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 of

the Securities Exchange Act of 1934

For the Month of August 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- .

Summary of 2012 1H Business Report

On August 29, 2012, Shinhan Financial Group (“SFG”) filed its 2012 1H 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 June 30, 2012

Exhibit 99.2

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

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

Principal Subsidiaries under Korean Law (as of June 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 Capital		100.0	%
Jeju Bank ¹⁾		68.9	%
Shinhan BNP Paribas Asset Management		65.0	%
Shinhan Data System		100.0	%
Shinhan Credit Information		100.0	%
Shinhan Private Equity Investment Management ²⁾		100.0	%
SHC Management		100.0	%
Shinhan Savings Bank ³⁾		100.0	%

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

2)	On November 2, 2011, Shinhan Private Equity renamed as “Shinhan Private Equity Investment Management” upon acquisition of a non-discretionary investment advisory license.

3)	On December 28, 2011, Shinhan Savings Bank became a direct subsidiary upon obtaining a savings bank license.

Indirect subsidiaries held through direct subsidiaries (as of June 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 Investment Management	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 June 30, 2012)


Types of Shares	Number of Shares
Common Shares		474,199,587
Redeemable Preferred Shares		11,100,000

Total		485,299,587

2. Business Results


*Operation Results*		(KRW billion)


	1H 2012 (Jan. 1 ~ Jun. 30)		FY2011 (Jan. 1 ~ Dec. 31)		FY2010 (Jan. 1 ~ Dec. 31)
Operating income		2,002.1		4,134.8		3,414.5
Equity in income(loss) of associates		13.0		57.8		15.3
Earnings before income tax		2,015.1		4,192.6		3,429.8
Income taxes		472.3		919.9		570.4
Consolidated net income		1,542.8		3,272.6		2,859.4
Net income in majority interest		1,457.7		3,100.0		2,684.6
Net income in minority interest		85.1		172.6		174.8

LOGO Some of the totals may not sum due to rounding

Source and Use of Funds

(KRW billion)


Consolidated Basis (KRW billion, %)		1H 2012								FY2011								FY2010
		Jan. 1 ~ Jun. 30								Jan. 1 ~ Dec. 31								Jan. 1 ~ Dec. 31
		Average Balance		Proportions (%)		Interest Paid		Interest Rate (%)		Average Balance		Proportions (%)		Interest Paid		Interest Rate (%)		Average Balance		Proportions (%)		Interest Paid		Interest Rate (%)
Source	Deposits		166,495.5		56.71		2,293.9		2.76		156,280.5		55.28		4,181.0		2.68		149,653.3		56.11		3,935.6		2.63
	Borrowings		14,430.9		4.92		131.5		1.82		14,037.4		4.97		259.2		1.85		12,403.4		4.65		250.4		2.02
	Debentures		39,833.5		13.57		907.2		4.55		40,017.2		14.16		1,942.9		4.86		40,356.3		15.13		2,041.2		5.06
	Other Liabilities		45,544.1		15.51		—		—		44,174.6		15.63		—		—		38,446.2		14.41		—		—

	Total Liabilities		266,304.1		90.71		—		—		254,509.7		90.03		—		—		240,859.2		90.30		—		—

	Total Stockholder’s Equity		27,283.0		9.29		—		—		28,184.6		9.97		—		—		25,872.4		9.70		—		—

	Total Liabilities & SE		293,587.1		100.00		—		—		282,694.3		100.00		—		—		266,731.6		100.00		—		—

Use	Currency & Due from Banks		16,617.8		5.66		146.7		1.77		14,396.1		5.09		248.6		1.73		14,457.1		5.42		168.5		1.17
	Loans		192,436.3		65.55		5,686.2		5.91		186,828.2		66.09		11,265.3		6.03		174,360.4		65.37		10,561.5		6.06
	Loans in KRW		148,029.9		50.42		4,196.9		5.67		143,097.0		50.62		8,281.2		5.79		135,645.6		50.85		7,632.4		5.63
	Loans in Foreign Currency		10,320.5		3.52		214.0		4.15		9,510.8		3.36		379.1		3.99		8,940.8		3.35		377.3		4.22
	Credit Card Accounts		17,348.2		5.91		918.8		10.59		17,740.2		6.28		1,887.5		10.64		16,278.4		6.10		1,794.8		11.03
	Others		16,737.8		5.70		356.4		4.26		16,480.2		5.83		717.5		4.35		13,495.8		5.06		756.9		5.61
	AFS Financial Assets		29,586.3		10.08		587.0		3.97		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		4.03		300.4		5.08		12,307.7		4.35		642.9		5.22		12,899.1		4.84		687.4		5.33
	Other Assets		43,123.5		14.69		—		—		43,573.8		15.41		—		—		42,969.3		16.11		—		—

	Total Assets		293,587.1		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.

Other Financial Information

1) Capital Adequacy


*Consolidated BIS Ratio (Shinhan Financial Group)*		(KRW billion)


	Jun. 30, 2012			Dec. 31, 2011			Dec. 31, 2010
Aggregate Amount of Equity Capital (A)		24,342.6			22,315.4			23,369.7

Risk-Weighted Assets (B)		197,726.9			195,579.4			188,785.7

BIS Ratio (A/B) ¹⁾		12.31	%		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	Jun. 30, 2012		Dec. 31, 2011		Dec. 31, 2010
Shinhan Bank ¹⁾	BIS Capital Adequacy Ratio		15.52		15.26		15.47
Jeju Bank ¹⁾	BIS Capital Adequacy Ratio		14.14		13.27		13.40
Shinhan Card ¹⁾	Adjusted Equity Capital Ratio		26.99		24.84		25.18
Shinhan Investment Corp. ²⁾	Net Capital Ratio		664.91		700.78		658.31
Shinhan Life Insurance ²⁾	Solvency Margin Ratio		277.71		324.02		397.93
Shinhan BNPP AM ²⁾	Net Capital Ratio		527.35		599.73		708.31
Shinhan Capital²⁾	Adjusted Equity Capital Ratio		14.87		14.90		14.23
Shinhan Savings Bank	BIS Capital Adequacy Ratio		12.88		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 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

1) Liquidity Ratios


*Won Liquidity Ratio*		(KRW billion, %)


Company	Jun. 30, 2012						Dec. 31, 2011						Dec. 31. 2010
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		297.5		41.2		721.7		4,225.5		3,911.2		108.0		972.6		246.0		395.3
Shinhan Bank		62,979.6		40,047.7		157.3		56,609.5		46,635.4		121.4		54,646.2		45,786.9		119.3
Shinhan Card		14,609.5		3,421.0		427.1		15,417.2		3,417.5		451.1		13,160.9		3,450.1		381.5
Shinhan Investment Corp.		9,428.5		6,603.6		142.8		6,161.4		5,036.5		122.3		6,615.7		5,293.5		125.0
Shinhan Life Insurance		1,330.8		351.6		378.5		843.5		341.5		247.0		517.3		254.7		203.1
Shinhan Capital		425.8		354.5		120.1		519.0		147.9		350.8		758.8		295.0		257.2
Jeju Bank		968.4		543.0		178.3		982.2		686.2		143.1		899.3		618.8		145.3
Shinhan Savings Bank		466.5		352.9		132.2		—		—		—		—		—		—

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, %)


	Jun. 30, 2012						Dec. 31, 2011						Dec. 31, 2010
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		27,901.4		23,821.2		117.1		25,887.9		22,254.2		116.3		24,238.7		23,092.8		105.0
Shinhan Investment Corp.		360.1		345.0		104.4		23.3		23.5		99.0		11.5		10.3		111.5
Shinhan Capital		180.9		124.2		145.7		51.5		21.9		235.7		333.5		285.0		117.0
Jeju Bank		9.6		5.2		186.1		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

3) Asset Quality


*Consolidated Basis*		(KRW billion, %)


	Jun. 30, 2012		Dec. 31, 2011		Dec. 31, 2010
Total Loans		198,276.2		201,245.9		184,676.3
Substandard & Below		3,093.3		2,587.1		2,736.8
Substandard & Below Ratio		1.56		1.29		1.48
Non-Performing Loans		2,545.5		1,903.5		1,977.7
NPL Ratio		1.28		0.95		1.07
NPL Coverage Ratio		150.40		162.19		132.80
Loan Loss Allowance ¹⁾		4,652.4		4,196.0		3,634.5
Substandard & Below Loans		3,093.3		2,587.1		2,736.8

1)	Including reserve for credit losses


*Separate Basis*		(KRW billion, %)


	Jun. 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		1.31		1.08		151.41		1.09		0.82		166.11		1.31		0.91		133.10
Shinhan Card		2.17		1.71		203.34		1.69		1.26		236.08		1.90		1.44		182.65
Shinhan Investment Corp.		16.22		17.01		74.82		16.97		16.92		71.46		12.29		12.29		82.41
Shinhan Life Insurance		0.45		0.25		231.16		0.45		0.23		280.64		0.62		1.48		226.89
Shinhan Capital		2.69		2.26		58.76		2.79		1.31		82.85		2.38		1.86		80.44
Jeju Bank		1.33		1.19		111.20		1.62		1.03		93.73		1.57		1.28		113.74
Shinhan Savings Bank		40.87		40.87		18.30		—		—		—		—		—		—

1)	Including reserve for credit losses

4) Write-Offs & Provision for Credit Losses

<SFG Consolidated Basis>

(KRW billion)


	1H 2012		FY2011		FY2010
Allowance for loan losses		2,982.4		2,729.1		2,993.3
Allowance for acceptances and guarantee		98.2		85.8		171.0
Allowance for unused loan commitments		431.2		444.8		462.5
Other allowance		200.6		339.0		225.9

Total allowance		3,712.4		3,598.7		3,852.7

Write-offs		491.6		1,382.1		1,284.7

<Shinhan Bank>

(KRW billion)


	1H 2012		FY2011		FY2010
Allowance for loan losses		1,781.9		1,580.9		1,803.8
Allowance for acceptances and guarantee		119.7		109.5		208.7
Allowance for unused loan commitments		82.1		85.2		85.8
Other allowance		122.0		256.2		155.4

Total allowance		2,105.7		2,031.8		2,253.8

Write-offs		173.2		811.8		773.1

<Shinhan Card>

(KRW billion)


	1H 2012		FY2011		FY2010
Allowance for loan losses		762.9		706.2		703.8
Allowance for acceptances and guarantee		—		—		—
Allowance for unused loan commitments		339.3		345.3		367.5
Other allowance		49.9		50.6		42.5

Total allowance		1,152.1		1,102.1		1,113.8

Write-offs		223.4		451.5		436.8

4) Debt to Equity Ratios


*Shinhan Financial Group*		(KRW billion)


Separate Basis	Jun. 30, 2012			Dec. 31, 2011 ¹⁾			Dec. 31, 2010
Debt		7,308.6			11,413.4			6,907.6
Equity		19,788.2			19,430.8			20,753.0
Debt to Equity Ratio		36.93	%		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.

Twenty Largest Exposures by Borrower

(KRW billion)


As of Jun. 30, 2012 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptance		Others		Total Exposures
Ministry of Strategy & Finance		—		—		7,837		—		—		7,837
Bank of Korea		1,370		—		4,972		—		—		6,342
Hyundai Heavy Industries Co., Ltd.		4		161		345		2,991		—		3,502
Industrial Bank of Korea		582		144		2,194		—		—		2,921
Korea Development Bank		16		—		2,510		—		—		2,525
Korea Deposit Insurance Corporation		—		—		2,438		—		—		2,438
Korea Finance Corporation		—		—		2,212		—		—		2,212
Korea Land & Housing Corporation		—		—		1,903		—		—		1,903
Korea Securities Finance Corporation		32		—		1,571		—		—		1,603
Woori Bank		145		141		1,257		6		—		1,548
Kookmin Bank		109		146		1,069		3		—		1,326
Samsung Heavy Industries Co., Ltd.		0		14		11		1,255		—		1,280
Hana Bank		13		74		1,006		—		—		1,093
Songdo Cosmopolitan City Development Inc.		931		—		20		—		—		951
Samsung C&T Corporation		41		85		457		329		—		912
Hyundai Samho Heavy Industries Co., Ltd.		0		20		—		880		—		900
KEPCO		1		—		882		8		—		892
POSCO		1		6		799		37		—		844
KB Kookmin Card Co., Ltd.		50		—		794		—		—		844
National Federation of Fisheries Cooperatives		1		6		802		—		—		810

Total		3,296		798		33,080		5,510		—		42,685

LOGO Some of the totals may not sum due to rounding


*Exposure to Main Debtor Groups*		(KRW billion)


As of Jun. 30, 2012 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Hyundai Heavy Industries		110		274		388		4,265		0		5,036
Samsung		193		1,087		965		1,882		0		4,128
Hyundai Motors		1,073		1,216		658		394		0		3,341
SK		409		744		1,062		996		2		3,213
LG		1,606		323		414		138		0		2,481
POSCO		197		258		872		261		6		1,594
Lotte		426		152		582		231		1		1,392
GS		259		187		198		494		0		1,138
LS		197		226		187		332		0		942
Hanwha		361		190		121		117		0		790

Total		4,831		4,656		5,446		9,112		9		24,055

LOGO Some of the totals may not sum due to rounding


*Loan Concentration by Industry*		(KRW billion)


As of Jun. 30, 2012 Consolidated basis	Total Exposures
As of Jun. 30, 2012 Consolidated basis	Amount		Weight (%)
Finance and Insurance		53,077		20.39	%
Manufacturing		35,129		13.49	%
Retail and wholesale		12,434		4.78	%
Real Estate, leasing and service		19,414		7.46	%
Construction		5,162		1.98	%
Hotel and leisure		3,850		1.48	%
Others		38,429		14.76	%
Consumers		92,826		35.66	%

Total		260,321		100.00	%

*	Including deposits, loans, and securities

Top Twenty Non-Performing Loans

(KRW billion)


Borrower	Industry	Gross Principal Outstanding		Allowance for Loan Losses
A	Real estate, leasing and service		130		18
B	Construction		48		22
C	Construction		44		32
D	Real estate, leasing and service		43		13
E	Finance and insurance		36		4
F	Manufacturing		34		33
G	Manufacturing		33		19
H	Real estate, leasing and service		32		4
I	Real estate, leasing and service		30		20
J	Construction		28		24
K	Manufacturing		25		0
L	Manufacturing		24		24
M	Manufacturing		23		2
N	Real estate, leasing and service		23		2
O	Real estate, leasing and service		23		9
P	Manufacturing		21		15
Q	Construction		20		13
R	Real estate, leasing and service		20		14
S	Science and technology service		18		18
T	Real estate, leasing and service		17		2

Total			672		288

1)	Consolidated basis as of Jun. 30, 2012

2)	Non-Performing Loans are defined as loans past due longer than 90 days.

LOGO Some of the totals may not sum due to rounding

3. Independent Auditor

Audit Opinion for the last 3 years

1H 2012

FY 2011

FY 2010

Audit Opinion

—

Unqualified

*	For the first half 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
1H 2012	KPMG Samjong Accounting Corp.	498¹⁾	Review/Audit of Financial Statements	3,250 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)	For one year period

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 & 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

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 President¹⁾	• Synergy Management Team • Information & Technology Planning Team • Audit Team
Jung Kee Min	Mar. 1959	Deputy President¹⁾ & 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

1)	Upon expiration of term of office, Mr. Jae-Gwang Soh and Mr. Jung Kee Min were re-appointed as Deputy Presidents by the BOD resolution on August 23, 2012.


*Stock Options*		(as of July. 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 Jul. 31, 2012 is KRW 44,510.
2)		The closing price of our common stock was KRW 36,200 on Jul. 31, 2012.


*Employees*		(As of Jun. 30, 2012)

Gender

Number of
Employees

Average length of Service

Total Salaries and wages
paid in 1H 2012
(KRW million)

Average Payment
per person
(KRW million)

Male

127

2 yrs 5 mths

6,861

Female

3 yrs 10 mths

845

Total

154

2 yrs 8 mths

7,706

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

Major Shareholders¹⁾ of Shinhan Financial Group as of Jun. 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.

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
(Jun. 30, 2012)

Ownership%
(Jun. 30, 2012)

16,974,245

2,715,374

1,162,417

18,527,202

3.91


*Common Share Traded on the Korea Exchange*		(KRW, number of shares)


		Jan. 2012		Feb. 2012		Mar. 2012		Apr. 2012		May. 2012		Jun. 2012		Jul. 2012
Price per share	High		45,350		47,000		45,450		44,650		41,300		41,350		40,900
	Low		38,650		43,300		41,850		39,500		37,000		37,250		33,350
	Avg.		41,503		44,733		44,024		42,175		39,531		39,340		36,970
Trading Volume			29,029,924		24,503,901		25,877,380		19,115,298		24,751,394		19,039,724		29,538,364
Highest Daily Trading Volume			3,951,641		2,333,552		2,880,865		1,347,832		1,993,543		1,598,942		2,623,823
Lowest Daily Trading Volume			612,935		640,488		734,827		563,905		565,284		534,206		587,270

*American Depositary Shares traded on the New York Stock Exchange*											(USD, number of shares)

		Jan. 2012		Feb. 2012		Mar. 2012		Apr. 2012		May. 2012		Jun. 2012		Jul. 2012
Price per share	High		79.83		84.44		80.95		79.08		71.53		71.70		72.84
	Low		67.34		76.92		74.09		69.54		63.74		62.79		58.54
	Avg.		73.82		79.79		77.94		73.73		67.86		67.51		64.74
Trading Volume			1,006,821		959,192		790,114		441,508		622,047		676,960		593,047
Highest Daily Trading Volume			140,487		81,667		78,920		55,206		75,027		68,399		57,657
Lowest Daily Trading Volume			20,666		23,554		16,636		5,464		8,077		7,491		9,613

*	1 ADR = 2 Common Shares

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 (Jun. 30, 2012)
Shinhan Investment Corp.	Loans in KRW	2006-07-31	2012-01-31		5.64	%		100		100		0		0
	Loans in KRW	2012-01-30	2017-01-30		4.11	%		0		0		100		100
	Loans in KRW	2012-06-28	2017-06-28		3.84	%		0		0		100		100
Shinhan Card	Loans in KRW	2010-10-29	2015-10-29		4.37	%		100		0		0		100
	Loans in KRW	2011-01-28	2016-01-28		4.91	%		100		0		0		100
	Loans in KRW	2011-02-24	2016-02-24		4.82	%		250		0		0		250
	Loans in KRW	2011-05-17	2016-05-17		4.47	%		100		0		0		100
	Loans in KRW	2012-03-14	2017-03-14		4.12	%		0		0		150		150
Shinhan Capital	Loans in KRW	2007-03-23	2012-03-23		5.48	%		50		50		0		0
	Loans in KRW	2007-06-08	2012-06-08		5.95	%		50		50		0		0
	Loans in KRW	2008-01-23	2013-01-23		6.60	%		50		0		0		50
	Loans in KRW	2010-09-28	2013-09-28		4.12	%		100		0		0		100
	Loans in KRW	2011-01-28	2014-01-28		4.53	%		50		0		0		50
	Loans in KRW	2011-04-29	2016-04-29		4.65	%		100		0		0		100
	Loans in KRW	2011-05-17	2016-05-17		4.47	%		50		0		0		50
	Loans in KRW	2012-03-14	2017-03-14		4.12	%		0		0		50		50
Shinhan PE IM	Loans in KRW	2011-08-12	2012-08-10		4.09	%		5		0		0		5

Total								1,105		200		400		1,305

Exhibit 99.1

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

Exhibit 99.2

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

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/ Jung Kee Min
Name: Jung Kee Min
Title: Chief Financial Officer

Date: August 29, 2012