco Private Real Estate Fund 143	Korea	June 30	30.30	-
Korea Investment Top Mezzanine Private Real Esate Trust No.1	Korea	June 30	22.22	-
LB YoungNam Logistics Private Trust No.40	Korea	June 30	25.00	-
Shinhan-Cognitive Start-up Fund L.P.	Korea	June 30	32.74	-
Shinhan AIM Private Fund of Fund 9-B	Korea	June 30	25.00	-
IGEN2022 No.1 private Equity Fund	Korea	June 30	27.95	-
Cornerstone J&M Fund I	Korea	June 30	26.67	-
Logisvalley Shinhan REIT Co.,Ltd.(*1)	Korea	March 31	20.27	-

(*1) The financial statements of March 31, 2022 are used for the equity method since the financial statements as of June 30, 2022 are not available. Significant trades and events occurred within the period are properly reflected.

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

(*3) In the course of the rehabilitation process, the shares were acquired through investment conversion. Although voting rights cannot be exercised during the rehabilitation process, normal voting rights are exercised because the rehabilitation process was completed before June 30, 2022.  Also, it has been reclassified into the investments in associates.

(*4) The latest financial statements are used for the equity method since the financial statements as of June 30 , 2022 are not available. Significant trades and events occurred within the period are properly reflected.

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

(*6) 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.

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

(*8) Although the Group has a significant influence with ownership percentage more than 50%, the contribution was classified as investments in associates as the Group does not have an ability to participate in the financial and operating policy-making process.

(*9) 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.

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

(*11) 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.

(*12) For the period ended June 30, 2022, it is incorporated into the consolidation target as the Group held control due to increased equity ratio and BNP Paribas Cardif Life Insurance, Ltd has changed its name to Shinhan EZ General Insurance, Ltd.                                                                                                          

86

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows:

	June 30, 2022
Investees	Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
BNP Paribas Cardif Life Insurance	44,022		-		(385)		(5,689)		-		37,948
Songrim Partners (*1)	-		-		-		-		-		-
Partners 4th Growth Investment Fund(*1)	13,033		(1,714)		2,643		(4,694)		-		9,268
KTB Newlake Global Healthcare PEF	9,412		(2,060)		66		-		-		7,418
Shinhan-Neoplux Energy Newbiz Fund	16,032		(391)		1,114		-		-		16,755
Shinhan-Albatross tech investment Fund	10,389		(1,800)		2,280		(6)		-		10,863
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund (*1)	-		198		(198)		-		-		-
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund(*1)	-		506		(506)		-		-		-
VOGO Debt Strategy Qualified IV Private	7,179		(1,282)		332		-		-		6,229
Shinhan-Midas Donga Secondary Fund	3,951		(1,025)		1,547		-		-		4,473
ShinHan – Soo Young Entrepreneur Investment Fund No.1	4,226		-		1,609		-		-		5,835
Shinhan Praxis K-Growth Global Private Equity Fund(*9)	7,761		(8,512)		4,425		-		-		3,674
Kiwoom Milestone Professional Private Real Estate Trust 19	5,253		-		(6)		-		-		5,247
AIP EURO Green Private Real Estate Trust No.3	29,703		(29,005)		(695)		-		-		3
Shinhan Global Healthcare Fund 1(*1)	-		-		-		-		-		-
KB NA Hickory Private Special Asset Fund	34,376		(1,071)		974		-		-		34,279
Koramco Europe Core Private Placement Real Estate Fund No.2-2	19,492		(631)		30		-		-		18,891
Shinhan EZ General Insurance, Ltd.(*2)	3,354		(3,169)		(183)		(2)		-		-
Hermes Private Investment Equity Fund	9,782		-		(4,395)		-		-		5,387
KDBC Midas Dong-A Global Contents Fund	2,955		-		1,320		-		-		4,275
Shinhan-Nvestor Liquidity Solution Fund	5,338		700		(102)		-		-		5,936
Shinhan AIM FoF Fund 1a	9,156		258		692		-		-		10,106
IGIS Global Credit Fund 150-1	5,402		(699)		692		-		-		5,395
Partner One Value up I Private Equity Fund	7,891		-		(3,625)		-		-		4,266
Genesis No.1 Private Equity Fund	55,533		214		1,906		-		-		57,653
Korea Omega Project Fund III	4,290		-		(393)		-		-		3,897
Soo Delivery Platform Growth Fund	5,873		(5,901)		28		-		-		-
Genesis North America Power Company No.1 PEF	13,736		(1,922)		1,341		-		-		13,155
Shinan MAIN Private Mixed Asset No.3	41,549		5,880		(8,159)		-		-		39,270
MIEL CO., LTD.(*1)	-		-		-		-		-		-
AIP Transportation Specialized Privately Placed Fund Trust #1	34,688		2,787		1,726		-		-		39,201
E&Healthcare Investment Fund No.6	6,866		(420)		(2,438)		-		-		4,008
One Shinhan Global Fund 1	3,773		-		(1,722)		-		-		2,051
Kiwoom-Shinhan Innovation Fund I	11,731		(1,500)		877		-		-		11,108
Daishin-K&T New Technology Investment Fund	7,991		-		(554)		-		-		7,437
Midas Asset Global CRE Debt Private Fund No.6	48,305		(1,700)		1,804		-		-		48,409
Samchully Midstream Private Placement Special Asset Fund 5-4	27,471		-		(995)		-		-		26,476
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3	25,204		(351)		419		-		-		25,272
NH-Amundi Global Infrastructure Trust 14	18,301		113		638		-		-		19,052

87

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

	June 30, 2022
Investees	Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
Jarvis Memorial Private Investment Trust 1	10,109		(347)		346		-		-		10,108
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37	33,153		1,264		1,070		-		-		35,487
Milestone Private Real Estate Fund 3 (Derivative Type)	18,544		(178)		(1,325)		-		-		17,041
RIFA Real estate private placement fund for normal investors No. 31	7,902		(418)		241		-		-		7,725
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2	10,236		(178)		210		-		-		10,268
Cape IT Fund No.3	10,065		-		405		-		-		10,470
FuturePlay-Shinhan TechInnovation Fund 1	7,149		-		(115)		-		-		7,034
Stonebridge Corporate 1st Fund	2,964		-		455		-		-		3,419
Vogo Realty Partners Private Real Estate Fund V	10,766		(331)		200		-		-		10,635
Korea Credit Bureau	7,695		-		(3,723)		-		-		3,972
Goduck Gangil1 PFV Co., Ltd(*1)	-		-		-		-		-		-
SBC PFV Co., Ltd	29,586		-		(599)		-		-		28,987
NH-amundi global infra private fund 16	52,008		(12,203)		8,988		-		-		48,793
IMM Global Private Equity Fund	118,615		(267)		2,978		-		-		121,326
HANA Alternative Eastate Professional Private122	29,489		(28,266)		(874)		-		-		349
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7	49,899		(50,540)		641		-		-		-
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust	282,199		(8,977)		(2,904)		-		-		270,318
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24	28,312		(18)		331		-		-		28,625
Sparklabs-Shinhan Opportunity Fund 1	4,640		(826)		765		-		-		4,579
BNW Tech-Innovation Private Equity Fund	5,881		-		(33)		-		-		5,848
IGIS Real-estate Private Investment Trust No.33	13,884		(360)		253		-		-		13,777
WWG Global Real Estate Investment Trust no.4	10,644		(761)		278		-		-		10,161
Goduck Gangil10 PFV Co., Ltd(*1)	-		-		205		-		-		205
Fidelis Global Private Real Estate Trust No.2	19,773		1,425		(758)		-		-		20,440
AIP EURO PRIVATE REAL ESTATE TRUST No. 12(2)	49,217		(2,786)		1,612		-		-		48,043
Shinhan Global Healthcare Fund 2(*1)	-		-		-		-		-		-
Pebblestone CGV Private Real Estate Trust No.1	13,710		(366)		261		-		-		13,605
SH Corporate Professional Investment Type Private Security Investment Trust No.45	173,955		(173,955)		-		-		-		-
Shinhan AIM Real Estate Fund No.2	23,275		-		333		-		-		23,608
Shinhan AIM Real Estate Fund No.1	44,312		(1,084)		1,802		-		-		45,030
SHBNPP Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust	32,948		(456)		453		-		-		32,945
SHBNPP Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust	20,550		-		(13)		-		-		20,537
SHBNPP Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2(USD)(*8)	18,855		1,704		(1,260)		-		-		19,299
Korea Omega-Shinhan Project Fund I	7,244		-		770		-		-		8,014
ST-Bonanja Food tech	3,359		-		958		-		-		4,317
Samsung SRA Real Estate Professional Private 45[FoFs]	12,880		1,694		(45)		-		-		14,529

88

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

	June 30, 2022
Investees	Beginning balance	Acquisition (Disposal) and dividend	Equity method income (loss)	Change in other comprehensive income (loss)	Impairment loss	Ending balance
IBK Global New Renewable Energy Special Asset Professional Private2	31,887	(1,071)	(3,392)	-	-	27,424
VS Cornerstone Fund	3,410	-	(22)	-	-	3,388
Aone Mezzanine Opportunity Professional Private	9,540	(5,084)	470	-	-	4,926
NH-Amundi US Infrastructure Private Fund2	27,024	2,441	152	-	-	29,617
KB Distribution Private Real Estate1	30,694	(30,694)	-	-	-	-
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No.2	13,016	(304)	(99)	-	-	12,613
Kakao-Shinhan 1st TNYT Fund	14,497	-	7,034	-	-	21,531
IMM Special Situation 1-2 PRIVATE EQUITY FUND	11,593	(8,690)	(246)	-	-	2,657
SJ-DAEKYO APRIL BIO VENTURE FUND	1,968	-	2,152	-	-	4,120
Pacific Private Placement Real Estate Fund No.40	11,598	(371)	286	-	-	11,513
Mastern Private Real Estate Loan Fund No.2	7,491	(1,199)	180	-	-	6,472
LB Scotland Amazon Fulfillment Center Fund 29	31,268	(1,078)	(542)	-	-	29,648
JR AMC Hungary Budapest Office Fund 16	12,140	(407)	534	-	-	12,267
EDNCENTRAL Co.,Ltd.(*1)	-	-	-	-	-	-
Future-Creation Neoplux Venture Capital Fund	3,017	-	1,649	-	-	4,666
Gyeonggi-Neoplux Superman Fund	7,878	-	224	-	-	8,102
NewWave 6th Fund	14,455	-	(786)	-	-	13,669
KTC-NP Growth Champ 2011-2 Private Equity Fund	3,990	-	(306)	-	-	3,684
Neoplux No.3 Private Equity Fund	22,601	(2)	(914)	-	-	21,685
PCC Amberstone Private Equity Fund I	22,790	(1,121)	1,098	-	-	22,767
KIAMCO POWERLOAN TRUST 4TH	45,301	(393)	386	-	-	45,294
Mastern Opportunity Seeking Real Estate Fund II	21,317	(5,953)	1,615	-	-	16,979
AION ELFIS PROFESSIONAL PRIVATE 1	4,422	232	(1,062)	-	-	3,592
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business	4,360	-	(47)	-	-	4,313
Neoplux Market-Frontier Secondary Fund(*5)	11,313	(653)	3,216	-	-	13,876
Harvest Private Equity Fund II	3,481	(159)	179	-	-	3,501
Synergy Green New Deal 1st New Technology Business Investment Fund	9,684	(74)	1,458	-	-	11,068
KAIM Real-estate Private Investment Trust 20	5,048	(175)	188	-	-	5,061
KIAMCO Vietnam Solar Special Asset Private Investment Trust	7,527	-	294	-	-	7,821
Daishin New Technology Investment Fund 5th	4,439	-	(1,327)	-	-	3,112
CSQUARE SNIPER PROFESSIONAL PRIVATE 10	3,247	(3,806)	559	-	-	-
Acurus Hyundai Investment Partners New Technology	4,714	(3,979)	(735)	-	-	-
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1	63,944	(60,279)	-	(3,665)	-	-
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2	63,944	(60,279)	-	(3,665)	-	-
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45	14,778	(14,778)	-	-	-	-

89

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

	June 30, 2022
Investees	Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
SHINHAN-NEO Core Industrial Technology Fund	5,691		1,980		(126)		-		-		7,545
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2	27,243		(1,338)		505		-		-		26,410
SIMONE Mezzanine Fund No.3	3,054		4		(9)		-		-		3,049
Eum Private Equity Fund No.7	7,873		-		1,437		-		-		9,310
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund	7,594		(2,074)		(2,300)		-		-		3,220
Kiwoom Hero No.4 Private Equity Fund	4,305		-		(708)		-		-		3,597
Vogo Canister Professional Trust Private Fund I	41,072		(1,503)		1,184		-		-		40,753
POSCO New Technology Investment Fund No.2	2,789		-		885		-		-		3,674
SW-S Fund	6,724		-		61		-		-		6,785
CL Buyout 1st PEF	13,791		273		(779)		-		-		13,285
Timefolio The Venture-V second	4,572		-		(389)		-		-		4,183
Newlake Growth Capital Partners2 PEF	12,921		(100)		(134)		-		-		12,687
Kiwoom Materials, Parts and Equipment 2 New Technology Business Investment Fund	2,874		-		276		-		-		3,150
Shinhan Smilegate Global PEF I	3,336		-		1,707		-		-		5,043
Fount Professional Investors Private Investment Trust No.3	5,197		(5,197)		-		-		-		-
Genesis Eco No.1 PEF	11,130		-		(3)		-		-		11,127
SHINHAN-NEO Market-Frontier 2nd Fund	24,606		8,540		64		-		-		33,210
NH-Synergy Core Industrial New Technology Fund	6,437		-		(31)		-		-		6,406
J& Moorim Jade Investment Fund	5,540		(385)		39		-		-		5,194
Ulmus SHC innovation investment fund	5,192		-		(268)		-		-		4,924
Mirae Asset Partners X Private Equity Fund	7,858		-		(36)		-		-		7,822
T Core Industrial Technology 1st Venture PEF	4,535		-		(30)		-		-		4,505
Curious Finale Corporate Recovery Private Equity Fund	3,690		(123)		490		-		-		4,057
TI First Property Private Investment Trust 1	3,055		-		(19)		-		-		3,036
MPLUS Professional Private Real Estate Fund 25	3,290		655		164		-		-		4,109
IBKC Global Contents Investment Fund	4,943		-		(39)		-		-		4,904
Nautic Smart No.6 Private Equity Fund	3,974		(1,472)		1		-		-		2,503
Premier Luminous Private Equity Fund	6,991		-		(38)		-		-		6,953
Hanyang-Meritz 1 Fund	3,483		-		(18)		-		-		3,465
KNT 2ND PRIVATE EQUITY FUND	4,157		-		(644)		-		-		3,513
A-STONE PROJECT FUND NO.2	1,960		(800)		2,374		-		-		3,534
Kiwoom-Shinhan Innovation Fund 2	2,677		9,000		(24)		-		-		11,653
Maple Mobility Fund	8,683		45		(297)		-		-		8,431
AVES 1st Corporate Recovery Private Equity Fund	4,736		-		62		-		-		4,798
JS Shinhan Private Equity Fund	5,037		-		(30)		-		-		5,007
Daishin Newgen New Technology Investment Fund 1st	12,169		-		(4,248)		-		-		7,921
META ESG Private Equity Fund I	5,677		-		325		-		-		6,002
SWFV FUND-1	9,646		-		(69)		-		-		9,577
PHAROS DK FUND	3,949		-		150		-		-		4,099
Shinhan VC tomorrow venture fund 1	9,042		18,226		(556)		-		-		26,712
Highland 2021-8 Fund	4,899		-		(34)		-		-		4,865
Medicii 2021-3 Fund	9,728		(88)		10		-		-		9,650
Stonebridge-Shinhan Unicorn Secondary Fund	2,074		4,160		(47)		-		-		6,187
Tres-Yujin Trust	9,995		(546)		579		-		-		10,028

90

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		June 30, 2022
Investees		Beginning balance	Acquisition (Disposal) and dividend	Equity method income (loss)	Change in other comprehensive income (loss)	Impairment loss	Ending balance
Shinhan-Time mezzanine blind Fund		14,942	-	(510)	-	-	14,432
Capstone REITs No.26		4,395	(75)	(161)	-	-	4,159
JB Incheon-Bucheon REITS No.54		4,999	-	(5)	-	-	4,994
Hankook Smart Real Asset Investment Trust No.3		4,342	2,195	393	-	-	6,930
JB Hwaseong-Hadong REITs No.53		4,999	-	(4)	-	-	4,995
KB Oaktree Trust No.3		3,159	1,261	553	-	-	4,973
Daehan No.36 Office Asset Management Company		21,500	(264)	618	-	-	21,854
Rhinos Premier Mezzanine Private Investment Fund No.1		3,005	-	88	-	-	3,093
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		19,903	36,183	1,651	-	-	57,737
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		40,105	(170)	656	-	-	40,591
SKS-Yozma Fund No.1		5,945	-	(62)	-	-	5,883
IBKC-METIS Global Contents Investment Fund		4,000	-	(47)	-	-	3,953
Keistone Unicorn Private Equity Fund		6,300	-	(35)	-	-	6,265
KB Distribution Private Real Estate 3-1		-	5,271	8	-	-	5,279
Pacific Private Investment Trust No.49-1		-	28,000	(912)	-	-	27,088
KIWOOM Real estate private placement fund for normal investors No. 31		-	8,595	(38)	-	-	8,557
RIFA Real estate private placement fund for normal investoes No. 51		-	5,730	(7)	-	-	5,723
Fivetree general private equity fund No.15		-	11,995	357	-	-	12,352
Shinhan-Kunicorn first Fund		-	10,000	(70)	-	-	9,930
Harvest Fund No.3		-	13,000	890	-	-	13,890
Korea Investment develop seed Trust No.1		-	10,000	253	-	-	10,253
Tiger Green alpah Trust No.29		-	26,716	398	-	-	27,114
STIC ALT Global II Private Equity Fund		-	10,000	(91)	-	-	9,909
NH-Brain EV Fund		-	13,000	(198)	-	-	12,802
DDI LVC Master Real Estate Investment Trust Co., Ltd.		-	6,625	-	-	-	6,625
Find-Green New Deal 2nd Equity Fund		-	5,000	(22)	-	-	4,978
ShinhanFitrin 1st Technology Business Investment Association		-	4,850	(39)	-	-	4,811
PARATUS No.3 Private Equity Fund		-	5,000	(43)	-	-	4,957
Koramco Private Real Estate Fund 143		-	3,030	-	-	-	3,030
Korea Investment Top Mezzanine Private Real Esate Trust No.1		-	9,933	-	-	-	9,933
LB YoungNam  Logistics Private Trust No.40		-	10,000	(88)	-	-	9,912
Shinhan-Cognitive Start-up Fund L.P.		-	9,200	157	-	-	9,357
Shinhan AIM Private Fund of Fund 9-B		-	6,400	-	-	-	6,400
IGEN2022 No.1 private Equity Fund		-	9,000	(86)	-	-	8,914
Cornerstone J&M Fund I		-	3,600	(9)	-	-	3,591
Logisvalley Shinhan REIT Co.,Ltd.		-	3,925	-	-	-	3,925
Others		171,750	44,146	4,049	-	-	219,945
Total	W	2,913,745	(195,200)	33,290	(17,721)	-	2,734,114

(*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 period ended June 30, 2022, it is incorporated into the consolidation target as the Group held control due to increased equity ratio and

BNP Paribas Cardif Life Insurance, Ltd has changed its name to Shinhan EZ General Insurance, Ltd.  

91

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
Investees		Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
BNP Paribas Cardif Life Insurance	W	50,600		-		(660)		(5,918)		-		44,022
Songrim Partners(*1)		-		-		-		-		-		-
Partners 4th Growth Investment Fund		11,958		(16,144)		12,525		4,694		-		13,033
KTB Newlake Global Healthcare PEF		9,404		-		8		-		-		9,412
Daekwang Semiconductor Co., Ltd.		3,631		(3,742)		113		(2)		-		-
Shinhan-Neoplux Energy Newbiz Fund		14,470		475		1,087		-		-		16,032
Shinhan-Albatross tech investment Fund		13,322		(9,000)		6,067		-		-		10,389
VOGO Debt Strategy Qualified IV Private		8,702		(1,733)		210		-		-		7,179
Shinhan-Midas Donga Secondary Fund		4,752		(500)		(301)		-		-		3,951
ShinHan – Soo Young Entrepreneur Investment Fund No.1		9,968		(7,879)		2,137		-		-		4,226
Shinhan Praxis K-Growth Global Private Equity Fund		9,945		(2,310)		126		-		-		7,761
Credian Healthcare Private Equity Fund II		5,835		(5,835)		-		-		-		-
Kiwoom Milestone Professional Private Real Estate Trust 19		9,918		(66)		(361)		-		(4,238)		5,253
AIP EURO Green Private Real Estate Trust No.3		21,021		(1,335)		10,017		-		-		29,703
Shinhan Global Healthcare Fund 1(*1)		-		-		-		-		-		-
JB Power TL Investment Type Private Placement Special Asset Fund 7		16,186		(15,947)		(239)		-		-		-
KB NA Hickory Private Special Asset Fund		34,938		(2,266)		1,704		-		-		34,376
Koramco Europe Core Private Placement Real Estate Fund No.2-2		18,618		(1,204)		2,078		-		-		19,492
BNP Paribas Cardif General Insurance		3,895		176		(708)		(9)		-		3,354
Hermes Private Investment Equity Fund		6,099		(3,167)		6,850		-		-		9,782
Shinhan-Nvestor Liquidity Solution Fund		4,493		331		514		-		-		5,338
Shinhan AIM FoF Fund 1a		8,760		(79)		475		-		-		9,156
IGIS Global Credit Fund 150-1		7,282		(3,246)		1,366		-		-		5,402
Partner One Value up I Private Equity Fund		11,779		(6,933)		3,045		-		-		7,891
Genesis No.1 Private Equity Fund		80,113		388		(24,968)		-		-		55,533
Korea Omega Project Fund III		3,563		-		727		-		-		4,290
Soo Delivery Platform Growth Fund		4,068		-		1,805		-		-		5,873
Genesis North America Power Company No.1 PEF		16,983		(5,229)		1,982		-		-		13,736
Hyungje art printing(*2)		-		-		-		-		-		-

92

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
Investees		Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
Shinan MAIN Private Mixed Asset No.3	W	10,582		24,500		6,467		-		-		41,549
Korea Finance Security		3,055		-		(61)		-		-		2,994
Multimedia Tech Co.Ltd.(*2)		-		-		-		-		-		-
MIEL CO.,LTD.(*1)		-		-		-		-		-		-
AIP Transportation Specialized Privately Placed Fund Trust #1		32,993		347		1,348		-		-		34,688
DB Epic Convertiblebond Private Trust No.2		5,785		(5,538)		(247)		-		-		-
E&Healthcare Investment Fund No.6		15,163		(3,431)		(4,866)		-		-		6,866
One Shinhan Global Fund 1		4,029		(519)		263		-		-		3,773
Kiwoom-Shinhan Innovation Fund I		15,969		(5,150)		912		-		-		11,731
Daishin-K&T New Technology Investment Fund		7,000		-		991		-		-		7,991
Midas Asset Global CRE Debt Private Fund No.6		47,389		(2,701)		3,617		-		-		48,305
Richmond Private Investment Trust No.82		15,049		(19,411)		4,362		-		-		-
Tiger Alternative Real Estate Professional Private5		18,499		(20,848)		2,349		-		-		-
Samchully Midstream Private Placement Special Asset Fund 5-4		28,818		(843)		(504)		-		-		27,471
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3		65,616		(41,622)		1,210		-		-		25,204
NH-Amundi Global Infrastructure Trust 14		18,819		(1,609)		1,091		-		-		18,301
Jarvis Memorial Private Investment Trust 1		10,043		(700)		766		-		-		10,109
Mastern Private Private Investment Trust 68		10,010		(10,332)		322		-		-		-
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37		35,641		(4,981)		2,493		-		-		33,153
Milestone Private Real Estate Fund 3		18,528		(472)		488		-		-		18,544
IGIS Private Real Estate Investment Trust 286		8,844		(9,176)		332		-		-		-
Nomura-Rifa Private Real Estate Investment Trust 31		8,407		(705)		200		-		-		7,902
SH Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2		13,323		(3,511)		424		-		-		10,236
Hana Semiconductor New Technology Fund		24,131		(26,129)		1,998		-		-		-
J&Magnet Startup Venture Specialized Private Equity Fund		5,935		(7,247)		1,312		-		-		-
Cape IT Fund No.3		10,649		(580)		(4)		-		-		10,065
FuturePlay-Shinhan TechInnovation Fund 1		4,295		3,025		(171)		-		-		7,149

93

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
Investees		Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
Stonebridge Corporate 1st Fund	W	3,239		-		(275)		-		-		2,964
Vogo Realty Partners Private Real Estate Fund V		10,827		(681)		620		-		-		10,766
Korea Credit Bureau		6,976		(90)		809		-		-		7,695
Goduck Gangil1 PFV Co., Ltd.(*1)		-		-		-		-		-		-
SBC PFV Co., Ltd.		18,208		12,499		(1,121)		-		-		29,586
NH-amundi global infra private fund 16		43,839		346		7,823		-		-		52,008
IMM Global Private Equity Fund		120,855		(10,462)		8,222		-		-		118,615
HANA Alternative Estate Professional Private122		29,631		(1,001)		859		-		-		29,489
Hanwha-Incus Plus New Technology Fund No.1		11,026		(8,284)		(2,742)		-		-		-
SH Corporate Professional Investment Type Private Security Investment Trust No.7		51,210		(1,518)		207		-		-		49,899
SH BNCT Professional Investment Type Private Special Asset Investment Trust		286,531		(15,191)		10,859		-		-		282,199
PSA EMP Private Equity Fund		9,814		(9,755)		(59)		-		-		-
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24		29,401		(2,630)		1,541		-		-		28,312
BRAIN DO PROFESSIONALE PRIVATE No. 27		3,441		(3,048)		583		-		-		976
UI Venture Fund 7th		3,279		(3,269)		(10)		-		-		-
Sparklabs-Shinhan Opportunity Fund 1		4,832		-		(192)		-		-		4,640
BNW Tech-Innovation Private Equity Fund		5,942		-		(61)		-		-		5,881
IGIS Real-estate Private Investment Trust No.33		14,099		(714)		499		-		-		13,884
Findvalue PreIPO 6th Professional Investment Type Private Investment Trust		3,002		(3,301)		299		-		-		-
WWG Global Real Estate Investment Trust no.4		17,752		(7,855)		747		-		-		10,644
Goduck Gangil10 PFV Co., Ltd(*1)		32		-		(32)		-		-		-
Fidelis Global Private Real Estate Trust No.2		19,485		(911)		1,199		-		-		19,773
IGIS PRIVATE REAL ESTATE TRUST NO.331		3,765		(3,765)		-		-		-		-
AIP EURO PRIVATE REAL ESTATE TRUST No. 12		48,344		(5,436)		6,309		-		-		49,217
Shinhan Healthcare Fund 2(*1)		986		-		(75)		-		(911)		-
Pebblestone CGV Private Real Estate Trust No.1		13,346		(748)		1,112		-		-		13,710
SH Corporate Professional Investment Type Private Security Investment Trust No.45		-		174,154		(199)		-		-		173,955
Shinhan AIM Real Estate Fund No.2		22,464		1,911		(1,100)		-		-		23,275

94

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
Investees		Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
Shinhan AIM Real Estate Fund No.1	W	46,945		(4,412)		1,779		-		-		44,312
SH Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust		32,944		(911)		915		-		-		32,948
SH Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust		20,902		7		(359)		-		-		20,550
SH Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2		6,692		13,667		(1,504)		-		-		18,855
SH Japan Photovoltaic Private Special Asset Investment Trust No.1		4,845		(4,845)		-		-		-		-
Korea Omega-Shinhan Project Fund I		5,931		2,000		(687)		-		-		7,244
ST-Bonanja Food tech		1,993		-		1,366		-		-		3,359
New Green Shinhan Mezzanine Fund		4,916		(5,622)		706		-		-		-
KORAMKO-Daum Professional Private Investment Trust No.12		7,528		(7,756)		228		-		-		-
Samsung SRA Real Estate Professional Private 45		10,666		2,656		(442)		-		-		12,880
IBK Global New Renewable Energy Special Asset Professional Private2		32,349		(1,988)		1,526		-		-		31,887
VS Cornerstone Fund		3,464		-		(54)		-		-		3,410
Aone Mezzanine Opportunity Professional Private		9,580		(28)		(12)		-		-		9,540
KiwoomUnicorn3 New Technology Business Investment Fund		4,283		(3,633)		(650)		-		-		-
Multi Asset The United States Thortons Professional Private1		41,440		(41,607)		167		-		-		-
Kiwoom Milestone US Real Estate Professional Private20		51,512		(51,512)		-		-		-		-
NH-Amundi US Infrastructure Private Fund2		25,430		207		1,387		-		-		27,024
KB Distribution Private Real Estate1		30,698		(1,423)		1,419		-		-		30,694
SH Jigae Namsan BTO professional Investment Type Private Special Asset Investment Trust		20,712		(22,293)		1,581		-		-		-
SH Japan Photovoltaic Private Special Asset Investment Trust No.2		29,149		(16,798)		665		-		-		13,016
Kakao-Shinhan 1st TNYT Fund		5,681		9,000		(184)		-		-		14,497
IMM Special Situation 1-2 PRIVATE EQUITY FUND		10,870		(160)		883		-		-		11,593
Pacific Private Placement Real Estate Fund No.40		11,647		(747)		698		-		-		11,598
Mastern Private Real Estate Loan Fund No.2		5,692		1,429		370		-		-		7,491

95

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
Investees		Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
LB Scotland Amazon Fulfillment Center Fund 29	W	31,182		(1,734)		1,820		-		-		31,268
JR AMC Hungary Budapest Office Fund 16		12,204		(821)		757		-		-		12,140
IGIS 372 Real Estate Professional Private		56,835		(56,835)		-		-		-		-
EDNCENTRAL Co.,Ltd.(*1)		1,040		-		(1,040)		-		-		-
KoFC-Neoplux R&D-Biz Creation 2013-1 Venture Capital Fund		3,830		(8,388)		4,558		-		-		-
Future-Creation Neoplux Venture Capital Fund		3,796		(995)		216		-		-		3,017
Gyeonggi-Neoplux Superman Fund		6,399		(2,257)		3,736		-		-		7,878
NewWave 6th Fund		6,150		7,575		730		-		-		14,455
KTC-NP Growth Champ 2011-2 Private Equity Fund		2,853		-		1,137		-		-		3,990
Neoplux No.3 Private Equity Fund		10,295		10,182		2,124		-		-		22,601
PCC Amberstone Private Equity Fund I		22,480		(2,356)		2,666		-		-		22,790
KIAMCO POWERLOAN TRUST 4TH		43,955		(164)		1,510		-		-		45,301
Mastern Opportunity Seeking Real Estate Fund II		19,799		(737)		2,255		-		-		21,317
AION ELFIS PROFESSIONAL PRIVATE 1		5,528		(1,350)		244		-		-		4,422
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business		4,453		-		(93)		-		-		4,360
Neoplux Market-Frontier Secondary Fund		11,545		(614)		382		-		-		11,313
Harvest Private Equity Fund II		2,982		-		499		-		-		3,481
Synergy Green New Deal 1st New Technology Business Investment Fund		10,008		(247)		(77)		-		-		9,684
KAIM Real-estate Private Investment Trust 20		5,098		(350)		300		-		-		5,048
KIAMCO Vietnam Solar Special Asset Private Investment Trust		7,948		(1,112)		691		-		-		7,527
Daishin New Technology Investment Fund 5th		2,850		-		1,589		-		-		4,439
CSQUARE SNIPER PROFESSIONAL PRIVATE 10		3,125		-		122		-		-		3,247
Acurus Hyundai Investment Partners New Technology		2,927		-		1,787		-		-		4,714
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1		44,594		4,103		11,371		3,876		-		63,944
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2		44,594		4,103		11,371		3,876		-		63,944
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45		15,855		-		(1,077)		-		-		14,778

96

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
Investees		Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
IGIS Professional Investors Private Investment Real Estate Investment LLC No.395	W	29,644		(29,644)		-		-		-		-
SHINHAN-NEO Core Industrial Technology Fund		1,979		3,960		(248)		-		-		5,691
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2		21,142		5,271		830		-		-		27,243
SIMONE Mezzanine Fund No.3		2,980		-		74		-		-		3,054
Eum Private Equity Fund No.7		7,872		121		(120)		-		-		7,873
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund		5,034		-		2,560		-		-		7,594
Kiwoom Hero No.4 Private Equity Fund		4,707		-		(402)		-		-		4,305
Vogo Canister Professional Trust Private Fund I		43,975		(4,712)		1,809		-		-		41,072
SW-S Fund		-		7,000		(276)		-		-		6,724
CL Buyout 1st PEF		-		13,875		(84)		-		-		13,791
Timefolio The Venture-V second		-		4,000		572		-		-		4,572
Newlake Growth Capital Partners2 PEF		-		13,000		(79)		-		-		12,921
Shinhan Smilegate Global PEF I		-		3,376		(40)		-		-		3,336
Fount Professional Investors Private Investment Trust No.3		-		5,000		197		-		-		5,197
Genesis Eco No.1 PEF		-		11,292		(162)		-		-		11,130
SHINHAN-NEO Market-Frontier 2nd Fund(*3)		-		25,620		(1,014)		-		-		24,606
NH-Synergy Core Industrial New Technology Fund		-		6,500		(63)		-		-		6,437
J& Moorim Jade Investment Fund		-		5,500		40		-		-		5,540
Ulmus SHC innovation investment fund		-		5,000		192		-		-		5,192
Mirae Asset Partners X Private Equity Fund		-		8,000		(142)		-		-		7,858
T Core Industrial Technology 1st Venture PEF		-		4,500		35		-		-		4,535
Curious Finale Corporate Recovery Private Equity Fund		-		3,377		313		-		-		3,690
TI First Property Private Investment Trust 1		-		2,879		176		-		-		3,055
MPLUS Professional Private Real Estate Fund 25		-		3,010		280		-		-		3,290
IBKC Global Contents Investment Fund		-		5,000		(57)		-		-		4,943
Nautic Smart No.6 Private Equity Fund		-		4,000		(26)		-		-		3,974
Premier Luminous Private Equity Fund		-		7,095		(104)		-		-		6,991
Hanyang-Meritz 1 Fund		-		3,500		(17)		-		-		3,483

97

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

12.  Investments in associates (continued)

(b) Changes in investments in associates for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
Investees		Beginning balance		Acquisition (Disposal) and dividend		Equity method income (loss)		Change in other comprehensive income (loss)		Impairment loss		Ending balance
KNT 2ND PRIVATE EQUITY FUND	W	-		3,000		1,157		-		-		4,157
Maple Mobility Fund		-		9,274		(591)		-		-		8,683
AVES 1st Corporate Recovery Private Equity Fund		-		4,800		(64)		-		-		4,736
JS Shinhan Private Equity Fund		-		5,076		(39)		-		-		5,037
Daishin Newgen New Technology Investment Fund 1st		-		8,000		4,169		-		-		12,169
META ESG Private Equity Fund I		-		5,726		(49)		-		-		5,677
SWFV FUND-1		-		9,700		(54)		-		-		9,646
PHAROS DK FUND		-		4,000		(51)		-		-		3,949
Shinhan VC tomorrow venture fund 1		-		9,113		(71)		-		-		9,042
Highland 2021-8 Fund		-		4,900		(1)		-		-		4,899
Medicii 2021-3 Fund		-		9,752		(24)		-		-		9,728
Tres-Yujin Trust		-		10,000		(5)		-		-		9,995
Shinhan-Time mezzanine blind Fund		-		15,000		(58)		-		-		14,942
Capstone REITs No.26		-		4,849		(454)		-		-		4,395
JB Incheon-Bucheon REITS No.54		-		5,000		(1)		-		-		4,999
Hankook Smart Real Asset Investment Trust No.3		-		4,173		169		-		-		4,342
JB Hwaseong-Hadong REITs No.53		-		5,000		(1)		-		-		4,999
KB Oaktree Trust No.3		-		3,141		18		-		-		3,159
Daehan No.36 Office Asset Management Company		-		21,500		-		-		-		21,500
Rhinos Premier Mezzanine Private Investment Fund No.1		-		3,000		5		-		-		3,005
SH Real Estate Loan Investment Type Private Real Estate Investment Trust No.2		-		19,426		477		-		-		19,903
Shinhan JigaeNamsan Road Private Special Asset Investment Trust		-		39,996		109		-		-		40,105
SKS-Yozma Fund No.1		-		6,000		(55)		-		-		5,945
IBKC-METIS Global Contents Investment Fund		-		4,000		-		-		-		4,000
Keistone Unicorn Private Equity Fund		-		6,300		-		-		-		6,300
Others		121,040		63,729		5,881		(3)		(5,570)		185,077
	W	2,657,768		101,582		158,600		6,514		(10,719)		2,913,745

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

(*2) For the year ended December 31, 2021, the Group has stopped recognizing its equity method income or loss to accumulated deficits and the shares are retired for the year ended December 31, 2021.

(*3) Classified as investments in associates without cash transactions.

98

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

13.  Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Securities sold:
Stocks	W	225,199	275,451
Bonds		538,102	505,202
Others		31,448	7,114
		794,749	787,767
Gold/silver deposits		523,232	581,458
	W	1,317,981	1,369,225

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

(a) Financial liabilities designated at fair value through profit or loss as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021	Reason for designation
Equity-linked securities sold	W	5,355,403	5,795,071	Combined financial instrument
Other securities sold with embedded derivatives		1,998,052	2,228,799
Debt securities issued		48,594	-	Fair value measurement and management
	W	7,402,049	8,023,870

    (*) 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 W7,402,049 million as of June 30, 2022. Decrease in values of the liability due to credit risk changes is W2,568 million for the six-month period ended June 30, 2022 and the accumulated changes in values are W(-)7,621 million as of June 30, 2022.

(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 June 30, 2022 and December 31, 2022 are as follows:

		June 30, 2022	December 31, 2021
Expiration payment	W	6,703,666	7,325,678
Carrying amount		7,402,049	8,023,870
Difference from carrying amount		(698,383)	(698,192)

99

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

15.  Debt securities issued

Debt securities issued as of June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022			December 31, 2021
	Interest rate (%)		Amount	Interest rate (%)		Amount
Debt securities issued in Korean won:
Debt securities issued	0.84~4.29	W	64,635,866	0.79~8.00	W	64,419,771
Subordinated debt securities issued	2.20~4.17		4,030,125	2.20~4.60		5,030,125
Gain on fair value hedges	-		(312,427)	-		(122,069)
Discount on debt securities issued	-		(41,838)	-		(38,845)
			68,311,726			69,288,982
Debt securities issued in foreign currencies:
Debt securities issued	0.25~7.59		8,509,035	0.25~7.59		7,462,087
Subordinated debt securities issued	3.34~5.10		4,234,508	3.34~5.10		3,307,306
Loss(gain) on fair value hedges	-		(200,842)	-		130,392
Discount on debt securities issued	-		(47,875)	-		(39,404)
			12,494,826			10,860,381
		W	80,806,552		W	80,149,363

100

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

16.  Defined benefit assets and liabilities

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

(a) Defined benefit obligations and plan assets as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Present value of defined benefit obligations	W	1,934,885	2,205,869
Fair value of plan assets		(2,374,805)	(2,296,685)
Recognized liability (asset) for defined benefit obligations (*)	W	(439,920)	(90,816)

(*) The asset for defined benefit obligation of W439,920 million as of June 30, 2022 is the net defined benefit assets of W472,081 million less the net defined liabilities of W32,161 million. In addition, the asset for defined benefit obligation of W90,816 million as of December 31, 2021 is the net defined benefit assets of W142,020 million less the net defined liabilities of W51,204 million.

(b) Net income relating to defined benefit liabilities loss for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022		June 30, 2021
		Three-month	Six- month	Three- month	Six- month
Current service costs	W	42,159	84,779	43,055	88,611
Interest expense (income)		(1,548)	(3,180)	50	215
Past service cost		-	-	282	282
	W	40,611	81,599	43,387	89,108

101

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

17.  Provisions

(a) Provisions as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Asset retirement obligations	W	82,519	82,123
Expected loss related to litigation		9,772	9,693
Unused credit commitments		319,482	300,008
Guarantee contracts issued		90,408	81,922
Financial guarantee contracts issued		61,267	55,344
Non-financial guarantee contracts issued		29,141	26,578
Others(*)		659,618	693,110
	W	1,161,799	1,166,856

(*) As of June 30, 2022 and December 31, 2021, the Group recognizes a provision of W482,839 million and W518,955 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.

(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the six-month period ended June 30, 2022 and the year ended December 31, 2021 are as follows:

		June 30, 2022
		Unused credit commitments			Financial guarantee contracts issued			Total
		12 months expected credit loss	Life-time expected credit loss	Impaired financial asset	12 months expected credit loss	Life-time expected credit loss	Impaired financial asset
Beginning balance	W	150,573	147,511	1,924	48,607	6,709	28	355,352
Transfer (from)to 12 months expected credit loss		49,171	(49,023)	(148)	3,319	(3,319)	-	-
Transfer (from)to life-time expected credit loss		(12,052)	12,103	(51)	(4,924)	4,924	-	-
Transfer (from)to impaired financial asset		(158)	(888)	1,046	-	-	-	-
Provided (reversed)		(31,670)	51,092	(730)	2,804	1,394	4	22,894
Change in foreign exchange rate		152	630	-	1,610	348	-	2,740
OtOthers(*)		-	-	-	783	(1,016)	(4)	(237)
Ending balance	W	156,016	161,425	2,041	52,199	9,040	28	380,749

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

102

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

17.  Provisions (continued)

(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the six-month period ended June 30, 2022 and the year ended December 31, 2021 are as follows (continued)

		December 31, 2021
		Unused credit commitments						Financial guarantee contracts issued						Total
		12 months expected credit loss		Life-time expected credit loss		Impaired financial asset		12 months expected credit loss		Life-time expected credit loss		Impaired financial asset
Beginning balance	W	164,147		140,137		1,435		54,550		7,335		10		367,614
Transfer (from)to 12 months expected credit loss		63,335		(63,249)		(86)		2,931		(2,931)		-		-
Transfer (from)to life-time expected credit loss		(11,889)		11,917		(28)		(3,621)		3,621		-		-
Transfer (from)to impaired financial asset		(274)		(939)		1,213		-		-		-		-
Provided (reversed)		(66,373)		58,188		(610)		(581)		(178)		5		(9,549)
Change in foreign exchange rate		1,964		1,077		-		1,910		534		-		5,485
OtOthers(*)		(337)		380		-		(6,582)		(1,672)		13		(8,198)
Ending balance	W	150,573		147,511		1,924		48,607		6,709		28		355,352

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

103

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

18.  Liabilities under insurance contracts

(a) Insurance liabilities as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Policy reserve	W	54,783,933	54,330,046
Policyholder’s equity adjustment		(2,263)	3,452
	W	54,781,670	54,333,498

(b) Income or expenses on insurance contracts for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022			June 30, 2021
		Three-month	Six- month		Three-month	Six- month
Insurance income
Premium income	W	1,450,403	2,923,053		1,582,947	3,222,363
Reinsurance income		44,864	85,789		36,456	73,412
Separate account income		21,463	41,544		16,492	37,742
		1,516,730	3,050,386		1,635,895	3,333,517
Insurance expenses
Claims paid		1,347,833	2,659,046		1,277,461	2,730,224
Reinsurance premium expenses(*1)		52,748	332,749		42,980	85,672
Provision for insurance liabilities(*1)(*2)		186,182	130,281		301,838	452,600
Separate account expenses		21,463	41,543		16,493	37,742
Acquisition costs		162,010	314,680		161,264	340,298
Collection expenses and discount fee		4,820	9,064		4,907	9,798
Deferred acquisition costs(-)		(97,737)	(188,055)		(97,916)	(207,122)
Amortization of deferred acquisition costs		97,911	200,625		103,790	215,263
		1,775,230	3,499,933		1,810,817	3,664,475
Net loss on insurance	W	(258,500)	(449,547)		(174,922)	(330,958)

(*1) It includes reinsurance expenses of W237,467 million and reversal of insurance liabilities of W236,434 million due to an issuance of joint reinsurance as of June 30, 2022.

(*2) Interest expenses on savings insurance contracts are included.

104

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

19.  Equity

(a)Equity as of June 30, 2022 and December 31, 2021 areas follows:

		June 30, 2022	December 31, 2021
Capital stock:
Common stock	W	2,608,176	2,608,176
Preferred stock		361,465	361,465
		2,969,641	2,969,641
Hybrid bond		3,932,822	3,334,531
Capital surplus:
Share premium		11,352,819	11,352,819
Others		742,224	742,224
		12,095,043	12,095,043
Capital adjustments		(577,977)	(664,429)
Accumulated other comprehensive income, net of tax:
Loss on financial assets at fair value through other comprehensive income		(2,794,808)	(614,872)
Gain on financial assets at fair value through profit or loss (Overlay approach)		5,822	141,821
Equity in other comprehensive income(loss) of associates		(6,993)	7,595
Foreign currency translation adjustments for foreign operations		16,770	(125,219)
Net loss from cash flow hedges		(89,836)	(26,471)
Other comprehensive loss of separate account		(128,399)	(22,850)
Remeasurement of defined benefit obligation		(150,619)	(343,124)
Changes in own credit risk on financial liabilities designated under fair value option		(5,524)	(1,816)
		(3,153,587)	(984,936)
Retained earnings		32,083,332	30,541,300
Non-controlling interest		2,349,022	2,247,272
	W	49,698,296	49,538,422

105

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

19.  Equity (continued)

(b) The details of preferred stock are as follows:

	The number of shares	Contracted dividend rate	Conversion request period(*)
Convertible preferred stock	17,482,000	4.0% per year based on issue price (non-cumulative, participating)	2020.05.01~2023.04.30

(*) Preferred stocks that have not been converted for 4 years from the issuance date and until the expiration date of the period of existence are automatically converted to common stocks at the expiration date of the period of existence.

(c) Hybrid bonds

Hybrid bonds classified as other equity instruments of June 30, 2022 and December 31, 2021 are as follows:

Issue date	Currency	Maturity date	Interest rate (%)		June 30, 2022	December 31, 2021
June 25, 2015	KRW	June 25, 2045	4.38	W	199,455	199,455
September 15, 2017	〃	Perpetual bond	3.77		134,683	134,683
September 15, 2017	〃	Perpetual bond	4.25		89,783	89,783
April 13, 2018	〃	Perpetual bond	4.08		134,678	134,678
April 13, 2018	〃	Perpetual bond	4.56		14,955	14,955
August 29, 2018	〃	Perpetual bond	4.15		398,679	398,679
June 28, 2019	〃	Perpetual bond	3.27		199,476	199,476
September 17, 2020	〃	Perpetual bond	3.12		448,699	448,699
March 16, 2021	〃	Perpetual bond	2.94		429,009	429,009
March 16, 2021	〃	Perpetual bond	3.30		169,581	169,581
January 25, 2022	〃	Perpetual bond	3.90		560,438	-
January 25, 2022	〃	Perpetual bond	4.00		37,853	-
August 13, 2018	USD	Perpetual bond	5.88		559,526	559,526
May 12, 2021	〃	Perpetual bond	2.88		556,007	556,007
				W	3,932,822	3,334,531

(*) For the six-month period ended June 30, 2022, the deduction for capital related to hybrid bonds issued is W1,709 million.

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

106

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

19.  Equity (continued)

(d) Accumulated other comprehensive income

Changes in accumulated other comprehensive income for the six-month period ended June 30, 2022 and the year ended December 31, 2021 are as follows:

		June 30, 2022
				Items that are or may be reclassified to profit or loss										Items that will not be reclassified to profit or loss								Total
		Gain (loss) on financial assets at fair value through other comprehensive income		Gain (loss) onvaluation of financial asset measured at FVTPL (overlay approach)		Equity in other comprehensive income (expense) of associates		Foreign currency translation adjustments for foreign operations		Net gain (loss) from cash flow hedges		Other comprehen-sive income of separate account		Remeasure -ments of the defined benefit plans		Equity in other comprehensive income (expense) of associates		Gain (loss) on securities at fair value through other comprehensive income		Gain (loss) on financial  liabilities measured at FVTPL attributable to changes in credit risk
Beginning balance	W	(730,295)		141,821		7,623		(125,219)		(26,471)		(22,850)		(343,124)		(28)		115,423		(1,816)		(984,936)
Change due to fair value		(3,163,414)		(191,403)		(17,572)		-		-		(145,585)		-		8		99,659		(2,568)		(3,420,875)
Reclassification:
Change due to impairment or disposal		8,263		-		-		-		-		-		-		-		-		-		8,263
Effect of hedge accounting		-		-		-		-		(242,186)		-		-		-		-		-		(242,186)
Hedging		50,957		-		-		(53,460)		117,195		-		-		-		-		-		114,692
Effects from changes in foreign exchange rate		-		-		-		200,699		-		-		-		-		728		-		201,427
Remeasurements of the defined benefit plans		-		-		-		-		-		-		264,908		-		-		-		264,908
Deferred income taxes		848,716		55,404		2,943		(5,148)		61,626		40,036		(72,065)		(2)		(27,144)		1,407		905,773
Transfer to other account		-		-		-		-		-		-		-		-		(1,919)		(2,547)		(4,466)
Non-controlling interests		4,218		-		-		(102)		-		-		(338)		-		-		-		3,778
Others		-		-		15		-		-		-		-		20		-		-		35
Ending balance	W	(2,981,555)		5,822		(6,991)		16,770		(89,836)		(128,399)		(150,619)		(2)		186,747		(5,524)		(3,153,587)

107

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

19.  Equity (continued)

(d) Accumulated other comprehensive income (continued)

Changes in accumulated other comprehensive income for the six-month period ended June 30, 2022 and the year ended December 31, 2021 are as follows (continued):

		December 31, 2021
				Items that are or may be reclassified to profit or loss										Items that will never be reclassified to profit or loss								Total
		Gain (loss) on  securities at fair value through other comprehensive income		Gain (loss) on valuation of financial asset  measured at FVTPL (overlay approach)		Equity in other comprehensive income (expense) of associates		Foreign currency translation adjustments for foreign operations		Net gain (loss) from cash flow hedges		Other comprehen-sive income (expense) of separate account		Remeasure -ments of the defined benefit plans		Equity in other comprehensive income (expense) of associates		Gain (loss) on securities at fair value through other comprehensive income		Gain (loss) on financial  liabilities measured at FVTPL attributable to changes in credit risk
Beginning balance	W	146,829		161,919		4,875		(377,061)		(48,171)		18,423		(385,780)		(26)		79,982		(5,171)		(404,181)
Change due to fair value		(1,110,290)		(31,924)		6,517		-		-		(56,484)		-		(3)		21,408		(1,526)		(1,172,302)
Reclassification:
Change due to impairment or disposal		(114,399)		-		-		-		-		-		-		-		-		-		(114,399)
Effect of hedge accounting		-		-		-		-		(209,869)		-		-		-		-		-		(209,869)
Hedging		10,627		-		-		(74,525)		239,800		-		-		-		-		-		175,902
Effects from changes in foreign exchange rate		-		-		-		333,059		-		-		-		-		673		-		333,732
Remeasurements of the defined benefit plans		-		-		-		-		-		-		59,441		-		-		-		59,441
Deferred income taxes		334,391		11,826		(3,769)		(6,226)		(8,231)		15,211		(16,164)		1		(16,061)		(1,272)		309,706
Transfer to other account		-		-		-		-		-		-		-		-		29,421		6,153		35,574
Non-controlling interests		2,547		-		-		(466)		-		-		(621)		-		-		-		1,460
Ending balance	W	(730,295)		141,821		7,623		(125,219)		(26,471)		(22,850)		(343,124)		(28)		115,423		(1,816)		(984,936)

108

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won, except per share data)

19.  Equity (continued)

(e) Regulatory reserve for loan losses

In accordance with Regulations for the Supervision of Financial Institutions, the Group reserves the difference between allowance for credit losses by IFRS and that as required by the Regulations at the account of regulatory reserve for loan losses in retained earnings.

i) Changes in regulatory reserve for loan losses including non-controlling interests as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Beginning balance	W	3,699,315	3,329,899
Planned regulatory reversal of (provision for) loan losses		(60,764)	369,416
Ending balance	W	3,638,551	3,699,315

ii) Profit attributable to equity holders of Shinhan Financial Group and earnings per share after factoring in regulatory reserve for loan losses for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022		June 30, 2021
		Three- month	Six- month	Three-month	Six- month
Profit attributable to equity holders of Shinhan Financial Group	W	1,320,429	2,720,813	1,251,841	2,443,779
Provision for (reversal of) regulatory reserve for loan losses		31,673	60,865	(71,846)	(188,794)
Profit attributable to equity holders of Shinhan Financial Group adjusted for regulatory reserve	W	1,352,102	2,781,678	1,179,995	2,254,985
Basic and diluted earnings per share adjusted for regulatory reserve in won(*)	W	2,482	5,090	2,172	4,127

(*) Dividends for hybrid bonds are deducted.

109

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won, except per share data)

19.  Equity (continued)

(f) Treasury stock

The changes in treasury stock during the six-month period ended June 30, 2022 and for the year ended December 31, 2021 is as follows:

	June 30, 2022			December 31, 2021
	The number of share		Carrying value	The number of shares		Carrying value
Beginning balance	6,352	W	227	704,796	W	28,215
Acquisition(*)	3,665,423		150,000	2,426		79
Disposal	-		-	(700,870)		(28,067)
Retirement(*)	(3,665,423)		(150,000)	-		-
Ending balance	6,352	W	227	6,352	W	227

(*) The controlling company has acquired treasury stocks for retirement for the six-month period ended June 30, 2022 and completed retirement of treasury stocks by retained earnings on April 25, 2022.

(g) Dividends

Dividends paid by the controlling company for the six-month period ended June 30, 2022 are as follows:

		Dividend base date
		March 31, 2022 (1st Quarter)
Common stock (W400 per share)	W	206,277
Convertible preferred stock (W400 per share)		6,993
	W	213,270

The annual dividends declared to be paid by the controlling company to the shareholders of the Company by the resolutions of the 21th general meeting of stockholders in respect of the year ended December 31, 2021 are as follows:

		June 30, 2022
Common stock (W1,400 per share)	W	723,230
Convertible preferred stock (W1,400 per share)		24,475
	W	747,705

110

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

20.  Net interest income

Net interest income for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022			June 30, 2021
		Three-month	Six- month		Three-month	Six- month
Interest income:
Cash and deposits at amortized cost	W	42,382	69,976		21,730	44,819
Deposit at FVTPL		260	590		307	657
Securities at FVTPL		177,204	369,628		172,637	331,075
Securities at FVOCI		285,959	536,823		215,122	429,381
Securities at amortized cost		295,416	575,868		270,489	535,615
Loans at amortized cost		3,731,153	7,104,477		2,900,898	5,730,809
Loans at FVTPL		21,273	37,212		4,667	17,689
Others		21,930	42,594		17,266	35,757
		4,575,577	8,737,168		3,603,116	7,125,802
Interest expense:
Deposits		848,241	1,574,235		506,065	1,034,157
Financial liabilities designated at FVTPL		257	257		-	-
Borrowings		182,541	310,595		68,631	145,910
Debt securities issued		404,551	777,947		341,078	687,733
Others		32,893	57,909		12,870	27,177
		1,468,483	2,720,943		928,644	1,894,977
Net interest income	W	3,107,094	6,016,225		2,674,472	5,230,825

21.  Net fees and commission income

Net fees and commission income for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022			June 30, 2021
		Three-month	Six- month		Three-month		Six- month
Fees and commission income:
Credit placement fees	W	19,595	39,154		21,317		42,246
Commission received as electronic charge receipt		36,929	73,397		38,309		75,699
Brokerage fees		91,052	192,464		146,423		323,957
Commission received as agency		32,568	66,679		37,269		74,992
Investment banking fees		69,083	165,672		49,914		77,161
Commission received in foreign exchange activities		76,522	144,891		67,757		130,810
Trust management fees		80,816	160,917		78,048		154,139
Credit card fees		337,610	636,209		325,879		589,902
Operating lease fees		111,464	218,315		86,947		167,758
Others		226,292	476,736		249,179		488,794
		1,081,931	2,174,434		1,101,042		2,125,458
Fees and commission expense:
Credit-related fee		9,121	18,423		7,852		18,245
Credit card fees		219,756	428,068		210,858		408,349
Others		157,976	289,015		159,703		294,776
		386,853	735,506		378,413		721,370
Net fees and commission income	W	695,078	1,438,928		722,629		1,404,088

111

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

22.  Reversal of (provision for) credit loss allowance

Reversal of (provision for) credit loss allowance on financial assets for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022		June 30, 2021
		Three-month	Six- month	Three-month	Six- month
Allowance provided:
Loans at amortized cost	W	(340,756)	(563,142)	(165,663)	(324,319)
Other financial assets at amortized cost		(7,066)	(16,963)	(6,388)	(23,943)
Securities at fair value through other comprehensive income		2,644	-	(1,277)	(2,002)
Unused credit line and financial guarantee		(9,494)	(22,894)	3,178	-
Securities at amortized cost		212	-	(927)	(927)
		(354,460)	(602,999)	(171,077)	(351,191)
Allowance reversed:
Securities at fair value through other comprehensive income		2,516	2,516	-	-
Securities at amortized cost		1,440	1,440	(60)	-
Unused credit line and financial guarantee		-	-	424	424
		3,956	3,956	364	424
	W	(350,504)	(599,043)	(170,713)	(350,767)

23.  General and administrative expenses

General and administrative expenses for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022				June 30, 2021
		Three-month		Six-month		Three-month		Six-month
Employee benefits:
Salaries	W	799,949		1,613,910		770,694		1,568,974
Severance benefits:		48,955		99,116		51,064		105,783
Defined contribution		9,789		20,612		9,232		19,648
Defined benefit		39,166		78,504		41,832		86,135
Termination benefits		123		764		65,186		65,825
		849,027		1,713,790		886,944		1,740,582
Entertainment		10,076		19,142		7,918		16,412
Depreciation		128,670		261,221		118,523		238,374
Amortization		43,764		83,696		35,368		75,890
Taxes and utility bills		66,796		113,166		57,327		106,997
Advertising		76,387		119,119		54,497		89,172
Research		7,059		14,020		5,827		11,590
Others		210,248		392,199		190,508		356,904
	W	1,392,027		2,716,353		1,356,912		2,635,921

112

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

24.  Share-based payments

(a) Performance shares granted as of June 30, 2022 are as follows:

	Expired	Not expired
Type	Cash-settled share-based payment
Performance conditions	Relative stock price linked (20.0%), management index (80.0%)
Exercising period	4 years from the commencement date of the year to which the grant date belongs
Estimated number of shares vested at June 30, 2022	196,034	2,418,330
Fair value per share in won(*)	W40,580, W44,222, W33,122, W37,387 for the expiration of exercising period from 2018 to 2021	W37,050

(*) Based on performance-based stock compensation, the reference stock price (the arithmetic average of the weighted average share price of transaction volume for the past two months, the previous one month, and the past one week) of four years after the commencement of the grant year is paid in cash, and the fair value of the reference stock to be paid in the future is assessed as the closing price of the settlement.

113

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

24.  Share-based payments (continued)

(b) Share-based compensation costs for the six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022
		Employees of
		The controlling company	The subsidiaries	Total
Stock options granted:(*)
7th	W	-	-	-
Performance share		2,111	16,882	18,993
	W	2,111	16,882	18,993

		June 30, 2021
		Employees of
		The controlling company	The subsidiaries	Total
Stock options granted:
7th		-	(1)	(1)
Performance share		3,416	25,929	29,345
	W	3,416	25,928	29,344

(*) As of December 31, 2021, all stock options have expired.

(c) Accrued expenses as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		Accrued expense
		Shinhan Financial Group	Subsidiaries	Total
Stock options granted:
Performance shares	W	11,697	85,287	96,984

		December 31, 2021(*)
		Accrued expense
		Shinhan Financial Group	Subsidiaries	Total
Stock options granted:
Performance shares	W	10,598	82,498	93,096

(*) As of December 31, 2021, all stock options have expired.

114

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

25.  Income tax expense

Income tax expense for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022		June 30, 2021
		Three-month	Six- month	Three-month	Six- month
Current income tax expense	W	393,128	755,528	386,106	765,596
Temporary differences		(338,826)	(625,958)	31,662	(76,515)
Income tax recognized in other comprehensive income		418,330	853,542	33,337	189,415
Income tax expenses	W	472,632	983,112	451,105	878,496
Effective tax rate		26.08%	26.26%	26.09%	26.03%

26.  Earnings per share

Basic and diluted earnings per share for the three-month six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022			June 30, 2021
		Three- month		Six- month	Three-month	Six- month
Profit attributable to equity holders of Shinhan Financial Group	W	1,320,429		2,720,813	1,251,841	2,443,779
Less:
Dividends to hybrid bond		(34,852)		(72,243)	(19,825)	(51,287)
Net profit available for common stock	W	1,285,577		2,648,570	1,232,016	2,392,492
Weighted average number of common stocks outstanding (*)		530,657,929		532,347,181	534,075,204	534,024,273
Basic and diluted earnings per share in Korean won	W	2,423		4,975	2,307	4,480

(*) The numberof basicordinarysharesoutstandingis512,934,131 sharesand theabove weighted- averagestocksare calculatedby reflecting the changes in 3,665,423 shares of treasurystocks acquired and retired for the six-month period ended June 30, 2022and 17,482,000 sharesof convertible preferredsharesissuedon May 1, 2019.

115

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

27.  Commitments and contingencies

(a) Guarantees, acceptances and credit commitments as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Guarantees and purchase agreements:
Outstanding guarantees	W	11,793,840	10,540,968
Contingent guarantees		5,473,528	4,670,771
ABS and ABCP purchase agreements		1,456,613	1,525,768
		18,723,981	16,737,507
Commitments to extend credit:
Loan commitments in won		83,024,044	81,707,963
Loan commitments in foreign currency		23,172,335	19,807,686
Other agreements (*)		95,549,513	92,338,217
		201,745,892	193,853,866
Endorsed bills:
Secured endorsed bills		6,477	8,199
Unsecured endorsed bills		11,476,659	7,683,165
		11,483,136	7,691,364
	W	231,953,009	218,282,737

(*) Unused credit commitments provided to the card customers are included, the amounts are W89,941,694 million for the six-month period ended June 30, 2022 and W86,979,545 million for the year ended December 31, 2021.

(b) Pending litigations

As of June 30, 2022, the Group is involved with 603 pending lawsuits as a defendant with total litigation fee of W547,234 million.

As of the June 30, 2022, the Group has recorded W9,772 million and W3,350 million respectively, as other provisions and insurance contract liabilities (reserve for claims) for litigations, etc., which have been decided to lose at the first trial. The outcome of the remaining litigations other than those accounted for provisions, etc. are not expected to have a material impact on the consolidated financial statements, but additional losses may result from future litigation.

(c) As a Prime Brokerage Service operator, the Group entered into a total return swap agreement (“TRS”, derivatives that exchange profits and losses from underlying assets such as stocks, bonds and funds) with a fund operated by Lime Asset Management ("Lime Fund"). Through TRS with the Group, the Lime Fund invested approximately $200 million in IIG Global Trade Finance Fund, IIG Trade Finance Fund, and IIG Trade Finance Fund-FX Hedged ("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.  

On November 12, 2021, the financial supervisory authority has finalized an institutional penalty (a six-month ban on sale of new private equity funds) imposed against the Group.

116

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

27.  Commitments and contingencies (continued)

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’. It is expected that the criminal trial will determine whether the Group is legally responsible or not. The Group has determined the present obligation that the Group may be liable for the charge of involvement in the fraud is not significant.

Considering the board resolutions and the results of the Financial Supervisory Service's dispute settlement committee, the Group has been completed or will be carried out the compensation and liquidity supply for some of the Lime Fund sales.

(d) The Group sold approximately W390.7 billion of German Heritage DLS trust products from May 2017 to December 2018. As of June 30, 2022, the repayment of W379.9 billion has been delayed. Accordingly, the supervisory authorities were conducting an inspection on the incomplete sale of trust products. The penalties imposed against the Group (Shinhan Investment Corp. having been banned from making new contracts on several specified monetary trusts for six months, etc.) were partially finalized by the Financial Services Commission(FSC) on November 12, 2021.

(e) The Group has sold Gen2 related trust instruments from May 2014 to November 2019. As of June 30, 2022, 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.

(f) The Group is responsible for the completion guarantee when the contractor fails for the completion guarantee. The Group bears the obligation to compensate the loan financial institution for damages when the Group fails for the completion guarantee. Now, Completion Guarantee Management Type Land Trust Project is currently underway. (142 cases other than the new residential and commercial apartment project in Gangnam-gu, Seoul (excluding completed business establishments)) As of June 30, 2022, the total PF loan amount of PF loan financial institutions invested in the Completion Guarantee Management Type Land Trust Project is W 4.8821 trillion. 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. As of June 30, 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 June 30, 2022. Meanwhile, the process of each business sites will be continuously monitored.

117

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

28.  Statement of cash flows

Cash and cash equivalents in the consolidated statements of cash flows as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Cash and due from banks at amortized cost	W	30,607,388	28,471,127
Adjustments:
Due from financial institutions with a maturity over   three months from date of acquisition		(1,455,467)	(1,490,600)
Restricted due from banks		(16,841,580)	(13,896,642)
	W	12,310,341	13,083,885

118

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

29.  Related parties

Intra-group balances, and income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. In accordance with K-IFRS No.1024, the Group defines the retirement benefit plans of the associates, key management and their families, the constolidation 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 associates and joint ventures, refer to ‘Note 12’.

(a). Balances with the related parties as of June 30, 2022 and December 31, 2021 are as follows:

Related party		Account		June 30, 2022		December 31, 2021
Investments in associates:
BNP Paribas Cardif Life Insurance		Other assets	W	48		61
〃		Credit card loans		103		87
〃		Deposits		11,671		14,870
〃		Provision for unused credit commitments		1		-
Partners 4th Growth Investment Fund		Deposits		257		10,096
Shinhan EZ General Insurance, Ltd(*2)		Credit card loans		-		24
〃		ACL		-		(2)
〃		Other provisions		-		4
〃		Deposits		-		1,455
Dream High Fund Ⅲ(*1)		Deposits		-		4
KDBC Midas Dong-A Snowball Venture Fund No.2		Deposits		52		350
Incorporated association Finance Saving Information Center		Deposits		9		16
Nomura investment property trust No.19		Loans		11,880		11,880
〃		Other assets		43		-
Shinan MAIN Private Mixed Asset No.3		Other assets		385		345
Korea Finance Security		Deposits		559		457
SHINHAN-CORE TREND GLOBAL FUND 1(*1)		Unearned revenue		-		17
Hermes Private Investment Equity Fund		Deposits		228		246
Korea Credit Bureau		Deposits		1		1,394
Goduck Gangil1 PFV Co., Ltd		Loans		9,375		12,000
〃		ACL		(28)		(52)
SBC PFV Co., Ltd		Deposits		21,713		33,278
Sprott Global Renewable Private Equity Fund I		Deposits		137		176
IMM Global Private Equity Fund		Loans		800		800
〃		ACL		(3)		(3)
〃		Deposits		21,031		21,543
Goduck Gangil10 PFV Co., Ltd		Loans		5,400		7,600
〃		ACL		(16)		(24)
〃		Deposits		31,691		72,740
Shinhan Global Healthcare Fund 2		Deposits		1		1
One Shinhan Global Fund 1		Unearned revenue		41		104
IMM Special Situation 1-2 PRIVATE EQUITY FUND		Deposits		196		23
EDNCENTRAL Co.,Ltd.		Loans		-		19,739
〃		Accrued income		-		9
〃		Deposits		-		1
〃		Unearned revenue		-		40
Future-Creation Neoplux Venture Capital Fund		Account receivables		3,935		3,919
Neoplux Market-Frontier Secondary Fund		Account receivables		459		954
Gyeonggi-Neoplux Superman Fund		Account receivables		940		620
Shinhan-Neoplux Energy Newbiz Fund		Account receivables		493		1,002
KTC-NP Growth Champ 2011-2 Private Equity Fund		Account receivables		4,504		4,512
Neoplux No.3 Private Equity Fund		Account receivables		1,723		662
NV Station Private Equity Fund		Deposits		29		41
Korea Digital Asset Custody		Deposits		669		526
SW-N Fund		Deposits		278		115

119

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

29.  Related parties (continued)

(a) Balances with the related parties as of June 30, 2022 and December 31, 2021 are as follows (continued):

Related party	Account		June 30, 2022		December 31, 2021
Investments in associates (continued):
Shinhan Smilegate Global PEF I	Unearned revenue	W	47		49
WaveTechnology co.Ltd	Deposits		208		99
SHINHAN-NEO Market-Frontier 2nd Fund	Account receivables		513		513
iPIXEL Co.,Ltd.	Loans		32		55
〃	Deposits		304		651
CJL No.1 Private Equity Fund	Deposits		777		779
NewWave 6th Fund	Account receivables		357		-
Nova New Technology Investment Fund No.1	Deposits		357		357
DS Power Semicon Private Equity Fund	Deposits		45		-
Genesis No.1 Private Equity Fund	Deposits		55		-
DDILVC Management Company	Deposits		880		-
Newlake Growth Capital Partners2 PEF	Deposits		736		-
Logis Valley Shinhan Management Company	Loans		43,000		-
	ACL		(29)		-
	Deposits		8,144		-
Shinhan-Albatross tech investment Fund	Deposits		2,381		-
Key management personnel and their immediate relatives:	Loans		5,994		6,149
	Assets		89,908		70,850
	Liabilities	W	102,498		159,432

(*1) Excluded from the associates due to disposal and liquidation for the six-month period ended June 30, 2022.

(*2) For the period ended June 30, 2022, it is incorporated into the consolidation target as the Group held control due to increased equity ratio and

BNP Paribas Cardif Life Insurance, Ltd has changed its name to Shinhan EZ General Insurance, Ltd.

120

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

29.  Related parties (continued)

(b) Transactions with the related parties for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

Related party	Account		June 30, 2022				June 30, 2021
			Three-month		Six- month		Three-month		Six-month
Investments in associates
BNP Paribas Cardif Life Insurance	Fees and commission income	W	496		1,052		832		1,532
〃	Interest expense		(9)		(15)		(3)		(7)
〃	General and administrative expenses		-		-		-		(1)
Shinhan Praxis K-Growth Global Private Equity Fund	Fees and commission income		-		-		89		180
Shinhan EZ General Insurance, Ltd(*3)	Fees and commission income		-		2		2		5
〃	Interest expense		-		(1)		-		-
〃	Reversal of allowance for credit losses (Allowance for credit losses)		4		5		-		-
SM New Technology Business(*1)	Fees and commission income		-		-		163		187
Partners 4th Growth Investment Fund	Interest expense		(5)		(12)		(2)		(5)
Shinhan-Albatross tech investment Fund	Fees and commission income		-		146		-		129
Shinhan-Midas Donga Secondary Fund	Fees and commission income		-		48		-		62
Shinhan-Nvestor Liquidity Solution Fund	Fees and commission income		-		181		91		181
Shinhan-PS Investment Fund No.1	Fees and commission income		5		10		5		10
Nomura-Rifa Private Real Estate Investment Trust 19	Interest income		130		259		-		-
Shinan MAIN Private Mixed Asset No.3	Fees and commission income		385		723		222		333
KOREA FINANCE SECURITY	Fees and commission income		1		3		2		5
ShinHan – Soo Young Entrepreneur Investment Fund No.1	Fees and commission income		-		140		-		67
Shinhan-Rhinos 1 Fund(*2)	Fees and commission income		-		61		-		47
SHINHAN-CORE TREND GLOBAL FUND1(*2)	Fees and commission income		-		-		27		52
Kiwoom-Shinhan Innovation Fund I	Fees and commission income		59		118		59		119
One Shinhan Global Fund 1	Fees and commission income		32		63		-		74
FuturePlay-Shinhan TechInnovation Fund 1	Fees and commission income		57		113		113		127
Korea Credit Bureau	Fees and commission income		4		7		3		6
〃	Interest expense		-		-		(4)		(9)
Goduck Gangil1 PFV Co., Ltd	Interest income		93		213		232		459
〃	Reversal of allowance for credit losses (Allowance for credit losses)		13		24		-		-
SBC PFV Co., Ltd	Interest expense		(6)		(13)		(3)		(4)
IMM Global Private Equity Fund	Interest income		7		13		6		12
〃	Interest expense		(67)		(115)		(4)		(9)
Goduck Gangil10 PFV Co., Ltd	Interest income		45		101		72		141
〃	Interest expense		(169)		(317)		(1)		(1)
〃	Reversal of allowance for credit losses (Allowance for credit losses)		5		8		24		24
COSPEC BIM tech(*1)	Interest income		-		-		-		41
〃	Reversal of allowance for credit losses (Allowance for credit losses)		-		-		-		95
Korea Omega-Shinhan Project Fund I	Fees and commission income		45		89		45		89
New Green Shinhan Mezzanine Fund(*1)	Fees and commission income		-		-		20		20
Sparklabs-Shinhan Opportunity Fund 1	Fees and commission income		50		100		100		100
EDNCENTRAL Co.,Ltd.	Interest income		(3)		267		279		555
〃	Fees and commission income		3,172		3,212		134		267
Kakao-Shinhan 1st TNYT Fund	Fees and commission income		97		193		193		193
KoFC-Neoplux R&D-Biz Creation 2013-1 Venture Capital Fund(*1)	Interest income		-		-		1		1
〃	Fees and commission income		-		-		52		116
Future-Creation Neoplux Venture Capital Fund	Interest income		-		-		13		14
〃	Fees and commission income		-		54		57		153
Neoplux Market-Frontier Secondary Fund	Fees and commission income		228		459		238		484
Gyeonggi-Neoplux Superman Fund	Fees and commission income		159		319		146		296
Shinhan-Neoplux Energy Newbiz Fund	Fees and commission income		247		493		257		498
NewWave 6th Fund	Fees and commission income		247		523		302		605

121

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Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

29.  Related parties (continued)

(b) Transactions with the related parties for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows (continued):

Related party	Account		June 30, 2022				June 30, 2021
			Three-month		Six-month		Three-month		Six-month
Investments in associates
SHINHAN-NEO Core Industrial Technology Fund	Fees and commission income	W	125		249		125		249
KTC-NP Growth Champ 2011-2 Private Equity Fund	Interest income		-		-		8		12
Neoplux No.3 Private Equity Fund	Fees and commission income		811		1,723		765		1,511
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45	Fees and commission income		-		-		23		46
Shinhan Smilegate Global PEF I	Fees and commission income		-		49		61		66
SHINHAN-NEO Market-Frontier 2nd Fund	Fees and commission income		512		1,025		512		1,001
Korea Digital Asset Custody	Interest expense		-		-		(1)		(1)
SWK-Shinhan New Technology Investment Fund 1st	Fees and commission income		31		46		11		11
Ulmus SHC innovation investment fund	Fees and commission income		23		46		16		16
iPIXEL Co.,Ltd.	Interest income		1		1		-		-
CJL No.1 Private Equity Fund	Interest expense		(1)		(2)		-		-
Kiwoom-Shinhan Innovation Fund 2	Fees and commission income		70		139		-		-
ETRI Holdings-Shinhan 1st Unicorn Fund	Fees and commission income		-		25		-		-
Shinhan VC tomorrow venture fund 1	Fees and commission income		850		1,700		-		-
JS Shinhan Private Equity Fund	Fees and commission income		(148)		298		-		-
Stonebridge-Shinhan Unicorn Secondary Fund	Fees and commission income		148		295		-		-
Shinhan-Kunicorn first Fund	Fees and commission income		-		261		-		-
Shinhan-Quantum Startup Fund	Fees and commission income		39		49		-		-
Shinhan Simone Fund Ⅰ	Fees and commission income		-		78		-		-
ShinhanFitrin 1st Technology Business Investment Association	Fees and commission income		15		15		-		-
DDI LVC Master Real Estate Investment Trust Co., Ltd.	Interest expense		(1)		(1)		-		-
Logisvalley Shinhan REIT Co.,Ltd. 〃	Interest income		16		16		-		-
	Reversal of allowance for credit losses (Allowance for credit losses)		(29)		(29)		-		-
Shinhan-Albatross tech investment Fund	Interest expense		(3)		(3)		-		-
Shinhan-Dev healthcare Fund I	Fees and commission income		28		28		-		-
Shinhan-Cognitive Start-up Fund L.P.	Fees and commission income		192		192		-		-
Key management personnel and their immediate relatives	Interest income		45		87		26		56
		W	8,046		14,813		5,308		10,210

(*1) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2021.

(*2) Excluded from the associates due to disposal and liquidation for the six-month period ended June 30, 2022.

(*3) For the period ended June 30, 2022, it is incorporated into the consolidation target as the Group held control due to increased equity ratio and

BNP Paribas Cardif Life Insurance, Ltd has changed its name to Shinhan EZ General Insurance, Ltd.

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SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

29.  Related parties (continued)

(c) Key management personnel compensation

Key management personnel compensation for the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:

		June 30, 2022			June 30, 2021
		Three- month		Six-month	Three-month	Six-month
Short-term employee benefits	W	4,513		13,281	4,688	10,386
Severance benefits		167		375	105	354
Share-based payment transactions(*)		1,443		6,066	4,834	9,680
	W	6,123		19,722	9,627	20,420

(*) The expenses of share-based payment transactions are the remuneration expenses during the vesting period.

(d) The guarantees and purchase agreement provided between the related parties as of June 30, 2022 and December 31, 2021 are as follows:

			Amount of guarantees
Guarantor	Guaranteed Parties		June 30, 2022	December 31, 2021		Account
Shinhan Bank	BNP Paribas Cardif Life Insurance	W	10,000	10,000		Unused loan limit
〃	Key Management Personnel		1,978	1,607		Unused loan limit
Shinhan Card	BNP Paribas Cardif Life Insurance		897	913		Unused credit line
〃	Shinhan EZ General Insurance(*)		-	226		Unused credit line
The Group	Structured entities		177,647	207,078		Purchase agreement
		W	190,522	219,824

(*) For the period ended June 30, 2022, it is incorporated into the consolidation target as the Group held control due to increased

equity ratio and BNP Paribas Cardif Life Insurance, Ltd has changed its name to Shinhan EZ General Insurance, Ltd.

(e) Details of collaterals provided by the related parties as of June 30, 2022 and December 31, 2021 are as follows:

				Amount of assets pledged
Provided to	Provided by	Pledged assets		June 30, 2022	December 31, 2021
Shinhan Bank	BNP Paribas Cardif Life Insurance	Government bonds	W	13,600	12,000
	iPIXEL Co.,Ltd.	Electronic credit guarantee		190	190
	Logis Valley Shinhan Management Company	Collateral trust		51,600	-
	Key Management Personnel 〃 〃	Properties		7,854	10,012
		Deposits and etc.		1,318	2,011
		Guarantee		2,575	375
				11,747	12,398
			W	77,137	24,588

123

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

29.  Related parties (continued)

(f) Details of significant loan transactions with related parties for the six-month period ended June 30, 2022 and for the year ended December 31, 2021 are as follows:

			June 30, 2022
Classification	Company		Beginning		Loan		Recover		Others(*)		Ending
Investments in associates Key Management Personnel	Nomura investment property trust No.19	W	11,880		-		-		-		11,880
	EDNCENTRAL Co.,Ltd.		19,739		-		(20,000)		261		-
	Goduck Gangil1 PFV Co., Ltd.		12,000		-		(2,625)		-		9,375
	Goduck Gangil10 PFV Co., Ltd.		7,600		-		(2,200)		-		5,400
	IMM Global Private Equity Fund		800		-		-		-		800
	iPIXEL Co.,Ltd.		55		-		-		(23)		32
	Logisvalley Shinhan REIT Co.,Ltd.		-		43,000		-		-		43,000
			6,150		3,080		(3,234)		-		5,996
	Total	W	58,224		46,080		(28,059)		238		76,483

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

			December 31, 2021
Classification	Company		Beginning	Loan	Recover	Others(*)	Ending
Investments in associates Key Management Personnel	Nomura investment property trust No.19	W	11,973	-	-	(93)	11,880
	IGIS PRIVATE REAL ESTATE TRUST NO.331		9,688	-	(9,769)	81	-
	EDNCENTRAL Co.,Ltd.		19,381	-	-	358	19,739
	Goduck Gangil1 PFV Co., Ltd.		24,000	-	(12,000)	-	12,000
	Goduck Gangil10 PFV Co., Ltd.		9,400	600	(2,400)	-	7,600
	IMM Global Private Equity Fund		800	-	-	-	800
	COSPEC BIM tech		151	-	-	(151)	-
	iPIXEL Co.,Ltd.		-	71	-	(16)	55
			5,146	5,315	(4,311)	-	6,150
Total		W	80,539	5,986	(28,480)	179	58,224

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

124

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

30.  Interests in unconsolidated structured entities

(a)The nature and extent of interests in unconsolidated structured entities

The Group involved in assets-backed securitization, structured financing, beneficiary certificates (primarily investment funds) and other structured entities and characteristics of these structured entities are as follows:

	Description
Assets-backed securitization	Securitization vehicles are established to buy assets from originators and issue asset-backed securities in order to facilitate the originators’ funding activities and enhance their financial soundness. The Group is involved in the securitization vehicles by purchasing (or committing to purchase) the asset-backed securities issued and/or providing other forms of credit enhancement. The Group does not consolidate a securitization vehicle if (i) the Group is unable to make or approve decisions as to the modification of the terms and conditions of the securities issued by such vehicle or disposal of such vehicles’ assets, (ii) (even if the Group is so able) if the Group does not have the exclusive or primary power to do so, or (iii) if the Group does not have exposure, or right, to a significant amount of variable returns from such entity due to the purchase (or commitment to purchase) of asset-backed securities so issued or subordinated obligations or by providing other forms of credit support.
Structured financing	Structured entities for project financing are established to raise funds and invest in a specific project such as M&A (mergers and acquisitions), BTL (build-transfer-lease), shipping finance, etc. The Group is involved in the structured entities by originating loans, investing in equity, or providing credit enhancement.
Investment fund	Investment fund means an investment trust, a PEF (private equity fund) or a partnership which invests in a group of assets such as stocks or bonds by issuing a type of beneficiary certificates to raise funds from the general public and distributes its income and capital gains to their investors. The Group manages assets by investing in shares of investment fund or playing a role of an operator or a GP (general partner) of investment fund, on behalf of other investors.

125

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

30.  Interests in unconsolidated structured entities (continued)

(a) The nature and extent of interests in unconsolidated structured entities(continued)

The size of unconsolidated structured entities as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022	December 31, 2021
Total assets:
Asset-backed securitization	W	245,544,075	248,200,446
Structured financing		290,037,252	255,854,384
Investment fund		306,306,606	301,241,508
	W	841,887,933	805,296,338

(b) Nature of risks

i) The carrying values of the assets and liabilities relating to its interests in unconsolidated structured entities as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		Assets-backed securitization	Structured financing	Investment fund	Total
Assets under consolidated financial statements:
Loans measured at fair value through profit or loss	W	20,037	703,782	500	724,319
Loan at amortized cost		814,139	15,389,144	248,454	16,451,737
Securities at fair value through profit or loss		4,025,103	249,562	14,111,956	18,386,621
Derivative assets		3,006	-	-	3,006
Securities at fair value through other comprehensive income		2,064,210	175,691	-	2,239,901
Securities at amortized cost		6,956,474	-	-	6,956,474
Other assets		58	46,004	48	46,110
	W	13,883,027	16,564,183	14,360,958	44,808,168
Liabilities under consolidated financial statements:
Derivate liabilities	W	27,547	296	-	27,843
Other liabilities		340	22,202	-	22,542
	W	27,887	22,498	-	50,385

126

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

30.  Interests in unconsolidated structured entities(continued)

(b) Nature of risks (continued)

		December 31, 2021
		Assets-backed securitization		Structured financing		Investment fund		Total
Assets under consolidated financial statements:
Loans measured at fair value through profit or loss	W	16,352		156,630		42,231		215,213
Loan at amortized cost		731,184		13,548,490		155,572		14,435,246
Securities at fair value through profit or loss		3,752,394		235,238		14,014,493		18,002,125
Derivative assets		4,343		16,560		-		20,903
Securities at fair value through other comprehensive income		2,510,057		215,237		-		2,725,294
Securities at amortized cost		6,493,106		-		-		6,493,106
Other assets		138		17,280		177		17,595
	W	13,507,574		14,189,435		14,212,473		41,909,482
Liabilities under consolidated financial statements:
Derivate liabilities	W	3,817		48		-		3,865
Other liabilities		103		21,683		-		21,786
	W	3,920		21,731		-		25,651

127

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

30.  Interests in unconsolidated structured entities (continued)

(b) Nature of risks (continued)

ii) The maximum risk exposure of the Group relating to its interests in unconsolidated structured entities as of June 30, 2022 and December 31, 2021 are as follows:

		June 30, 2022
		Assets-backed securitization	Structured financing	Investment fund	Total
Assets held	W	13,883,027	16,564,183	14,360,958	44,808,168
ABS and ABCP purchase agreements		942,017	55,658	1,776,303	2,773,978
Loan commitments		478,392	1,206,817	-	1,685,209
Guarantees		21,200	-	-	21,200
Others		60	141,060	-	141,120
	W	15,324,696	17,967,718	16,137,261	49,429,675

		December 31, 2021
		Assets-backed securitization		Structured financing		Investment fund		Total
Assets held	W	13,507,574		14,189,435		14,212,473		41,909,482
ABS and ABCP purchase agreements		895,273		2,210		2,703,353		3,600,836
Loan commitments		439,843		984,082		6,900		1,430,825
Guarantees		21,200		105,550		-		126,750
Others		-		150,579		-		150,579
	W	14,863,890		15,431,856		16,922,726		47,218,472

128

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

31. Business combination

(a) Shinhan EZ General Insurance, Ltd

On June 30, 2022, the Group obtained control by acquiring 94.54% (The acquisition price of W41 billion) of the total issued shares of Shinhan EZ General Insurance, Ltd (formerly, BNP Paribas Cardif Life Insurance Ltd.) after the Financial Services Commission approved the incorporation of subsidiary on June 9, 2022. The main reason for business combination is to secure new business opportunities in the insurance finance area and to achieve synergy between existing businesses. Meanwhile, the fair value assessment of assets and liabilities acquired by the acquisition is in progress as of June 30, 2022 and the amount of goodwill considering the assets, liabilities and conditional considerations may change in the future.

(b) The merger of Shinhan Asset Management Co., Ltd. and Shinhan Alternative Investment Management Inc.

Shinhan Asset Management Co., Ltd. and Shinhan Alternative Investment Management Inc. have merged on January 5, 2022 to form a holding company named Shinhan Asset Management Co., Ltd. As a result of the merger, the common shareholders as of immediately prior to the merger of Shinhan Alternative Investment Management Inc. (the extinct corporation) are entitled to receive 0.4430946 share of Shinhan Asset Management Co., Ltd. (the surviving corporation)’s common share (W 5,000 per share) per common share of Shinhan Alternative Investment Management Inc. There is no further transfer of any such shares except in accordance with the exchange ratio agreed upon by both parties under the merger agreement addressed above.

32. Events after reporting period

(a) Quarterly dividend resolution

The Company has decided to pay a quarterly dividend of W400 per share for common stock and convertible preferred stock by a resolution of the Board of Directors on August 12, 2022. The total amount of dividends is W212,164 million, and the dividend base date is June 30, 2022

(b) The sale of the headquarters building of Shinhan Financial Investment Corp.

In accordance with the resolution of the Board of Directors on May 2, 2022, the Group selected a preferred bidder and approved the signing of a memorandum of understanding regarding the sale of Shinhan Investment Corp's headquarters building and approved the sale of the headquarters building on July 6, 2022. Accordingly, the Group classified tangible assets and investment real estate and related liabilities related to the headquarters building as non-current assets and liabilities available for sale. On July 15, 2022, the Group signed a contract to sell the headquarters building (sold amount of W639.5 billion), and the sale of the headquarters building was completed on August 5, 2022.

129

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

The rapid spread of the COVID-19 is negatively affecting the global economy. The Group uses forward-looking information to estimate expected credit losses in accordance with IFRS No.1109 ‘Financial Instruments’. Accordingly, the default rate applied in estimating allowance for expected credit loss for the period ended June 30, 2022 was re-estimated using changed forward-looking information on Corporate bond’s rate of return, GDP growth rate and Consumer price fluctuation rate, which were major variables for calculating the default rate. As of June 30, 2022, the economic environment has remained uncertain. Expected credit losses may change depending on the end of the COVID-19 and the pace of economic recovery. The Group will continue to monitor the economic effects of the COVID-19 disease.

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

(a) Shinhan Bank

		June 30, 2022
		Airlift passenger	Lodging	Oil/petroleum refinery	Art-related	Movie theater	Clothing manufacturing	Travel	Total
Loans at amortized cost	W	165,633	3,240,175	1,071,843	215,166	63,544	2,277,546	68,108	7,102,015
Securities at fair value through profit or loss		-	-	35,099	-	-	-	-	35,099
Securities at fair value through other comprehensive income		124,122	18,559	245,620	-	7,767	11,601	-	407,669
Off-balance accounts		386,651	323,287	2,997,078	8,045	74,817	998,120	32,911	4,820,909
	W	676,406	3,582,021	4,349,640	223,211	146,128	3,287,267	101,019	12,365,692

		December 31, 2021
		Airlift passenger	Lodging	Oil/petroleum refinery	Art-related	Movie theater	Clothing manufacturing	Travel	Total
Loans at amortized cost	W	164,904	3,314,684	937,385	219,859	86,241	2,082,545	92,152	6,897,770
Securities at fair value through profit or loss		-	-	29,911	-	-	-	2,737	32,648
Securities at fair value through other comprehensive income		114,158	18,142	264,343	-	7,123	10,678	-	414,444
Off-balance accounts		364,351	323,638	2,650,311	20,196	91,622	982,026	37,941	4,470,085
	W	643,413	3,656,464	3,881,950	240,055	184,986	3,075,249	132,830	11,814,947

130

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

(b) Shinhan Card Co., Ltd.

		June 30, 2022
		Retails
		Credit sales	Short term card loan		Long term card loan	Total
Loans at amortized cost	W	383,717	148,370		406,663	938,750
Total Exposure		830,504		-		830,504
		December 31, 2021
		Retails
		Credit sales	Short term card loan		Long term card loan	Total
Loans at amortized cost	W	371,197	152,838		387,318	911,353
Total Exposure		814,598		-		814,598

(c) Jeju Bank

		June 30, 2022
		Airlift passenger	Lodging	Art-related	Movie theater	Leisure related service industry	Bus business	Bath business	Youth training facilities business	Total
Loans at amortized cost	W	-	303,243	4,944	226	10,423	8,265	17,015	5,451	349,567
Off-balance accounts		4	6,487	176	2	817	265	454	4	8,209
	W	4	309,730	5,120	228	11,240	8,530	17,469	5,455	357,776

		December 31, 2021
		Airlift passenger	Lodging	Art-related	Movie theater	Leisure related service industry	Bus business	Bath business	Youth training facilities business	Total
Loans at amortized cost	W	-	295,664	4,161	596	25,432	7,535	17,089	5,466	355,943
Off-balance accounts		4	5,439	161	4	991	197	538	6	7,340
	W	4	301,103	4,322	600	26,423	7,732	17,627	5,472	363,283

131

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

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

As of June 30, 2022 and December 31, 2021, the exposures of the loans applied for moratorium of interest payments and moratorium of repayment in installments by Shinhan Bank and Jeju Bank are as follows:

(a) Shinhan Bank

		June 30, 2022	December 31, 2021
Moratorium of interest payments	W	200,137	224,449
Moratorium of repayment in installments		1,264,678	1,342,366
Moratorium of interest payments and moratorium of repayment in installments		76,595	65,773
	W	1,541,410	1,632,588

(b) Jeju Bank

		June 30, 2022	December 31, 2021
Moratorium of interest payments	W	-	348
Moratorium of repayment in installments		314,068	276,193
	W	314,068	276,541

132

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

34.  LIBOR Interest rates

The effective interest rate, not the carrying value, is adjusted when replacing the interest rate index of a financial instrument measured at amortized cost in relation to the reform of the interest rate index. It includes exceptions, such as allowing hedge accounting to continue uninterrupted even if an interest rate indicator replacement occurs in a hedging relationship. Regarding the suspension of LIBOR interest rate calculation, the financial instruments that have not been converted to replaced interest rate benchmark among the LIBOR interest rates as of June 30, 2022 and December 31, 2021 are as follows:

(a) Non-derivative financial assets

		June 30, 2022
		Carrying Value
		USD LIBOR(*2)		JPY LIBOR		EUR LIBOR		Other LIBORs
Due from banks and loans at amortized cost:
Loans	W	2,958,623		-		-		-
Securities at fair value through other comprehensive income:
Financial institution bonds	W	204,748		-		-		-
Corporate bonds and others		295,199		-		-		-
	W	499,947		-		-		-
Securities at amortized cost : Corporate bonds		242,739		-		-		-
Commitments and financial guarantee contracts(*1)	W	220,667		-		-		-

(*1) Commitments and financial guarantee contracts are at nominal value.

(*2) The instruments that will be matured before the end of June 30, 2023, when USD LIBOR interest rate calculation is discontinued, are excluded.

		December 31, 2021
		Carrying Value
		USD LIBOR(*2)		JPY LIBOR		EUR LIBOR		Other LIBORs
Due from banks and loans at amortized cost:
Loans	W	2,768,972		207,660		49,642		122,104
Securities at fair value through other comprehensive income:
Financial institution bonds	W	167,167		-		-		-
Corporate bonds and others		281,949		-		-		-
	W	449,116		-		-		-
Commitments and financial guarantee contracts(*1)	W	280,224		39,148		56,552		13,853

(*1) Commitments and financial guarantee contracts are at nominal value.

(*2) The instruments that will be matured before the end of June 30, 2023, when USD LIBOR interest rate calculation is discontinued, are excluded.

(b) Non-derivative financial liabilities

		June 30, 2022
		Carrying Value
		USD LIBOR(*)	JPY LIBOR	EUR LIBOR	Other LIBORs
Financial liabilities at amortized cost:
Deposits	W	200,000	-	-	-
Borrowings		51,716	-	-	-
Debt securities issued		1,376,545	-	-	-
	W	1,628,261	-	-	-

(*) The instruments that will be matured before the end of June 30, 2023, when USD LIBOR interest rate calculation is discontinued, are excluded.

133

SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2022 and 2021(Unaudited), and December 31, 2021

(In millions of won)

34.  LIBOR Interest rates (continued)

(b) Non-derivative financial liabilities (continued)

		December 31, 2021
		Carrying Value
		USD LIBOR(*)	JPY LIBOR	EUR LIBOR	Other LIBORs
Financial liabilities at amortized cost:
Deposits	W	200,000	-	-	-
Borrowings		347,420	-	-	-
Debt securities issued		986,871	-	-	-
	W	1,534,291	-	-	-

(*) The instruments that will be matured before the end of June 30, 2023, when USD LIBOR interest rate calculation is discontinued, are excluded..

(c) Derivatives

		June 30, 2022
		Value of Open Interest
		USD LIBOR(*)	JPY LIBOR	EUR LIBOR	Other LIBORs
Held for trading using:
Interest rates	W	11,734,000	-	-	-
Currency		12,028,181	-	-	-
Stocks		190,430	-	-	-
Credits		1,209	-	-	-
Others		413,728	-	-	-
	W	24,367,548	-	-	-
Held for hedging:
Interest rates		4,317,934	-	-	-
Currency		263,752	-	-	-
	W	4,581,686	-	-	-

(*) The instruments that will be matured before the end of June 30, 2023, when USD LIBOR interest rate calculation is discontinued, are excluded.

		December 31, 2021
		Value of Open Interest
		USD LIBOR(*)	JPY LIBOR	EUR LIBOR	Other LIBORs
Held for trading using:
Interest rates	W	10,772,390	-	-	-
Currency		10,900,844	-	-	-
Stocks		268,243	-	-	-
Credits		1,108	-	-	-
Others		379,360	-	-	-
	W	22,321,945	-	-	-
Held for hedging:
Interest rates		4,150,155	-	-	-
Currency		278,705	-	-	-
	W	4,428,860	-	-	-

(*) The instruments that will be matured before the end of June 30, 2023, when USD LIBOR interest rate calculation is discontinued, are excluded.

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