Form 6-K
Table of Contents

 

 

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 November 2012

 

 

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  x            Form 40-F  ¨

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

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

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

Yes  ¨            No  x

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

 

 

 

Table of Contents

Summary of 2012 3Q Business Report

On November 23, 2012, Shinhan Financial Group (“SFG”) filed its 2012 3Q Business Report (the “Business Report”) with the Financial Supervisory Service of the Republic of Korea (“Korea”) pursuant to the Financial Investment Services and Capital Market Act of Korea. This is the summary of the Business Report translated into English. Non-material or previously disclosed information are omitted or abridged.

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

 

Table of Contents   
1. Introduction of the Group      3   
2. Business Results      6   
3. Independent Auditor      16   
4. Directors, Executive Officers and Employees      17   
5. Major Shareholder and Market Price Information of Our Common Shares and ADRs      19   
6. Related Party Transactions      20   

Exhibit 99.1

Independent Auditors’ Review Report (Separate Financial Statements) of Shinhan Financial Group as of September 30, 2012

Exhibit 99.2

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of September 30, 2012

 

2

Table of Contents

1. Introduction of the Group

Company History in 2009 through 2012

 

  •  

Jan. 2009: Shinhan BNP Paribas Asset Management launched through the merger of Shinhan BNP Paribas ITMC and SH Asset Management

 

  •  

Jun. 2009 : SH&C separated from SFG after SFG consummated share transfers of SH&C

 

  •  

Sep. 2009 : SBJ became an indirect subsidiary of SFG

 

  •  

Oct. 2009 : Shinhan Bank Vietnam became an indirect subsidiary of SFG

 

  •  

Nov. 2009 : Liquidated Shinhan Finance Ltd. , an indirect subsidiary of SFG

 

  •  

Dec. 2009 : Shinhan Capital Petra PEF became an indirect subsidiary of SFG

 

  •  

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

 

  •  

Jun. 2010 : CHB Valuemeet 2001 First SPC was disaffiliated from SFG

 

  •  

Jun. 2010 : CHB Valuemeet 2001 Second SPC and CHB Valuemeet 2002 First SPC were disaffiliated from SFG

 

  •  

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

 

  •  

Oct. 2010 : Shinhan Maritime Private Equity Fund I became an indirect subsidiary of SFG

 

  •  

Dec. 2010 : KOFC Shinhan Frontier Champ 2010-4 PEF Investment Corp. became an indirect subsidiary of SFG

 

  •  

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

 

  •  

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

 

  •  

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

 

3

Table of Contents

Principal Subsidiaries under Korean Law (as of September 30, 2012)

Direct Subsidiaries

 

Subsidiaries

    Ownership by SFG  

Shinhan Bank

      100.0 % 

Shinhan Card

      100.0 % 

Shinhan Investment Corp.

      100.0 % 

Shinhan Life Insurance

      100.0 % 

Shinhan BNP Paribas Asset Management

      65.0 % 

Shinhan Capital

      100.0 % 

Jeju Bank 1)

      68.9 % 

Shinhan Savings Bank 2)

      100.0 % 

Shinhan Data System

      100.0 % 

Shinhan Credit Information

      100.0 % 

Shinhan Private Equity Investment Management 3)

      100.0 % 

SHC Management 4)

      100.0 % 

 

1) Jeju Bank is currently listed on the Korea Exchange.
2) On December 28, 2011, Shinhan Savings Bank became a direct subsidiary upon obtaining a savings bank license.
3) On November 2, 2011, Shinhan Private Equity renamed as “Shinhan Private Equity Investment Management” upon acquisition of a investment advisory license.
4) Currently in liquidation proceedings.

 

4

Table of Contents

Indirect subsidiaries held through direct subsidiaries (as of September 30, 2012)

 

Direct Subsidiaries

   

Indirect Subsidiaries

    Ownership by
the Parent		  

Shinhan Bank

   

Shinhan Asia Limited

      100.0 % 
  

Shinhan Bank America

      100.0 % 
  

Shinhan Bank Europe

      100.0 % 
  

Shinhan Khmer Bank Limited

      90.0 % 
  

Shinhan Bank Kazakhstan

      100.0 % 
  

Shinhan Bank China Limited

      100.0 % 
  

Shinhan AITAS

      99.8 % 
  

Shinhan Bank Canada

      100.0 % 
  

Shinhan Bank Japan

      100.0 % 
  

Shinhan Bank Vietnam 1)

      100.0 % 

Shinhan Investment Corp.

   

Shinhan Investment America Inc.

      100.0 % 
  

Shinhan Investment Europe Ltd.

      100.0 % 
  

Shinhan Investment Asia Ltd.

      100.0 % 
  

Shinhan Maritime Private Equity Fund I

      7.1 % 
  

KOFC Shinhan Frontier Champ 2010-4 PEF Investment Corp. 2)

      8.5 % 

Shinhan BNP Paribas Asset Management

   

Shinhan BNP Paribas Asset Management (Hong Kong) Limited

      100.0 % 

Shinhan Private Equity Investment Management

   

Shinhan NPS Private Equity Fund 1st

      5.0 % 3) 
  

Shinhan Private Equity Fund 2nd

      2.2 % 4) 

 

1) On November 28, 2011, upon 100% acquisition of Shinhan Vina Bank, Shinhan Bank Vietnam was merged with Shinhan Vina Bank.
2) Shinhan Capital currently owns 6.5% of KOFC Shinhan Frontier Champ 2010-4 PEF Investment Corp.
3) Shinhan Financial Group and its subsidiaries currently own 36.7% of Shinhan NPS Private Equity Fund 1st.
4) Shinhan Financial Group and its subsidiaries currently own 32.6% of Shinhan Private Equity Fund 2nd.

Number of Shares (as of September 30, 2012)

 

Types of Shares

    Number of Shares  

Common Shares

      474,199,587   

Redeemable Preferred Shares

      11,100,000   
  

 

 

  

Total

      485,299,587   
  

 

 

  

 

5

Table of Contents

2. Business Results

 

Operation Results    (KRW billion)

 

     3Q 2012
(Jan. 1 ~ Sep. 30)		      FY2011
(Jan. 1 ~  Dec. 31)		      FY2010
(Jan. 1 ~  Dec. 31)		  

Operating income

      2,650.6         4,134.8         3,414.5   

Equity in income(loss) of associates

      19.7         57.8         15.3   

Earnings before income tax

      2,670.3         4,192.6         3,429.8   

Income taxes

      600.9         919.9         570.4   
  

 

 

     

 

 

     

 

 

  

Consolidated net income

      2,069.3         3,272.6         2,859.4   

Net income in majority interest

      1,942.6         3,100.0         2,684.6   

Net income in minority interest

      126.7         172.6         174.8   
  

 

 

     

 

 

     

 

 

  

 

LOGO Some of the totals may not sum due to rounding.

 

6

Table of Contents

Source and Use of Funds

(KRW billion)

 

          3Q 2012     FY2011     FY2010  
        Jan. 1 ~ Sep. 30     Jan. 1 ~ Dec. 31     Jan. 1 ~ Dec. 31  

Consolidated Basis

(KRW billion, %)

   Average
Balance		     Proportions
(%)		     Interest
Paid		     Interest
Rate
(%)		     Average
Balance		     Proportions
(%)		     Interest
Paid		     Interest
Rate
(%)		     Average
Balance		     Proportions
(%)		     Interest
Paid		     Interest
Rate
(%)		  

Source

  

Deposits

     167,646.6        56.37        3,429.5        2.73        156,280.5        55.28        4,181.0        2.68        149,653.3        56.11        3,935.6        2.63   
 

Borrowings

     14,395.3        4.84        197.9        1.83        14,037.4        4.97        259.2        1.85        12,403.4        4.65        250.4        2.02   
 

Debentures

     39,996.3        13.45        1,331.4        4.44        40,017.2        14.16        1,942.9        4.86        40,356.3        15.13        2,041.2        5.06   
 

Other Liabilities

     47,740.6        16.05        —          —          44,174.6        15.63        —          —          38,446.2        14.41        —          —     
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
 

Total Liabilities

     269,778.8        90.72        —          —          254,509.7        90.03        —          —          240,859.2        90.30        —          —     
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
 

Total Stockholder’s Equity

     27,609.7        9.28        —          —          28,184.6        9.97        —          —          25,872.4        9.70        —          —     
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
 

Total Liabilities & SE

     297,388.5        100.00        —          —          282,694.3        100.00        —          —          266,731.6        100.00        —          —     
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Use

  

Currency & Due from Banks

     16,488.0        5.54        205.2        1.66        14,396.1        5.09        248.6        1.73        14,457.1        5.42        168.5        1.17   
 

Loans

     194,482.3        65.40        8,550.0        5.86        186,828.2        66.09        11,265.3        6.03        174,360.4        65.37        10,561.5        6.06   
 

Loans in KRW

     149,299.2        50.20        6,296.4        5.62        143,097.0        50.62        8,281.2        5.79        135,645.6        50.85        7,632.4        5.63   
 

Loans in Foreign Currency

     10,434.7        3.51        323.9        4.14        9,510.8        3.36        379.1        3.99        8,940.8        3.35        377.3        4.22   
 

Credit Card Accounts

     17,421.4        5.86        1,381.2        10.57        17,740.2        6.28        1,887.5        10.64        16,278.4        6.10        1,794.8        11.03   
 

Others

     17,327.0        5.83        548.5        4.22        16,480.2        5.83        717.5        4.35        13,495.8        5.06        756.9        5.61   
 

AFS Financial Assets

     29,920.3        10.06        872.5        3.89        25,588.5        9.05        1,025.9        4.01        22,045.7        8.27        953.6        4.33   
 

HTM Financial Assets

     11,823.2        3.98        451.0        5.09        12,307.7        4.35        642.9        5.22        12,899.1        4.84        687.4        5.33   
 

Other Assets

     44,674.7        15.02        —          —          43,573.8        15.41        —          —          42,969.3        16.11        —          —     
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
 

Total Assets

     297,388.5        100.00        —          —          282,694.3        100.00        —          —          266,731.6        100.00        —          —     
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

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

 

7

Table of Contents

Other Financial Information

 

* The main serial financial figures and indices for Sep. 30, 2012 listed herein may be subject to change.

1) Capital Adequacy

 

Consolidated BIS Ratio (Shinhan Financial Group)    (KRW billion)
     Sep. 30, 2012     Dec. 31, 2011     Dec. 31, 2010  

Aggregate Amount of Equity Capital (A)

      24,794.1        22,315.4        23,369.7   

Risk-Weighted Assets (B)

      202,489.3        195,579.4        188,785.7   

BIS Ratio (A/B) 1)

      12.24 %      11.41 %      12.38 % 

 

1) In accordance with the amendments in the Financial Holding Company Guidelines of the Financial Service Commission (“FSC”), the Group BIS Ratio under BASEL I. is used as an index for measuring capital adequacy.
2) BIS ratio for Dec. 31, 2010 based on Korean GAAP is 12.77%.

 

Capital Adequacy Ratios (Subsidiaries)                   (%)

Subsidiary

   

Capital Adequacy Ratio

    Sep. 30, 2012      Dec. 31, 2011      Dec. 31, 2010  

Shinhan Bank 1)

    BIS Capital Adequacy Ratio      15.41         15.26         15.47   

Jeju Bank 1)

    BIS Capital Adequacy Ratio      15.06         13.27         13.40   

Shinhan Card 1)

    Adjusted Equity Capital Ratio      27.50         24.84         25.18   

Shinhan Investment Corp. 2)

    Net Capital Ratio      587.62         700.78         658.31   

Shinhan Life Insurance 2)

    Solvency Margin Ratio      311.85         324.02         397.93   

Shinhan BNPP AM 2)

    Net Capital Ratio      558.86         599.73         708.31   

Shinhan Capital 2)

    Adjusted Equity Capital Ratio      14.97         14.90         14.23   

Shinhan Savings Bank

    BIS Capital Adequacy Ratio      14.44         n/a         n/a   

 

•  

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

•  

Basel II FIRB was applied in calculating Shinhan Bank’s BIS Capital Adequacy Ratios.

•  

Basel II TSA was applied in calculating Jeju Bank’s BIS Capital Adequacy Ratios.

•  

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

•  

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 FSC. Under these guidelines, Shinhan Card and Shinhan Capital are required to maintain a minimum adjusted equity capital ratio of 8%.

•  

Net Capital Ratio is computed in accordance with the guidelines issued by the FSC. Under these guidelines, Shinhan Investment Corporation and Shinhan BNP Paribas Asset Management are required to maintain a minimum net capital ratio of 100%.

•  

Under the guidelines issued by the FSC, Shinhan Life Insurance is required to maintain a minimum solvency margin ratio of 100%. The risk-based capital methodology was applied in calculating the solvency margin ratio of Shinhan Life Insurance.

 

1) Capital adequacy ratios for Dec. 31, 2010 based on K-GAAP is as follows:

Shinhan Bank: 15.93%, Jeju Bank: 14.18%, Shinhan Card: 24.99%

 

2) Capital adequacy ratios of Shinhan Investment Corp., Shinhan Life Insurance, Shinhan BNPP AM, and Shinhan Capital for Dec. 31, 2010 are based on K-GAAP.

 

8

Table of Contents

1) Liquidity Ratios

 

Won Liquidity Ratio                                  (KRW billion, %)

Company

    Sep. 30, 2012      Dec. 31, 2011      Dec. 31. 2010  
   Won
Assets		      Won
Liabilities		      Won
Liquidity
Ratio		      Won
Assets		      Won
Liabilities		      Won
Liquidity
Ratio		      Won
Assets		      Won
Liabilities		      Won
Liquidity
Ratio		  

Shinhan Financial Group

      396.3         246.7         160.6         4,225.5         3,911.2         108.0         972.6         246.0         395.3   

Shinhan Bank

      65,602.0         45,361.0         144.6         56,609.5         46,635.4         121.4         54,646.2         45,786.9         119.3   

Shinhan Card

      14,836.8         3,549.8         418.0         15,417.2         3,417.5         451.1         13,160.9         3,450.1         381.5   

Shinhan Investment Corp.

      10,261.2         7,512.0         136.6         6,161.4         5,036.5         122.3         6,615.7         5,293.5         125.0   

Shinhan Life Insurance

      1,111.6         364.3         305.1         843.5         341.5         247.0         517.3         254.7         203.1   

Shinhan Capital

      612.9         240.5         254.8         519.0         147.9         350.8         758.8         295.0         257.2   

Jeju Bank

      929.6         561.7         165.5         982.2         686.2         143.1         899.3         618.8         145.3   

Shinhan Savings Bank

      330.9         112.9         293.1         —           —           —           —           —           —     

 

1) Shinhan Financial Group, Shinhan Bank, Jeju Bank: Due within 1 month
2) Shinhan Life Insurance: (Won assets due within 3 months /3 months average of Claim payments )*100
3) Shinhan Card, Shinhan Investment Corp., Shinhan Capital, Shinhan Savings Bank: Due within 3 months

 

Foreign Currency (FC) Liquidity Ratio                        (KRW billion, %)

Company

    Sep. 30, 2012      Dec. 31, 2011      Dec. 31, 2010  
   FC
Assets		      FC
Liabilities		      FC
Liquidity
Ratio		      FC
Assets		      FC
Liabilities		      FC
Liquidity
Ratio		      FC
Assets		      FC
Liabilities		      FC
Liquidity
Ratio		  

Shinhan Financial Group

      —           —           —           —           —           —           —           —           —     

Shinhan Bank

      29,926.2         27,260.3         109.8         25,887.9         22,254.2         116.3         24,238.7         23,092.8         105.0   

Shinhan Investment Corp.

      466.3         435.8         107.0         23.3         23.5         99.0         11.5         10.3         111.5   

Shinhan Capital

      139.5         90.6         154.0         51.5         21.9         235.7         333.5         285.0         117.0   

Jeju Bank

      16.3         8.3         194.9         15.4         9.4         164.3         13.0         10.5         123.8   

 

1) Foreign currency liquidity ratios are computed with assets and liabilities due within 3 months
2) Shinhan Bank’s foreign currency liquidity ratio reflected securitization weight with the guidelines issued by the FSS

 

9

Table of Contents

3) Asset Quality

 

SFG Consolidated Basis    (KRW billion, %)
     Sep. 30, 2012      Dec. 31, 2011      Dec. 31, 2010  

Total Loans

      203,991.1         201,245.9         184,676.3   

Substandard & Below

      3,071.7         2,587.1         2,736.8   

Substandard & Below Ratio

      1.51         1.29         1.48   

Non-Performing Loans

      2,487.4         1,903.5         1,977.7   

NPL Ratio

      1.22         0.95         1.07   

NPL Coverage Ratio

      148.02         162.19         132.80   

Loan Loss Allowance 1)

      4,546.7         4,196.0         3,634.5   

Substandard & Below Loans

      3,071.7         2,587.1         2,736.8   

 

1) Including reserve for credit losses.

 

Separate Basis                                  (%)
     Sep. 30, 2012      Dec. 31, 2011      Dec. 31, 2010  
   Substandard
& Below
Ratio		      NPL
Ratio		      NPL
Coverage
Ratio 1)		      Substandard
& Below
Ratio		      NPL
Ratio		      NPL
Coverage
Ratio 1)		      Substandard
& Below
Ratio		      NPL
Ratio		      NPL
Coverage
Ratio 1)		  

Shinhan Financial Group

      —           —           —           —           —           —           —           —           —     

Shinhan Bank

      1.27         1.03         153.72         1.09         0.82         166.11         1.31         0.91         133.10   

Shinhan Card

      2.17         1.68         201.62         1.69         1.26         236.08         1.90         1.44         182.65   

Shinhan Investment Corp.

      10.43         10.43         82.32         16.97         16.92         71.46         12.29         12.29         82.41   

Shinhan Life Insurance

      0.51         0.29         243.75         0.45         0.23         280.64         0.62         1.48         226.89   

Shinhan Capital

      2.94         2.36         58.91         2.79         1.31         82.85         2.38         1.86         80.44   

Jeju Bank

      1.84         1.70         87.11         1.62         1.03         93.73         1.57         1.28         113.74   

Shinhan Savings Bank

      38.82         38.82         35.61         —           —           —           —           —           —     

 

1) Including reserve for credit losses.

 

10

Table of Contents

4) Write-Offs & Provision for Credit Losses

 

<SFG Consolidated Basis>

 

 

    (KRW billion)
     Sep. 30, 2012      Dec. 31, 2011      Dec. 31, 2010  

Allowance for loan losses

      3,047.7         2,729.1         2,993.3   

Allowance for acceptances and guarantee

      82.0         85.8         171.0   

Allowance for unused loan commitments

      422.2         444.8         462.5   

Other allowance

      227.1         339.0         225.9   
  

 

 

     

 

 

     

 

 

  

Total allowance

      3,779.0         3,598.7         3,852.7   
  

 

 

     

 

 

     

 

 

  

Write-offs

      885.5         1,382.1         1,284.7   

 

<Shinhan Bank>

 

 

    (KRW billion)
     Sep. 30, 2012      Dec. 31, 2011      Dec. 31, 2010  

Allowance for loan losses

      1,791.0         1,580.9         1,803.8   

Allowance for acceptances and guarantee

      115.5         109.5         208.7   

Allowance for unused loan commitments

      76.3         85.2         85.8   

Other allowance

      149.5         256.2         155.4   
  

 

 

     

 

 

     

 

 

  

Total allowance

      2,132.3         2,031.8         2,253.8   
  

 

 

     

 

 

     

 

 

  

Write-offs

      403.4         811.8         773.1   

 

<Shinhan Card>

 

 

    (KRW billion)
     Sep. 30, 2012      Dec. 31, 2011      Dec. 31, 2010  

Allowance for loan losses

      784.7         706.2         703.8   

Allowance for acceptances and guarantee

      —           —           —     

Allowance for unused loan commitments

      337.2         345.3         367.5   

Other allowance

      49.0         50.6         42.5   
  

 

 

     

 

 

     

 

 

  

Total allowance

      1,170.9         1,102.1         1,113.8   
  

 

 

     

 

 

     

 

 

  

Write-offs

      358.3         451.5         436.8   

 

11

Table of Contents

4) Debt to Equity Ratios

 

Shinhan Financial Group    (KRW billion)

Separate Basis

    Sep. 30, 2012     Dec. 31, 2011 1)     Dec. 31, 2010  

Debt

      7,548.0        11,413.4        6,907.6   

Equity

      19,729.5        19,430.8        20,753.0   

Debt to Equity Ratio

      38.26 %      58.74 %      33.29 % 

 

1) Upon the resolution of Board of Directors to redeem Series 10 redeemable preferred shares and Series 11 convertible redeemable preferred shares held on December 15, 2011, KRW 3.75 trillion capital decrease and liability increase reflected on Debt to Equity Ratio.

 

12

Table of Contents
Twenty Largest Exposures by Borrower                                          
     (KRW billion)  

As of Sep. 30, 2012

Consolidated basis

    Loans in Won      Loans in
Foreign
Currency		      Securities      Guarantees
and
Acceptance		      Others      Total
Exposures		  

Ministry of Strategy & Finance

      —           —           8,384         —           —           8,384   

Bank of Korea

      2,270         —           5,203         —           —           7,473   

Hyundai Heavy Industries Co., Ltd.

      2         132         312         2,908         —           3,355   

Industrial Bank of Korea

      557         45         2,341         —           —           2,943   

Korea Finance Corporation

      —           —           2,788         —           —           2,788   

Korea Deposit Insurance Corporation

      —           —           2,543         —           —           2,543   

Korea Development Bank

      13         24         2,315         —           —           2,352   

Korea Land & Housing Corporation

      —           —           1,877         —           —           1,877   

Kookmin Bank

      807         7         1,044         —           —           1,858   

Woori Bank

      249         14         1,288         6         —           1,557   

Korea Securities Finance Corporation

      33         —           1,453         —           —           1,486   

Samsung Heavy Industries Co., Ltd.

      —           68         61         1,185         —           1,314   

Hana Bank

      14         58         1,156         —           —           1,228   

POSCO

      2         177         792         62         —           1,033   

Standard Chartered Bank Korea

      303         —           648         —           —           952   

KEPCO

      —           —           912         8         —           920   

Songdo Cosmopolitan City Development Inc.

      912         —           —           —           —           912   

Korea EximBank

      —           —           830         —           —           830   

Samsung C&T Corporation

      41         65         461         252         —           819   

Hyundai Samho Heavy Industries Co., Ltd.

      —           16         —           802         —           819   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      5,205         605         34,408         5,224         —           45,442   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

LOGO Some of the totals may not sum due to rounding

 

13

Table of Contents
Exposure to Main Debtor Groups    (KRW billion)

As of Sep. 30, 2012

Consolidated basis

    Loans in Won      Loans in Foreign
Currency		      Securities      Guarantees and
Acceptances		      Others      Total
Exposures		  

Hyundai Heavy Industries

      108         337         363         4,041         —           4,850   

Samsung

      242         891         1,071         1,779         —           3,983   

Hyundai Motors

      1,479         1,340         712         356         —           3,887   

SK

      491         909         1,055         1,032         2         3,488   

LG

      1,611         365         376         135         —           2,487   

POSCO

      202         308         855         405         6         1,776   

Lotte

      473         224         678         182         1         1,558   

GS

      306         124         520         447         —           1,396   

LS

      208         375         243         387         —           1,213   

Hyosung

      236         460         18         188         —           901   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      5,357         5,334         5,890         8,952         9         25,541   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

LOGO Some of the totals may not sum due to rounding.

 

Loan Concentration by Industry    (KRW billion)

As of Sep. 30, 2012

Consolidated basis

    Total Exposures  
   Amount      Weight (%)  

Finance and Insurance

      55,865         20.7   

Manufacturing

      36,444         13.5   

Retail and wholesale

      13,001         4.8   

Real Estate, leasing and service

      19,662         7.3   

Construction

      5,334         2.0   

Hotel and leisure

      4,076         1.5   

Others

      40,193         14.9   

Consumers

      95,549         35.4   
  

 

 

     

 

 

  

Total

      270,123         100   
  

 

 

     

 

 

  

 

* Including deposits, loans, and securities.

 

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Table of Contents

Top Twenty Non-Performing Loans

(KRW billion)

 

Borrower

  

Industry

   Gross Principal
Outstanding		     Allowance for
Loan Losses		  

A

  

Development and Subdividing of Residential Buildings

     116        2   

B

  

Development and Subdividing of Residential Buildings

     52        1   

C

  

Other Non-Residential Building Construction

     45        45   

D

  

Development and Subdividing of Residential Buildings

     43        16   

E

  

Office and Commercial Building Construction

     44        32   

F

  

Manufacture of Other Paper and Paperboard

     39        28   

G

  

Manufacture of Television

     34        31   

H

  

Building of Steel Ships

     33        19   

I

  

Renting of Non-Residential Buildings

     31        3   

J

  

Development and Subdividing of Residential Buildings

     30        20   

K

  

Manufacture of Synthetic Resin and Other Plastic Materials

     30        18   

L

  

Other Civil Engineering Construction

     29        21   

M

  

Apartment Building Construction

     26        23   

N

  

Development and Subdividing of Residential Buildings

     25        5   

O

  

Non-Financial Holding Companies

     25        15   

P

  

Renting of Non-Residential Buildings

     25        10   

Q

  

Manufacture of Sections for Ships

     25        0   

R

  

Construction of Highways, Streets and Roads

     24        17   

S

  

Manufacture of Tires and Tubes

     23        23   

T

  

Other Financial Business

     23        5   
   

 

 

    

 

 

  

Total

     720        332   
   

 

 

    

 

 

  

 

1) Consolidated basis as of Sep. 30, 2012.
2) Non-Performing Loans are defined as loans past due longer than 90 days.
3) Some of the totals may not sum due to rounding.

 

15

Table of Contents

3. Independent Auditor

Audit Opinion for the last 3 years

 

      3Q 2012      FY 2011    FY 2010

Audit Opinion

      —         Unqualified    Unqualified

 

* For the third quarter of 2012, the independent accountant conducted a review for our financial statements instead of auditing them.

Compensation to the Independent Auditor for Audit and Review Services

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

 

Year

  

Auditor

   Payment
(KRW mil.)		    

Details

  

Working
hours

3Q 2012

   KPMG Samjong Accounting Corp.     498  1)    Review/Audit of Financial Statements   4,900 hours

2011

   KPMG Samjong Accounting Corp.     487      Review/Audit of Financial Statements   9,016 hours

2010

   KPMG Samjong Accounting Corp.     366      Review/Audit of Financial Statements   4,650 hours

 

1) Payment for the three quarters of 2012 covers the full year of 2012

 

16

Table of Contents

4. Directors, Executive Officers and Employees

Directors and Executive Officers

1) Executive Directors

 

Name

   

Month and
Year

of Birth

   

Position

   

Service Term

Dong Woo Han    Nov. 1948    Chairman of Shinhan Financial Group Board Steering Committee Chair Corporate Governance & CEO Recommendation Committee Member    3 years starting from March 23, 2011

2) Non-Executive Directors

Currently, 11 non-executive directors are in office, 10 of which outside directors who are nominated by our Outside Director Recommendation Committee and appointed pursuant to the approval of general shareholders’ meeting on March 29, 2012.

Our non-executive directors are as follows:

 

Name

   

Month and Year

of Birth

   

Outside

Director

   

Sub-Committees

   

Service Term

Jin Won Suh    April 1951    X    -    4 years starting from March 23, 2011
Taeeun Kwon    January 1941    O   

Audit Committee member

Corporate Governance & CEO Recommendation Committee member

    2 years starting from March 23, 2011
Kee Young Kim    October 1937    O   

Risk Management Committee Chair

Compensation Committee member

Corporate Governance & CEO Recommendation Committee Chair

    2 years starting from March 23, 2011
Seok Won Kim    April 1947    O   

Audit Committee member

Compensation Committee Chair

    2 years starting from March 23, 2011
Hoon Namkoong    June 1947    O   

Chairman of Board of Directors

Board Steering Committee member

Risk Management Committee member

Corporate Governance & CEO Recommendation Committee member

    2 years starting from March 23, 2011
Jaekun Yoo    August 1941    O    Corporate Governance & CEO Recommendation Committee member    2 years starting from March 23, 2011
Sang-Kyeong Lee    September 1945    O   

Audit Committee member

Compensation Committee member

    2 years starting from March 29, 2012
Ke Sop Yun    May 1945    O   

Audit Committee Chair

Board Steering Committee member

    4 years starting from March 17, 2009
Jung Il Lee    August 1952    O    Board Steering Committee member    2 years starting from March 23, 2011
Haruki Hirakawa    November 1964    O    Compensation Committee member    2 years starting from March 23, 2011
Philippe Aguignier    September 1957    O   

Risk Management Committee member

Corporate Governance & CEO Recommendation Committee member

    3 years starting from March 24, 2010

 

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Table of Contents

3) Executive Officers

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

 

Name

   

Month and Year

of Birth

   

Position

   

In charge of

Buhmsoo Choi

    Aug. 1956    Deputy President   

•      Strategic Planning Team

•      Global Business Strategy Team

•      Shinhan FSB Research Institute

Sung Ho Wi

    June 1958    Deputy President   

•      Wealth Management Planning Office

Se Il Oh

    Sep. 1957    Deputy President   

•      Corporate & Investment Banking Planning Office

Jae-Gwang Soh

    Aug. 1961    Deputy  President   

•      Synergy Management Team

•      Information & Technology Planning Team

•      Audit Team

Jung Kee Min

    Mar. 1959    Deputy President & Chief Financial Officer   

•      Finance Management Team

•      Investor Relations Team

•      Business Management Team

Dong Hwan Lee

    Sep. 1959    Executive Vice-President   

•      Public Relations Team

•      CSR & Culture Management Team

•      General Affairs Team

Bo Hyuk Yim

    Mar. 1961    Managing Director   

•      Risk Management Team

Woo Gyun Park

    Mar. 1959    Managing Director   

•      Compliance Team

 

Stock Options   (As of Oct. 31, 2012)

 

     No. of
Granted Options
(A)		      No. of  Exercised
Options
(B)		      No. of  Cancelled
Options
(C)		      No. of  Exercisable
Options
(D = A – B – C)		      Exercise  Price
(KRW)		  

Granted in 2005

      2,620,331         2,266,642         251,300         102,389         28,006   

Granted in 2006

      3,206,173         713,167         480,300         2,012,706         38,829   

Granted in 2007

      1,231,169         0         205,313         1,025,856         54,560   

Granted in 2008

      805,174         0         185,396         619,778         49,053   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      7,862,847         2,979,809         1,122,309         3,760,729         —     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

Note 1) The weighted-average exercise price of outstanding exercisable options as of Oct. 31, 2012 is KRW 44,510.
         2) The closing price of our common stock was KRW 37,450 on Oct. 31, 2012.

 

Employees   (As of Sep. 30, 2012)

Gender

    Number of
Employees		   

Average length of Service

    Total Salaries and  wages
paid in 2012
(KRW million)		     

Average Payment

per person

(KRW million)

Male

    128    2 yrs 4 mths      11,840       92

Female

    28    3 yrs 2 mths      1,217       43
  

 

   

 

   

 

 

     

 

Total

    156    2 yrs 5 mths      13,057       84
  

 

   

 

   

 

 

     

 

 

Note 1) Average length of service including service within group subsidiaries as of Sep. 30, 2012 is Male 13 yrs 1 mths and Female 7yrs 1 mths, whereas total average is 12yrs.
         2) Total salaries and average payment per person excludes retired employees. Including retired employees, total salaries paid stands at KRW15,215 million and average payment per person KRW78 million.

 

18

Table of Contents

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

Major Shareholders1) of Shinhan Financial Group as of Sep. 30, 2012

 

Name

    No. of Common Shares owned     Ownership%  

National Pension Service

      34,829,793  3)      7.34 % 3) 

BNP Paribas Group

      30,106,276  3)      6.35 % 3) 

 

1) Shareholders who own beneficial ownership of 5% or more (common share basis).
2) In addition to the common share holdings, National Pension Service holds a total of 2,000,000 shares of Shinhan Financial Group’s series 12 non-voting redeemable preferred stock as of Dec. 31, 2011.
3) As of December 31, 2011.

Share ownership of Employee Stock Ownership Association

 

Beginning Balance

(Jan. 1, 2012)

    Increase      Decrease      Ending Balance
(Sep. 30, 2012)		      Ownership%1)
(Sep. 30, 2012)		  

16,974,245

      3,161,923         1,447,145         18,689,023         3.94 % 

 

1) Common share basis.

 

Common Share Traded on the Korea Exchange         (KRW, number of shares)   
     Apr. 2012      May. 2012      Jun. 2012      Jul. 2012      Aug. 2012      Sep. 2012      Oct. 2012  

Price per share

    High      44,650         41,300         41,350         40,900         37,600         39,350         38,700   
  

Low

      39,500         37,000         37,250         33,350         34,250         34,500         36,750   
  

Avg.

      42,175         39,531         39,340         36,970         36,367         37,020         37,652   

Trading Volume

      19,115,298         24,751,394         19,039,724         29,538,364         29,398,615         30,282,383         16,965,939   

Highest Daily Trading Volume

      1,347,832         1,993,543         1,598,942         2,623,823         2,479,453         3,497,457         1,531,700   

Lowest Daily Trading Volume

      563,905         565,284         534,206         587,270         594,170         551,598         396,731   

 

American Depositary Receipts traded on the New York Stock Exchange         (USD, number of shares)   
     Apr. 2012      May. 2012      Jun. 2012      Jul. 2012      Aug. 2012      Sep. 2012      Oct. 2012  

Price per share

    High      79.08         71.53         71.70         72.84         66.30         69.90         34.97   
   Low      69.54         63.74         62.79         58.54         61.83         60.77         33.07   
   Avg.      73.73         67.86         67.51         64.74         64.41         66.17         33.95   

Trading Volume

           441,508              622,047             676,960              593,047              848,141              565,578              974,446   

Highest Daily Trading Volume

      55,206         75,027         68,399         57,657         205,904         69,439         87,800   

Lowest Daily Trading Volume

      5,464         8,077         7,491         9,613         7,520         9,852         11,364   

 

1) Shinhan Financial Group changed the ratio on its American Depositary Receipts (ADRs) from one (1) ADR representing two (2) common shares to one (1) ADR representing one (1) common share effective October 15, 2012.

 

2) Figures from April 2012 to September 2012 reflect the previous ratio (2:1), whereas figures for October 2012 reflect the changed ratio(1:1).

 

19

Table of Contents

6. Related Party Transactions

 

Loans to Subsidiaries

  

           (KRW billion)   

Subsidiary

   

Loan Type

   

Origination

Date

   

Maturity

Date

    Lending
Rate		     Beginning
Balance
(Jan.  1,
2012)		      Decrease      Increase      Ending
Balance
(Sep.  30,
2012)		  

Shinhan Investment Corp.

    Loans in KRW    2006-07-31    2012-01-31      5.64 %      100.0         100.0         0         0   
   Loans in KRW    2012-01-30    2017-01-30      4.11 %      0         0         100.0         100.0   
   Loans in KRW    2012-06-28    2017-06-28      3.84 %      0         0         100.0         100.0   

Shinhan Card

    Loans in KRW    2010-10-29    2015-10-29      4.37 %      100.0         0         0         100.0   
   Loans in KRW    2011-01-28    2016-01-28      4.91 %      100.0         0         0         100.0   
   Loans in KRW    2011-02-24    2016-02-24      4.82 %      250.0         0         0         250.0   
   Loans in KRW    2011-05-17    2016-05-17      4.47 %      100.0         0         0         100.0   
   Loans in KRW    2012-03-14    2017-03-14      4.12 %      0         0         150.0         150.0   

Shinhan Capital

    Loans in KRW    2007-03-23    2012-03-23      5.48 %      50.0         50.0         0         0   
   Loans in KRW    2007-06-08    2012-06-08      5.95 %      50.0         50.0         0         0   
   Loans in KRW    2008-01-23    2013-01-23      6.60 %      50.0         0         0         50.0   
   Loans in KRW    2010-09-28    2013-09-28      4.12 %      100.0         0         0         100.0   
   Loans in KRW    2011-01-28    2014-01-28      4.53 %      50.0         0         0         50.0   
   Loans in KRW    2011-04-29    2016-04-29      4.65 %      100.0         0         0         100.0   
   Loans in KRW    2011-05-17    2016-05-17      4.47 %      50.0         0         0         50.0   
   Loans in KRW    2012-03-14    2017-03-14      4.12 %      0         0         50.0         50.0   

Shinhan PE IM

    Loans in KRW    2011-08-12    2012-08-10      4.09 %      5.0         5.0         0         0   
   Loans in KRW    2012-08-10    2013-08-09      4.09 %      0         0         5.0         5.0   
             

 

 

     

 

 

     

 

 

     

 

 

  

Total

  

     1,105.0         205.0         405.0         1,305.0   
             

 

 

     

 

 

     

 

 

     

 

 

  

 

20

Table of Contents

Exhibit 99.1

Independent Auditors’ Review Report (Separate Financial Statements) of Shinhan Financial Group as of Sep 30, 2012

Exhibit 99.2

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of Sep 30, 2012

 

21

Table of Contents

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.

/s/ Jung Kee Min

Name:   Jung Kee Min
Title:   Chief Financial Officer

Date: November 26, 2012

 

22