Edgar Filing: SHINHAN FINANCIAL GROUP CO LTD

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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the Month of August 2006

SHINHAN FINANCIAL GROUP CO., LTD.

(Translation of registrant’s name into English)

120, 2-Ga, Taepyung-Ro, Jung-Gu, Seoul 100-102, Korea
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .

Summary of 2006 1H Business Report

On August 14, 2006, Shinhan Financial Group (“SFG”) filed the 2006 1H business report (the “Business Report”) with the Financial Supervisory Service of the Republic of Korea (“Korea”) pursuant to the Securities and Exchange Act of Korea. This is the summary of the Business Report translated into English. Non-material or previously disclosed information are omitted or abridged.

The financial information in this report has been prepared in accordance with accounting principles generally accepted in Korea.


Table of Contents

1. Introduction of the Group
2. Business Results
3. Independent Accountant
4. Directors, Executive Officers and Employees
5. Activities of Board of Directors and Sub-committees
6. Market Price Information of Our Common Shares and ADRs
7. Related Party Transactions

Exhibit 99 Independent Accountant’s Review Report (Non Consolidated Financial Statements) of Shinhan Financial Group as of June 30, 2006.

1. Introduction of the Group

Company History in 2006 1H

		▪	April 1, 2006

			The integrated Shinhan Bank was launched and the credit card business of Chohung Bank was spun-off and merged into Shinhan Card

		▪	April 11, 2006

			SFG’s largest shareholder was changed from KDIC to BNP Paribas Group (currently owning 33,682,104 common shares, 9.38% of total common shares)

Principal Subsidiaries under Korean Law as of June 30, 2006

Direct Subsidiaries


Subsidiaries	Ownership by SFG
Shinhan Bank ¹⁾		100.0	%
Good Morning Shinhan Securities		100.0	%
Shinhan Life Insurance		100.0	%
Shinhan Card		100.0	%
Shinhan Capital		100.0	%
Shinhan BNP Paribas ITMC		50.0	%
Jeju Bank		62.4	%
SH&C Life Insurance		50.0	%
Shinhan Macquarie Financial Advisory		51.0	%
Shinhan Credit Information		100.0	%
Shinhan Private Equity		100.0	%


1)		As of April 1, 2006, Chohung Bank merged with Shinhan Bank, and the name of the remaining integrated bank is ‘Shinhan Bank.’

Indirect subsidiaries held through direct subsidiaries

(As of June 30, 2006)


		Ownership by
Direct Subsidiaries	Indirect Subsidiaries	the Parent
Shinhan Bank	Shinhan Data System		100.0	%
	Shinhan Finance Ltd. (Hong Kong)		100.0	%
	SH Asset Management Co. Ltd ¹⁾		79.8	%
	Shinhan Asia Limited ¹⁾		100.0	%
	Shinhan Bank America ¹⁾		100.0	%
	Shinhan Bank Europe Gmbh ¹⁾		100.0	%
	Shinhan Vina Bank ¹⁾		50.0	%
	CHB Valuemeet 2001 year 1^st Securitization		50.0	%
	CHB Valuemeet 2001 year 2^nd Securitization		50.0	%
	CHB Valuemeet 2002 year 1^st Securitization		50.0	%
Good Morning	Good Morning Shinhan Securities Europe		100.0	%
Shinhan Securities	Good Morning Shinhan Securities USA		100.0	%
Shinhan Private Equity	Shinhan NPS Private Equity Fund 1^st		5.0	% ²⁾


1)		Names of subsidiaries previously owned by Chohung Bank were changed accordingly after the integration with Shinhan Bank.

2)		Shinhan Financial Group currently owns 36.7% of Shinhan NPS Private Equity Fund 1^st.

Number of Shares by type

The table below shows the number of issued and outstanding shares of the Group as of June 30, 2006


			Total amount of
Types of Shares	Number of Shares		par value (KRW)
Common Shares		359,207,313		1,796,036,565,000
Redeemable Preferred Shares		52,583,961		262,919,805,000
Redeemable Convertible Preferred Shares		22,360,301		111,801,505,000
Total		434,151,575		2,170,757,875,000

Employee Stock Ownership Plan (ESOP)

(1) Contribution to ESOA (Employee Stock Ownership Association)


		Contribution
Contribution from	Contribution Date	Amount		Contributor	Use of money
		(KRW)
	Feb. 28, 2006		542,407,000	Shinhan Card	Stock Purchase
	March 3, 2006		802,088,300	Shinhan Capital	Stock Purchase
Company	March 6, 2006		10,641,000,000	Shinhan Bank	Stock Purchase
	March 14, 2006		212,552,860	SFG	Stock Purchase
	April 26, 2006		43,240,950	Shinhan Bank	Operating Expenses
Sub-total			12,241,289,110	—
Employees	—		—	—
Sub-total			—	—
Total			12,241,289,110	—

(2) Changes in ESOA Share Ownership ¹⁾

(Unit: shares)


		Beginning
	Share Type	Balance		Increase		Decrease		Ending Balance
		(Jan.1, 2006)						(June 30, 2006)
Association Accounts	Common Shares		1,942,413		—		361		1,942,052
Employee Accounts	Common Shares		843,270		733,850		21,641		1,555,479
Total	—		2,785,683		733,850		22,002		3,497,531


1)		Shinhan Financial Group introduced the Employee Stock Ownership Plan (ESOP) on December 5, 2002.

(3) ESOA Share Ownership per each company

(As of June 30, 2006, Unit: shares)


Company	Association Accounts		Employee Accounts		Total Balance
Shinhan Financial Group		36,672		13,492		50,164
Shinhan Bank		1,886,973		1,461,602		3,348,575
Shinhan Capital		18,407		21,576		39,983
Shinhan Card		—		23,649		23,649
Shinhan Life Insurance		—		31,170		31,170
SH&C Life Insurance		—		556		556
Shinhan Credit Information		—		576		576
Shinhan Data System		—		2,858		2,858
Total		1,942,052		1,555,479		3,497,531

2. Business Results

Operational Results

(in millions of Korean Won)


	2006 1H		2005		2004
	(Jan. 1~June 30)		(Jan.1~Dec.31)		(Jan.1~Dec.31)
Operating Revenue		1,152,135		1,886,806		1,224,147
Gain using equity method of accounting		1,110,260		1,789,621		1,108,952
Interest income		40,391		95,812		114,264
Other income		1,484		1,373		931
Operating Expense		80,288		154,873		147,638
Loss using equity method of accounting		294		1,047		212
Operating Income		1,071,847		1,731,933		1,076,509

Source and Use of Funds

Source of Funds

(in millions of Korean Won)


	2006 1H				2005				2004
	(Jan. 1~June 30)				(Jan.1~Dec.31)				(Jan.1~Dec.31)
	Average		Ratio		Average		Ratio		Average		Ratio
	Balance ¹⁾		(%)		Balance ¹⁾		(%)		Balance ¹⁾		(%)
Stockholders’ Equity		9,874,139		76.59		8,463,137		77.36		6,770,562		74.00
Capital Stock		2,170,758		16.84		2,100,646		19.20		2,012,812		22.00
Capital Surplus		4,360,112		33.82		3,846,957		35.16		3,485,465		38.10
Retained Earnings		2,717,964		21.08		2,158,881		19.73		1,130,293		12.35
Capital Adjustment		625,305		4.85		356,653		3.26		141,992		1.55
Borrowings		3,019,663		23.41		2,477,425		22.64		2,378,244		26.00
Debentures		2,228,545		17.28		2,090,759		19.11		2,017,816		22.06
Other liabilities		791,118		6.13		386,666		3.53		360,428		3.94
Total		12,893,802		100.00		10,940,562		100.00		9,148,806		100.00


1)		The Average Balance was calculated by averaging the ending balance of each quarter.

Use of Funds

(in millions of Korean Won)


	2006 1H				2005				2004
	(Jan. 1~June 30)				(Jan.1~Dec.31)				(Jan.1~Dec.31)
	Average		Ratio		Average		Ratio		Average		Ratio
	Balance ¹⁾		(%)		Balance ¹⁾		(%)		Balance ¹⁾		(%)
Investments on equity stock		11,054,951		85.75		9,060,179		82.81		7,100,773		77.61
Shinhan Bank (pre-merger)		2,952,466		22.90		4,198,207		38.37		3,709,669		40.55
Shinhan Bank ²⁾		5,699,175		44.20		3,393,190		31.01		2,411,868		26.36
Good Morning Shinhan Securities		923,410		7.16		867,403		7.93		610,171		6.67
Shinhan Life Insurance		755,028		5.86		147,558		1.35		—		—
Shinhan Card		439,590		3.41		197,754		1.81		162,378		1.77
Shinhan Capital		161,261		1.25		139,108		1.27		112,775		1.23
Shinhan BNP Paribas ITMC		24,019		0.19		23,139		0.21		22,435		0.25
E-Shinhan		—		—		2,197		0.02		2,617		0.03
Shinhan Macquarie FA		1,883		0.01		1,641		0.01		1,159		0.01
Jeju Bank		64,387		0.50		57,606		0.53		49,418		0.54
Shinhan Credit Information		8,663		0.07		8,198		0.07		4,628		0.05
SH&C Life Insurance		16,487		0.13		14,879		0.14		13,655		0.15
Shinhan Private Equity		8,582		0.07		9,300		0.09		1,958		0.02
Investment on Bonds		—		—		—		—		—		—
Loans		1,346,429		10.44		1,667,537		15.24		1,953,788		21.36
Fixed Assets		1,067		0.01		1,296		0.01		1,508		0.02
Intangible Assets		1,030		0.01		1,030		0.01		477		0.01
Cash Deposit in bank		451,967		3.50		177,313		1.62		55,370		0.61
Other Assets		38,358		0.29		33,207		0.31		36,893		0.40
Total		12,893,802		100.00		10,940,562		100.00		9,148,809		100.00


1)		The Average Balance was calculated by averaging the ending balances of each quarter.

2)		Shinhan Bank and Chohung Bank were integrated as of April 1, 2006, under the name of “Shinhan Bank,” Chohung Bank being the surviving entity.

Other Financial Information

Requisite Capital Ratio

(in billions of Korean Won)


	2006 1H			2005			2004
Aggregate Amount of Equity Capital (A)		11,926.9			11,434.0			9,867.9
Requisite Capital (B)		8,941.9			8,609.1			7,625.3
Requisite Capital Ratio (A/B) ¹⁾		133.38	%		132.81	%		129.41	%


1)		Under the guidelines issued by the Financial Supervisory Commission applicable to financial holding companies, we, at the holding company level, are required to maintain a minimum requisite capital ratio of 100%.

Won Liquidity Ratio

(in billions of Korean Won)


	2006 1H			2005			2004
Won Assets due within 3 months (A)		792.4			341.5			221.3
Won Liabilities due within 3 months (B)		755.4			332.7			212.1
Won Liquidity Ratio (A/B) ¹⁾		104.90	%		102.65	%		104.36	%


1)		Under the guidelines issued by the Financial Supervisory Commission, we, at the holding company level, are required to maintain a Won liquidity ratio of not less than 100%.

Liabilities to Equity Ratio

(in billions of Korean Won)


	2006 1H			2005			2004
Liabilities (A)		3,368.3			2,325.1			2,325.0
Equity (B)		9,994.5			10,137.0			7,747.3
Liabilities to Equity Ratio (A/B)		33.70	%		22.94	%		30.01	%

Capital Adequacy Ratio and Other Ratios of Certain Subsidiaries

(1) Total Capital Adequacy Ratio (%) *


	2006 1H		2005		2004
Shinhan Bank **		11.81		10.94		9.40
Jeju Bank		12.22		11.71		10.91


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

**		As the integrated Shinhan Bank was launched on April 1, 2006, 2006 1H figures are of the integrated Shinhan Bank whereas the 2004 and 2005 figures are of the pre-merger Chohung Bank, the surviving entity.

(2) Net Capital Ratio (%) *


	June 30 2006		Mar.31 2006		Mar.31 2005
Good Morning Shinhan Securities		511.66		558.60		629.22


*		Net Capital Ratio is computed in accordance with the guidelines issued by the Financial Supervisory Service for securities investment trust businesses. Under these guidelines, Good Morning Shinhan Securities is required to maintain a minimum net capital ratio of 100%.

(3) Solvency Margin Ratio (%)


	June 30 2006		Mar.31 2006		Mar.31 2005
Shinhan Life Insurance *		229.08		230.80		—


*		Shinhan Life Insurance joined Shinhan Financial Group as the Group’s subsidiary as of December 13, 2005

(4) Adjusted Equity Capital Ratio (%) *


	June 30 2006		2005		2004
Shinhan Card		15.20		17.68		16.48


*		The Adjusted Equity Capital Ratio represents the ratio of total adjusted shareholder’s equity to total adjusted assets and is computed in accordance with the guidelines issued by the Financial Supervisory Commission for credit card companies. Under these guidelines, Shinhan Card is required to maintain a minimum adjusted equity capital ratio of 8%.

(5) Non Performing Loans

(in billions of Korean Won)


					Dec.31. 2005				Dec.31. 2004
					(March 31, 2006 for GMS				(March 31, 2005 for GMS)
	June 30 2006				Securities)				Securities)
	Balance of		NPL to total		Balance of		NPL to total		Balance of		NPL to total
	NPL		Loans (%)		NPL		Loans (%)		NPL		Loans (%)
Shinhan Bank ¹⁾		930.1		0.89		531.3		1.15		814.1		1.89
Jeju Bank ¹⁾		11.2		0.73		16.3		1.15		30.3		2.33
GMS Securities ²⁾		27.3		5.50		26.9		5.71		30.7		11.75
Shinhan Card ³⁾		219.5		5.58		33.4		2.71		37.5		4.46


1)		Non-performing loans of banks are defined as those loans are past due more than 90 days or those are placed on non-accrual status according to the guidelines of the Financial Supervisory Service.

		For Shinhan Bank, figures for the period ended June 30, 2006 are of the integrated Shinhan Bank, whereas figures for 2004 and 2005 are of the per-merger Chohung Bank, the surviving entity.

2)		Under the guidelines of the Financial Supervisory Service, every securities company shall classify its loans into five categories: “normal,” “precautionary,” “substandard,” “doubtful” and “estimated loss.” Under the Group’s internal measures, non-performing loans of Good Morning Shinhan Securities includes loans classified as “substandard,” “doubtful,” and “estimated loss.”

3)		Under the guidelines of the Financial Supervisory Service, every credit card company shall classify its loans into five categories: “normal,” “precautionary,” “substandard,” “doubtful” and “estimated loss.” Under the Group’s internal measures, non-performing loans of Shinhan Card includes loans classified as “substandard,” “doubtful” and “estimated loss.”

		Figures for the period ended June 30, 2006 include the credit card business of Chohung Bank that was spun-off and merged into Shinhan Card.

(6) Loan Loss Allowances & Write-offs for the period

(in billions of Korean Won)


			Jan. 1, 2006~		Jan. 1, 2005~		Jan. 1, 2004~
			June 30, 2006		Dec. 31, 2005		Dec. 31, 2004
Shinhan Bank ¹⁾	Loan Loss	Domestic		1,666.9		905.0		1,001.8
	Allowance	Overseas		55.3		27.6		51.2
		Total		1,722.2		932.6		1,053.0
	Write-offs			12.8		571.5		1,400.2
Jeju Bank	Loan Loss	Domestic		22.2		25.3		32.2
	Allowance	Overseas		—		—		—
		Total		22.2		25.3		32.2
	Write-offs			5.2		19.1		24.7
GM Shinhan Securities ²⁾	Loan Loss	Domestic		29.4		28.9		30.9
	Allowance	Overseas		—		—		—
		Total		29.4		28.9		30.9
	Write-offs			—		2.3		1.9
Shinhan Card	Loan Loss	Domestic		208.7		46.3		49.8
	Allowance	Overseas		—		—		—
		Total		208.7		46.3		49.8
	Write-offs			61.6		117.6		233.2


1)		2006 1H figures are of the integrated Shinhan Bank, whereas figures for 2004 and 2005 are for pre-merger Chohung Bank, the surviving entity.

2)		The fiscal year of Good Morning Shinhan Securities ends on March 31 of each year. Accordingly, the relevant periods for Good Morning Shinhan Securities are adjusted as follows: (i) from April 1, 2006 to June 30, 2006, (ii) from April 1, 2005 to March 31, 2006, and (iii) from April 1, 2004 to March 31, 2005.

3. Independent Accountant

Audit Opinion for the last 3 years


	2006 1H	FY 2005	FY 2004
Audit Opinion	Unqualified	Unqualified	Unqualified

Compensation to the Independent Auditor for Audit and Review Services

The following is a description of the fees for audit and review services performed by our independent auditor for the last three years in connection with our financial statements prepared in accordance with generally accepted accounting principles in Korea.


Year	Auditor	Payment (KRW)		Working hours
2006 1H	KPMG Samjong Accounting Corp.		304,000,000	1,440 hours
2005	KPMG Samjong Accounting Corp.		288,000,000	3,073 hours
2004	KPMG Samjong Accounting Corp.		300,000,000	2,504 hours

Compensation for Services Other than Korean GAAP Audit and Review

The following is a description of the fees and commissions paid to our independent auditor for the services set forth below for the last three years.


Year	Contract	Service description	Payment
	signed in
2006 1H	2005 Dec.	Audit of the Financial Statements based on US GAAP for FY2005	KRW 1,888,000,000
2005	Jan.	Audit of the Financial Statements based on US GAAP for FY2004	USD 2,000,000
	July	Settlement of taxation affairs	KRW 15,000,000
2004	Jan.	Consulting services for disclosure control and procedure & Internal control system	KRW 1,375,000,000

4. Directors, Executive Officers and Employees

Directors and Executive Officers

1) Executive Directors

Our executive directors are as follows as of March 21, 2006:


Name	Date of Birth	Position	Service Term
Eung Chan Ra	Nov.25, 1938	Chairman of BOD	3 years starting from March 25, 2004
		Head of the Board Steering Committee
In Ho Lee	Nov. 2, 1943	President & CEO	3 years starting from March 25, 2004
		Board Steering Committee member
Young Hwi Choi	Oct. 28, 1945	Executive Director	3 years starting from March 25, 2004

2) Non-Executive Directors

Currently, 12 non-executive directors are in office. Of the twelve members, 10 are outside directors, nominated by our Outside Director Recommendation Committee and appointed pursuant to the approval of general shareholders’ meeting on March 21, 2006.

Our non-executive directors are as follows:


Name	Date of Birth	Current Position	Service Term
Young Seok Choi	Jul. 2, 1929	Non-Executive Director	3 years starting from March 25, 2004
		Audit Committee member
Yong Woong Yang	Aug. 4, 1948	Non-Executive Director	3 years starting from March 25, 2004
Il Sup Kim	Jul.1, 1946	Outside Director	1 year starting from March 21, 2006
		Head of Audit Committee
		Compensation Committee member
Sang Yoon Lee	Sep.13, 1942	Outside Director	1 year starting from March 21, 2006
		Board Steering Committee member
		Audit Committee member
		Compensation Committee member
Yoon Soo Yoon	Mar. 5, 1946	Outside Director	1 year starting from March 21, 2006
		Head of Compensation Committee
		Risk Management Committee member
Shee Yul Ryoo	Sep. 5, 1938	Outside Director	1 year starting from March 21, 2006
		Board Steering Committee member
		Compensation Committee member
		Head of Risk Management Committee
Byung Hun Park	Sep. 10, 1928	Outside Director	1 year starting from March 21, 2006
		Board Steering Committee member
Young Hoon Choi	Nov. 8, 1928	Outside Director	1 year starting from March 21, 2006
Si Jong Kim	Apr. 16, 1937	Outside Director	1 year starting from March 21, 2006
		Audit Committee member
Philippe Reynieix	Jun. 24, 1949	Outside Director	1 year starting from March 21, 2006
		Risk Management Committee member
Haeng Nam Chung	Mar. 15.1941	Outside Director	1 year starting from March 21, 2006
Myoung Soo Choi	Aug. 5 1957	Outside Director	1 year starting from March 21, 2006

For personal profiles of the outside directors, please refer to our form 6-K filed on February 24, 2006.

3) Executive Officers

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


Name	Date of Birth	Position	Taking Charge of
Jae Woo Lee	July 2, 1950	Managing Director (Chief Operating Officer)	General Affairs Team, Public Relations Team, and Human Resources Team
Byung Jae Cho	Jan. 6, 1951	Managing Director (Chief Financial Officer)	Finance Planning Team, Risk Management Team, and Investor Relations Team
Jin Won Suh	April 20, 1951	Managing Director (Chief Strategy Officer)	Strategic Planning Team, Future Strategy & Management Team, and Information & Technology Planning Team,
Jae Woon Yoon	July 22, 1951	Managing Director (Group Synergy Officer)	Joint Procurement Team, Synergy Management Team, and Audit & Compliance Team

Stock Options


		No. of		No. of Exercised		No. of Cancelled		No. of Exercisable
Guarantee		Granted Options		Options		Options		Options
		(A)		(B)		(C)		(D=A-B-C)
Granted on 2002	Management, Head of Department		864,576		238,211		—		626,365
Granted on 2003	Management, Head of Department		1,020,206		268,003		11,390		740,813
Granted on 2004	Management, Head of Department		1,258,923		72,500		15,200		1,171,223
Granted on 2005	Management, Head of Department,
	Outside Directors		2,695,200		—		68,200		2,627,000
Granted on 2006	Management, Head of Department,
	Outside Directors		3,296,200		—		—		3,296,200
Total			9,135,105		578,714		94,790		8,461,601

Employees

(As of June 30, 2006)

Total Salaries and wages paid

Average Payment per

Number of

Average length of

in 2006 1H

person in 2006 1H

Employees

Service

(in mil. of Korean Won)

Male

2 yrs 3mths

3,562

Female

2 yrs 6mths

488

Total

100

2 yrs 5mths

4,050

5. Activities of Board of Directors and sub-committees for the year 2006

Meetings of Board of Directors


	Date	Agenda
1	Jan. 12, 2006		1.	Appointment of Outside Director Recommendation Committee members	Approved
				— Eung Chan Ra, Byung Hun Park, Young Hoon Choi, Shee Yul Ryoo, Yoon Soo Yoon
			2.	Appointment of management (non-director)	Approved
				— Baek Soon Lee (term ending: March 31, 2006)
2	Feb. 6, 2006		1.	Partial alteration of the articles of association	Approved
			2.	Closing of the 5th FY(2005)	Approved
3	Feb. 16, 2006		1.	Convening of the 5th General Meeting of Shareholders	Approved
				— 10:00 AM, March 21, 2006
			2.	Remuneration levels for Directors	Approved
				— KRW 5 billion
			3.	Stock option grant to executives, employees and outside directors of the Group and Subsidiaries	Approved
				— 1,418,900 shares for executives and management, 40,000 shares for outside directors, and up to 2,098,600 shares for employees
			4.	Alterations in previous contract concerning the granting of Stock Options	Approved
			5.	Alterations in regulations concerning the ‘Guide to provide and use Personal Credit Information’	Approved
			6.	Appointment of management (non-director)	Approved
				— Jin Won Suh (term ending: January 12, 2008)
			7.	Appointment of corporate advisor	Approved
				— advisor: Pyung Joo Kim
4	Mar. 21, 2006		1.	Appointment of Board steering Committee members	Approved
				— Eung Chan Ra, In Ho Lee, Byung Hun Park, Shee Yul Ryoo, Sang Yoon Lee
			2.	Confirmation of Director Remuneration	Approved
				— Confirmation of individual director remuneration within the limitations set by the Board of Directors
5	May 10, 2006		1.	Appointment of Risk Management Committee members	Approved
				— Sheel Yul Ryoo, Yoon Soo Yoon, Reynieix
			2.	Appointment of Compensation Committee members	Approved
				— Il Sup Kim, Shee Yul Ryoo, Yoon Soo Yoon, Sang Yoon Lee
			3.	Approval of Limitation of corporate bond issuance for the second half of 2006	Approved
				— Issuance limited to KRW 1,100 billion (including USD 100 Mil)
			4.	Enactment of Internal Control over Financial Reporting etc.	Approved
				— Settlement of standards and processes of Internal Control over Financial Reporting based on internal accounting regulations and SOX404.
			5.	Alterations in regulations concerning the exercising of stock options granted in 2004	Approved
				— retirement of employees within two years after the granting of stock options due to a transfer to a subsidiary company is seen as a continuation of services
			6.	Partial cancellation of stock options granted on 2004 and 2005	Approved
				— 6 people, 10,400 shares
6	July 12, 2006		1.	Redemption of Redeemable Preferred Shares	Approved
				— Redemption of Redeemable Preferred Shares, related to the acquisition of Chohung Bank, with upcoming maturities in August (Redemption Amount: KRW 697.8 bil.)

Meetings of Board Steering Committee


	Date	Agenda
1	Jan. 12, 2006		1.	Deliberation on Candidates for Non-Director Executive Officers	Approved
				— Eung Chan Ra, Byung Hyun Park, Young Hoon Choi, Shee Yul Ryoo, Yoon Soo Yoon (5 people)
			2.	Deliberation of non-director management	Approved
				— Baek Soon Lee
2	Feb. 16, 2006		1.	Recommendation of Audit Committee Members	Approved
				— Il Sup Kim, Sang Yoon Lee, Young Seok Choi, Si Jong Kim
			2.	Partial Alterations in the granting of stock options	Approved
				— 10,000 shares per person, 40,000 shares in total
			3.	Deliberation of non-director management	Approved
				— Jin Won Suh
3	May 10, 2006		1.	Recommendation of Risk Management Committee members	Approved
				— members : Shee Yul Ryoo, Yoon Soo Yoon, Reynieix (3 people)
			2.	Recommendation of Compensation Committee members	Approved
				— members : Il Sup Kim, Shee Yul Ryoo, Yoon Soo Yoon, Sang Yoon Lee (4 people)

Meetings of Risk Management Committee


	Date	Agenda
1	Feb. 16, 2006		1.	Approval item: 2006 Capital Adequacy Ratio of the Group and Plan for Risk Management by each Type	Approved
			2.	Reporting item: 2005 4th quarter Capital Adequacy Ratio of the Group and Plan for Risk Management by each Type	—
2	May 30, 2006		1.	Appointment of Risk Management Committee chairperson	Approved
				— Shee Yul Ryoo appointed as chairperson
			2.	Alterations in the Group‘s Risk Management Policies	Approved
3	June 12, 2006		1.	2006 Capital Adequacy Ratio of Shinhan Bank and Plans for Risk Management	Approved

Meetings of Audit Committee


	Date	Agenda
1	Feb. 16, 2006		1.	Audit Results for the 5th Fiscal Year	Approved
				— Confirmation of Audit Results for the 5th FY and Submission of Audit Report
			2.	Appointment of Independent Auditors for US GAAP, for Shinhan Life Insurance	Approved
				— KPMC Samjong Accounting Corp. was appointed
			3.	Evaluation of the Operation Status of the Internal Accounting Control System for the Year 2005	Approved
				— The internal accounting control system is properly operated.
				— The proper operation of the internal accounting control system of the major subsidiaries are to be reported separately
			4.	Evaluation of the Internal Monitoring System	Approved
				— The internal monitoring system is properly operated.
			5.	Ratification of the Company and its Subsidiaries‘ Non-audit Contracts	Approved
				1) Examination of financial statements for the acquisition process of Shinhan Life Insurance (Shinhan Financial Group — Samjong Accounting Corp.)
				2) Examination of financial statements for the acquisition process of Shinhan Life Insurance (Shinhan Life Insurance — Samjong Accounting Corp.)
				3) Income Tax Advisory, Tax Adjustment (Shinhan Bank New York Branch—KPMG New York)
				4) Auditing and Tax adjustment concerning PEF Shinhan National Pension
				5) Comfort Letters regarding the issuance of bonds (Shinhan Bank with Samjong Accounting Corp.)
			6.	Auditing Results of the 5th Annual Shareholders‘ Meeting	Approved
				— Results found to be appropriate
2	Mar. 21, 2006		1.	Approval of auditing plans for 2006	Approved
				— Auditing plans for Shinhan Financial Group and subsidiary companies approved
			2.	Approval of auditing fees of K-GAAP	Approved
				— Auditing fees considered appropriate for Korean accounting standards
3	May 10, 2006		1.	Appointment of Audit Committee chairperson	Approved
				— Il Sup Kim appointed as chairperson

Meetings of Outside Director Recommendation Committee


	Date	Agenda
1	Jan. 12, 2006		1.	Appointment of Head of Outside Director Recommendation Committee	Approved
				— Mr. Byung Hun Park
2	Feb. 16, 2006		1.	Recommendation of Outside Director Candidates	Approved
				— Outside director candidates: Byung Hun Park, Si Jong Kim, Young Hoon Choi, Myung Soo Choi, Hang Nam Jung and Philippe Reynieix (6 candidates)
				— Outside director candidates with professional expertise: Il Sup Kim, Sang Yoon Lee, Yoon Soo Yoon, and Shee Yul Ryoo (4 candidates)

Meetings of Compensation Committee


	Date	Agenda
1	Jan. 12, 2006		1.	2006 Evaluation and Compensation Scheme for the Management	Approved
2	Feb. 14, 2006		1.	2006 Evaluation and Compensation Scheme for the Management	Approved
			2.	Setting 2006 Group KPI Target and MBO of the Management	Approved
			3.	2006 Stock Options granted to the Management	Approved
3	May 30, 2006		1.	Reappointment of MBO per management / Alterations in the Group’s KPI system	Approved
			2.	Alterations in Remuneration System of Management	Approved

6. Market Price Information of our Common Shares and ADRs

Common Share Traded on the Korea Exchange

(in Korean Won or number of shares)


		Jan. 2006		Feb. 2006		Mar. 2006		April 2006		May 2006		June 2006
Price per share	High		42,000		41,450		43,500		47,100		49,500		45,000
	Low		38,000		38,250		36,800		44,000		43,400		40,400
Trading Volume			24,454,664		25,609,271		42,326,382		50,222,367		28,343,860		24,274,622

American Depositary Shares traded on the New York Stock Exchange

Shinhan Financial Group listed its American Depositary Shares on the New York Stock Exchange on September 16, 2003.

(in US Dollars or number of shares)


		Jan. 2006		Feb. 2006		Mar. 2006		April 2006		May 2006		June 2006
Price per share	High		86.40		86.78		88.10		99.02		106.08		95.95
	Low		77.00		78.66		74.05		91.15		89.03		81.15
Trading Volume			695,300		670,300		842,800		414,500		784,700		675,200

7. Related Party Transactions

Loans to Subsidiaries

(As of June 30, 2006)


		Origination		Funding			Lending			Beginning			Ending
Borrower	Loan Type	date	Maturity date	Rate			Rate			Balance	Increase	Decrease	Balance
										Jan.1 2006			June 30, 2006
GMS Securities	Loans in KRW	2005-01-31	2010-07-31		4.59	%		5.25	%	700	—	—	700
Shinhan Bank ³⁾	Privately Placed Bonds	2001-12-21	2008-03-21		7.12	%		7.42	%	500	—	500
Shinhan Card	Loans in KRW	2003-01-24	2006-01-24		5.19	%		5.50	%	500	—	500	—
Shinhan Card	Loans in KRW	2003-02-26	2006-02-26		4.99	%		5.29	%	2,000	—	2,000	—
Shinhan Card	Loans in KRW	2003-04-23	2009-04-23		5.47	%		6.28	%	1,000	—	—	1,000
Shinhan Card	Loans in KRW	2003-05-23	2006-05-23		5.29	%		5.59	%	500	—	500	—
Shinhan Card	Loans in KRW	2003-06-24	2006-06-24		5.43	%		5.73	%	1,500	—	1,500
Shinhan Card	Loans in KRW	2003-10-24	2006-10-24		4.63	%		4.95	%	1,000	—	—	1,000
Shinhan Card	Loans in KRW	2005-03-18	2007-03-18		4.13	%		4.49	%	500	—	—	500
Shinhan Card	Loans in KRW	2005-03-18	2008-03-18		4.23	%		4.54	%	500	—	—	500
Shinhan Capital	Loans in KRW	2002-03-29	2007-04-04		7.47	%		8.12	%	200	—	—	200
Shinhan Capital	Loans in KRW	2002-07-29	2007-07-29		6.30	%		6.65	%	200	—	—	200
Shinhan Capital	Loans in KRW	2002-11-21	2007-11-21		5.88	%		6.18	%	200	—	—	200
Shinhan Capital	Loans in KRW	2002-12-16	2007-12-16		5.96	%		6.22	%	200	—	—	200
Shinhan Capital	Loans in KRW	2003-01-24	2006-01-24		5.19	%		5.54	%	200	—	200	—
Shinhan Capital	Loans in KRW	2003-05-23	2006-05-23		5.29	%		5.59	%	500	—	500
Shinhan Capital	Loans in KRW	2003-06-24	2008-06-24		5.69	%		5.95	%	300	—	—	300
Shinhan Capital	Loans in KRW	2003-07-24	2006-07-24		5.55	%		5.85	%	300	—	—	300
Shinhan Capital	Loans in KRW	2003-07-24	2008-07-24		5.87	%		6.13	%	200	—	—	200
Shinhan Capital	Loans in KRW	2004-03-24	2007-03-24		4.76	%		5.16	%	300	—	—	300
Shinhan Capital	Loans in KRW	2004-03-24	2009-03-24		5.11	%		5.93	%	200	—	—	200
Shinhan Capital	Loans in KRW	2004-06-25	2009-06-25		4.93	%		5.22	%	500	—	—	500


		Origination		Funding			Lending			Beginning			Ending
Borrower	Loan Type	date	Maturity date	Rate			Rate			Balance	Increase	Decrease	Balance
										Jan.1 2006			June 30, 2006
Shinhan Capital	Loans in KRW	2005-01-31	2008-01-31		4.21	%		4.58	%	300	—	—	300
Shinhan Capital	Loans in KRW	2005-03-18	2007-03-18		4.23	%		4.49	%	500	—	—	500
Shinhan Capital	Loans in KRW	2005-05-09	2008-05-09		3.99	%		4.33	%	500	—	—	500
Shinhan Capital	Loans in KRW	2005-12-16	2008-12-16		5.48	%		5.67	%	400	—	—	400
Jeju Bank	Loans in KRW	2005-12-28	2011-01-28		5.74	%		6.43	%	200	—	—	200
Shinhan Capital	Loans in foreign currency	2003-12-30	2006-12-30	3M Libor +70bp			3M Libor +90bp			304	—	16	288
Shinhan Capital	Loans in foreign currency	2004-07-15	2007-06-15	3M Libor +70bp			3M Libor +90bp			405	—	21	384
Jeju Bank^{1) 2)}	Privately Placed Bonds	2004-05-07	2007-03-30		6.26	%		—		31	—	31	—
Jeju Bank ²⁾	Privately Placed Bonds	2002-05-20	2008-01-20		7.25	%		8.14	%	200	—	200	—
Shinhan Card	Loans in KRW	2006-01-24	2009-01-24		5.24	%		5.41	%		500		500
Shinhan Capital	Loans in KRW	2006-01-24	2009-01-24		5.24	%		5.41	%		500		500
Shinhan Card	Loans in KRW	2006-02-27	2009-02-27		5.07	%		5.23	%		1,000		1,000
Shinhan Card	Loans in KRW	2006-04-24	2009-04-24		5.09	%		5.22	%		1,000		1,000
Total										14,840	3,000	5,968	11,872


Note 1)		Privately placed bonds, which were under complete ownership of Shinhan Bank when first issued in June 30, 2001, were acquired by SFG as of May 7, 2004.

Note 2)		All privately placed bonds issued by Jeju Bank were redeemed on March 13, 2006.

Note 3)		All privately placed bonds issued by Shinhan Bank were redeemed on June 29, 2006.

Exhibit 99 Independent Accountant’s Review Report (Non Consolidated Financial Statements) of Shinhan Financial Group as of June 30, 2006.

SIGNATURES

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



		SHINHAN FINANCIAL GROUP CO., LTD.


		By /s/ Byung Jae Cho

		Name: Byung Jae Cho Title: Chief Financial Officer

Date : August 21, 2006

SHINHAN FINANCIAL GROUP CO., LTD

Non-Consolidated Financial Statements

(Unaudited)

June 30, 2006 and 2005

(With Independent Accountants’ Review Report Thereon)

Independent Accountants’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Stockholders
Shinhan Financial Group Co., Ltd.:

We have reviewed the accompanying non-consolidated balance sheets of Shinhan Financial Group Co., Ltd. (the “Company”) as of June 30, 2006 and the related non-consolidated statements of income and cash flows for the three-month and six-month periods ended June 30, 2006 and 2005. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these financial statements based on our review.

We conducted our reviews in accordance with the Review Standards for Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. These Standards require that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data and, thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our reviews, nothing has come to our attention that causes us to believe that the non-consolidated financial statements referred to above are not presented fairly, in all material respects, in accordance with accounting principles generally accepted in the Republic of Korea.

The non-consolidated balance sheet of the Company as of December 31, 2005 and the related non-consolidated statements of income, appropriation of retained earnings and cash flows for the year then ended, which are not accompanying this report were audited by us and our report thereon, dated January 26, 2006, expressed an unqualified opinion. The accompanying non-consolidated balance sheet of the Company as of December 31, 2005, presented for comparative purposes, is not different from that audited by us in all material respects, except that the adoption of Korean Accounting Standard No. 18 resulted in an increase in retained earning and a decrease in capital adjustments of W1,731 million.

The accompanying non-consolidated financial statements have been translated into United States dollars solely for the convenience of the reader. We have reviewed the translation and, nothing has come to our attention to suggest that the financial statements expressed in Korean Won have not been translated into dollars on the basis set forth in note 2(b) to the financial statements.

The following matters may be helpful to the readers in their understanding of the non-consolidated financial statements:

As discussed in Note 1 to the non-consolidated financial statements, on April 1, 2006 Chohung Bank merged with Shinhan Bank with the merge ratio of 1:3.8678 and changed its name to Shinhan Bank. Additionally, Chohung Bank spun off its credit card operation and merged with Shinhan Card Co., Ltd. Each share of Chohung Bank was converted into 0.9809 shares of Shinhan Card Co., Ltd. on April 1, 2006.

As discussed in Note 2(a) to the non-consolidated financial statements, accounting principles and review standards and their application in practice vary among countries. The accompanying non-consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying non-consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and review standards and their application in practice.

As discussed in Note 10 to the non-consolidated financial statements, the Company recorded assets with and interest income from related party transactions as of June 30, 2006 and December 31, 2005 and for three-month and six-month periods ended June 30, 2006 and 2005.

As discussed in Note 12 to the non-consolidated financial statements, regarding the acquisition of shares in Chohung Bank in 2003, the Company made an agreement with the Korea Deposit Insurance Corporation (the “KDIC”) to pay contingent consideration to the KDIC (“Earn Out Payment”) based on the earnings of Chohung Bank in future periods. As of June 30, 2006, the contingent consideration was not included in the acquisition cost because the amount was not determinable.

KPMG Samjong Accounting Corp.
Seoul, Korea
July 25, 2006

This report is effective as of July 25, 2006, 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 non-consolidated 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.

Non-Consolidated Balance Sheets

June 30, 2006 and December 31, 2005

(In millions of Won and thousands of U.S. dollars)


	Won				U.S. dollars (note 2)
	2006		2005		2006		2005
Assets
Cash and due from banks	W	749,368		64,374	$	780,348		67,035
Securities (note 3)		11,384,468		10,882,359		11,855,116		11,332,249
Loans (notes 4 and 11)		1,181,285		1,476,630		1,230,121		1,537,676
Fixed assets (note 5)		1,911		2,290		1,990		2,385
Other assets (notes 6 and 11)		45,702		36,478		47,591		37,986

Total assets	W	13,362,734		12,462,131	$	13,915,166		12,977,331

Liabilities and Stockholders’ equity
Liabilities:
Borrowings (notes 7 and 11)	W	137,221		156,098	$	142,894		162,551
Debentures (note 8)		2,503,935		2,126,043		2,607,451		2,213,936
Retirement and severance benefits		745		552		776		575
Other liabilities (notes 9 and 11)		726,367		42,421		756,395		44,175

Total liabilities		3,368,268		2,325,114		3,507,516		2,421,237
Stockholders’ equity:
Capital stock of W5,000 par value (note 13)
Common stock		1,796,037		1,796,037		1,870,287		1,870,287
Authorized - 1,000,000,000 shares
Issued and outstanding - 359,207,313 shares
Preferred stock		374,721		374,721		390,212		390,212
Issued and outstanding - 74,944,262 shares
Capital surplus		4,360,112		4,360,112		4,540,365		4,540,365
Retained earnings (note 14)		2,844,392		2,960,355		2,961,983		3,082,740
Capital adjustments (notes 3, 15 and 16)		619,204		645,792		644,803		672,490

Total stockholders’ equity		9,994,466		10,137,017		10,407,650		10,556,094
Commitments and contingencies (note 12)

Total liabilities and stockholders’ equity	W	13,362,734		12,462,131	$	13,915,166		12,977,331

See accompanying notes to non-consolidated financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Non-Consolidated Statements of Income

For the three-month and six-month periods ended June 30, 2006 and 2005

(In millions of Won and thousands of U.S. dollars, except earnings per share)


									U.S. dollars (note 2)
									Three month		Six month
	Won								period		period
	Three month period				Six month period				ended		ended
	ended June 30,				ended June 30,				June 30,		June 30,
	2006		2005		2006		2005		2006		2006
Operating revenue:
Gain from equity method (notes 3 and 23)	W	615,499		482,976		1,110,260		882,107	$	640,944		1,156,159
Interest income (note 10)		19,642		24,493		40,391		49,059		20,454		42,061
Other		1,005		550		1,484		366		1,047		1,545

		636,146		508,019		1,152,135		931,532		662,445		1,199,765

Operating expense:
Loss from equity method (notes 3 and 23)		1,251		594		294		824		1,303		306
Interest expense		27,970		27,467		56,979		55,181		29,126		59,334
Fees and commission expense		114		25		196		70		119		204
General and administrative expense (note 17)		11,235		9,925		22,819		17,726		11,699		23,763

		40,570		38,011		80,288		73,801		42,247		83,607

Operating income		595,576		470,008		1,071,847		857,731		620,198		1,116,158
Non-operating income (expense), net		133		374		212		752		138		221

Income before income taxes		595,709		470,382		1,072,059		858,483		620,336		1,116,379
Income taxes (note 18)		—		—		—		—		—		—

Net income	W	595,709		470,382		1,072,059		858,483	$	620,336		1,116,379

Income per share in Won and U.S. dollars (note 19)	W	1,630		1,423		2,925		2,582	$	1.70		3.05

Diluted income per share in Won and U.S. dollars (note 19)	W	1,537		1,257		2,760		2,280	$	1.60		2.87

See accompanying notes to non-consolidated financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Non-Consolidated Statements of Cash Flows

For the three-month and six-month periods ended June 30, 2006 and 2005

(In millions of Won and thousands of U.S. dollars)


													U.S. dollars (note 2)
													Three month			Six month
	Won												period			period
	Three month period						Six month period						ended			ended
	ended June 30,						ended June 30,						June 30,			June 30,
	2006			2005			2006			2005			2006			2006
Cash flows from operating activities:
Net income	W	595,709			470,382			1,072,059			858,483		$	620,336			1,116,379
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		151			151			302			290			157			314
Amortization		73			29			145			57			76			151
Reversal of allowance for loan losses, net		(1,005	)		(550	)		(1,484	)		(366	)		(1,047	)		(1,545	)
Provision for retirement and severance benefit		75			98			357			339			78			372
Gain from equity method, net		(614,248	)		(482,382	)		(1,109,966	)		(881,283	)		(639,641	)		(1,155,853	)
Stock compensation costs		3,329			2,471			6,797			3,926			3,467			7,078
Decrease (increase) in other assets		1,534			(1,239	)		1,775			(2,141	)		1,597			1,848
Decrease in other liabilities		(5,426	)		(13,395	)		(1,006	)		(27,036	)		(5,650	)		(1,047	)
Retirement and severance benefit paid		(6	)		—			(315	)		(13	)		(6	)		(328	)
Decrease in deposit for severance benefit insurance		134			—			152			88			139			158
Other, net		569			687			1,130			1,379			593			1,177

Net cash used in operating activities		(19,111	)		(23,748	)		(30,054	)		(46,277	)		(19,901	)		(31,296	)

Cash flows from investing activities:
Cash provided by investing activities:
Decrease in equity method investment securities		—			—			—			379,210			—			—
Decrease in loans		300,000			110,000			593,140			71,314			312,402			617,661
Decrease in fixed assets		2			36			31			36			2			32
Decrease in other assets		10			7			—			—			10			—
Dividends received		20,000			—			465,524			—			20,827			484,770

		320,012			110,043			1,058,695			450,560			333,241			1,102,463

SHINHAN FINANCIAL GROUP CO., LTD.

Non-Consolidated Statements of Cash Flows, Continued

For the three-month and six-month periods ended June 30, 2006 and 2005

(In millions of Won and thousands of U.S. dollars)


													U.S. dollars (note 2)
													Three month			Six month
	Won												period			period
	Three month period						Six month period						ended			ended
	ended June 30,						ended June 30,						June 30,			June 30,
	2006			2005			2006			2005			2006			2006
Cash used in investing activities:
Increase in loans		(100,000	)		—			(300,000	)		—			(104,134	)		(312,403	)
Increase in fixed assets		(49	)		(542	)		(98	)		(751	)		(51	)		(102	)
Increase in other assets		—			—			(1	)		(3	)		—			(1	)
Decrease in other liabilities		—			—			(20,596	)		—			—			(21,447	)

		(100,049	)		(542	)		(320,695	)		(754	)		(104,185	)		(333,953	)

Net cash provided by investing activities		219,963			109,501			738,000			449,806			229,056			768,510

Cash flows from financing activities:
Cash provided by financing activities:
Increase in borrowings		70,000			21,053			170,000			53,053			72,894			177,028
Increase in debentures		800,000			250,000			1,000,000			500,000			833,073			1,041,341
Proceeds from disposition of treasury stock		—			—			—			499			—			—

		870,000			271,053			1,170,000			553,552			905,967			1,218,369
Cash used in financing activities:
Decrease in borrowings		(165,000	)		(27,000	)		(185,188	)		(98,314	)		(171,821	)		(192,844	)
Decrease in debentures		(350,000	)		(160,000	)		(620,000	)		(340,000	)		(364,469	)		(645,631	)
Debentures issuance cost paid		(2,289	)		(891	)		(3,239	)		(1,872	)		(2,384	)		(3,373	)
Dividends paid		(346,353	)		(316,145	)		(384,525	)		(347,492	)		(360,671	)		(400,422	)
Acquisition of treasury stock		—			—			—			(438	)		—			—

		(863,642	)		(504,036	)		(1,192,952	)		(788,116	)		(899,345	)		(1,242,270	)

Net cash provided by (used in) financing activities		6,358			(232,983	)		(22,952	)		(234,564	)		6,622			(23,901	)

Net increase (decrease) in cash and cash equivalents		207,210			(147,230	)		684,994			168,965			215,777			713,313
Cash and cash equivalents at beginning of period		542,158			347,340			64,374			31,145			564,571			67,035

Cash and cash equivalents at end of period	W	749,368			200,110			749,368			200,110		$	780,348			780,348

See accompanying notes to non-consolidated financial statements.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements

June 30, 2006 and 2005

(Unaudited)

(1)		General Description

		Shinhan Financial Group Co., Ltd. (the “Company”) was incorporated on September 1, 2001 by way of the transfer of all issued shares owned by the stockholders of Shinhan Bank, Shinhan Securities Co., Ltd., Shinhan Capital Co., Ltd. and Shinhan Investment Trust Management Co., Ltd. to the Company. The Company was formed with W1,461,721 million of initial capital stock for the purpose of providing management services and financing to affiliated companies. The Company’s shares were listed on the Korea Exchange on September 10, 2001.

		On September 16, 2003, the Company’s American depository shares were listed on the New York Stock Exchange.

		As of June 30, 2006, the Company had eight subsidiaries and three joint venture companies, and its capital stock consisted of W1,796,037 million in common stock and W374,721 million in preferred stock. Details of its subsidiaries and joint venture companies are as follows:

(a)

Subsidiaries

	a.		Shinhan Bank (Formerly Chohung Bank)

			Chohung Bank was established on October 1, 1943 through the merger of Han Sung Bank, established on February 19, 1897, and Dong Il Bank, established on August 8, 1906, to engage in commercial banking and trust operations.

			On April 1, 2006, Chohung Bank merged with Shinhan Bank with the merge ratio of 1:3.8678 and changed its name to Shinhan Bank. Additionally, Chohung Bank spun off its credit card operation and merged with Shinhan Card Co., Ltd. Each share of Chohung Bank was converted into 0.9809 shares of Shinhan Card Co., Ltd. on April 1, 2006.

			As of June 30, 2006, Shinhan Bank operated through 883 domestic branches, 83 depositary offices and 11 overseas branches, and its capital stock amounted to W7,528,078 million.

	b.		Good Morning Shinhan Securities Co., Ltd.

			Good Morning Shinhan Securities Co., Ltd. (“Good Morning Shinhan Securities”) was incorporated on April 2, 1973 to engage in securities trading, underwriting and brokerage services. As of June 30, 2006, it operated through 77 branches and its capital stock amounted to W796,998 million (including W19,117 million of preferred stock).

	c.		Shinhan Life Insurance Co., Ltd.

			Shinhan Life Insurance Co., Ltd. (“Shinhan Life Insurance”) was incorporated in January 1990 under the laws of the Republic of Korea to engage in life insurance and related businesses. As of June 30, 2006, Shinhan Life Insurance operated through 116 branches and its capital stock amounted to W200,000 million.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements

June 30, 2006 and 2005

(Unaudited)

(1)

General Description, Continued

	d.		Shinhan Card Co., Ltd.

			Shinhan Card Co., Ltd. (“Shinhan Card”) was established on June 1, 2002 under the Credit Specialty Finance Business Law through the spin-off of the credit card division of Shinhan Bank. Shinhan Card is engaged principally in credit card services, factoring, consumer loan and installment financing. As of June 30, 2006, Shinhan Card had 3.12 million franchise accounts and 6.62 million credit card holders, and its capital stock amounted to W358,886 million.

	e.		Shinhan Capital Co., Ltd.

			Shinhan Capital Co., Ltd. (“Shinhan Capital”) was incorporated on April 19, 1991 to engage in the leasing and rental business. It changed its name on May 27, 1999 from Shinhan Leasing Co., Ltd. to Shinhan Capital. Shinhan Capital’s capital stock as of June 30, 2006 amounted to W80,000 million.

	f.		Jeju Bank

			Jeju Bank was incorporated on March 18, 1969 under the General Banking Act of the Republic of Korea to engage in the commercial banking and trust business and listed its shares on the Korea Exchange on December 28, 1972. Jeju Bank’s capital stock as of June 30, 2006 amounted to W77,644 million.

	g.		Shinhan Credit Information Co., Ltd.

			Shinhan Credit Information Co., Ltd. (“Shinhan Credit Information”) was established on July 8, 2002 to engage in the business of debt collection services and credit research. Shinhan Credit Information’s capital stock as of June 30, 2006 amounted to W3,000 million.

	h.		Shinhan Private Equity, Inc.

			Shinhan Private Equity, Inc. (“Shinhan PE”) was established on December 16, 2004 to provide financial advisory services and operating assistance to domestic and overseas private equity funds. Shinhan PE’s capital stock as of June 30, 2006 amounted to W10,000 million.

(b)

Joint Venture Companies

	a.		Shinhan BNP Paribas Investment Trust Management Co., Ltd.

			On August 1, 1996, Shinhan Investment Trust Management Co., Ltd. was established and obtained a license to engage in the business of investment and trust of securities and advisory services under the Investment and Trust of Securities Law. Under the joint venture agreement made on October 2002, with BNP Paribas Asset Management Group, Shinhan Investment Trust Management Co., Ltd. was renamed Shinhan BNP Paribas Investment Trust Management Co., Ltd. (“Shinhan BNP Paribas ITMC”). Shinhan BNP Paribas ITMC’s capital stock as of June 30, 2006 amounted to W40,000 million.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements

June 30, 2006 and 2005

(Unaudited)

(1)

General Description, Continued

	b.		SH&C Life Insurance Co., Ltd.

			SH&C Life Insurance Co., Ltd. (“SH&C Life Insurance”) was established on October 1, 2002 to engage in the insurance business and other related business under the joint venture agreement with Cardif SA. SH&C Life Insurance’s capital stock as of June 30, 2006 amounted to W30,000 million.

	c.		Shinhan Macquarie Financial Advisory Co., Ltd.

			On August 1, 2001, Shinhan Macquarie Financial Advisory Co., Ltd. (“Shinhan Macquarie”) was incorporated to engage in the business of financial advisory services and cross border leasing under the joint venture agreement with Macquarie International Holdings Ltd. Shinhan Macquarie’s capital stock as of June 30, 2006 amounted to W1,000 million.

Details of ownership as of June 30, 2006 and December 31, 2005 were as follows:


		2006				2005
				Ownership				Ownership
		Number of		percentage		Number of		percentage
Investor	Investee	shares		(%)		shares		(%)
Subsidiaries:
Shinhan Financial Group	Shinhan Bank		1,505,615,506		100.00		933,324,364		100.00
	Good Morning Shinhan Securities		159,399,664		100.00		159,399,664		100.00
	Shinhan Life Insurance		40,000,000		100.00		40,000,000		100.00
	Shinhan Card		71,777,256		100.00		30,569,400		100.00
	Shinhan Capital		12,250,000		100.00		12,250,000		100.00
	Jeju Bank		9,692,369		62.40		9,692,369		62.40
	Shinhan Credit Information		600,000		100.00		600,000		100.00
	Shinhan PE		2,000,000		100.00		2,000,000		100.00
Shinhan Bank	Shinhan Financial Group		8,985,417		2.50		11,406,522		3.20
Good Morning Shinhan Securities	Shinhan Financial Group		—		—		203,675		0.10
Joint venture companies:
Shinhan Financial Group	Shinhan BNP Paribas ITMC		4,000,001		50.00		4,000,001		50.00
	SH&C Life Insurance		3,000,001		50.00		3,000,001		50.00
	Shinhan Macquarie		102,000		51.00		102,000		51.00

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(2)

Basis of Financial Statements Presentation and Summary of Significant Accounting Policies

	(a)		Basis of Financial Statements Presentation

			The Company maintains its accounting records in Korean Won and prepares statutory non-consolidated financial statements in the Korean language in conformity with accounting principles generally accepted in the Republic of Korea. Certain accounting principles applied by the Company that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles in other countries. Accordingly, these non-consolidated financial statements are intended for use only by those who are informed about Korean accounting principles and practices. The accompanying non-consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

			Certain information included in the Korean language financial statements, but not required for a fair presentation of the Company’s financial position, results of operations or cash flows, is not presented in the accompanying non-consolidated financial statements.

			The accompanying non-consolidated financial statements include only the accounts of the Company, and do not include the accounts of any of its subsidiaries.

	(b)		Basis of Financial Statements Translation

			The non-consolidated financial statements are expressed in Korean Won and, solely for the convenience of the reader, have been translated into U.S. dollars at the rate of W960.30 to US$1, the basic exchange rate on June 30, 2006. These translations should not be construed as a representation that any or all of the amounts shown could be converted into U.S. dollars at this or any other rate.

	(c)		Application of the Statements of Korean Financial Accounting Standards

			The Company has adopted Statements of Korea Accounting Standards (the “SKAS”) No. 18 (“Investment in Joint Venture Companies”), No. 19 (“Lease”) and No. 20 (“Related Party Disclosure”), effective from the first fiscal year beginning after December 31, 2005. Except for the adoption of the aforementioned accounting standards, the same accounting policies were applied for the non-consolidated financial statements both as of and for the six-month period ended June 30, 2006 and as of and for the year ended December 31, 2005. The non-consolidated financial statements as of and for the year ended December 31, 2005, which are presented for comparative purposes, reflect the above accounting standards. Application of these accounting standards resulted in an increase in retained earnings and decrease in equity method investment securities by W1,731 million.

	(d)		Allowance for Loan Losses

			Allowance for doubtful accounts is estimated based on an analysis of individual accounts and past experience of collection.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(2)

Basis of Financial Statements Presentation and Summary of Significant Accounting Policies, Continued

	(e)		Equity Method Investment Securities

			Equity securities held for investment in companies in which the Company is able to exercise significant control over the investees are accounted for using the equity method.

			Under the equity method, the Company’s initial investment is recorded at cost and is subsequently increased to reflect the Company’s share of the investee income and reduced to reflect the Company’s share of the investee losses or dividends received. Any excess in the Company’s acquisition cost over the Company’s share of the investee’s identifiable net assets is considered as goodwill (negative goodwill) and amortized by the straight-line method over a reasonable period, generally less than 20 years. The amortization of goodwill is recorded against the equity income of affiliates. When events or circumstances indicate that the carrying amount may not be recoverable, the Company reviews goodwill for any impairment.

			Under the equity method, the Company does not record its share of loss of an affiliate company when such loss would make the Company’s investment in such entity less than zero. If the Company holds preferred stock or long-term debt issued by the affiliate, the Company’s share of loss of the affiliate remains recorded until such investment is reduced to zero.

	(f)		Joint Venture

			Investments in jointly controlled entities are accounted for using the equity method.

	(g)		Fixed Assets

	ii)		Property and equipment

			Property and equipment are stated at cost. Assets acquired through exchange, investment in kind or donation are recorded at their fair value.

			Depreciation is computed by the declining-balance method using rates based on the useful lives of the respective assets or using the straight-line method over the estimated useful lives of the assets as follows:


Descriptions	Depreciation method	Useful lives
Vehicles	Declining-balance	Five years
Furniture, fixtures and other	”	”
Leasehold improvement	Straight-line	”

			Significant additions or improvements extending useful lives of assets are capitalized. However, normal maintenance and repairs are charged to expense as incurred.

	iii)		Intangible Assets

			Intangible assets are stated at cost less accumulated amortization and impairment losses. Intangible assets are amortized using the straight-line method over five years.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(2)

Basis of Financial Statements Presentation and Summary of Significant Accounting Policies, Continued

	(h)		Income Taxes

			Income tax on the income or loss for the year comprises current and deferred tax. Income tax is recognized in the statement of income. Deferred tax is recognized in the statement of income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

			Deferred tax is provided using the asset and liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

			A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available against which the unused tax losses and credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

	(i)		Discount (Premium) on Debentures

			Discount (premium) on debentures issued, which represents the difference between the face value and issuance price of debentures, is amortized using the effective interest method over the life of the debentures. The amount amortized is included in interest expense.

	(j)		Retirement and Severance Benefits

			Employees who have been with the Company for more than one year are entitled to lump-sum payments based on current rates of pay and length of service when they leave the Company. The Company’s estimated liability under the plan which would be payable if all employees left on the balance sheet date is accrued in the accompanying balance sheets. A portion of the liability is covered by an employees’ severance benefits trust where the employees have a vested interest in the deposit with the insurance company (or the bank) in trust. The deposit for severance benefits held in trust is, therefore, reflected in the accompanying non-consolidated balance sheets as a reduction of the liability for retirement and severance benefits.

	(k)		Translation of Foreign Currency Denominated Assets and Liabilities

			Monetary assets and liabilities denominated in foreign currencies are translated into Korean Won at the balance sheet dates, with the resulting gains and losses recognized in current results of operations. Monetary assets and liabilities denominated in foreign currencies are translated into Korean Won at W960.30 and W1,013.0 to US$1, the rates of exchange on June 30, 2006 and December 31, 2005, respectively, that are permitted by Financial Accounting Standards. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated into Korean Won at the foreign exchange rate ruling at the date of the transaction.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(2)

Basis of Financial Statements Presentation and Summary of Significant Accounting Policies, Continued

	(l)		Stock Options

			The stock option program allows the Company’s employees to acquire shares of the Company for a specified price at specified times. The option exercise price is generally fixed at below the market price of the underlying shares at the date of the grant. The Company values equity-settled stock options based upon an option pricing model under the fair value method and recognizes this value as an expense and capital adjustment over the period in which the options vest. When the options are exercised, equity is increased by the amount of the proceeds received which is equal to the exercise price. However, compensation cost for cash-settled stock options is measured each period based on the current stock price and is recognized as an expense and a liability over the service period.

	(m)		Provision

			Provisions are recognized when all of the following are met: (1) an entity has a present obligation as a result of a past event, (2) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and (3) a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

			Where the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognized as a separate asset when, and only when, it is virtually certain that reimbursement will be received if the Company settles the obligation. The expense relating to a provision is presented net of the amount recognized for a reimbursement.

	(n)		Use of Estimates

			The preparation of non-consolidated financial statements in accordance with accounting principles generally accepted in the Republic of Korea requires management to make estimates and assumptions that affect the amounts reported in the non-consolidated financial statements and related notes to financial statements. Actual results could differ from those estimates.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(3)		Securities

		Securities as of June 30, 2006 and December 31, 2005 consist solely of equity method investment securities and details were as follows:


	(in millions of Won)
	2006
			Acquisition			Equity
	Beginning		and			method			Retained			Capital			Ending
Investees	balance		dividend, net			gain (loss)			earnings			adjustments			balance
Subsidiaries:
Shinhan Bank	W	8,751,516		(955,218	)		867,358			(3,406	)		(148,493	)		8,511,757
Good Morning Shinhan Securities		900,138		—			47,945			(101,457	)		107,916			954,542
Shinhan Life Insurance		737,788		(20,000	)		39,265			(301	)		7,006			763,758
Shinhan Card		221,449		526,806			111,610			—			—			859,865
Shinhan Capital		151,789		(15,313	)		29,181			—			2,487			168,144
Jeju Bank		60,770		—			8,545			—			(694	)		68,621
Shinhan Credit Information		9,263		(1,800	)		1,350			—			—			8,813
Shinhan PE		8,741		—			(294	)		—			—			8,447

		10,841,454		(465,525	)		1,104,959			(105,164	)		(31,778	)		11,343,946

Joint venture companies:
Shinhan BNP Paribas ITMC		24,103		(3,600	)		2,222			—			(1	)		22,724
SH&C Life Insurance		15,513		—			1,457			—			227			17,197
Shinhan Macquarie		1,289		(2,016	)		1,327			—			—			600

		40,905		(5,616	)		5,007			—			226			40,522

	W	10,882,359		(471,141	)		1,109,966			(105,164	)		(31,552	)		11,384,468

The changes in goodwill (negative goodwill) for the six-month period ended June 30, 2006 were as follows:


	(in millions of Won)
							Amortization
	Beginning balance			Increase			(reversal)			Ending balance
Shinhan Bank	W	1,065,725			(343,112	)		38,161			684,452
Good Morning Shinhan Securities		110,530			—			8,502			102,028
Shinhan Life Insurance		414,545			—			20,901			393,644
Shinhan Card		—			343,112			7,513			335,599
Jeju Bank		(4,285	)		—			(343	)		(3,942	)

	W	1,586,515			—			74,734			1,511,781

The market value of the shares of Jeju Bank owned by the Company was W66,780 million as of June 30, 2006 (W6,890 per share).

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(3)

Securities, Continued


	(in millions of Won)
	2005
			Acquisition			Equity
	Beginning		and			method			Retained			Capital			Ending
Investees	balance		dividend, net			gain (loss)			earnings			adjustments			balance
Subsidiaries:
Shinhan Bank	W	4,125,253		(367,210	)		826,156			(1,590	)		(82,638	)		4,499,971
Chohung Bank		2,891,019		220,714			777,844			(1,807	)		363,775			4,251,545
Good Morning Shinhan Securities		843,500		—			74,629			(30,311	)		12,320			900,138
Shinhan Life Insurance		—		730,432			2,565			—			4,791			737,788
Shinhan Card		168,708		—			52,741			—			—			221,449
Shinhan Capital		122,525		(12,000	)		36,418			—			4,846			151,789
Jeju Bank		53,036		—			7,825			(30	)		(61	)		60,770
e-Shinhan		2,887		(2,861	)		—			—			(26	)		—
Shinhan Credit Information		6,862		—			2,401			—			—			9,263
Shinhan PE		9,788		—			(1,047	)		—			—			8,741

		8,223,578		569,075			1,779,532			(33,738	)		303,007			10,841,454

Joint ventures:
Shinhan BNP Paribas ITMC		22,810		(2,400	)		3,725			—			(32	)		24,103
SH&C Life Insurance		14,614		—			2,680			—			(1,781	)		15,513
Shinhan Macquarie		1,098		(2,446	)		2,637			—			—			1,289

		38,522		(4,846	)		9,042			—			(1,813	)		40,905

	W	8,262,100		564,229			1,788,574			(33,738	)		301,194			10,882,359

The changes in goodwill (negative goodwill) for the year ended December 31, 2005 were as follows:


	(in millions of Won)
						Amortization
	Beginning balance			Increase		(reversals)			Ending balance
Chohung Bank	W	922,468			220,714		77,457			1,065,725
Good Morning Shinhan Securities		127,534			—		17,004			110,530
Shinhan Life Insurance		—			418,029		3,484			414,545
Jeju Bank		(4,970	)		—		(685	)		(4,285	)

	W	1,045,032			638,743		97,260			1,586,515

The market value of the shares of Jeju Bank owned by the Company was W68,816 million as of December 31, 2005 (W7,100 per share).

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(4)

Loans

(a)

Loans as of June 30, 2006 and December 31, 2005 consisted of the following:


	(in millions of Won and thousands of U.S. dollars)
	Won						U.S. dollars (Note 2)
	2006			2005			2006			2005
Loans in Won	W	1,120,000			1,340,000		$	1,166,302			1,395,397
Loans in foreign currencies		67,221			70,910			70,000			73,842
Privately placed bonds		—			73,140			—			76,164

		1,187,221			1,484,050			1,236,302			1,545,403
Less: allowance for loan losses		(5,936	)		(7,420	)		(6,181	)		(7,727	)

	W	1,181,285			1,476,630		$	1,230,121			1,537,676

(b)

Details of loans as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won)
	Borrower	Interest rate (%)	2006			2005
Loans in Won	Shinhan Card	4.49 - 6.28	W	550,000			750,000
	Shinhan Capital	4.33 - 8.12		480,000			500,000
	Good Morning Shinhan Securities	5.25		70,000			70,000
	Jeju Bank	6.43		20,000			20,000

				1,120,000			1,340,000
Loans in foreign currencies	Shinhan Capital	3M Libor+0.9		67,221			70,910
Privately placed bonds	Shinhan Bank	7.42		—			50,000
	Jeju Bank	8.14		—			23,140

				—			73,140

				1,187,221			1,484,050
Allowance for loan losses				(5,936	)		(7,420	)

			W	1,181,285			1,476,630

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(4)

Loans, Continued

(c)

The maturities of loans as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won)
			Loans in		Privately
	Loans		foreign		placed
At June 30, 2006	in Won		currencies		bonds		Total
Due in 3 months or less	W	30,000		—		—		30,000
Due after 3 months through 6 months		100,000		28,809		—		128,809
Due after 6 months through 12 months		150,000		38,412		—		188,412
Due after 1 year through 3 years		750,000		—		—		750,000
Thereafter		90,000		—		—		90,000

	W	1,120,000		67,221		—		1,187,221


	(in millions of Won)
			Loans in		Privately
	Loans		foreign		placed
At December 31, 2005	in Won		currencies		bonds		Total
Due in 3 months or less	W	270,000		—		—		270,000
Due after 3 months through 6 months		250,000		—		—		250,000
Due after 6 months through 12 months		130,000		30,390		—		160,390
Due after 1 year through 3 years		430,000		40,520		73,140		543,660
Thereafter		260,000		—		—		260,000

	W	1,340,000		70,910		73,140		1,484,050

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(5)		Fixed Assets

		Fixed assets as of June 30, 2006 and December 31, 2005 consisted of the following:


	(in millions of Won and thousands of U.S. dollars)
	Won						U.S. dollars (Note 2)
	2006			2005			2006			2005
Property and equipment:
Vehicles	W	391			391		$	407			407
Furniture and fixtures		1,362			1,391			1,418			1,449
Other		1,730			1,704			1,802			1,774

		3,483			3,486			3,627			3,630
Less: accumulated depreciation		(2,554	)		(2,286	)		(2,660	)		(2,381	)

		929			1,200			967			1,249

Intangible assets:
Other		982			1,090			1,023			1,136

	W	1,911			2,290		$	1,990			2,385

		As of June 30, 2006 and December 31, 2005, the Company maintained insurance policies covering loss and liability arising from automobile accidents.

(6)		Other Assets

		Other assets as of June 30, 2006 and December 31, 2005 consisted of the following:


	(in millions of Won and thousands of U.S. dollars)
	Won				U.S. dollars (Note 2)
	2006		2005		2006		2005
Guarantee deposits paid	W	10,082		10,082	$	10,499		10,499
Accounts receivable		25,363		14,809		26,411		15,421
Accrued income		8,011		8,466		8,342		8,816
Advance payments		10		10		10		10
Prepaid expenses		80		724		83		754
Prepaid income taxes		346		577		361		601
Other		1,810		1,810		1,885		1,885

	W	45,702		36,478	$	47,591		37,986

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(7)

Borrowings

(a)

Borrowings as of June 30, 2006 and December 31, 2005 consisted of the following:


	(in millions of Won and thousands of U.S. dollars)
	Won				U.S. dollars (Note 2)
	2006		2005		2006		2005
Borrowings in Won	W	70,000		85,188	$	72,894		88,710
Borrowings in foreign currencies		67,221		70,910		70,000		73,841

	W	137,221		156,098	$	142,894		162,551

(b)

Details of borrowings as of June 30, 2006 and December 31, 2005 were as follows:


(in millions of Won)
Issue date	Maturity date	Interest rate (%)	2006		2005
Borrowings in Won:
September 30, 2005	January 03, 2006	4.18%	W	—		20,000
December 28, 2005	April 03, 2006	4.31%		—		65,000
March 23, 2005	March 23, 2006	6M +1.05%		—		188
March 30, 2006	March 30, 2009	5.15%		70,000		—

				70,000		85,188

Borrowings in foreign currencies:
December 30, 2003	December 30, 2006	3ML+0.7%		28,809		30,390
July 15, 2004	June 15, 2007	3ML+0.7%		38,412		40,520
				67,221		70,910

				67,221		70,910

			W	137,221		156,098

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(7)

Borrowings, Continued

(c)

The maturities of borrowings as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won)
	Borrowings		Borrowings in
At June 30, 2006	in Won		foreign currencies		Total
Due after 3 months through 6 months	W	—		28,809		28,809
Due after 6 months through 12 months		—		38,412		38,412
Due after 1 year through 3 years		70,000		—		70,000

	W	70,000		67,221		137,221


	(in millions of Won)
	Borrowings		Borrowings in
At December 31, 2005	in Won		foreign currencies		Total
Due in 3 months or less	W	20,188		—		20,188
Due after 3 months through 6 months		65,000		—		65,000
Due after 6 months through 12 months		—		30,390		30,390
Due after 1 year through 3 years		—		40,520		40,520

	W	85,188		70,910		156,098

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(8)

Debentures

(a)

Debentures as of June 30, 2006 and December 31, 2005 consisted of the following:


	(in millions of Won and thousands of U.S. dollars)
	Won						U.S. dollars (Note 2)
	2006			2005			2006			2005
Debentures in Korean Won	W	2,510,000			2,130,000		$	2,613,767			2,218,057
Less: discount on debentures		(6,065	)		(3,957	)		(6,316	)		(4,121	)

	W	2,503,935			2,126,043		$	2,607,451			2,213,936

(b)

Details of debentures as of June 30, 2006 and December 31, 2005 were as follows:


				(in millions of Won)
Issue date	Maturity date	Interest rate (%)		2006		2005
Unsecured debentures in Korean Won:
December 21, 2001	December 21, 2006		7.12	W	50,000		50,000
April 04, 2002	April 04, 2007		7.47		20,000		20,000
May 20, 2002	May 20, 2007		7.25		20,000		20,000
July 29, 2002	July 29, 2007		6.30		20,000		20,000
November 21, 2002	November 21, 2007		5.88		20,000		20,000
December 16, 2002	December 16, 2007		5.96		20,000		20,000
January 24, 2003	January 24, 2006		5.19		—		70,000
February 26, 2003	February 26, 2006		4.99		—		200,000
April 23, 2003	April 23, 2006		5.47		—		100,000
May 23, 2003	May 23, 2006		5.29		—		100,000
June 24, 2003	June 24, 2006		5.43		—		150,000
June 24, 2003	June 24, 2008		5.69		30,000		30,000
July 24, 2003	July 24, 2006		5.55		30,000		30,000
July 24, 2003	July 24, 2008		5.87		20,000		20,000
October 24, 2003	October 24, 2006		4.63		100,000		100,000
December 23, 2003	December 23, 2006		5.35		200,000		200,000
March 24, 2004	March 24, 2007		4.76		30,000		30,000
March 24, 2004	March 24, 2009		5.11		20,000		20,000
June 25, 2004	June 25, 2009		4.93		50,000		50,000
July 08, 2004	July 08, 2009		4.81		100,000		100,000
January 31, 2005	January 31, 2008		4.21		30,000		30,000
January 31, 2005	January 31, 2010		4.59		70,000		70,000
March 18, 2005	March 18, 2007		4.13		100,000		100,000

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(8)

Debentures, Continued


					(in millions of Won)
Issue date	Maturity date	Interest rate (%)		2006			2005
March 18, 2005	March 18, 2008		4.23		50,000			50,000
May 09, 2005	May 09, 2008		3.99		50,000			50,000
June 29, 2005	June 29, 2008		4.01		50,000			50,000
June 29, 2005	June 29, 2010		4.28		150,000			150,000
September 14, 2005	September 14, 2008		4.77		70,000			70,000
September 14, 2005	September 14, 2010		5.18		110,000			110,000
December 16, 2005	December 16, 2008		5.48		40,000			40,000
December 16, 2005	December 16, 2010		5.74		60,000			60,000
January 24, 2006	January 24, 2009		5.24		100,000			—
February 27, 2006	February 27, 2009		5.07		100,000			—
April 24, 2006	April 24, 2009		5.09		200,000			—
June 28, 2006	June 28, 2009		5.25		220,000			—
June 28, 2006	June 28, 2009		5.42		130,000			—
June 28, 2006	June 28, 2009		5.52		50,000			—
June 29, 2006	June 29, 2009		5.24		100,000			—
June 29, 2006	June 29, 2009		5.32		100,000			—

					2,510,000			2,130,000
Discount on debentures					(6,065	)		(3,957	)

				W	2,503,935			2,126,043

(c)

The maturities of debentures in Korean Won as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won)
	2006		2005
Due in 3 months or less	W	30,000		270,000
Due after 3 months through 6 months		350,000		350,000
Due after 6 months through 12 months		170,000		380,000
Due after 1 year through 3 years		1,090,000		570,000
Thereafter		870,000		560,000

	W	2,510,000		2,130,000

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(9)		Other Liabilities

		Other liabilities as of June 30, 2006 and December 31, 2005 consisted of the following:


			(in millions of Won and thousands of U.S. dollars)
	Won				U.S. dollars (Note 2)
	2006		2005		2006		2005
Withholding taxes	W	281		491	$	293		511
Dividends payable		1,809		1,284		1,883		1,337
Accounts payable		698,795		20,990		727,684		21,858
Accrued expenses		25,482		19,656		26,535		20,469

	W	726,367		42,421	$	756,395		44,175

(10)

Related Party Transactions

(a)

Significant transactions with the related parties for the three-month and six-month periods ended June 30, 2006 and 2005 were as follows:


					(in millions of Won)
	Three-month period ended				Six-month period ended
	June 30,				June 30,
Related party	2006		2005		2006		2005
Shinhan Bank	W	1,262		1,235		2,783		2,221
Good Morning Shinhan Securities		944		915		1,866		1,538
Shinhan Card		9,222		13,484		18,732		27,388
Shinhan Capital		7,896		8,400		16,017		17,000
Jeju Bank		318		459		992		912

	W	19,642		24,493		40,390		49,059

(b)

Significant balances with the related parties as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won)
Related party	2006		2005
Shinhan Bank	W	86,002		137,476
Good Morning Shinhan Securities		72,528		71,344
Shinhan Life Insurance		413		—
Shinhan Card		555,027		755,403
Shinhan Capital		550,813		574,628
Jeju Bank		20,010		43,340
Shinhan Credit Information		106		112

	W	1,284,899		1,582,303

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(10)

Related Party Transactions, Continued

(c)

The guarantees and acceptances provided between the related parties as of June 30, 2006 were as follows:


		(in millions of Won)
			Amount
Creditor	Debtor	Account	guaranteed
Shinhan Financial Group	SH&C Life Insurance	Guarantees for loans	W	7,000
Shinhan Bank	Shinhan Card	Guarantees in foreign currencies		480
”	Shinhan Capital	Letter of credit		1,691
”	Shinhan Finance	Guarantees for loans		15,407
”	Shinhan Asia	Guarantees for letter of credit		6,482

			W	31,060

(d)

Compensation of key management personnel for the six-month period ended June 30, 2006 was as follows:


	(in millions of Won)
	Total
	compensation
Short-term salaries	W	3,002
Share-based benefits		6,291

	W	9,293

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(11)		Assets and Liabilities Denominated in Foreign Currency

		Assets and liabilities denominated in foreign currency as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won and thousands of U.S. dollars)
	Foreign currency				Won equivalent
	2006		2005		2006		2005
Assets:
Loans	$	70,000		70,000	W	67,221		70,910
Other assets		457		388		439		393

	$	70,457		70,388	W	67,660		71,303

Liabilities:
Borrowings	$	70,000		70,000	W	67,221		70,910
Other liabilities		440		371		423		376

	$	70,440		70,371	W	67,644		71,286

(12)		Commitments and Contingencies

		On July 9, 2003, the Company made an agreement with the Korea Depository Insurance Corporation (“KDIC”) to acquire 80.04% (543,570,144 shares) of total outstanding shares in Chohung Bank. Under the agreement, the Company would be required to pay a contingent consideration (“Earn Out Payment”) to the KDIC in relation to the earnings of Chohung Bank in the future with the following details:


n Amount		: 20% of the total net income of Chohung Bank for fiscal years 2004, 2005 and 2006 in excess of W1,800 billion

n Payment date		: within 30 days after the date that the above amount is determined for fiscal year 2006

The contingent consideration was not included in the acquisition cost, because the amount was not determinable.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(13) Capital Stock

(a)

As of June 30, 2006 and December 31, 2005, details of preferred stock issued by the Company were as follows:


			Predetermined
	Number of		dividend rate
	shares		(%)(*)		Redeemable period
Redeemable preferred stock:
Series 1		9,316,792		4.04	August 19, 2004 - August 18, 2006
Series 2		9,316,792		4.04	August 19, 2005 - August 18, 2007
Series 3		9,316,792		4.04	August 19, 2006 - August 18, 2008
Series 4		9,316,792		4.04	August 19, 2007 - August 18, 2009
Series 5		9,316,793		4.04	August 19, 2008 - August 18, 2010
Series 6		3,500,000		7.00	July 19, 2006 - August 18, 2006
Series 7		2,433,334		7.46	July 19, 2008 - August 18, 2008
Series 8		66,666		7.86	July 19, 2010 - August 18, 2010

		52,583,961
Redeemable convertible preferred stock:
Series 9 (**)		22,360,301		2.02	August 19, 2006 - August 18, 2008

		74,944,262


(*)	Based on issue price


(**)	Convertible period	: August 19, 2006 - August 18, 2007
	Conversion ratio	: 1 common share to 1 preferred share
	Conversion price in Won	: W18,086

(b)

There were no changes in capital stock for the six-month period ended June 30, 2006. Details of changes for the year ended December 31, 2005 were as follows:


	(in millions of Won, except shares)
	Number of		Capital		Preferred			Capital
	shares		stock		stock			surplus
Balance at January 1, 2005		416,623,575	W	1,596,595		486,523			3,718,623
Share exchange		17,528,000		87,640		—			641,427
Preferred stock converted into common stock		—		111,802		(111,802	)		—
Disposition of treasury stock		—		—		—			62

Balance at December 31, 2005		434,151,575	W	1,796,037		374,721			4,360,112

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)


(14)		Retained Earnings

		Retained earnings as of June 30, 2006 and December 31, 2005 consisted of the following:


	(in millions of Won and thousands of U.S. dollars)
	Won				U.S. dollars (Note 2)
	2006		2005		2006		2005
Legal reserve	W	396,928		223,722	$	413,338		232,971
Retained earnings before appropriation		2,447,464		2,736,633		2,548,645		2,849,769

	W	2,844,392		2,960,355	$	2,961,983		3,082,740

The Korean Financial Holding Company Act requires the Company to appropriate a minimum of 10% of annual net income as legal reserve whenever dividends are paid until such reserve equals its paid-in capital. This reserve is not available for payment of cash dividends. However, subject to the stockholders’ approval, it may be transferred to common stock in connection with stock dividends or used to reduce any accumulated deficit.

(15) Capital Adjustments

Details of capital adjustments as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won and thousands of U.S. dollars)
	Won				U.S. dollars (Note 2)
	2006		2005		2006		2005
Unrealized gain on equity method investment securities, net	W	597,078		628,630	$	621,762		654,617
Stock options (note 16)		22,126		17,162		23,041		17,873

	W	619,204		645,792	$	644,803		672,490

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(16) Stock Options

(a)

Details of stock options granted as of June 30, 2006 and December 31, 2005 were as follows:


		1st grant			2nd grant			3rd grant			4th grant				5th grant
Grant date	May 22, 2002			May 15, 2003			March 25, 2004			March 30, 2005				March 21, 2006
Options granted			1,004,200			1,156,300			1,301,600			2,695,200				3,296,200
Options forfeited or exercised			375,135			410,087			122,777			636,035				5,143

Options outstanding			629,135			746,213			1,178,823			2,059,165				3,291,057
Type of stock options		Cash-settled options									Cash-settled or equity-settled options
Exercise price in Won			W18,910			W11,800			W21,595			W28,006				W38,829
Vesting period		Within four years after two years from grant date
Forfeited period		After six years from grant date						After five years from grant date			After seven years from grant date
Assumptions used to determine the fair value of options:
Risk-free interest rate			—			—			—			4.07	%			5.02	%
Expected exercise period			—			—			—		5 years				5 years
Expected stock price volatility			—			—			—			17.92	%			13.43	%
Expected dividend yield			—			—			—			—				—
Expected ratios of no-exercise			—			—			—			—				—
Weighted average fair value			—			—			—			W11,201				W16,668

With respect to the stock options granted on March 25, 2004, the Company decided to pay the difference between the market price and the exercise price in cash for the six-month period ended June 30, 2006 and determined to apply the intrinsic value method to those stock options. As a result, stock options decreased by W8,538 million (decrease in accounts receivable of W6,508 million and increase in accrued expenses of W2,030 million).

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(16) Stock Options, Continued

(b)

Changes in stock compensation costs for the six-month period ended June 30, 2006 were as follows:


		(in millions of Won)
		Employee of
		Shinhan
Stock options		Financial
granted	Stock compensation cost	Group		Subsidiaries			Total
1st	Recorded at beginning of the period	W	2,934		12,144			15,078
	Incurred during the period		379		81			460
	To be recorded in subsequent periods		—		—			—
2nd	Recorded at beginning of the period		4,334		19,053			23,387
	Incurred during the period		431		(142	)		289
	To be recorded in subsequent periods		—		—			—
3rd	Recorded at beginning of the period		2,030		6,508			8,538
	Incurred during the period		4,375		12,944			17,319
	To be recorded in subsequent periods		—		—			—
4th	Recorded at beginning of the period		767		7,858			8,625
	Incurred during the period		534		5,312			5,846
	To be recorded in subsequent periods		738		7,855			8,593
5th	Recorded at beginning of the period		—		—			—
	Incurred during the period		1,078		6,576			7,654
	To be recorded in subsequent periods		6,619		40,583			47,202

For the 4th and 5th stock options granted, the difference between the exercise price and the fair value on the date of exercise would be assumed by the subsidiaries of the Company. Therefore, in relation to those stock options, stock compensation costs have been recorded as long-term payables by the subsidiaries and as accounts receivable by the Company.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(17) General and Administrative Expense

Details of general and administrative expense for the three-month and six-month periods ended June 30, 2006 and 2005 were as follows:


	(in millions of Won)
	Three-month period ended				Six-month period ended
	June 30,				June 30,
	2006		2005		2006		2005
Salaries	W	7,199		5,607		14,281		9,409
Provision for retirement and severance benefits		75		98		357		339
Other employee benefits		201		870		760		1,125
Rental		184		152		303		260
Entertainment		213		198		425		386
Depreciation		151		151		302		290
Amortization		73		29		145		57
Taxes and dues		607		537		653		604
Advertising		6		3		18		3
Fees and commission		1,865		1,511		4,243		3,564
Other		661		769		1,332		1,689

	W	11,235		9,925		22,819		17,726

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(18)

Income Taxes

	(a)		The Company is subject to income taxes based on taxable income, which result in a normal tax rate of 27.5%. For the six-month periods ended June 30, 2006 and 2005, the Company recognized no income tax expense.

	(b)		Changes in significant accumulated temporary differences and tax effects for the six-month period ended June 30, 2006 and the year ended December 31, 2005 were as follows:


	(in millions of Won)
	2006
	Beginning									Ending
	balance (*)			Increase			Decrease			balance
Temporary differences:
Securities	W	(3,427,679	)		(973,251	)		(1,986,374	)		(2,414,556	)
Retirement and severance benefits		828			25			315			538
Accrued income		(299	)		—			(299	)		—
Deposit for severance benefit insurance		(828	)		—			(152	)		(676	)
Stock options		17,163			13,500			8,538			22,125
Other		(7,098	)		(5,518	)		(7,227	)		(5,389	)

		(3,417,913	)		(965,244	)		(1,985,199	)		(2,397,958	)

Unrealizable temporary differences on gain from equity method		3,421,190									2,408,073


Net temporary differences	W	3,277									10,115


Tax effects of temporary differences		901									2,782

Tax effects of tax loss carryforwards		—									5,620


Net tax effects	W	901									8,402


Tax effects recorded in financial statements	W	—									—


(*)		Amount resulting from prior year tax return is reflected in the current period.


The net tax effects of W8,402 million as of June 30, 2006 were not recognized as deferred tax assets due to uncertainty of realization.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(18)

Income Taxes, Continued


	(in millions of Won)
	2005
	Beginning									Ending
	balance (*)			Increase			Decrease			balance
Temporary differences:
Securities	W	(1,371,425	)		(2,050,871	)		5,383			(3,427,679	)
Retirement and severance benefits		466			499			137			828
Accrued income		(299	)		(299	)		(299	)		(299	)
Deposit for severance benefit insurance		(466	)		(509	)		(147	)		(828	)
Stock option		8,842			19,983			4,942			23,883
Other		(6,203	)		(18,784	)		(3,354	)		(21,633	)

		(1,369,085	)		(2,049,981	)		6,662			(3,425,728	)

Unrealizable temporary differences on gain from equity method		1,369,044									3,421,737


Net temporary differences	W	(41	)								3,277


Tax effects of temporary differences		(11	)								901

Tax effects of tax loss carryforwards		—									5,284


Net tax effects	W	(11	)								6,185

Tax effects recorded in financial statements	W	—									—


(*)		Amount resulting from prior year tax return is reflected in the current period.

The net tax effects of W6,185 million as of December 31, 2005 were not recognized as deferred tax assets due to uncertainty as to their realization.

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(19)

Earnings Per Share

	(a)		Earnings per share

			Earnings per common share is calculated by dividing net income less preferred stock dividend requirement by the weighted average number of shares of common stock outstanding. The Company’s ordinary income and net earnings per share for the three-month and six-month periods ended June 30, 2006 and 2005 were as follows:


	(in millions of Won, except per share)
	Three-month period				Six-month period
	ended June 30,				ended June 30,
	2006		2005		2006		2005
Net income for period	W	595,709		470,382		1,072,059		858,483
Less: dividends on preferred stock		26,670		28,706		53,046		57,097


Ordinary income available for common stock		569,039		441,676		1,019,013		801,386
Weighted average number of common shares outstanding		349,078,849		310,333,444		348,342,076		310,324,883


Ordinary income per share in Won	W	1,630		1,423		2,925		2,582


Net income per share in Won	W	1,630		1,423		2,925		2,582

	(b)		Diluted earnings per share

			For the six-month period ended June 30, 2006, if convertible preferred stock and stock options had been exercised, 27,710,523 shares of common stock would have been issued, and if preferred stock had been converted into common stock on its issue date, the weighted average number of common shares outstanding would have been 370,702,377.

			Details of diluted ordinary/net earnings per share due to dilutive effects for the three-month and six-month periods ended June 30, 2006 and 2005 were as follows:


	(in millions of Won, except per share)
	Three-month period				Six-month period
	ended June 30,				ended June 30,
	2006		2005		2006		2005
Ordinary income available for common stock	W	569,040		441,676		1,019,013		801,386
Add: dividends on redeemable convertible preferred stock		2,037		4,073		4,051		8,102


Diluted ordinary income/net earnings		571,077		445,749		1,023,064		809,488
Weighted average number of common shares outstanding		371,439,150		354,510,514		370,702,37		355,045,486


Diluted ordinary income per share in Won	W	1,537		1,257		2,760		2,280


Diluted net income per share in Won	W	1,537		1,257		2,760		2,280

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(19)

Earnings Per Share, Continued

(c)

Convertible stock and stock options


		Number of shares
	Convertible period	to be issued
Redeemable convertible preferred stock	August 19, 2006 - August 18, 2008		22,360,301
Stock options	March 30, 2008 - March 29, 2012		2,059,165
Stock options	March 21, 2009 - March 20, 2013		3,291,057

			27,710,523

(d)

Ordinary income per share and net earnings per share for the three-month period ended March 31, 2006 and the year ended December 31, 2005 were as follows:


	(in Won)
	Three-month ended		Year ended
	March 31, 2006		December 31, 2005
Ordinary and net income per share	W	1,295		4,874
Diluted ordinary and net income per share		1,220		4,591

(20)

Statements of Cash Flows

Significant transactions not involving cash inflows or outflows for the three-month and six-month periods ended June 30, 2006 and 2005 were as follows:


	(in millions of Won)
	Three-month period						Six-month period
	ended June 30,						ended June 30,
	2006			2005			2006			2005
Changes in capital adjustments from the application of the equity method	W	(61,378	)		(203,208	)		(31,551	)		83,779
Changes in retained earnings from the application of the equity method		(109,868	)		30,676			(105,165	)		32,131
Stock options recorded as accounts receivable		8,536			(330	)		11,888			961
Appropriation of retained earnings as legal reserve		—			—			173,207			105,030
Dividends receivable on equity method investment securities		5,616			4,846			5,616			4,846

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(21)

Condensed Financial Statements of Subsidiaries and Joint Venture Companies

	(a)		Balance sheets

			The condensed balance sheets of subsidiaries and joint venture companies as of June 30, 2006 and December 31, 2005 were as follows:


	(in millions of Won)
	2006
					Total stockholders'
Subsidiaries	Total assets		Total liabilities		equity
Shinhan Bank	W	150,047,005		141,566,870		8,480,135
Good Morning Shinhan Securities		3,690,192		2,875,096		815,096
Shinhan Life Insurance		5,531,284		5,165,379		365,905
Shinhan Card		3,446,086		2,924,570		521,516
Shinhan Capital		1,519,394		1,353,986		165,408
Shinhan BNP Paribas ITMC		59,018		13,571		45,447
Jeju Bank		2,135,007		2,003,364		131,643
SH&C Life Insurance		839,105		804,711		34,394
Shinhan Macquarie		17,595		16,393		1,202
Shinhan Credit Information		11,241		2,428		8,813
Shinhan PE		8,588		141		8,447


	W	167,304,515		156,726,509		10,578,006


	(in millions of Won)
	2005
					Total stockholders'
Subsidiaries	Total assets		Total liabilities		equity
Shinhan Bank	W	75,641,968		71,042,501		4,599,467
Chohung Bank		66,609,526		62,783,304		3,826,222
Good Morning Shinhan Securities		3,882,713		3,122,337		760,376
Shinhan Life Insurance		5,129,302		4,810,804		318,498
Shinhan Card		1,532,291		1,314,592		217,699
Shinhan Capital		1,400,829		1,251,895		148,934
Shinhan BNP Paribas ITMC		53,437		5,233		48,204
Jeju Bank		2,051,202		1,931,693		119,509
SH&C Life Insurance		708,175		677,150		31,025
Shinhan Macquarie		11,848		9,320		2,528
Shinhan Credit Information		12,073		2,810		9,263
Shinhan PE		8,826		85		8,741


	W	157,042,190		146,951,724		10,090,466

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(21)

Condensed Financial Statements of Subsidiaries and Joint Venture Companies, Continued

	(b)		Statements of Income

			Condensed statements of income of subsidiaries and joint venture companies for the three-month and six-month periods ended June 30, 2006 and 2005 are as follows:


	(in millions of Won)
	Six-month period ended June 30, 2006
					Operating			Ordinary			Net
	Operating		Operating		income			income			income
Subsidiaries	revenue		expense		(loss)			(loss)			(loss)
Shinhan Bank	W	7,827,496		6,843,428		984,068			1,316,353			948,384
Good Morning Shinhan Securities		656,416		581,019		75,397			84,545			61,198
Shinhan Life Insurance		1,095,390		1,020,536		74,854			83,503			60,702
Shinhan Card		345,971		290,227		55,744			52,977			120,123
Shinhan Capital		98,818		81,889		16,929			36,648			29,299
Shinhan BNP Paribas ITMC		11,886		5,763		6,123			6,164			4,446
Jeju Bank		69,421		11,227		58,194			13,716			13,247
SH&C Life Insurance		27,498		30,561		(3,063	)		2,664			2,914
Shinhan Macquarie		15,291		12,134		3,157			3,835			2,707
Shinhan Credit Information		12,340		10,725		1,615			1,876			1,367
Shinhan PE		1,488		1,808		(320	)		(205	)		(371	)


	W	10,162,015		8,889,317		1,272,698			1,602,076			1,244,016


	(in millions of Won)
	Six-month period ended June 30, 2005
					Operating			Ordinary			Net
	Operating		Operating		income			income			income
Subsidiaries	revenue		expense		(loss)			(loss)			(loss)
Shinhan Bank	W	3,321,036		2,790,708		530,328			607,980			443,582
Chohung Bank		4,045,627		3,746,165		299,462			356,005			355,221
Good Morning Shinhan Securities		330,564		310,577		19,987			24,912			18,040
Shinhan Card		203,110		177,441		25,669			27,552			27,552
Shinhan Capital		106,148		84,866		21,282			20,880			14,543
Shinhan BNP Paribas ITMC		8,823		4,271		4,552			4,844			3,439
Jeju Bank		63,752		55,300		8,452			8,810			8,810
SH&C life Insurance		22,555		22,555		—			2,598			2,598
e-ShinhanS		1,033		1,370		(337	)		(320	)		(320	)
Shinhan Macquarie		17,087		10,721		6,366			6,509			4,623
Shinhan Credit Information		11,984		9,921		2,063			2,030			1,452
Shinhan PE		—		693		(693	)		(585	)		(585	)


	W	8,131,719		7,214,588		917,131			1,061,215			878,955

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(21)

Condensed Financial Statements of Subsidiaries and Joint Venture Companies, Continued


	(in millions of Won)
	Three-month period ended June 30, 2006
					Operating			Ordinary			Net
	Operating		Operating		income			income			income
Subsidiaries	revenue		expense		(loss)			(loss)			(loss)
Shinhan Bank	W	3,557,546		3,143,501		414,045			701,311			519,420
Good Morning Shinhan Securities		434,992		393,748		41,244			50,118			36,124
Shinhan Life Insurance		547,713		507,628		40,085			42,342			30,688
Shinhan Card		238,797		207,593		31,204			28,897			103,617
Shinhan Capital		47,081		36,790		10,291			10,520			8,085
Shinhan BNP Paribas ITMC		6,223		3,253		2,970			3,012			2,186
Jeju Bank		36,228		29,469		6,759			8,368			8,002
SH&C Life Insurance		17,184		15,816		1,368			1,216			870
Shinhan Macquarie		1,405		1,866		(461	)		(368	)		(298	)
Shinhan Credit Information		12,340		10,725		1,615			1,876			1,367
Shinhan PE		748		849		(101	)		(34	)		(110	)


	W	4,900,257		4,351,238		549,019			847,258			709,951


	(in millions of Won)
	Three-month period ended June 30, 2005
					Operating			Ordinary			Net
	Operating		Operating		income			income			income
Subsidiaries	revenue		expense		(loss)			(loss)			(loss)
Shinhan Bank	W	1,371,930		1,087,664		284,266			312,199			225,235
Chohung Bank		1,694,955		1,496,496		198,459			229,605			229,313
Good Morning Shinhan Securities		145,014		138,172		6,842			9,844			7,207
Shinhan Card		103,137		90,296		12,841			14,813			14,813
Shinhan Capital		47,729		42,008		5,721			5,048			3,160
Shinhan BNP Paribas ITMC		4,664		2,239		2,425			2,427			1,710
Jeju Bank		32,466		28,125		4,341			4,243			4,243
SH&C life Insurance		11,345		11,105		240			1,617			1,617
e-Shinhan		427		689		(262	)		(262	)		(262	)
Shinhan Macquarie		2,392		2,679		(287	)		(93	)		5
Shinhan Credit Information		6,077		5,056		1,021			974			683
Shinhan PE		—		400		(400	)		(350	)		(350	)


	W	3,420,136		2,904,929		515,207			580,065			487,374

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(22)

Financing and Operating Status of the Company, Subsidiaries and Joint Venture Companies

(a)

The financing status of the Company and its subsidiaries as of June 30, 2006 and December 31, 2005 was as follows:


	(in millions of Won)
	2006
	Deposits		Borrowings		Debentures (*)		Total
Shinhan Financial Group	W	—		137,221		2,503,935		2,641,156
Shinhan Bank		84,190,137		17,282,909		21,329,980		122,803,026
Good Morning Shinhan Securities		717,042		358,000		—		1,075,042
Shinhan Life Insurance		—		20,000		—		20,000
Shinhan Card		—		1,378,000		1,339,411		2,717,411
Shinhan Capital		—		873,184		331,132		1,204,316
Jeju Bank		1,731,208		126,975		35,260		1,893,443

	W	86,638,387		20,176,289		25,539,718		132,354,394


(*)		Net of discount on debentures


	(in millions of Won)
	2005
	Deposits		Borrowings		Debentures (*)		Total
Shinhan Financial Group	W	—		156,098		2,126,043		2,282,141
Shinhan Bank		43,996,904		9,096,330		12,327,937		65,421,171
Chohung Bank		41,404,815		5,788,793		7,848,891		55,042,499
Good Morning Shinhan Securities		913,795		829,425		—		1,743,220
Shinhan Life Insurance		—		47,000		—		47,000
Shinhan Card		—		1,025,500		179,544		1,205,044
Shinhan Capital		—		721,885		345,201		1,067,086
Jeju Bank		1,681,985		89,689		35,000		1,806,674

	W	87,997,499		17,754,720		22,862,616		128,614,835


(*)		Net of discount on debentures

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(22)

Financing and Operating Status of the Company, Subsidiaries and Joint Venture Companies, Continued

(b)

The operating status of the Company and its subsidiaries as of June 30, 2006 and December 31, 2005 was as follows:


	(in millions of Won)
	2006
					Cash and due
	Loans (*)		Securities		from banks		Total
Shinhan Financial Group	W	1,181,285		11,384,468		749,368		13,315,121
Shinhan Bank		101,490,392		24,654,124		6,302,252		132,446,768
Good Morning Shinhan Securities		402,022		2,104,331		691,270		3,197,623
Shinhan Life Insurance		1,301,054		2,347,091		514,328		4,162,473
Shinhan Card		3,263,179		24,964		2,006		3,290,149
Shinhan Capital		1,196,217		143,966		71,755		1,411,938
Shinhan BNP Paribas ITMC		346		10,290		37,811		48,447
Jeju Bank		1,503,881		390,282		116,570		2,010,733
SH&C Life Insurance		11,522		49,000		1,650		62,172
Shinhan Macquarie		—		—		13,207		13,207
Shinhan Credit Information		—		—		5,480		5,480
Shinhan PE		—		—		7,692		7,692

	W	110,349,898		41,108,516		8,513,389		159,971,803


(*)		Net of allowance for loan losses and present value discounts


	(in millions of Won)
	2005
					Cash and due
	Loans (*)		Securities		from banks		Total
Shinhan Financial Group	W	1,476,630		10,882,359		64,374		12,423,363
Shinhan Bank		55,191,023		13,289,065		2,301,465		70,781,553
Chohung Bank		44,648,308		10,644,933		2,171,777		57,465,018
Good Morning Shinhan Securities		302,457		2,161,569		921,164		3,385,190
Shinhan Life Insurance		1,377,904		2,034,360		421,028		3,833,292
Shinhan Card		1,479,533		414		5,876		1,485,823
Shinhan Capital		1,061,971		131,623		115,388		1,308,982
Shinhan BNP Paribas ITMC		620		10,307		34,098		45,025
Jeju Bank		1,416,748		348,658		108,971		1,874,377
SH&C Life Insurance		372		48,023		23,031		71,426
Shinhan Macquarie		—		—		9,318		9,318
Shinhan Credit Information		—		—		6,011		6,011
Shinhan PE		—		846		6,967		7,813

	W	106,955,566		39,552,157		6,189,468		152,697,191


(*)		Net of allowance for loan losses and present value discounts

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(23)		Contribution of Subsidiaries and Joint Venture Companies to the Company’s Net Income

		Effects under the equity method on the Company’s net income for the three-month and six-month periods ended June 30, 2006 and 2005 are as follows:


	(in millions of Won, except ratio)
	Three-month period						Six-month period
	ended June 30, 2006						ended June 30, 2006
	Amount			Ratio (%)			Amount			Ratio (%)
Gain (loss) from equity method on:
Shinhan Bank	W	457,254			74.44		W	867,358			78.14
Good Morning Shinhan Securities		27,225			4.43			47,945			4.32
Shinhan Life Insurance		19,970			3.25			39,265			3.54
Shinhan Card		95,604			15.56			111,610			10.06
Shinhan Capital		7,829			1.27			29,181			2.63
Shinhan BNP Paribas ITMC		1,092			0.18			2,222			0.20
Jeju Bank		5,191			0.85			8,545			0.77
SH&C Life Insurance		435			0.07			1,457			0.13
Shinhan Macquarie		(1,141	)		(0.19	)		1,327			0.12
Shinhan Credit Information		899			0.15			1,350			0.12
Shinhan PE		(110	)		(0.02	)		(294	)		(0.03	)

		614,248			100.00			1,109,966			100.00

Other income		21,872						45,776
Other expense		(40,411	)					(83,683	)

Net income for period	W	595,709					W	1,072,059

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(23)

Contribution of Subsidiaries and Joint Venture Companies to the Company’s Net Income, Continued


	(in millions of Won, except ratio)
	Three-month period						Six-month period
	ended June 30, 2005						ended June 30, 2005
	Amount			Ratio (%)			Amount			Ratio (%)
Gain (loss) from equity method on:
Shinhan Bank	W	225,235			46.69		W	443,582			50.33
Chohung Bank		232,275			48.15			374,796			42.53
Good Morning Shinhan Securities		2,850			0.59			9,679			1.10
Shinhan Card		14,564			3.02			27,052			3.07
Shinhan Capital		2,861			0.59			14,327			1.63
Shinhan BNP Paribas ITMC		855			0.18			1,719			0.20
Jeju Bank		2,845			0.59			5,892			0.67
SH&C Life Insurance		809			0.17			1,299			0.15
e-Shinhan		(193	)		(0.04	)		(236	)		(0.03	)
Shinhan Macquarie		(47	)		(0.01	)		2,309			0.26
Shinhan Credit Information		682			0.14			1,452			0.16
Shinhan PE		(354	)		(0.07	)		(588	)		(0.07	)

		482,382			100.00			881,283			100.00

Other income		25,431						53,422
Other expense		(37,431	)					(76,222	)

Net income for period	W	470,382					W	858,483

SHINHAN FINANCIAL GROUP CO., LTD.

Notes to Non-Consolidated Financial Statements, Continued

June 30, 2006 and 2005

(Unaudited)

(24)		Allowance for Loan Losses of the Company, Subsidiaries and Joint Venture Companies

		Changes in the allowance for loan losses of the Company, its subsidiaries and joint venture companies for the six-month period ended June 30, 2006 and the year ended December 31, 2005 were as follows:


	(in millions of Won)
	2006
	Beginning		Increase			Ending
	balance		(decrease)			balance
Shinhan Financial Group	W	7,420		(1,484	)		5,936
Shinhan Bank		1,572,829		79,369			1,652,198
Good Morning Shinhan Securities		27,256		2,118			29,374
Shinhan Life Insurance		17,740		(2,122	)		15,618
Shinhan Card		67,400		158,180			225,580
Shinhan Capital		30,373		343			30,716
Shinhan BNP Paribas ITMC		18		1			19
Jeju Bank		25,146		(2,954	)		22,192
SH&C Life Insurance		46		(2	)		44
Shinhan Macquarie		3		(2	)		1
Shinhan Credit Information		1		—			1

	W	1,748,232		233,447			1,981,679


	(in millions of Won)
	2005
	Beginning		Increase			Ending
	balance		(decrease)			balance
Shinhan Financial Group	W	8,794		(1,374	)		7,420
Shinhan Bank		743,506		(59,949	)		683,557
Chohung Bank		1,006,721		(117,449	)		889,272
Good Morning Shinhan Securities		29,416		(2,160	)		27,256
Shinhan Life Insurance		—		17,740			17,740
Shinhan Card		47,831		19,569			67,400
Shinhan Capital		27,021		3,352			30,373
Shinhan BNP Paribas ITMC		13		5			18
Jeju Bank		32,145		(6,999	)		25,146
SH&C Life Insurance		15		31			46
Shinhan Macquarie		53		(50	)		3
Shinhan Credit Information		—		1			1

	W	1,895,515		(147,283	)		1,748,232