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 November 2014

SHINHAN FINANCIAL GROUP CO., LTD.

(Translation of registrant’s name into English)

20, Sejong-Daero 9-gil, 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 2014 3Q Business Report

On November 14, 2014, Shinhan Financial Group (“SFG”) filed its 2014 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	16

4.	Directors, Executive Officers and Employees	17

5.	Major Shareholder and Market Price Information of our Common Shares and ADRs	20

6.	Related Party Transactions	21

1. Introduction of the Group

Company History in 2009 through 2014

•

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 direct 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 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.

Principal Subsidiaries under Korean Law (as of September 30, 2014)

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 Bank¹⁾		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 Management⁴⁾		100.0	%

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

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 September 30, 2014)


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 Limited¹⁾		90.0	%
	Shinhan Bank Kazakhstan		100.0	%
	Shinhan Bank China Limited		100.0	%
	Shinhan Bank Canada		100.0	%
	Shinhan Bank Japan		100.0	%
	Shinhan Bank Vietnam		100.0	%
Shinhan Investment Corp.	Shinhan Investment America Inc.		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	Shinhan NPS Private Equity Fund 1st³⁾		5.0	%
	Shinhan Private Equity Fund 2nd ⁴⁾		2.2	%
	Shinhan-Stonebridge Petro Private Equity Fund ⁵⁾		0.6	%

1)	Shinhan Financial Group and its subsidiaries currently own 93.3% 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 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 September 30, 2014)


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)


	3Q 2014 (Jan. 1 ~ Sep. 30)		FY2013 (Jan. 1 ~ Dec. 31)		FY2012 (Jan. 1 ~ Dec. 31)
Operating income		2,344.5		2,637.6		3,178.0
Equity in income(loss) of associates		31.2		7.3		27.5
Non-Operating Income(loss)		54.1		37.3		25.1
Earnings before income tax		2,429.8		2,682.1		3,230.6
Income taxes		570.7		622.6		738.7
Consolidated net income		1,859.1		2,059.6		2,491.9
Net income in majority interest		1,768.0		1,902.8		2,321.9
Net income in minority interest		91.0		156.8		170.0

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

Source and Use of Funds


Consolidated Basis (KRW billion, %)		3Q 2014								FY2013								FY2012
		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 (%)
Source	Deposits		184,073.0		57.15		2,612.4		1.89		176,825.5		56.58		3,914.2		2.21		170,937.0		56.64		4,636.9		2.71
	Borrowings		12,035.0		3.74		149.4		1.66		13,054.6		4.18		229.3		1.76		14,463.2		4.79		293.5		2.03
	Debentures		36,428.7		11.31		994.5		3.64		38,303.2		12.26		1,521.5		3.97		39,763.3		13.18		1,740.2		4.38
	Other Liabilities		59,637.0		18.51		—		—		55,163.7		17.65		—		—		48,721.2		16.14		—		—

	Total Liabilities		292,173.7		90.71		—		—		283,347.0		90.67		—		—		273,884.7		90.75		—		—

	Total Stockholder’s Equity		29,905.6		9.29		—		—		29,159.3		9.33		—		—		27,920.0		9.25		—		—

	Total Liabilities & SE		322,079.3		100.00		—		—		312,506.3		100.00		—		—		301,804.7		100.00		—		—

Use	Currency & Due from Banks		19,355.8		6.01		175.5		1.21		17,264.0		5.52		200.9		1.16		15,655.9		5.19		246.7		1.58
	Loans		209,898.7		65.17		7,315.1		4.65		203,254.8		65.04		10,173.5		5.01		196,161.4		65.00		11,309.1		5.77
	Loans in KRW		162,738.9		50.53		5,332.9		4.37		156,496.7		50.08		7,435.5		4.75		150,826.8		49.97		8,334.2		5.53
	Loans in Foreign Currency		11,262.0		3.50		298.1		3.53		10,506.0		3.36		394.6		3.76		10,335.9		3.42		439.1		4.25
	Credit Card Accounts		17,433.6		5.41		1,283.3		9.81		17,445.2		5.58		1,763.8		10.11		17,507.8		5.80		1,834.0		10.48
	Others		18,464.2		5.73		400.8		2.89		18,806.9		6.02		579.6		3.08		17,490.9		5.80		701.9		4.01
	AFS Financial Assets		26,851.1		8.34		626.1		3.11		29,620.6		9.48		979.2		3.31		28,996.9		9.61		1,111.9		3.83
	HTM Financial Assets		11,752.6		3.65		388.1		4.40		11,197.0		3.58		527.9		4.71		11,790.5		3.91		594.7		5.04
	Other Assets		54,221.1		16.83		—		—		51,169.9		16.37		—		—		49,200.0		16.30		—		—

	Total Assets		322,079.3		100.00		—		—		312,506.3		100.00		—		—		301,804.7		100.00		—		—

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, 2014 listed herein may be subject to change.

1) Capital Adequacy


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


	Sep. 30, 2014			Dec. 31, 2013			Dec. 31, 2012
Aggregate Amount of Equity Capital (A)		26,062.6			25,605.8			25,075.7
Risk-Weighted Assets (B)		195,738.3			190,716.6			201,184.4
BIS Ratio (A/B)		13.32	%		13.43	%		12.46	%

Note) Figs. from Dec. 31, 2013 based on Basel III, Figs. for Dec. 31, 2012 based on Basel I


*Capital Adequacy Ratios (Subsidiaries)*		(%)


Subsidiary	Capital Adequacy Ratio	Sep. 30, 2014		Dec. 31, 2013		Dec. 31, 2012
Shinhan Bank	BIS Capital Adequacy Ratio		16.21		16.29		15.83
Jeju Bank	BIS Capital Adequacy Ratio		14.70		15.95		15.89
Shinhan Card	Adjusted Equity Capital Ratio		29.54		30.41		27.43
Shinhan Investment Corp.	Net Capital Ratio		384.52		493.33		666.34
Shinhan Life Insurance	Risk Based Capital Ratio		257.63		253.06		287.70
Shinhan BNPP AM	Net Capital Ratio		598.47		599.75		583.21
Shinhan Capital	Adjusted Equity Capital Ratio		15.71		15.05		14.98
Shinhan Savings Bank	BIS Capital Adequacy Ratio		15.71		12.22		n/a

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 from Dec. 31, 2013. whereas, Basel II FIRB was applied for Dec. 31, 2012.

•

Basel III TSA was applied in calculating Jeju Bank’s BIS Capital Adequacy Ratio from Dec. 31, 2013. whereas, Basel II TSA was applied for Dec. 31, 2012.

•

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 and Shinhan BNP Paribas Asset Management are required to maintain a minimum net capital ratio of 150%.

•

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

2) Liquidity


*Won Liquidity Ratio*		(KRW billion, %)


Company	Sep. 30, 2014						Dec. 31, 2013						Dec. 31, 2012
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		269.8		38.8		695.4		578.3		263.0		219.9		189.1		93.4		202.6
Shinhan Bank		5,764,726.7		4,343,884.2		132.7		53,589.9		41,699.5		128.5		56,506.3		41,131.1		137.4
Shinhan Card		14,305.1		3,384.8		422.6		14,490.7		3,902.1		371.4		15,472.3		3,420.9		452.3
Shinhan Investment Corp.		16,326.1		11,865.6		137.6		10,613.7		7,833.6		135.5		9,358.8		6,725.4		139.2
Shinhan Life Insurance		1,560.7		460.6		338.8		1,174.2		419.6		279.8		969.1		377.2		256.9
Shinhan Capital		619.4		356.5		173.8		510.9		221.1		231.1		587.5		161.3		364.1
Jeju Bank		77,293.9		59,568.6		129.8		937.3		559.0		167.7		9,984.0		6,511.8		153.3
Shinhan Savings Bank		170.5		122.9		138.7		257.4		91.8		280.2		—		—		—

Notes :

•

Shinhan Financial Group, Shinhan Bank and Jeju Bank: 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

•

Shinhan Financial Group figures are separate basis


*Foreign Currency (FC) Liquidity Ratio*		(USD thousand, %)


Company	Sep. 30, 2014						Dec. 31, 2013						Dec. 31, 2012
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		26,989,353		22,298,853		121.0		25,808,136		20,294,035		127.2		25,501,141		20,005,132		127.5
Shinhan Investment Corp.		1,251,419		924,301		135.4		451,293		390,614		115.5		450,807		417,150		108.1
Shinhan Capital		53,052		53,066		100.0		84,439		55,637		151.8		108,100		71,391		151.4
Jeju Bank		11,273		9,257		121.8		8,486		5,203		163.1		11,253		5,676		198.3

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 separate basis

3) Asset Quality


*SFG Consolidated Basis*		(KRW billion, %)


	Sep. 30, 2014		Dec. 31, 2013		Dec. 31, 2012
Total Loans		220,514.8		207,680.2		203,155.4
Substandard & Below		2,619.7		2,609.1		2,718.9
Substandard & Below Ratio		1.19		1.26		1.34
Non-Performing Loans		2,147.7		1,990.2		2,173.3
NPL Ratio		0.97		0.96		1.07
Substandard & Below Coverage Ratio		169.71		162.96		169.55
Loan Loss Allowance ¹⁾		4,446.0		4,251.7		4,609.9
Substandard & Below Loans		2,619.7		2,609.1		2,718.9

Note) Including reserve for credit losses.


*Separate Basis*		(%)


	Sep. 30, 2014						Dec. 31, 2013						Dec. 31, 2012
	Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio ¹⁾		Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio ¹⁾		Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio ¹⁾
Shinhan Financial Group		—		—		—		—		—		—		—		—		—
Shinhan Bank		1.07		0.87		155.62		1.16		0.90		149.22		1.08		0.87		171.32
Shinhan Card		1.72		1.21		294.08		1.53		1.00		314.75		2.14		1.64		248.83
Shinhan Investment Corp.		1.49		1.49		132.96		4.65		4.65		94.16		11.17		11.18		77.61
Shinhan Life Insurance		0.12		0.18		690.59		0.20		0.19		472.62		0.50		0.26		361.33
Shinhan Capital		2.90		4.11		86.91		2.23		1.88		111.21		2.98		1.91		95.84
Jeju Bank		1.94		1.68		88.77		1.53		1.49		102.47		1.49		1.47		100.62
Shinhan Savings Bank		13.44		11.82		35.64		17.70		13.64		33.30		—		—		—

Note) Including reserve for credit losses.

4) Write-Offs & Provision for Credit Losses

SFG Consolidated Basis

(KRW billion)


	Sep. 30, 2014		Dec. 31, 2013		Dec. 31, 2012
Allowance for loan losses		2,672.6		2,575.0		2,903.5
Allowance for acceptances and guarantees		103.1		93.0		77.8
Allowance for unused loan commitments		395.5		411.2		415.4
Other allowance		190.1		246.1		254.6

Total allowance		3,361.3		3,325.3		3,651.3

Write-offs		811.3		1,504.1		1,417.2

Shinhan Bank

(KRW billion)


	Sep. 30, 2014		Dec. 31, 2013		Dec. 31, 2012
Allowance for loan losses		1,514.5		1,502.1		1,649.8
Allowance for acceptances and guarantees		130.5		111.5		112.8
Allowance for unused loan commitments		66.8		80.3		78.1
Other allowance		116.4		180.0		168.8

Total allowance		1,828.2		1,873.9		2,009.5

Write-offs		346.7		750.8		695.6

Shinhan Card

(KRW billion)


	Sep. 30, 2014		Dec. 31, 2013		Dec. 31, 2012
Allowance for loan losses		735.9		673.5		777.4
Allowance for acceptances and guarantees		—		—		—
Allowance for unused loan commitments		315.2		318.6		328.5
Other allowance		59.3		52.7		46.7

Total allowance		1,110.4		1,044.8		1,152.6

Write-offs		402.1		647.5		511.6

5) Debt to Equity Ratios


*Shinhan Financial Group (Separate Basis)*		(KRW billion)


	Sep. 30, 2014			Dec. 31, 2013			Dec. 31, 2012
Debt		6,749.0			7,450.2			7,546.0
Equity		20,297.9			19,974.5			19,666.9
Debt to Equity Ratio		33.25	%		37.30	%		38.37	%

Twenty Largest Exposures by Borrower

(KRW billion)


As of Sep. 30, 2014 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Bank of Korea		2,450		—		4,940		0		—		7,390
Ministry of Strategy & Finance		0		—		6,794		—		—		6,794
Korea Deposit Insurance Corporation		—		—		3,031		—		—		3,031
Korea Development Bank		16		11		2,462		—		—		2,488
Industrial Bank of Korea		777		21		1,581		—		—		2,379
Hyundai Heavy Industries Co., Ltd.		28		200		91		2,055		0		2,373
Korea Finance Corporation		—		—		1,638		—		—		1,638
Korea Land & Housing Corporation		0		—		1,482		—		—		1,482
Woori Bank		326		12		1,094		—		—		1,432
Korea Securities Finance Corporation		—		—		1,365		—		—		1,365
Hyundai Samho Heavy Industries Co., Ltd.		1		51		—		1,104		0		1,155
Samsung Heavy Industries Co., Ltd.		150		10		21		858		0		1,039
Korea Exchange Bank		509		—		425		0		—		934
Kookmin Bank		226		—		699		—		—		925
KEPCO		0		—		891		14		—		905
Hana Bank		109		10		783		—		—		902
KB Card		—		—		868		—		—		868
Hyundai Steel		465		245		113		11		0		834
Export-Import Bank of Korea		—		—		799		—		—		799
Korea Housing-Finance Corporation		0		—		789		—		—		790

Total		5,057		560		29,867		4,041		0		39,525

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

Exposure to ten Main Debtor Groups

(KRW billion)


As of Sep. 30, 2014 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Hyundai Heavy Industries		172		446		132		3,871		0		4,622
Samsung		554		1,161		1,010		1,510		0		4,236
Hyundai Motors		1,075		1,009		1,419		306		0		3,809
SK		618		1,103		1,088		946		0		3,756
Lotte		291		705		1,111		328		1		2,436
LG		641		394		345		772		0		2,152
POSCO		257		578		400		201		5		1,441
LS		177		389		195		625		0		1,385
GS		300		342		166		184		0		992
Hyosung		297		427		44		112		0		880

Total		4,383		6,554		5,911		8,855		7		25,710

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

Loan and due from banks Concentration by Industry

(KRW billion)


As of Sep. 30, 2014 Consolidated basis	Total Exposures
As of Sep. 30, 2014 Consolidated basis	Amount		Weight (%)
Finance and Insurance		27,131		12	%
Manufacturing		35,596		15	%
Retail and wholesale		13,628		6	%
Real Estate, leasing and service		18,194		8	%
Construction		3,516		2	%
Hotel and Restaurant		4,954		2	%
Others		24,704		11	%
Consumers		106,398		45	%

Total		234,119		100	%

Notes :

•

Including deposits and loans

•

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	Building of Steel Ships		188		156		90
B	Apartment Building Construction		171		139		118
C	Development and Subdividing of Residential Buildings		90		90		10
D	Building of Steel Ships		86		83		7
E	Building of Steel Ships		44		44		0
F	Renting of Non-Residential Buildings		32		32		2
G	Building of Steel Ships		38		31		24
H	Manufacture of Other Insulated Wire and Cable		30		30		7
I	Development and Subdividing of Residential Buildings		30		30		22
J	Building of Steel Ships		29		29		3
K	Other Civil Engineering Construction		29		29		24
L	Manufacture of Other Paper and Paperboard		27		26		8
M	Apartment Building Construction		22		22		9
N	Manufacture of Tires and Tubes		22		22		22
O	Building of Steel Ships		21		21		1
P	Manufacture of Sections for Ships		20		20		2
Q	Manufacture of Other Basic Iron and Steel n. e. c.		22		20		14
R	Apartment Building Construction		20		20		18
S	Development and Subdividing of Residential Buildings		19		19		7
T	Manufacture of Synthetic Resin and Other Plastic Materials		18		18		0

Total			956		879		386

Notes :

•

Consolidated basis as of Sep. 30, 2014.

•

Some of the totals may not sum due to rounding.

3. Independent Auditor

Audit Opinion for the last 3 years

3Q 2014¹⁾

FY2013

FY 2012

Audit Opinion

—

Unqualified

1)	For the third quarter of 2014, 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
2014	KPMG Samjong Accounting Corp.	500 (annualized basis)	Review/Audit of Financial Statements	4,156²⁾ Hours
2014	KPMG Samjong Accounting Corp.	73 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	410²⁾ hours
2013	KPMG Samjong Accounting Corp.	508	Review/Audit of Financial Statements	6,270 hours
	KPMG Samjong Accounting Corp.	140	K-IFRS Report Package Audit for Shinhan Savings Bank	1,511 hours
	KPMG Samjong Accounting Corp.	45	Non-statutory audit of subsidiaries under the consolidated corporate tax system for CY2013	510 hours
2012	KPMG Samjong Accounting Corp.	498	Review/Audit of Financial Statements	6,380 hours
	KPMG Samjong Accounting Corp.	35	K-IFRS Report Package Audit for Shinhan Savings Bank	372 hours
	KPMG Samjong Accounting Corp.	70	Non-statutory audit of subsidiaries under the consolidated corporate tax system for CY2012	690 hours

1)	Excluding value-added taxes.

2)	As of September 30, 2014.

*	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 KRW1,169 million(Excluding value-added taxes) for FY2014

4. Directors, Executive Officers and Employees

Directors and Executive Officers


1) Executive Director						(As of Sep. 30, 2014)

Name

Month and

Year

of Birth

Position

Service Term

Dong Woo Han

November. 1948

- Chairman of Shinhan Financial Group

- Board Steering Committee chair

- Corporate Governance & CEO Recommendation Committee member

6 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.

9 outside directors were appointed as board of directors at the 13th Annual General Meeting of Shareholders on March 26, 2014, of which 7 directors renewed their terms and 2 directors newly appointed.


Our non-executive directors are as follows: Director								(As of Sep. 30, 2014)


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
Hoon Namkoong	June 1947	O	Chairman of Board of Directors Risk Management Committee member Compensation Committee member Corporate Governance & CEO Recommendation Committee member	4 years starting from March 23, 2011
Boo In Ko	December 1941	O	Board Steering Committee member Corporate Governance & CEO Recommendation Committee member	2 years starting from March 28, 2013
Taeeun Kwon	January 1941	O	Audit Committee chair Corporate Governance & CEO Recommendation Committee member	4 years starting from March 23, 2011
Kee Young Kim	October 1937	O	Board Steering Committee member Risk Management Committee chair	4 years starting from March 23, 2011
Seok Won Kim	April 1947	O	Audit Committee member Board Steering Committee member Compensation Committee chair	4 years starting from March 23, 2011
Man Woo Lee	November 1954	O	Compensation Committee member Audit Committee member	2 years starting from March 26, 2014
Sang Kyung Lee	September 1945	O	Audit Committee member Corporate Governance & CEO Recommendation Committee chair	3 years starting from March 29, 2012
Jin Chung	March 1937	O	Board Steering Committee member	2 years starting from March 26, 2014
Haruki Hirakawa	November 1964	O	Compensation Committee member	4 years starting from March 23, 2011
Philippe Aguignier	September 1957	O	Risk Management Committee member Corporate Governance & CEO Recommendation Committee member	5 years starting from March 24, 2010

3) Executive Officers

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

(As of Sep. 30, 2014)


Name	Month and Year of Birth	Position	In charge of

Hyung Jin Kim	August. 1958	Deputy President & Chief Strategy Officer	- Strategic Planning Team - Global Business Strategy Team - Future Strategy Research Institute - Corporate Culture Development Team

Jae Gwang Soh	August. 1961	Deputy President	- Synergy Management Team - Information & Communication Technology Planning Team - Smart Finance Team - Audit Team

Jung Kee Min	March. 1959	Deputy President & Chief Financial Officer	- Finance Management Team - Investor Relations Team - HR Team

Sin Gee Lee	July. 1956	Deputy President	- Public Relations Team - CSR Team - Management Support Team

Young Jin Lim	November. 1960	Deputy President	- Wealth Management Planning Office

Dong Hwan Lee	September. 1959	Deputy President	- Corporate & Investment Banking Planning Office

Bo Hyuk Yim	March. 1961	Executive Vice President	- Risk Management Team

Woo Gyun Park	March. 1959	Managing Director	- Compliance Team

Byung Chul Lim	January. 1964	Managing Director	- Future Strategy Research Institute

Young Kyo Jeon	August. 1962	Managing Director	- Finance Management Team

Compensation to Directors

Total Amount Approved at the Meeting of Shareholders

(KRW millions)


	Total number of persons			Total amount approved at shareholders’ meeting		Notes
Directors (Outside directors)		12(10	)		3,000		—

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

2) Total Amount Paid as of September 30, 2014

(KRW millions)


	Total number of Persons		Total Compensation		Average Compensation per person		Notes
Registered Directors		2		1,033		517	Excluding outside directors
Outside Directors		6		236		39	Excluding Audit committee members
Audit committee members or internal auditor		4		173		43

Total		12		1,443		120

Notes :

•

Represents the total number of applicable persons as of September 30, 2014.

•

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 ￦500 million or greater. In 2014, Dong Woo Han, our Chairman and Chief Executive Officer, received ￦1,033 million which consisted of ￦601 million in salaries and wages and ￦432 million in bonus payments. He also currently holds 14,585 performance shares. The exercisability of these performance shares will be determined based on a review of our business performance and share price movements during the period from 2014 to 2017.

Stock Options

(As of October 31, 2014)


	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		1,025,856		205,313		—		54,560
Granted in 2008		805,174		105,973		185,396		513,805		49,053

Total		7,862,847		6,015,988		1,122,309		724,550		—

Notes :

•

The weighted-average exercise price of outstanding exercisable options as of October 31, 2014 is KRW 44,550

•

The closing price of our common stock was KRW 50,300 on October 31, 2014.


*Employees*		(As of September. 30, 2014)


Gender	Number of Employees	Average length of Service	Total Salaries and wages paid in 2014 (KRW million)		Average Payment per person (KRW million)
Male	124	2 yrs 7 mths (13 yrs 2 mths)¹⁾		10,388		84
Female	31	4 yrs 1 mths (7 yrs 6 mths)¹⁾		1,646		53

Total	155	2 yrs 10 mths (12 yrs)¹⁾		12,034		78

1)	Average length of service including service within group subsidiaries

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

Major Shareholders¹⁾ of Shinhan Financial Group as of Sep. 30, 2014


Name	No. of Common Shares owned		Ownership%
National Pension Service²⁾		41,795,962		8.81	%
BNP Paribas		25,356,276		5.35	%

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

2)	In addition to the common share holdings, National Pension Service holds a total of 2,000,000 shares of Shinhan Financial Group’s series 12 non-voting redeemable preferred stock as of Dec. 31, 2013.


*Share ownership of Employee Stock Ownership Association*								(Number of shares, %)


Beginning Balance (Jan. 1, 2014)		Increase		Decrease		Ending Balance (Sep. 30, 2014)		Ownership%¹⁾ (Sep. 30, 2014)
	19,332,502		2,157,157		2,215,655		19,274,004		4.06	%

1)	Common share basis.


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


		Mar.2014		Apr.2014		May.2014		Jun.2014		Jul.2014		Aug.2014		Sep.2014		Oct.2014
Price per share	High		47,000		47,000		48,000		47,050		51,400		52,500		53,400		51,500
	Low		43,500		44,300		44,350		44,750		45,050		49,600		48,600		46,650
	Avg.		44,738		46,020		46,382		45,766		46,946		51,265		51,450		48,312
Trading Volume			19,108,513		16,844,244		15,069,258		13,242,290		22,024,157		18,969,092		15,330,315		18,282,710
Highest Daily Trading Volume			1,384,236		1,358,277		1,771,421		1,133,644		2,323,992		1,719,788		1,274,251		2,125,736
Lowest Daily Trading Volume			314,973		331,564		348,442		426,735		402,572		378,945		299,495		449,310

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

		Mar.2014		Apr.2014		May.2014		Jun.2014		Jul.2014		Aug.2014		Sep.2014		Oct.2014
Price per share	High		43.95		44.85		47.00		45.91		50.08		51.71		52.44		48.83
	Low		40.24		42.55		43.69		43.76		43.98		48.80		45.46		43.83
	Avg.		41.79		43.99		45.24		44.74		46.08		50.29		49.67		45.27
Trading Volume			959,833		586,382		1,112,050		1,060,150		1,148,662		936,199		816,760		1,515,371
Highest Daily Trading Volume			91,319		65,948		171,740		117,824		206,681		183,381		72,945		238,875
Lowest Daily Trading Volume			21,689		11,087		14,177		14,098		17,973		14,103		19,966		25,052

Note) 1 ADR = 1 Common Shares

6. Related Party Transactions


*Loans to Subsidiaries*														(KRW billion)

Subsidiary	Loan Type	Origination Date		Maturity Date		Lending Rate			Beginning Balance (Jan. 1, 2014)		Decrease		Increase		Ending Balance (Sep. 30, 2014)
Shinhan Investment Corp.	Loans in KRW		2012-01-30		2017-01-30		4.11	%		100.0		—		—		100.0
Shinhan Investment Corp.	Loans in KRW		2012-06-28		2017-06-28		3.84	%		100.0		—		—		100.0
Shinhan Card	Loans in KRW		2010-10-29		2015-10-29		4.37	%		100.0		—		—		100.0
	Loans in KRW		2011-01-28		2016-01-28		4.91	%		100.0		—		—		100.0
	Loans in KRW		2011-02-24		2016-02-24		4.82	%		250.0		—		—		250.0
	Loans in KRW		2011-05-17		2016-05-17		4.47	%		100.0		—		—		100.0
	Loans in KRW		2012-03-14		2017-03-14		4.12	%		150.0		—		—		150.0
Shinhan Capital	Loans in KRW		2011-01-28		2014-01-28		4.53	%		50.0		50.0		—		—
	Loans in KRW		2011-04-29		2016-04-29		4.65	%		100.0		—		—		100.0
	Loans in KRW		2011-05-17		2016-05-17		4.47	%		50.0		—		—		50.0
	Loans in KRW		2012-03-14		2017-03-14		4.12	%		50.0		—		—		50.0
	Loans in KRW		2012-12-14		2017-12-14		3.33	%		50.0		—		—		50.0
	Loans in KRW		2013-01-18		2018-01-18		3.18	%		50.0		—		—		50.0
	Loans in KRW		2013-09-05		2018-09-05		3.61	%		80.0		—		—		80.0
	Loans in KRW		2014-01-27		2019-01-27		3.60	%		—		—		50.0		50.0
Shinhan Private Equity	Loans in KRW		2013-08-09		2014-08-08		2.81	%		2.5		2.5		—		—
	Loans in KRW		2013-11-27		2014-11-26		3.01	%		5.0		—		—		5.0
	Loans in KRW		2014-08-08		2015-08-07		2.81	%		—		—		2.5		2.5

Total										1,337.5		52.5		52.5		1,337.5

Exhibit 99.1

Independent Auditors’ Review Report (Separate Financial Statements) of Shinhan Financial Group as of

September 30, 2014

Exhibit 99.2

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of

September 30, 2014

SIGNATURES

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


SHINHAN FINANCIAL GROUP CO., LTD.

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

Date: November 14, 2014