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 May 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 1Q Business Report

On May 15, 2017, Shinhan Financial Group (“SFG”) filed its FY2017 1Q 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

2. Business Results

3. Independent Auditor

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

5. Directors, Executive Officers and Employees

6. Related Party Transactions

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 Mar. 31, 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 Mar. 31, 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 ¹⁾		94.3	%
	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		98.98	%

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 PEF²⁾		8.5	%
	Shinhan Praxis K-Growth Global Private Equity Fund ³⁾		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 Private Equity	Shinhan NPS Private Equity Fund 1st ⁴⁾		5.0	%
	Shinhan Private Equity Fund 2nd ⁵⁾		2.2	%
	Shinhan-Stonebridge Petro Private Equity Fund ⁶⁾		0.6	%

1)	Shinhan Financial Group and its subsidiaries currently own 95.7% of Shinhan Khmer Bank Limited.

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

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

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

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

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

Number of Shares (as of Mar. 31, 2017)


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

Total		474,199,587

2. Business Results

Operation Results


					(KRW billion)
	1Q 2017 (Jan. 1 ~ Mar. 31)		1Q 2016 (Jan. 1 ~ Mar. 31)		FY2016 (Jan. 1 ~ Dec. 31)		FY2015 (Jan. 1 ~ Dec. 31)
Operating income		1,298.3		655.4		3,108.6		2,973.1
Equity method income		-0.4		2.6		10.0		21.0
Other non-operating income		7.9		25.1		51.8		146.5
Profit before income taxes		1,305.7		683.1		3,170.5		3,140.6
Income tax expense		298.5		-104.6		345.6		694.6

Consolidated net income		1,007.3		787.7		2,824.9		2,446.0
Net income attributable to equity holders of the Group		997.1		771.3		2,774.8		2,367.2
Net income attributable to non-controlling interest		10.2		16.4		50.1		78.8

Notes :

•

Some of the totals may not sum due to rounding.

Source and Use of Funds


Consolidated Basis (KRW billion, %)		1Q 2017								FY2016								FY2015
		Jan. 1 ~ Mar. 31								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		235,185.7		58.8		605.5		1.03		226,966.8		58.7		2,586.7		1.14		203,910.5		57.3		2,861.0		1.40
	Borrowings		16,281.2		4.1		45.7		1.12		15,047.2		3.9		176.4		1.17		13,492.9		3.8		150.7		1.12
	Debt Securities Issued		44,673.1		11.2		255.1		2.28		42,790.8		11.1		1,085.8		2.54		39,334.8		11.0		1,183.8		3.01
Source	Other Liabilities		72,361.7		18.1		—		—		70,504.9		18.2		—		—		68,378.1		19.2		—		—

	Total Liabilities		368,501.6		92.1		—		—		355,309.7		91.9		—		—		325,116.3		91.3		—		—

	Total Stockholder’s Equity		31,836.6		8.0		—		—		31,499.5		8.1		—		—		31,063.1		8.7		—		—

	Total Liabilities & SE		400,338.2		100.0		—		—		386,809.3		100.0		—		—		356,179.4		100.0		—		—

	Cash & Due from Banks		20,991.9		5.2		41.8		0.80		20,933.1		5.4		185.5		0.89		21,993.4		6.2		225.6		1.03
	Loans		259,096.7		64.7		2,307.4		3.56		252,132.2		65.2		9,244.0		3.67		231,889.2		65.1		9,031.6		3.89
	Loans in KRW		201,968.8		50.5		1,626.1		3.22		197,841.4		51.2		6,541.9		3.31		180,410.1		50.7		6,479.5		3.59
	Loans in Foreign Currency		15,872.3		4.0		129.9		3.27		14,936.7		3.9		482.2		3.23		13,528.2		3.8		415.0		3.07
Use	Credit Card Accounts		19,585.1		4.9		414.3		8.46		18,804.3		4.9		1,708.5		9.09		17,819.5		5.0		1,635.3		9.18
	Others		21,670.5		5.4		137.1		2.53		20,549.8		5.3		511.4		2.49		20,131.5		5.7		501.9		2.49
	AFS Financial Assets		32,457.9		8.1		152.9		1.88		30,308.9		7.8		612.1		2.02		26,830.0		7.5		654.4		2.44
	HTM Financial Assets		20,139.1		5.0		151.1		3.00		17,409.7		4.5		561.8		3.23		14,961.0		4.2		539.0		3.60
	Other Assets		67,652.6		16.9		—		—		66,025.3		17.1		—		—		60,505.8		17.0		—		—

	Total Assets		400,338.2		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 Mar. 31, 2017 listed herein may be subject to change.

1) Capital Adequacy

Consolidated BIS Ratio (Shinhan Financial Group)


					(KRW billion)
	Mar. 31, 2017(e)			Dec. 31, 2016			Dec. 31, 2015
Aggregate Amount of Equity Capital (A)		29,581.6			29,786.5			27,216.4
Risk-Weighted Assets (B)		196,841.2			198,642.6			203,274.5
BIS Ratio (A/B)		15.03	%		15.00	%		13.39	%

Note) based on Basel III

Capital Adequacy Ratios (Subsidiaries)


						(%)
Subsidiary	Capital Adequacy Ratio	Mar. 31, 2017(e)		Dec. 31, 2016		Dec. 31, 2015
Shinhan Bank	BIS Capital Adequacy Ratio		15.8		15.7		14.8
Shinhan Card	Adjusted Equity Capital Ratio		24.5		26.2		28.9
Shinhan Investment Corp.	Net Capital Ratio		849.2		892.0		387.2
Shinhan Life Insurance	Risk Based Capital Ratio		180.3		178.3		204.2
Shinhan BNP Paribas Asset Management	Equity Capital (KRW billion)		141.3		148.6		157.3
	Minimum Capital Requirement (KRW billion)		24.5		24.0		23.2
Shinhan Capital	Adjusted Equity Capital Ratio		14.2		14.9		16.8
Jeju Bank	BIS Capital Adequacy Ratio		12.6		12.8		12.6
Shinhan Savings Bank	BIS Capital Adequacy Ratio		14.8		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	Mar. 31, 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		1,284.0		1,028.9		124.8		198.8		134.8		147.5		624.1		216.0		288.9
Shinhan Card		15,315.7		4,997.3		306.5		14,722.9		4,069.1		361.8		14,588.0		3,845.4		379.4
Shinhan Investment Corp.		11,900.6		9,136.7		130.3		12,472.3		8,227.4		151.6		11,546.7		6,525.0		177.0
Shinhan Life Insurance		1,020.7		516.2		197.7		915.8		502.0		182.4		1,189.5		486.7		244.4
Shinhan Capital		676.4		597.7		113.2		684.5		521.2		131.3		784.7		355.4		220.8
Shinhan Savings Bank		262.6		171.5		153.1		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	Mar. 31, 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		38,597.50		36,857.90		104.8		35,961.90		37,257.50		96.7		37,421.50		38,253.30		97.8
Jeju Bank		538.1		436.4		123.3		563.2		401.9		140.1		546.3		352		155.2

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

Foreign Currency (FC) Liquidity Ratio


													(USD millions, %)
Company	Mar. 31, 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		44,054.4		38,712.6		113.8		39,631.1		35,968.5		110.2		31,925.0		27,205.6		117.4
Shinhan Investment Corp.		5,046.6		4,331.5		116.5		5,635.3		5,073.4		111.1		1,875.7		1,793.8		104.6
Shinhan Capital		135.6		69.7		194.5		80.3		1.1		7,333.0		83.1		73.4		113.2
Jeju Bank		16.3		9.8		167.0		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)
	Mar. 31, 2017			Dec. 31, 2016			Dec. 31, 2015
Total Loans		257,055.8			259,772.6			246,487.6
Substandard & Below		1,969.3			1,927.6			2,171.6
Substandard & Below Ratio		0.77	%		0.74	%		0.88	%
Non-Performing Loans		1,628.5			1,595.8			1,691.5
NPL Ratio		0.63	%		0.61	%		0.69	%
Substandard & Below Coverage Ratio		118.74	%		125.99	%		191.22	%
Loan Loss Allowance		2,338.3			2,428.7			4,152.5	¹⁾
Substandard & Below Loans		1,969.3			1,927.6			2,171.6

1)	Including reserve for credit losses

Separate Basis


																		(	%)
	Mar. 31, 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		0.68		0.58		94		0.65		0.56		96		0.80		0.61		173
Shinhan Card		1.19		0.73		235		1.16		0.76		271		1.24		0.81		355
Shinhan Investment Corp.		0.10		0.10		434		0.10		0.10		413		0.15		0.15		485
Shinhan Life Insurance		0.09		0.08		317		0.09		0.08		335		0.09		0.09		927
Shinhan Capital		2.67		3.03		90		2.61		2.93		94		3.06		3.58		86
Jeju Bank		1.12		0.79		26		1.24		0.93		35		0.87		0.50		141
Shinhan Savings Bank		5.02		3.55		59		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)
	Mar. 31, 2017			Dec. 31, 2016			Dec. 31, 2015
Debt		7,900.7			6,977.7			6,894.5
Equity		20,412.8			20,217.9			20,781.0
Debt to Equity Ratio		38.70	%		34.51	%		33.18	%

Twenty Largest Exposures by Borrower


							(KRW billion)
As of Mar. 31, 2017 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Ministry of Strategy & Finance		0.0		—		11,562.4		—		—		11,562.4
Bank of Korea		2,050.0		—		5,545.8		0.1		—		7,595.9
Korea Housing Finance Corporation		0.0		—		5,125.9		—		—		5,125.9
Korea Development Bank		64.9		11.4		4,719.0		—		—		4,795.3
Industrial Bank of Korea		669.7		122.8		1,533.7		0.6		—		2,326.8
Korea Deposit Insurance Corporation		—		—		2,141.7		—		—		2,141.7
NongHyup Bank		907.2		8.2		715.1		4.3		—		1,634.7
Kookmin Bank		940.6		—		625.0		0.4		—		1,566.0
Korea Securities Finance Corporation		31.3		—		1,488.9		—		—		1,520.2
Export-Import Bank of Korea		—		—		1,517.0		0.6		—		1,517.6
Woori Bank		360.0		156.3		917.3		1.3		—		1,434.9
Samsung Electronics co., ltd.		0.0		1,233.0		20.3		—		0.0		1,253.4
Hana Bank		99.7		418.5		701.6		0.0		—		1,219.9
Korea Land & Housing Corporation		—		—		1,213.5		—		—		1,213.5
Hyundai Heavy Industries Co., Ltd.		82.2		135.8		13.9		737.1		—		969.0
LG Electronics Inc.		170.6		51.5		90.8		395.9		—		708.7
Kia Motors Corporation		130.8		491.1		2.9		1.2		0.1		626.1
Mirae Asset Daewoo Co.,Ltd		301.4		—		277.5		—		—		579.0
National Federation of Fisheries Cooperatives		32.0		7.2		533.2		—		—		572.3
KB Kookmin Card Co., Ltd		55.3		—		501.3		—		—		556.6

Total		5,895.9		2,635.7		39,246.9		1,141.4		0.1		48,919.9

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

Exposure to ten Main Debtor Groups


							(KRW billion)
As of Mar. 31, 2017 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Samsung		422.1		1,677.9		1,126.6		1,021.1		2.5		4,250.2
Hyundai Motors		1,057.4		1,774.4		1,032.5		330.1		0.4		4,194.7
Lotte		429.1		725.0		1,023.8		376.4		0.0		2,554.2
Hyundai Heavy Industries		329.2		196.6		294.7		1,181.1		—		2,001.5
LG		606.4		344.3		247.6		513.2		0.0		1,711.5
SK		324.5		357.2		500.6		373.1		0.1		1,555.4
Hanwha		488.0		214.5		440.9		243.0		0.0		1,386.4
LS		136.8		354.9		189.5		513.7		—		1,194.8
GS		478.1		120.7		213.2		119.1		0.0		931.1
Hyosung		155.2		369.5		82.0		166.6		0.0		773.3

Total		4,426.7		6,134.9		5,151.3		4,837.3		3.0		20,553.1

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

Loans, Due from banks and Securities Concentration by Industry


	(KRW billion)
As of Mar. 31, 2017 Consolidated basis	Total Exposures
As of Mar. 31, 2017 Consolidated basis	Amount		Weight (%)
Finance and Insurance		74,655.8		20.9	%
Manufacturing		43,025.9		12.0	%
Retail and wholesale		16,870.9		4.7	%
Real Estate, leasing and service		22,156.7		6.2	%
Construction		3,628.9		1.0	%
Hotel and Restaurant		5,238.9		1.5	%
Others		59,685.5		16.7	%
Consumers		132,593.8		37.1	%

Total		357,856.4		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		110.7		110.7		33.8
B	Manufacture of Distilling Machinery, Heat exchange unit and Gas Generators		81.0		81.0		55.0
C	Manufacture of Plastic Products for Fabricating of Machine		56.4		56.4		42.2
D	Building of Steel Ships		39.3		39.3		3.1
E	Manufacture of Sections for Ships		38.5		36.2		21.5
F	Renting of Non-Residential Buildings		31.5		31.5		—
G	Development and Subdividing of Residential Buildings		30.0		30.0		23.2
H	Other Civil Engineering Construction		29.7		29.7		20.7
I	Building of Steel Ships		26.0		26.0		12.4
J	Manufacture of Sections for Ships		25.1		23.6		—
K	Building of Steel Ships		22.3		22.3		0.8
L	Construction of Highways, Streets and Roads		17.5		17.5		12.4
M	Apartment Building Construction		17.4		16.4		15.0
N	Apartment Building Construction		16.3		16.3		2.2
O	Manufacture of Sections for Ships		15.9		15.9		—
P	Golf Course Operation		15.0		15.0		7.6
Q	Wholesale of Non-Specialized Goods		11.8		11.8		11.8
R	Golf Course Operation		11.4		11.4		—
S	Manufacture of Printing and Writing Paper		11.6		11.2		7.9
T	Other Financial Business n.e.c.		10.0		10.0		1.4

	Total		617.2		612.1		271.1

Notes :

•

Consolidated basis as of Mar. 31, 2017.

•

Some of the totals may not sum due to rounding.

3. Independent Auditor

Audit Opinion for the last 3 years

1Q 2017

FY2016

FY2015

Audit Opinion

—

Unqualified

* For the first 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	1,051 Hours
FY2017	KPMG Samjong Accounting Corp.	78 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	140 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 Mar. 31, 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 (Mar. 31, 2017)		Ownership%¹⁾ (Mar. 31, 2017)
Employee Stock Ownership		22,310,764		1,587,881		1,081,946		22,816,699		—
ESOA account		88,320		16,405		—		104,725		—

Total		22,399,084		1,604,286		1,081,946		22,921,424		4.83	%

1) Common share basis.

Common Share Traded on the Korea Exchange


								(KRW, number of shares)
		Oct.2016		Nov.2016		Dec.2016		Jan.2017		Feb.2017		Mar.2017
Price per share	High		44,150		45,600		47,700		47,000		47,500		49,750
	Low		39,950		42,100		43,000		44,800		45,800		46,600
	Avg.		42,538		43,839		46,143		45,728		46,675		47,989
Trading Volume			16,898,605		26,285,441		19,185,002		29,005,344		16,963,361		22,415,521
Highest Daily Trading Volume			1,249,175		5,791,871		2,555,332		10,173,319		1,647,779		1,852,240
Lowest Daily Trading Volume			481,075		435,530		309,297		242,707		460,634		466,466

American Depositary Receipts traded on the New York Stock Exchange


								(USD, number of shares)
		Oct.2016		Nov.2016		Dec.2016		Jan.2017		Feb.2017		Mar.2017
Price per share	High		39.00		38.76		40.88		39.78		41.87		43.68
	Low		35.87		36.93		37.17		36.81		39.77		40.51
	Avg.		37.55		37.75		39.11		38.58		40.93		42.30
Trading Volume			850,185		1,404,277		2,168,102		1,778,962		1,275,836		1,811,306
Highest Daily Trading Volume			83,148		118,133		340,037		206,031		172,320		187,417
Lowest Daily Trading Volume			19,095		24,152		37,042		40,949		33,096		23,952

Note) 1 ADR = 1 Common Shares

5. Directors, Executive Officers and Employees

Directors and Executive Officers

1) Executive Director


				(As of Mar. 31, 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 Mar. 31, 2017)

Name

Month and Year
of Birth

Outside
Director

Sub-Committees

Service Term

Wi Sung-ho

June 1958

2 years starting from March 23, 2017

Park Ansoon

January 1945

Corporate Social Responsibility Committee member

Outside Director Recommendation Committee member

2 years starting from March 23, 2017

Park Cheul

April 1946

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

Audit Committee Chair

Corporate Social Responsibility Committee member

Board Steering Committee member

4 years starting from March 26, 2014

Lee Sang-kyung

September 1945

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

Remuneration Committee Chair

Audit Committee member

Corporate Governance & CEO Recommendation Committee member

2 years starting from March 24, 2016

Lee Jung-il

August 1952

Corporate Governance & CEO Recommendation Committee member

2 years starting from March 24, 2016

Lee Heun-ya

September 1959

Risk Management Committee member

Board Steering Committee member

Outside Director Recommendation Committee member

2 years starting from March 24, 2016

Joo Jaeseong

January 1956

Risk Management Committee Chair

Corporate Social Responsibility Committee Chair

Board Steering Committee member

2 years starting from March 23, 2017

Yuki Hirakawa

October 1960

Corporate Social Responsibility Committee member

Corporate Governance & CEO Recommendation Committee member

3 years starting from March 25, 2015

Philippe Avril

April 1960

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 Mar. 31, 2017)
Name	Month and Year of Birth		Position	In charge of
Yim Bo-hyuk		March 1961	Deputy President & Chief Financial Officer	- Finance Management Team - Investor Relations Team - HR Team - Information & Communication Technology Planning Team

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

Jin Okdong		February 1961	Deputy President	- Synergy Management 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 Team - Corporate Culture Development 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 Mar. 31, 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 Mar. 31, 2017)
	Total number of Persons		Total Compensation (KRW millions)		Average Compensation per person (KRW millions)		Notes
Registered Directors		2		626		215	Excluding outside directors
Outside Directors		7		105		17	Excluding Audit committee members
Audit committee members or internal auditor		3		66		22

Total		12		797		66

Notes :

•

Represents the total number of applicable persons as of Mar. 31, 2017.

Stock Options


					(As of Mar. 31, 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		2,620,331		2,266,642		251,300		102,389		28,006
Granted in 2006		3,206,173		2,617,517		480,300		108,356		38,829
Granted in 2007		1,231,169		967,092		205,313		58,764		54,560
Granted in 2008		805,174		574,150		185,396		45,628		49,053

Total		7,862,847		6,425,401		1,122,309		315,137		—

Notes :

•

The weighted-average exercise price of outstanding exercisable options as of Mar. 31, 2017 is KRW 39,726

•

The closing price of our common stock was KRW 46,600 on Mar. 31, 2017.

•

On March 18, 2015, the exercise period for all outstanding stock options expired, except for a limited number of stock options for which the expiration of the exercise period has been suspended by a resolution of the board of directors.

Employees


							(As of Mar. 31, 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		115	2 yrs 5 mths (13 yrs 2 mths)¹⁾		4,117		35
Female		25	6 yrs 1 mths (9 yrs 7 mths)¹⁾		613		24

Total		140	3 yrs 1 mths (12 yrs 7 mths)¹⁾		4,730		33

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 (Mar. 31, 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
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
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

Total										935		200		200		935

Exhibit 99.1

Independent Auditors’ Review Report (Separate Financial Statements) of Shinhan Financial Group as of March 31, 2017

Exhibit 99.2

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of March 31, 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: May 15, 2017