Edgar Filing: SHINHAN FINANCIAL GROUP CO LTD

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

Under the Securities Exchange Act of 1934

For the Month of November 2017

SHINHAN FINANCIAL GROUP CO., LTD.

(Translation of registrant’s name into English)

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

(Address of principal executive offices)

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

Form 20-F ☑ Form 40-F ☐

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

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

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

Yes ☐ No ☑

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

Summary of FY2017 3Q Business Report

On November 14, 2017, Shinhan Financial Group (“SFG”) filed its FY2017 3Q Business Report (the “Business Report”) with the Financial Services Commission of Korea and the Korea Exchange pursuant to the Financial Investment Services and Capital Market Act of Korea. This is the summary of the Business Report translated into English. Non-material or previously disclosed information are omitted or abridged.

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

Table of Contents


1. Introduction of the Group			3

2. Business Results			6

3. Independent Auditor			15

4. Major Shareholder and Market Price Information of our Common Shares and ADRs			16

5. Directors, Executive Officers and Employees			17

6. Related Party Transactions			22

1. Introduction of the Group

Company History in 2010 through 2017

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

Dec. 2016 : Launched new integrated PT Bank Shinhan Indonesia

Principal Subsidiaries under Korean Law (as of Sep. 30, 2017)

Direct Subsidiaries


Subsidiaries	Ownership by SFG
Shinhan Bank		100.0	%
Shinhan Card		100.0	%
Shinhan Investment Corp.		100.0	%
Shinhan Life Insurance		100.0	%
Shinhan BNP Paribas Asset Management		65.0	%
Shinhan Capital		100.0	%
Jeju Bank ¹⁾		68.9	%
Shinhan Savings Bank ²⁾		100.0	%
Shinhan Data System		100.0	%
Shinhan AITAS ³⁾		99.8	%
Shinhan Credit Information		100.0	%
Shinhan Private Equity		100.0	%
SHC Management ⁴⁾		100.0	%

1)	Jeju Bank is currently listed on the Korea Exchange.

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

On April 1, 2013, Shinhan Savings Bank merged with Yehanbyoul Savings Bank, both of which were direct subsidiaries of Shinhan Financial Group. As a result of the integration of the two savings banks, the previous Shinhan Savings Bank has been liquidated and is thus no longer a subsidiary of Shinhan Financial Group and instead, Yehanbyoul Savings Bank now exists under the name of “Shinhan Savings Bank” as an existing legal entity constituting a member of Shinhan Financial Group.

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

4)	Currently in liquidation proceedings

Indirect subsidiaries held through direct subsidiaries (as of Sep. 30, 2017)


Direct Subsidiaries	Indirect Subsidiaries	Ownership by the Parent
Shinhan Bank	Shinhan Asia Limited		100.0	%
	Shinhan Bank America		100.0	%
	Shinhan Bank Japan		100.0	%
	Shinhan Bank Europe		100.0	%
	Shinhan Khmer Bank Limited		97.5	%
	Shinhan Bank Kazakhstan		100.0	%
	Shinhan Bank China Limited		100.0	%
	Shinhan Bank Canada		100.0	%
	Shinhan Bank Vietnam		100.0	%
	Banco Shinhan de Mexico		100.0	%
	PT Bank Shinhan Indonesia		99.0	%

Shinhan Card	LLP MFO Shinhan Finance		100.0	%
	PT. Shinhan Indo Finance		50.0	%
	Shinhan Microfinance Co., Ltd.		100.00	%

Shinhan Investment Corp.	Shinhan Investment Corp. USA Inc.		100.0	%
	Shinhan Investment Corp. Asia Inc.		100.0	%
	KOFC Shinhan Frontier Champ 2010-4 PEF¹)		8.5	%
	Shinhan Praxis K-Growth Global Private Equity Fund²⁾		14.1	%
	Shinhan Securities Vietnam Co., Ltd		100.0	%
	PT Shinhan Securities Indonesia		99.0	%

Shinhan BNP Paribas Asset Management	Shinhan BNP Paribas Asset Management (Hong Kong) Limited		100.0	%

	Shinhan NPS Private Equity Fund 1st³⁾		5.0	%
Shinhan Private Equity	Shinhan Private Equity Fund 2nd⁴⁾		2.2	%
	Shinhan-Stonebridge Petro Private Equity Fund⁵⁾		0.6	%

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

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

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

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

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

Number of Shares (as of Sep. 30, 2017)


Types of Shares	Number of Shares
Common Shares		474,199,587

Total		474,199,587

2. Business Results

Operation Results


							(KRW billion)
	2017 3Q (Jan. 1 ~ Sep. 30)		2016 3Q (Jan. 1 ~ Sep. 30)		FY2016 (Jan. 1 ~ Dec. 31)		FY2015 (Jan. 1 ~ Dec. 31)
Operating income		3,493.2		2,482.5		3,108.6		2,973.1
Equity method income		19.5		5.9		10.0		21.0
Other non-operating income		63.1		48.4		51.8		146.5
Profit before income taxes		3,575.7		2,536.8		3,170.5		3,140.6
Income tax expense		838.1		326.3		345.6		694.6

Consolidated net income		2,737.6		2,210.5		2,824.9		2,446.0
Net income attributable to equity holders of the Group		2,706.4		2,162.7		2,774.8		2,367.2
Net income attributable to non-controlling interest		31.2		47.8		50.1		78.8

Notes :

•

Some of the totals may not sum due to rounding.

Source and Use of Funds


Consolidated Basis (KRW billion, %)		2017 3Q								FY2016								FY2015
		Jan. 1 ~ Sep. 30								Jan. 1 ~ Dec. 31								Jan. 1 ~ Dec. 31
		Average Balance¹⁾		Proportions (%)		Interest Paid		Interest Rate (%)		Average Balance¹⁾		Proportions (%)		Interest Paid		Interest Rate (%)		Average Balance¹⁾		Proportions (%)		Interest Paid		Interest Rate (%)
	Deposits		239,441.2		58.2		1,826.1		1.02		226,966.8		58.7		2,586.7		1.14		203,910.5		57.3		2,861.0		1.40
	Borrowings		17,434.8		4.2		154.8		1.19		15,047.2		3.9		176.4		1.17		13,492.9		3.8		150.7		1.12
	Debt Securities Issued		46,658.0		11.3		802.0		2.30		42,790.8		11.1		1,085.8		2.54		39,334.8		11.0		1,183.8		3.01
Source	Other Liabilities		75,048.5		18.4		—		—		70,504.9		18.2		—		—		68,378.1		19.2		—		—

	Total Liabilities		378,582.5		92.0		—		—		355,309.7		91.9		—		—		325,116.3		91.3		—		—

	Total Stockholder’s Equity		32,512.5		7.9		—		—		31,499.5		8.1		—		—		31,063.1		8.7		—		—

	Total Liabilities & SE		411,095.0		100.0		—		—		386,809.3		100.0		—		—		356,179.4		100.0		—		—

	Cash & Due from Banks		21,297.3		5.2		127.3		0.80		20,933.1		5.4		185.5		0.89		21,993.4		6.2		225.6		1.03
	Loans		263,852.8		64.2		7,128.3		3.61		252,132.2		65.2		9,244.0		3.67		231,889.2		65.1		9,031.6		3.89
	Loans in KRW		205,148.5		49.9		5,022.0		3.27		197,841.4		51.2		6,541.9		3.31		180,410.1		50.7		6,479.5		3.59
	Loans in Foreign Currency		16,627.4		4.0		422.8		3.40		14,936.7		3.9		482.2		3.23		13,528.2		3.8		415.0		3.07
Use	Credit Card Accounts		19,780.9		4.8		1,254.5		8.48		18,804.3		4.9		1,708.5		9.09		17,819.5		5.0		1,635.3		9.18
	Others		22,296.0		5.5		429.1		2.57		20,549.8		5.3		511.4		2.49		20,131.5		5.7		501.9		2.49
	AFS Financial Assets		33,690.6		8.2		470.6		1.87		30,308.9		7.8		612.1		2.02		26,830.0		7.5		654.4		2.44
	HTM Financial Assets		21,501.8		5.2		476.5		2.96		17,409.7		4.5		561.8		3.23		14,961.0		4.2		539.0		3.60
	Other Assets		70,752.5		17.2		—		—		66,025.3		17.1		—		—		60,505.8		17.0		—		—

	Total Assets		411,095.0		100.0		—		—		386,809.3		100.0		—		—		356,179.4		100.0		—		—

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

Other Financial Information

*	The main serial financial figures and indices for Sep. 30, 2017 listed herein may be subject to change.

1) Capital Adequacy

Consolidated BIS Ratio (Shinhan Financial Group)


								(KRW billion	)
	Sep. 30, 2017 (e)			Dec. 31, 2016			Dec. 31, 2015
Aggregate Amount of Equity Capital (A)		31,472,2			29,786.5			27,216.4
Risk-Weighted Assets (B)		207,440.1			198,642.6			203,274.5
BIS Ratio (A/B)		15.17	%		15.00	%		13.39	%

Note) based on Basel III

Capital Adequacy Ratios (Subsidiaries) (%)


						(%)
Subsidiary	Capital Adequacy Ratio	Sep. 30, 2017 (e)		Dec. 31, 2016		Dec. 31, 2015
Shinhan Bank	BIS Capital Adequacy Ratio		16.1		15.7		14.8
Shinhan Card	Adjusted Equity Capital Ratio		24.2		26.2		28.9
Shinhan Investment Corp.	Net Capital Ratio		867.5		892.0		387.2
Shinhan Life Insurance	Risk Based Capital Ratio		181.5		178.3		204.2
Shinhan BNP Paribas Asset Management	Equity Capital (KRW billion)		152.4		148.6		157.3
	Minimum Capital Requirement (KRW billion)		23.8		24.0		23.2
Shinhan Capital	Adjusted Equity Capital Ratio		13.8		14.9		16.8
Jeju Bank	BIS Capital Adequacy Ratio		14.5		12.8		12.6
Shinhan Savings Bank	BIS Capital Adequacy Ratio		14.6		14.9		16.3

Notes :

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

2) Liquidity

Won Liquidity Ratio


													(KRW billion, %)
Company	Sep. 30, 2017						Dec. 31, 2016						Dec. 31, 2015
Company	Won Assets		Won Liabilities		Won Liquidity Ratio(%)		Won Assets		Won Liabilities		Won Liquidity Ratio(%)		Won Assets		Won Liabilities		Won Liquidity Ratio(%)
Shinhan Financial Group		531.6		134.4		395.5		198.8		134.8		147.5		624.1		216.0		288.9
Shinhan Card		16,080.7		4,574.0		351.6		14,722.9		4,069.1		361.8		14,588.0		3,845.4		379.4
Shinhan Investment Corp.		14,786.9		10,033.6		147.4		12,472.3		8,227.4		151.6		11,546.7		6,525.0		177.0
Shinhan Life Insurance		892.3		540.2		165.2		915.8		502.0		182.4		1,189.5		486.7		244.4
Shinhan Capital		733.6		629.5		116.5		684.5		521.2		131.3		784.7		355.4		220.8
Shinhan Savings Bank		253.0		204.1		123.9		169.8		138.7		122.4		144.2		103.1		139.9

Notes :

•

Shinhan Financial Group: Due within 1 month

•

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

•

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

•

Liquidity Ratio for Shinhan Bank and Jeju Bank have been replaced by Liquidity Coverage Ratio from Mar 31, 2015 to reflect the recent amendments to detailed regulations on supervision of banking business.

Liquidity Coverage Ratio


													(KRW billion, %)
Company	Sep. 30, 2017						Dec. 31, 2016						Dec. 31, 2015
Company	High Quality Liquid Assets		Net Cash Outflows		Liquidity Coverage Ratio(%)*		High Quality Liquid Assets		Net Cash Outflows		Liquidity Coverage Ratio(%)		High Quality Liquid Assets		Net Cash Outflows		Liquidity Coverage Ratio(%)
Shinhan Bank		44,384.8		46,052.5		96.4		35,961.9		37,257.5		96.7		37,421.5		38,253.3		97.8
Jeju Bank		536.5		469.4		114.7		563.2		401.9		142.6		546.3		352.0		155.2

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

Foreign Currency (FC) Liquidity Ratio


													(USD millions, %)
Company	Sep. 30, 2017						Dec. 31, 2016						Dec. 31, 2015
Company	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		52,096.0		46,811.0		111.3		39,631.1		35,968.5		110.2		31,925.0		27,205.6		117.4
Shinhan Investment Corp.		7,931.2		6,915.6		114.7		5,635.3		5,073.4		111.1		1,875.7		1,793.8		104.6
Shinhan Capital		93.0		0.3		30,573.9		80.3		1.1		7,333.0		83.1		73.4		113.2
Jeju Bank		20.4		14.0		145.5		13.3		10.7		124.7		15.2		9.7		156.3

Notes :

•

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

•

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

•

Shinhan Financial Group figures are based on the separate basis.

3) Asset Quality

SFG Consolidated Basis


	(KRW billion)
	Sep. 30, 2017			Dec. 31, 2016			Dec. 31, 2015
Total Loans		271,951.3			259,772.6			246,487.6
Substandard & Below		1,742.1			1,927.6			2,171.6
Substandard & Below Ratio		0.64	%		0.74	%		0.88	%
Non-Performing Loans		1,460.1			1,595.8			1,691.5
NPL Ratio		0.54	%		0.61	%		0.69	%
Substandard & Below Coverage Ratio		127.40	%		125.99	%		191.22	%
Loan Loss Allowance		2,219.5			2,428.7			4,152.5	¹⁾
Substandard & Below Loans		1,742.1			1,927.6			2,171.6

1)	Including reserve for credit losses

Separate Basis


																		(	%)
	Sep. 30, 2017						Dec. 31, 2016						Dec. 31, 2015
	Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio		Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio		Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio ¹⁾
Shinhan Financial Group		—		—		—		—		—		—		—		—		—
Shinhan Bank		0.57		0.49		104		0.65		0.56		96		0.80		0.61		173
Shinhan Card		1.12		0.72		226		1.16		0.76		271		1.24		0.81		355
Shinhan Investment Corp.		0.09		0.09		470		0.10		0.10		413		0.15		0.15		485
Shinhan Life Insurance		0.07		0.06		336		0.09		0.08		335		0.09		0.09		927
Shinhan Capital		1.36		1.61		124		2.61		2.93		94		3.06		3.58		86
Jeju Bank		1.17		1.12		27		1.24		0.93		35		0.87		0.50		141
Shinhan Savings Bank		4.37		3.16		61		5.42		3.45		53		6.51		5.37		58

1)	Including reserve for credit losses

4) Debt to Equity Ratios

Shinhan Financial Group (Separate Basis)


	(KRW billion)
	Sep. 30, 2017			Dec. 31, 2016			Dec. 31, 2015
Debt		7,668.1			6,977.7			6,894.5
Equity		20,243.2			20,217.9			20,781.0
Debt to Equity Ratio		37.88	%		34.51	%		33.18	%

Twenty Largest Exposures by Borrower


							(KRW billion)
As of Sep. 30, 2017 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Ministry of Strategy & Finance		0.0		—		14,561.4		—		—		14,561.4
Bank of Korea		170.0		—		5,654.2		0.1		—		5,824.2
Korea Development Bank		465.3		—		5,080.3		—		—		5,545.6
Korea Housing Finance Corporation		0.0		—		5,015.5		—		—		5,015.5
Industrial Bank of Korea		652.1		149.1		2,165.4		0.5		—		2,967.0
Export-Import Bank of Korea		—		—		2,374.7		58.0		—		2,432.6
Korea Deposit Insurance Corporation		—		—		2,350.0		—		—		2,350.0
Korea Securities Finance Corporation		995.0		—		1,313.8		—		—		2,308.8
Samsung Electronics Co., Ltd.		—		2,165.4		25.7		—		0.0		2,191.1
NongHyup Bank		1,567.6		7.5		592.5		2.4		—		2,170.0
Korea Land & Housing Corporation		—		—		1,367.7		—		—		1,367.7
Kookmin Bank		477.1		114.7		689.7		0.6		—		1,281.9
Woori Bank		90.6		154.3		1,009.2		0.1		—		1,254.2
Hana Bank		138.8		289.9		580.8		2.9		—		1,012.4
Small & medium Business Corporation		0.0		—		873.3		—		—		873.3
Korea Investment & Securities Co., Ltd.		651.2		—		170.0		—		—		821.2
LG Electronics Inc.		71.3		60.8		206.2		445.0		—		783.4
Hotel Lotte Co., Ltd.		160.0		321.1		10.0		196.0		0.0		687.1
Hyundai Motor Company		58.7		525.4		40.0		26.1		0.1		650.2
Korea Student Aid Foundation		—		—		622.8		—		—		622.8

Total		5,497.6		3,788.1		44,703.0		731.6		0.1		54,720.3

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

Exposure to ten Main Debtor Groups


							(KRW billion)
As of Sep. 30, 2017 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Samsung		409.0		2,710.4		1,075.6		833.9		0.0		5,028.9
Hyundai Motors		1,031.7		2,053.8		986.1		364.5		0.2		4,436.4
Lotte		379.8		789.9		978.0		482.9		0.2		2,630.8
SK		603.5		262.9		637.6		451.6		0.0		1,955.6
LG		393.8		197.1		421.0		601.5		0.0		1,613.4
Hyundai Heavy Industries		178.4		161.5		385.9		887.1		—		1,612.9
Hanwha		477.5		244.6		554.5		308.6		0.0		1,585.2
LS		127.8		426.3		239.3		599.1		—		1,392.5
GS		345.0		100.0		366.6		133.5		0.0		945.1
Hyosung		152.5		426.8		75.0		151.3		0.0		805.6

Total		4,098.9		7,373.1		5,719.7		4,814.2		0.4		22,006.4

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

Loans, Due from banks and Securities Concentration by Industry


	(KRW billion)
As of Sep. 30, 2017 Consolidated basis	Total Exposures
As of Sep. 30, 2017 Consolidated basis	Amount		Weight (%)
Finance and Insurance		77,370.8		20.4	%
Manufacturing		46,413.6		12.2	%
Retail and wholesale		17,633.5		4.6	%
Real Estate, leasing and service		24,717.6		6.5	%
Construction		4,039.4		1.1	%
Hotel and Restaurant		5,284.4		1.4	%
Others		64,335.5		16.9	%
Consumers		140,244.4		36.9	%

Total		380,039.2		100.0	%

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

Top Twenty Non-Performing Loans


	(KRW billion)
Borrower	Industry	Gross Principal Outstanding		Substandard & Below		Allowance for Loan Losses
A	Manufacture of Cold Rolled, Drawn and Extruded Iron or Steel Products		113.2		113.2		32.3
B	Manufacture of Distilling Machinery, Heat exchange unit and Gas Generators		81.0		81.0		54.6
C	Manufacture of Plastic Products for Fabricating of Machine		56.8		56.8		42.0
D	Manufacture of Sections for Ships		40.6		38.3		25.8
E	Building of Steel Ships		35.8		35.8		11.5
F	Other Civil Engineering Construction		29.9		29.9		20.5
G	Building of Steel Ships		24.6		24.6		12.0
H	Manufacture of Sections for Ships		25.9		24.4		0.0
I	Building of Steel Ships		22.9		22.9		0.8
J	Construction of Highways, Streets and Roads		17.4		17.4		12.3
K	Apartment Building Construction		16.7		16.7		1.8
L	Apartment Building Construction		17.6		16.6		15.0
M	Golf Course Operation		14.2		14.2		0.0
N	Wholesale of Non-Specialized Goods		12.1		12.1		11.4
O	Manufacture of Sections for Ships		11.4		11.4		3.4
P	Golf Course Operation		11.4		11.4		0.0
Q	Manufacture of Other Smelting, Refining and Alloys of Non-ferrous Metals		9.2		9.2		3.3
R	Development and Subdividing of Other Real Estate		8.2		8.2		0.0
S	Wastewater Treatment Services		7.7		7.7		3.7
T	Wedding Chapel Services		7.4		7.4		0.0

	Total		564.0		559.2		250.4

Notes :

•

Consolidated basis as of Sep. 30, 2017.

•

Some of the totals may not sum due to rounding.

3. Independent Auditor

Audit Opinion for the last 3 years

2017 3Q

FY2016

FY2015

Audit Opinion

—

Unqualified

* For the third quarter of 2017, the independent accountant conducted a review for our financial statements instead of auditing them.

Compensation to the Independent Auditor for Audit and Review Services

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


Year	Auditor	Payment ¹⁾ (KRW mil.)	Details	Working hours
FY2017	KPMG Samjong Accounting Corp.	626 (annualized basis)	Review/Audit of Financial Statements	3,768 Hours
FY2017	KPMG Samjong Accounting Corp.	78 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	408 Hours
FY2016	KPMG Samjong Accounting Corp.	581 (annualized basis)	Review/Audit of Financial Statements	7,512 Hours
FY2016	KPMG Samjong Accounting Corp.	73 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	807 Hours
FY2015	KPMG Samjong Accounting Corp.	561 (annualized basis)	Review/Audit of Financial Statements	8,236 Hours
	KPMG Samjong Accounting Corp.	73 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	895 Hours
	KPMG Samjong Accounting Corp.	12 (annualized basis)	Non-statutory audit of subsidiaries under the consolidated corporate tax system for CY2015	282 hours

1)	Excluding value-added taxes.

*	In addition to above mentioned description of fees for audit and review services, KPMG Samjong Accounting Corp. also provided services related to US listing and ICOFR audit in accordance with the standards of the PCAOB which we agreed to pay KRW1,430 million(excluding value-added taxes) for FY2017.

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

Major Shareholders¹⁾ of Shinhan Financial Group as of Sep. 30, 2017


Name	No. of Common Shares owned²⁾		Ownership%
National Pension Service		45,269,850		9.55	%
BlackRock Fund Advisors³⁾		24,320,723		5.13	%

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

2)	Based on the results of shareholder registry closing as of December 31, 2016

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

Share ownership of Employee Stock Ownership Association


					(Number of shares, %)
Share ownership	Beginning Balance (Jan. 1, 2017)		Increase		Decrease		Ending Balance (Sep. 30, 2017)		Ownership% (Sep. 30, 2017)
Employee Stock Ownership		22,310,764		2,366,996		2,371,330		22,306,430		—
ESOA account		88,320		41,775		25,621		104,474		—

Total		22,399,084		2,408,771		2,396,951		22,410,904		4.73	%

Common Share Traded on the Korea Exchange


								(KRW, number of shares)
		Apr. 2017		May. 2017		Jun. 2017		Jul. 2017		Aug. 2017		Sep. 2017
Price per share	High		48,900		50,800		50,700		53,200		55,400		51,700
	Low		45,600		48,150		48,450		48,900		51,600		48,000
	Avg.		47,200		49,392		49,567		50,671		53,277		50,114
Trading Volume			15,982,095		20,318,010		19,994,728		20,212,738		18,024,052		20,132,865
Highest Daily Trading Volume			1,314,224		2,329,091		1,404,702		2,426,599		1,350,593		1,992,199
Lowest Daily Trading Volume			369,293		543,818		437,819		503,554		393,748		443,303

American Depositary Receipts traded on the New York Stock Exchange


								(USD, number of shares)
		Apr. 2017		May. 2017		Jun. 2017		Jul. 2017		Aug. 2017		Sep. 2017
Price per share	High		43.06		45.35		45.1		47.63		48.76		46.32
	Low		40.2		41.79		42.66		42.5		45.52		42.59
	Avg.		41.57		43.83		43.99		44.98		46.97		44.09
Trading Volume			1,457,502		1,862,440		2,066,088		1,740,216		1,718,672		1,714,260
Highest Daily Trading Volume			109,599		196,431		227,522		159,928		158,601		195,481
Lowest Daily Trading Volume			54,358		28,081		52,780		37,466		35,920		41,549

Note) 1 ADR = 1 Common Shares

5. Directors, Executive Officers and Employees

Directors and Executive Officers

1) Executive Director


			(As of Sep. 30, 2017)
Name	Month and Year of Birth	Position	Service Term
Cho Yong-byoung	June 1957	- Chairman of Shinhan Financial Group - Board Steering Committee Chair - Corporate Governance & CEO Recommendation Committee member - Outside Director Recommendation Committee member - Corporate Social Responsibility Committee member	3 years starting from March 23, 2017

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.

7 outside directors were appointed as board of directors at the 16th Annual General Meeting of Shareholders on March 23, 2017, of which 5 directors renewed their terms and 2 directors were newly appointed.

Our non-executive directors are as follows:


					(As of Sep. 30, 2017)
Name	Month and Year of Birth	Outside Director		Sub-Committees	Service Term
Wi Sung-ho	June 1958		X	-	2 years starting from March 23, 2017
Park Ansoon	January 1945		O	Corporate Social Responsibility Committee member Outside Director Recommendation Committee member	2 years starting from March 23, 2017
Park Cheul	April 1946		O	Chairman of Board of Directors Outside Director Recommendation Committee Chair Risk Management Committee member Board Steering Committee member	3 years starting from March 25, 2015
Lee Manwoo	November 1954		O	Audit Committee Chair Corporate Social Responsibility Committee member Board Steering Committee member	4 years starting from March 26, 2014
Lee Sang-kyung	September 1945		O	Corporate Governance & CEO Recommendation Committee member Audit Committee member Remuneration Committee member Outside Director Recommendation Committee member	6 years starting from March 29, 2012
Lee Steven Sung-ryang	August 1955		O	Remuneration Committee Chair Audit Committee member Corporate Governance & CEO Recommendation Committee member	2 years starting from March 24, 2016
Lee Jung-il	August 1952		O	Corporate Governance & CEO Recommendation Committee member	2 years starting from March 24, 2016
Lee Heun-ya	September 1959		O	Risk Management Committee member Board Steering Committee member Outside Director Recommendation Committee member	2 years starting from March 24, 2016
Joo Jaeseong	January 1956		O	Risk Management Committee Chair Corporate Social Responsibility Committee Chair Board Steering Committee member	2 years starting from March 23, 2017
Yuki Hirakawa	October 1960		O	Corporate Social Responsibility Committee member Corporate Governance & CEO Recommendation Committee member	3 years starting from March 25, 2015
Philippe Avril	April 1960		O	Risk Management Committee member Remuneration Committee member Corporate Governance & CEO Recommendation Committee member	3 years starting from March 25, 2015

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

3) Executive Officers

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


				(As of Sep. 30, 2017)
Name	Month and Year of Birth		Position	In charge of
Lee Dong-hwan		September 1959	Deputy President	- Group & Global Investment Banking Business Department
Yim Bo-hyuk		March 1961	Deputy President & Chief Financial Officer	- Finance Management Team - Investor Relations Team - Human Resource Team - Accounting Team - Corporate Culture Development Team

Heo Young-taeg		August 1961	Deputy President	- Global Business Planning Office

Woo Young-woong		March 1960	Deputy President & Chief Strategy Officer	- Strategic Planning Team - Global Business & Capital Market Team - Future Strategy Research Institute - Digital Strategy Team

Jin Okdong		February 1961	Deputy President	- One Shinhan Strategy Team - Public Relations Team - Management Support Team - CSR Team - Platform Marketing Team

Lee Chang-goo		January 1961	Executive Vice President	- Wealth Management Planning Office

Park Woo-gyun		March 1959	Executive Director & Compliance Officer	- Compliance Team

Kim Im-geun		July 1963	Executive Director & Chief Risk Officer	- Risk Management Team - Risk Model Validation Team - Credit Review Team

Compensation to Directors

1) Total Amount Approved at the Meeting of Shareholders


				(As of Sep. 30, 2017)
	Total number of persons		Total amount approved at shareholders’ meeting (KRW millions)	Notes
Directors (Outside directors)		12(10)	3,500	—

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

2) Total Amount Paid


							(As of Sep. 30, 2017)
	Total number of Persons		Total Compensation (KRW millions)		Average Compensation per person (KRW millions)		Notes
Registered Directors		2		1,026		446	Excluding outside directors
Outside Directors		7		312		47	Excluding Audit committee members
Audit committee members or internal auditor		3		162		54

Total		12		1,500		125

Notes :

•

Represents the total number of applicable persons as of Sep. 30, 2017.

•

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

Stock Options


					(As of Sep. 30, 2017)
	No. of Granted Options (A)		No. of Exercised Options (B)		No. of Cancelled Options (C)		No. of Exercisable Options (D = A – B –C)		Exercise Price (KRW)
Granted in 2005		102,389		99,889		—		2,500		28,006
Granted in 2006		108,356		105,856		—		2,500		38,829
Granted in 2007		58,764		—		—		58,764		54,560
Granted in 2008		60,753		—		15,125		45,628		49,053

Total		330,262		205,745		15,125		109,392		—

Notes :

•

The weighted-average exercise price of outstanding exercisable options as of Sep. 30, 2017 is KRW 51,297.

•

The closing price of our common stock was KRW 50,300 on Sep. 30, 2017.

•

As of Sep. 30, 2017, the exercise of 9,466 options granted in 2008 is temporarily suspended.

Employees


					(As of Sep. 30, 2017)
Gender	Number of Employees		Average length of Service	Total Salaries and wages paid in 2017 (KRW million)		Average Payment per person (KRW million)
Male		121	2 yrs 7 mths (13 yrs 5 mths) ¹⁾		10,012		82
Female		22	5 yrs 6 mths (9 yrs 3 mths) ¹⁾		1,240		56

Total		143	3 yrs 0 mths (12 yrs 9 mths)¹⁾		11,252		78

1)	Average length of service including service within group subsidiaries

6. Related Party Transactions

Loans to Subsidiaries


														(KRW billion)
Subsidiary	Loan Type	Origination Date		Maturity Date		Lending Rate			Beginning Balance (Jan. 1, 2017)		Decrease		Increase		Ending Balance (Sep. 30, 2017)
Shinhan Card	Loans in KRW		2012-03-14		2017-03-14		4.12	%		150		150		—		—
	Loans in KRW		2016-01-26		2021-01-26		1.98	%		150		—		—		150
	Loans in KRW		2016-02-24		2021-02-24		1.84	%		150		—		—		150
	Loans in KRW		2017-03-22		2022-03-22		2.22	%		—		—		150		150
	Loans in KRW		2017-04-20		2022-04-20		2.21	%		—		—		100		100
	Loans in KRW		2017-05-12		2022-05-12		2.35	%		—		—		50		50
Shinhan Capital	Loans in KRW		2012-03-14		2017-03-14		4.12	%		50		50		—		—
	Loans in KRW		2012-12-14		2017-12-14		3.33	%		50		—		—		50
	Loans in KRW		2013-01-18		2018-01-18		3.18	%		50		—		—		50
	Loans in KRW		2013-09-05		2018-09-05		3.61	%		80		—		—		80
	Loans in KRW		2014-01-27		2019-01-27		3.60	%		50		—		—		50
	Loans in KRW		2016-03-16		2021-03-16		1.90	%		50		—		—		50
	Loans in KRW		2016-04-27		2019-04-27		1.63	%		100		—		—		100
	Loans in KRW		2017-03-22		2022-03-22		2.22	%		—		—		50		50
	Loans in KRW		2017-04-20		2022-04-20		2.21	%		—		—		50		50
	Loans in KRW		2017-05-12		2022-05-12		2.35	%		—		—		50		50
	Loans in KRW		2017-08-24		2022-08-24		2.37	%		—		—		50		50
Shinhan Private Equity	Loans in KRW		2016-11-23		2017-11-22		1.95	%		5		—		—		5
Shinhan Savings Bank	Loans in KRW		2016-06-17		2021-06-17		1.61	%		50		—		—		50
	Loans in KRW		2017-06-23		2022-06-23		2.27	%		—		—		50		50

Total										935		200		550		1,285

Exhibit 99.1

Independent Auditors’ Review Report (Separate Financial Statements) of Shinhan Financial Group as of September 30, 2017

Exhibit 99.2

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of September 30, 2017

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/ Yim Bo-hyuk

Name: Yim Bo-hyuk

Title: Chief Financial Officer

Date: November 14, 2017