Post-Employment Benefits

12 Months Ended

Dec. 31, 2025

13.

Post-Employment Benefits

(a)

Defined benefit plans

The Parent Company and certain subsidiaries’ defined benefit plans provide a lump-sum payment to an employee based on final salary rates and length of service at the time the employee leaves the Parent Company or certain subsidiaries.

The defined benefit plans expose the Group to actuarial risks, such as the risk associated with expected periods of service, interest rate risk, market (investment) risk, and others.

13.

Post-Employment Benefits, Continued

(a)

Defined benefit plans, Continued

Details of net defined benefit liabilities (defined benefit assets) recognized as of December 31, 2024 and 2025 are as follows:


(In millions of won)	December 31, 2024			December 31, 2025
Present value of defined benefit obligations	W	1,444,252			1,276,310
Fair value of plan assets		(1,603,911	)		(1,473,736	)
Total	W	(159,659	)		(197,426	)
Defined benefit liabilities, net	W	1,093			1,109
Defined benefit assets, net	W	(160,752	)		(198,535	)

ii)

Changes in the present value of the defined benefit obligations for the years ended December 31, 2024 and 2025 are as follows:


(In millions of won)	2024			2025
Defined benefit obligations at January 1	W	1,491,146			1,444,252
Current service cost		148,868			146,650
Interest cost		67,426			55,318
Remeasurements (before tax)		142,422			(82,071	)
Benefit payments		(399,549	)		(284,794	)
Net transfers from (to) related parties		(5,975	)		(3,036	)
Others		(86	)		(9	)
Defined benefit obligations at December 31	W	1,444,252			1,276,310

Weighted average remaining maturity of defined benefit obligations as of December 31, 2025 is 7.62 years (December 31, 2024 : 9.98 years).

iii)

Changes in fair value of plan assets for the years ended December 31, 2024 and 2025 are as follows:


(In millions of won)	2024			2025
Fair value of plan assets at January 1	W	1,897,025			1,603,911
Interest income		86,280			60,768
Remeasurements (before tax)		(11,781	)		(894	)
Contributions by employer directly to plan assets		1,499			98,705
Benefit payments		(369,112	)		(288,754	)
Fair value of plan assets at December 31	W	1,603,911			1,473,736

The Group is considering the amount of recent contributions and the size of plan assets when estimating the contributions expected to be paid in the fiscal year commencing after the end of the reporting period.

iv)

Details of plan assets as of December 31, 2024 and 2025 are as follows:


(In millions of won)	December 31, 2024		December 31, 2025
Time deposits in banks	W	1,603,911		1,473,736

13.

Post-Employment Benefits, Continued

(a)

Defined benefit plans, Continued

As of December 31, 2025, the Group maintains the plan assets with Shinhan Bank, KEB Hana Bank and others.

Details of expenses related to defined benefit plans recognized in profit or loss for the years ended December 31, 2023, 2024 and 2025 are as follows:


(In millions of won)	2023			2024			2025
Current service cost	W	173,879			148,868			146,650
Net interest cost		(23,942	)		(18,854	)		(5,450	)
Total(*)	W	149,937			130,014			141,200

(*) The total cost related to the defined benefit plans includes capitalized amounts of W10,885 million (2023: W15,085 million, 2024: W9,885 million).

Details of expenses are recognized in the consolidated statements of comprehensive income (loss) as follows:


(In millions of won)	2023		2024		2025
Cost of sales	W	99,141		89,052		94,756
Selling expenses		7,138		6,201		6,988
Administrative expenses		16,865		14,271		15,624
Research and development expenses		11,708		10,605		12,947
Total(*)	W	134,852		120,129		130,315

(*) The total cost recognized in the consolidated statements of comprehensive income (loss) related to the defined benefit

plan excludes capitalized amounts of W10,885 million (2023: W15,085 million, 2024: W9,885 million).

vi)

Details of remeasurements of net defined benefit liabilities (assets) included in other comprehensive income (loss) for the years ended December 31, 2023, 2024 and 2025 are as follows:


(In millions of won)	2023			2024			2025
Balance at January 1	W	(2,900	)		47,087			(84,833	)
Remeasurements
Actuarial profit or loss arising from:
Experience adjustment		66,461			(21,525	)		(5,600	)
Demographic assumptions		(85	)		7,487			(12,692	)
Financial assumptions		(871	)		(128,384	)		100,363
Return on plan assets		(870	)		(11,781	)		(894	)
Group’s share of associates regarding remeasurements		170			(85	)		—
Subtotal	W	64,805			(154,288	)		81,177
Income tax	W	(14,818	)		22,368			(7,065	)
Balance at December 31	W	47,087			(84,833	)		(10,721	)

13.

Post-Employment Benefits, Continued

(a)

Defined benefit plans, Continued

vii)

Details of principal actuarial assumptions as of December 31, 2024 and 2025 are as follows:


	December 31, 2024			December 31, 2025
Expected rate of salary increase		4.0	%		4.0	%
Discount rate for defined benefit obligations(*)		3.9	%		4.7	%

(*) For the year ended December 31, 2025, the Group changed the methodology used to estimate the discount rate applied to measure the defined benefit obligation. The Group determined that this methodology results in a more reasonable estimate of the assumption. As a result of this change in accounting estimate, the defined benefit obligation decreased by W83,842 million, and retained earnings increased by W76,545 million.

viii)

Reasonably possible changes to respective relevant actuarial assumptions would have affected the defined benefit obligations by the following amounts as of December 31, 2025:


	Defined benefit obligations
(In millions of won)	1% increase			1% decrease
Discount rate for defined benefit obligations	W	(88,618	)		100,158
Expected rate of salary increase		104,279			(93,567	)

(b)

Defined contribution plans

The amount recognized as an expense in relation to the defined contribution plans for the year ended December 31, 2025 is W33,253 million (2023: W8,534 million, 2024: W19,057 million).