Exhibit 99.2
Consolidated Financial Statements (Independent Auditor’s Report)
SHINHAN FINANCIAL GROUP CO., LTD.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 2020 and 2019
(With Independent Auditors’ Report Thereon)
Contents
|
| Page |
|
|
|
Independent Auditors' Report |
| 1 |
|
|
|
Consolidated Statements of Financial Position |
| 5 |
|
|
|
Consolidated Statements of Comprehensive Income |
| 7 |
|
|
|
Consolidated Statements of Changes in Equity |
| 9 |
|
|
|
Consolidated Statements of Cash Flows |
| 11 |
|
|
|
Notes to the Consolidated Financial Statements |
| 14 |
Independent Auditor’s Report
(English Translation of a Report Originally Issued in Korean)
To the Board of Directors and Shareholders of Shinhan Financial Group Co., Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Shinhan Financial Group Co., Ltd. and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated statement of financial position as at December 31, 2020, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS).
Basis for Opinion
We conducted our audit in accordance with Korean Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of the consolidated financial statements and we have fulfilled our other ethical responsibilities in accordance with the ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
1. Expected Credit Losses on Loans Measured at Amortized Cost
Why it is determined to be a key audit matter:
The impairment guidance under Korean IFRS 1109 Financial Instruments requires determination of significant increases in credit risk and measurement of expected credit losses using forward-looking information and others. Accordingly, the Group developed a new measurement model utilizing various types of information, which requires a higher level of management’s interpretation and judgment.
The Group measures expected credit losses on loans measured at amortized cost based on both individual and collective assessments. Individual assessment of expected credit losses is performed based on estimates of future forecast cash flow with a relatively high degree of management’s estimates and judgments, and collective assessment of expected credit losses is involved with a variety and complex variable inputs and assumptions that requires management’s estimates and judgments. Due to these facts, expected credit losses of loans measured at amortized costs are determined as a key audit matter.
As described in Note 12, loans measured at amortized cost subject to individual or collective assessments amount to W 359,282,485 million, with allowances for credit losses of W 3,060,966 million as of December 31, 2020.
How our audit addressed the key audit matter:
(1) Assessment of expected credit losses on an individual basis
We obtained an understanding and evaluated the processes and controls relating to the assessment of expected credit losses on an individual basis. In particular, we focused our effort on the assumptions used in estimating future cash flows. We evaluated
whether management’s estimation was reasonable and we assessed the key assumptions in the cash flow projection including growth rate of entities subject to individual assessment and collateral valuation. As part of these procedures, we assessed whether sales growth rate, operating income ratio, and assumptions on investment activities were consistent with historical operating performance and current market conditions. Furthermore, we assessed the appropriateness of collateral valuation by conducting our own research on recent property prices and engaged independent appraisal specialists in assessing reasonableness of appraisal reports, models and methodologies used by management.
(2) Assessment of expected credit losses on a collective basis
We obtained an understanding and evaluated the processes and controls relating to management’s calculation of expected credit losses on a collective basis in accordance with impairment requirements under Korean IFRS 1109 Financial Instruments. As explained in Note 3(8), management assesses credit ratings to recognize lifetime expected credit losses on loans with significant increase in credit risk and impaired loans. Other than these cases, management recognizes 12-months of expected credit losses. To calculate all expected credit losses, management has applied forward-looking information, possible multiple scenarios, probability of default, loss given default and other assumptions estimated through its internal procedures and controls implemented for various assumptions.
We assessed the design and operating effectiveness of controls relating to credit ratings that reasonably reflect both qualitative and quantitative information. Our testing over the accuracy and reliability of the information included agreeing qualitative and quantitative information with relevant evidence.
We reviewed the appropriateness of management policies and procedures to determine significant increases in credit risk, and tested reasonableness of expected credit loss model applied by each of the three stages(Stage 1, 2 and 3) depending on how significantly credit risk was increased.
Our audit effort involved risk specialists in verifying the reasonability and possibility of forward-looking information and multiple scenarios produced by management. Also, our audit involved risk specialists to statistically analyze the correlation between forward-looking information and probability of default or loss given default. We assessed the appropriateness of methodologies for adjusting the probability of default to reflect forward-looking information on estimation of expected credit losses. We further tested the reasonableness and mathematical accuracy of the information through recalculation and inspection of supporting data.
We reviewed the methodologies used by management to verify that probability of default and loss given default were calibrated using sufficient and reasonable historical data. We determined that the default and loss data used were appropriately gathered and applied in accordance with internal control procedures. In addition, we assessed reasonableness and accuracy of probability of default and loss given default through procedures including recalculation, and evaluated management’s default and loss data by agreeing them with relevant evidence.
2. Valuation of Over-The-Counter Derivatives
Why it is determined to be a key audit matter :
Fair value of large portion of over-the-counter derivatives in the consolidated financial statements is calculated through the use of an internally developed valuation system. Judgment is required in estimating the fair value of these derivatives held by Shinhan Investment Co., Ltd. in determining appropriate models, assumptions and inputs. Given the complexity of estimation and the extent of judgment involved in valuing these over-the-counter derivatives, we considered this to be a key audit matter. Over-the-counter derivatives of Shinhan Investment Co., Ltd. subject to fair value measurement are financial liabilities designated as fair value through profit or loss related to derivative linked securities and financial assets at fair value through profit or loss(See Note 4(5)) that amount to W 8,834,694 million as of December 31, 2020.
How our audit addressed the key audit matter :
We obtained an understanding and evaluated processes and controls in relation to fair value measurement. Our focus was particularly on the accuracy of underlying transaction data used and mathematical calculation in accordance with management’s internal valuation methodologies.
We assessed design and tested operating effectiveness of controls over accuracy and completeness of key inputs such as underlying transaction data (notional amount, interest rate, maturity etc.) used in management’s determination of estimated fair value. We tested transaction data used in the valuation by examining supporting evidence including contracts and trade confirmations.
We also tested the controls over periodic verification of management’s internal valuation system, verification of input data, and recalculation of output data to ensure the accuracy of over-the-counter derivative valuation. We involved our derivative valuation specialist to independently estimate fair values utilizing independent valuation models and variables to see if management’s valuation is outside our ranges.
Emphasis of Matter
Without qualifying our conclusion, we draw attention to Note 4 and Note 48 of the financial statements. As explained in Note 4 and Note 48, the rapid spread of the COVID-19 has had a negative impact on the global economy, which can result in an increase in expected credit losses, potential impairment of assets, and negatively affecting the Group's ability to generate revenue.
Other Matter
The consolidated financial statements of the Company for the year ended December 31, 2019, were audited by Samjong KPMG auditor who expressed an unqualified opinion on those statements on March 5, 2020.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Korean IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Korean Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Korean Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • |
| Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • |
| Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. |
| • |
| Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| • |
| Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| • |
| Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
| • |
| Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Sungeun Jin, Certified Public Accountant.
/s/ Samil PricewaterhouseCoopers
Seoul, Korea
March 3, 2021
|
This report is effective as of March 3, 2021, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any. |
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Financial Position
As of December 31, 2020 and 2019
(In millions of won) |
| Note |
| 2020 |
| 2019 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Cash and due from banks at amortized cost |
| 4, 8, 19 |
| 33,410,542 |
| 28,423,744 |
Financial assets at fair value through profit or loss |
| 4, 9, 19 |
| 59,091,403 |
| 53,163,143 |
Derivative assets |
| 4, 10 |
| 5,633,915 |
| 2,829,274 |
Securities at fair value through other comprehensive income |
| 4, 11, 19 |
| 58,316,112 |
| 59,381,053 |
Securities at amortized cost |
| 4, 11, 19 |
| 47,282,623 |
| 45,582,065 |
Loans at amortized cost |
| 4, 12, 19 |
| 356,221,519 |
| 323,244,979 |
Property and equipment, net |
| 13, 18, 19 |
| 3,989,697 |
| 4,083,328 |
Intangible assets |
| 14 |
| 5,480,619 |
| 5,558,714 |
Investments in associates |
| 15 |
| 2,657,768 |
| 1,452,861 |
Current tax receivable |
|
|
| 51,894 |
| 88,433 |
Deferred tax assets |
| 41 |
| 215,345 |
| 218,254 |
Investment property |
| 16 |
| 615,235 |
| 488,610 |
Defined benefit assets |
| 25 |
| 18,374 |
| 1,682 |
Other assets |
| 4, 17 |
| 32,194,666 |
| 27,878,281 |
Assets held for sale |
|
|
| 54,392 |
| 25,160 |
|
|
|
|
|
|
|
Total assets |
|
|
| 605,234,104 |
| 552,419,581 |
|
|
|
|
|
|
|
5
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Financial Position (Continued)
As of December 31, 2020 and 2019
(In millions of won) |
| Note |
| 2020 |
| 2019 |
Liabilities |
|
|
|
|
|
|
Deposits |
| 4, 20 |
| 326,416,868 |
| 294,874,256 |
Financial liabilities at fair value through profit or loss |
| 4, 21 |
| 1,436,694 |
| 1,632,457 |
Financial liabilities designated at fair value through profit or loss |
| 4, 22 |
| 8,455,724 |
| 9,409,456 |
Derivative liabilities |
| 4, 10 |
| 5,016,567 |
| 2,303,012 |
Borrowings |
| 4, 23 |
| 41,594,064 |
| 34,863,156 |
Debt securities issued |
| 4, 24 |
| 75,134,394 |
| 75,363,364 |
Defined benefit liabilities |
| 25 |
| 62,514 |
| 121,140 |
Provisions |
| 26 |
| 804,736 |
| 557,024 |
Current tax payable |
|
|
| 389,586 |
| 512,757 |
Deferred tax liabilities |
| 41 |
| 579,656 |
| 451,603 |
Liabilities under insurance contracts |
| 27 |
| 53,460,230 |
| 52,163,417 |
Other liabilities |
| 4, 28 |
| 45,526,213 |
| 38,237,558 |
|
|
|
|
|
|
|
Total liabilities |
|
|
| 558,877,246 |
| 510,489,200 |
|
|
|
|
|
|
|
Equity |
| 29 |
|
|
|
|
Capital stock |
|
|
| 2,969,641 |
| 2,732,463 |
Hybrid bonds |
|
|
| 2,179,934 |
| 1,731,235 |
Capital surplus |
|
|
| 12,234,939 |
| 10,565,353 |
Capital adjustments |
|
|
| (687,935) |
| (1,116,770) |
Accumulated other comprehensive loss |
|
|
| (404,181) |
| (260,156) |
Retained earnings |
|
|
| 27,777,169 |
| 25,525,821 |
Total equity attributable to equity holders of Shinhan Financial Group Co., Ltd. |
|
|
| 44,069,567 |
| 39,177,946 |
Non-controlling interests |
|
|
| 2,287,291 |
| 2,752,435 |
Total equity |
|
|
| 46,356,858 |
| 41,930,381 |
|
|
|
|
|
|
|
Total liabilities and equity |
|
|
| 605,234,104 |
| 552,419,581 |
See accompanying notes to the consolidated financial statements.
6
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2020 and 2019
(In millions of won) |
| Note |
| 2020 |
| 2019 |
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
Financial assets at fair value through other comprehensive income and at amortized cost |
|
|
| 13,943,159 |
| 14,878,516 |
Financial assets at fair value through profit or loss |
|
|
| 830,837 |
| 828,846 |
|
|
|
| 14,773,996 |
| 15,707,362 |
Interest expense |
|
|
| (4,891,296) |
| (5,969,398) |
Net interest income |
| 31 |
| 9,882,700 |
| 9,737,964 |
|
|
|
|
|
|
|
Fees and commission income |
|
|
| 3,814,474 |
| 3,557,013 |
Fees and commission expense |
|
|
| (1,431,541) |
| (1,416,494) |
Net fees and commission income |
| 32 |
| 2,382,933 |
| 2,140,519 |
|
|
|
|
|
|
|
Insurance income |
|
|
| 7,247,753 |
| 7,569,425 |
Insurance expenses |
|
|
| (7,851,685) |
| (8,066,351) |
Net insurance expenses |
| 27 |
| (603,932) |
| (496,926) |
|
|
|
|
|
|
|
Dividend income |
| 33 |
| 97,956 |
| 82,158 |
Net gain on financial instruments at fair value through profit or loss |
| 34 |
| 272,830 |
| 1,385,482 |
Net loss on financial instruments at fair value through profit or loss (overlay approach) |
| 9 |
| (136,255) |
| (247,585) |
Net gain (loss) on financial instruments designated at fair value through profit or loss |
| 35 |
| 198,239 |
| (846,046) |
Net foreign currency transaction gain |
|
|
| 526,615 |
| 440,948 |
Net gain on disposal of financial asset at fair value through other comprehensive income |
| 11 |
| 273,793 |
| 152,278 |
Net gain (loss) on disposal of securities at amortized cost |
| 11 |
| (25) |
| 66 |
Provision for allowance for credit loss |
| 36 |
| (1,382,179) |
| (980,692) |
General and administrative expenses |
| 37 |
| (5,212,473) |
| (5,134,674) |
Other operating expenses, net |
| 39 |
| (1,370,466) |
| (1,187,242) |
|
|
|
|
|
|
|
Operating income |
|
|
| 4,929,736 |
| 5,046,250 |
|
|
|
|
|
|
|
Equity method income |
| 15 |
| 159,533 |
| 53,287 |
Other non-operating expense, net |
| 40 |
| (335,398) |
| (188,029) |
Profit before income taxes |
|
|
| 4,753,871 |
| 4,911,508 |
|
|
|
|
|
|
|
Income tax expense |
| 41 |
| 1,255,795 |
| 1,269,124 |
Profit for the year |
|
|
| 3,498,076 |
| 3,642,384 |
7
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Continued)
For the years ended December 31, 2020 and 2019
(In millions of won, except earnings per share data) |
| Note |
| 2020 |
| 2019 |
|
|
|
|
|
|
|
Other comprehensive income for the year, net of income tax |
| 29 |
|
|
|
|
Items that are or may be reclassified to profit or loss: |
|
|
|
|
|
|
Gain (loss) on financial asset at fair value through other comprehensive income |
|
|
| (86,784) |
| 352,085 |
Gain on financial instruments at fair value through profit or loss (overlay approach) |
| 9 |
| 90,298 |
| 162,967 |
Equity in other comprehensive income (loss) of associates |
|
|
| (3,318) |
| 3,302 |
Foreign currency translation adjustments for foreign operations |
|
|
| (161,365) |
| 105,771 |
Net change in unrealized fair value of cash flow hedges |
|
|
| (14,460) |
| (18,589) |
Other comprehensive income of separate account |
|
|
| 3,884 |
| 10,427 |
|
|
|
| (171,745) |
| 615,963 |
Items that will never be reclassified to profit or loss: |
|
|
|
|
|
|
Remeasurements of the defined benefit liability |
|
|
| 15,812 |
| (54,644) |
Equity in other comprehensive loss of associates |
|
|
| (10) |
| (8) |
Valuation gain on financial asset at fair value through other comprehensive income |
|
|
| 6,841 |
| 18,885 |
Loss on disposal of financial asset at fair value through other comprehensive income |
|
|
| (27,826) |
| (5,861) |
Changes in own credit risk on financial liabilities designated at fair value through profit of loss |
|
|
| 3,084 |
| (8,425) |
|
|
|
| (2,099) |
| (50,053) |
Total other comprehensive income, net of income tax |
|
|
| (173,844) |
| 565,910 |
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
| 3,324,232 |
| 4,208,294 |
|
|
|
|
|
|
|
Profit attributable to: |
|
|
|
|
|
|
Equity holders of Shinhan Financial Group Co., Ltd. |
| 29, 42 |
| 3,414,595 |
| 3,403,497 |
Non-controlling interests |
|
|
| 83,481 |
| 238,887 |
|
|
|
| 3,498,076 |
| 3,642,384 |
Total comprehensive income attributable to: |
|
|
|
|
|
|
Equity holders of Shinhan Financial Group Co., Ltd. |
|
|
| 3,242,745 |
| 3,890,701 |
Non-controlling interests |
|
|
| 81,487 |
| 317,593 |
|
|
|
| 3,324,232 |
| 4,208,294 |
|
|
|
|
|
|
|
Earnings per share: |
| 29, 42 |
|
|
|
|
Basic and diluted earnings per share in won |
|
|
| 6,654 |
| 7,000 |
See accompanying notes to the consolidated financial statements.
8
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2019
(In millions of won) |
| Equity attributable to equity holders of Shinhan Financial Group Co., Ltd. |
|
|
|
| |||||||||||||
|
| Capital stock |
| Hybrid bonds |
| Capital surplus |
| Capital adjustments |
| Accumulated other compre-hensive income (loss) |
| Retained earnings |
| Sub-total |
| Non-controlling interests |
| Total | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance at January 1, 2019 |
| 2,645,053 |
| 1,531,759 |
| 9,895,488 |
| (552,895) |
| (753,220) |
| 22,959,440 |
| 35,725,625 |
| 925,805 |
| 36,651,430 | |
Total comprehensive income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Profit for the year |
| - |
| - |
| - |
| - |
| - |
| 3,403,497 |
| 3,403,497 |
| 238,887 |
| 3,642,384 | |
Other comprehensive income (loss), net of income tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gain on financial asset at fair value through other comprehensive income |
| - |
| - |
| - |
| - |
| 297,652 |
| - |
| 297,652 |
| 67,457 |
| 365,109 | |
Gain on financial instruments at fair value through profit or loss (overlay approach) |
| - |
| - |
| - |
| - |
| 150,678 |
| - |
| 150,678 |
| 12,289 |
| 162,967 | |
Equity in other comprehensive income of associates |
| - |
| - |
| - |
| - |
| 3,294 |
| - |
| 3,294 |
| - |
| 3,294 | |
Foreign currency translation adjustments |
| - |
| - |
| - |
| - |
| 104,388 |
| - |
| 104,388 |
| 1,383 |
| 105,771 | |
Net change in unrealized fair value of cash flow hedges |
| - |
| - |
| - |
| - |
| (15,960) |
| - |
| (15,960) |
| (2,629) |
| (18,589) | |
Other comprehensive income of separate account |
| - |
| - |
| - |
| - |
| 10,427 |
| - |
| 10,427 |
| - |
| 10,427 | |
Remeasurements of defined benefit plans |
| - |
| - |
| - |
| - |
| (54,850) |
| - |
| (54,850) |
| 206 |
| (54,644) | |
Changes in own credit risk on financial liabilities designated at fair value through profit or loss |
| - |
| - |
| - |
| - |
| (8,425) |
| - |
| (8,425) |
| - |
| (8,425) | |
Total other comprehensive income |
| - |
| - |
| - |
| - |
| 487,204 |
| - |
| 487,204 |
| 78,706 |
| 565,910 | |
Total comprehensive income |
| - |
| - |
| - |
| - |
| 487,204 |
| 3,403,497 |
| 3,890,701 |
| 317,593 |
| 4,208,294 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Other changes in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Dividends |
| - |
| - |
| - |
| - |
| - |
| (753,041) |
| (753,041) |
| - |
| (753,041) | |
Dividends to hybrid bonds |
| - |
| - |
| - |
| - |
| - |
| (61,993) |
| (61,993) |
| - |
| (61,993) | |
Issuance of hybrid bonds |
| - |
| 199,476 |
| - |
| - |
| - |
| - |
| 199,476 |
| - |
| 199,476 | |
Issuance of convertible preferred shares |
| 87,410 |
| - |
| 660,381 |
| - |
| - |
| - |
| 747,791 |
| - |
| 747,791 | |
Acquisition of treasury stock |
| - |
| - |
| - |
| (444,077) |
| - |
| - |
| (444,077) |
| - |
| (444,077) | |
Change in other capital adjustments |
| - |
| - |
| 9,484 |
| (119,798) |
| - |
| (16,222) |
| (126,536) |
| - |
| (126,536) | |
Change in other non-controlling interests |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 1,509,037 |
| 1,509,037 |
|
|
| 87,410 |
| 199,476 |
| 669,865 |
| (563,875) |
| - |
| (831,256) |
| (438,380) |
| 1,509,037 |
| 1,070,657 | |
Reclassification of OCI retained earnings |
| - |
| - |
| - |
| - |
| 5,860 |
| (5,860) |
| - |
| - |
| - | |
Balance at December 31, 2019 |
| 2,732,463 |
| 1,731,235 |
| 10,565,353 |
| (1,116,770) |
| (260,156) |
| 25,525,821 |
| 39,177,946 |
| 2,752,435 |
| 41,930,381 |
See accompanying notes to the consolidated financial statements.
9
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity (Continued)
For the years ended December 31, 2020
(In millions of won) |
| Equity attributable to equity holders of Shinhan Financial Group Co., Ltd. |
|
|
|
| |||||||||||||
|
| Capital stock |
| Hybrid bonds |
| Capital surplus |
| Capital adjustments |
| Accumulated other compre-hensive income (loss) |
| Retained earnings |
| Sub-total |
| Non-controlling interests |
| Total | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance at January 1, 2020 |
| 2,732,463 |
| 1,731,235 |
| 10,565,353 |
| (1,116,770) |
| (260,156) |
| 25,525,821 |
| 39,177,946 |
| 2,752,435 |
| 41,930,381 | |
Total comprehensive income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Profit for the year |
| - |
| - |
| - |
| - |
| - |
| 3,414,595 |
| 3,414,595 |
| 83,481 |
| 3,498,076 | |
Other comprehensive income (loss), net of income tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gain on financial asset at fair value through other comprehensive income |
| - |
| - |
| - |
| - |
| (107,484) |
| - |
| (107,484) |
| (285) |
| (107,769) | |
Gain on financial instruments at fair value through profit or loss (overlay approach) |
| - |
| - |
| - |
| - |
| 90,298 |
| - |
| 90,298 |
| - |
| 90,298 | |
Equity in other comprehensive income of associates |
| - |
| - |
| - |
| - |
| (3,328) |
| - |
| (3,328) |
| - |
| (3,328) | |
Foreign currency translation adjustments |
| - |
| - |
| - |
| - |
| (159,596) |
| - |
| (159,596) |
| (1,769) |
| (161,365) | |
Net change in unrealized fair value of cash flow hedges |
| - |
| - |
| - |
| - |
| (14,460) |
| - |
| (14,460) |
| - |
| (14,460) | |
Other comprehensive income of separate account |
| - |
| - |
| - |
| - |
| 3,884 |
| - |
| 3,884 |
| - |
| 3,884 | |
Remeasurements of defined benefit plans |
| - |
| - |
| - |
| - |
| 15,752 |
| - |
| 15,752 |
| 60 |
| 15,812 | |
Changes in own credit risk on financial liabilities designated at fair value through profit or loss |
| - |
| - |
| - |
| - |
| 3,084 |
| - |
| 3,084 |
| - |
| 3,084 | |
Total other comprehensive income |
| - |
| - |
| - |
| - |
| (171,850) |
| - |
| (171,850) |
| (1,994) |
| (173,844) | |
Total comprehensive income |
| - |
| - |
| - |
| - |
| (171,850) |
| 3,414,595 |
| 3,242,745 |
| 81,487 |
| 3,324,232 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Other changes in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Dividends |
| - |
| - |
| - |
| - |
| - |
| (883,929) |
| (883,929) |
| - |
| (883,929) | |
Dividends to hybrid bonds |
| - |
| - |
| - |
| - |
| - |
| (85,327) |
| (85,327) |
| - |
| (85,327) | |
Issuance of hybrid bonds |
| - |
| 448,699 |
| - |
| - |
| - |
| - |
| 448,699 |
| - |
| 448,699 | |
Paid-in capital increase |
| 237,178 |
| - |
| 1,197,774 |
| - |
| - |
| - |
| 1,434,952 |
| - |
| 1,434,952 | |
Acquisition of treasury stock(Note 29) |
| - |
| - |
| - |
| (150,467) |
| - |
| - |
| (150,467) |
| - |
| (150,467) | |
Disposal of treasury stock(Note 29) |
| - |
| - |
| - |
| 451,809 |
| - |
| - |
| 451,809 |
| - |
| 451,809 | |
Retirement of treasury stock(Note 29) |
| - |
| - |
| - |
| 150,000 |
| - |
| (150,025) |
| (25) |
| - |
| (25) | |
Change in other capital adjustments |
| - |
| - |
| 471,812 |
| (22,507) |
| - |
| (16,141) |
| 433,164 |
| - |
| 433,164 | |
Change in other non-controlling interests |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (546,631) |
| (546,631) |
|
|
| 237,178 |
| 448,699 |
| 1,669,586 |
| 428,835 |
| - |
| (1,135,422) |
| 1,648,876 |
| (546,631) |
| 1,102,245 | |
Reclassification of OCI retained earnings |
| - |
| - |
| - |
| - |
| 27,825 |
| (27,825) |
| - |
| - |
| - | |
Balance at December 31, 2020 |
| 2,969,641 |
| 2,179,934 |
| 12,234,939 |
| (687,935) |
| (404,181) |
| 27,777,169 |
| 44,069,567 |
| 2,287,291 |
| 46,356,858 |
See accompanying notes to the consolidated financial statements
10
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2020 and 2019
(In millions of won) |
| Note |
| 2020 |
| 2019 |
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
Profit before income taxes |
|
|
| 4,753,871 |
| 4,911,508 |
Adjustments for: |
|
|
|
|
|
|
Interest income |
| 31 |
| (14,773,996) |
| (15,707,362) |
Interest expense |
| 31 |
| 4,891,296 |
| 5,969,398 |
Dividend income |
| 33 |
| (97,956) |
| (82,158) |
Net fees and commission expense |
| 32 |
| 187,304 |
| 125,975 |
Net insurance loss |
| 27 |
| 1,726,150 |
| 2,098,617 |
Net loss (gain) on financial instruments at fair value through profit or loss |
| 34 |
| 136,191 |
| (38,738) |
Net gain on derivatives |
| 10 |
| (245,681) |
| (388,880) |
Net loss on financial instruments at fair value through profit or loss (overlay approach) |
| 9 |
| 136,255 |
| 247,585 |
Net foreign currency translation loss(gain) |
|
|
| (232,723) |
| 147,952 |
Net loss (gain) on financial instruments designated at fair value through profit or loss |
| 35 |
| (241,066) |
| 33,872 |
Net gain on disposal of financial asset at fair value through other comprehensive income |
| 11 |
| (273,793) |
| (152,278) |
Net loss (gain) on disposal of securities at amortized cost |
| 11 |
| 25 |
| (66) |
Provision for allowance for credit loss |
| 36 |
| 1,382,179 |
| 980,692 |
Employee costs |
| 25 |
| 175,539 |
| 188,313 |
Depreciation and amortization |
| 37 |
| 768,488 |
| 677,152 |
Other operating expense |
| 39 |
| 202,178 |
| 305,781 |
Equity method income, net |
| 15 |
| (159,533) |
| (53,287) |
Other non-operating expense |
| 40 |
| 153,360 |
| 148,091 |
|
|
|
| (6,265,783) |
| (5,499,341) |
|
|
|
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
Cash and due from banks at amortized cost |
|
|
| (4,915,143) |
| (10,059,356) |
Securities at fair value through profit or loss |
|
|
| (7,088,599) |
| (3,977,211) |
Due from banks at fair value through profit or loss |
|
|
| 862,047 |
| 73,904 |
Loans at fair value through profit or loss |
|
|
| 132,172 |
| (943,321) |
Financial asset designated at fair value through profit or loss |
|
|
| (708,627) |
| 847,715 |
Derivative instruments |
|
|
| (65,288) |
| 58,532 |
Loans at amortized cost |
|
|
| (32,897,127) |
| (18,831,825) |
Other assets |
|
|
| (7,866,826) |
| (4,452,651) |
11
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 2020 and 2019
(In millions of won) |
| Note |
| 2020 |
| 2019 |
|
|
|
|
|
|
|
Deposits |
|
|
| 33,139,123 |
| 29,123,272 |
Liabilities for defined benefit obligations |
|
|
| (243,428) |
| (263,882) |
Provisions |
|
|
| 51,567 |
| 28,380 |
Other liabilities |
|
|
| 8,503,803 |
| 7,851,505 |
|
|
|
| (11,096,326) |
| (544,938) |
|
|
|
|
|
|
|
Income taxes paid |
|
|
| (1,184,910) |
| (1,130,148) |
Interest received |
|
|
| 14,570,884 |
| 15,200,114 |
Interest paid |
|
|
| (5,267,781) |
| (5,793,865) |
Dividends received |
|
|
| 80,728 |
| 35,716 |
|
|
|
|
|
|
|
Net cash inflow (outflow) from operating activities |
|
|
| (4,409,317) |
| 7,179,046 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Decrease in financial instruments at fair value through profit or loss |
|
|
| 4,537,421 |
| 3,690,283 |
Increase in financial instruments at fair value through profit or loss |
|
|
| (4,982,663) |
| (6,712,873) |
Proceeds from disposal of securities at fair value through other comprehensive income |
|
|
| 53,048,284 |
| 36,334,241 |
Acquisition of securities at fair value through other comprehensive income |
|
|
| (52,657,353) |
| (46,908,632) |
Proceeds from disposal of securities at amortized cost |
|
|
| 5,923,611 |
| 6,722,627 |
Acquisition of securities at amortized cost |
|
|
| (7,645,000) |
| (12,209,898) |
Proceeds from disposal of property and equipment |
| 13, 40 |
| 248,037 |
| 51,942 |
Acquisition of property and equipment |
| 13 |
| (279,654) |
| (270,386) |
Proceeds from disposal of intangible assets |
| 14, 40 |
| 5,298 |
| 24,825 |
Acquisition of intangible assets |
| 14 |
| (362,415) |
| (318,930) |
Proceeds from disposal of investments in associates |
| 15 |
| 266,322 |
| 182,604 |
Acquisition of investments in associates |
|
|
| (776,799) |
| (669,341) |
Proceeds from disposal of investment property |
| 16, 40 |
| 113,038 |
| 86,422 |
Acquisition of investment property |
| 16 |
| (243,806) |
| (2,774) |
Proceeds from disposal of assets held for sale |
|
|
| 2,048 |
| 137 |
Other, net |
|
|
| 11,233 |
| (264,585) |
Proceeds from settlement of hedging derivative financial instruments for financial assets |
|
|
| 25,722 |
| 19,303 |
Payment of settlement of hedging derivative financial instruments for financial assets |
|
|
| (186,169) |
| (195,900) |
Net cash flow from business combination |
| 47 |
| (73,081) |
| (2,246,932) |
Net cash outflow from investing activities |
|
|
| (3,025,926) |
| (22,687,867) |
12
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 2020 and 2019
(In millions of won) |
| Note |
| 2020 |
| 2019 |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Issuance of hybrid bonds |
|
|
| 448,698 |
| 199,476 |
Net increase in borrowings |
|
|
| 7,465,106 |
| 5,017,269 |
Proceeds from debt securities issued |
|
|
| 21,480,455 |
| 31,083,390 |
Repayments of debt securities issued |
|
|
| (21,508,827) |
| (19,881,717) |
Other liabilities |
|
|
| (30,526) |
| (33,619) |
Dividends paid |
|
|
| (968,847) |
| (830,772) |
Proceeds from settlement of hedging derivative financial instruments for debt securities issued |
|
|
| 851,381 |
| 1,694,362 |
Payment of settlement of hedging derivative financial instruments for debt securities issued |
|
|
| (807,705) |
| (1,716,320) |
Acquisition of treasury stock |
|
|
| (150,182) |
| (444,077) |
Disposal of treasury stock |
|
|
| 161,863 |
| - |
Increase in non-controlling interests |
|
|
| 566,673 |
| 312,390 |
Redemption of lease liabilities |
|
|
| (781,867) |
| (269,362) |
Paid-in capital increase |
|
|
| 1,154,347 |
| - |
Issuance of convertible preferred shares |
|
|
| - |
| 747,791 |
Net cash inflow from financing activities |
|
|
| 7,880,569 |
| 15,878,811 |
|
|
|
|
|
|
|
Effect of changes in foreign exchange rate on cash and cash equivalents held |
|
|
| (61,518) |
| 29,428 |
Increase in cash and cash equivalents |
|
|
| 383,808 |
| 399,418 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
| 44 |
| 8,579,174 |
| 8,179,756 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
| 44 |
| 8,962,982 |
| 8,579,174 |
See accompanying notes to the consolidated financial statements.
13
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
1. Reporting entity
Shinhan Financial Group Co., Ltd., the controlling company, and its subsidiaries included in consolidation (collectively the “Group”) are summarized as follows:
(a) Controlling company
Shinhan Financial Group Co., Ltd. (the “Shinhan Financial Group” or the “Company”), the controlling company, is incorporated on September 1, 2001 for the main purposes of controlling, managing and funding Shinhan Bank, Shinhan Securities Co., Ltd., Shinhan Capital Co., Ltd. and Shinhan BNP Asset Management Co., Ltd. by way of share transfers. The total capital stock amounted to W1,461,721 million. Also, Shinhan Financial Group’s shares have been listed on the Korea Exchange since September 10, 2001 and Shinhan Financial Group’s American Depositary Shares have been listed on the New York Stock Exchange since September 16, 2003.
(b) Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of December 31, 2020 and 2019 are as follows:
|
|
|
|
|
| Date of financial information |
| Ownership (%) | ||
Investor |
| Investee(*1) |
| Location |
|
| December 31, 2020 |
| December 31, 2019 | |
Shinhan Financial Group Co., Ltd. |
| Shinhan Bank |
| Korea |
| December 31 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Card Co., Ltd. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Investment Corp. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Life Insurance Co., Ltd. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Orange Life Insurance Co., Ltd. (*2) |
| 〃 |
| 〃 |
| 100.0 |
| 59.2 |
〃 |
| Shinhan Capital Co., Ltd. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Jeju Bank |
| 〃 |
| 〃 |
| 75.3 |
| 75.3 |
〃 |
| Shinhan Credit Information Co., Ltd. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Alternative Investment Management Inc. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan BNP Paribas Asset Management Co., Ltd. |
| 〃 |
| 〃 |
| 65.0 |
| 65.0 |
〃 |
| SHC Management Co., Ltd. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan DS |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Savings Bank |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Asia Trust Co., Ltd. |
|
|
|
|
| 60.0 |
| 60.0 |
〃 |
| Shinhan AITAS Co., Ltd. |
| 〃 |
| 〃 |
| 99.8 |
| 99.8 |
〃 |
| Shinhan REITs Management Co., Ltd. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan AI Co., Ltd. |
| 〃 |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Neoplux Co., Ltd.(*3) |
| 〃 |
| 〃 |
| 100.0 |
| - |
Shinhan Bank |
| Shinhan Asia Limited (*4) |
| Hong Kong |
| 〃 |
| - |
| 99.9 |
〃 |
| Shinhan Bank America |
| USA |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Bank Europe GmbH |
| Germany |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Bank Cambodia |
| Cambodia |
| 〃 |
| 97.5 |
| 97.5 |
〃 |
| Shinhan Bank Kazakhstan Limited |
| Kazakhstan |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Bank Canada |
| Canada |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Bank (China) Limited |
| China |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Bank Japan |
| Japan |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Bank Vietnam Ltd |
| Vietnam |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Banco Shinhan de Mexico |
| Mexico |
| 〃 |
| 99.9 |
| 99.9 |
〃 |
| PT Bank Shinhan Indonesia |
| Indonesia |
| 〃 |
| 99.0 |
| 99.0 |
Shinhan Bank Japan |
| SBJDNX (*5) |
| Japan |
| 〃 |
| 100.0 |
| - |
Shinhan Card Co., Ltd. |
| LLP MFO Shinhan Finance |
| Kazakhstan |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| PT. Shinhan Indo Finance |
| Indonesia |
| 〃 |
| 50.0 |
| 50.0 |
〃 |
| Shinhan Microfinance Co., Ltd. |
| Myanmar |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| Prudential Vietnam Finance |
| Vietnam |
| 〃 |
| 100.0 |
| 100.0 |
14
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
1. Reporting entity (continued)
(b) Ownership of Shinhan Financial Group and its major consolidated subsidiaries as of December 31, 2020 and 2019 are as follows (continued):
|
|
|
|
|
| Date of financial information |
| Ownership (%) | ||
Investor |
| Investee(*1) |
| Location |
|
| December 31, 2020 |
| December 31, 2019 | |
Shinhan Investment Corp. |
| Shinhan Investment Corp. USA Inc. |
| USA |
| December 31 |
| 100.0 |
| 100.0 |
〃 |
| Shinhan Investment Corp. Asia Ltd. |
| Hong Kong |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| SHINHAN SECURITIES VIETNAM CO., LTD. |
| Vietnam |
| 〃 |
| 100.0 |
| 100.0 |
〃 |
| PT. Shinhan Sekuritas Indonesia |
| Indonesia |
| 〃 |
| 99.0 |
| 99.0 |
PT Shinhan Sekuritas Indonesia |
| PT. Shinhan Asset Management Indonesia |
| 〃 |
| 〃 |
| 75.0 |
| 75.0 |
Shinhan Life Insurance Co., Ltd. |
| Shinhan Financial Plus (*5) |
| Korea |
| 〃 |
| 100.0 |
| - |
Shinhan BNP Paribas Asset Management Co., Ltd. |
| Shinhan BNP ASSET MGT HK Ltd. |
| Hong Kong |
| 〃 |
| 100.0 |
| 100.0 |
Shinhan DS |
| SHINHAN DS VIETNAM CO., LTD. |
| Vietnam |
| 〃 |
| 100.0 |
| 100.0 |
(*1) Subsidiaries such as trust, beneficiary certificate, corporate restructuring fund and private equity fund which are not actually operating their own business are excluded.
(*2) The Group acquired additional shares of Orange Life Insurance Co., Ltd. for the year ended December 31, 2020, and Orange Life Insurance Co., Ltd. became a wholly owned subsidiary of the Group.
(*3) The Group acquired a 96.77% stake in Neoplux.Co., Ltd. for the year ended December 31, 2020. The entity became a wholly owned subsidiary as the Group acquired residual shares additionally.
(*4) As of December 31, 2020, liquidation procedure has been completed.
(*5) Newly invested subsidiaries subject to consolidation are included for the year ended December 31, 2020.
15
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
1. Reporting entity (continued)
(c) Consolidated structured entities
Consolidated structured entities are as follows:
Category |
| Consolidated structured entities |
| Description |
|
|
|
|
|
Trust |
| Shinhan Bank (including development trust) and 17 others |
| A trust is consolidated when the Group as a trustee is exposed to variable returns, if principle or interest amounts of the entrusted properties falls below guaranteed amount, the Group should compensate it, and the Group has the ability to affect those returns. |
Asset-Backed Securitization
|
| MPC Yulchon Green I and 210 others |
| An entity for asset backed securitization is consolidated when the Group has sole decision-making authority to dispose assets or change the conditions of the assets, and the Group is exposed to, or has rights to related variable returns by providing credit enhancement and purchases of subordinated securities. |
Structured Financing |
| SHPE Holdings One Co., Ltd. |
| An entity established for structured financing relating to real estate, shipping, or mergers and acquisitions is consolidated, when the Group has the greatest credit to the entity, has sole decision-making authority of these Entities due to the entities default, and is exposed to, or has rights to related variable returns. |
Investment Fund |
| KoFC Shinhan Frontier Champ 2010-4 PEF and 124 others |
| An investment fund is consolidated, when the Group manages or invests assets of the investment funds on behalf of other investors as a collective investor or a business executive, or has the ability to dismiss the manager of the investment funds, and is exposed to, or has rights to, the variable returns. |
(*) The Group provides credit contribution (ABCP purchase agreements) of W4,162,593 million for the purpose of credit enhancement of structured companies.
16
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
2. Basis of preparation
(a) Statement of compliance
The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
The consolidated financial statements are authorized for issue by the Board of Directors on February 5, 2021, which will be submitted for approval to the stockholder’s meeting to be held on March 25, 2021.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the statement of financial position:
- | derivative financial instruments measured at fair value |
- | financial instruments at fair value through profit or loss measured at fair value |
- | financial instruments at fair value through other comprehensive income measured at fair value |
- | liabilities for cash-settled share-based payment arrangements measured at fair value |
- | financial liabilities designated as hedged items in a fair value hedge accounting of which changes in fair value attributable to the hedged risk recognized in profit or loss |
- | liabilities for defined benefit plans recognized at the net of the total present value of defined benefit obligations less the fair value of plan assets |
(c) Functional and presentation currency
These consolidated financial statements are presented in Korean won, which is the Controlling Company’s functional currency and the currency of the primary economic environment in which the Group operates.
(d) Use of estimates and judgments
The preparation of the consolidated financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. If the estimates and assumptions based on management's best judgment as of December 31, 2020 are different from the actual environment, these estimates and actual results may be different.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about critical judgments in applying accounting policies that have a significant effect on the amounts recognized in the consolidated financial statements and information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are described in Note 5.
In preparing these consolidated financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty are the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2019.
17
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
2. Basis of preparation (continued)
(e) Change in accounting policy
Except for the following new standards, which have been applied from January 1, 2020, the accounting policies applied by the Group in these consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as of and for the year ended December 31, 2019.
i) Amendments to Korean IFRS No.1001 ‘Presentation of financial statements’ and Korean IFRS No.1008 ‘Accounting policies, changes in accounting estimates and errors’ – Definition of materiality
The amendments clarify the explanation of the definition of material and Korean IFRS No.1001 and Korean IFRS No.1008 are amended in accordance with the clarified definitions. Materiality is assessed by reference to omission or misstatement of material information as well as effects of immaterial information, and to the nature of the users when determining the information to be disclosed by the Group. The amendments do not have a significant impact on the consolidated financial statements.
ii) Amendments to Korean IFRS No. 1103 'Business combination' – Definition of business
To consider the integration of the acquired activities and assets as a business, the amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs and excludes economic benefits from lowing the costs. If all of the fair value of gross assets acquired is substantially concentrated in a single identifiable asset or a group of similar assets, an entity may elect to apply a concentration test, an optional test, to permit a simplified assessment of whether an acquired asset of activities and assets is not a business. The amendments do not have a significant impact on the consolidated financial statements.
(iii) Amendments to Korean IFRS No.1116 ‘Lease’ - The practical expedient for the exemption, discount or deferral of rent related to COVID-19
As a practical expedient, the lessee may not evaluate whether a rent concession, such as the rent discount directly resulting from COVID-19, constitutes a change in the lease. The lessee with this choice shall account for changes in lease payments, such as rent discounts, consistently with the way the Standard specifies when those changes are not lease changes. The Group changed its accounting policy in accordance with the amendments made to Korean IFRS No.1116. The amended accounting policies are applied retrospectively in accordance with the transitional provisions in Korean IFRS No.1116. Retrospective application of accounting policies has no cumulative effect on the initial application to be reflected in retained earnings at the beginning of January 1, 2020 and the comparative financial statements presented have not been restated. The amount recognized in profit or loss is W 24,928 million to reflect the change in lease payments arising from the same lease discount for the year ended December 31, 2020 as a result of the amendment to the Korean IFRS No.1116 ‘Lease’.
18
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies
Except for the new standards and the amendment to the following standard, which are applied from January 1, 2020, the accounting policies applied by the Group in these consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as of and for the year ended December 31, 2020 and have mentioned in the Note 2.
(a) Operating segments
The Group has divided the segments based on internal reports reviewed periodically by the top sales decision maker to make decisions about the resources allocated to the segments and evaluate their performance. There are five reporting segments as described in Note 7. The reporting segments are operated separately according to the nature of the goods and services provided and the organizational structure of the Group.
The segment reported to the Chief Executive Officer (“CEO”) includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
It is the CEO’s responsibility to evaluate the resources to be distributed to the business and the performance of the business, and to make strategic decisions.
(b) Basis of consolidation
i) Subsidiaries
Subsidiaries are investees controlled by the Group. The Group controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
If a member of the Group uses accounting policies other than those adopted in the consolidated financial statements for the same transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.
ii) Structured entity
The Group establishes or invests in various structured entities. It does not own shares directly or indirectly for these companies. Considering the terms and conditions of the arrangement in which the structured entity was established, the consolidated entity gains and loses from the operations of the structured entity. It is included in the consolidated entities if it is determined that it has the ability to direct the activities of a consolidated structured entity that can most significantly affect these gains and losses. The Group does not recognize any non-controlling interests as equity in relation to structured entities in the consolidated statements of financial position since the non-controlling interests in these entities are recognized as liabilities of the Group.
iii) Intra-group transactions eliminated on consolidation
Intra-group balances, transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealized intra-group losses are recognized as expense if intra-group losses indicate an impairment that requires recognition in the consolidated financial statements.
19
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(b) Basis of consolidation (continued)
iv) Non-controlling interests
Non-controlling interests in a subsidiary are accounted for separately from the parent’s ownership interests in a subsidiary. Each component of net profit or loss and other comprehensive income is attributed to the owners of the parent and non-controlling interest holders, even when the non-controlling interests balance is reduced to below zero.
(c) Business combinations
i) Business combinations
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control.
Each identifiable asset and liability is measured at its acquisition-date fair value except for below:
- Leases and insurance contracts are required to be classified on the basis of the contractual terms and other factors
- Only those contingent liabilities assumed in a business combination that are a present obligation and can be measured reliably are recognized
- Deferred tax assets or liabilities are recognized and measured in accordance with K-IFRS No.1012, ‘Income Taxes’
- Employee benefit arrangements are recognized and measured in accordance with K-IFRS No.1019, ‘Employee Benefits’
- Indemnification assets are recognized and measured on the same basis as the indemnified liability or asset
- Reacquired rights are measured in accordance with special provisions
- Liabilities or equity instruments related to share-based payment transactions are measured in accordance with the method in K-IFRS No.1102, ‘Share-based Payment’
- Non-current assets held for sale are measured at fair value less costs to sell in accordance with K-IFRS No.1105, ‘Non-current Assets Held for Sale and Discontinued Operations’
As of the acquisition date, non-controlling interests in the acquired are measured as the non-controlling interests' proportionate share of the acquired’s identifiable net assets.
The transfer consideration in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquired and the equity interests issued by the acquirer. However, any portion of the acquirer's share-based payment awards exchanged for awards held by the acquired employee that is included in transfer consideration in the business combination shall be measured in accordance with the method described above rather than at fair value.
Acquisition-related costs are costs the acquirer incurs to effect a business combination. Those costs include : broker's fees; advisory, legal, accounting, valuation and other professional or consulting fees; general administrative costs, including the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. Acquisition-related costs, other than those associated with the issue of debt or equity securities, which are recognized in accordance with K-IFRS No.1032 and 1109, are expensed in the periods in which the costs are incurred and the services are received.
20
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(d) Investments in associates and joint ventures
An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The investment in an associate and a joint venture is initially recognized at cost, and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss and changes in equity of the associate and the joint venture after the date of acquisition. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated the Group's stake in preparing the consolidated financial statements. Intra-group losses are recognized as expense if intra-group losses indicate an impairment that requires recognition in the consolidated financial statements.
If an associate or a joint venture uses accounting policies different from those of the Group for transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in applying the equity method.
When the carrying amount of that interest, including any long-term investments, is reduced to nil, the recognition of further losses is discontinued except to the extent that the Group has an obligation or has to make payments on behalf of the investee for further losses.
(e) Cash and cash equivalents
Cash and cash equivalents are comprised of cash balances and call deposits with original maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments. Equity instruments are excluded from cash equivalents unless they are, in substance, cash equivalents, like in the case of preferred shares acquired within a short period of their maturity and with a specified redemption date.
21
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(f) Non-derivative financial assets
Financial assets are recognized in the consolidated statement of financial position when the Group becomes a party to the contract. In addition, a standardized purchase or sale (a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the market concerned) is recognized on the trade date.
A financial asset is measured initially at its fair value plus, for an item not at Fair Value Through Profit or Loss (“FVTPL”), transaction costs that are directly attributable to its acquisition of the financial asset. Transaction costs on the financial assets at FVTPL that are directly attributable to the acquisition are recognized in profit or loss as incurred.
i) Financial assets designated at FVTPL
Financial assets can be irrevocably designated as measured at FVTPL despite of classification standards stated below, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise from measuring assets or liabilities or recognizing the gains or losses on them on different bases.
ii) Equity instruments
For the equity instruments that are not held for short-term trading, at initial recognition, the Group may make an irrevocable election to present subsequent changes in fair value in other comprehensive income. Equity instruments that are not classified as financial assets at Fair Value through Other Comprehensive Income (“FVOCI”) are classified as financial assets at FVTPL.
The Group subsequently measures all equity investments at fair value. Valuation gains or losses of the equity instruments that are classified as financial assets at FVOCI previously recognized as other comprehensive income is not reclassified as profit or loss on recognition. The Group recognizes dividends in profit or loss when the Group’s right to receive payments of the dividend is established.
Valuation gains or losses due to changes in fair value of the financial assets at FVTPL are recognized in the consolidated statement of comprehensive income gains or losses on financial assets at FVTPL. Impairment loss (reversal) on equity instruments at FVOCI is not recognized separately.
iii) Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model in which the asset is managed and the contractual cash flow characteristics of the asset. Debt instruments are classified as financial assets at amortized cost, at FVOCI, or at FVTPL. Debt instruments are reclassified only when the Group’s business model changes.
①Financial assets at amortized cost
Assets that are held within a business model whose objective is to hold assets to collect contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a financial asset measured at amortized cost that is not subject to a hedging relationship is recognized in profit or loss when the financial asset is derecognized or impaired. Interest income on the effective interest method is included in the ‘Interest income’ in the consolidated statement of comprehensive income.
22
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(f) Non-derivative financial assets (continued)
② Financial assets at FVOCI
Assets that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Other than impairment losses, interest income, foreign exchange differences, gains or losses of the financial assets at FVOCI are recognized as other comprehensive income in equity. On removal, gains or losses accumulated in other comprehensive income are reclassified to profit or loss. The interest income on the effective interest method is included in the ‘Interest income’ in the consolidated statement of comprehensive income. Foreign exchange differences and impairment losses are included in the ‘Net foreign currency transaction gain’ and ‘Provision for credit losses allowance’ in the consolidated statement of comprehensive income, respectively.
③ Financial assets at FVTPL
Debt securities other than financial assets at amortized costs or FVOCI are classified at FVTPL. Unless hedge accounting is applied, gains or losses from financial assets at FVTPL are recognized as profit or loss and are included in ‘Net gain on financial assets at fair value through profit or loss’ in the consolidated statement of comprehensive income.
iv) Embedded derivatives
Financial assets with embedded derivatives are classified regarding the entire hybrid contract, and the embedded derivatives are not separately recognized. The entire hybrid contract is considered when it is determined whether the contractual cash flows represent solely payments of principal and interest.
v) Derecognition of financial assets
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. If the Group does not have or transfer most of the risks and rewards of ownership of the financial asset, the entity shall remove the financial asset if it does not control the financial asset. If the Group continues to control the financial asset, it continues to recognize the transferred asset to the extent that it is continuously involved and recognizes the related liability together.
If the Group transfers the right to cash flows of a financial asset but holds most of the risks and rewards of ownership of the financial asset, the entity shall continue to recognize the asset. Also, the amount of disposal amount is recognized as a liability.
vi) Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the consolidated statement of financial position only when the Group currently has a legally enforceable right to set off the recognized amounts, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
23
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(g) Derivative financial instruments
Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.
i) Hedge accounting
The Group holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Group designated derivatives as hedging instruments to hedge the risk of changes in the fair value of assets, liabilities or firm commitments (a fair value hedge) and foreign currency risk of highly probable forecasted transactions or firm commitments (a cash flow hedge).
On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction. In addition, this document describes the hedging instrument, hedged item, and the method of evaluating the effect of the hedging instrument offsetting changes in the fair value or cash flow of the hedged item due to the hedged risk at the initiation of the hedging relationship and in subsequent periods.
① Fair value hedge
Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit or loss. The gain or loss from remeasuring the hedging instrument at fair value for a derivative hedging instrument and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss in the same line item of the separate statement of comprehensive income.
The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, or if the hedge no longer meets the criteria. Any adjustment arising from G/L on the hedged item attributable to the hedged risk is amortized to profit or loss from the date the hedge accounting is discontinued.
② Cash flow hedge
When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.
③ Net investment hedge
The portion of the change in fair value of a financial instrument designated as a hedging instrument that meets the requirements for hedge accounting for a net investment in a foreign operation is recognized in other comprehensive income and the ineffective portion of the hedge is recognized in profit or loss. The portion recognized as other comprehensive income that is effective as a hedge is recognized in the statement of comprehensive income as a result of reclassification adjustments in accordance with K-IFRS No. 1021, "Effect of Changes in Foreign Exchange Rates" at the time of disposing of its overseas operations or disposing of a portion of its overseas operations To profit or loss.
24
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(g) Derivative financial instruments (continued)
ii) Other derivative financial instruments
All derivatives except those designated as hedging instruments and are effective in hedging are measured at fair value. Changes in the fair value of other derivative financial instrument not designated as a hedging instrument are recognized immediately in profit or loss.
iii) Unobservable valuation differences at initial recognition
Any difference between the fair value of over the counter derivatives at initial recognition and the amount that would be determined at that date using a valuation technique in a situation in which the valuation is dependent on unobservable parameters is not recognized in profit or loss but is recognized on a straight-line basis over the life of the instrument or the remainder is recognized in profit or loss immediately when the fair value becomes observable.
(h) Impairment: Financial assets and contract assets
The Group recognizes allowance for credit loss for debt instruments measured at amortized cost and fair value through other comprehensive income, and lease receivable, loan commitments and financial guarantee contracts using the expected credit loss impairment model. Financial assets migrate through the following three stages based on the change in credit risk since initial recognition and allowance for credit loss for the financial assets are measured at the 12-month expected credit losses (“ECL”) or the lifetime ECL, depending on the stage.
Category |
| Allowance for credit loss | ||
STAGE 1 |
| When credit risk has not increased significantly since the initial recognition |
| 12-months ECL: the ECL associated with the probability of default events occurring within the next 12 months
|
STAGE 2 |
| When credit risk has increased significantly since the initial recognition |
| Lifetime ECL: a lifetime ECL associated with the probability of default events occurring over the remaining lifetime
|
STAGE 3 |
| When assets are impaired |
| Same as above |
The Group, meanwhile, only recognizes the cumulative changes in lifetime expected credit losses since the initial recognition as an allowance for credit loss for purchased or originated credit-impaired financial assets. The total period refers to the expected life span of the financial instrument up to the contract expiration date.
25
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(h) Impairment: Financial assets and contract assets (continued)
i) Reflection of forward-looking information
The Group reflects forward-looking information presented by internal experts based on a variety of information when measuring expected credit losses. For the purpose of estimating these forward-looking information, the Group utilizes the economic outlook published by domestic and overseas research institutes or government and public agencies. The Group reflects future macroeconomic conditions anticipated from a neutral standpoint that is free from bias in measuring expected credit losses. Expected credit losses in this respect reflect conditions that are most likely to occur and are based on the same assumptions that the Group used in its business plan and management strategy.
ii) Measurement of amortization cost regarding the expected credit loss of financial assets
The expected credit loss of an amortized financial asset is measured as the difference between the present value of the cash flows expected to be received and the cash flow expected to be received. For this purpose, we calculate expected cash flows for individually significant financial assets. For non-individual significant financial assets, the financial assets collectively include expected credit losses as part of a set of financial assets with similar credit risk characteristics.
Expected credit losses are deducted using the allowance for credit loss account and are written off if the financial assets are not recoverable. The allowance for credit loss is increased when the written-off loan receivables are subsequently collected and changes in the allowance for credit loss are recognized in profit or loss.
iii) Measurement of estimated credit loss of financial assets at FVOCI
The calculation of expected credit losses is the same as for financial assets measured at amortized cost, but changes in allowance for credit loss are recognized in other comprehensive income. In the case of disposal and redemption of other comprehensive income - fair value, the allowance for credit loss is reclassified from other comprehensive income to profit or loss and recognized in profit or loss.
(i) Property and equipment
Property and equipment are initially measured at cost and after initial recognition. The cost of property and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Property and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. Certain land and buildings are measured at fair value at the date of transition to K-IFRS, which is deemed cost, in accordance with K-IFRS No.1101, ‘First-time Adoption of K-IFRS’. Subsequent to initial recognition, the asset is measured at cost less accumulated depreciation and accumulated impairment losses, if any.
The Group recognizes in the carrying amount of an item of property and equipment the cost of replacing part of property and equipment when that cost is incurred if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of those parts that are replaced is derecognized. The costs of the day-to-day servicing of property and equipment are recognized in profit or loss as incurred.
Land is not depreciated. Other property and equipment are depreciated on a straight-line basis over the estimated useful lives, which most closely reflect the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets under finance leases are depreciated over the shorter of the lease term and their useful lives. The estimated useful lives for the current and comparative periods are as follows:
Descriptions |
| Useful lives |
Buildings |
| 40~50 years |
Other properties |
| 4~5 years |
26
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(i) Property and equipment (continued)
Depreciation methods, useful lives and residual values are reassessed at each fiscal year-end and any adjustment is accounted for as a change in accounting estimate.
(j) Intangible assets
Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.
Amortization of intangible assets except for goodwill and membership rights is calculated on a straight-line basis over the estimated useful lives of intangible assets as shown below, from the date that they are available for use. The residual value of intangible assets is zero. However, if there are no foreseeable limits to the periods over which certain intangible assets are expected to be available for use, they are determined to have indefinite useful lives and are not amortized.
Descriptions |
| Useful lives |
Software |
| 5 years |
Capitalized development cost |
| 5 years |
Other intangible assets |
| 5 years or contract periods |
Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes are accounted for as changes in accounting estimates.
Expenditures on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.
(k) Investment properties
Investment property is property held either to earn rental income or for capital appreciation or both. An investment property is initially recognized at cost including any directly attributable expenditure. Subsequent to initial recognition, the asset is measured at cost less accumulated depreciation and accumulated impairment losses, if any.
The depreciation method and the estimated useful lives for the current and comparative periods are as follows:
Descriptions |
| Depreciation method |
| Useful lives |
Buildings |
| Straight-line |
| 40 years |
27
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(l) Leases
i) Accounting treatment as the lessee
The Group leases various tangible assets, such as real estate and vehicles, and the each lease contract is negotiated individually and includes a variety of terms and conditions. There are no other restrictions imposed by the lease contracts, but the lease assets cannot be provided as collaterals for borrowings.
At the commencement date of the lease, the Group recognizes the right-of-use assets and the lease liabilities. Each lease payment is allocated to payment for the principal portion of the lease liability and financial costs. The Group recognizes in profit or loss the amount calculated to produce a constant periodic rate of interest on the lease liability balance for each period as financial costs. Right-of-use assets are depreciated using a straight-line method from the commencement date over the lease term.
Lease liabilities are measured at the present value of the lease payments that are not paid at the commencement date of the lease, and the lease payments included in the measurement of the liabilities consist of the following payments:
- Fixed payments (including in-substance fixed payments, less any lease incentives receivable)
- Variable lease payments depending on the index or rate
- Amounts expected to be paid by the lessee under the residual value guarantee
- The exercise price of a purchase option if the lessee is reasonably certain to exercise that option
extended Lease payments in an optional renewal period if the lessee is reasonably certain to that they will exercise the extension option
- Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease
If the interest rate implicit in the lease is readily determined, the lease payments are discounted by the rate; if the rate is not readily determined, the lessee’s incremental borrowing rate is used.
The cost of the right-of-use assets comprise:
- The amount of the initial measurement of the lease liability
- Any lease payments made at or before the commencement date (less any lease incentives received)
- Any initial direct costs incurred by the lessee
- An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease
Lease payments related to short-term leases or low-value assets are recognized as current expenses over the lease term using the straight-line method. A short-term lease is a lease that has a lease term of 12 months or less, and the low-value assets lease is a lease of which the underlying asset value is not more than W6 million.
Additional considerations for the Group when accounting for lessees include:
Extension and termination options are included in a number of real estate lease contracts of the Group. In determining the lease term, management considers all relevant facts and circumstances that create an economic incentive not to exercise the options. The periods covered by, a) an option to extend the lease if the lessee is reasonably certain to exercise that option, or b) an option to terminate the lease if the lessee is reasonably certain not to exercise that option, is included when determining the lease term. The Group reassesses whether the Group is reasonably certain to exercise the extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that is within the control of the lessee, and affects whether the lessee is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.
28
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(l) Leases (continued)
ii) Accounting treatment as the lessor
The Group leases out to lessees various tangible assets, including vehicles under operating and finance lease contracts, and the each lease contract is negotiated individually and includes a variety of terms and conditions. The risk management method for all rights held by the Group in the underlying assets includes repurchase agreements, residual value guarantees, etc.
① Finance leases
The Group recognizes them as a receivable at an amount equal to the net investment in the lease, and the difference from the carrying amount of the leasing asset as of the commencement date is recognized as profit or loss from disposal of the lease asset. In addition, interest income is recognized by applying the effective interest method for the amount of the Group's net investment in finance leases. Lease-related direct costs are included in the initial recognition of financial lease receivables and are accounted for in a way that reduces the revenue for the lease term.
② Operating leases
The Group recognizes the lease payments as income on straight-line basis, and adds the lease initial direct costs incurred during negotiation and contract phase of the operating lease to the carrying amount of the underlying asset. In addition, the depreciation policy of operating lease assets is consistent with the Group’s depreciation policy of other similar assets.
(n) Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. The assets or disposal group that are classified as non-current assets held for sale are measured at the lower of their carrying amount and fair value less cost to sell.
The Group recognizes an impairment loss for any initial or subsequent write-down of an asset (or disposal group) to fair value less costs to sell, and a gain for any subsequent increase in fair value less costs to sell, up to the cumulative impairment loss previously recognized in accordance with K-IFRS No. 1036 ‘Impairment of Assets’.
An asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated (or amortized).
29
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(o) Impairment of non-financial assets
The carrying amounts of the Group’s non-financial assets, other than assets arising from employee benefits, deferred tax assets and non-current assets held for sale, are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amount to their carrying amount.
The Group estimates the recoverable amount of an individual asset, and , if it is impossible to measure the individual recoverable amount of an asset, then the Group estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. The recoverable amount of an asset or a CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or the CGU.
An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss.
Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergies arising from the goodwill acquired. Any impairment identified at the CGU level will first reduce the carrying value of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
(p) Non-derivative financial liabilities
The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liability in accordance with the substance of the contractual arrangement and the definitions of financial liabilities.
Transaction costs on the financial liabilities at FVTPL are recognized in profit or loss as incurred.
i) Financial liabilities designated at FVTPL
Financial liabilities can be irrevocably designated as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases, or a group of financial instruments is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. The amount of change in the fair value of the financial liabilities designated at FVTPL that is attributable to changes in the credit risk of that liabilities shall be presented in other comprehensive income.
ii) Financial liabilities at FVTPL
Since initial recognition, financial liabilities at FVTPL is measured at fair value, and changes in the fair value are recognized as profit or loss.
30
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(p) Non-derivative financial liabilities (continued)
iii) Other financial liabilities
Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities, and other financial liabilities include deposits, borrowings, debentures and etc. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the acquisition. Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the effective interest method.
The Group derecognizes a financial liability from the consolidated statement of financial position when it is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).
(q) Foreign currencies
i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency using the exchange rate at the end of the reporting period. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period. Translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss and translation differences on non-monetary assets such as equities held at fair value through other comprehensive income are recognized in other comprehensive income.
Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, a financial liability designated as a hedging instrument of the net investment in a foreign operation or a qualifying cash flow hedge, which are recognized in other comprehensive income Translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss and translation differences on non-monetary assets such as equities held at fair value through other comprehensive income are recognized in other comprehensive income.
ii) Foreign operations
If the presentation currency of the Group is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods:
The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation and are translated using the exchange rate at the reporting date.
When a foreign operation is disposed of, the relevant amount in the translation is transferred to profit or loss as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to profit or loss.
31
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(q) Foreign currencies (continued)
iii) Net investment in a foreign operation
If the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, then foreign currency differences arising on the item form part of the net investment in the foreign operation and are recognized in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.
(r) Equity capital
i) Capital stock
Capital stock is classified as equity. Incremental costs directly attributable to the transaction of stock are deducted from equity, net of any tax effects.
Preferred stocks are classified as equity if they do not need to be repaid or are repaid only at the option of the Group and if payment is determined by the Group's discretion, and dividends are recognized when the shareholders' meeting approves the dividends. Preferred stocks that are eligible for reimbursement of a defined or determinable amount on or after a certain date are classified as liabilities. The related dividend is recognized in profit or loss at the time of occurrence as interest expense.
ii) Hybrid bonds
The Group classifies an issued financial instrument, or its component parts, as a financial liability or an equity instrument depending on the substance of the contractual arrangement of such financial instrument. Hybrid bonds where the Group has an unconditional right to avoid delivering cash or another financial asset to settle a contractual obligation are classified as an equity instrument and presented in equity. Hybrid bonds issued by subsidiaries of the group are classified as non-controlling interests according to this classification criteria. In addition, distributions paid are treated as net income attributable to non-controlling interests in the consolidated statement of comprehensive income.
iii) Capital adjustment
The effect of changes in ownership interests in subsidiaries that do not lose control over the equity attributable to owners of the parent is included in capital adjustments.
32
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(s) Employee benefits
i) Short-term employee benefits
Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render the related service. When an employee has rendered service to the Group during an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.
ii) Other long-term employee benefits
The Group’s net obligation in respect of other long-term employee benefits that are not expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.
iii) Retirement benefits: defined contribution plans
The Group recognizes the contribution expense as an account of severance payments in profit or loss in the period according to the defined contribution plans. Contributions payable are recognized as liabilities (unpaid expenses) after deducting the contributions already paid. In addition, if the contribution already paid exceeds the contribution due for services provided before the end of the reporting period, the future contribution is reduced or cash refunded due to the excess is recognized as an asset (prepaid expense).
iv) Retirement benefits: defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of plan assets is deducted.
Defined benefit liabilities are calculated annually by independent actuaries using the predicted unit credit method. If the net present value of the defined benefit obligation less the fair value of the plan assets is an asset then the present value of the economic benefits available to the entity in the form of a refund from the plan or a reduction in future contributions to the plan.
The remeasurement component of net defined benefit liability is the change in the effect of the asset except for the amount included in the net interest income of plan assets and net revenues of plan assets excluding actuarial gains and losses to the net of defined benefit liabilities. It is immediately recognized in other comprehensive income. The Group determines the net interest on the net defined benefit obligation (asset) by multiplying the net defined benefit obligation (asset) by the discount rate determined at the beginning of the annual reporting period and is the net present value of the net defined benefit obligation. It is determined by taking into consideration the fluctuations. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.
When an amendment or reduction of the system occurs, the gain or loss resulting from the change or decrease in the benefits to the past service is immediately recognized in profit or loss. The Group recognizes gains or losses on settlement when the defined benefit plan is settled.
33
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(s) Employee benefit (continued)
v) Termination benefits
Termination benefits are recognized as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.
(t) Share-based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period that the employees unconditionally become entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as personnel expense in profit or loss.
(u) Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.
Provisions shall be used only for expenditures for which the provisions are originally recognized.
34
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(v) Financial guarantee contract
A financial guarantee contract is a contract that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial guarantee contract.
After initial recognition, financial guarantee contracts are measured at the higher of:
- Loss allowance in accordance with K-IFRS No.1109, ‘Financial Instruments’
- The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of K-IFRS No.1115, ‘Revenue from Contracts with Customers’
(w) Insurance contracts
i) Investment contract liabilities, including insurance contract liabilities and discretionary dividend factors
The group establishes liability reserves in accordance with the Insurance Business Law and the related regulations. The reserves are calculated according to the insurance policy, insurance premiums and liability reserve calculation method. The main contents are as follows.
i-1) Premium reserves
The present value of the premiums payable to the policy holders after the balance sheet date is the present value of the net premium to be paid after the end of the reporting period. The amount is deducted from the value.
i-2) Prepaid premium reserves
As of the end of the reporting period, premiums that have paid due are calculated based on premiums and the liability reserve calculation method.
i-3) Guarantee reserves
The total amount of reserve for variable minimum guarantee (①) and reserve for general account guarantee (②) is provided as guarantee reserve.
① Variable minimum guarantee reserve
This reserve is the amount that must be accumulated to guarantee insurance premiums above a certain level for contracts maintained as of the end of the reporting period, and is measured at the higher of :
i) the average amount of the top 30% of net loss expected in the future
ii) the minimum required amount by insurance types, minimum guarantees and limits of stock investment portion
35
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(w) Insurance contracts (continued)
②General account guarantee reserve
As of the end of the reporting period, the amount of reserve for insurance contracts that are insured under general account is required to be paid to guarantee the level of refunds, and select the largest of the following:
i) Average of the amount deducted from the appropriateness of the liability reserve calculated by excluding the guarantee option from the appropriateness evaluation of the liability reserve calculated by including the guarantee option for each interest rate scenario
ii) The amount of compensation (including annulment contract) against the guarantee received from the policy holder by the rate applied at the premium calculation in the insurance premium and liability reserve calculation method
i-4) Reserve for outstanding claims
As of the end of the reporting period, the Group has accrued the amount for which the reason for the payment of insurance claims, etc. has been incurred and the amount of the claim payment has not been paid yet due to the dispute or lawsuit related to the insurance settlement (pending in the Financial Dispute Mediation Committee). In addition, the Group recognizes unrecognized losses based on historical experience.
i-5) Reserves for participating policyholders' dividends
The reserve is provided for the purpose of contributing to the policyholder dividend according to the laws and regulations and the reserve for dividend reserve for the policyholder and the dividend reserve for the subsequent business year.
The policyholder dividend reserve is the amount that is not paid as of the end of the reporting period for the settlement amount and the reserve for dividend policy for the next fiscal year is based on the policyholder dividend calculated on the insurance contract effective as of the end of the reporting period.
① Excess crediting rate reserve
In the case of a dividend insurance contract which has been maintained for more than one year as of the end of the reporting period among contracts signed before October 1, 1997, the difference between the planned interest rate and the one-year maturity deposit rate shall be preserved.
② Mortality dividend reserve
Dividends arising from contracts that are maintained for more than one year at the end of the reporting period are used to offset the expected mortality and actual mortality rates applied to premiums.
③ Interest dividend reserve
For the contracts that have been maintained for more than one year as of the end of the reporting period, the amount calculated by applying the interest dividend reserve rate to the net written premium reserve less the unearned acquisition costs. However, the insurance sold before October 1, 1997 is applied to the amount deducted from the net premium in the event that the planned interest rate by the insurance product is less than the dividend standard.
④ Reserves for long-term special dividends
For the effective dividend policy agreement that has been maintained for 6 years or more, the amount calculated by applying the long-term special dividend rate to the amount deducted from the net premiums for the end of the year.
36
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(w) Insurance contracts (continued)
However, insurance sold before October 1, 1997 is applied to the deduction of unearned premiums at the end of the year when the expected interest rate by the insurance product is less than the dividend standard rate.
i-6) Reserve for interest dividends
In order to cover the policyholder dividend in the future, the total amount is set aside according to business performance according to the law or insurance contracts.
i-7) Reserve for dividend insurance loss reserve
In accordance with the regulations set by the supervisory authority, dividend insurance profit is accumulated within 30/100 of the contractor's stake. The reserve for the compensation of dividend insurance losses shall compensate for the loss of dividend insurance contracts in accordance with the provisions of the fiscal year within five years from the end of the accumulated reporting period and shall be used as the policyholder dividend source for the individual contractor.
ii) Contractor's equity adjustment
The Group classifies the gains and losses on available-for-sale financial assets as of the end of the reporting period as contractor's equity and shareholder's equity based on the ratio of the average liability reserves of the dividend and non-dividend policies for the fiscal year. The amount corresponding to the contractor's equity is categorized as the adjustment of the contractor's equity.
iii) Evaluation of debt appropriateness
At the end of each reporting period, the group assesses whether the recognized insurance liability is appropriate using the current estimates of future cash flows of the policy, and if the carrying amount of the insurance liability is deemed to be inappropriate in terms of the estimated future cash flows. The reserve for premiums is added to the profit or loss by the amount corresponding to the deficiency.
iv) Reinsurance assets
The group presents the recoverable amount of reinsurance assets. The group assesses at the end of each reporting period whether there is objective evidence that a reinsurance asset is impaired. If there is objective evidence that the entity will not be able to collect all amounts under the terms of the agreement as a result of an event that occurred after the initial recognition and if the event has a reliable and measurable impact on the amount to be received. If reinsurance assets are determined to be impaired, impairment loss is recognized in the profit and loss for the current period.
v) Deferred acquisition cost
The group recognizes unrealized gains and losses arising from long-term insurance contracts as assets and amortizes the premiums over the life of the insurance contracts equally. If the contribution period exceeds 7 years, the amortization period is 7 years if there is an unrecognized balance at the date of the cancellation, the entire amount of the cancellation is amortized in the fiscal year to which the cancellation date belongs. But, if the ratio of additional premiums is higher at the early stage of the insurance period for the purpose of recovering the excess of the unearned premiums and the early settlement costs, the new settlement expenses are treated as the period expense.
37
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(x) Recognition of revenues and expenses
Other than revenues under the scope of K-IFRS No.1017, ‘Leases’, K-IFRS No.1028, ‘Investments in Associates and Joint Ventures’, K-IFRS No.1109, ‘Financial Instruments’, K-IFRS No.1110, ‘Consolidated Financial Statements’, and K-IFRS No.1111, ‘Joint Arrangements’, the Group’s revenues are recognized using five-step revenue recognition model as follows: ① ‘Identifying the contract’ → ② ‘Identifying performance obligations’ → ③ ‘Determining the transaction price’ → ④ ‘Allocating the transaction price to performance obligations’ → ⑤ ‘Recognizing the revenue by satisfying performance obligations’.
i) Interest income and expense
Interest income and expense are recognized in profit or loss using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument, but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, and all other premiums or discounts. When it is not possible to estimate reliably the cash flows or the expected life of a financial instrument, the Group uses the contractual cash flows over the full contractual term of the financial instrument.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is thereafter recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
ii) Fees and commission
The recognition of revenue for financial service fees depends on the purposes for which the fees are assessed and the basis of accounting for any associated financial instrument.
① Fees that are an integral part of the effective interest rate of a financial instrument
Such fees are generally treated as an adjustment to the effective interest rate. Such fees may include compensation for activities such as evaluating the borrower’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, preparing and processing documents, closing the transaction and the origination fees received on issuing financial liabilities. However, when the financial instrument is measured at fair value with the change in fair value recognized in profit or loss, the fees are recognized as revenue when the instrument is initially recognized.
② Fees earned as services are provided
Fees and commission income, including investment management fees, sales commission, and account servicing fees, are recognized as the related services are provided.
38
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(x) Recognition of revenues and expenses (continued)
③ Fees that are earned on the execution of a significant act
The fees that are earned on the execution of a significant act including commission on the allotment of shares or other securities to a client, placement fee for arranging a loan between a borrower and an investor and sales commission, are recognized as revenue when the significant act has been completed.
iii) Insurance income
The Group recognizes insurance income for the insurance premium paid of which the payment date arrived by the
premium payment methods of the insurance contract; and recognizes advance receipts for the insurance premium
paid of which the payment date has not arrived at the end of the reporting period.
iv) Dividends
Dividends income is recognized when the shareholder’s right to receive payment is established. Usually this is the ex-dividend date for equity securities. The Group provides compensation in various forms such as payment discounts and gifts.
(y) Revenue from Contracts with Customers
The fair value of the consideration received or receivable in exchange for the initial transaction is allocated to the reward points ("points") and the remainder of the fee income. The Group provides compensation in various forms such as payment discounts and free gifts. The consideration to be allocated to the points is estimated based on the fair value of the monetary benefits to be provided in consideration of the expected recovery rate of points awarded in accordance with the customer loyalty program and the expected time of recovery. Points for distribution through the cost paid by the customer is recognized by deducting from the revenue from fees.
39
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(z) Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.
Deferred tax is recognized, using the asset-liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which they can be utilized. However, deferred tax is not recognized for the following temporary differences: taxable temporary differences arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit or loss nor taxable income.
The Group applies a consolidated tax method based on a consolidated tax base and a domestic corporation (hereinafter referred to as the "Consolidated Entity Corporation ") that is fully controlled by the consolidated parent company and the consolidated tax base.
The Group evaluates the feasibility of temporary differences, taking into account the future taxable income of individual companies and consolidated groups, respectively. The change in deferred tax assets (liabilities) was recognized as expense (income), except for the amount associated with items directly added to the equity account.
For additional temporary differences in subsidiaries, associates, and joint venture investment interests, the Group may control the timing of the disappearance of temporary differences. All deferred tax liabilities are recognised except in cases where temporary differences are unlikely to dissipate in the foreseeable future. Deferred tax assets arising from deductible temporary differences are likely to be extinguished in the foreseeable future. In addition, It is recognised when taxable income is likely to be used for temporary differences.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period. The carrying amount of deferred tax assets is reduced when it is no longer likely that sufficient taxable income will be generated to use benefits from deferred tax assets.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are corporate taxes imposed by the same taxation authority. Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current tax liabilities and assets.
40
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(z) Income tax (continued)
Because of the tax polices taken by the Group, tax uncertainties arise from the complexity of transactions and differences in tax law analysis. Also, it arises from a tax refund suit, tax investigation, or a refund suit against the tax authorities' tax amount. The Group paid the tax amount by the tax authorities in accordance with K-IFRS No. 2123. However, it will be recognized as the corporate tax assets if there is a high possibility of a refund in the future. In addition, the amount expected to be paid as a result of the tax investigation is recognized as the tax liability.
(aa) Accounting for trust accounts
The Group accounts for trust accounts separately from its bank accounts under the Financial Investment Services and Capital Markets Act and thus the trust accounts are not included in the accompanying consolidated financial statements. In this regard, the funds lent to the trust account are counted as trust account loans and loans borrowed from the trust account as other accounting accounts (non-payment of the trust account). In accordance with the Financial Investment Business Regulations, trust remuneration is acquired in connection with the operation, management, and disposal of trust property, and it is counted as the operating profit of trust business.
(ab) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the ordinary shareholder of the Group by the weighted average number of common shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.
(ac) Issued/Amended Accounting Standards that are not applied
The following new standards and amendments to existing standards have been published and are mandatory for the Group to adopt for annual periods beginning after January 1, 2020, and the Group has not early adopted them.
i) K-IFRS No.1109, ‘Financial Instruments’ and K-IFRS No.1039, ‘Financial Instruments: Recognition and Measurement’ and K-IFRS No.1107, ‘Financial Instruments: Disclosures’ Revision’ and K-IFRS No.1104, ‘Insurance Contracts’ K-IFRS No.1116, ‘Leases’ amended – Interest rate indicator reform
The effective interest rate, not the carrying amount, is adjusted when replacing the interest rate index of a financial instrument measured at amortized cost in relation to the reform of the interest rate index. It includes exceptions, such as allowing hedge accounting to continue uninterrupted even if an interest rate indicator replacement occurs in a hedging relationship. This amendments will take effect for annual periods beginning after January 1, 2021 and are permitted for early application. The Group is checking the impact of the amendments on the consolidated financial statements.
ii) K-IFRS No. 1103 'Business combination' amended – Reference to the Conceptual Framework
For liabilities and contingent liabilities, an exception has been added to apply within K- IFRS No. 1037, ‘Provisions, Contingent Liabilities and Contingent Assets’ and K-IFRS No 2121, even though the definition of assets and liabilities to be recognized is amended to refer to the revised conceptual framework for financial reporting. In addition, it is clarified that contingent assets are not recognized at the acquisition date. This amendment will take effect for annual periods beginning after January 1, 2022 and are permitted for early application. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.
41
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant accounting policies (continued)
(ac) Issued/Amended Accounting Standards that are not applied (continued)
(iii) K-IFRS No. 1016 ‘Property, Plant and Equipment ' amended – the amount of the sale before the intended use
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced before that asset is available for use, i.e. proceeds while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Consequently, the Group recognise such sales proceeds and related costs in profit or loss.This amendments will take effect for annual periods beginning after January 1, 2022 and are permitted for early application. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.
(iv) K-IFRS No. 1037, ‘Provisions, Contingent Liabilities and Contingent Assets’ amended - Onerous Contracts: Cost of Fulfilling a Contract
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. This amendments will take effect for annual periods beginning after January 1, 2022 and are permitted for early application. The Group expects that the amendments will not have a significant impact on the consolidated financial statements.
(v) Annual Improvements to K-IFRSs 2018-2020 Cycle
For Annual Improvements to K-IFRSs 2018-2020 Cycle, the amendments will take effect for annual periods beginning after January 1, 2022 and are permitted for early application. The amendments will not have a significant impact on the consolidated financial statements.
- K-IFRS No.1101, ‘‘First-time Adoption of K-IFRS’-First-time adopter subsidiaries
- K-IFRS No.1109, ‘Financial Instruments’ -10% test-related fee for financial liabilities removal
- K-IFRS No.1116, ‘Leases’ -Lease incentives
- K-IFRS No.1041, ‘Agriculture’ - Fair value measurement
vi) K-IFRS No. 1001 ‘Presentation of Financial Statements’ amended - Classification of Liabilities as Current or Non-current
It is classified as current or non-current according to the actual rights existing as of the end of fiscal year. The Company does not consider the possibility of exercising the right to postpone the payment of the liability or the expectations of management. The payment of the liability includes the transfer of the equity instrument, except that the option to settle the equity instrument from a compound financial instrument meets the definition of the equity instrument and is recognized separately from the liability. This amendment is effective for annual periods beginning on or after January 1, 2023. The Group expects that the amendment will not have a significant impact on its consolidated financial statements.
42
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management
(a) Overview
(a) Overview
Shinhan Financial Group Co., Ltd. (collectively the “Group”) manages various risks that may be arisen by each business sector and the major risks to which the Group is exposed include credit risk, market risk, interest rate risk, and liquidity risk. These risks are recognized, measured, controlled and reported in accordance with risk management guidelines established at the controlling company level and at the subsidiary level.
i) Risk management principles
The risk management principles of the Group are as follows:
- All business activities take into account the balance of risks and profits within a predetermined risk trend.
- The controlling company shall present the Group Risk Management Model Standards and supervise their compliance, and have responsibility and authority for group-level monitoring.
- Operate a risk-related decision-making system that enhances management's involvement.
- Organize and operate risk management organizations independent of the business sector.
- Operate a performance management system that clearly considers risks when making business decisions.
- Aim for preemptive and practical risk management functions.
- Share a cautious view to prepare for possible deterioration of the situation.
ii) Risk management organization
The basic policies and strategies for risk management of the Group are established by the Risk Management Committee (collectively the "Group Risk Management Committee") within the controlling company's Board of Directors. The Group's Chief Risk Management Officer (CRO) assists the Group Risk Management Committee and consults the risk policies and strategies of the group and each subsidiary through the Group Risk Council, which includes the Chief Risk Management Officer of each subsidiary. The subsidiary implements the risk policies and strategies of the Group through each company's risk management committee, risk-related committee, and risk management organization, and consistently establishes and implements the detailed risk policies and strategies of the subsidiary. The risk management team of the controlling company assists the Group's chief risk management officer for risk management and supervision.
Shinhan Financial Group has a hierarchical limit system to manage the risks of the Group to an appropriate level. The Group Risk Management Committee sets the risk limits that can be assumed by the Group and its subsidiaries, while the Risk Management Committee and the Committee of each subsidiary set and manage detailed risk limits by risk, department, desk and product types.
43
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(a) Overview (continued)
ii) Risk management organization (continued)
① Group Risk Management Committee
The Group established the risk management system for the Group and each of its subsidiaries, and comprehensively manages group risk-related matters such as establishing risk policies, limits, and approvals. The Committee consists of directors of the Group.
The resolution of the Committee is as follows:
-Establish risk management basic policy in line with management strategy
-Determine the level of risk that can be assumed by the Group and each subsidiary
-Approve appropriate investment limit or loss allowance limit
-Enact and amend the Group Risk Management Regulations and the Group Risk Council Regulations
-Matters concerning risk management organization structure and division of duties
-Matters concerning the operation of the risk management system;
-Matters concerning the establishment of various limits and approval of limits
-Make decisions on approval of the FSS's internal rating law for non-retail and retail credit rating systems
-Matters concerning risk disclosure policy
-Analysis of crisis situation, related capital management plan and financing plan
-Matters deemed necessary by the board of directors
-Materials required by external regulations such as the Financial Services Commission and other regulations and guidelines
-Matters deemed necessary by the Chairman
The resolution of the Group Risk Management Committee is reported to the Board of Directors.
② Group Risk Management Council
In order to maintain the Group's risk policy and strategy consistently, the Group decides what is necessary to discuss the risks of the Group and to carry out the policies set by the Group Risk Management Committee. The members are chaired by the group's risk management officer and consist of the risk management officers of major subsidiaries.
iii) Group Risk Management System
① Management of the risk capital
Risk capital refers to the capital required to compensate for the potential loss (risk) if it is actually realized. Risk capital management refers to the management of the risk assets considering its risk appetite, which is a datum point on the level of risk burden compared to available capital, so as to maintain the risk capital at an appropriate level. The Group and subsidiaries establish and operate a risk planning process to reflect the risk plan in advance when establishing financial and business plans for risk capital management, and establish a risk limit management system to controlrisk to an appropriate level.
44
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(a) Overview (continued)
iii) Group Risk Management System (continued)
② Risk Monitoring
In order to proactively manage risks by periodically identifying risk factors that can affect the group's business environment, the Group has established a multi-dimensional risk monitoring system. Each subsidiary is required to report to the Group on key issues that affect risk management at the group level. The Group prepares weekly, monthly and occasional monitoring reports to report to Group management including the CRO.
In addition, the Risk Dash Board is operated to derive abnormal symptoms through three-dimensional monitoring of major portfolios, increased risks, and external environmental changes (news) of assets for each subsidiary. If necessary, the Group takes preemptive risk management to establish and implement countermeasures.
③ Risk Reviewing
When conducting new product∙new business and major policy changes, risk factors are reviewed by using a pre-defined checklist to prevent indiscriminate promotion of business that is not easy to judge risk and to support rational decision making. The subsidiary's risk management department conducts a preliminary review and post-monitoring process on products, services, and projects to be pursued in the business division. In case of matters that are linked or jointly promoted with other subsidiaries, the risk reviews are carried out after prior-consultation with the risk management department of the Group.
④ Risk management
The Group maintains a group wide risk management system to detect the signals of any risk crisis preemptively and, in the event of a crisis actually happening, to respond on a timely, efficient and flexible basis so as to ensure the Group’s survival as a going concern. Each subsidiary maintains crisis planning for three levels of contingencies, namely, ‘alert’, ‘imminent crisis’ and ‘crisis’ determination of which is made based on quantitative and qualitative monitoring and consequence analysis, and upon the happening of any such contingency, is required to respond according to a prescribed contingency plan. At the controlling company level, the Group maintains and installs crisis detection and response system which is applied consistently group-wide, and upon the happening of any contingency at two or more subsidiary level, the Group directly takes charge of the situation so that the Group manages it on a concerted group wide basis.
45
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(b) Credit risk
Credit risk is the risk of potential economic loss that may be caused if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and is the largest risk which the Group is facing. The Group’s credit risk management encompasses all areas of credit that may result in potential economic loss, including not just transactions that are recorded on balance sheets, but also off-balance-sheet transactions such as guarantees, loan commitments and derivative transactions.
Shinhan Bank's basic policy on credit risk management is determined by the Risk Policy Committee. The Risk Policy Committee consists of the chairman of the CRO, the Chief Credit Officer (CCO), the head of the business group, and the head of the risk management department, and decides the credit risk management plan and the direction of the loan policy for the entire bank. Apart from the Risk Policy Committee, the Credit Review Committee is established to separate credit monitoring, such as large loans and limit approval, and the CCO is composed of the chairman, the head of the group in charge of the credit-related business group, the head of the credit planning department, and the senior examination team to enhance the soundness of the loan and profitability of operation.
Shinhan Bank's credit risk management includes processes such as credit evaluation, credit monitoring, and credit supervision, and credit risk measurement of counterparties and limit management processes and credit risk measurements for portfolios. All loan customers of Shinhan Bank are evaluated and managed with credit ratings. Retail customers are evaluated by summing up the information of the bank's internal information and external credit information, and the corporate customers are evaluated by considering financial and non-financial items such as industrial risk, operating risk, and management risk. The evaluated credit rating is used for credit approval, limit management, pricing, credit loss provisioning, etc., and is the basis for credit risk management. The credit evaluation system is divided into an evaluation system for retail customers, a SOHO evaluation system, and an evaluation system for corporate customers. It is subdivided and refined by each model to reflect the Basel III requirements. The corporate credit decision is based on a collective decision-making system, making objective and prudent decisions. In the case of a general credit of loans, the credit is approved based on the consultation between the credit officer of the branch and the headquarters’ Review Committee. In the case of a large or important credit, the credit is approved by the review council. In particular, the Credit Deliberation Committee, the highest decision-making body of the loan, reviews for important loans such as large loans. Credits for retail customers are monitored by an automated credit scoring systems (CSS) based on objective statistical methods and bank credit policies.
Credits for corporate customers are performed by the loan officers and reviewers of branch offices by automatically searching for anticipated insolvent companies among business loan partners, and the credit department independent of the business sector evaluates the adequacy of the result of the loan review and, if necessary, the credit rating of the corporate is requested of an adjustment. In accordance with these procedures, the corporate customers are classified as an early warning company, an observation company, and a normal company, and then are managed differently according to the management guidelines for each risk stage, thereby preventing the insolvency of the loan at an early stage. In order to control the credit risk for the credit portfolio to an appropriate level, credit VaR limits are set and managed for each business and business sector, and to prepare for the credit risk caused by biased exposure to specific sectors, the Group sets and manages exposure limits for each sector by the party, industry, country, etc.
Shinhan Card's basic policy on credit risk is determined by the Risk Management Committee. The Risk Management Committee consists of the Risk Management Officer (CRO) as the chairperson, and is composed of the heads of each business division and supporting division, and the heads of related departments. Apart from the RMC, a credit committee in charge of monitoring corporate credits and other important credits over a certain amount has been established to separate credit policy decisions from credit monitoring.
Shinhan Card's credit scoring system is divided into ASS (Application Scoring System) and BSS (Behavior Scoring System). For applications that meet the eligibility criteria for card issuance, the card will be issued only if the AS credit rating is above the standard. the company's internal information, CB company's external information, and personal information on the application are used to calculate the AS credit rating. The BS, which is recalculated monthly, predicts the delinquency probability of cardholders, and utilizes it to monitor members and monitor portfolio risk.
46
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
|
|
(b) Credit risk (continued)
i) Techniques, assumptions and input variables used to measure impairment
i-1) Determining significant increases in credit risk since initial recognition
At the end of each reporting period, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses.
To make the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, and is indicative of significant increases in credit risk since initial recognition. Information includes the default experience data held by the Group and analysis by an internal credit rating expert.
i-1-1) Measuring the risk of default
The Group assigns an internal credit risk rating to each individual exposure based on observable data and historical experiences that have been found to have a reasonable correlation with the risk of default. The internal credit risk rating is determined by considering both qualitative and quantitative factors that indicate the risk of default, which may vary depending on the nature of the exposure and the type of borrower.
i-1-2) Measuring term structure of probability of default
The Group accumulates information after analyzing the information regarding exposure to credit risk and default information by the type of product and borrower and results of internal credit risk assessment. For some portfolios, the Group uses information obtained from external credit rating agencies when performing these analyses.
The Group applies statistical techniques to estimate the probability of default for the remaining life of the exposure from the accumulated data and to estimate changes in the estimated probability of default over time.
47
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(b) Credit risk (continued)
i) Techniques, assumptions and input variables used to measure impairment (continued)
i-1-3) Significant increases in credit risk
The Group uses the indicators defined as per portfolio to determine the significant increase in credit risk and such indicators generally consist of changes in the risk of default estimated from changes in the internal credit risk rating, qualitative factors, days of delinquency, and others. The method used to determine whether credit risk of financial instruments has significantly increased after the initial recognitions is summarized as follows:
Corporate exposures |
| Retail exposures |
| Card exposures |
|
|
|
|
|
Significant change in credit ratings |
| Significant change in credit ratings |
| Significant change in credit ratings |
Continued past due more than 30 days |
| Continued past due more than 30 days |
| Continued past due more than 7 days(personal card) |
Loan classification of and below precautionary |
| Loan classification of and below precautionary |
| Loan classification of and below precautionary |
Borrower with early warning signals |
| Borrower with early warning signals |
| Specific pool segment |
Negative net assets |
| Specific pool segment |
|
|
Adverse audit opinion or disclaimer of opinion |
| Loans relating to constructor whose collective loans are insolvent |
|
|
Interest coverage ratios of below 1 for consecutive three years |
|
|
|
|
Negative cash flows from operating activities for consecutive two years |
|
|
|
|
The Group assumes that the credit risk of the financial instrument has been increased significantly since initial recognition if a specific exposure is past due more than 30 days (except, for a specific portfolio if it is past due more than 7 days). The Group counts the number of days past due from the earliest date on which the Group fails to fully receive the contractual payments from the borrower, and does not take into account the grace period granted to the borrower.
The Group regularly reviews the criteria for determining if there have been significant increases in credit risk from the following perspective:
- A significant increase in credit risk shall be identified prior to the occurrence of default.
- The criteria established to judge the significant increase in credit risk shall have a more predictive power than the criteria for days of delinquency.
- As a result of applying the judgment criteria, financial instruments shall not be to move too frequently between the 12-month expected credit losses measurement and the lifetime expected credit losses measurement.
48
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(b) Credit risk (continued)
i) Techniques, assumptions and input variables used to measure impairment (continued)
i-2) Modified financial assets
If the contractual cash flows on a financial asset have been modified through renegotiation and the financial asset is not derecognized, the Group assesses whether there has been a significant increase in the credit risk of the financial instrument by comparing the risk of a default occurring at initial recognition based on the original, unmodified contractual terms and the risk of a default occurring at the reporting date based on the modified contractual terms.
The Group may adjust the contractual cash flows of loans to customers who are in financial difficulties in order to manage the risk of default and enhance the collectability (hereinafter referred to as ‘debt restructuring’). These adjustments generally involve extension of maturity, changes in interest payment schedule, and changes in other contractual terms.
Debt restructuring is a qualitative indicator of a significant increase in credit risk and the Group recognizes lifetime expected credit losses for the exposure expected to be the subject of such adjustments. If a borrower faithfully makes payments of contractual cash flows that are modified in accordance with the debt restructuring or if the borrower's internal credit rating has recovered to the level prior to the recognition of the lifetime expected credit losses, the Group recognizes the 12-month expected credit losses for that exposure again.
i-3) Risk of default
The Group considers a financial asset to be in default if it meets one or more of the following conditions:
- If a borrower is overdue 90 days or more from the contractual payment date,
- If the Group judges that it is not possible to recover principal and interest without enforcing the collateral on a financial asset
The Group uses the following indicators when determining whether a borrower is in default:
- Qualitative factors (e.g. breach of contractual terms),
- Quantitative factors (e.g. if the same borrower does not perform more than one payment obligations to the Group, the number of days past due per payment obligation. However, in the case of a specific portfolio, the Group uses the number of days past due for each financial instrument),
- Internal observation data and external data
The definition of default applied by the Group generally conforms to the definition of default defined for regulatory capital management purposes; however, depending on the situations, the information used to determine whether a default has incurred and the extent thereof may vary.
49
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(b) Credit risk (continued)
i) Techniques, assumptions and input variables used to measure impairment (continued)
i-4) Reflection of forward-looking information
The Group reflects forward-looking information presented by internal experts based on a variety of information when measuring expected credit losses. For the purpose of estimating these forward-looking information, the Group utilizes the economic outlook published by domestic and overseas research institutes or government and public agencies.
The Group reflects future macroeconomic conditions anticipated from a neutral standpoint that is free from bias in measuring expected credit losses and the expected credit loss from this point of view reflects the most likely situation. The Group is based on the assumptions consistent with that are based on the business plan and management strategy.
The Group identified the key macroeconomic variables needed to forecast credit risk and credit losses for each portfolio as follows by analyzing past experience data and drew correlations across credit risk for each variable. For the year ended December 31, 2020, macroeconomic variables used by the Group are as follows for each scenario.
① Upside scenario
Major variables(*1) |
| Correlation |
| 2020.4Q(*2) |
| 2021 | ||||||
|
|
| 1Q |
| 2Q |
| 3Q |
| 4Q | |||
GDP growth rate(YoY %) |
| (-) |
| -2.8 |
| 0.0 |
| 3.9 |
| 3.0 |
| 4.3 |
Private consumption index(YoY %) |
| (-) |
| -4.8 |
| 3.0 |
| 2.3 |
| 3.5 |
| 4.1 |
Facility investment growth rate(YoY %) |
| (-) |
| 3.5 |
| 5.5 |
| 6.5 |
| 1.5 |
| 5.0 |
Consumer price index growth rate(%) |
| (-) |
| 0.3 |
| 0.6 |
| 0.9 |
| 0.8 |
| 0.9 |
Balance on current account(billion dollars) |
| (-) |
| 170.0 |
| 130.0 |
| 160.0 |
| 190.0 |
| 180.0 |
Government bond 3y yields(%) |
| - |
| 0.90 |
| 1.00 |
| 1.00 |
| 1.10 |
| 1.10 |
② Central scenario
Major variables(*1) |
| Correlation |
| 2020.4Q(*2) |
| 2021 | ||||||
|
|
| 1Q |
| 2Q |
| 3Q |
| 4Q | |||
GDP growth rate(YoY %) |
| (-) |
| -2.8 |
| -0.7 |
| 3.6 |
| 2.5 |
| 3.7 |
Private consumption index(YoY %) |
| (-) |
| -4.8 |
| 2.6 |
| 2.1 |
| 3.0 |
| 3.5 |
Facility investment growth rate(YoY %) |
| (-) |
| 3.5 |
| 5.0 |
| 6.0 |
| 0.8 |
| 4.5 |
Consumer price index growth rate(%) |
| (-) |
| 0.3 |
| 0.5 |
| 0.9 |
| 0.7 |
| 0.8 |
Balance on current account(billion dollars) |
| (-) |
| 170.0 |
| 120.0 |
| 150.0 |
| 180.0 |
| 170.0 |
Government bond 3y yields(%) |
| - |
| 0.90 |
| 1.00 |
| 1.00 |
| 1.00 |
| 1.00 |
50
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(b) Credit risk (continued)
i) Techniques, assumptions and input variables used to measure impairment (continued)
i-4) Reflection of forward-looking information (continued)
③ Downside scenario
Major variables(*1) |
| Correlation |
| 2020.4Q(*2) |
| 2021 | ||||||
|
|
| 1Q |
| 2Q |
| 3Q |
| 4Q | |||
GDP growth rate |
| (-) |
| -2.8 |
| -1.5 |
| 2.3 |
| 1.7 |
| 3.0 |
Private consumption index |
| (-) |
| -4.8 |
| 1.9 |
| 1.1 |
| 2.6 |
| 3.4 |
Facility investment growth rate |
| (-) |
| 3.5 |
| 3.5 |
| 4.5 |
| -1.0 |
| 3.0 |
Consumer price index growth rate |
| (-) |
| 0.3 |
| 0.4 |
| 0.8 |
| 0.6 |
| 0.7 |
Balance on current account(billion dollars) |
| (-) |
| 170.0 |
| 110.0 |
| 140.0 |
| 170.0 |
| 160.0 |
Government bond 3y yields |
| - |
| 0.90 |
| 1.10 |
| 1.10 |
| 1.10 |
| 1.10 |
(*1) Shinhan Bank applied the private consumption index and facility investment growth rate as the major variables. In addition, Shinhan Card applied the GDP growth rate, consumer price index growth rate, balance on current account, and government bond 3y yields as the major variables.
(*2) Considering the forecast period of the company's bankruptcy, we reflected the future economic outlook.
(*3) The macroeconomic outlook figures are estimated by the Group for the purpose of calculating expected credit losses based on information from domestic and foreign research institutes. Therefore, it could be different from other institutions' estimates.
The predicted correlations between the macroeconomic variables and the risk of default, used by the Group, are derived based on data from the past ten years.
Due to the spread of the COVID-19, the economic recession is expected to be greater than the previous forecast. The forecast default rate for the year ended December 31, 2020 is re-estimated using changed forward-looking information on economic growth rate, private consumption index, KOSPI, which are major variables for calculating the default rate. As a result, the forecast default rate for some portfolios have increased.
Shinhan Bank has set aside an additional W 286 billion in COVID-19 provisions by Shinhan Bank has set aside an additional W 286 billion in COVID-19 provisions by reflecting the future outlook information above and the effect of Stage 2 classification of interest payment/divisional repayment. Shinhan Card has accumulated an additional W 52.4 billion in COVID-19 provisions by updating the correlation model between expected credit losses and forward-looking information.
51
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(b) Credit risk (continued)
i) Techniques, assumptions and input variables used to measure impairment (continued)
i-4) Reflection of forward-looking information (continued)
Shinhan Bank has considered multiple economic scenarios in applying forward-looking information to measure expected credit losses. The sensitivity analysis of the impact on the Group's expected credit loss allowance if the weights of the upside and downside scenarios are assumed to be 100% and other assumptions are the same is as follows:
|
| Sensitivity : Change amount for provisions (In millions of won) |
|
| ||
| Upside(100%) |
| Downside(100%) |
| ||
Shinhan Bank |
| (3,332) |
| 26,507 |
| Forward-looking information update |
Shinhan Card |
| (24,109) |
| 35,205 |
|
52
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial risk management (continued)
(b) Credit risk (continued)
i-5) Measurement of expected credit losses
Key variables used in measuring expected credit losses are as follows:
- Probability of default (“PD”)
- Loss given default (“LGD”)
- Exposure at default (“EAD”)
These variables have been estimated from historical experience data by using the statistical techniques developed internally by the Group and have been adjusted to reflect forward-looking information.
Estimates of PD over a specified period are estimated by reflecting characteristics of counterparties and their exposure, based on a statistical model at a specific point of time. The Group uses its own information to develop a statistical credit assessment model used for the estimation, and additional information observed in the market is considered for some portfolios such as a group of large corporates. When a counterparty or exposure is concentrated in specific grades, the method of measuring PD for those grades would be adjusted, and the PD by grade is estimated by considering contract expiration of the exposure.
LGD refers to the expected loss if a borrower defaults. The Group calculates LGD based on the experience recovery rate measured from past default exposures. The model for measuring LGD is developed to reflect type of collateral, seniority of collateral, type of borrower, and cost of recovery. In particular, LGD for retail loan products uses loan to value (LTV) as a key variable. The recovery rate reflected in the LGD calculation is based on the present value of recovery amount, discounted at the effective interest rate.
EAD refers to the expected exposure at the time of default. The Group derives EAD reflecting a rate at which the current exposure is expected to be used additionally up to the point of default within the contractual limit. EAD of financial assets is equal to the total carrying amount of the asset, and EAD of loan commitments or financial guarantee contracts is calculated as the sum of the amount expected to be used in the future.
In measuring expected credit losses on financial assets, the Group uses the contractual maturity as the period subject to expected credit loss measurement. The contractual maturity is computed taking into account the extension right held by the borrower.
Risk factors of PD, LGD and EAD are collectively estimated according to the following criteria:
- Type of products
- Internal credit risk rating
- Type of collateral
- Loan to value (“LTV”)
- Industry that the borrower belongs to
- Location of the borrower or collateral
- Days of delinquency
The criteria classifying groups is periodically reviewed to maintain homogeneity of the group and adjusted if necessary. The Group uses external benchmark information to supplement internal information for a particular portfolio that did not have sufficient internal data accumulated from the past experience.
53
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
i) Techniques, assumptions and input variables used to measure impairment (continued)
i-6) Write-off of financial assets
The Group writes off a portion of or entire loan or debt security that is not expected to receive its principal and interest. In general, the Group conducts write-off when it is deemed that the borrower has no sufficient resources or income to repay the principal and interest. Such determination on write-off is carried out in accordance with the internal rules of the Group and is carried out with the approval of an external institution, if necessary. Apart from write-off, the Group may continue to exercise its right of collection under its own recovery policy even after the write-off of financial assets.
ii) Maximum exposure to credit risk
Exposure to credit risk is the exposure related to due from banks, loans, investments in debt securities, derivative transactions, off-balance sheet accounts such as loan commitment. The exposures of due from banks and loans are classified into government, bank, corporation or retail based on the exposure classification criteria of BASEL III credit risk weights, and the net carrying amount, excluding provisions, is presented as the maximum amount that can be exposed by credit risk.
The Group’s maximum exposure to credit risk without taking into account of any collateral held or other credit enhancements as of December 31, 2020 and 2019 is as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Due from banks and loans at amortized cost (*1)(*3): |
|
|
|
|
Banks |
| 17,016,263 |
| 12,950,561 |
Retail |
| 170,314,316 |
| 152,840,826 |
Government/Public sector/Central bank |
| 24,778,332 |
| 19,461,567 |
Corporations |
| 152,895,324 |
| 140,718,619 |
Card receivable |
| 22,822,546 |
| 23,114,264 |
|
| 387,826,781 |
| 349,085,837 |
|
|
|
|
|
Due from banks and loans at fair value through profit or loss(*3): |
|
|
|
|
Banks |
| 93,109 |
| 897,525 |
Corporations |
| 1,986,804 |
| 2,154,821 |
|
| 2,079,913 |
| 3,052,346 |
|
|
|
|
|
Securities at fair value through profit or loss |
| 55,275,031 |
| 48,512,857 |
Securities at fair value through other comprehensive income |
| 57,409,433 |
| 58,573,094 |
Securities at amortized cost(*1) |
| 47,282,623 |
| 45,582,065 |
Derivative assets |
| 5,633,915 |
| 2,829,274 |
Other financial assets(*1)(*2) |
| 20,341,191 |
| 17,477,778 |
Financial guarantee contracts |
| 4,481,506 |
| 4,698,558 |
Loan commitments and other credit liabilities |
| 187,067,821 |
| 177,660,547 |
|
| 767,398,214 |
| 707,472,356 |
(*1) The maximum exposure amounts for due from banks, loans, securities at amortized cost and other financial assets at amortized cost are recorded as net of allowances.
(*2) Other financial assets mainly comprise of receivables, accrued income, secured key money deposits, prepayment, and domestic exchange settlement debit settled in a day.
(*3) Classified as similar credit risk group based on calculation of the BIS ratio under new Basel Capital Accord (Basel III).
54
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
iii) The maximum amount of exposure to credit risk by type of collateral as of December, 31, 2020 and 2019 is as follows:
|
| December 31, 2020 | ||||||
Classification |
| 12 months Expected credit loss |
| Life time expected credit loss |
| Total | ||
|
| Not impaired |
| Impaired |
| |||
Guarantee |
| 36,355,387 |
| 5,944,417 |
| 185,777 |
| 42,485,581 |
Deposits and Savings |
| 1,258,934 |
| 313,723 |
| 1,509 |
| 1,574,166 |
Property and equipment |
| 1,301,810 |
| 324,098 |
| 12,341 |
| 1,638,249 |
Real estate |
| 109,092,694 |
| 13,914,172 |
| 311,946 |
| 123,318,812 |
Securities |
| 2,181,874 |
| 108,718 |
| 88,025 |
| 2,378,617 |
Others |
| 4,830,557 |
| - |
| 1,943 |
| 4,832,500 |
Total |
| 155,021,256 |
| 20,605,128 |
| 601,541 |
| 176,227,925 |
|
| December 31, 2019 | ||||||
Classification |
| 12 months Expected credit loss |
| Life time expected credit loss |
| Total | ||
|
| Not impaired |
| Impaired |
| |||
Guarantee |
| 12,232,197 |
| 3,756,006 |
| 64,386 |
| 16,052,589 |
Deposits and Savings |
| 1,058,353 |
| 266,407 |
| 2,437 |
| 1,327,197 |
Property and equipment |
| 1,021,002 |
| 307,502 |
| 12,840 |
| 1,341,344 |
Real estate |
| 128,098,318 |
| 14,932,637 |
| 370,361 |
| 143,401,316 |
Securities |
| 3,340,337 |
| 137,105 |
| - |
| 3,477,442 |
Others |
| 5,035,192 |
| 4,437 |
| 364 |
| 5,039,993 |
Total |
| 150,785,399 |
| 19,404,094 |
| 450,388 |
| 170,639,881 |
55
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
iv) Impairment information by credit risk of financial assets
Details of impaired financial assets due to credit risk as of December 31, 2020 are as follows:
|
| December 31, 2020 | ||||||||||||||||
|
| 12-month expected loss |
| Life time expected loss |
| Total |
| Allowances |
| Net |
| Mitigation of credit risk due to collateral | ||||||
|
| Grade 1 |
| Grade 2 |
| Grade 1 |
| Grade 2 |
| Impaired |
| |||||||
Due from banks and loans at amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 14,935,722 |
| 1,996,948 |
| 87,084 |
| 10,027 |
| - |
| 17,029,781 |
| (13,518) |
| 17,016,263 |
| 29,994 |
Retail |
| 152,159,976 |
| 8,385,069 |
| 6,062,587 |
| 3,686,863 |
| 574,354 |
| 170,868,849 |
| (554,533) |
| 170,314,316 |
| 91,711,254 |
Government/Public sector/ Central bank |
| 23,849,701 |
| 834,912 |
| 96,183 |
| 1,748 |
| - |
| 24,782,544 |
| (4,212) |
| 24,778,332 |
| 9,000 |
Corporations |
| 93,740,349 |
| 34,637,533 |
| 11,391,410 |
| 13,758,332 |
| 982,037 |
| 154,509,661 |
| (1,614,337) |
| 152,895,324 |
| 83,580,715 |
Card receivable |
| 16,995,332 |
| 2,304,536 |
| 1,754,723 |
| 2,197,877 |
| 454,451 |
| 23,706,919 |
| (884,373) |
| 22,822,546 |
| 6,845 |
|
| 301,681,080 |
| 48,158,998 |
| 19,391,987 |
| 19,654,847 |
| 2,010,842 |
| 390,897,754 |
| (3,070,973) |
| 387,826,781 |
| 175,337,808 |
Securities at fair value through other comprehensive income(*) |
| 48,506,057 |
| 8,636,241 |
| - |
| 267,135 |
| - |
| 57,409,433 |
| - |
| 57,409,433 |
| - |
Securities at amortized cost |
| 45,888,769 |
| 1,404,340 |
| - |
| - |
| - |
| 47,293,109 |
| (10,486) |
| 47,282,623 |
| - |
|
| 396,075,906 |
| 58,199,579 |
| 19,391,987 |
| 19,921,982 |
| 2,010,842 |
| 495,600,296 |
| (3,081,459) |
| 492,518,837 |
| 175,337,808 |
56
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
iv)Impairment information by credit risk of financial assets (continued)
Details of impaired financial assets due to credit risk as of December 31, 2019 are as follows:
|
| December 31, 2019 | ||||||||||||||||
|
| 12-month expected loss |
| Life time expected loss |
| Total |
| Allowances |
| Net |
| Mitigation of credit risk due to collateral | ||||||
|
| Grade 1 |
| Grade 2 |
| Grade 1 |
| Grade 2 |
| Impaired |
| |||||||
Due from banks and loans at amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 11,703,863 |
| 1,179,294 |
| 77,675 |
| 1,804 |
| - |
| 12,962,636 |
| (12,075) |
| 12,950,561 |
| 57,087 |
Retail |
| 136,124,712 |
| 7,443,675 |
| 5,694,210 |
| 3,608,216 |
| 476,897 |
| 153,347,710 |
| (506,884) |
| 152,840,826 |
| 87,826,564 |
Government/Public sector/ Central bank |
| 19,274,854 |
| 111,987 |
| 80,648 |
| - |
| - |
| 19,467,489 |
| (5,922) |
| 19,461,567 |
| - |
Corporations |
| 85,202,285 |
| 32,112,103 |
| 10,219,343 |
| 13,546,622 |
| 956,772 |
| 142,037,125 |
| (1,318,506) |
| 140,718,619 |
| 77,732,792 |
Card receivable |
| 17,161,184 |
| 2,249,276 |
| 1,879,073 |
| 2,233,942 |
| 444,311 |
| 23,967,786 |
| (853,522) |
| 23,114,264 |
| 8,728 |
|
| 269,466,898 |
| 43,096,335 |
| 17,950,949 |
| 19,390,584 |
| 1,877,980 |
| 351,782,746 |
| (2,696,909) |
| 349,085,837 |
| 165,625,171 |
Securities at fair value through other comprehensive income(*) |
| 49,276,299 |
| 9,057,701 |
| - |
| 239,094 |
| - |
| 58,573,094 |
| - |
| 58,573,094 |
| - |
Securities at amortized cost |
| 44,296,882 |
| 1,271,681 |
| 23,272 |
| - |
| - |
| 45,591,835 |
| (9,770) |
| 45,582,065 |
| - |
|
| 363,040,079 |
| 53,425,717 |
| 17,974,221 |
| 19,629,678 |
| 1,877,980 |
| 455,947,675 |
| (2,706,679) |
| 453,240,996 |
| 165,625,171 |
(*) Credit loss allowance recognized as other comprehensive income of securities at fair value through other comprehensive income amounted to W 23,171 million and W 28,236 million as of December 31, 2020 and 2019.
57
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
iv) Credit risk exposures per credit grade of off-balance items
Credit risk exposures per credit grade of off-balance items as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Grade 1 |
| Grade 2 |
| Impaired |
| Total |
Financial guarantee: |
|
|
|
|
|
|
|
|
12-month expected credit loss |
| 2,884,641 |
| 1,110,945 |
| - |
| 3,995,586 |
Life time expected credit loss |
| 308,785 |
| 176,977 |
| - |
| 485,762 |
Impaired |
| - |
| - |
| 158 |
| 158 |
|
| 3,193,426 |
| 1,287,922 |
| 158 |
| 4,481,506 |
Loan commitment and |
|
|
|
|
|
|
|
|
12-month expected credit loss |
| 156,787,448 |
| 20,715,236 |
| - |
| 177,502,684 |
Life time expected credit loss |
| 6,738,016 |
| 2,822,003 |
| - |
| 9,560,019 |
Impaired |
| - |
| - |
| 5,118 |
| 5,118 |
|
| 163,525,464 |
| 23,537,239 |
| 5,118 |
| 187,067,821 |
|
| 166,718,890 |
| 24,825,161 |
| 5,276 |
| 191,549,327 |
|
| December 31, 2019 | ||||||
|
| Grade 1 |
| Grade 2 |
| Impaired |
| Total |
Financial guarantee: |
|
|
|
|
|
|
|
|
12 months expected credit loss |
| 2,805,417 |
| 1,495,091 |
| - |
| 4,300,508 |
Life time expected credit loss |
| 248,544 |
| 148,696 |
| - |
| 397,240 |
Impaired |
| - |
| - |
| 810 |
| 810 |
|
| 3,053,961 |
| 1,643,787 |
| 810 |
| 4,698,558 |
Loan commitment and |
|
|
|
|
|
|
|
|
12 months expected credit loss |
| 146,010,944 |
| 21,044,977 |
| - |
| 167,055,921 |
Life time expected credit loss |
| 7,850,945 |
| 2,730,143 |
| - |
| 10,581,088 |
Impaired |
| - |
| - |
| 23,538 |
| 23,538 |
|
| 153,861,889 |
| 23,775,120 |
| 23,538 |
| 177,660,547 |
|
| 156,915,850 |
| 25,418,907 |
| 24,348 |
| 182,359,105 |
v) Credit qualities are classified based on the internal credit rating as follows:
Type of Borrower |
| Grade 1 |
| Grade 2 |
Individuals |
| Probability of default below 2.25% for each pool
|
| Probability of default 2.25% or above for each pool
|
Government/Public agency/Central bank |
| OECD sovereign credit rating of 6 or above |
| OECD sovereign credit rating of below 6 |
Banks and Corporations (Credit card bonds) |
| Internal credit rating of BBB+ or above |
| Internal credit rating of below BBB+ |
Card receivables (Individuals)
|
| Behavior scoring system of 7 grade or above |
| Behavior scoring system of below 7 grade |
58
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
vi) Credit risk exposures per credit quality of derivative assets
Credit quality of derivative assets as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Grade 1 |
| 4,994,809 |
| 2,377,548 |
Grade 2 |
| 639,106 |
| 451,726 |
|
| 5,633,915 |
| 2,829,274 |
(*) Credit quality of derivative assets is classified based on the internal credit ratings.
59
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
vii) Concentration by geographic location
An analysis of concentration by geographic location for financial instrument, net of allowance, as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||||||
|
| Korea |
| USA |
| UK |
| Japan |
| Germany |
| Vietnam |
| China |
| Other |
| Total |
Due from banks and loans at amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 6,990,520 |
| 823,698 |
| 156,002 |
| 784,538 |
| 316,293 |
| 1,166,397 |
| 2,889,115 |
| 3,889,700 |
| 17,016,263 |
Retail |
| 161,434,788 |
| 392,499 |
| 6,724 |
| 4,124,680 |
| 2,386 |
| 1,780,361 |
| 1,329,067 |
| 1,243,811 |
| 170,314,316 |
Government |
| 20,998,640 |
| 952,215 |
| - |
| 1,418,805 |
| 121,663 |
| 209,395 |
| 441,863 |
| 635,751 |
| 24,778,332 |
Corporations |
| 133,827,181 |
| 3,278,234 |
| 435,135 |
| 3,796,824 |
| 103,647 |
| 2,319,327 |
| 3,039,177 |
| 6,095,799 |
| 152,895,324 |
Card |
| 22,614,285 |
| 8,867 |
| 351 |
| 1,983 |
| 194 |
| 152,141 |
| 27,926 |
| 16,799 |
| 22,822,546 |
|
| 345,865,414 |
| 5,455,513 |
| 598,212 |
| 10,126,830 |
| 544,183 |
| 5,627,621 |
| 7,727,148 |
| 11,881,860 |
| 387,826,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits and loans at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank |
| 61,476 |
| 31,633 |
| - |
| - |
| - |
| - |
| - |
| - |
| 93,109 |
Corporations |
| 1,057,690 |
| 466,812 |
| - |
| 19,807 |
| - |
| 744 |
| - |
| 441,751 |
| 1,986,804 |
|
| 1,119,166 |
| 498,445 |
| - |
| 19,807 |
| - |
| 744 |
| - |
| 441,751 |
| 2,079,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities measured at FVTPL |
| 51,574,884 |
| 2,129,355 |
| 198,567 |
| 46,086 |
| 4,486 |
| 24,539 |
| 168,863 |
| 1,128,251 |
| 55,275,031 |
Securities at FVOCI |
| 53,386,556 |
| 1,464,611 |
| 112,001 |
| 221,917 |
| 36,412 |
| 172,904 |
| 886,080 |
| 1,128,952 |
| 57,409,433 |
Securities at amortized cost |
| 44,537,890 |
| 723,287 |
| - |
| 243,592 |
| - |
| 710,106 |
| 45,121 |
| 1,022,627 |
| 47,282,623 |
|
| 496,483,910 |
| 10,271,211 |
| 908,780 |
| 10,658,232 |
| 585,081 |
| 6,535,914 |
| 8,827,212 |
| 15,603,441 |
| 549,873,781 |
(*) The following accounts are the net carrying value less provision for doubtful accounts.
60
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
vii) Concentration by geographic location (continued)
An analysis of concentration by geographic location for financial instrument, net of allowance, as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||||||||||
|
| Korea |
| USA |
| UK |
| Japan |
| Germany |
| Vietnam |
| China |
| Other |
| Total |
Due from banks and loans at amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 5,124,738 |
| 1,263,568 |
| 423,788 |
| 289,233 |
| 203,166 |
| 1,068,822 |
| 2,816,320 |
| 1,760,926 |
| 12,950,561 |
Retail |
| 144,700,885 |
| 371,602 |
| 5,444 |
| 3,888,964 |
| 1,548 |
| 1,612,761 |
| 1,211,857 |
| 1,047,765 |
| 152,840,826 |
Government |
| 16,805,176 |
| 529,096 |
| - |
| 1,080,381 |
| - |
| 140,960 |
| 445,526 |
| 460,428 |
| 19,461,567 |
Corporations |
| 122,926,428 |
| 3,116,777 |
| 187,856 |
| 3,403,806 |
| 99,083 |
| 2,140,573 |
| 2,758,888 |
| 6,085,208 |
| 140,718,619 |
Card |
| 22,916,799 |
| 9,068 |
| 321 |
| 2,233 |
| 214 |
| 141,844 |
| 25,513 |
| 18,272 |
| 23,114,264 |
|
| 312,474,026 |
| 5,290,111 |
| 617,409 |
| 8,664,617 |
| 304,011 |
| 5,104,960 |
| 7,258,104 |
| 9,372,599 |
| 349,085,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits and loans at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank |
| 177,713 |
| 719,812 |
| - |
| - |
| - |
| - |
| - |
| - |
| 897,525 |
Corporations |
| 2,146,949 |
| - |
| - |
| - |
| - |
| - |
| - |
| 7,872 |
| 2,154,821 |
|
| 2,324,662 |
| 719,812 |
| - |
| - |
| - |
| - |
| - |
| 7,872 |
| 3,052,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities measured at FVTPL |
| 45,635,765 |
| 1,662,249 |
| 194,591 |
| 49,067 |
| 6,346 |
| 21,625 |
| 220,837 |
| 722,377 |
| 48,512,857 |
Securities at FVOCI |
| 53,939,143 |
| 1,955,627 |
| 97,710 |
| 195,165 |
| 93,769 |
| 294,095 |
| 798,068 |
| 1,199,517 |
| 58,573,094 |
Securities at amortized cost |
| 42,927,646 |
| 769,884 |
| - |
| 163,112 |
| - |
| 604,019 |
| 40,741 |
| 1,076,663 |
| 45,582,065 |
|
| 457,301,242 |
| 10,397,683 |
| 909,710 |
| 9,071,961 |
| 404,126 |
| 6,024,699 |
| 8,317,750 |
| 12,379,028 |
| 504,806,199 |
(*) The following accounts are the net carrying value less provision for doubtful accounts.
61
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
viii) Concentration by industry sector
An analysis of concentration by industry sector of financial instrument, net of allowance, as of and December 31, 2020 and 2019 is as follows:
|
| December 31, 2020 | ||||||||||||||||
|
| Finance and insurance |
| Manu -facturing |
| Retail and wholesale |
| Real estate and business |
| Construction service |
| Lodging and Restaurant |
| Other |
| Retail customers |
| Total |
Due from banks and loans at amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 16,656,030 |
| - |
| - |
| - |
| - |
| - |
| 360,233 |
| - |
| 17,016,263 |
Retail |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 170,314,316 |
| 170,314,316 |
Government/Public sector/Central bank |
| 24,671,308 |
| - |
| - |
| 1,796 |
| - |
| - |
| 105,228 |
| - |
| 24,778,332 |
Corporations |
| 10,403,261 |
| 48,430,680 |
| 18,679,397 |
| 35,920,334 |
| 3,521,216 |
| 6,479,253 |
| 29,461,183 |
| - |
| 152,895,324 |
Card receivable |
| 44,980 |
| 169,900 |
| 252,537 |
| 36,372 |
| 38,456 |
| 23,150 |
| 1,685,293 |
| 20,571,858 |
| 22,822,546 |
|
| 51,775,579 |
| 48,600,580 |
| 18,931,934 |
| 35,958,502 |
| 3,559,672 |
| 6,502,403 |
| 31,611,937 |
| 190,886,174 |
| 387,826,781 |
Due from banks and loans at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 63,112 |
| - |
| - |
| 29,997 |
| - |
| - |
| - |
| - |
| 93,109 |
Corporations |
| 1,114,789 |
| 641,554 |
| 19,210 |
| 51,008 |
| 3,000 |
| - |
| 157,243 |
| - |
| 1,986,804 |
|
| 1,177,901 |
| 641,554 |
| 19,210 |
| 81,005 |
| 3,000 |
| - |
| 157,243 |
| - |
| 2,079,913 |
Securities at fair value through profit or loss |
| 34,294,362 |
| 2,978,991 |
| 1,223,958 |
| 574,547 |
| 248,399 |
| 46,177 |
| 15,908,597 |
| - |
| 55,275,031 |
Securities at fair value through other comprehensive income |
| 26,528,743 |
| 3,448,765 |
| 577,781 |
| 830,988 |
| 974,333 |
| 22,643 |
| 25,026,180 |
| - |
| 57,409,433 |
Securities at amortized cost |
| 10,361,913 |
| 21,750 |
| - |
| 1,053,779 |
| 963,348 |
| - |
| 34,881,833 |
| - |
| 47,282,623 |
|
| 124,138,498 |
| 55,691,640 |
| 20,752,883 |
| 38,498,821 |
| 5,748,752 |
| 6,571,223 |
| 107,585,790 |
| 190,886,174 |
| 549,873,781 |
(*)The composition details by industry are net book value less allowances.
62
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(b) Credit risk (continued)
viii) Concentration by industry sector (continued)
An analysis of concentration by industry sector of financial instrument, net of allowance, as of December 31, 2020 and 2019 is as follows (continued):
|
| December 31, 2019 | ||||||||||||||||
|
| Finance and insurance |
| Manufacturing |
| Retail and wholesale |
| Real estate and business |
| Construction service |
| Lodging and Restaurant |
| Other |
| Retail customers |
| Total |
Due from banks and loans at amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 12,461,379 |
| - |
| - |
| - |
| - |
| - |
| 489,182 |
| - |
| 12,950,561 |
Retail |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 152,840,826 |
| 152,840,826 |
Government/Public sector/Central bank |
| 19,342,308 |
| - |
| - |
| 2,295 |
| - |
| - |
| 116,964 |
| - |
| 19,461,567 |
Corporations |
| 9,456,194 |
| 44,781,794 |
| 17,004,407 |
| 30,029,000 |
| 3,485,602 |
| 6,003,383 |
| 29,958,239 |
| - |
| 140,718,619 |
Card receivable |
| 39,003 |
| 212,863 |
| 170,873 |
| 49,000 |
| 41,664 |
| 23,397 |
| 22,427,544 |
| 149,920 |
| 23,114,264 |
|
| 41,298,884 |
| 44,994,657 |
| 17,175,280 |
| 30,080,295 |
| 3,527,266 |
| 6,026,780 |
| 52,991,929 |
| 152,990,746 |
| 349,085,837 |
Due from banks and loans at FVTPL: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks |
| 897,525 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 897,525 |
Corporations |
| 1,301,066 |
| 505,198 |
| 120,636 |
| 7,872 |
| 3,500 |
| 900 |
| 215,649 |
| - |
| 2,154,821 |
|
| 2,198,591 |
| 505,198 |
| 120,636 |
| 7,872 |
| 3,500 |
| 900 |
| 215,649 |
| - |
| 3,052,346 |
Securities at fair value through profit or loss |
| 29,826,338 |
| 2,466,874 |
| 1,112,688 |
| 350,720 |
| 262,183 |
| 75,152 |
| 14,418,902 |
| - |
| 48,512,857 |
Securities at fair value through other comprehensive income |
| 28,673,958 |
| 3,500,514 |
| 673,614 |
| 807,274 |
| 1,164,947 |
| 12,889 |
| 23,739,898 |
| - |
| 58,573,094 |
Securities at amortized cost |
| 9,930,409 |
| 49,876 |
| - |
| 884,072 |
| 1,076,086 |
| - |
| 33,641,622 |
| - |
| 45,582,065 |
|
| 111,928,180 |
| 51,517,119 |
| 19,082,218 |
| 32,130,233 |
| 6,033,982 |
| 6,115,721 |
| 125,008,000 |
| 152,990,746 |
| 504,806,199 |
(*)The composition details by industry are net book value less allowances.
63
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk
i) Market risk management from trading positions
i-1) Concept of Market risk
Market risk is defined as the risk of loss of trading account position of financial institutions due to changes on market price, such as interest rates, exchange rates and stock prices, etc. and is divided into general market risks and individual risks. A general market risk refers to a loss from price variability caused by events affecting the market as a whole, such as interest rates, exchange rates and stock prices; and an individual risk refers to a loss from price variability related to individual events of securities issuer, such as bonds and stocks.
i-2) Market Risk Management Method
The basic principle of market risk management in the trading sector is to maintain the maximum possible loss due to market risk within a certain level. To this end, the Group sets and operates VaR limits, investment limits, position limits, sensitivity limits, and loss limits from the portfolio to individual desks. These limits are managed daily by the department in charge of risk management, independent from the operating department.
Trading positions refer to securities, foreign exchange positions, and derivative financial instruments held for the purpose of obtaining short-term trading gains. As a method of measuring market risk, VaR (Value at Risk) is typical, and it is a statistical measurement of the potential maximum loss that can occur due to changes in market conditions. VaR calculates the standard method market risk using the Group Market Risk Measurement System (TRMS), and Shinhan Bank and Shinhan Financial Investment use their own internal model market risk calculation system.
Stress tests are conducted to supplement risk measurement by statistical methods and to manage losses that may arise from rapid changes in the economic environment.
Shinhan Bank measures the market risk of linear products, such as stocks and bonds, as well as non-linear products, such as options by applying historical simulation method of 99% confidence level-based VaR. Trading position data is automatically interfaced into measurement system, and the system conducts VaR measurement and manages the limit. In addition, the Bank sets loss limit, sensitivity limit, investment limit, stress limit, etc. for Trading Department and desks, and monitors daily.
Shinhan Investment measures daily market risk by applying historical simulation VaR method of 99.9% confidence level-based VaR. Historical simulation VaR method does not require assumption on a particular distribution since the method derives scenarios directly from historical market data, and measures non-linear products, such as options, in details. In addition to the VaR limit, the Shinhan Investment sets and manages issuance and transaction limit, and stop-loss limit for each department.
64
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk (continued)
i) Market risk management from trading positions (continued)
i-2) Managements (continued)
An analysis of the Group’s requisite capital in light of the market risk for trading positions as of and for the years ended December 31, 2020 and 2019 based on the standard guidelines for risk management promulgated by the Financial Supervisory Service, is as follows:
|
| December 31, 2020 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 525,465 |
| 592,668 |
| 495,292 |
| 592,668 |
Stock price risk |
| 222,277 |
| 240,535 |
| 202,036 |
| 222,544 |
Foreign exchange risk |
| 120,088 |
| 124,915 |
| 113,497 |
| 113,497 |
Commodity risk |
| 13,818 |
| 22,982 |
| 9,539 |
| 9,539 |
Option volatility risk |
| 8,910 |
| 23,224 |
| 3,234 |
| 3,234 |
|
| 890,560 |
| 1,004,324 |
| 823,597 |
| 941,482 |
|
| December 31, 2019 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 508,039 |
| 527,349 |
| 479,121 |
| 504,948 |
Stock price risk |
| 191,019 |
| 210,589 |
| 162,595 |
| 210,589 |
Foreign exchange risk |
| 143,317 |
| 151,779 |
| 138,543 |
| 139,562 |
Commodity risk |
| 7,691 |
| 10,558 |
| 4,953 |
| 10,558 |
Option volatility risk |
| 57,972 |
| 74,892 |
| 39,591 |
| 67,160 |
|
| 908,038 |
| 975,167 |
| 824,803 |
| 932,817 |
i-3) Shinhan Bank
The analyses of the ten-day 99% confidence level-based VaR for managing market risk for trading positions of Shinhan Bank as of and for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 41,165 |
| 56,950 |
| 28,322 |
| 42,867 |
Stock price risk |
| 27,077 |
| 66,254 |
| 7,545 |
| 7,893 |
Foreign exchange risk (*) |
| 65,309 |
| 83,335 |
| 27,668 |
| 69,024 |
Option volatility risk |
| 305 |
| 1,073 |
| 114 |
| 138 |
Commodity risk |
| 13 |
| 170 |
| - |
| 1 |
Portfolio diversification risk |
|
|
|
|
|
|
| (25,310) |
|
| 106,030 |
| 154,487 |
| 49,486 |
| 94,613 |
|
| December 31, 2019 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 21,208 |
| 32,430 |
| 12,709 |
| 28,313 |
Stock price risk |
| 18,136 |
| 49,424 |
| 8,171 |
| 15,386 |
Foreign exchange risk (*) |
| 24,727 |
| 29,085 |
| 22,259 |
| 25,910 |
Option volatility risk |
| 161 |
| 325 |
| 60 |
| 212 |
Commodity risk |
| 15 |
| 104 |
| - |
| 10 |
Portfolio diversification risk |
|
|
|
|
|
|
| (21,879) |
|
| 47,925 |
| 81,553 |
| 31,482 |
| 47,952 |
65
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
(*) Both trading and non-trading accounts are included since Shinhan Bank manages foreign exchange risk on a total position basis.
66
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk (continued)
i) Market risk management from trading positions (continued)
i-4) Shinhan Card
The analyses of Shinhan Card’s requisite capital in light of the market risk for trading positions as of and for the years ended December 31 2020, and 2019, based on the standard guidelines for risk management promulgated by the Financial Supervisory Service, are as follows:
|
| December 31, 2020 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 2,034 |
| 2,400 |
| 1,900 |
| 2,400 |
|
| December 31, 2019 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 1,417 |
| 2,000 |
| 1,000 |
| 2,000 |
(*) Foreign subsidiaries are excluded from the calculation.
i-5) Shinhan Investment
The analyses of the ten-day 99.9% confidence level-based VaR for managing market risk for trading positions of Shinhan Investment as of and for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 20,512 |
| 30,903 |
| 12,076 |
| 23,551 |
Stock price risk |
| 26,136 |
| 51,509 |
| 2,412 |
| 36,573 |
Foreign exchange risk |
| 12,477 |
| 46,970 |
| 632 |
| 15,557 |
Option volatility risk |
| 43,324 |
| 162,008 |
| 2,894 |
| 57,924 |
Portfolio diversification risk |
|
|
|
|
|
|
| (38,397) |
|
| 75,226 |
| 187,985 |
| 18,648 |
| 95,208 |
|
| December 31, 2019 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 13,725 |
| 20,857 |
| 5,671 |
| 11,946 |
Stock price risk |
| 31,330 |
| 74,421 |
| 15,449 |
| 25,691 |
Foreign exchange risk |
| 4,107 |
| 37,970 |
| 368 |
| 4,369 |
Option volatility risk |
| 9,889 |
| 31,711 |
| 2,504 |
| 9,876 |
Portfolio diversification risk |
|
|
|
|
|
|
| (15,150) |
|
| 38,262 |
| 85,597 |
| 5,780 |
| 36,732 |
67
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk (continued)
i) Market risk management from trading positions (continued)
i-6) Shinhan Life Insurance
The analyses of the ten-day 99.9% confidence level-based VaR for managing market risk for trading positions of Shinhan Life Insurance as of and for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 2,967 |
| 6,934 |
| 354 |
| 619 |
Stock price risk |
| 10,953 |
| 16,592 |
| 4,481 |
| 13,742 |
Foreign exchange risk |
| 10,485 |
| 21,588 |
| 4,665 |
| 13,669 |
Option volatility risk |
| 433 |
| 1,096 |
| 40 |
| 1,089 |
|
| 24,838 |
| 46,210 |
| 9,540 |
| 29,119 |
|
| December 31, 2019 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Interest rate risk |
| 1,853 |
| 8,856 |
| 313 |
| 600 |
Stock price risk |
| 5,015 |
| 6,520 |
| 4,374 |
| 4,978 |
Foreign exchange risk |
| 1,581 |
| 3,434 |
| 3 |
| 2,050 |
Option volatility risk |
| 316 |
| 632 |
| 124 |
| 472 |
|
| 8,765 |
| 19,442 |
| 4,814 |
| 8,100 |
i-6) Orange Life Insurance Co., Ltd.
The analyses of the ten-day 99.9% confidence level-based VaR for managing market risk for trading positions of Orange Life Insurance as of and for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Foreign exchange risk |
| 17,064 |
| 19,597 |
| 10,172 |
| 17,964 |
Option volatility risk |
| 73 |
| 84 |
| 7 |
| 73 |
|
| 17,137 |
| 19,681 |
| 10,179 |
| 18,037 |
|
| December 31, 2019 | ||||||
|
| Average |
| Maximum |
| Minimum |
| December 31 |
Foreign exchange risk |
| 18,578 |
| 23,614 |
| 12,577 |
| 16,710 |
68
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk (continued)
ii) Interest rate risk management from non-trading positions
ii-1) Principle
Interest rate risk refers to the possibility of a decrease in net interest income or in net asset value that occurs when interest rates fluctuate unfavorably from the Group's financial position. The Group manages net interest income or changes in net asset value that occur due to changes in interest rates by early predicting the factors of interest rate risk fluctuation related to the Group's net interest income and net asset value through the interest rate risk management.
ii-2) Managements
Shinhan Financial Group's major financial subsidiaries manage interest rate risks independently by the risk management organization and the treasury department, and have internal regulations on interest rate risk management strategies, procedures, organization, measurement, and major assumptions.
One of the key indicators of managing interest rate risk is the Earnings at Risk (EaR) from an earning perspective and the Value at Risk (VaR) from an economic value perspective. Interest rate VaR represents the maximum anticipated loss in a net present value calculation, whereas interest rate EaR represents the maximum anticipated loss in a net earnings calculation for the immediately following one-year period, in each case, as a result of negative movements in interest rates.
The precision of risk management system differs by each subsidiary. Interest rate VaR and interest rate EaR are measured by internal method or IRRBB (Interest Rate Risk In The Banking Book), and interest rate risk limits are set and monitored based on the interest rate VaR. In accordance with the amendments in Regulations for Supervision of Financial Holding Companies, the Group measures the interest rate risk using the Basel III based IRRBB, which measures the interest rate risk more precisely than the existing BIS standard framework by segmenting maturities of interest rates, reflecting customer behaviour models and diversifying interest rate shocks. The interest rate VaR scenario based IRRBB measures ① parallel up shock ② parallel down shock ③ steepener shock ④ flattener shock ⑤ short rate up shock ⑥ short rate down shock. By the parallel up shock and parallel down shock, the interest rate VaR scenario measures the scenario value with the largest loss as interest rate risk. Under the existing BIS standard framework, ± 200bp parallel shock scenario is applied to all currency. However, as the shock width is set differently by currency and period, interest rate risk is measured significantly by the IRRBB. ((KRW) Parallel ± 300bp, Short Term ± 400bp, Long Term ± 200bp, (USD) Parallel ± 200bp, Short Term ± 300bp, Long Term ± 150bp) In the IRRBB method, the existing interest rate VaR and the interest rate EaR are expressed as △ EVE (Economic Value of Equity) and △ NII (Net Interest Income), respectively.
Since impacts of each subsidiary on changes of interest rates are differentiated by portfolios, the Group is preparing to respond proactively while monitoring the financial market and regulatory environment, and making efforts to hedge or reduce interest rate risk. In addition, the subsidiaries conduct the crisis analysis on changes in market interest rates and report it to management and the Group.
In particular, through its ALM (Asset and Liability Management) system, Shinhan Bank measures and manages its interest rate risk based on various analytical measures such as interest rate gap, duration gap and NPV (Net Present Value) and NII (Net Interest Income) simulations, and monitors on a monthly basis its interest rate VaR limits, interest rate EaR (Earnings at Risk) limits and interest rate gap ratio limits.
69
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk (continued)
ii) Interest rate risk management from non-trading positions (continued):
The details of interest rate VaR and EaR for major subsidiaries for as of December 31, 2020 and 2019 are as follows:
ii-3) Shinhan Bank
|
| December 31, 2020 |
| December 31, 2019 |
△EVE (*1) |
| 468,327 |
| 369,944 |
△NII (*2) |
| 115,221 |
| 161,385 |
ii-4) Shinhan Card
|
| December 31, 2020 |
| December 31, 2019 |
△EVE (*1) |
| 463,647 |
| 696,505 |
△NII (*2) |
| 594,210 |
| 554,499 |
ii-5) Shinhan Investment
|
| December 31, 2020 |
| December 31, 2019 |
△EVE (*1) |
| 209,929 |
| 77,436 |
△NII (*2) |
| 89,925 |
| 127,476 |
ii-6) Shinhan Life Insurance
|
| December 31, 2020 |
| December 31, 2019 |
△EVE (*1) |
| 4,140,109 |
| 4,831,042 |
△NII (*2) |
| 46,073 |
| 77,000 |
ii-7) Orange Life Insurance Co., Ltd.
|
| December 31, 2020 |
| December 31, 2019 |
△EVE (*1) |
| 2,007,029 |
| 2,800,603 |
△NII (*2) |
| 38,733 |
| 46,372 |
(*1) △EVE is the economic value of equity capital that can arise from changes in interest rates that affect the present value of assets, liabilities and off-balance sheet items by using the Basel III standard based IRRBB method.
(*2) △NII is the change in net interest income that can occur over the next year due to changes in interest rates by using the Basel III standard based IRRBB method.
70
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk (continued)
iii) Foreign exchange risk
Exposure to foreign exchange risk can be defined as the difference (net position) between assets and liabilities presented in foreign currency, including derivative financial instruments linked to foreign exchange rate. Foreign exchange risk is a factor that causes market risk of the trading position and is managed by the Group under the market risk management system.
The management of Shinhan Bank’s foreign exchange position is centralized at the FX & Derivatives Department. Dealers in the FX & Derivatives Department manage Shinhan Bank’s overall position within the set limits through spot trading, forward contracts, currency options, futures and swaps and foreign exchange swaps. Shinhan Bank sets a limit for net open positions by currency and the limits for currencies other than the U.S. dollars (USD), Japanese yen (JPY), Euros (EUR) and Chinese yuan (CNY) are set in order to minimize exposures from the other foreign exchange trading.
Foreign currency denominated assets and liabilities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||
|
| USD |
| JPY |
| EUR |
| CNY |
| Other |
| Total |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks at amortized cost |
| 4,729,453 |
| 1,988,215 |
| 402,137 |
| 798,053 |
| 3,053,388 |
| 10,971,246 |
Due from banks at FVTPL |
| 31,633 |
| - |
| - |
| - |
| - |
| 31,633 |
Loan receivables measured at FVTPL |
| 745,277 |
| 19,807 |
| 91,503 |
| - |
| - |
| 856,587 |
Loan at amortized cost |
| 21,435,678 |
| 9,076,702 |
| 1,296,284 |
| 4,130,855 |
| 8,987,453 |
| 44,926,972 |
Securities at FVTPL |
| 4,426,257 |
| 2,574 |
| 455,769 |
| - |
| 316,468 |
| 5,201,068 |
Derivative assets |
| 913,778 |
| 21,531 |
| 50,842 |
| 1,100 |
| 114,055 |
| 1,101,306 |
Securities at FVOCI |
| 3,868,880 |
| 149,718 |
| 222,547 |
| 460,681 |
| 1,000,855 |
| 5,702,681 |
Securities at amortized cost |
| 1,273,204 |
| 240,619 |
| 69,132 |
| 45,151 |
| 1,588,358 |
| 3,216,464 |
Other financial assets |
| 2,180,140 |
| 284,695 |
| 177,538 |
| 336,325 |
| 559,805 |
| 3,538,503 |
|
| 39,604,300 |
| 11,783,861 |
| 2,765,752 |
| 5,772,165 |
| 15,620,382 |
| 75,546,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
| 17,542,371 |
| 10,136,700 |
| 991,501 |
| 4,650,406 |
| 8,438,144 |
| 41,759,122 |
Financial liabilities at FVTPL |
| - |
| - |
| - |
| - |
| 544,916 |
| 544,916 |
Derivative liabilities |
| 558,064 |
| 10,819 |
| 33,940 |
| 858 |
| 105,134 |
| 708,815 |
Borrowings |
| 8,431,144 |
| 810,819 |
| 306,829 |
| 163,454 |
| 692,305 |
| 10,404,551 |
Debt securities issued |
| 8,417,214 |
| 87,504 |
| 933,570 |
| - |
| 1,652,835 |
| 11,091,123 |
Financial liabilities designated at FVTPL |
| 1,068,245 |
| - |
| - |
| - |
| - |
| 1,068,245 |
Other financial liabilities |
| 3,479,117 |
| 123,510 |
| 250,428 |
| 564,623 |
| 843,635 |
| 5,261,313 |
|
| 39,496,155 |
| 11,169,352 |
| 2,516,268 |
| 5,379,341 |
| 12,276,969 |
| 70,838,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
| 108,145 |
| 614,509 |
| 249,484 |
| 392,824 |
| 3,343,413 |
| 4,708,375 |
Off-balance derivative exposure |
| 438,469 |
| (166,923) |
| 187,408 |
| 44,764 |
| (896,933) |
| (393,215) |
Net position |
| 546,614 |
| 447,586 |
| 436,892 |
| 437,588 |
| 2,446,480 |
| 4,315,160 |
71
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(c) Market risk (continued)
iii) Foreign exchange risk (continued)
Foreign currency denominated assets and liabilities as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||||
|
| USD |
| JPY |
| EUR |
| CNY |
| Other |
| Total |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks at amortized cost |
| 4,235,225 |
| 1,532,661 |
| 354,686 |
| 1,714,524 |
| 1,715,443 |
| 9,552,539 |
Due from banks at FVTPL |
| 719,812 |
| - |
| - |
| - |
| - |
| 719,812 |
Loan receivables measured at FVTPL |
| 479,950 |
| - |
| 7,872 |
| - |
| - |
| 487,822 |
Loan at amortized cost |
| 18,275,153 |
| 8,256,756 |
| 955,836 |
| 3,350,557 |
| 7,960,731 |
| 38,799,033 |
Securities at FVTPL |
| 5,391,450 |
| 32,565 |
| 303,917 |
| - |
| 357,018 |
| 6,084,950 |
Derivative assets |
| 342,120 |
| 1,403 |
| 16,922 |
| 391 |
| 80,506 |
| 441,342 |
Securities at FVOCI |
| 4,775,714 |
| 83,713 |
| 337,573 |
| 436,236 |
| 917,335 |
| 6,550,571 |
Securities at amortized cost |
| 1,392,901 |
| 183,133 |
| 67,080 |
| 40,769 |
| 1,482,574 |
| 3,166,457 |
Other financial assets |
| 3,176,509 |
| 136,419 |
| 171,080 |
| 380,955 |
| 462,734 |
| 4,327,697 |
|
| 38,788,834 |
| 10,226,650 |
| 2,214,966 |
| 5,923,432 |
| 12,976,341 |
| 70,130,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
| 14,658,624 |
| 9,057,393 |
| 843,946 |
| 4,426,507 |
| 6,906,741 |
| 35,893,211 |
Financial liabilities at FVTPL |
| - |
| - |
| - |
| - |
| 474,080 |
| 474,080 |
Derivative liabilities |
| 320,176 |
| 6,466 |
| 20,833 |
| 1,163 |
| 15,564 |
| 364,202 |
Borrowings |
| 8,938,762 |
| 347,881 |
| 190,366 |
| 407,767 |
| 139,658 |
| 10,024,434 |
Debt securities issued |
| 7,882,293 |
| 319,041 |
| 960,890 |
| - |
| 1,526,661 |
| 10,688,885 |
Financial liabilities designated at FVTPL |
| 1,444,254 |
| - |
| - |
| - |
| - |
| 1,444,254 |
Other financial liabilities |
| 4,391,046 |
| 155,736 |
| 125,172 |
| 567,860 |
| 978,153 |
| 6,217,967 |
|
| 37,635,155 |
| 9,886,517 |
| 2,141,207 |
| 5,403,297 |
| 10,040,857 |
| 65,107,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
| 1,153,679 |
| 340,133 |
| 73,759 |
| 520,135 |
| 2,935,484 |
| 5,023,190 |
Off-balance derivative exposure |
| (1,335,794) |
| (160,734) |
| 273,571 |
| (114,015) |
| (844,534) |
| (2,181,506) |
Net position |
| (182,115) |
| 179,399 |
| 347,330 |
| 406,120 |
| 2,090,950 |
| 2,841,684 |
72
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(d) Liquidity risk
Liquidity risk refers to the risk of unexpected losses (such as the disposal of assets abnormal pricing, the procurement of high interest rates, etc.) or insolvency due to inconsistency in funding periods between assets and liabilities or a sudden outflow of funds.
Each subsidiary seeks to minimize liquidity risk through early detection of risk factors related to the sourcing and managing of funding that may cause volatility in liquidity and by ensuring that it maintains an appropriate level of liquidity through systematic management. At the Group level, the Group manages liquidity risk by conducting monthly stress tests that compare liquidity requirements under normal situations against those under three types of stress situations, namely, the group-specific internal crisis, crisis in the external market and a combination of internal and external crisis. Therefore, the Group is checking the liquidity side for abnormalities in preparation for the usual crisis.
In addition, in order to pre-emptively and comprehensively manage liquidity risk, the Group measures and monitors liquidity risk management using various indices, including the ‘limit management index’, ‘early warning index’ and ‘monitoring index’.
Shinhan Bank applies the following basic principles for liquidity risk management:
- Raise funding in sufficient amounts, at the optimal time at reasonable costs;
- Maintain risk at appropriate levels and preemptively manage them through a prescribed risk limit system and an early warning signal detection system;
- Secure stable sources of revenue and minimize actual losses by implementing an effective asset-liability management system based on diversified sources of funding with varying maturities;
- Monitor and manage daily and intra-daily liquidity positions and risk exposures for timely payment and settlement of financial obligations due under both normal and crisis situations;
- Conduct periodic contingency analysis in anticipation of any potential liquidity crisis and establish and implement emergency plans in case of a crisis actually happening; and
- Consider liquidity-related costs, benefits of and risks in determining the pricing of the Group’s products and services, employee performance evaluations and approval of launching of new products and services.
Shinhan Card sets and operates a level that can withstand a 3-month credit crunch for end-of-month liquidity. The Group defines and manages the level of caution, anxiety and risk for the real-life liquidity gap ratio, liquidity buffer ratio, and ABS weight compared to borrowings. A contingency plan has been established to prepare for a crisis.
73
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(d) Liquidity risk (continued)
The details of the composition of non-derivative financial instruments and derivative financial instruments by remaining period are as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||
|
| Less than 1 month |
| 1~3 months |
| 3~6 months |
| 6 months ~ 1 year |
| 1~5 years |
| More than 5 years |
| Total |
Non-derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks at amortized cost |
| 30,486,441 |
| 845,977 |
| 501,733 |
| 860,975 |
| 4,467 |
| 516,661 |
| 33,216,254 |
Due from banks at fair value through profit or loss |
| 63,113 |
| - |
| - |
| - |
| - |
| - |
| 63,113 |
Loans at fair value through profit or loss |
| 31,100 |
| 689,261 |
| 46,369 |
| 117,820 |
| 310,954 |
| 880,595 |
| 2,076,099 |
Loans at amortized cost |
| 30,170,280 |
| 38,040,760 |
| 52,331,623 |
| 82,840,301 |
| 119,243,663 |
| 69,258,709 |
| 391,885,336 |
Securities at fair value through profit or loss |
| 44,779,587 |
| 1,413,545 |
| 571,552 |
| 1,160,406 |
| 3,384,948 |
| 4,729,943 |
| 56,039,981 |
Securities at fair value through other comprehensive income |
| 55,002,284 |
| 10,740 |
| 207 |
| 414 |
| 79,640 |
| 3,321,488 |
| 58,414,773 |
Securities at amortized cost |
| 385,809 |
| 2,070,392 |
| 1,202,211 |
| 3,649,376 |
| 19,054,766 |
| 34,889,104 |
| 61,251,658 |
Other financial assets |
| 15,451,455 |
| 102,714 |
| 138,116 |
| 287,473 |
| 231,608 |
| 1,571,561 |
| 17,782,927 |
|
| 176,370,069 |
| 43,173,389 |
| 54,791,811 |
| 88,916,765 |
| 142,310,046 |
| 115,168,061 |
| 620,730,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits(*2) |
| 187,299,944 |
| 28,357,521 |
| 36,578,825 |
| 59,863,780 |
| 14,894,480 |
| 2,355,459 |
| 329,350,009 |
Financial liabilities at fair value through profit or loss |
| 1,409,608 |
| 794 |
| 7,042 |
| 2,785 |
| 18,870 |
| - |
| 1,439,099 |
Borrowings |
| 14,670,192 |
| 3,783,621 |
| 2,920,338 |
| 5,463,070 |
| 10,692,374 |
| 4,392,815 |
| 41,922,410 |
Debt securities issued |
| 5,872,508 |
| 6,261,775 |
| 5,039,503 |
| 11,457,246 |
| 43,712,609 |
| 6,454,265 |
| 78,797,906 |
Financial liabilities designated at fair value through profit or loss |
| 596,675 |
| 221,857 |
| 336,784 |
| 1,277,802 |
| 5,043,549 |
| 979,057 |
| 8,455,724 |
Other financial liabilities |
| 29,128,836 |
| 97,138 |
| 151,655 |
| 542,221 |
| 643,043 |
| 75,813 |
| 30,638,706 |
|
| 238,977,763 |
| 38,722,706 |
| 45,034,147 |
| 78,606,904 |
| 75,004,925 |
| 14,257,409 |
| 490,603,854 |
Off balance(*3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance guarantee contracts |
| 4,481,506 |
| - |
| - |
| - |
| - |
| - |
| 4,481,506 |
Loan commitments and other |
| 187,536,416 |
| - |
| - |
| 19,900 |
| - |
| - |
| 187,556,316 |
|
| 192,017,922 |
| - |
| - |
| 19,900 |
| - |
| - |
| 192,037,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and gross settlement of derivatives |
| 419,951 |
| 29,829 |
| 75,483 |
| 149,274 |
| 103,770 |
| 101,072 |
| 879,379 |
74
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(d) Liquidity risk (continued)
The details of the composition of non-derivative financial instruments and derivative financial instruments by remaining period are as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||||||
|
| Less than 1 month |
| 1~3 months |
| 3~6 months |
| 6 months ~ 1 year |
| 1~5 years |
| More than 5 years |
| Total |
Non-derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks at amortized cost |
| 25,543,400 |
| 1,039,822 |
| 421,453 |
| 1,145,323 |
| 50,070 |
| 249,503 |
| 28,449,571 |
Due from banks at fair value through profit or loss |
| 130,780 |
| 150,217 |
| 594,643 |
| 21,885 |
| - |
| - |
| 897,525 |
Loans at fair value through profit or loss |
| 29,961 |
| 783,429 |
| 12,638 |
| 142,756 |
| 773,305 |
| 488,326 |
| 2,230,415 |
Loans at amortized cost |
| 28,857,297 |
| 36,706,993 |
| 46,672,732 |
| 74,931,639 |
| 103,334,861 |
| 70,169,035 |
| 360,672,557 |
Securities at fair value through profit or loss |
| 39,736,655 |
| 1,852,680 |
| 728,518 |
| 1,120,791 |
| 2,716,677 |
| 3,774,694 |
| 49,930,015 |
Securities at fair value through other comprehensive income |
| 57,317,802 |
| - |
| - |
| 40,145 |
| 30,195 |
| 2,111,220 |
| 59,499,362 |
Securities at amortized cost |
| 1,214,108 |
| 2,015,590 |
| 1,704,574 |
| 2,098,374 |
| 17,491,024 |
| 32,951,459 |
| 57,475,129 |
Other financial assets |
| 13,291,239 |
| 122,258 |
| 122,893 |
| 562,793 |
| 249,166 |
| 3,122,107 |
| 17,470,456 |
|
| 166,121,242 |
| 42,670,989 |
| 50,257,451 |
| 80,063,706 |
| 124,645,298 |
| 112,866,344 |
| 576,625,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits(*2) |
| 149,773,324 |
| 31,415,213 |
| 38,077,790 |
| 61,746,589 |
| 14,972,484 |
| 3,590,916 |
| 299,576,316 |
Financial liabilities at fair value through profit or loss |
| 1,558,186 |
| 1,096 |
| 12,095 |
| 17,997 |
| 48,609 |
| - |
| 1,637,983 |
Borrowings |
| 15,314,322 |
| 3,690,803 |
| 3,608,178 |
| 4,028,183 |
| 5,244,109 |
| 3,002,243 |
| 34,887,838 |
Debt securities issued |
| 5,367,601 |
| 4,370,308 |
| 4,876,333 |
| 8,945,916 |
| 49,804,651 |
| 6,467,621 |
| 79,832,430 |
Financial liabilities designated at fair value through profit or loss |
| 487,743 |
| 110,965 |
| 678,041 |
| 1,651,198 |
| 5,414,944 |
| 1,066,565 |
| 9,409,456 |
Other financial liabilities |
| 23,504,746 |
| 118,689 |
| 253,779 |
| 510,768 |
| 416,868 |
| 3,449,392 |
| 28,254,242 |
|
| 196,005,922 |
| 39,707,074 |
| 47,506,216 |
| 76,900,651 |
| 75,901,665 |
| 17,576,737 |
| 453,598,265 |
Off balance(*3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance guarantee contracts |
| 4,698,558 |
| - |
| - |
| - |
| - |
| - |
| 4,698,558 |
Loan commitments and other |
| 178,516,047 |
| - |
| - |
| - |
| - |
| - |
| 178,516,047 |
|
| 183,214,605 |
| - |
| - |
| - |
| - |
| - |
| 183,214,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and gross settlement of derivatives |
| 407,885 |
| 9,640 |
| 34,228 |
| 18,196 |
| 160,292 |
| 176,976 |
| 807,217 |
75
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(d) Liquidity risk (continued)
(*1) These amounts include cash flows of principal and interest on financial assets and financial liabilities.
(*2) Demand deposits amounting to W148,725,197 million and W116,282,706 million as of December 31, 2020 and 2019 are included in the ‘Less than 1 month’ category, respectively.
(*3) Financial instruments held for trading measured at market price are included in the ‘Less than 1 month’ category.
(*4) Financial guarantees such as financial guarantee contracts and loan commitments and other credit contributions provided by the Group are classified based on the earliest date at which the Group should fulfill the obligation under the guarantee when the counterparty requests payment.
(e) Measurement of fair value
The fair values of financial instruments being traded in an active market are determined by the published market prices of each period end. The published market prices of financial instruments being held by the Group are based on the trading agencies’ notifications. If the market for a financial instrument is not active, such as OTC (Over The Counter market) derivatives, fair value is determined either by using a valuation technique or independent third-party valuation service.
The Group uses its judgment to select a variety of methods and make rational assumptions that are mainly based on market conditions existing at the end of each reporting period. The fair value of financial instruments is determined using valuation techniques; a method of using recent transactions between independent parties with reasonable judgment and willingness to trade, a method of referring to the current fair value of other financial instruments that are substantially identical, discounted cash flow model and option pricing models. For example, the fair value of an interest rate swap is calculated as the present value of the expected future cash flows, and the fair value of foreign exchange forwarding contract is calculated by applying the public forward exchange rate at the end of the reporting period.
The Group classifies and discloses fair value of financial instruments into the following three-level hierarchy:
ž | Level 1: Financial instruments measured at quoted prices from active markets are classified as fair value level 1. |
|
ž | Level 2: Financial instruments measured using valuation techniques where all significant inputs are observable market data are classified as level 2. |
|
ž | Level 3: Financial instruments measured using valuation techniques where one or more significant inputs are not based on observable market data are classified as level 3. |
|
76
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value
i-1) The fair value hierarchy of financial instruments presented at their fair values in the statements of financial position as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Level 1 |
| Level 2 |
| Level 3(*1) |
| Total |
Financial assets |
|
|
|
|
|
|
|
|
Due from banks measured at FVTPL |
| - |
| - |
| 63,112 |
| 63,112 |
Loan receivables measured at FVTPL(*1) |
| - |
| 708,111 |
| 1,308,690 |
| 2,016,801 |
Financial assets at FVTPL: |
|
|
|
|
|
|
|
|
Debt securities and other securities(*2) |
| 7,029,453 |
| 39,335,739 |
| 8,721,500 |
| 55,086,692 |
Equity securities |
| 693,816 |
| 210,230 |
| 832,413 |
| 1,736,459 |
Gold/silver deposits |
| 188,339 |
| - |
| - |
| 188,339 |
|
| 7,911,608 |
| 39,545,969 |
| 9,553,913 |
| 57,011,490 |
Derivative assets: |
|
|
|
|
|
|
|
|
Trading |
| 125,339 |
| 4,623,218 |
| 408,855 |
| 5,157,412 |
Hedging |
| - |
| 475,708 |
| 795 |
| 476,503 |
|
| 125,339 |
| 5,098,926 |
| 409,650 |
| 5,633,915 |
Securities measured at FVOCI: |
|
|
|
|
|
|
|
|
Debt securities |
| 17,515,390 |
| 39,861,238 |
| 32,805 |
| 57,409,433 |
Equity securities |
| 172,403 |
| 49,673 |
| 684,603 |
| 906,679 |
|
| 17,687,793 |
| 39,910,911 |
| 717,408 |
| 58,316,112 |
|
| 25,724,740 |
| 85,263,917 |
| 12,052,773 |
| 123,041,430 |
Financial liabilities: |
|
|
|
|
|
|
|
|
Financial liabilities measured at FVTPL: |
|
|
|
|
|
|
|
|
Securities sold |
| 897,129 |
| - |
| - |
| 897,129 |
Gold/silver deposits |
| 539,565 |
| - |
| - |
| 539,565 |
|
| 1,436,694 |
| - |
| - |
| 1,436,694 |
Financial liabilities designated at fair value through profit or loss: |
|
|
|
|
|
|
|
|
Derivatives-combined securities(*2) |
| - |
| 314,220 |
| 8,141,504 |
| 8,455,724 |
Derivative liabilities: |
|
|
|
|
|
|
|
|
Trading |
| 161,628 |
| 4,431,080 |
| 87,356 |
| 4,680,064 |
Hedging |
| - |
| 233,684 |
| 102,819 |
| 336,503 |
|
| 161,628 |
| 4,664,764 |
| 190,175 |
| 5,016,567 |
|
| 1,598,322 |
| 4,978,984 |
| 8,331,679 |
| 14,908,985 |
(*1) Of the Financial assets at FVTPL invested by the group, P-note’s valuation of amount related to Lime Asset Management is W 161.2 billion. As of December 31, 2020, in this regard, international disputes are under way, and the Group does not have a fair value, so based on the recent audit report, the fair value was estimated in consideration of changes in the future. Accounting estimates and assumptions used in preparing consolidated financial statements may lead to adjustment in response to changes in uncertainty, such as information and market conditions available in the future. In addition, the ultimate impact on the business, financial condition, performance, and liquidity of the Group is unpredictable.
(*2) Financial instruments (Beneficiary certificates: 211.7 billion and derivatives-combined securities: 211.7 billion) related to GEN2 Partners asset management were delayed in repurchase for the year ended December 31, 2020. The Group estimated fair value using the net asset value based on the most recent data available for the repurchase suspension fund. Since then, it has an uncertainty in measuring fair value due to market conditions.
77
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value
i-1) The fair value hierarchy of financial instruments presented at their fair values in the statements of financial position as of December 31, 2020 and 2019 are as follows (continued):
(*3)The valuation amount for the over-the-counter derivatives classified as Level 3 by Shinhan Investment Corp. are W 204,608 million in financial assets at FVTPL, W 8,141,504 million in financial liabilities designated at fair value through profit or loss, W 405,313 million in derivative assets, and W 83,269 million in derivative liabilities. The above level 3 over-the-counter derivatives measure fair value using the internal valuation model of Shinhan Investment Corp.
|
| December 31, 2019 | ||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
Financial assets |
|
|
|
|
|
|
|
|
Due from banks measured at FVTPL |
| - |
| 66,870 |
| 830,655 |
| 897,525 |
Loan receivables measured at FVTPL |
| - |
| 686,446 |
| 1,468,375 |
| 2,154,821 |
Financial assets at FVTPL: |
|
|
|
|
|
|
|
|
Debt securities and other securities |
| 6,304,161 |
| 33,145,583 |
| 8,951,398 |
| 48,401,142 |
Equity securities |
| 890,714 |
| 195,395 |
| 511,831 |
| 1,597,940 |
Gold/silver deposits |
| 111,715 |
| - |
| - |
| 111,715 |
|
| 7,306,590 |
| 33,340,978 |
| 9,463,229 |
| 50,110,797 |
Derivative assets: |
|
|
|
|
|
|
|
|
Trading |
| 35,711 |
| 2,088,307 |
| 462,050 |
| 2,586,068 |
Hedging |
| - |
| 240,430 |
| 2,776 |
| 243,206 |
|
| 35,711 |
| 2,328,737 |
| 464,826 |
| 2,829,274 |
Securities measured at FVOCI: |
|
|
|
|
|
|
|
|
Debt securities |
| 16,892,704 |
| 41,645,124 |
| 35,266 |
| 58,573,094 |
Equity securities |
| 183,107 |
| - |
| 624,852 |
| 807,959 |
|
| 17,075,811 |
| 41,645,124 |
| 660,118 |
| 59,381,053 |
|
| 24,418,112 |
| 78,068,155 |
| 12,887,203 |
| 115,373,470 |
Financial liabilities: |
|
|
|
|
|
|
|
|
Financial liabilities measured at FVTPL: |
|
|
|
|
|
|
|
|
Securities sold |
| 1,164,697 |
| - |
| - |
| 1,164,697 |
Gold/silver deposits |
| 467,760 |
| - |
| - |
| 467,760 |
|
| 1,632,457 |
| - |
| - |
| 1,632,457 |
Financial liabilities designated at fair value through profit or loss: |
|
|
|
|
|
|
|
|
Derivatives-combined securities |
| - |
| 897,967 |
| 8,511,489 |
| 9,409,456 |
Derivative liabilities: |
|
|
|
|
|
|
|
|
Trading |
| 46,854 |
| 1,834,930 |
| 119,220 |
| 2,001,004 |
Hedging |
| - |
| 112,258 |
| 189,750 |
| 302,008 |
|
| 46,854 |
| 1,947,188 |
| 308,970 |
| 2,303,012 |
|
| 1,679,311 |
| 2,845,155 |
| 8,820,459 |
| 13,344,925 |
78
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value
i-2) Classification of financial instruments as fair value level 3
The Group determines the fair value of the Group's fair value of assets using value from external independent and qualified valuers or internal valuation model at the end of every financial year. Changes in carrying values of financial instruments classified as Level 3 for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Financial |
| Securities |
| Financial liabilities designated at fair value through profit or loss |
| Derivative assets and liabilities, net |
Beginning balance |
| 11,762,259 |
| 660,118 |
| (8,511,489) |
| 155,856 |
Recognized in total comprehensive income for the year: |
|
|
|
|
|
|
|
|
Recognized in profit (loss) for the year(*1) |
| (59,931) |
| (2,094) |
| (196,743) |
| 136,386 |
Recognized in other comprehensive income (loss) for the year |
| 69,819 |
| (2,521) |
| (9,689) |
| - |
|
| 9,888 |
| (4,615) |
| (206,432) |
| 136,386 |
Purchase |
| 4,461,802 |
| 61,919 |
| - |
| 1,171 |
Issue |
| - |
| - |
| (9,043,503) |
| - |
Settlement |
| (5,231,666) |
| (14) |
| 9,928,472 |
| (74,584) |
Reclassification(*3) |
| (377,641) |
| - |
| - |
| - |
Transfer to level3(*2) |
| 358,123 |
| - |
| (308,552) |
| 625 |
Transfer from level3(*2) |
| (57,513) |
| - |
| - |
| 21 |
Business combination (Note 47) |
| 463 |
| - |
| - |
| - |
Ending balance |
| 10,925,715 |
| 717,408 |
| (8,141,504) |
| 219,475 |
79
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value(continued)
i-2) Classification of financial instruments as fair value level 3(continued)
The Group determines the fair value of the Group's fair value of assets using value from external independent and qualified valuers or internal valuation model at the end of every financial year. Changes in carrying values of financial instruments classified as Level 3 for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||
|
| Financial |
| Securities |
| Financial liabilities designated at fair value through profit or loss |
| Derivative assets and liabilities, net |
Beginning balance |
| 7,122,565 |
| 550,505 |
| (6,833,737) |
| (526,223) |
Recognized in total comprehensive income for the year: |
|
|
|
|
|
|
|
|
Recognized in profit (loss) for the year(*1) |
| 61,738 |
| 1,461 |
| (826,594) |
| 591,332 |
Recognized in other comprehensive income (loss) for the year |
| 125,037 |
| 34,716 |
| (13,654) |
| - |
|
| 186,775 |
| 36,177 |
| (840,248) |
| 591,332 |
Purchase |
| 5,941,978 |
| 103,564 |
| - |
| 2,221 |
Issue |
| - |
| - |
| (8,821,680) |
| - |
Settlement |
| (2,332,781) |
| (22,842) |
| 7,984,176 |
| 88,312 |
Reclassification |
| - |
| (7,286) |
| - |
| - |
Transfer to level3(*2) |
| 162,906 |
| - |
| - |
| 248 |
Transfer from level3(*2) |
| (27,075) |
| - |
| - |
| (34) |
Business combination (Note 47) |
| 707,891 |
| - |
| - |
| - |
Ending balance |
| 11,762,259 |
| 660,118 |
| (8,511,489) |
| 155,856 |
(*1) Recognized profit or loss of the changes in carrying value of financial instruments classified as Level 3 for the years ended December 31, 2020 and 2019 are included in the accounts of the statements of comprehensive income, of which the amounts and the related accounts are as follows:
|
| December 31, 2020 | ||
|
| Amounts recognized in profit or loss |
| Recognized profit or loss from the financial instruments held as of December 31 |
Net gain (loss) on financial assets at fair value through profit or loss |
| (8,304) |
| (180,419) |
Net gain (loss) on financial liabilities designated at fair value through profit or loss |
| (196,743) |
| 189,885 |
Net gain (loss) on securities at fair value through other comprehensive income |
| (2,094) |
| (2,094) |
Other operating expenses |
| 84,759 |
| 19,495 |
|
| (122,382) |
| 26,867 |
80
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value(continued)
i-2) Changes in carrying values of financial instruments classified as Level 3 for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||
|
| Amounts recognized in profit or loss |
| Recognized profit or loss from the financial instruments held as of December 31 |
Net gain (loss) on financial assets at fair value through profit or loss |
| 544,849 |
| 23,912 |
Net gain (loss) on financial liabilities designated at fair value through profit or loss |
| (826,594) |
| (66,113) |
Net gain (loss) on securities at fair value through other comprehensive income |
| 1,461 |
| 1,191 |
Other operating expenses |
| 108,221 |
| 109,547 |
|
| (172,063) |
| 68,537 |
(*2) The investment securities transferred to Level 3 as the availability of observable market data changed due to reasons such as suspension of trading, and the derivative instruments transferred to Level 3 as the availability of observable market data changed due to reasons such as changes in the valuation.
(*3) It has been replaced by investment assets in associates.
81
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value (continued)
i-3) Valuation techniques and significant inputs not observable in markets
i-3-1) Valuation techniques and inputs used in measuring the fair value of financial instruments classified as level 2 as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
Type of financial instrument |
| Valuation technique |
| Carrying Value |
| Significant inputs |
Assets |
|
|
|
|
|
|
Financial asset at fair value through profit or loss |
|
|
|
|
|
|
Debt securities |
| DCF |
| 40,043,850 |
| Discount rate, interest rate, stock price, and etc. |
Equity securities |
| NAV |
| 210,230 |
| Price of underlying assets such as stocks, bonds, etc. |
|
|
|
| 40,254,080 |
|
|
Derivative assets |
|
|
|
|
|
|
Trading |
| Option model, DCF |
| 4,623,218 |
| Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc. |
Hedging |
|
| 475,708 |
| ||
|
|
|
| 5,098,926 |
|
|
Securities at fair value through other comprehensive income |
|
|
|
|
|
|
Debt securities |
| DCF |
| 39,861,238 |
| Discount rate and price of underlying assets such as stock, bonds, etc. |
Equity securities | NAV | 49,673 | ||||
|
|
|
| 39,910,911 |
|
|
|
|
|
| 85,263,917 |
|
|
Liabilities |
|
|
|
|
|
|
Financial liabilities designated at fair value through profit or loss |
|
|
|
|
|
|
Complex financial instruments |
| DCF |
| 314,220 |
| Discount rate |
Derivative liabilities |
|
|
|
|
|
|
Trading |
| Option model, DCF |
| 4,431,080 |
| Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc. |
Hedging |
|
| 233,684 |
| ||
|
|
|
| 4,664,764 |
|
|
|
|
|
| 4,978,984 |
|
|
82
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value (continued)
i-3) Valuation techniques and significant inputs not observable in markets (continued)
i-3-1) Valuation techniques and inputs used in measuring the fair value of financial instruments classified as level 2 as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||
Type of financial instrument |
| Valuation technique |
| Carrying Value |
| Significant inputs |
Assets |
|
|
|
|
|
|
Financial asset at fair value through profit or loss |
|
|
|
|
|
|
Debt securities |
| DCF |
| 33,898,899 |
| Discount rate, interest rate, stock price, and etc. |
Equity securities |
| NAV |
| 195,395 |
| Price of underlying assets such as stocks, bonds |
|
|
|
| 34,094,294 |
|
|
Derivative assets |
|
|
|
|
|
|
Trading |
| Option model, DCF |
| 2,088,307 |
| Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc. |
Hedging |
|
| 240,430 |
| ||
|
|
|
| 2,328,737 |
|
|
Securities at fair value through other comprehensive income |
| DCF |
| 41,645,124 |
| Discount rate, growth rate and price of underlying assets such as stock, bonds |
|
|
|
| 78,068,155 |
|
|
Liabilities |
|
|
|
|
|
|
Financial liabilities designated at fair value through profit or loss |
|
|
|
|
|
|
Borrowings |
| DCF |
| 897,967 |
| Discount rate |
Derivative liabilities |
|
|
|
|
|
|
Trading |
| Option model, DCF |
| 1,834,930 |
| Discount rate, foreign exchange rate, volatility, stock price, and commodity index, etc. |
Hedging |
|
| 112,258 |
| ||
|
|
|
| 1,947,188 |
|
|
|
|
|
| 2,845,155 |
|
|
83
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value (continued)
i-3) Valuation techniques and significant inputs not observable in markets (continued)
i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | |||||||
Type of financial instrument |
| Valuation technique |
|
| Carrying value(*2) |
| Significant unobservable inputs |
| Range |
Financial assets |
|
|
|
|
|
|
|
|
|
Financial asset at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
Debt securities |
| DCF, Option model(*1), Comparable company analysis |
|
| 10,093,302 |
| The volatility of the underlying asset, Discount rate, and Correlations |
| 5.06%~61.32% 0.35%~27.17% 0.00%~100.0% |
Equity securities |
| DCF, NAV, Option model(*1), Comparable company analysis |
|
| 832,413 |
| The volatility of the underlying asset, and Correlations
|
| 21.00%~40.00% 5.83%~16.87% 20.00%~79.00% |
|
|
|
|
| 10,925,715 |
|
|
|
|
Derivative assets |
|
|
|
|
|
|
|
|
|
Equity and foreign exchange related |
| Option model(*1) |
|
| 113,496 |
| The volatility of the underlying asset, and Correlations |
| 4.30%~127.00% -3.00%~82.00% |
Interest rates related |
| Option model(*1) |
|
| 23,112 |
| The volatility of the underlying asset, Regression coefficient, and Correlations |
| 0.47%~1.00% 0.30%~0.58% 26.00%~90.45% |
Credit and commodity related |
| Option model(*1) |
|
| 273,042 |
| The volatility of the underlying asset, and Correlations |
| 1.00%~40.00% -43.00%~92.00% |
|
|
|
|
| 409,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at fair value through other comprehensive income |
|
|
|
|
|
|
|
|
|
Debt securities |
| DCF, NAV, Option model(*1), Comparable company analysis |
|
| 32,805 |
| The volatility of the underlying asset, Discount rate, and Growth rate |
| 22.11% 0.05%~19.05% 0.00%~2.00% |
Equity securities |
|
|
| 684,603 |
|
| |||
|
|
|
|
| 717,408 |
|
|
|
|
|
|
|
|
| 12,052,773 |
|
|
|
|
84
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value (continued)
i-3) Valuation techniques and significant inputs not observable in markets (continued)
i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2020 | |||||||
Type of financial instrument |
| Valuation technique |
|
| Carrying value(*2) |
| Significant unobservable inputs |
| Range |
Financial liabilities |
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
Equity related |
| Option model(*1) |
|
| 8,141,504 |
| The volatility of the underlying asset, and Correlations |
| 1.00%~127.00% -43.00%~92.00% |
Derivative liabilities |
|
|
|
|
|
|
|
|
|
Equity and foreign exchange related |
| Option model(*1) |
|
| 25,525 |
| The volatility of the underlying asset, and Correlations |
| 4.30%~61.00% -3.00%~82.00% |
Interest rates related |
| Option model(*1) |
|
| 134,759 |
| The volatility of the underlying asset, Regression coefficient, and Correlations |
| 0.47%~40.00% 0.30%~0.63% 20.13%~90.34% |
Credit and commodity related |
| Option model(*1) |
|
| 29,891 |
| The volatility of the underlying asset, and Correlations |
| 1.00%~102.00% -43.00%~92.00% |
|
|
|
|
| 190,175 |
|
|
|
|
|
|
|
|
| 8,331,679 |
|
|
|
|
(*1) Option model that the Group uses in derivative valuation includes Black-Scholes model, Hull-White model, Monte Carlo simulation, etc.
(*2) There is no disclosure for valuation techniques and input variables related to items where the carrying amount is recognized as a reasonable approximation of fair value and the carrying amount is disclosed at fair value.
85
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value (continued)
i-3) Valuation techniques and significant inputs not observable in markets (continued)
i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | |||||||
Type of financial instrument |
| Valuation technique |
|
| Carrying value(*2) |
| Significant unobservable inputs |
| Range |
Financial assets |
|
|
|
|
|
|
|
|
|
Financial asset at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
Debt securities |
| DCF, Option model(*1) |
|
| 11,250,428 |
| The volatility of the underlying asset, and Discount rate |
| 0.00%~46.36% 1.14%~30.70% |
Equity securities |
| DCF, NAV |
|
| 511,831 |
| The volatility of the underlying asset, Correlations, and Discount rate |
| 1.00%~43.00% 5.00%~88.00% 5.06%~15.42% |
|
|
|
|
| 11,762,259 |
|
|
|
|
Derivative assets |
|
|
|
|
|
|
|
|
|
Equity and foreign exchange related |
| Option model(*1) |
|
| 145,011 |
| The volatility of the underlying asset, and Correlations |
| 1.51%~56.00% -42.00%~82.00% |
Interest rates related |
| Option model(*1) |
|
| 30,983 |
| The volatility of the underlying asset, Regression coefficient, and Correlations |
| 0.50%~0.67% 1.30%~1.57% 59.53% |
Credit and commodity related |
| Option model(*1) |
|
| 288,832 |
| The volatility of the underlying asset, and Correlations |
| 0.00%~39.00% 0.00%~93.00% |
|
|
|
|
| 464,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at fair value through other comprehensive income |
|
|
|
|
|
|
|
|
|
Debt securities |
| DCF |
|
| 35,266 |
| Discount rate, and Growth rate |
| 7.78%~19.32% 0.00%~2.00% |
Equity securities |
| NAV |
|
| 624,852 |
|
| ||
|
|
|
|
| 660,118 |
|
|
|
|
|
|
|
|
| 12,887,203 |
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
Equity related |
| Option model(*1) |
|
| 8,511,489 |
| The volatility of the underlying asset, and Correlations |
| 0.00%~140.00% -46.00%~93.00% |
Derivative liabilities |
|
|
|
|
|
|
|
|
|
Equity and foreign exchange related |
| Option model(*1) |
|
| 30,412 |
| The volatility of the underlying asset, and Correlations |
| 0.00%~140.00% 0.00%~78.00% |
86
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value (continued)
i-3) Valuation techniques and significant inputs not observable in markets (continued)
i-3-2) Valuation techniques and significant inputs, but not observable, used in measuring the fair value of financial instruments classified as level 3 as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | |||||||
Type of financial instrument |
| Valuation technique |
|
| Carrying value(*2) |
| Significant unobservable inputs |
| Range |
Interest rates related |
| Option model(*1) |
|
| 213,170 |
| The volatility of the underlying asset Regression coefficient, and Correlations |
| 0.00%~55.00% 1.30%~2.77% 45.06%~90.34% |
Credit and commodity related |
| Option model(*1) |
|
| 65,388 |
| The volatility of the underlying asset, and Correlations |
| 0.00%~109.00% -46.00%~93.00% |
|
|
|
|
| 308,970 |
|
|
|
|
|
|
|
|
| 8,820,459 |
|
|
|
|
(*1) Option model that the Group uses in derivative valuation includes Black-Scholes model, Hull-White model, Monte Carlo simulation, etc.
(*2) There is no disclosure for valuation techniques and input variables related to items where the carrying amount is recognized as a reasonable approximation of fair value and the carrying amount is disclosed at fair value.
87
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
i) Financial instruments measured at fair value (continued)
i-4) Sensitivity for changing in unobservable inputs
For level 3 fair value measurement, changing one or more of the unobservable inputs used to reasonably possible alternative assumptions would have the following effects on profit or loss, or other comprehensive income as of December 31, 2020 and 2019.
|
| December 31, 2020 | ||
|
| Favorable changes |
| Unfavorable changes |
Financial assets: |
|
|
|
|
Effects on profit or loss for the period(*1): |
|
|
|
|
Financial asset at fair value through profit or loss |
| 53,821 |
| (48,547) |
Derivative assets |
| 23,011 |
| (21,532) |
Securities at fair value through other comprehensive income(*2) |
| 26,817 |
| (21,044) |
|
| 103,649 |
| (91,123) |
Financial liabilities: |
|
|
|
|
Effects on profit or loss for the period(*1): |
|
|
|
|
Financial liabilities designated at fair value through profit or loss |
| 72,042 |
| (71,690) |
Derivative liabilities |
| 17,976 |
| (18,368) |
|
| 90,018 |
| (90,058) |
|
| December 31, 2019 | ||
|
| Favorable changes |
| Unfavorable changes |
Financial assets: |
|
|
|
|
Effects on profit or loss for the period(*1): |
|
|
|
|
Financial asset at fair value through profit or loss |
| 44,108 |
| (23,618) |
Derivative assets |
| 24,792 |
| (22,184) |
Securities at fair value through other comprehensive income(*2) |
| 36,258 |
| (22,183) |
|
| 105,158 |
| (67,985) |
Financial liabilities: |
|
|
|
|
Effects on profit or loss for the period(*1): |
|
|
|
|
Financial liabilities designated at fair value through profit or loss |
| 55,224 |
| (53,294) |
Derivative liabilities |
| 16,830 |
| (22,535) |
|
| 72,054 |
| (75,829) |
(*1) Fair value changes are calculated by increasing or decreasing the volatility of the underlying asset
(-10~10%) or correlations (-10~10%).
(*2) Fair value changes are calculated by increasing or decreasing discount rate (-1~1%) or growth rate (0~1%).
88
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
ii) Financial instruments measured at amortized cost
ii-1) The method of measuring the fair value of financial instruments measured at amortized cost is as follows:
Type |
| Measurement methods of fair value |
|
|
|
Cash and due from banks |
| The carrying amount and the fair value for cash are identical and most of deposits are floating interest rate deposits or next day deposits of a short-term instrument. For this reason, the carrying value approximates fair value. |
Loans |
| The fair value of the loans is measured by discounting the expected cash flow at the market interest rate and credit risk of the borrower. |
Securities measured at amortized cost |
| The minimum price between the Korea Asset Pricing’s valuation, and KIS Pricing’s is used as a fair value. |
Deposits and borrowings
|
| The carrying amount and the fair value for demand deposits, cash management account deposits, call money as short-term instrument are identical. The fair value of others is measured by discounting the contractual cash flow at the market interest rate that takes into account the residual risk. |
Debt securities issued |
| Where available, the fair value of deposits and borrowings is based on the published price quotations in an active market. In case there is no data for an active market price, it is measured by discounting the contractual cash flow at the market interest rate that takes into account the residual risk. |
Other financial assets and other financial liabilities |
| The carrying amounts are measured at fair value for short-term and suspense accounts, such as spot exchange, inter-bank fund transfer, and domestic exchange of payments, and for the remaining financial instruments, the present value is calculated by discounting the contractual cash flows at a discount rate which considered residual risk at the market interest rate. |
89
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
ii) Financial instruments measured at amortized cost (continued)
ii-2) The carrying value and the fair value of financial instruments measured at amortized cost as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 | ||||
|
| Carrying value |
| Fair value |
| Carrying value |
| Fair value |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits measured at amortized cost |
| 31,605,262 |
| 31,607,122 |
| 25,840,858 |
| 25,852,497 |
|
|
|
|
|
|
|
|
|
Loans measured at amortized cost |
|
|
|
|
|
|
|
|
Retails |
| 146,843,366 |
| 147,634,589 |
| 134,510,282 |
| 135,620,862 |
Corporations |
| 177,046,416 |
| 178,420,230 |
| 159,560,873 |
| 160,818,205 |
Public and other funding loans |
| 4,021,926 |
| 4,048,167 |
| 3,427,855 |
| 3,446,485 |
Loans between banks |
| 5,487,147 |
| 5,495,236 |
| 2,629,999 |
| 2,644,603 |
Credit card |
| 22,822,664 |
| 23,220,987 |
| 23,115,970 |
| 23,489,180 |
|
| 356,221,519 |
| 358,819,209 |
| 323,244,979 |
| 326,019,335 |
Securities measured at amortized cost |
|
|
|
|
|
|
|
|
Government bonds |
| 31,816,320 |
| 33,391,597 |
| 30,385,084 |
| 32,242,339 |
Financial institution bonds |
| 3,835,577 |
| 3,987,172 |
| 4,770,204 |
| 4,882,081 |
Corporation bonds |
| 11,630,726 |
| 12,075,175 |
| 10,426,777 |
| 10,878,059 |
|
| 47,282,623 |
| 49,453,944 |
| 45,582,065 |
| 48,002,479 |
Other financial assets |
| 20,341,191 |
| 20,359,778 |
| 17,477,778 |
| 17,493,331 |
|
| 455,450,595 |
| 460,240,053 |
| 412,145,680 |
| 417,367,642 |
Deposit liabilities: |
|
|
|
|
|
|
|
|
Demand deposits |
| 148,725,197 |
| 148,725,197 |
| 116,282,707 |
| 116,282,707 |
Time deposits |
| 157,833,891 |
| 157,936,969 |
| 158,427,447 |
| 158,478,949 |
Certificate of deposit |
| 5,946,704 |
| 5,965,139 |
| 9,707,791 |
| 9,714,806 |
Issued bill deposit |
| 6,226,937 |
| 6,226,855 |
| 4,579,587 |
| 4,579,425 |
CMA deposits |
| 4,006,319 |
| 4,006,319 |
| 3,987,372 |
| 3,987,372 |
Other |
| 3,677,820 |
| 3,678,316 |
| 1,889,352 |
| 1,889,700 |
|
| 326,416,868 |
| 326,538,795 |
| 294,874,256 |
| 294,932,959 |
Borrowing debts: |
|
|
|
|
|
|
|
|
Call-money |
| 1,760,042 |
| 1,760,042 |
| 712,247 |
| 712,247 |
Bills sold |
| 10,706 |
| 10,696 |
| 19,070 |
| 19,035 |
Bonds sold under repurchase agreements |
| 11,065,584 |
| 11,065,584 |
| 9,089,736 |
| 9,089,736 |
Borrowings |
| 28,757,732 |
| 28,863,015 |
| 25,042,103 |
| 25,205,292 |
|
| 41,594,064 |
| 41,699,337 |
| 34,863,156 |
| 35,026,310 |
Debts: |
|
|
|
|
|
|
|
|
Borrowings in Korean won |
| 64,083,920 |
| 64,842,258 |
| 64,717,212 |
| 65,322,413 |
Borrowings in foreign currency |
| 11,050,474 |
| 11,262,332 |
| 10,646,152 |
| 10,783,027 |
|
| 75,134,394 |
| 76,104,590 |
| 75,363,364 |
| 76,105,440 |
Other financial liabilities |
| 34,129,626 |
| 34,136,128 |
| 28,231,911 |
| 27,949,306 |
|
| 477,274,952 |
| 478,478,850 |
| 433,332,687 |
| 434,014,015 |
90
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
ii) Financial instruments measured at amortized cost (continued)
ii-3) The fair value hierarchy of financial assets and liabilities which are not measured at their fair values in the statements of financial position but with their fair value disclosed as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Level 1 | Level 2 | Level 3 |
| Total |
Assets: |
|
|
|
| ||
Deposits measured at amortized cost |
| 779,759 | 29,957,444 | 869,919 |
| 31,607,122 |
|
|
|
|
|
|
|
Loans measured at amortized cost |
|
|
|
|
|
|
Retails |
| - | - | 147,634,589 |
| 147,634,589 |
Corporations |
| - | - | 178,420,230 |
| 178,420,230 |
Public and other funding loans |
| - | - | 4,048,167 |
| 4,048,167 |
Loans between banks |
| - | 2,187,270 | 3,307,966 |
| 5,495,236 |
Credit card |
| - | - | 23,220,987 |
| 23,220,987 |
|
| - | 2,187,270 | 356,631,939 |
| 358,819,209 |
Securities measured at amortized cost: |
|
|
|
|
|
|
Government bonds |
| 22,130,487 | 11,261,110 | - |
| 33,391,597 |
Financial institution bonds |
| 1,070,220 | 2,916,952 | - |
| 3,987,172 |
Debentures |
| - | 11,994,724 | 80,451 |
| 12,075,175 |
|
| 23,200,707 | 26,172,786 | 80,451 |
| 49,453,944 |
|
|
|
|
|
|
|
Other financial assets |
| - | 8,661,345 | 11,698,433 |
| 20,359,778 |
|
| 23,980,466 | 66,978,845 | 369,280,742 |
| 460,240,053 |
Deposit liabilities: |
|
|
|
| ||
Demand deposits |
| - | 148,725,197 | - |
| 148,725,197 |
Time deposits |
| - | - | 157,936,969 |
| 157,936,969 |
Certificate of deposit |
| - | - | 5,965,139 |
| 5,965,139 |
Issued bill deposit |
| - | - | 6,226,855 |
| 6,226,855 |
CMA deposits |
| - | 4,006,319 | - |
| 4,006,319 |
Other |
| - | 3,534,696 | 143,620 |
| 3,678,316 |
|
| - | 156,266,212 | 170,272,583 |
| 326,538,795 |
Borrowing debts: |
|
|
|
|
|
|
Call-money |
| - | 1,760,042 | - |
| 1,760,042 |
Bills sold |
| - | - | 10,696 |
| 10,696 |
Bonds sold under repurchase agreements |
| 95,400 | - | 10,970,184 |
| 11,065,584 |
Borrowings |
| - | 8,500 | 28,854,515 |
| 28,863,015 |
|
| 95,400 | 1,768,542 | 39,835,395 |
| 41,699,337 |
Debts: |
|
|
|
|
|
|
Borrowings in won |
| - | 35,740,750 | 29,101,508 |
| 64,842,258 |
Borrowings in foreign currency |
| - | 7,944,242 | 3,318,090 |
| 11,262,332 |
|
| - | 43,684,992 | 32,419,598 |
| 76,104,590 |
|
|
|
|
|
|
|
Other financial liabilities |
| - | 10,383,020 | 23,753,108 |
| 34,136,128 |
|
| 95,400 | 212,102,766 | 266,280,684 |
| 478,478,850 |
91
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
ii) Financial instruments measured at amortized cost (continued)
ii-3) The fair value hierarchy of financial assets and liabilities which are not measured at their fair values in the statements of financial position but with their fair value disclosed as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||
|
| Level 1 | Level 2 | Level 3 |
| Total |
Assets: |
|
|
|
| ||
Deposits measured at amortized cost |
| 3,133,425 | 22,149,706 | 569,366 |
| 25,852,497 |
|
|
|
|
|
|
|
Loans measured at amortized cost |
|
|
|
|
|
|
Retails |
| - | - | 135,620,862 |
| 135,620,862 |
Corporations |
| 108 | - | 160,818,097 |
| 160,818,205 |
Public and other funding loans |
| - | - | 3,446,485 |
| 3,446,485 |
Loans between banks |
| - | 960,827 | 1,683,776 |
| 2,644,603 |
Credit card |
| - | - | 23,489,180 |
| 23,489,180 |
|
| 108 | 960,827 | 325,058,400 |
| 326,019,335 |
Securities measured at amortized cost: |
|
|
|
|
|
|
Government bonds |
| 20,524,820 | 11,717,519 | - |
| 32,242,339 |
Financial institution bonds |
| 2,252,484 | 2,629,597 | - |
| 4,882,081 |
Debentures |
| - | 10,792,000 | 86,059 |
| 10,878,059 |
|
| 22,777,304 | 25,139,116 | 86,059 |
| 48,002,479 |
|
|
|
|
|
|
|
Other financial assets |
| 526,813 | 10,813,821 | 6,152,697 |
| 17,493,331 |
|
| 26,437,650 | 59,063,470 | 331,866,522 |
| 417,367,642 |
Deposit liabilities: |
|
|
|
| ||
Demand deposits |
| 1,053,963 | 115,216,336 | 12,408 |
| 116,282,707 |
Time deposits |
| - | - | 158,478,949 |
| 158,478,949 |
Certificate of deposit |
| - | - | 9,714,806 |
| 9,714,806 |
Issued bill deposit |
| - | - | 4,579,425 |
| 4,579,425 |
CMA deposits |
| - | 3,987,372 | - |
| 3,987,372 |
Other |
| 1,747,509 | - | 142,191 |
| 1,889,700 |
|
| 2,801,472 | 119,203,708 | 172,927,779 |
| 294,932,959 |
Borrowing debts: |
|
|
|
|
|
|
Call-money |
| 174,000 | 538,247 | - |
| 712,247 |
Bills sold |
| - | - | 19,035 |
| 19,035 |
Bonds sold under repurchase agreements |
| 6,734,162 | - | 2,355,574 |
| 9,089,736 |
Borrowings |
| - | - | 25,205,292 |
| 25,205,292 |
|
| 6,908,162 | 538,247 | 27,579,901 |
| 35,026,310 |
Debts: |
|
|
|
|
|
|
Borrowings in won |
| - | 43,747,553 | 21,574,860 |
| 65,322,413 |
Borrowings in foreign currency |
| - | 7,535,065 | 3,247,962 |
| 10,783,027 |
|
| - | 51,282,618 | 24,822,822 |
| 76,105,440 |
|
|
|
|
|
|
|
Other financial liabilities |
| 526,685 | 7,932,723 | 19,489,898 |
| 27,949,306 |
|
| 10,236,319 | 178,957,296 | 244,820,400 |
| 434,014,015 |
92
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
ii) Financial instruments measured at amortized cost (continued)
ii-4) Valuation techniques and inputs used in the fair value measurements categorized within Level 2 and Level 3 for fair value disclosures, which are not recognized at fair value, as at December 31, 2020 and 2019, are as follows:
|
| December 31, 2020 | ||||
|
| Fair value(*) |
| Valuation technique |
| Inputs |
|
|
| ||||
Financial instruments classified as level 2 : | ||||||
Assets |
|
|
|
|
|
|
Due from banks measured at amortized cost |
| 29,957,444 |
| DCF |
| Discount rate |
Loans measured at amortized cost |
| 2,187,270 |
| DCF |
| Discount rate, credit spread, prepayment rate |
Securities measured at amortized cost |
| 26,172,786 |
| DCF |
| Discount rate |
Other financial assets |
| 8,661,345 |
| DCF |
| Discount rate |
Financial instruments classified as level 3 : |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Due from banks measured at amortized cost |
| 869,919 |
| DCF |
| Discount rate |
Loans measured at amortized cost |
| 356,631,939 |
| DCF |
| Discount rate, credit spread, prepayment rate |
Securities measured at amortized cost |
| 80,451 |
| DCF |
| Discount rate |
Other financial assets |
| 11,698,433 |
| DCF |
| Discount rate |
|
| 436,259,587 |
|
|
|
|
|
|
|
|
|
|
|
Financial instruments classified as level 2 : |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits |
| 156,266,212 |
| DCF |
| Discount rate |
Borrowings |
| 1,768,542 |
| DCF |
| Discount rate |
Debt securities issued |
| 43,684,992 |
| DCF |
| Discount rate |
Other financial liabilities |
| 10,383,020 |
| DCF |
| Discount rate |
Financial instruments classified as level 3 : | ||||||
Liabilities |
|
|
|
|
|
|
Deposits |
| 170,272,583 |
| DCF |
| Discount rate |
Borrowings |
| 39,835,395 |
| DCF |
| Discount rate |
Debt securities issued |
| 32,419,598 |
| DCF |
| Discount rate, regression coefficient, correlation coefficient |
Other financial liabilities |
| 23,753,108 |
| DCF |
| Discount rate |
|
| 478,383,450 |
|
|
|
|
93
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
ii) Financial instruments measured at amortized cost (continued)
- For financial instruments not measured at fair value in the statement of financial position but for which the fair value is disclosed, information on valuation technique and inputs used in measuring fair value of financial instruments classified as level 2 or level 3 at December 31, 2020 and 2019 are as follows:
|
| December 31, 2019 | ||||
|
| Fair value(*) |
| Valuation technique |
| Inputs |
|
|
| ||||
Financial instruments classified as level 2 : | ||||||
Assets |
|
|
|
|
|
|
Due from banks measured at amortized cost |
| 22,149,706 |
| DCF |
| Discount rate |
Loans measured at amortized cost |
| 960,827 |
| DCF |
| Discount rate, credit spread, prepayment rate |
Securities measured at amortized cost |
| 25,139,116 |
| DCF |
| Discount rate |
Other financial assets |
| 10,813,821 |
| DCF |
| Discount rate |
Financial instruments classified as level 3 : |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Due from banks measured at amortized cost |
| 569,366 |
| DCF |
| Discount rate |
Loans measured at amortized cost |
| 325,058,400 |
| DCF |
| Discount rate, credit spread, prepayment rate |
Securities measured at amortized cost |
| 86,059 |
| DCF |
| Discount rate |
Other financial assets |
| 6,152,697 |
| DCF |
| Discount rate |
|
| 390,929,992 |
|
|
|
|
|
|
|
|
|
|
|
Financial instruments classified as level 2 : |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits |
| 119,203,708 |
| DCF |
| Discount rate |
Borrowings |
| 538,247 |
| DCF |
| Discount rate |
Debt securities issued |
| 51,282,618 |
| DCF |
| Discount rate |
Other financial liabilities |
| 7,932,723 |
| DCF |
| Discount rate |
Financial instruments classified as level 3 : | ||||||
Liabilities |
|
|
|
|
|
|
Deposits |
| 172,927,779 |
| DCF |
| Discount rate |
Borrowings |
| 27,579,901 |
| DCF |
| Discount rate |
Debt securities issued |
| 24,822,822 |
| DCF |
| Discount rate, regression coefficient, correlation coefficient |
Other financial liabilities |
| 19,489,898 |
| DCF |
| Discount rate |
|
| 423,777,696 |
|
|
|
|
(*) Valuation techniques and inputs are not disclosed when the carrying amount is a reasonable approximation of fair value
94
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(e) Measurement of fair value (continued)
ⅲ) Changes in gains or losses on valuation at the transaction date for the years ended December 31, 2020 and 2019, are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Beginning balance |
| (172,859) |
| (126,111) |
New transactions |
| (347,030) |
| (178,223) |
Recognized in profit for the year |
| 227,290 |
| 131,475 |
Ending balance |
| (292,599) |
| (172,859) |
(f) Classification by categories of financial instruments
Financial assets and liabilities are measured at fair value or amortized cost. The financial instruments measured at fair value or amortized costs are measured in accordance with the Group’s valuation methodologies, which are described in Note 4.(e) Measurement of fair value.
The carrying amounts of each category of financial assets and financial liabilities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||
|
| FVTPL |
| FVOCI |
| Amortized cost |
| Derivatives held for hedging |
| Total |
Assets: |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks at amortized cost |
| - |
| - |
| 33,410,542 |
| - |
| 33,410,542 |
Due from banks at fair value through profit or loss |
| 63,112 |
| - |
| - |
| - |
| 63,112 |
Securities at fair value through profit or loss |
| 57,011,490 |
| - |
| - |
| - |
| 57,011,490 |
Derivatives assets |
| 5,157,412 |
| - |
| - |
| 476,503 |
| 5,633,915 |
Loans at fair value through profit or loss |
| 2,016,801 |
| - |
| - |
| - |
| 2,016,801 |
Loans at amortized cost |
| - |
| - |
| 356,221,519 |
| - |
| 356,221,519 |
Securities at fair value through other comprehensive income |
| - |
| 58,316,112 |
| - |
| - |
| 58,316,112 |
Securities at amortized cost |
| - |
| - |
| 47,282,623 |
| - |
| 47,282,623 |
Other |
| - |
| - |
| 20,341,191 |
| - |
| 20,341,191 |
|
| 64,248,815 |
| 58,316,112 |
| 457,255,875 |
| 476,503 |
| 580,297,305 |
95
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(f) Classification by categories of financial instruments (continued)
The carrying amounts of each category of financial assets and financial liabilities as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2020 | ||||||||
|
| FVTPL |
| FVTPL liabilities designated |
| Financial liabilities measured at amortized cost |
| Derivatives held for hedging |
| Total |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Deposits |
| - |
| - |
| 326,416,868 |
| - |
| 326,416,868 |
Financial liabilities at fair value through profit or loss |
| 1,436,694 |
| - |
| - |
| - |
| 1,436,694 |
Financial liabilities designated at FVTPL |
| - |
| 8,455,724 |
| - |
| - |
| 8,455,724 |
Derivatives liabilities |
| 4,680,064 |
| - |
| - |
| 336,503 |
| 5,016,567 |
Borrowings |
| - |
| - |
| 41,594,064 |
| - |
| 41,594,064 |
Debt securities issued |
| - |
| - |
| 75,134,394 |
| - |
| 75,134,394 |
Other |
| - |
| - |
| 34,129,626 |
| - |
| 34,129,626 |
|
| 6,116,758 |
| 8,455,724 |
| 477,274,952 |
| 336,503 |
| 492,183,937 |
96
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(f) Classification by categories of financial instruments (continued)
The carrying amounts of each category of financial assets and financial liabilities as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||
|
| FVTPL |
| FVOCI |
| Amortized cost |
| Derivatives held for hedging |
| Total |
Assets: |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks at amortized cost |
| - |
| - |
| 28,423,744 |
| - |
| 28,423,744 |
Due from banks at fair value through profit or loss |
| 897,525 |
| - |
| - |
| - |
| 897,525 |
Securities at fair value through profit or loss |
| 50,110,797 |
| - |
| - |
| - |
| 50,110,797 |
Derivatives assets |
| 2,586,068 |
| - |
| - |
| 243,206 |
| 2,829,274 |
Loans at fair value through profit or loss |
| 2,154,821 |
| - |
| - |
| - |
| 2,154,821 |
Loans at amortized cost |
| - |
| - |
| 323,244,979 |
| - |
| 323,244,979 |
Securities at fair value through other comprehensive income |
| - |
| 59,381,053 |
| - |
| - |
| 59,381,053 |
Securities at amortized cost |
| - |
| - |
| 45,582,065 |
| - |
| 45,582,065 |
Other |
| - |
| - |
| 17,477,778 |
| - |
| 17,477,778 |
|
| 55,749,211 |
| 59,381,053 |
| 414,728,566 |
| 243,206 |
| 530,102,036 |
|
| December 31, 2019 | ||||||||
|
| FVTPL |
| FVTPL liabilities designated |
| Financial liabilities measured at amortized cost |
| Derivatives held for hedging |
| Total |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Deposits |
| - |
| - |
| 294,874,256 |
| - |
| 294,874,256 |
Financial liabilities at fair value through profit or loss |
| 1,632,457 |
| - |
| - |
| - |
| 1,632,457 |
Financial liabilities designated at FVTPL |
| - |
| 9,409,456 |
| - |
| - |
| 9,409,456 |
Derivatives liabilities |
| 2,001,004 |
| - |
| - |
| 302,008 |
| 2,303,012 |
Borrowings |
| - |
| - |
| 34,863,156 |
| - |
| 34,863,156 |
Debt securities issued |
| - |
| - |
| 75,363,364 |
| - |
| 75,363,364 |
Other |
| - |
| - |
| 28,231,911 |
| - |
| 28,231,911 |
|
| 3,633,461 |
| 9,409,456 |
| 433,332,687 |
| 302,008 |
| 446,677,612 |
97
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(g) Transfer of financial instruments
i) Transfers that do not qualify for derecognition
① Sale of repurchase bonds
Among the Group’s sale of repurchase bonds, followings are the details of financial instruments that do not qualify for derecognition because the Group sold under repurchase agreement at a fixed price as of December 31, 2020 and 2019:
|
| December 31, 2020 |
| December 31, 2019 |
Transferred asset: |
|
|
|
|
Securities at FVTPL |
| 8,915,488 |
| 7,924,953 |
Securities at FVOCI |
| 1,638,651 |
| 1,867,470 |
Securities at amortized cost |
| 205,639 |
| 818,470 |
|
| 10,759,778 |
| 10,610,893 |
Associated liabilities: |
|
|
|
|
Bonds sold under repurchase agreements |
| 11,075,004 |
|
8,717,336 |
② Securities loaned
If the securities owned by the Group are loaned, the ownership of the securities is transferred, but is required to be returned at the end of the loan period. Therefore, the Group continues to recognize the entire securities loaned as it holds most of the risks and compensation of the securities.
Securities loaned as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
| Borrowers |
Government bonds |
| 3,213,719 |
| 3,951,869 |
| Korea Securities Finance Corp., Korea Securities Depository |
Financial institutions bonds |
| 220,324 |
| 460,052 |
| Korea Securities Finance Corp., Korea Securities Depository |
Equity securities |
| 99,670 |
| 30,242 |
| Korea Securities Finance Corp. |
|
| 3,533,713 |
| 4,442,163 |
|
|
ii) Financial instruments qualified for derecognition and continued involvement
There is no financial instruments which qualify for derecognition and in which the Group has continuing involvements as of December 31, 2020, and 2019.
98
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(h) Offsetting financial assets and financial liabilities
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | |||||||||||
|
| Gross amounts of recognized financial assets/ liabilities |
| Gross amounts of recognized financial assets/ liabilities set off in the statement of financial position |
| Net amounts of financial assets/ liabilities presented in the statement of financial position |
| Related amounts not set off in the statement of financial position |
| Net amount | |||
| Financial instruments |
| Cash collateral received |
| |||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| |
Derivatives(*1) |
| 5,361,225 |
| - |
| 5,361,225 |
| 4,448,496 |
| 314,328 |
| 12,129,369 | |
Other financial instruments(*1) |
| 18,033,663 |
| 6,502,695 |
| 11,530,968 |
|
|
| ||||
Securities repurchased under repurchase agreements and bonds purchased under repurchase agreements(*2) |
| 13,694,305 |
| - |
| 13,694,305 |
| 13,185,633 |
| - |
| 508,672 | |
Securities loaned(*2) |
| 1,202,494 |
| - |
| 1,202,494 |
| 1,202,494 |
| - |
| - | |
Domestic exchange settlement debit(*3) |
| 29,911,693 |
| 25,785,507 |
| 4,126,186 |
| 116,290 |
| - |
| 4,009,896 | |
Receivables from disposal of securities(*4) |
| 29,341 |
| 3,140 |
| 26,201 |
| - |
| - |
| 26,201 | |
Insurance receivables |
| 8,374 |
| - |
| 8,374 |
| 5,526 |
| - |
| 2,848 | |
|
| 68,241,095 |
| 32,291,342 |
| 35,949,753 |
| 18,958,439 |
| 314,328 |
| 16,676,986 | |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| |
Derivatives(*1) |
| 13,153,952 |
| - |
| 13,153,952 |
| 5,490,974 |
| 1,000 |
| 18,500,005 | |
Other financial instruments(*1) |
| 17,340,722 |
| 6,502,695 |
| 10,838,027 |
|
|
| ||||
Bonds purchased under repurchase agreements(*2) |
| 11,065,584 |
| - |
| 11,065,584 |
| 10,260,684 |
| - |
| 804,900 | |
Securities borrowed(*2) |
| 897,129 |
| - |
| 897,129 |
| 897,129 |
| - |
| - | |
Domestic exchange settlement pending(*3) |
| 31,605,249 |
| 25,785,507 |
| 5,819,742 |
| 4,099,248 |
| - |
| 1,720,494 | |
Payable from purchase of securities(*4) |
| 3,148 |
| 3,140 |
| 8 |
| 8 |
| - |
| - | |
Insurance payables |
| 5,742 |
| - |
| 5,742 |
| 5,526 |
| - |
| 216 | |
|
| 74,071,526 |
| 32,291,342 |
| 41,780,184 |
| 20,753,569 |
| 1,000 |
| 21,015,615 |
99
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(h) Offsetting financial assets and financial liabilities (continued)
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2019 | |||||||||||
|
| Gross amounts of recognized financial assets/ liabilities |
| Gross amounts of recognized financial assets/ liabilities set off in the statement of financial position |
| Net amounts of financial assets/ liabilities presented in the statement of financial position |
| Related amounts not set off in the statement of financial position |
| Net amount | |||
| Financial instruments |
| Cash collateral received |
| |||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| |
Derivatives(*1) |
| 2,694,236 |
| - |
| 2,694,236 |
| 8,090,372
|
| 263,541
|
| 1,645,802
| |
Other financial instruments(*1) |
| 8,624,844 |
| 1,319,365 |
| 7,305,479 |
|
|
| ||||
Securities repurchased under repurchase agreements and bonds purchased under repurchase agreements(*2) |
| 11,828,135 |
| - |
| 11,828,135 |
| 11,051,075 |
| - |
| 777,060 | |
Securities loaned(*2) |
| 1,927,674 |
| - |
| 1,927,674 |
| 1,927,674 |
| - |
| - | |
Domestic exchange settlement debit(*3) |
| 31,814,310 |
| 27,008,189 |
| 4,806,121 |
| 526,653 |
| - |
| 4,279,468 | |
Receivables from disposal of securities(*4) |
| 25,808 |
| 1,134 |
| 24,674 |
| - |
| - |
| 24,674 | |
Insurance receivables |
| 10,353 |
| - |
| 10,353 |
| 8,008 |
| - |
| 2,345 | |
|
| 56,925,360 |
| 28,328,688 |
| 28,596,672 |
| 21,603,782 |
| 263,541 |
| 6,729,349 | |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| |
Derivatives(*1) |
| 12,803,450 |
| - |
| 12,803,450 |
| 8,279,924
|
| 11,693
|
| 10,704,107
| |
Other financial instruments(*1) |
| 7,511,639 |
| 1,319,365 |
| 6,192,274 |
|
|
| ||||
Bonds purchased under repurchase agreements(*2) |
| 8,717,336 |
| - |
| 8,717,336 |
| 8,717,336 |
| - |
| - | |
Securities borrowed(*2) |
| 1,135,614 |
| - |
| 1,135,614 |
| 1,135,614 |
| - |
| - | |
Domestic exchange settlement pending(*3) |
| 28,936,661 |
| 27,008,189 |
| 1,928,472 |
| 1,857,152 |
| - |
| 71,320 | |
Payable from purchase of securities(*4) |
| 1,607 |
| 1,134 |
| 473 |
| 473 |
| - |
| - | |
Insurance payables |
| 8,202 |
| - |
| 8,202 |
| 8,008 |
| - |
| 194 | |
|
| 59,114,509 |
| 28,328,688 |
| 30,785,821 |
| 19,998,507 |
| 11,693 |
| 10,775,621 |
100
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(h) Offsetting financial assets and financial liabilities (continued)
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of December 31, 2020 and 2019 are as follows (continued):
(*1) The Group has certain derivative transactions subject to the ISDA (International Derivatives Swaps and Dealers Association) agreement. According to the ISDA agreement, when credit events (e.g. default) of counterparties occur, all derivative agreements are terminated and set off. At the time of termination, the parties to the transaction will offset the amount of payment or payment to each other, and one party will pay the other party a single amount will be paid to the other party.
(*2) Resale and repurchase agreement, securities borrowing and lending agreement are also similar to ISDA agreement with respect to enforceable netting agreements.
(*3) The Group has legally enforceable right to set off and settles financial assets and liabilities on a net basis under normal business terms. Therefore, domestic exchanges settlement receivables (payables) are recorded on a net basis in the consolidated statements of financial position.
(*4) It is an account that deals with bonds and liabilities based on the settlement of listed stocks traded in the market. The Group currently has a legally enforceable right to set off the recognized amounts and intends to settle on a net basis. Therefore, the net amount is presented in the consolidated statement of financial position. The offset amount of related bonds and liabilities based on the settlement of over-the-counter derivatives in-house payment by Central Clearing System is included.
(*5) As of December 31, 2020, the total amount of financial liabilities includes W 8,455,724 million (W 9,409,456 million as of December 31, 2019) of ELS (equity-linked securities) products and of DLS (derivative linked securities) products. In the course of this transaction, the Group has provided collateral for some transactions. The financial instruments provided as collateral of W 1,087,349 million (W 122,129 million as of December 31, 2019) are included in the related instruments not offset in the statement of financial position. The total amount of financial liabilities recognized as of December 31, 2020 is W 693,017 million for transactions with the other party with collective offset contracts or similar arrangements.
101
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
4. Financial risk management (continued)
(i) Capital risk management
The criteria for capital adequacy to be complied with by the Group are 8.0% or more of the total equity capital ratio, 6.0% or higher of the basic capital ratio, and 4.5% or more of the common stock capital ratio. In addition, the minimum regulatory BIS capital ratio, which should be maintained additionally to increase the ability to absorb losses, has been raised to up to 14% as the capital regulation based on the Basel III standard is enforced from 2016. This is based on the addition of capital conservation capital (2.5%p) and domestic system-critical banks (D-SIB) capital (1.0%p) and economic response capital (2.5%p) to the existing lowest common equity capital ratio, and economic response capital can be charged up to 2.5%p during credit expansion period. As of December 31, 2020, the minimum regulatory BIS capital ratio to be observed is 11.5%, which is the standard for applying capital conservation capital (2.5%p), D-SIB capital (1.0%p), and economic response capital (0%p).
Basel III capital ratio is the concept of 'International Agreement on the Measurement and Standards of Equity Capital' of the Basel Bank Supervisory Commission of BIS (International Settlement Bank). It is calculated as '(common stock capital (after deduction of deductions) + other basic capital + supplementary capital) ÷ risk weighted assets'.
The capital of common stock can be the first to make up for the loss of the financial holding company. The capital of common stock consists of capital stock, capital reserve, retained earnings and other, which will not be redeemed until the liquidation and will be redeemed at the last during the liquidation. Other basic capital consists of capital securities that meet certain requirements as capital of permanent nature. Complementary capital is capital that can compensate for losses of financial holding companies during liquidation, and consists of capital securities, etc. that meet certain requirements. The deduction items are those held by the Group as assets or capital items, but do not contribute to the ability to absorb losses. Unless otherwise noted, it will be deducted from common stock capital.
The capital ratio of the Group based on Basel III is as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Capital : |
|
|
|
|
Tier I common equity capital |
| 32,461,864 |
| 28,561,566 |
Additional tier 1 capital |
| 3,805,372 |
| 3,138,262 |
Tier I capital |
| 36,267,236 |
| 31,699,828 |
Tier II capital |
| 3,441,841 |
| 4,014,740 |
Total capital (A) |
| 39,709,077 |
| 35,714,568 |
|
|
|
|
|
Total risk-weighted assets (B) |
| 252,321,426 |
| 256,891,664 |
|
|
|
|
|
Capital adequacy ratio (A/B) |
| 15.74% |
| 13.90% |
Tier I capital adequacy ratio |
| 14.37% |
| 12.34% |
Common stock ratio |
| 12.87% |
| 11.12% |
(*) As of December 31, 2020, the Group has maintained an appropriate consolidated equity capital ratio according to the BIS equity capital regulation.
102
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
5. Significant estimates and judgments
The preparation of financial statements requires the Group to make estimates and assumptions concerning the future. Management also needs to exercise judgment in applying the Group’s accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the related actual results, it can contain a significant risk of causing a material adjustment. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Estimation of impairment of goodwill
The Group reviews the goodwill annually in accordance with the accounting policy in Note 3. The recoverable amount of the cash-generating unit (group) is determined based on the value-in-use calculation. These calculations are based on estimates.
(b) Income taxes
The Group is subject to tax laws from various countries. In the normal course of business, there are various types of transactions and different accounting methods that may add uncertainties to the decision of the final income taxes. The Group has recognized current and deferred taxes that reflect tax consequences based on the best estimates in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. However, actual income taxes in the future may not be identical to the recognized deferred tax assets and liabilities, and this difference can affect current and deferred tax at the period when the final tax effect is determined.
(c) Fair value of financial instruments
The fair values of financial instruments (e.g. over-the-counter derivatives) which are not actively traded in the market are determined by using valuation techniques. The Group determines valuation techniques and assumptions based on significant market conditions at the end of each reporting period. Diverse valuation techniques are used to determine the fair value of financial instruments, from generic valuation techniques to internally developed valuation models that incorporate various types of assumptions and variables.
(d) Allowance for credit loss, guarantees and unused loan commitments
The Group determines and recognizes allowances for losses on debt securities, loans and other receivables measured at amortized cost or FVOCI, and recognizes provisions for guarantees and unused loan commitments through impairment testing. The accuracy of allowances and provisions for credit losses are determined by the estimation of expected cash flows for individually assessed allowances, and methodology and assumptions used for collectively assessed allowances and provisions for groups of loans, guarantees and unused loan commitments.
(e) Defined benefit obligation
The present value of a defined benefit obligation that is measured by actuarial valuation methods uses various assumptions which can change according to various elements. The assumptions used to determine the net cost (profit) of an annuity include a discount rate, and these changes will affect the carrying amount of the defined benefit obligation. The Group is deciding the appropriate discount rate for each half year. The discount rate represents the interest rate that should be used to determine the present value of the estimated future cash outflow expected to occur in settlement of the defined benefit obligation. The Group determines the appropriate discount rate by considering the interest rate of blue-chip corporate bonds that are denominated in the currency in which the pension is paid and have a maturity similar to the period of the associated defined benefit obligation. Other significant assumptions related to defined benefit obligations are based on current market situations.
103
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
5. Significant estimates and judgments (continued)
(f) Hedging relationship
The Group expects a high risk hedging effect throughout the hedging period in designating the hedging relationship and it is probable that the hedged transaction will be highly probable in the cash flow hedge.
6. Investment in subsidiaries
(a) The summarized financial information of the controlling company and the Group’s major subsidiaries as of December 31, 2020 and 2019 is as follows:
|
| December 31, 2020 |
| December 31, 2019 | ||||||||
Investees(*1)(*2) |
| Asset balance |
|
Liability balance |
| Equity balance |
| Asset balance |
|
Liability balance |
| Equity balance |
Shinhan Financial Group(separate) |
| 35,483,914 |
| 10,426,817 |
| 25,057,097 |
| 32,261,322 |
| 9,795,896 |
| 22,465,426 |
Shinhan Bank |
| 427,675,103 |
| 400,009,589 |
| 27,665,514 |
| 392,723,044 |
| 366,629,929 |
| 26,093,115 |
Shinhan Card Co., Ltd. |
| 34,885,223 |
| 28,465,675 |
| 6,419,548 |
| 32,917,910 |
| 26,769,044 |
| 6,148,866 |
Shinhan Investment Corp. |
| 46,632,433 |
| 42,258,341 |
| 4,374,092 |
| 37,375,487 |
| 33,138,930 |
| 4,236,557 |
Shinhan Life Insurance Co., Ltd. |
| 36,777,496 |
| 34,232,052 |
| 2,545,444 |
| 34,133,649 |
| 32,062,490 |
| 2,071,159 |
Orange Life Insurance Co., Ltd. |
| 33,813,587 |
| 30,574,073 |
| 3,239,514 |
| 32,841,359 |
| 29,654,711 |
| 3,186,648 |
Shinhan Capital Co., Ltd. |
| 8,901,349 |
| 7,710,010 |
| 1,191,339 |
| 7,566,428 |
| 6,612,519 |
| 953,909 |
Jeju Bank |
| 6,531,838 |
| 6,022,397 |
| 509,441 |
| 6,192,927 |
| 5,695,223 |
| 497,704 |
Shinhan Credit Information Co., Ltd. |
| 27,806 |
| 10,826 |
| 16,980 |
| 25,292 |
| 10,044 |
| 15,248 |
Shinhan Alternative Investment Management Inc. |
| 87,053 |
| 71,591 |
| 15,462 |
| 87,694 |
| 75,665 |
| 12,029 |
Shinhan BNP Paribas Asset Management Co., Ltd. |
| 191,127 |
| 20,530 |
| 170,597 |
| 184,203 |
| 19,678 |
| 164,525 |
SHC Management Co., Ltd. |
| 9,644 |
| - |
| 9,644 |
| 9,639 |
| - |
| 9,639 |
Shinhan DS |
| 95,150 |
| 70,916 |
| 24,234 |
| 89,141 |
| 67,954 |
| 21,187 |
Shinhan Savings Bank |
| 1,842,231 |
| 1,635,433 |
| 206,798 |
| 1,602,902 |
| 1,418,317 |
| 184,585 |
Asia Trust Co., Ltd. |
| 259,899 |
| 85,274 |
| 174,625 |
| 172,793 |
| 43,933 |
| 128,860 |
Shinhan AITAS Co., Ltd. |
| 87,378 |
| 12,159 |
| 75,219 |
| 77,086 |
| 10,962 |
| 66,124 |
Shinhan REITs Management Co., Ltd. |
| 52,555 |
| 8,582 |
| 43,973 |
| 45,832 |
| 5,619 |
| 40,213 |
Shinhan AI Co., Ltd. |
| 42,903 |
| 1,890 |
| 41,013 |
| 42,402 |
| 1,674 |
| 40,728 |
Neoplux Co., Ltd. |
| 72,550 |
| 12,697 |
| 59,853 |
| - |
| - |
| - |
(*1) The consolidated financial statements of the consolidated subsidiaries are based on consolidated financial statements, if applicable.
(*2) Trusts, beneficiary certificates, securitization special limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.
104
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
6. Investment in subsidiaries (continued)
(b) The summarized income information of the controlling company and the Group’s major subsidiaries for the years ended December 31, 2020 and 2019 is as follows:
|
| December 31, 2020 |
| December 31, 2019 | ||||||||
Investees(*1)(*2) |
| Operating Revenue |
| Net Income |
| Comprehensive Income |
| Operating Revenue |
| Net Income |
| Comprehensive Income |
Shinhan Financial Group (separate) |
| 1,718,407 |
| 1,274,443 |
| 1,274,892 |
| 1,480,030 |
| 1,129,173 |
| 1,127,202 |
Shinhan Bank |
| 25,049,392 |
| 2,078,232 |
| 1,911,575 |
| 23,145,476 |
| 2,329,268 |
| 2,527,665 |
Shinhan Card Co., Ltd. |
| 4,091,178 |
| 606,554 |
| 599,451 |
| 3,892,257 |
| 509,032 |
| 486,114 |
Shinhan Investment Corp. |
| 9,290,965 |
| 154,531 |
| 147,210 |
| 6,139,926 |
| 220,764 |
| 225,963 |
Shinhan Life Insurance Co., Ltd. |
| 5,405,933 |
| 177,834 |
| 227,596 |
| 5,413,175 |
| 123,870 |
| 326,783 |
Orange Life Insurance Co., Ltd.(*3) |
| 4,456,340 |
| 279,282 |
| 132,425 |
| 4,662,085 |
| 271,455 |
| 433,510 |
Shinhan Capital Co., Ltd. |
| 626,455 |
| 160,583 |
| 162,134 |
| 455,246 |
| 126,050 |
| 123,032 |
Jeju Bank |
| 214,615 |
| 17,521 |
| 16,557 |
| 239,732 |
| 27,934 |
| 30,519 |
Shinhan Credit Information Co., Ltd. |
| 42,658 |
| 1,493 |
| 1,650 |
| 38,648 |
| 507 |
| 658 |
Shinhan Alternative Investment Management Inc. |
| 17,219 |
| 3,433 |
| 3,433 |
| 32,401 |
| 2,144 |
| 2,144 |
Shinhan BNP Paribas Asset Management Co., Ltd. |
| 88,870 |
| 26,663 |
| 26,663 |
| 84,256 |
| 23,090 |
| 22,655 |
SHC Management Co., Ltd. |
| 70 |
| 5 |
| 5 |
| 154 |
| 82 |
| 82 |
Shinhan DS |
| 164,327 |
| 1,862 |
| 2,845 |
| 138,697 |
| 2,074 |
| 1,292 |
Shinhan Savings Bank |
| 123,590 |
| 26,953 |
| 26,888 |
| 116,849 |
| 23,122 |
| 22,972 |
Asia Trust Co., Ltd.(*3) |
| 102,816 |
| 45,791 |
| 45,765 |
| 54,920 |
| 18,098 |
| 18,128 |
Shinhan AITAS Co., Ltd. |
| 58,599 |
| 13,020 |
| 12,954 |
| 51,823 |
| 10,821 |
| 10,821 |
Shinhan REITs Management Co., Ltd. |
| 12,176 |
| 3,764 |
| 3,764 |
| 7,342 |
| 7,414 |
| 7,411 |
Shinhan AI Co., Ltd. |
| 10,246 |
| 304 |
| 284 |
| 3,088 |
| (654) |
| (654) |
Neoplux Co., Ltd.(*3) |
| 3,500 |
| (1,146) |
| (1,015) |
| - |
| - |
| - |
(*1) The consolidated financial statements of the consolidated subsidiaries are based on consolidated financial statements, if applicable.
(*2) Trusts, beneficiary certificates, securitization special limited liability companies, associates and private equity investment specialists that are not actually operating their own business are excluded.
(*3) For the acquired company, the amount is from the consolidated statements of comprehensive income for the period after the acquisition point.
105
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
6. Investment in subsidiaries (continued)
(c) Change in the scope of consolidation
i) Change in consolidated subsidiaries for the year ended December 31, 2020 are as follows:
|
| Company |
| Description |
Included |
| Neoplux Co., Ltd. |
| Newly acquired subsidiary |
Included |
| SBJDNX |
| Newly invested subsidiary |
Included |
| Shinhan Financial Plus |
| Newly invested subsidiary |
Excluded |
| Shinhan Asia Ltd. |
| Liquidation |
(*) Subsidiaries such as trust, beneficiary certificate, corporate restructuring fund and private equity fund which are not actually operating their own business are excluded.
ii) Change in consolidated subsidiaries for the year ended December 31, 2019 are as follows:
|
| Company |
| Description |
Included |
| Orange Life Insurance Co., Ltd. |
| Newly acquired subsidiary |
| Asia Trust Co., Ltd. |
| Newly acquired subsidiary | |
| Prudential Vietnam Finance |
| Newly acquired subsidiary | |
| Shinhan AI Co., Ltd. |
| Newly invested subsidiary |
(*) Subsidiaries such as trust, beneficiary certificate, corporate restructuring fund and private equity fund which
are not actually operating their own business are excluded.
106
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
7. Operating segments
(a) Segment information
The general descriptions by operating segments as of December 31, 2020 are as follows:
Segment |
| Description |
|
|
|
Banking
|
| Credit to customers, lending to and receiving deposits from customers, and their accompanying work |
Credit card |
| Sales of credit cards, cash services, card loan services and their accompanying work |
Securities |
| Securities trading, consignment trading, underwriting and their accompanying work |
Life insurance |
| Life insurance business and its accompanying work |
Others |
| Business segments that do not belong to the above segments, such as leasing, rental, collection of bonds, assets management and other remaining business |
107
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
7. Operating segments (continued)
(b) The following tables provide information of income and expense for each operating segment for the years ended December 31, 2020 and 2019:
|
| December 31, 2020 | ||||||||||||
|
| Banking |
| Credit card |
| Securities |
| Life insurance |
| Others |
| Consolidation adjustment |
| Total |
Net interest income |
| 6,037,632 |
| 1,755,039 |
| 517,044 |
| 1,608,953 |
| 166,622 |
| (202,590) |
| 9,882,700 |
Net fees and commission income |
| 822,408 |
| 483,486 |
| 544,183 |
| 162,284 |
| 368,350 |
| 2,222 |
| 2,382,933 |
Reversal of (provision for) allowance for credit loss (“ACL”) |
| (690,084) |
| (483,883) |
| (111,796) |
| (12,236) |
| (85,951) |
| 1,771 |
| (1,382,179) |
General and administrative expenses |
| (3,237,641) |
| (698,796) |
| (565,485) |
| (463,439) |
| (372,591) |
| 125,479 |
| (5,212,473) |
Other income (expense), net |
| (130,488) |
| (169,304) |
| (11,348) |
| (727,530) |
| 260,873 |
| 36,552 |
| (741,245) |
Operating income |
| 2,801,827 |
| 886,542 |
| 372,598 |
| 568,032 |
| 337,303 |
| (36,566) |
| 4,929,736 |
Equity method income (loss) |
| (811) |
| - |
| 37,760 |
| (1,244) |
| 29,644 |
| 94,184 |
| 159,533 |
Income tax expense |
| 673,972 |
| 251,357 |
| 48,464 |
| 156,698 |
| 94,094 |
| 31,210 |
| 1,255,795 |
Profit for the year |
| 1,999,002 |
| 703,305 |
| 154,531 |
| 457,116 |
| 273,575 |
| (89,453) |
| 3,498,076 |
Controlling interest |
| 1,998,563 |
| 703,204 |
| 154,772 |
| 457,116 |
| 273,575 |
| (172,635) |
| 3,414,595 |
Non-controlling interests |
| 439 |
| 101 |
| (241) |
| - |
| - |
| 83,182 |
| 83,481 |
|
| December 31, 2019 | ||||||||||||
|
| Banking |
| Credit card |
| Securities |
| Life insurance |
| Others |
| Consolidation adjustment |
| Total |
Net interest income |
| 5,989,462 |
| 1,753,966 |
| 457,852 |
| 1,647,795 |
| 127,564 |
| (238,675) |
| 9,737,964 |
Net fees and commission income |
| 950,389 |
| 403,259 |
| 351,303 |
| 167,324 |
| 272,244 |
| (4,000) |
| 2,140,519 |
Reversal of (provision for) allowance for credit loss (“ACL”) |
| (389,004) |
| (566,415) |
| 1,325 |
| (797) |
| (25,030) |
| (771) |
| (980,692) |
General and administrative expenses |
| (3,177,158) |
| (745,848) |
| (511,418) |
| (443,013) |
| (335,090) |
| 77,853 |
| (5,134,674) |
Other income (expense), net |
| (211,882) |
| (33,204) |
| (59,006) |
| (786,103) |
| 129,272 |
| 244,056 |
| (716,867) |
Operating income |
| 3,161,807 |
| 811,758 |
| 240,056 |
| 585,206 |
| 168,960 |
| 78,463 |
| 5,046,250 |
Equity method income (loss) |
| (764) |
| - |
| 18,163 |
| (1,296) |
| 12,265 |
| 24,919 |
| 53,287 |
Income tax expense |
| 718,650 |
| 205,863 |
| 68,311 |
| 187,608 |
| 73,213 |
| 15,479 |
| 1,269,124 |
Profit for the year |
| 2,256,652 |
| 609,582 |
| 220,764 |
| 395,325 |
| 100,259 |
| 59,802 |
| 3,642,384 |
Controlling interest |
| 2,256,576 |
| 609,350 |
| 220,850 |
| 395,325 |
| 100,259 |
| (178,863) |
| 3,403,497 |
Non-controlling interests |
| 76 |
| 232 |
| (86) |
| - |
| - |
| 238,665 |
| 238,887 |
108
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
7. Operating segments (continued)
(c) Interest gains and losses from segment external customers and cross-sector interest gains and losses for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||
|
| Banking |
| Credit card |
| Securities |
| Life insurance |
| Others |
| Consolidation adjustment(*) |
| Total |
Net interest income from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers (*) |
| 6,037,205 |
| 1,809,149 |
| 526,167 |
| 1,605,575 |
| 114,290 |
| (209,686) |
| 9,882,700 |
Internal transactions |
| 427 |
| (54,110) |
| (9,123) |
| 3,378 |
| 52,332 |
| 7,096 |
| - |
|
| 6,037,632 |
| 1,755,039 |
| 517,044 |
| 1,608,953 |
| 166,622 |
| (202,590) |
| 9,882,700 |
(*) The consolidated adjustment amount for interest income from external customers is the amount that occurs as a result of fair value evaluation of securities, etc., when processing business combination accounting.
|
| December 31, 2019 | ||||||||||||
|
| Banking |
| Credit card |
| Securities |
| Life insurance |
| Others |
| Consolidation adjustment(*) |
| Total |
Net interest income from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers (*) |
| 5,995,097 |
| 1,781,266 |
| 450,268 |
| 1,647,988 |
| 103,161 |
| (239,816) |
| 9,737,964 |
Internal transactions |
| (5,635) |
| (27,300) |
| 7,584 |
| (193) |
| 24,403 |
| 1,141 |
| - |
|
| 5,989,462 |
| 1,753,966 |
| 457,852 |
| 1,647,795 |
| 127,564 |
| (238,675) |
| 9,737,964 |
(*) The consolidated adjustment amount for interest income from external customers is the amount that occurs as a result of fair value evaluation of securities, etc., when processing business combination accounting.
(d) The following tables provide information of net fees and commission income (expense) of each operating segment for the years ended December 31, 2020 and 2019.
|
| December 31, 2020 | ||||||||||||
|
| Banking |
| Credit card |
| Securities |
| Life insurance |
| Others |
| Consolidation adjustment |
| Total |
Net fees and commission income from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers |
| 859,225 |
| 531,394 |
| 553,308 |
| 173,865 |
| 265,141 |
| - |
| 2,382,933 |
Internal transactions |
| (36,817) |
| (47,908) |
| (9,125) |
| (11,581) |
| 103,209 |
| 2,222 |
| - |
|
| 822,408 |
| 483,486 |
| 544,183 |
| 162,284 |
| 368,350 |
| 2,222 |
| 2,382,933 |
|
| December 31, 2019 | ||||||||||||
|
| Banking |
| Credit card |
| Securities |
| Life insurance |
| Others |
| Consolidation adjustment |
| Total |
Net fees and commission income from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers |
| 974,636 |
| 436,523 |
| 361,526 |
| 175,171 |
| 192,663 |
| - |
| 2,140,519 |
Internal transactions |
| (24,247) |
| (33,264) |
| (10,223) |
| (7,847) |
| 79,581 |
| (4,000) |
| - |
|
| 950,389 |
| 403,259 |
| 351,303 |
| 167,324 |
| 272,244 |
| (4,000) |
| 2,140,519 |
109
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
7. Operating segments (continued)
(e) Financial information of geographical area
The following table provides information of income from external consumers by geographical area for the years ended December 31, 2020 and 2019.
|
| December 31, 2020 |
| December 31, 2019 |
Domestic |
| 4,436,252 |
| 4,378,239 |
Overseas |
| 493,484 |
| 668,011 |
|
| 4,929,736 |
| 5,046,250 |
The following table provides information of non-current assets by geographical area as of December 31, 2020 and 2019.
|
| December 31, 2020 |
| December 31, 2019 |
Domestic |
| 9,734,468 |
| 9,816,600 |
Overseas |
| 351,083 |
| 314,052 |
|
| 10,085,551 |
| 10,130,652 |
(*) Non-current assets comprise property and equipment, intangible assets and investment properties.
110
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
8. Cash and due from banks at amortized cost
(a) Cash and due from banks at amortized cost as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Cash and cash equivalents |
|
|
|
|
Cash |
| 1,782,301 |
| 2,573,579 |
Cash equivalents |
| 22,979 |
| 9,307 |
|
| 1,805,280 |
| 2,582,886 |
Deposits in won: |
|
|
|
|
Reserve deposits |
| 16,957,521 |
| 13,840,988 |
Time deposits |
| 950,624 |
| 1,413,964 |
Other |
| 3,953,337 |
| 1,890,541 |
|
| 21,861,482 |
| 17,145,493 |
Deposits in foreign currency: |
|
|
|
|
Deposits |
| 5,576,206 |
| 5,616,049 |
Time deposits |
| 2,721,849 |
| 2,393,885 |
Other |
| 1,455,732 |
| 697,505 |
|
| 9,753,787 |
| 8,707,439 |
|
|
|
|
|
Allowance for credit losses |
| (10,007) |
| (12,074) |
|
| 33,410,542 |
| 28,423,744 |
(b) Restricted due from banks at amortized cost as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
| Related Regulations or Acts |
Deposits denominated in Korean won: |
|
|
|
|
|
|
Reserve deposits |
| 16,957,521 |
| 13,840,988 |
| Article 55 of the Bank of Korea Act |
Other |
| 2,390,761 |
| 1,081,698 |
| Article 28 and 70 of the Bank of Korea Act, Article 74 of the Capital Markets and Financial Investment Business Act, etc. |
|
| 19,348,282 |
| 14,922,686 |
|
|
|
|
|
|
|
|
|
Deposits denominated in foreign currency |
| 2,621,129 |
|
1,584,239 |
| Article of the Bank of Korea Act, New York State Banking Act, derivatives, etc. |
|
| 21,969,411 |
| 16,506,925 |
|
|
111
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
9. Financial assets at fair value through profit or loss
(a) Financial assets at fair value through profit or loss as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Debt instruments: |
|
|
|
|
Governments |
| 4,248,448 |
| 2,873,419 |
Financial institutions |
| 13,997,922 |
| 12,711,074 |
Corporations |
| 9,356,842 |
| 8,541,514 |
Stocks with put option |
| 583,590 |
| 598,858 |
Equity investment with put option |
| 1,860,195 |
| 1,458,933 |
Beneficiary certificates |
| 12,451,709 |
| 10,678,620 |
Commercial papers |
| 6,369,854 |
| 5,160,063 |
CMA |
| 2,806,485 |
| 3,723,401 |
Others(*) |
| 3,411,647 |
| 2,655,260 |
|
| 55,086,692 |
| 48,401,142 |
|
|
|
|
|
Equity instruments: |
|
|
|
|
Stocks |
| 1,627,020 |
| 1,488,743 |
Equity investment |
| 1,697 |
| - |
Others |
| 107,742 |
| 109,197 |
|
| 1,736,459 |
| 1,597,940 |
|
| 56,823,151 |
| 49,999,082 |
Other: |
|
|
|
|
Loans at fair value |
| 2,016,801 |
| 2,154,821 |
Due from banks at fair value |
| 63,112 |
| 897,525 |
Gold/silver deposits |
| 188,339 |
| 111,715 |
|
| 59,091,403 |
| 53,163,143 |
(*) As of December 31, 2020 and 2019, restricted reserve for claims of customers’ deposits (trusts) are W1,907,210 million and W 1,103,050 million, respectively.
112
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
9. Financial assets at fair value through profit or loss (continued)
(b) Financial assets to which overlay approach are applied in accordance with K-IFRS No. 1109 ‘Financial Instruments’ and K-IFRS No. 1104 ‘Insurance Contracts’ as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
|
|
|
|
|
Due from banks at fair value through profit or loss |
| 63,112 |
| 897,525 |
Securities at fair value through profit or loss |
| 4,865,908 |
| 5,139,380 |
|
| 4,929,020 |
| 6,036,905 |
A financial asset is eligible for designation for the overlay approach, if it is measured at fair value through profit or loss applying K-IFRS No. 1109 but would not have been measured at fair value through profit or loss in its entirety applying K-IFRS No. 1039; and it is not held in respect of an activity that is not associated with contracts within the scope of K-IFRS No. 1104.
The reclassified amounts between profit or loss and other comprehensive income due to the overlay approach as of and for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Profit or loss |
| Other comprehensive income(*) | ||||
|
| By K-IFRS No. 1109 |
| By K-IFRS No. 1039 |
| Amount |
| Tax effect |
Net gain (loss) on valuation of financial assets at fair value through profit or loss |
| 123,808 |
| (21,488) |
| 145,296 |
| (39,140) |
Net gain (loss) on disposal of financial assets at fair value through profit or loss |
| 53,806 |
| 62,926 |
| (9,120) |
| 4,086 |
Net gain (loss) on foreign currency conversion of financial assets at fair value through profit or loss |
| 74 |
| - |
| 74 |
| (20) |
|
| 177,688 |
| 41,438 |
| 136,250 |
| (35,074) |
(*) The amount of the policyholders equity adjustment for the reclassification of other comprehensive income is W(10,878) million.
|
| December 31, 2019 | ||||||
|
| Profit or loss |
| Other comprehensive income(*) | ||||
|
| By K-IFRS No. 1109 |
| By K-IFRS No. 1039 |
| Amount |
| Tax effect |
Net gain (loss) on valuation of financial assets at fair value through profit or loss |
| 150,865 |
| (74,586) |
| 225,451 |
| (50,042) |
Net gain (loss) on disposal of financial assets at fair value through profit or loss |
| 65,627 |
| 43,493 |
| 22,134 |
| (4,672) |
|
| 216,492 |
| (31,093) |
| 247,585 |
| (54,714) |
113
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives
(a) The notional amounts of derivatives outstanding as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Foreign currency related: |
|
|
|
|
Over the counter: |
|
|
|
|
Currency forwards |
| 117,566,233 |
| 137,383,704 |
Currency swaps |
| 33,562,251 |
| 40,826,444 |
Currency options |
| 2,501,983 |
| 2,758,801 |
|
| 153,630,467 |
| 180,968,949 |
Exchange traded: |
|
|
|
|
Currency futures |
| 1,102,534 |
| 1,045,138 |
|
| 154,733,001 |
| 182,014,087 |
Interest rates related: |
|
|
|
|
Over the counter: |
|
|
|
|
Interest rate swaps |
| 36,205,843 |
| 37,801,528 |
Interest rate options |
| 324,238 |
| 286,000 |
|
| 36,530,081 |
| 38,087,528 |
Exchange traded: |
|
|
|
|
Interest rate futures |
| 2,465,374 |
| 2,455,450 |
Interest rate swaps(*) |
| 68,475,400 |
| 65,868,540 |
|
| 70,940,774 |
| 68,323,990 |
|
| 107,470,855 |
| 106,411,518 |
Credit related: |
|
|
|
|
Over the counter: |
|
|
|
|
Credit swaps |
| 4,536,626 |
| 5,404,257 |
|
|
|
|
|
Equity related: |
|
|
|
|
Over the counter: |
|
|
|
|
Equity swaps and forwards |
| 2,628,661 |
| 4,255,831 |
Equity options |
| 508,686 |
| 864,038 |
|
| 3,137,347 |
| 5,119,869 |
Exchange traded: |
|
|
|
|
Equity futures |
| 1,638,126 |
| 876,220 |
Equity options |
| 4,277,882 |
| 4,039,226 |
|
| 5,916,008 |
| 4,915,446 |
|
| 9,053,355 |
| 10,035,315 |
Commodity related: |
|
|
|
|
Over the counter: |
|
|
|
|
Commodity swaps and forwards |
| 537,351 |
| 758,533 |
Exchange traded: |
|
|
|
|
Commodity futures and options |
| 263,460 |
| 344,329 |
|
| 800,811 |
| 1,102,862 |
Hedge: |
|
|
|
|
Currency forwards |
| 1,281,945 |
| 1,869,518 |
Currency swaps |
| 4,328,333 |
| 4,532,114 |
Interest rate swaps |
| 7,844,392 |
| 10,091,632 |
|
| 13,454,670 |
| 16,493,264 |
|
| 290,049,318 |
| 321,461,303 |
(*) The notional amounts of derivatives outstanding those will be settled in the ‘Central Counter Party (CCP)’ system.
114
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(b) Fair values of derivative instruments as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 | ||||
|
| Assets |
| Liabilities |
| Assets |
| Liabilities |
Foreign currency related: |
|
|
|
|
|
|
|
|
Over the counter: |
|
|
|
|
|
|
|
|
Currency forwards |
| 3,135,319 |
| 3,021,258 |
| 1,360,384 |
| 1,056,760 |
Currency swaps |
| 1,145,619 |
| 979,022 |
| 473,797 |
| 519,445 |
Currency options |
| 33,253 |
| 31,871 |
| 9,007 |
| 9,430 |
|
| 4,314,191 |
| 4,032,151 |
| 1,843,188 |
| 1,585,635 |
Exchange traded: |
|
|
|
|
|
|
|
|
Currency futures |
| 90 |
| 186 |
| - |
| - |
|
| 4,314,281 |
| 4,032,337 |
| 1,843,188 |
| 1,585,635 |
Interest rates related: |
|
|
|
|
|
|
|
|
Over the counter: |
|
|
|
|
|
|
|
|
Interest rate swaps |
| 311,403 |
| 363,297 |
| 260,020 |
| 247,723 |
Interest rate options |
| 2,148 |
| 2,217 |
| 835 |
| 5,626 |
|
| 313,551 |
| 365,514 |
| 260,855 |
| 253,349 |
Exchange traded: |
|
|
|
|
|
|
|
|
Interest rate futures |
| 900 |
| 422 |
| 697 |
| 595 |
|
| 314,451 |
| 365,936 |
| 261,552 |
| 253,944 |
Credit related: |
|
|
|
|
|
|
|
|
Over the counter: |
|
|
|
|
|
|
|
|
Credit swaps |
| 273,578 |
| 29,682 |
| 283,015 |
| 38,598 |
|
|
|
|
|
|
|
|
|
Equity related: |
|
|
|
|
|
|
|
|
Over the counter: |
|
|
|
|
|
|
|
|
Equity swap and forwards |
| 122,034 |
| 48,218 |
| 144,276 |
| 39,422 |
Equity options |
| 2,750 |
| 9,840 |
| 4,526 |
| 9,402 |
|
| 124,784 |
| 58,058 |
| 148,802 |
| 48,824 |
Exchange traded: |
|
|
|
|
|
|
|
|
Equity futures |
| 34,816 |
| 7,711 |
| 4,318 |
| 6,417 |
Equity options |
| 77,973 |
| 153,461 |
| 28,355 |
| 29,741 |
|
| 112,789 |
| 161,172 |
| 32,673 |
| 36,158 |
|
| 237,573 |
| 219,230 |
| 181,475 |
| 84,982 |
Commodity related: |
|
|
|
|
|
|
|
|
Over the counter: |
|
|
|
|
|
|
|
|
Commodity swaps and forwards |
| 5,949 |
| 32,693 |
| 14,496 |
| 27,745 |
Exchange traded: |
|
|
|
|
|
|
|
|
Commodity futures and options |
| 11,580 |
| 186 |
| 2,342 |
| 10,100 |
|
| 17,529 |
| 32,879 |
| 16,838 |
| 37,845 |
Hedge: |
|
|
|
|
|
|
|
|
Currency forwards |
| 91,747 |
| 10,507 |
| 14,380 |
| 21,121 |
Currency swaps |
| 65,256 |
| 186,150 |
| 74,240 |
| 48,396 |
Interest rate forwards and swaps |
| 319,500 |
| 139,846 |
| 154,586 |
| 232,491 |
|
| 476,503 |
| 336,503 |
| 243,206 |
| 302,008 |
|
| 5,633,915 |
| 5,016,567 |
| 2,829,274 |
| 2,303,012 |
115
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(c) Gain or loss on valuation of derivatives for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Foreign currency related: |
|
|
|
|
Over the counter: |
|
|
|
|
Currency forwards |
| (108,854) |
| 174,340 |
Currency swaps |
| 210,072 |
| (24,827) |
Currency options |
| 4,979 |
| 4,056 |
|
| 106,197 |
| 153,569 |
Exchange traded: |
|
|
|
|
Currency futures |
| (96) |
| - |
|
| 106,101 |
| 153,569 |
Interest rates related: |
|
|
|
|
Over the counter: |
|
|
|
|
Interest rate swaps |
| (73,926) |
| (75,349) |
Interest rate options |
| (372) |
| (1,938) |
|
| (74,298) |
| (77,287) |
Exchange traded: |
|
|
|
|
Interest rate futures |
| 4,236 |
| 1,008 |
|
| (70,062) |
| (76,279) |
Credit related: |
|
|
|
|
Over the counter: |
|
|
|
|
Credit swaps |
| 7,255 |
| 213,754 |
|
|
|
|
|
Equity related: |
|
|
|
|
Over the counter: |
|
|
|
|
Equity swap and forwards |
| (15,979) |
| 46,770 |
Equity options |
| (2,082) |
| (841) |
|
| (18,061) |
| 45,929 |
Exchange traded: |
|
|
|
|
Equity futures |
| 26,305 |
| (2,275) |
Equity options |
| 196,288 |
| 58,721 |
|
| 222,593 |
| 56,446 |
|
| 204,532 |
| 102,375 |
Commodity related: |
|
|
|
|
Over the counter: |
|
|
|
|
Commodity swaps and forwards |
| (13,519) |
| 3,191 |
Commodity options |
| - |
| 29 |
|
| (13,519) |
| 3,220 |
Exchange traded: |
|
|
|
|
Commodity futures and options |
| 11,374 |
| (7,759) |
|
| (2,145) |
| (4,539) |
|
|
|
|
|
Hedge |
| 120,700 |
| 332,778 |
|
| 366,381 |
| 721,658 |
116
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(d) Impact of hedge accounting on the consolidated financial statements
i) Gains(losses) on fair value hedged items and hedging instruments attributable to the hedged ineffectiveness for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Gains (losses) on fair value hedges (hedged items) |
| Gains (losses) on fair value hedges (hedging instruments) |
| Hedge ineffectiveness recognized in profit or loss (*2) |
Fair value hedges: |
|
|
|
|
|
|
Interest rate swaps(*1) |
| (228,266) |
| 233,008 |
| 4,742 |
Foreign exchange risk(*1) |
| (21,336) |
| 12,071 |
| (9,265) |
|
| (249,602) |
| 245,079 |
| (4,523) |
|
| December 31, 2019 | ||||
|
| Gains (losses) on fair value hedges (hedged items) |
| Gains (losses) on fair value hedges (hedging instruments) |
| Hedge ineffectiveness recognized in profit or loss (*2) |
Fair value hedges: |
|
|
|
|
|
|
Interest rate swaps(*1) |
| (370,787) |
| 377,121 |
| 6,334 |
Foreign exchange risk(*1) |
| 13,725 |
| (18,786) |
| (5,061) |
|
| (357,062) |
| 358,335 |
| 1,273 |
(*1) The related account categories are presented as interest rate swap assets / liabilities and currency swap assets.
(*2) Ineffective portion of hedge: the difference between hedging instruments and hedged items.
|
| December 31, 2020 | ||||
|
| Gains (losses) on hedges recognized in other comprehensive income |
| Hedge ineffectiveness recognized in profit or loss(*2) |
| From cash flow hedge reserve to profit or loss Reclassified amount |
Cash flow hedges: |
|
|
|
|
|
|
Interest rate risk(*1) |
| (3,220) |
| (343) |
| - |
Foreign exchange risk(*1) |
| (16,693) |
| (6,539) |
| 26,405 |
Discontinuation of cash flow hedges |
| (45) |
| - |
| 45 |
Hedge of net investments: |
|
|
|
|
|
|
Foreign exchange risk(*1) |
| 44,049 |
| (2,134) |
| - |
|
| 24,091 |
| (9,016) |
| 26,450 |
ii) Due to the ineffectiveness of hedge of cash flow risk and hedge of net investment in foreign operations during the year, the amounts recognized in the income statement and other comprehensive income are as follows:
117
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(d) Impact of hedge accounting on the consolidated financial statements (continued)
ii) Due to the ineffectiveness of hedge of cash flow risk and hedge of net investment in foreign operations during the year, the amounts recognized in the income statement and other comprehensive income are as follows (continued):
|
| December 31, 2019 | ||||
|
| Gains (losses) on hedges recognized in other comprehensive income |
| Hedge ineffectiveness recognized in profit or loss (*2) |
| From cash flow hedge reserve to profit or loss Reclassified amount |
Cash flow hedges |
|
|
|
|
|
|
Interest rate risk(*1) |
| (11,126) |
| - |
| - |
Foreign exchange risk(*1) |
| 52,932 |
| (25,709) |
| (57,870) |
Discontinuation of cash flow hedges |
| (7,986) |
| - |
| 7,986 |
Hedge of net investments |
|
|
|
|
|
|
Foreign exchange risk(*1) |
| (49,463) |
| (2,327) |
| - |
|
| (15,643) |
| (28,036) |
| (49,884) |
(*1) The related account categories are presented as interest rate swap assets / liabilities and currency swap assets
/ liabilities, currency forwards assets / liabilities and borrowings.
(*2) Ineffective portion of hedge: The difference between hedging instruments and hedged items.
118
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity
i) Purpose and strategy of risk avoidance
The Group transacts with derivative financial instruments to hedge its interest rate risk and currency risk arising from the assets and liabilities of the Group. The Group applies the fair value hedge accounting for the changes in the market interest rates of the Korean won structured notes, foreign currency generated financial debentures, structured deposits in foreign currencies, foreign currency structured deposits and foreign currency investment receivables; and cash flow hedge accounting for interest rate swaps and currency swaps to hedge cash flow risk due to interest rates and foreign exchange rates of the Korean won debt, the Korean won bonds, foreign currency bonds, etc. In addition, in order to hedge the exchange rate risk of the net investment in overseas business, the Group applies the net investment hedge accounting for foreign operations using currency forward and non-derivative financial instruments.
ii) Nominal amounts and average hedge ratios for hedging instruments as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||
|
| Less than 1 year |
| 1~2 years |
| 2~3 years |
| 3~4 years |
| 4~5 years |
| More than 5 years |
| Total |
Interest risk: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal values: |
| 657,656 |
| 640,992 |
| 1,217,588 |
| 456,688 |
| 247,244 |
| 4,624,224 |
| 7,844,392 |
Average price condition(*1) |
| 1.12% |
| 0.88% |
| 1.30% |
| 0.98% |
| 0.67% |
| 0.38% |
| 0.67% |
Average hedge ratio: |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange risk:(*2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal values: |
| 2,340,409 |
| 1,448,787 |
| 1,734,593 |
| 457,199 |
| 575,527 |
| 250,014 |
| 6,806,529 |
Average hedge ratio: |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
(*1) Interest rate swaps consist of 3M CD, 3M USD Libor, 3M Euribor, and 3M AUD Bond.
(*2) The average exchange rates of net investment hedge instruments are USD/KRW 1,154.76, JPY/KRW 10.61, EUR/KRW 1,287.16, GBP/KRW 1,480.30, AUD/KRW 800.67, CAD/KRW 895.95, SGD/KRW 847.09, CNY/KRW 168.84, SEK/KRW 124.60
|
| December 31, 2019 | ||||||||||||
|
| Less than 1 year |
| 1~2 years |
| 2~3 years |
| 3~4 years |
| 4~5 years |
| More than 5 years |
| Total |
Interest risk: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal values: |
| 750,469 |
| 704,985 |
| 717,948 |
| 1,228,424 |
| 575,481 |
| 6,114,325 |
| 10,091,632 |
Average hedge ratio: |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange risk: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal values: |
| 3,651,118 |
| 1,075,886 |
| 1,269,520 |
| 968,770 |
| 84,275 |
| 534,898 |
| 7,584,467 |
Average hedge ratio: |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
| 100% |
119
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity (continued)
iii) Effect of derivatives on statement financial position, statement of comprehensive income, statement of changes in equity
|
|
| December 31, 2020 | ||||||
|
|
| Nominal amount |
| Carrying value of asset(*) |
| Carrying value of liabilities(*) |
| Changes if fair value in the period |
Fair value hedges |
|
|
|
|
|
|
|
|
|
Interest rate swap |
|
| 6,965,492 |
| 319,294 |
| 120,728 |
| 181,151 |
Currency swap |
|
| - |
| - |
| 67 |
| 985 |
Currency forward |
|
| 254,023 |
| 20,093 |
| 66 |
| 24,481 |
|
|
|
|
|
|
|
|
|
|
Cash flow hedge |
|
|
|
|
|
|
|
|
|
Interest rate swap |
|
| 878,900 |
| 206 |
| 19,118 |
| 3,303 |
Currency swap |
|
| 4,328,333 |
| 65,256 |
| 186,083 |
| (8,560) |
Currency forward |
|
| 810,322 |
| 60,473 |
| - |
| (4,181) |
|
|
|
|
|
|
|
|
|
|
Hedge of net investments in foreign operations |
|
|
|
|
|
|
|
|
|
Currency forward |
|
| 217,600 |
| 11,181 |
| 10,441 |
| (2,991) |
Borrowings |
|
| 1,196,252 |
| - |
| 1,193,269 |
| 44,907 |
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forward assets and liabilities.
|
|
| December 31, 2019 | ||||||
|
|
| Nominal amount |
| Carrying value of asset(*) |
| Carrying value of liabilities(*) |
| Changes if fair value in the period |
Fair value hedges |
|
|
|
|
|
|
|
|
|
Interest rate swap |
|
| 9,371,632 |
| 154,586 |
| 210,079 |
| 314,766 |
Currency swap |
|
| - |
| - |
| 248 |
| (1,813) |
Currency forward |
|
| 261,486 |
| 776 |
| 1,358 |
| (582) |
|
|
|
|
|
|
|
|
|
|
Cash flow hedge |
|
|
|
|
|
|
|
|
|
Interest rate swap |
|
| 720,000 |
| - |
| 22,412 |
| (11,126) |
Currency swap |
|
| 4,532,114 |
| 74,240 |
| 48,148 |
| (29,829) |
Currency forward |
|
| 1,376,472 |
| 11,854 |
| 19,763 |
| (4,426) |
|
|
|
|
|
|
|
|
|
|
Hedge of net investments in foreign operations |
|
|
|
|
|
|
|
|
|
Currency forward |
|
| 231,560 |
| 1,750 |
| - |
| (4,036) |
Borrowings |
|
| 1,182,835 |
| - |
| 1,177,897 |
| (47,755) |
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forward assets and liabilities.
120
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(e) Effect of hedge accounting on financial statement, statement of comprehensive income, statement of changes in equity (continued)
iv) Effect of hedging items on statement financial position, statement of comprehensive income, statement of changes in equity
|
| December 31, 2020 | ||||||||||||
|
| Carrying value of asset(*) |
| Carrying value of liabilities(*) |
| Assets of Cumulative fair value hedge adjustment |
| Liabilities of Cumulative fair value hedge adjustment |
| Changes if fair value in the year |
| Cash flow hedge reserve |
| Foreign currency conversion reserves |
Fair value hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and etc |
| 143,496 |
| 6,750,929 |
| 6,563 |
| 193,452 |
| (175,369) |
| - |
| - |
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities in foreign currency |
| 342,205 |
| - |
| - |
| - |
| (26,927) |
| - |
| - |
Cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures in won and debentures in foreign currency |
| 617,463 |
| 1,674,460 |
| - |
| - |
| 2,296 |
| 60,659 |
| - |
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures in foreign currency and loans in foreign currency |
| 3,264,740 |
| 2,962,041 |
| - |
| - |
| (58,557) |
| (32,001) |
| - |
Hedge of net investments in foreign operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets in foreign business establishment |
| - |
| - |
| - |
| - |
| 44,049 |
| - |
| (141,151) |
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forwards.
|
| December 31, 2019 | ||||||||||||
|
| Carrying value of asset(*) |
| Carrying value of liabilities(*) |
| Assets of Cumulative fair value hedge adjustment |
| Liabilities of Cumulative fair value hedge adjustment |
| Changes if fair value in the year |
| Cash flow hedge reserve |
| Foreign currency conversion reserves |
Fair value hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and etc |
| 432,172 |
| 8,859,022 |
| 4,846 |
| (56,292) |
| (308,463) |
| - |
| - |
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities in foreign currency |
| 306,638 |
| - |
| - |
| - |
| 1,671 |
| - |
| - |
Cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures in won and debentures in foreign currency |
| 645,723 |
| 1,740,000 |
| - |
| - |
| (11,126) |
| 80,674 |
| - |
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures in foreign currency and loans in foreign currency |
| 4,116,068 |
| 3,035,423 |
| - |
| - |
| 115,867 |
| (11,188) |
| - |
Hedge of net investments in foreign operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets in foreign business establishment |
| - |
| - |
| - |
| - |
| (49,463) |
| - |
| (88,953) |
(*) The related account categories are presented as interest rate swap assets / liabilities and currency forwards.
121
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
10. Derivatives (continued)
(f) Hedge relationships affected by an interest rate index
The revised Standard requires exceptions to the analysis of future information in relation to the application of hedge accounting, while uncertainty exists due to movements of the interest rate indicator reform. The exception assumes that when assessing whether the expected cash flows that comply with existing interest rate indicators are highly probable, whether there is an economic relationship between the hedged item and the hedging instrument, and whether there is a high hedge effectiveness between the hedged item and the hedging instrument, the interest rate indicators that are based on the hedged item do not change due to the effect of the interest rate index reform. The nominal amount of the hedging instrument related to the interest rate index exposed to the hedging relationship due to the Group's reform of the interest rate index as of December 31, 2020 is as follows:
Interest rate index |
| Nominal amount of hedge |
| Carrying amount of non-derivative financial assets |
| Carrying amount of non-derivative financial liabilities(*2) |
KRW 3M CD (*1) |
| - |
| 3,329,556 |
| 3,440,000 |
USD 1M LIBOR |
| - |
| 1,537,051 |
| 1,540,608 |
USD 3M LIBOR (*1) |
| 357,072 |
| 3,438,080 |
| 3,790,651 |
EUR 1M LIBOR |
| - |
| 264,074 |
| 264,450 |
EUR 3M LIBOR |
| - |
| 267,648 |
| 267,648 |
(*1) Include nominal amount of the hedging instrument related to the CMS(Constant Maturity Swap) calculated based on the CD and LIBOR rate.
(*2) Include the nominal amount that will mature before the end of 2022, the transition point of LIBOR.
From 2022, the USD LIBOR interest rate will be replaced by a Secured Overnight Financing Rate (SOFR) based on actual transactions, and the EUR LIBOR interest rate will be replaced by the next day's unsecured rate, Euro Short-Term Rate (ESTER). The Risk-Free Reference rate (RFR) is under development, and the RFR rate will be unveiled during the first half of 2021 in South Korea. The Group has assumed that in this hedging relationship, the spread changed on the basis of SOFR, ESTER and RFR in 2022 would be similar to the spread included in the interest rate swap and interest rate forward used as the hedging instrument. The Group does not assume any changes in other conditions. The Group is working on a project to convert contracts that refer to existing interest rate indicators into alternative indicators with the aim of minimizing business disruptions, mitigating operational risks and reducing possible financial losses.
122
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
11. Securities at fair value through other comprehensive income and securities at amortized cost
(a) Details of securities at FVOCI and securities at amortized cost as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Securities at FVOCI: |
|
|
|
|
Debt securities: |
|
|
|
|
Government bonds |
| 19,370,393 |
| 17,597,910 |
Financial institutions bonds |
| 20,053,716 |
| 21,527,242 |
Corporate bonds and others |
| 17,985,324 |
| 19,447,942 |
|
| 57,409,433 |
| 58,573,094 |
Equity securities(*): |
|
|
|
|
Stocks |
| 777,901 |
| 728,311 |
Equity investments |
| 4,445 |
| 5,356 |
Others |
| 124,333 |
| 74,292 |
|
| 906,679 |
| 807,959 |
|
| 58,316,112 |
| 59,381,053 |
Securities at amortized cost: |
|
|
|
|
Debt securities: |
|
|
|
|
Government bonds |
| 31,816,320 |
| 30,385,084 |
Financial institutions bonds |
| 3,835,577 |
| 4,770,204 |
Corporate bonds and others |
| 11,630,726 |
| 10,426,777 |
|
| 47,282,623 |
| 45,582,065 |
|
| 105,598,735 |
| 104,963,118 |
(*) Equity securities in the above table are classified as other comprehensive income - equity securities designated as fair value items, and other comprehensive income and fair value options are exercised for the purpose of holding as required by the policy.
123
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
11. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(b) Changes in carrying value of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||
|
| Securities at fair value through other comprehensive income |
| Securities at amortized cost | ||||||||
|
| 12-month expected credit loss |
| Life time expected credit loss |
| Total |
| 12-month expected credit loss |
| Life time expected credit loss |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning allowance |
| 58,334,000 |
| 239,094 |
| 58,573,094 |
| 45,568,563 |
| 23,272 |
| 45,591,835 |
Transfer to 12-month expected credit loss |
| 30,233 |
| (30,233) |
| - |
| - |
| - |
| - |
Transfer to life time expected credit loss |
| (83,132) |
| 83,132 |
| - |
| - |
| - |
| - |
Transfer to impaired financial asset |
| - |
| - |
| - |
| - |
| - |
| - |
Purchase |
| 52,637,678 |
| 19,675 |
| 52,657,353 |
| 7,645,000 |
| - |
| 7,645,000 |
Disposal |
| (34,969,744) |
| (21,247) |
| (34,990,991) |
| - |
| - |
| - |
Repayment |
| (17,610,988) |
| (12) |
| (17,611,000) |
| (5,900,311) |
| (23,272) |
| (5,923,583) |
Others (*) |
| (1,195,749) |
| (23,274) |
| (1,219,023) |
| (20,143) |
| - |
| (20,143) |
Ending balance |
| 57,142,298 |
| 267,135 |
| 57,409,433 |
| 47,293,109 |
| - |
| 47,293,109 |
(*) Included the effects from changes in foreign exchange rate, amortization of fair value adjustments recognized through business combination accountings.
124
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
11. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(b) Changes in carrying value of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||||
|
| Securities at fair value through other comprehensive income |
| Securities at amortized cost | ||||||||
|
| 12-month expected credit loss |
| Life time expected credit loss |
| Total |
| 12-month expected credit loss |
| Life time expected credit loss |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning allowance |
| 37,571,814 |
| 105,831 |
| 37,677,645 |
| 28,464,921 |
| 22,475 |
| 28,487,396 |
Transfer to 12-month expected credit loss |
| 34,555 |
| (34,555) |
| - |
| 20,198 |
| (20,198) |
| - |
Transfer to life time expected credit loss |
| (64,928) |
| 64,928 |
| - |
| - |
| - |
| - |
Transfer to impaired financial asset |
| - |
| - |
| - |
| - |
| - |
| - |
Purchase |
| 46,847,222 |
| 61,410 |
| 46,908,632 |
| 12,209,898 |
| - |
| 12,209,898 |
Disposal |
| (16,109,006) |
| (10,222) |
| (16,119,228) |
| - |
| - |
| - |
Repayment |
| (21,129,182) |
| - |
| (21,129,182) |
| (6,722,560) |
| - |
| (6,722,560) |
Others (*) |
| 230,733 |
| 51,702 |
| 282,435 |
| 322,107 |
| 20,995 |
| 343,102 |
Business combination |
| 10,952,792 |
| - |
| 10,952,792 |
| 11,273,999 |
| - |
| 11,273,999 |
Ending balance |
| 58,334,000 |
| 239,094 |
| 58,573,094 |
| 45,568,563 |
| 23,272 |
| 45,591,835 |
(*) Included the effects from changes in foreign exchange rate, amortization of fair value adjustments recognized through business combination accountings.
125
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
11. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(c) Changes in allowance for credit loss of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||
|
| Securities at fair value through other comprehensive income |
| Securities at amortized cost | ||||||||
|
| 12 months expected credit loss |
| Life time expected credit loss |
| Total |
| 12 months expected credit loss |
| Life time expected credit loss |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning allowance |
| 27,581 |
| 655 |
| 28,236 |
| 9,759 |
| 11 |
| 9,770 |
Transfer to 12 months expected credit loss |
| 22 |
| (22) |
| - |
| - |
| - |
| - |
Transfer to life time expected credit loss |
| (193) |
| 193 |
| - |
| - |
| - |
| - |
Transfer to impaired financial asset |
| - |
| - |
| - |
| - |
| - |
| - |
Provision (reversal) |
| 3,480 |
| 349 |
| 3,829 |
| 1,086 |
| (11) |
| 1,075 |
Disposal |
| (9,019) |
| (487) |
| (9,506) |
| - |
| - |
| - |
Others (*) |
| 622 |
| (10) |
| 612 |
| (359) |
| - |
| (359) |
Ending balance |
| 22,493 |
| 678 |
| 23,171 |
| 10,486 |
| - |
| 10,486 |
(*) Included the effects from changes in foreign exchange rate, debt restructuring, debt-equity swap.
126
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
11. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(c) Changes in allowance for credit loss of debt securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2019 | ||||||||||
|
| Securities at fair value through other comprehensive income |
| Securities at amortized cost | ||||||||
|
| 12 months expected credit loss |
| Life time expected credit loss |
| Total |
| 12 months expected credit loss |
| Life time expected credit loss |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning allowance |
| 25,722 |
| 362 |
| 26,084 |
| 9,243 |
| 17 |
| 9,260 |
Transfer to 12 months expected credit loss |
| 33 |
| (33) |
| - |
| 4,301 |
| (4,301) |
| - |
Transfer to life time expected credit loss |
| (60) |
| 60 |
| - |
| - |
| - |
| - |
Transfer to impaired financial asset |
| - |
| - |
| - |
| - |
| - |
| - |
Provision (reversal) |
| 8,403 |
| (2,616) |
| 5,787 |
| (3,752) |
| 4,295 |
| 543 |
Disposal |
| (5,340) |
| (258) |
| (5,598) |
| - |
| - |
| - |
Others (*) |
| (1,177) |
| 3,140 |
| 1,963 |
| (33) |
| - |
| (33) |
Ending balance |
| 27,581 |
| 655 |
| 28,236 |
| 9,759 |
| 11 |
| 9,770 |
(*) Included the effects from changes in foreign exchange rate, debt restructuring, debt-equity swap.
127
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
11. Securities at fair value through other comprehensive income and securities at amortized cost (continued)
(d) Gain or loss on disposal of securities at fair value through other comprehensive income and securities at amortized cost for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
|
|
|
|
|
Gain on disposal of securities at FVOCI |
| 301,920 |
| 159,883 |
Loss on disposal of securities at FVOCI |
| (28,127) |
| (7,605) |
Gain on disposal of securities at amortized cost (*) |
| 42 |
| 86 |
Loss on disposal of securities at amortized cost (*) |
| (67) |
| (20) |
|
| 273,768 |
| 152,344 |
(*) The issuers of those securities have exercised the early redemption options.
(e) Income or loss on equity securities at fair value through other comprehensive income
i) The Group recognizes dividends, amounting to W21,503 million and W16,586 million, related to equity securities at fair value through other comprehensive income for the years ended December 31, 2020 and 2019, respectively.
ii) The details of disposal of equity securities at fair value through other comprehensive income for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
|
|
|
|
|
Fair value at the date of disposal |
| 69,969 |
| 45,074 |
Cumulative net gain at the time of disposal |
| (38,380) |
| (10,843) |
128
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets
(a) Loans at amortized cost as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Household loans |
| 146,789,916 |
| 134,423,473 |
Corporate loans |
| 179,011,251 |
| 161,029,877 |
Public and other loans |
| 3,734,629 |
| 3,311,735 |
Loans to banks |
| 5,492,400 |
| 2,633,532 |
Credit card receivables |
| 23,759,422 |
| 24,024,491 |
|
| 358,787,618 |
| 325,423,108 |
Discount |
| (21,948) |
| (27,824) |
Deferred loan origination costs |
| 516,815 |
| 534,530 |
|
| 359,282,485 |
| 325,929,814 |
Less: Allowance for credit loss |
| (3,060,966) |
| (2,684,835) |
|
| 356,221,519 |
| 323,244,979 |
129
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(b) Changes in carrying value of loans at amortized cost and other assets as of December 31, 2020 and 2019 are as follows:
i) Loans at amortized cost
|
| December 31, 2020 | ||||||||||||||||||||||||
|
| Retail |
| Corporate |
| Credit card |
| Others |
|
| ||||||||||||||||
12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 126,586,551 |
| 7,870,908 |
| 415,892 |
| 135,591,673 |
| 24,661,662 |
| 1,001,587 |
| 19,419,606 |
| 4,124,576 |
| 444,235 |
| 5,167,393 |
| 629,468 |
| 16,263 |
| 325,929,814 |
Transfer (from) to 12 months expected credit losses |
| 2,891,847 |
| (2,885,809) |
| (6,038) |
| 6,009,242 |
| (6,006,226) |
| (3,016) |
| 351,253 |
| (350,651) |
| (602) |
| 15,976 |
| (15,976) |
| - |
| - |
Transfer (from) to lifetime expected credit losses |
| (3,916,612) |
| 3,944,714 |
| (28,102) |
| (9,015,428) |
| 9,027,416 |
| (11,988) |
| (571,971) |
| 572,291 |
| (320) |
| (85,337) |
| 85,337 |
| - |
| - |
Transfer (from) to credit- impaired financial assets |
| (189,681) |
| (157,637) |
| 347,318 |
| (195,863) |
| (441,969) |
| 637,832 |
| (114,388) |
| (191,777) |
| 306,165 |
| (3,964) |
| (37) |
| 4,001 |
| - |
Net increase and decrease(*1) |
| 13,457,675 |
| (556,142) |
| 81,131 |
| 20,679,401 |
| (1,030,466) |
| 15,944 |
| (115,242) |
| (202,750) |
| 290,907 |
| 3,311,105 |
| (33,596) |
| 2,402 |
| 35,900,369 |
Charge off |
| - |
| - |
| (254,723) |
| - |
| - |
| (317,514) |
| - |
| - |
| (572,008) |
| - |
| - |
| (2,531) |
| (1,146,776) |
Disposal |
| (313,150) |
| (897) |
| (89,051) |
| (731,001) |
| - |
| (264,913) |
| - |
| - |
| - |
| - |
| - |
| (1,910) |
| (1,400,922) |
Ending balance |
| 138,516,630 |
| 8,215,137 |
| 466,427 |
| 152,338,024 |
| 26,210,417 |
| 1,057,932 |
| 18,969,258 |
| 3,951,689 |
| 468,377 |
| 8,405,173 |
| 665,196 |
| 18,225 |
| 359,282,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1) Other changes are due to debt restructuring, debt-equity swap and changes in foreign exchange rate.
(*2) The amount of uncollected loans currently in recovery (principal and interest) is W10,436,407 million, which is written off as of December 31, 2020.
130
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(b) Changes in carrying value of loans at amortized cost and other assets as of December 31, 2020 and 2019 are as follows (continued):
ii) Other financial assets
|
| December 31, 2020 | ||||||
12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 43,245,002 |
| 106,517 |
| 45,965 |
| 43,397,484 |
Transfer (from) to 12 month expected credit losses |
| 15,157 |
| (15,123) |
| (34) |
| - |
Transfer (from) to lifetime expected credit losses |
| (25,839) |
| 25,848 |
| (9) |
| - |
Transfer (from) to credit- impaired financial assets |
| (1,628) |
| (7,342) |
| 8,970 |
| - |
Net increase and decrease(*2) |
| 8,633,124 |
| (10,001) |
| 30,490 |
| 8,653,613 |
Charge off |
| - |
| - |
| (26,814) |
| (26,814) |
Disposal |
| - |
| - |
| (910) |
| (910) |
Business combination(Note 47) |
| 15,982 |
| - |
| - |
| 15,982 |
Ending balance |
| 51,881,798 |
| 99,899 |
| 57,658 |
| 52,039,355 |
|
|
|
|
|
|
|
|
|
(*1) The amortized cost includes the gross carrying amount of deposits and other assets.
(*2) The amount is due to execution, collection, debt restructuring, investment conversion, exchange rate fluctuation, etc.
131
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(b) Changes in carrying value of loans at amortized cost and other assets as of December 31, 2020 and 2019 are as follows (continued):
i) Loans at amortized cost (continued)
|
| December 31, 2019 | ||||||||||||||||||||||||
|
| Retail |
| Corporate |
| Credit card |
| Others |
|
| ||||||||||||||||
12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 114,279,870 |
| 6,820,058 |
| 348,722 |
| 129,468,766 |
| 21,782,590 |
| 919,381 |
| 18,155,156 |
| 3,830,509 |
| 413,175 |
| 5,695,187 |
| 605,440 |
| 15,686 |
| 302,334,540 |
Transfer (from) to 12 months expected credit losses |
| 2,619,036 |
| (2,614,416) |
| (4,620) |
| 4,093,725 |
| (4,088,373) |
| (5,352) |
| 320,288 |
| (320,129) |
| (159) |
| 37,430 |
| (37,430) |
| - |
| - |
Transfer (from) to lifetime expected credit losses |
| (5,385,659) |
| 5,406,091 |
| (20,432) |
| (16,484,206) |
| 16,597,346 |
| (113,140) |
| (603,069) |
| 603,280 |
| (211) |
| (210,161) |
| 210,333 |
| (172) |
| - |
Transfer (from) to credit- impaired financial assets |
| (627,950) |
| (43,168) |
| 671,118 |
| (1,088,270) |
| (76,177) |
| 1,164,447 |
| (36,483) |
| (22,473) |
| 58,956 |
| (39,844) |
| - |
| 39,844 |
| - |
Net increase and decrease(*1) |
| 13,234,263 |
| (1,700,287) |
| (222,961) |
| 19,326,283 |
| (9,567,098) |
| (443,468) |
| 1,583,714 |
| 33,389 |
| 305,336 |
| (315,219) |
| (148,875) |
| (11,979) |
| 22,073,098 |
Charge off |
| - |
| - |
| (257,742) |
| - |
| - |
| (259,400) |
| - |
| - |
| (332,862) |
| - |
| - |
| (8,718) |
| (858,722) |
Disposal |
| - |
| (5,122) |
| (108,624) |
| (117,453) |
| (3,806) |
| (283,747) |
| - |
| - |
| - |
| - |
| - |
| (18,398) |
| (537,150) |
Business combination |
| 2,466,991 |
| 7,752 |
| 10,431 |
| 392,828 |
| 17,180 |
| 22,866 |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,918,048 |
Ending balance |
| 126,586,551 |
| 7,870,908 |
| 415,892 |
| 135,591,673 |
| 24,661,662 |
| 1,001,587 |
| 19,419,606 |
| 4,124,576 |
| 444,235 |
| 5,167,393 |
| 629,468 |
| 16,263 |
| 325,929,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*1) Other changes are due to debt restructuring, debt-equity swap and changes in foreign exchange rate.
(*2) The amount of uncollected loans currently in recovery (principal and interest) is W10,155,562 million, which is written off as of December 31, 2019.
132
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(b) Changes in carrying value of loans at amortized cost and other assets as of December 31, 2020 and 2019 are as follows (continued):
ii) Other financial assets (continued)
|
| December 31, 2019 | ||||||
12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 31,508,694 |
| 99,461 |
| 32,003 |
| 31,640,158 |
Transfer (from) to 12 month expected credit losses |
| 12,685 |
| (12,675) |
| (10) |
| - |
Transfer (from) to lifetime expected credit losses |
| (253,546) |
| 253,575 |
| (29) |
| - |
Transfer (from) to credit- impaired financial assets |
| (3,124) |
| (5,324) |
| 8,448 |
| - |
Net increase and decrease(*2) |
| 10,746,289 |
| (230,014) |
| 25,245 |
| 10,541,520 |
Charge off |
| - |
| - |
| (29,456) |
| (29,456) |
Disposal (*3) |
| (182,212) |
| (3) |
| (1,062) |
| (183,277) |
Others |
| 261,019 |
| 42 |
| - |
| 261,061 |
Business combination |
| 1,416,216 |
| 1,497 |
| 10,826 |
| 1,428,539 |
Ending balance |
| 43,245,002 |
| 106,517 |
| 45,965 |
| 43,397,484 |
|
|
|
|
|
|
|
|
|
(*1) The amortized cost includes the gross carrying amount of deposits and other assets.
(*2) The amount is due to execution, collection, debt restructuring, investment conversion, exchange rate fluctuation, etc.
(*3) Included the disposal amount of financial instruments for the purpose of collecting loans for credit concentration risk management of non-current assets, which recognized gains of W13,317 million.
133
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2020 and 2019 are as follows:
i) Loans at amortized cost
|
| December 31, 2020 | ||||||||||||||||||||||||
|
| Retail |
| Corporate |
| Credit cards |
| Others |
|
| ||||||||||||||||
12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 133,412 |
| 91,025 |
| 169,038 |
| 419,752 |
| 531,286 |
| 469,207 |
| 173,884 |
| 365,248 |
| 314,850 |
| 7,501 |
| 7,481 |
| 2,151 |
| 2,684,835 |
Transfer (from) to 12 months expected credit losses |
| 20,082 |
| (19,487) |
| (595) |
| 67,590 |
| (66,777) |
| (813) |
| 22,148 |
| (21,591) |
| (557) |
| 164 |
| (164) |
| - |
| - |
Transfer (from) to lifetime expected credit losses |
| (9,077) |
| 18,772 |
| (9,695) |
| (49,727) |
| 55,512 |
| (5,785) |
| (11,568) |
| 11,834 |
| (266) |
| (242) |
| 242 |
| - |
| - |
Transfer (from) to credit- impaired financial assets |
| (3,247) |
| (9,010) |
| 12,257 |
| (1,590) |
| (52,383) |
| 53,973 |
| (901) |
| (2,041) |
| 2,942 |
| (13) |
| (9) |
| 22 |
| - |
Provision (reversal) |
| 5,253 |
| (5,319) |
| 199,765 |
| 149,400 |
| 211,341 |
| 265,557 |
| 103,793 |
| 210,592 |
| 137,254 |
| 4,188 |
| 2,048 |
| 6,823 |
| 1,290,695 |
Charge off |
| - |
| - |
| (254,723) |
| - |
| - |
| (317,514) |
| - |
| - |
| (572,008) |
| - |
| - |
| (2,531) |
| (1,146,776) |
Amortization of discount |
| - |
| - |
| (5,630) |
| - |
| - |
| (15,151) |
| - |
| - |
| (7,807) |
| - |
| - |
| - |
| (28,588) |
Disposal |
| (343) |
| (8) |
| (18,605) |
| (726) |
| - |
| (24,473) |
| - |
| - |
| - |
| - |
| - |
| (182) |
| (44,337) |
Collection |
| - |
| - |
| 85,819 |
| - |
| - |
| 63,822 |
| - |
| - |
| 200,234 |
| - |
| - |
| 134 |
| 350,009 |
Others (*) |
| 2,954 |
| 10,075 |
| 20,809 |
| (16,085) |
| (13,896) |
| (7,579) |
| (83,448) |
| (189,589) |
| 232,048 |
| (164) |
| 3 |
| - |
| (44,872) |
Ending balance |
| 149,034 |
| 86,048 |
| 198,440 |
| 568,614 |
| 665,083 |
| 481,244 |
| 203,908 |
| 374,453 |
| 306,690 |
| 11,434 |
| 9,601 |
| 6,417 |
| 3,060,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Other changes are due to debt restructuring, debt-equity swap and changes in foreign exchange rate.
134
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2020 and 2019 are as follows (continued):
ii) Other financial assets
|
| December 31, 2020 | ||||||
12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 33,987 |
| 7,272 |
| 37,590 |
| 78,849 |
Transfer (from) to 12 months expected credit losses |
| 286 |
| (273) |
| (13) |
| - |
Transfer (from) to lifetime expected credit losses |
| (259) |
| 264 |
| (5) |
| - |
Transfer (from) to credit- impaired financial assets |
| (256) |
| (1,492) |
| 1,748 |
| - |
Provision (reversal) |
| (2,143) |
| 2,650 |
| 33,278 |
| 33,785 |
Charge off |
| - |
| - |
| (26,814) |
| (26,814) |
Disposal |
| (2) |
| - |
| (32) |
| (34) |
Collection |
| - |
| - |
| 2,166 |
| 2,166 |
Others (*2) |
| 4,078 |
| (140) |
| 1,012 |
| 4,950 |
Ending balance |
| 35,691 |
| 8,281 |
| 48,930 |
| 92,902 |
|
|
|
|
|
|
|
|
|
(*1) The amortized cost includes the gross carrying amount of deposits and other assets.
(*2) Other changes are due to debt restructuring, debt-equity swap and changes in foreign exchange rate.
135
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2020 and 2019 are as follows (continued):
i) Loans at amortized cost
|
| December 31, 2019 | ||||||||||||||||||||||||
|
| Retail |
| Corporate |
| Credit cards |
| Others |
|
| ||||||||||||||||
12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| 12 month expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 115,295 |
| 88,360 |
| 156,459 |
| 434,793 |
| 581,915 |
| 519,683 |
| 170,242 |
| 351,765 |
| 280,098 |
| 10,670 |
| 5,882 |
| 9,906 |
| 2,725,068 |
Transfer (from) to 12 months expected credit losses |
| 18,079 |
| (17,592) |
| (487) |
| 50,720 |
| (48,295) |
| (2,425) |
| 55,815 |
| (55,712) |
| (103) |
| 757 |
| (757) |
| - |
| - |
Transfer (from) to lifetime expected credit losses |
| (9,411) |
| 17,342 |
| (7,931) |
| (35,790) |
| 118,605 |
| (82,815) |
| (20,607) |
| 20,756 |
| (149) |
| (159) |
| 289 |
| (130) |
| - |
Transfer (from) to credit- impaired financial assets |
| (942) |
| (3,739) |
| 4,681 |
| (565) |
| (13,332) |
| 13,897 |
| (1,250) |
| (3,916) |
| 5,166 |
| - |
| - |
| - |
| - |
Provision (reversal) |
| (7,751) |
| 19,130 |
| 214,260 |
| (43,230) |
| (31,265) |
| 277,436 |
| 57,062 |
| 280,047 |
| 147,332 |
| (4,067) |
| 1,907 |
| 37 |
| 910,898 |
Charge off |
| - |
| - |
| (257,742) |
| - |
| - |
| (259,400) |
| - |
| - |
| (332,862) |
| - |
| - |
| (8,718) |
| (858,722) |
Amortization of discount |
| - |
| - |
| (274) |
| - |
| - |
| (19,396) |
| - |
| - |
| (5,541) |
| - |
| - |
| - |
| (25,211) |
Disposal |
| - |
| (241) |
| (21,561) |
| (6) |
| (245) |
| (30,436) |
| - |
| - |
| - |
| - |
| - |
| (820) |
| (53,309) |
Collection |
| - |
| - |
| 70,319 |
| - |
| - |
| 62,973 |
| - |
| - |
| 190,738 |
| - |
| - |
| 1,876 |
| 325,906 |
Others (*) |
| 2,484 |
| (15,353) |
| 4,522 |
| 13,810 |
| (76,711) |
| (27,910) |
| (87,378) |
| (227,692) |
| 30,171 |
| 300 |
| 160 |
| - |
| (383,597) |
Business combination (Note 47) |
| 15,658 |
| 3,118 |
| 6,792 |
| 20 |
| 614 |
| 17,600 |
| - |
| - |
| - |
| - |
| - |
| - |
| 43,802 |
Ending balance |
| 133,412 |
| 91,025 |
| 169,038 |
| 419,752 |
| 531,286 |
| 469,207 |
| 173,884 |
| 365,248 |
| 314,850 |
| 7,501 |
| 7,481 |
| 2,151 |
| 2,684,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Other changes are due to debt restructuring, debt-equity swap and changes in foreign exchange rate.
136
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
12. Loans at amortized cost and other assets (continued)
(c) Changes in allowance for credit loss of loans at amortized cost and other financial assets as of December 31, 2020 and 2019 are as follows (continued):
ii) Other financial assets
|
| December 31, 2019 | ||||||
12 months expected credit loss |
| Life time expected credit loss |
| Impaired financial asset |
| Total | ||
Beginning balance |
| 39,927 |
| 6,930 |
| 24,764 |
| 71,621 |
Transfer (from) to 12 months expected credit losses |
| 458 |
| (453) |
| (5) |
| - |
Transfer (from) to lifetime expected credit losses |
| (231) |
| 244 |
| (13) |
| - |
Transfer (from) to credit- impaired financial assets |
| (172) |
| (2,310) |
| 2,482 |
| - |
Provision |
| 2,822 |
| 2,667 |
| 28,456 |
| 33,945 |
Charge off |
| - |
| - |
| (29,456) |
| (29,456) |
Collection |
| - |
| - |
| 1,873 |
| 1,873 |
Others (*2) |
| (9,738) |
| 9 |
| 435 |
| (9,294) |
Business combination |
| 921 |
| 185 |
| 9,054 |
| 10,160 |
Ending balance |
| 33,987 |
| 7,272 |
| 37,590 |
| 78,849 |
|
|
|
|
|
|
|
|
|
(*1) The amortized cost includes the gross carrying amount of deposits and other assets.
(*2) Other changes are due to debt restructuring, debt-equity swap and changes in foreign exchange rate.
(d) Changes in deferred loan origination costs for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Beginning balance |
| 534,530 |
| 497,368 |
Loan origination |
| 257,034 |
| 232,943 |
Amortization |
| (274,749) |
| (208,998) |
Business combination |
| - |
| 13,217 |
Ending balance |
| 516,815 |
| 534,530 |
137
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
13. Property and equipment
(a) Details of property and equipment as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Acquisition cost |
| Accumulated depreciation |
| Carrying value |
Land |
| 2,219,227 |
| - |
| 2,219,227 |
Buildings |
| 1,230,187 |
| (419,426) |
| 810,761 |
Right-of-use assets |
| 1,016,183 |
| (425,766) |
| 590,417 |
Others |
| 2,197,485 |
| (1,828,193) |
| 369,292 |
|
| 6,663,082 |
| (2,673,385) |
| 3,989,697 |
|
| December 31, 2019 | ||||
|
| Acquisition cost |
| Accumulated depreciation |
| Carrying value |
Land |
| 1,815,112 |
| - |
| 1,815,112 |
Buildings |
| 1,167,514 |
| (377,065) |
| 790,449 |
Right-of-use assets |
| 1,357,206 |
| (244,410) |
| 1,112,796 |
Others |
| 2,130,805 |
| (1,765,834) |
| 364,971 |
|
| 6,470,637 |
| (2,387,309) |
| 4,083,328 |
(b) Changes in property and equipment for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||
|
| Land |
| Buildings |
| Right-of-use assets |
| Others |
| Total |
Beginning balance |
| 1,815,112 |
| 790,449 |
| 1,112,796 |
| 364,971 |
| 4,083,328 |
Acquisition(*1) |
| 78,066 |
| 56,828 |
| 305,958 |
| 140,958 |
| 581,810 |
Disposal(*1) |
| (92,683) |
| (46,897) |
| -24,173 |
| (2,398) |
| (166,151) |
Depreciation |
| - |
| (56,041) |
| -286,028 |
| (133,437) |
| (475,506) |
Amounts transferred from(to) investment property |
| 55,316 |
| (51,252) |
| - |
| - |
| 4,064 |
Amounts transferred from(to) intangible assets |
| - |
| - |
| - |
| 3,738 |
| 3,738 |
Amounts transferred from(to) non-current assets held for sale(*2) |
| (31,622) |
| (11) |
| - |
| - |
| (31,633) |
Amounts transferred from(to) right-of-use assets(*2) |
| 395,346 |
| 118,091 |
| -513,437 |
| - |
| - |
Others |
| - |
| - |
| - |
| (2,235) |
| (2,235) |
Effects of foreign currency movements |
| (308) |
| (406) |
| -5,380 |
| (2,459) |
| (8,553) |
Business combination (Note 47) |
| - |
| - |
| 681 |
| 154 |
| 835 |
Ending balance |
| 2,219,227 |
| 810,761 |
| 590,417 |
| 369,292 |
| 3,989,697 |
(*1) W56,575 million transferred from assets-under-construction is included.
(*2) Included buildings, and land.
138
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
13. Property and equipment (continued)
(b) Changes in property and equipment for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||
|
| Land |
| Buildings |
| Right-of-use assets |
| Others |
| Total |
Beginning balance |
| 1,827,711 |
| 852,569 |
| 583,576 |
| 313,853 |
| 3,577,709 |
Acquisition(*1) |
| 69,045 |
| 16,946 |
| 805,783 |
| 184,630 |
| 1,076,404 |
Disposal(*1) |
| (249) |
| (1,719) |
| (12,595) |
| (29,081) |
| (43,644) |
Depreciation |
| - |
| (55,450) |
| (298,538) |
| (125,669) |
| (479,657) |
Amounts transferred from(to) investment property |
| (81,311) |
| (23,262) |
| - |
| - |
| (104,573) |
Amounts transferred from(to) intangible assets |
| - |
| - |
| - |
| 271 |
| 271 |
Amounts transferred from(to) non-current assets held for sale(*2) |
| (410) |
| (45) |
| - |
| - |
| (455) |
Effects of foreign currency movements |
| 326 |
| 1,410 |
| 2,981 |
| 9,314 |
| 14,031 |
Business combination |
| - |
| - |
| 31,589 |
| 11,653 |
| 43,242 |
Ending balance |
| 1,815,112 |
| 790,449 |
| 1,112,796 |
| 364,971 |
| 4,083,328 |
(*1) W76,004 million transferred from assets-under-construction is included.
(*2) Included buildings, and land.
(c) Insured assets and liability insurance as of December 31, 2020 are as follows:
|
| December 31, 2020 | ||||
Type of insurance |
| Insured assets and objects |
| Amount covered |
| Insurance company |
Comprehensive insurance for financial institutions |
| Cash(including ATM) |
| 25,200 |
| Samsung Fire & Marine Insurance Co., Ltd., etc. |
Comprehensive Property insurance |
|
Property Total Risk, Machine Risk, General Liability Liability Collateral
|
| 1,510,644 |
| Samsung Fire & Marine Insurance Co., Ltd., etc. |
Fire insurance |
| Business property and real estate |
| 24,235 |
| Meritz Fire & Marine Insurance Co., Ltd., etc. |
Compensation liability insurance for officers |
| Officer liability |
| 110,000 |
| Meritz Fire & Marine Insurance Co., Ltd., etc. |
Compensation liability insurance for employee accident
|
| Executives
|
| 71,287 |
| Meritz Fire & Marine Insurance Co., Ltd., etc. |
Burglary insurance |
| Cash and securities |
| 80,165 |
| Samsung Fire & Marine Insurance Co., Ltd., etc. |
Others |
| Personal information liability insurance etc. |
| 32,549 |
| Samsung Fire & Marine Insurance Co., Ltd., etc. |
139
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
14. Intangible assets
(a) Details of intangible assets as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Goodwill |
| 4,689,792 |
| 4,690,049 |
Software |
| 144,535 |
| 129,235 |
Development cost |
| 183,592 |
| 144,100 |
Others |
| 462,700 |
| 595,330 |
|
| 5,480,619 |
| 5,558,714 |
(b) Changes in intangible assets for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||
|
| Goodwill |
| Software |
| Development cost |
| Others |
| Total |
Beginning balance |
| 4,690,049 |
| 129,235 |
| 144,100 |
| 595,330 |
| 5,558,714 |
Acquisition |
| - |
| 64,195 |
| 105,101 |
| 64,079 |
| 233,375 |
Disposal |
| - |
| (1) |
| (75) |
| (26,785) |
| (26,861) |
Amounts transferred from(to) property and equipment |
| - |
| 1,415 |
| (7,820) |
| 2,667 |
| (3,738) |
Impairment(*1)(*2) |
| (14,235) |
| - |
| - |
| (27,075) |
| (41,310) |
Amortization(*3) |
| - |
| (49,159) |
| (57,690) |
| (145,756) |
| (252,605) |
Effects of foreign currency movements |
| - |
| (1,150) |
| (24) |
| (222) |
| (1,396) |
Business combination (Note 47) |
| 13,978 |
| - |
| - |
| 462 |
| 14,440 |
Ending balance |
| 4,689,792 |
| 144,535 |
| 183,592 |
| 462,700 |
| 5,480,619 |
(*1) The number of customer contacts decreased due to the decrease in the base interest rate in Indonesia in 2020 and the impact of COVID-19. Therefore, reclaimable amount decreased due to reduced loan and increased provisioning by corporate borrowers. PT Bank Shinhan Indonesia’s CGUs can recover W 409,968 million. The carrying amount exceeding the recoverable amount of PT Bank Shinhan Indonesia’s CGUs is W 14,379 million. The Group recognized as impairment losses of W 14,235 million based on the 99% stake the Group owns.
(*2) The Group reviewed the recoverable value of intangible assets related to the rights to be the depository bank of local governments due to the performance below forecast and future prospects. For the year ended December 31, 2020, the impairment loss amounted to W27,133 million. The impairment loss is included in the non-operating expenses in the consolidated statement of comprehensive income.
(*3) Included in general administrative expense and other operating income of the consolidated statements of comprehensive income.
140
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
14. Intangible assets
(b) Changes in intangible assets for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||
|
| Goodwill |
| Software |
| Development cost |
| Others |
| Total |
Beginning balance |
| 3,903,518 |
| 102,393 |
| 82,536 |
| 231,687 |
| 4,320,134 |
Acquisition |
| - |
| 56,834 |
| 71,713 |
| 675,070 |
| 803,617 |
Business combination (Note 47) |
| 786,531 |
| 9,469 |
| 30,435 |
| 44,850 |
| 871,285 |
Disposal |
| - |
| (428) |
| (1,310) |
| (16,476) |
| (18,214) |
Amounts transferred from(to) property and equipment |
| - |
| 697 |
| (968) |
| - |
| (271) |
Impairment(*1)(*2) |
| - |
| - |
| (474) |
| (151,169) |
| (151,643) |
Amortization(*3) |
| - |
| (40,578) |
| (37,832) |
| (189,533) |
| (267,943) |
Effects of foreign currency movements |
| - |
| 848 |
| - |
| 901 |
| 1,749 |
Ending balance |
| 4,690,049 |
| 129,235 |
| 144,100 |
| 595,330 |
| 5,558,714 |
(*1) The Group reviewed the recoverable value of intangible assets related to the rights to be the depository bank of local governments due to the performance below forecast and future prospects. For the year ended December 31, 2019, the impairment loss amounted to W151,523 million. The impairment loss is included in the non-operating expenses in the consolidated statement of comprehensive income.
(*2) Memberships were impaired. Memberships such as golf and condominium memberships are intangible assets that cannot be limited to a specific period of time. If the market value of the exchanges is less than the carrying amount as of December 31, 2019, the impairment loss is recognized.
(*3) Included in general administrative expense and other operating income of the consolidated statements of comprehensive income.
141
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
14. Intangible asset (continued)
(c) Goodwill
i) Goodwill allocated in the Group’s CGUs as of December 31, 2020 and 2019
|
| December 31, 2020 |
| December 31, 2019 |
Banking |
| 795,823 |
| 810,058 |
Credit card |
| 2,880,383 |
| 2,880,383 |
Securities |
| 7,904 |
| 7,904 |
Life insurance (Shinhan Life Insurance ) |
| 275,371 |
| 275,371 |
Life insurance (Orange Life Insurance Co., Ltd.) |
| 564,576 |
| 564,576 |
Others |
| 165,735 |
| 151,757 |
|
| 4,689,792 |
| 4,690,049 |
ii) Changes in goodwill for the years ended December 31, 2020 and 2019
|
| December 31, 2020 |
| December 31, 2019 |
Beginning balance |
| 4,690,049 |
| 3,903,518 |
Acquisitions through business combinations (*1)(*2) |
| 13,978 |
| 786,531 |
Impairment losses |
| (14,235) |
| - |
Ending balance |
| 4,689,792 |
| 4,690,049 |
(*1) It is the goodwill recognized by the Group as it newly acquired the Neoflux Co., Ltd. (Note 47)
(*2) It is the goodwill recognized by the Group as it newly acquired the Orange Life Insurance Co., Ltd.(“Orange Life”), Asia Trust Co., and the Shinhan Card’s acquisition of the new business for the year ended December 31, 2019.
iii) Goodwill impairment test
The recoverable amounts of each CGU are evaluated based on their respective value in use.
- Explanation on evaluation method
The income approach is applied when evaluating the recoverable amounts based on value in use, considering the characteristics of each unit or group of CGU.
- Projection period
When evaluating the value in use, 5.5 years of cash flow estimates are used in projection and the value thereafter is reflected as terminal value. 30 years and 60 years of cash flow estimates for Shinhan Life and Orange Life, respectively are applied and the present value of the future cash flows thereafter is not applied as it is not significant.
.
142
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
14. Intangible assets, net (continued)
- Discount rates and terminal growth rates
The required rates of return expected by shareholders are applied to the discount rates. It is calculated in consideration of which comprises a risk-free interest rate, a market risk premium and systemic risk (beta factor). In addition, terminal growth rate is estimated based on inflation rate.
Discount rates and terminal growth rates applied to each CGU are as follows:
|
| Discount rate(%) |
| Terminal growth rate(%) |
Banking |
| 9.3 ~ 13.1 |
| 1.0 ~ 2.0 |
Credit card |
| 8.4 ~ 12.9 |
| 1.0 ~ 2.0 |
Securities |
| 12.3 ~ 13.0 |
| 2.0 |
Life insurance (Shinhan Life Insurance ) |
| 7.0 |
| - |
Life insurance (Orange Life Insurance Co., Ltd.) |
| 7.0 |
| - |
Others |
| 10.9 ~ 13.5 |
| 1.0 |
iv) Key assumptions
Key assumptions used in the discounted cash flow calculations of CGUs (other than life insurance components) are as follows:
| 2020 |
| 2021 |
| 2022 |
| 2023 |
| 2024 |
| 2025 |
CPI growth(%) | 0.4 |
| 1.2 |
| 1.8 |
| 1.7 |
| 1.7 |
| 1.7 |
Private consumption growth(%) | (3.2) |
| 2.6 |
| 2.8 |
| 2.6 |
| 2.4 |
| 2.4 |
Real GDP growth(%) | (1.8) |
| 2.6 |
| 2.9 |
| 2.7 |
| 2.7 |
| 2.7 |
Key assumptions used in the discounted cash flow calculations of life insurance components are as follows:
|
| Key assumptions |
Rate of return on investment(%) |
| 2.40 ~ 2.80 |
Risk-based capital ratio(%) |
| 150.00 |
v) Total recoverable amount and total carrying value of CGUs to which goodwill has been allocated, are as follows:
|
| Amount |
Total recoverable amount |
| 49,034,706 |
Total carrying value(*1) |
| 43,690,747 |
|
| 5,343,959 |
(*1) It is the carrying amount after reflecting the impairment loss in the banking sector.
(*2) The goodwill that the fair value assessment of the intangible asset identification and identification assets for allocation of the consideration for Neoplux Co., Ltd. is excluded because the valuations are not completed(Note 47).
143
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates
Investees |
| Country |
| Reporting date |
| Ownership (%) | ||
|
|
| December 31, 2020 |
| December 31, 2019 | |||
BNP Paribas Cardif Life Insurance (*1)(*2) |
| Korea |
| September 30 |
| 14.99 |
| 14.99 |
Songrim Partners (*1)(*3) |
| Korea |
| December 31 |
| 35.34 |
| 35.34 |
Neoplux Technology Valuation Investment Fund (*11) |
| Korea |
| - |
| - |
| 33.33 |
Partners 4th Growth Investment Fund (*1) |
| Korea |
| September 30 |
| 25.00 |
| 25.00 |
KTB Newlake Global Healthcare PEF (*1) |
| Korea |
| September 30 |
| 30.00 |
| 30.00 |
Daekwang Semiconductor Co., Ltd. (*1)(*3) |
| Korea |
| September 30 |
| 20.94 |
| 20.94 |
Shinhan-Neoplux Energy Newbiz Fund |
| Korea |
| December 31 |
| 31.66 |
| 23.33 |
Shinhan-Albatross tech investment Fund(*4) |
| Korea |
| December 31 |
| 49.97 |
| 50.00 |
Plutus-SG Private Equity Fund(*6) |
| Korea |
| - |
| - |
| 26.67 |
Eum Private Equity Fund No.3 |
| Korea |
| December 31 |
| 20.76 |
| 20.76 |
KTB Confidence Private Placement(*6) |
| Korea |
| - |
| - |
| 31.43 |
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund |
| Korea |
| December 31 |
| 23.89 |
| 23.89 |
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund |
| Korea |
| December 31 |
| 20.16 |
| 20.16 |
VOGO Debt Strategy Qualified INV Private |
| Korea |
| December 31 |
| 20.00 |
| 20.00 |
Shinhan-Midas Donga Secondary Fund(*5) |
| Korea |
| December 31 |
| 50.00 |
| 50.00 |
ShinHan – Soo Young Entrepreneur Investment Fund No.1 |
| Korea |
| December 31 |
| 24.00 |
| 24.00 |
Synergy-Shinhan Mezzanine New Technology Investment Fund(*6) |
| Korea |
| - |
| - |
| 47.62 |
Shinhan Praxis K-Growth Global Private Equity Fund(*8) |
| Korea |
| December 31 |
| 18.87 |
| 18.87 |
Credian Healthcare Private Equity Fund II |
| Korea |
| December 31 |
| 34.07 |
| 34.07 |
Kiwoom Milestone Professional Private Real Estate Trust 19 |
| Korea |
| December 31 |
| 50.00 |
| 50.00 |
AIP EURO Green Private Real Estate Trust No.3 |
| Korea |
| December 31 |
| 21.28 |
| 21.28 |
Hanhwa US Equity Strategy Private Real Estate Fund No.1 |
| Korea |
| December 31 |
| 44.84 |
| 44.84 |
Shinhan Global Healthcare Fund 1(*8) |
| Korea |
| December 31 |
| 4.41 |
| 4.41 |
JB Power TL Investment Type Private Placement Special Asset Fund 7 |
| Korea |
| December 31 |
| 33.33 |
| 33.33 |
IBK AONE convertible 1(*6) |
| Korea |
| - |
| - |
| 47.25 |
Rico synergy collabo Multi-Mezzanine 3(*6) |
| Korea |
| - |
| - |
| 50.03 |
KB NA Hickory Private Special Asset Fund |
| Korea |
| December 31 |
| 37.50 |
| 37.50 |
Koramco Europe Core Private Placement Real Estate Fund No.2-2 |
| Korea |
| December 31 |
| 44.02 |
| 44.02 |
BNP Paribas Cardif General Insurance(*1)(*2) |
| Korea |
| September 30 |
| 7.46 |
| 10.00 |
Axis Global Growth New Technology Investment Association(*6) |
| Korea |
| - |
| - |
| 31.85 |
Hermes Private Investment Equity Fund |
| Korea |
| December 31 |
| 29.17 |
| 29.17 |
SHC ULMUS Fund No.1(*6) |
| Korea |
| - |
| - |
| 29.41 |
Shinhan-Nvestor Liquidity Solution Fund |
| Korea |
| December 31 |
| 24.92 |
| 24.92 |
Shinhan AIM FoF Fund 1a |
| Korea |
| December 31 |
| 25.00 |
| 25.00 |
IGIS Global Credit Fund 150-1 |
| Korea |
| December 31 |
| 25.00 |
| 25.00 |
GX Shinhan Intervest 1st Private Equity Fund(*6) |
| Korea |
| - |
| - |
| 25.27 |
Soo Commerce Platform Growth Fund |
| Korea |
| December 31 |
| 24.62 |
| 24.62 |
Partner One Value up I Private Equity Fund |
| Korea |
| December 31 |
| 27.91 |
| 27.91 |
Genesis No.1 Private Equity Fund |
| Korea |
| December 31 |
| 22.80 |
| 22.80 |
GMB ICT New Technology Investment Fund(*6) |
| Korea |
| - |
| - |
| 26.75 |
(a) Investments in associates as of December 31, 2020 and 2019 are as follows:
144
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(a) Investments in associates as of December 31, 2020 and 2019 are as follows (continued):
Investees |
| Country |
| Reporting date |
| Ownership (%) | ||
|
|
| December 31, 2020 |
| December 31, 2019 | |||
Korea Omega Project Fund III |
| Korea |
| December 31 |
| 23.53 |
| 23.53 |
Soo Delivery Platform Growth Fund |
| Korea |
| December 31 |
| 30.00 |
| 30.00 |
Genesis North America Power Company No.1 PEF |
| Korea |
| December 31 |
| 39.96 |
| 39.92 |
Hyungje art printing(*1)(*3) |
| Korea |
| December 31 |
| 31.54 |
| 31.54 |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| Korea |
| December 31 |
| 23.33 |
| 23.33 |
Shinhan-Rhinos 1 Fund |
| Korea |
| December 31 |
| 22.48 |
| 22.48 |
Pacific Private Investment Trust No.20 |
| Korea |
| December 31 |
| 21.74 |
| 21.74 |
Susung Mezzanine project P1 Private Investment Trust |
| Korea |
| December 31 |
| 41.31 |
| 41.18 |
Korea Finance Security(*1)(*8) |
| Korea |
| September 30 |
| 14.91 |
| 14.91 |
Multimedia Tech Co.Ltd(*1)(*3) |
| Korea |
| December 31 |
| 21.06 |
| 21.06 |
MIEL CO.,LTD(*1)(*3) |
| Korea |
| December 31 |
| 28.77 |
| 28.77 |
AIP Transportation Specialized Privately Placed Fund Trust #1 |
| Korea |
| December 31 |
| 35.73 |
| 35.73 |
DB Epic Convertiblebond Private Trust No.2(*7)(*9) |
| Korea |
| December 31 |
| 50.98 |
| 50.00 |
PCC S/W 2nd Fund(*6) |
| Korea |
| - |
| - |
| 29.56 |
E&Healthcare Investment Fund No.6 |
| Korea |
| December 31 |
| 21.05 |
| 20.37 |
One Shinhan Global Fund1(*4)(*8) |
| Korea |
| December 31 |
| 19.96 |
| 19.98 |
Kiwoom-Shinhan Innovation Fund I(*5) |
| Korea |
| December 31 |
| 50.00 |
| 50.00 |
Daishin-K&T New Technology Investment Fund |
| Korea |
| December 31 |
| 31.25 |
| 31.25 |
Midas Asset Global CRE Debt Private Fund No.6 |
| Korea |
| December 31 |
| 41.16 |
| 20.05 |
Richmond Private Investment Trust No.82(*7) |
| Korea |
| December 31 |
| 60.00 |
| 60.00 |
Tiger Alternative Real Estate Professional Private5 |
| Korea |
| December 31 |
| 48.71 |
| 48.71 |
Samchully Midstream Private Placement Special Asset Fund 5-4 |
| Korea |
| December 31 |
| 42.92 |
| 42.92 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| Korea |
| December 31 |
| 20.00 |
| 20.00 |
AUCTUS FITRIN Corporate Recovery Private Equity Fund(*6) |
| Korea |
| - |
| - |
| 21.43 |
NH-Amundi Global Infrastructure Trust 14 |
| Korea |
| December 31 |
| 30.00 |
| 30.00 |
Pacific Private Real Estate Fund Investment Trust No.30(*6) |
| Korea |
| - |
| - |
| 37.50 |
Jarvis Memorial Private Investment Trust 1(*7) |
| Korea |
| December 31 |
| 99.01 |
| 99.01 |
Mastern Private Private Invetstment Trust 68(*7) |
| Korea |
| December 31 |
| 53.76 |
| 53.76 |
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37(*7) |
| Korea |
| December 31 |
| 60.00 |
| 60.00 |
Milestone Private Real Estate Fund 3 (Derivative Type) |
| Korea |
| December 31 |
| 32.06 |
| 32.06 |
IGIS Private Real Estate Investment Trust 286 |
| Korea |
| December 31 |
| 41.44 |
| 41.56 |
Nomura-Rifa Private Real Estate Investment Trust 31 |
| Korea |
| December 31 |
| 31.31 |
| 31.31 |
Lime Pricing Private Equity Fund(*6) |
| Korea |
| - |
| - |
| 25.85 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2 |
| Korea |
| December 31 |
| 21.27 |
| 21.27 |
DS Solid.II Hedge Fund(*6) |
| Korea |
| - |
| - |
| 27.41 |
Hana Semiconductor New Technology Fund |
| Korea |
| December 31 |
| 24.30 |
| 24.30 |
J&Magnet Startup Venture Specialized Private Equity Fund |
| Korea |
| December 31 |
| 24.39 |
| 24.39 |
Cape IT Fund No.3 |
| Korea |
| December 31 |
| 32.89 |
| 32.89 |
FuturePlay-Shinhan TechInnovation Fund 1(*5) |
| Korea |
| December 31 |
| 50.00 |
| 50.00 |
Stonebridge Corporate 1st Fund |
| Korea |
| December 31 |
| 44.12 |
| 44.12 |
145
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(a) Investments in associates as of December 31, 2020 and 2019 are as follows (continued):
Investees |
| Country |
| Reporting date |
| Ownership (%) | |||
|
|
| December 31, 2020 |
| December 31, 2019 | ||||
Vogo Realty Partners Private Real Estate Fund V |
| Korea |
| December 31 |
| 21.64 |
| 21.64 | |
IL GU FARM CO.,LTD(*6) |
| Korea |
| - |
| - |
| 28.47 | |
Korea Credit Bureau(*1)(*8) |
| Korea |
| September 30 |
| 9.00 |
| 9.00 | |
Goduck Gangil1 PFV Co., Ltd(*1)(*8) |
| Korea |
| September 30 |
| 1.04 |
| 1.04 | |
SBC PFV Co., Ltd(*1)(*10) |
| Korea |
| September 30 |
| 25.00 |
| 25.00 | |
Sprott Global Renewable Private Equity Fund II(*6) |
| Korea |
| - |
| - |
| 23.10 | |
NH-amundi global infra private fund 16 |
| Korea |
| December 31 |
| 50.00 |
| 50.00 | |
IMM Global Private Equity Fund |
| Korea |
| December 31 |
| 33.00 |
| 31.85 | |
HANA Alternative Estate Professional Private122(*7) |
| Korea |
| December 31 |
| 75.19 |
| 75.19 | |
Hanwha-Incus Plus New Technology Fund No.1 |
| Korea |
| December 31 |
| 42.64 |
| 42.64 | |
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7[Bond] |
| Korea |
| December 31 |
| 45.96 |
| 45.96 | |
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust(*12) |
| Korea |
| December 31 |
| 72.39 |
| 57.50 | |
PSA EMP Private Equity Fund |
| Korea |
| December 31 |
| 28.99 |
| 28.99 | |
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24(*7) |
| Korea |
| December 31 |
| 52.28 |
| 52.28 | |
SHBNPP Peace of Mind TDF 2035 Security Investment Trust [Equity Balanced-FoF](*6) |
| Korea |
| - |
| - |
| 25.70 | |
SHBNPP Peace of Mind TDF 2040 Security Investment Trust [Equity Balanced-FoF](*6) |
| Korea |
| - |
| - |
| 25.42 | |
BRAIN DO PROFESSIONALE PRIVATE No. 27 |
| Korea |
| December 31 |
| 29.13 |
| 29.13 | |
VISION US Muni US Local Debt Opportunities Professional Private1(*11) |
| Korea |
| - |
| - |
| 25.00 | |
UI Venture Fund 7th(*5) |
| Korea |
| December 31 |
| 24.39 |
| - | |
Sparklabs-Shinhan Opportunity Fund 1(*5) |
| Korea |
| December 31 |
| 49.50 |
| - | |
BNW Tech-Innovation Private Equity Fund(*5) |
| Korea |
| December 31 |
| 29.85 |
| - | |
IGIS Real-estate Private Investment Trust No.33 |
| Korea |
| December 31 |
| 40.86 |
| - | |
Findvalue PreIPO 6th Professional Investment Type Private Investment Trust |
| Korea |
| December 31 |
| 31.58 |
| - | |
WWG Global Real Estate Investment Trust no.4 |
| Korea |
| December 31 |
| 29.55 |
| - | |
Fidelis Global Private Real Estate Trust No.2(*7) |
| Korea |
| December 31 |
| 78.26 |
| - | |
IGIS PRIVATE REAL ESTATE TRUST NO.331 |
| Korea |
| December 31 |
| 30.77 |
| - | |
AIP EURO PRIVATE REAL ESTATE TRUST No. 12 |
| Korea |
| December 31 |
| 28.70 |
| - | |
Pebblestone CGV Private Real Estate Trust No.1 |
| Korea |
| December 31 |
| 48.53 |
| - | |
Shinhan AIM Real Estate Fund No.2 |
| Korea |
| December 31 |
| 30.00 |
| - | |
Shinhan AIM Real Estate Fund No.1 |
| Korea |
| December 31 |
| 21.01 |
| - | |
SHBNPP Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust [Infra business] |
| Korea |
| December 31 |
| 22.02 |
| - | |
SHBNPP Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust [Infra business] |
| Korea |
| December 31 |
| 29.19 |
| - | |
SHBNPP Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2(USD)(*7) |
| Korea |
| December 31 |
| 71.43 |
| - | |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No. 1 [Equity securities-Derivative] |
| Korea |
| December 31 |
| 30.00 |
| - | |
Korea Omega-Shinhan Project Fund I(*5) |
| Korea |
| December 31 |
| 50.00 |
| - | |
New Green Shinhan Mezzanine Fund(*5) |
| Korea |
| December 31 |
| 39.22 |
| - | |
KORAMKO-Daum Professional Private Investment Trust No.12 |
| Korea |
| December 31 |
| 33.33 |
| - | |
Samsung SRA Real Estate Professional Private 45[FoFs] |
| Korea |
| December 31 |
| 25.00 |
| - | |
IBK Global New Renewable Energy Special Asset Professional Private2 |
| Korea |
| December 31 |
| 28.98 |
| - |
146
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(a) Investments in associates as of December 31, 2020 and 2019 are as follows (continued):
Investees |
| Country |
| Reporting date |
| Ownership (%) | |||
|
|
| December 31, 2020 |
| December 31, 2019 | ||||
VS Cornerstone Fund |
| Korea |
| December 31 |
| 41.18 |
| - | |
Aone Mezzanine Opportunity Professional Private (*7) |
| Korea |
| December 31 |
| 66.12 |
| - | |
KiwoomUnicorn3New Technology Business Investment Fund |
| Korea |
| December 31 |
| 21.28 |
| - | |
Multi Asset The United States Thortons Professional Private1 |
| Korea |
| December 31 |
| 25.00 |
| - | |
Kiwoom Milestone US Real Estate Professional Private20(*7) |
| Korea |
| December 31 |
| 75.27 |
| - | |
NH-Amundi US Infrastructure Private Fund2 |
| Korea |
| December 31 |
| 25.91 |
| - | |
KB Distribution Private Real Estate1(*7) |
| Korea |
| December 31 |
| 62.00 |
| - | |
SHBNPP Jigae Namsan BTO professional Investment Type Private Special Asset Investment Trust [Infra business] |
| Korea |
| December 31 |
| 28.93 |
| - | |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No.2 [Loan-Derivative] |
| Korea |
| December 31 |
| 30.00 |
| - | |
Kakao-Shinhan 1st TNYT Fund(*5) |
| Korea |
| December 31 |
| 48.62 |
| - | |
IMM Special Situation 1-2 PRIVATE EQUITY FUND(*5) |
| Korea |
| December 31 |
| 20.02 |
| - | |
Pacific Private Placement Real Estate Fund No.40 |
| Korea |
| December 31 |
| 24.73 |
| - | |
Mastern Private Real Estate Loan Fund No.2 |
| Korea |
| December 31 |
| 33.57 |
| - | |
LB Scotland Amazon Fulfillment Center Fund 29(*7) |
| Korea |
| December 31 |
| 70.14 |
| - | |
JR AMC Hungary Budapest Office Fund 16 |
| Korea |
| December 31 |
| 32.57 |
| - | |
IGIS 372 Real Estate Professional Private |
| Korea |
| December 31 |
| 28.39 |
| - | |
KoFC-Neoplux R&D-Biz Creation 2013-1 Venture Capital Fund(*4) |
| Korea |
| December 31 |
| 19.00 |
| - | |
Future-Creation Neoplux Venture Capital Fund(*4) |
| Korea |
| December 31 |
| 16.25 |
| - | |
Gyeonggi-Neoplux Superman Fund(*4) |
| Korea |
| December 31 |
| 21.76 |
| - | |
NewWave 6th Fund(*4) |
| Korea |
| December 31 |
| 30.00 |
| - | |
Neoplux No.3 Private Equity Fund(*4) |
| Korea |
| December 31 |
| 10.00 |
| - | |
PCC Amberstone Private Equity Fund I |
| Korea |
| December 31 |
| 21.67 |
| - | |
KIAMCO POWERLOAN TRUST 4TH |
| Korea |
| December 31 |
| 47.37 |
| - | |
Mastern Opportunity Seeking Real Estate Fund II |
| Korea |
| December 31 |
| 20.00 |
| - | |
AION ELFIS PROFESSIONAL PRIVATE 1 |
| Korea |
| December 31 |
| 20.00 |
| - | |
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business |
| Korea |
| December 31 |
| 29.68 |
| - | |
Neoplux Market-Frontier Secondary Fund(*4) |
| Korea |
| December 31 |
| 19.74 |
| - | |
Synergy Green New Deal 1st New Technology Business Investment Fund |
| Korea |
| December 31 |
| 28.17 |
| - | |
KAIM Real-estate Private Investment Trust 20 |
| Korea |
| December 31 |
| 38.46 |
| - | |
KIAMCO Vietnam Solar Special Asset Private Investment Trust |
| Korea |
| December 31 |
| 50.00 |
| - | |
CSQUARE SNIPER PROFESSIONAL PRIVATE 10(*7) |
| Korea |
| December 31 |
| 62.50 |
| - | |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1(*7) |
| Korea |
| December 31 |
| 97.85 |
| - | |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2(*7) |
| Korea |
| December 31 |
| 97.85 |
| - | |
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45 |
| Korea |
| December 31 |
| 25.00 |
| - | |
IGIS Professional Investors Private Investment Real Estate Investment LLC No.395(*7) |
| Korea |
| December 31 |
| 58.82 |
| - | |
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2 |
| Korea |
| December 31 |
| 30.00 |
| - | |
Eum Private Equity Fund No.7 |
| Korea |
| December 31 |
| 21.00 |
| - | |
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund |
| Korea |
| December 31 |
| 25.00 |
| - | |
Kiwoom Hero No.4 Private Equity Fund |
| Korea |
| December 31 |
| 21.05 |
| - | |
Vogo Canister Professional Trust Private Fund I |
| Korea |
| December 31 |
| 36.68 |
| - |
147
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(a) Investments in associates as of December 31, 2020 and 2019 are as follows (continued):
(*1) The latest financial statements are used for the equity method since the financial statements as of December 31, 2020 are not available. Significant trades and events occurred within the period are properly reflected.
(*2) The Group applies the equity method accounting as the Group has a significant influence on the investees through important business transactions.
(*3) As a part of the rehabilitation process, the Group acquired shares through the conversion of equity investments, as the Group cannot exercise voting rights during the process, the Group has classified the shares as investments at fair value through profit or loss. The Group reclassified Securities at fair value through profit or loss to investments in associates as the reorganization procedures are completed and now the Group can normally exercise its voting rights to the investees.
(*4) As a managing partner, the Group has a significant influence over the investees.
(*5) As a limited partner, the Group does not have an ability to participate in policy-making processes to obtain economic benefit from the investees that would allow the Group to control the entity.
(*6) Excluded from the investments in associates due to full or partial disposal of shares, or loss of significant influence.
(*7) Although the ownership interests are more than 50%, the Group applies the equity method accounting as the Group does not have an ability to participate in the financial and operating policy-making process.
(*8) Although the ownership percentages are less than 20%, the Group applies the equity method accounting since it participates in policy-making processes and therefore can exercise significant influence on investees.
(*9) For the year ended December 31, 2020, the name is changed from 'Lime Neptune Professional Private 6' to 'DB Epic Convertible bond Private Trust No.2'.
(*10) The rate of Group’s voting rights is 4.65%.
(*11) For the year ended December 31, 2020, it is incorporated into the consolidation target as it held control due to increased equity ratio.
(*12) It has a significant impact with a 50% or more stake. However, the full payment guarantee for the investment does not expose the variable profit. Therefore, the investment amount is classified as an investment assets in the associates.
148
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b)Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
BNP Paribas Cardif Life Insurance |
| 52,586 |
| - |
| (928) |
| (1,058) |
| - |
| 50,600 |
Songrim Partners(*1) |
| - |
| - |
| - |
| - |
| - |
| - |
Neoplux Technology Valuation Investment Fund (*3) |
| 16,384 |
| (16,171) |
| (213) |
| - |
| - |
| - |
Partners 4th Growth Investment Fund |
| 14,917 |
| (4,474) |
| 1,515 |
| - |
| - |
| 11,958 |
KTB Newlake Global Healthcare PEF |
| 11,280 |
| (1,950) |
| 74 |
| - |
| - |
| 9,404 |
Daekwang Semiconductor Co., Ltd. |
| 3,388 |
| - |
| 243 |
| - |
| - |
| 3,631 |
Shinhan-Neoplux Energy Newbiz Fund(*4) |
| 7,880 |
| 5,887 |
| 703 |
| - |
| - |
| 14,470 |
Shinhan-Albatross tech investment Fund |
| 8,734 |
| 4,650 |
| (62) |
| - |
| - |
| 13,322 |
Plutus-SG Private Equity Fund |
| 4,231 |
| (5,230) |
| 999 |
| - |
| - |
| - |
Eum Private Equity Fund No.3 |
| 3,574 |
| (5,621) |
| 2,050 |
| - |
| - |
| 3 |
KTB Confidence Private Placement |
| 6,067 |
| (6,063) |
| (4) |
| - |
| - |
| - |
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund |
| 4,256 |
| (772) |
| (3,484) |
| - |
| - |
| - |
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund |
| 8,916 |
| (48) |
| (8,868) |
| - |
| - |
| - |
VOGO Debt Strategy Qualified INV Private |
| 9,930 |
| (1,700) |
| 472 |
| - |
| - |
| 8,702 |
Shinhan-Midas Donga Secondary Fund |
| 3,486 |
| 1,150 |
| 116 |
| - |
| - |
| 4,752 |
ShinHan – Soo Young Entrepreneur Investment Fund No.1 |
| 4,549 |
| 1,495 |
| 3,924 |
| - |
| - |
| 9,968 |
Synergy-Shinhan Mezzanine New Technology Investment Fund |
| 3,912 |
| (4,406) |
| 494 |
| - |
| - |
| - |
Shinhan Praxis K-Growth Global Private Equity Fund |
| 10,302 |
| 78 |
| (435) |
| - |
| - |
| 9,945 |
Credian Healthcare Private Equity Fund II |
| 2,377 |
| (4,937) |
| 8,395 |
| - |
| - |
| 5,835 |
Kiwoom Milestone Professional Private Real Estate Trust 19 |
| 10,407 |
| (265) |
| (224) |
| - |
| - |
| 9,918 |
AIP EURO Green Private Real Estate Trust No.3 |
| 20,884 |
| (1,189) |
| 1,326 |
| - |
| - |
| 21,021 |
Hanhwa US Equity Strategy Private Real Estate Fund No.1 |
| 25,964 |
| (26,907) |
| 3,220 |
| - |
| - |
| 2,277 |
Shinhan Global Healthcare Fund 1 |
| 3,209 |
| - |
| 128 |
| - |
| (3,337) |
| - |
JB Power TL Investment Type Private Placement Special Asset Fund 7 |
| 16,800 |
| (1,359) |
| 745 |
| - |
| - |
| 16,186 |
IBK AONE convertible 1 |
| 6,077 |
| (6,048) |
| (29) |
| - |
| - |
| - |
Rico synergy collabo Multi-Mezzanine 3 |
| 3,217 |
| (3,221) |
| 4 |
| - |
| - |
| - |
KB NA Hickory Private Special Asset Fund |
| 35,930 |
| (2,609) |
| 1,617 |
| - |
| - |
| 34,938 |
Koramco Europe Core Private Placement Real Estate Fund No.2-2 |
| 19,562 |
| (1,330) |
| 386 |
| - |
| - |
| 18,618 |
BNP Paribas Cardif General Insurance |
| 2,113 |
| 3,066 |
| (1,244) |
| (40) |
| - |
| 3,895 |
Axis Global Growth New Technology Investment Association |
| 3,205 |
| (2,920) |
| (285) |
| - |
| - |
| - |
Hermes Private Investment Equity Fund |
| 6,376 |
| - |
| (277) |
| - |
| - |
| 6,099 |
SHC ULMUS Fund No.1 |
| 3,149 |
| (3,289) |
| 140 |
| - |
| - |
| - |
Shinhan-Nvestor Liquidity Solution Fund |
| 4,865 |
| (1,004) |
| 632 |
| - |
| - |
| 4,493 |
Shinhan AIM FoF Fund 1a |
| 7,242 |
| 1,324 |
| 194 |
| - |
| - |
| 8,760 |
IGIS Global Credit Fund 150-1 |
| 9,718 |
| (4,002) |
| 1,566 |
| - |
| - |
| 7,282 |
149
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
GX Shinhan Intervest 1st Private Equity Fund |
| 33,166 |
| (54,515) |
| 21,349 |
| - |
| - |
| - |
Soo Commerce Platform Growth Fund |
| 6,343 |
| (8,474) |
| 3,278 |
| - |
| - |
| 1,147 |
Partner One Value up I Private Equity Fund |
| 11,891 |
| (20) |
| (92) |
| - |
| - |
| 11,779 |
Genesis No.1 Private Equity Fund |
| 51,150 |
| 388 |
| 28,575 |
| - |
| - |
| 80,113 |
GMB ICT New Technology Investment Fund |
| 7,854 |
| (7,853) |
| (1) |
| - |
| - |
| - |
Korea Omega Project Fund III |
| 3,016 |
| - |
| 547 |
| - |
| - |
| 3,563 |
Soo Delivery Platform Growth Fund |
| 8,922 |
| (7,929) |
| 3,075 |
| - |
| - |
| 4,068 |
Genesis North America Power Company No.1 PEF |
| 18,275 |
| (3,869) |
| 2,577 |
| - |
| - |
| 16,983 |
Hyungje art printing (*1) |
| - |
| - |
| - |
| - |
| - |
| - |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 20,712 |
| (10,794) |
| 664 |
| - |
| - |
| 10,582 |
Shinhan-Rhinos 1 Fund |
| 3,029 |
| (1,004) |
| 574 |
| - |
| - |
| 2,599 |
Pacific Private Investment Trust No.20 |
| 4,076 |
| (1,289) |
| 212 |
| - |
| - |
| 2,999 |
Susung Mezzanine project P1 Private Investment Trust |
| 5,128 |
| (3,613) |
| (170) |
| - |
| - |
| 1,345 |
Korea Finance Security |
| 3,235 |
| - |
| (180) |
| - |
| - |
| 3,055 |
Multimedia Tech Co.Ltd (*1) |
| 19 |
| - |
| (19) |
| - |
| - |
| - |
MIEL CO.,LTD (*1) |
| - |
| - |
| - |
| - |
| - |
| - |
AIP Transportation Specialized Privately Placed Fund Trust #1 |
| 31,580 |
| 1,366 |
| 47 |
| - |
| - |
| 32,993 |
DB Epic Convertiblebond Private Trust No.2 |
| 5,063 |
| 202 |
| 520 |
| - |
| - |
| 5,785 |
PCC S/W 2nd Fund |
| 3,001 |
| (3,328) |
| 327 |
| - |
| - |
| - |
E&Healthcare Investment Fund No.6 |
| 7,776 |
| - |
| 7,387 |
| - |
| - |
| 15,163 |
One Shinhan Global Fund1 |
| 4,441 |
| - |
| (412) |
| - |
| - |
| 4,029 |
Kiwoom-Shinhan Innovation Fund I |
| 7,284 |
| 7,500 |
| 1,185 |
| - |
| - |
| 15,969 |
Daishin-K&T New Technology Investment Fund |
| 7,057 |
| - |
| (57) |
| - |
| - |
| 7,000 |
Midas Asset Global CRE Debt Private Fund No.6 |
| 23,731 |
| 21,537 |
| 2,121 |
| - |
| - |
| 47,389 |
Richmond Private Investment Trust No.82 |
| 15,120 |
| (855) |
| 784 |
| - |
| - |
| 15,049 |
Tiger Alternative Real Estate Professional Private5 |
| 19,820 |
| (1,376) |
| 55 |
| - |
| - |
| 18,499 |
Samchully Midstream Private Placement Special Asset Fund 5-4 |
| 30,742 |
| (968) |
| (956) |
| - |
| - |
| 28,818 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 53,831 |
| 9,253 |
| 2,532 |
| - |
| - |
| 65,616 |
AUCTUS FITRIN Corporate Recovery Private Equity Fund |
| 14,358 |
| (14,484) |
| 126 |
| - |
| - |
| - |
NH-Amundi Global Infrastructure Trust 14 |
| 18,497 |
| (460) |
| 782 |
| - |
| - |
| 18,819 |
150
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
Pacific Private Real Estate Fund Investment Trust No.30 (*3) |
| 14,816 |
| (15,374) |
| 558 |
| - |
| - |
| - |
Jarvis Memorial Private Investment Trust 1 |
| 10,166 |
| (763) |
| 640 |
| - |
| - |
| 10,043 |
Mastern Private Private Invetstment Trust 68 |
| 9,999 |
| (460) |
| 471 |
| - |
| - |
| 10,010 |
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 |
| 4,397 |
| 30,510 |
| 734 |
| - |
| - |
| 35,641 |
Milestone Private Real Estate Fund 3 (Derivative Type) |
| 17,186 |
| (838) |
| 2,180 |
| - |
| - |
| 18,528 |
IGIS Private Real Estate Investment Trust 286 |
| 9,768 |
| (1,361) |
| 437 |
| - |
| - |
| 8,844 |
Nomura-Rifa Private Real Estate Investment Trust 31 |
| 8,914 |
| (932) |
| 425 |
| - |
| - |
| 8,407 |
Lime Pricing Private Equity Fund |
| 8,300 |
| (8,217) |
| (83) |
| - |
| - |
| - |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2 |
| 41,991 |
| (29,980) |
| 1,312 |
| - |
| - |
| 13,323 |
DS Solid.II Hedge Fund |
| 4,123 |
| (6,397) |
| 2,274 |
| - |
| - |
| - |
Hana Semiconductor New Technology Fund |
| 12,856 |
| (2,557) |
| 13,832 |
| - |
| - |
| 24,131 |
J&Magnet Startup Venture Specialized Private Equity Fund |
| 5,979 |
| (2,151) |
| 2,107 |
| - |
| - |
| 5,935 |
Cape IT Fund No.3 |
| 9,967 |
| (580) |
| 1,262 |
| - |
| - |
| 10,649 |
FuturePlay-Shinhan TechInnovation Fund 1 |
| 868 |
| 3,661 |
| (234) |
| - |
| - |
| 4,295 |
Stonebridge Corporate 1st Fund |
| 2,981 |
| - |
| 258 |
| - |
| - |
| 3,239 |
Vogo Realty Partners Private Real Estate Fund V |
| 10,376 |
| (566) |
| 1,017 |
| - |
| - |
| 10,827 |
IL GU FARM CO.,LTD (*1) |
| - |
| - |
| - |
| - |
| - |
| - |
Korea Credit Bureau |
| 6,812 |
| (90) |
| 254 |
| - |
| - |
| 6,976 |
Goduck Gangil1 PFV Co., Ltd (*1) |
| 48 |
| - |
| (48) |
| - |
| - |
| - |
SBC PFV Co., Ltd |
| 20,000 |
| - |
| (1,792) |
| - |
| - |
| 18,208 |
Sprott Global Renewable Private Equity Fund II |
| 19,016 |
| (18,909) |
| (107) |
| - |
| - |
| - |
NH-amundi global infra private fund 16 |
| 48,158 |
| (1,236) |
| (3,083) |
| - |
| - |
| 43,839 |
IMM Global Private Equity Fund |
| 28,925 |
| 90,776 |
| 1,154 |
| - |
| - |
| 120,855 |
HANA Alternative Estate Professional Private122 |
| 26,205 |
| (644) |
| 4,070 |
| - |
| - |
| 29,631 |
Hanwha-Incus Plus New Technology Fund No.1 |
| 5,499 |
| - |
| 5,527 |
| - |
| - |
| 11,026 |
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7[Bond] |
| 51,293 |
| (1,613) |
| 1,530 |
| - |
| - |
| 51,210 |
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust |
| 150,317 |
| 127,753 |
| 8,461 |
| - |
| - |
| 286,531 |
PSA EMP Private Equity Fund |
| 9,927 |
| (278) |
| 165 |
| - |
| - |
| 9,814 |
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24 |
| 29,463 |
| (239) |
| 177 |
| - |
| - |
| 29,401 |
SHBNPP Peace of Mind TDF 2035 Security Investment Trust [Equity Balanced-FoF] |
| 5,727 |
| (5,727) |
| - |
| - |
| - |
| - |
151
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
SHBNPP Peace of Mind TDF 2040 Security Investment Trust [Equity Balanced-FoF] |
| 5,729 |
| (5,729) |
| - |
| - |
| - |
| - |
BRAIN DO PROFESSIONALE PRIVATE No. 27 |
| 3,065 |
| - |
| 376 |
| - |
| - |
| 3,441 |
VISION US Muni US Local Debt Opportunities Professional Private1(*3) |
| 9,869 |
| (10,032) |
| 163 |
| - |
| - |
| - |
UI Venture Fund 7th |
| - |
| 3,000 |
| 279 |
| - |
| - |
| 3,279 |
Sparklabs-Shinhan Opportunity Fund 1 |
| - |
| 4,999 |
| (167) |
| - |
| - |
| 4,832 |
BNW Tech-Innovation Private Equity Fund |
| - |
| 6,000 |
| (58) |
| - |
| - |
| 5,942 |
IGIS Real-estate Private Investment Trust No.33 |
| - |
| 13,945 |
| 154 |
| - |
| - |
| 14,099 |
Findvalue PreIPO 6th Professional Investment Type Private Investment Trust. |
| - |
| 3,000 |
| 2 |
| - |
| - |
| 3,002 |
WWG Global Real Estate Investment Trust no.4 |
| - |
| 16,874 |
| 878 |
| - |
| - |
| 17,752 |
Fidelis Global Private Real Estate Trust No.2 |
| - |
| 18,582 |
| 903 |
| - |
| - |
| 19,485 |
IGIS PRIVATE REAL ESTATE TRUST NO.331 |
| - |
| 3,932 |
| (167) |
| - |
| - |
| 3,765 |
AIP EURO PRIVATE REAL ESTATE TRUST No. 12 |
| - |
| 45,082 |
| 3,262 |
| - |
| - |
| 48,344 |
Pebblestone CGV Private Real Estate Trust No.1 |
| - |
| 12,793 |
| 553 |
| - |
| - |
| 13,346 |
Shinhan AIM Real Estate Fund No.2(*2) |
| - |
| 36,186 |
| (7,652) |
| - |
| (6,070) |
| 22,464 |
Shinhan AIM Real Estate Fund No.1(*2) |
| - |
| 45,415 |
| 1,530 |
| - |
| - |
| 46,945 |
SHBNPP Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust [Infra business](*2) |
| - |
| 32,258 |
| 686 |
| - |
| - |
| 32,944 |
SHBNPP Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust [Infra business](*2) |
| - |
| 22,003 |
| (1,101) |
| - |
| - |
| 20,902 |
SHBNPP Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2(USD) |
| - |
| 7,273 |
| (581) |
| - |
| - |
| 6,692 |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No. 1 [Equity securities-Derivative](*2) |
| - |
| 4,859 |
| (14) |
| - |
| - |
| 4,845 |
Korea Omega-Shinhan Project Fund I |
| - |
| 6,000 |
| (69) |
| - |
| - |
| 5,931 |
New Green Shinhan Mezzanine Fund |
| - |
| 4,000 |
| 916 |
| - |
| - |
| 4,916 |
KORAMKO-Daum Professional Private Investment Trust No.12 |
| - |
| 6,930 |
| 598 |
| - |
| - |
| 7,528 |
Samsung SRA Real Estate Professional Private 45[FoFs] |
| - |
| 10,701 |
| (35) |
| - |
| - |
| 10,666 |
IBK Global New Renewable Energy Special Asset Professional Private2 |
| - |
| 29,177 |
| 3,172 |
| - |
| - |
| 32,349 |
VS Cornerstone Fund |
| - |
| 3,500 |
| (36) |
| - |
| - |
| 3,464 |
Aone Mezzanine Opportunity Professional Private |
| - |
| 8,000 |
| 1,580 |
| - |
| - |
| 9,580 |
KiwoomUnicorn3New Technology Business Investment Fund |
| - |
| 3,000 |
| 1,283 |
| - |
| - |
| 4,283 |
152
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
Multi Asset The United States Thortons Professional Private1(*2) |
| - |
| 44,202 |
| (2,762) |
| - |
| - |
| 41,440 |
Kiwoom Milestone US Real Estate Professional Private20 |
| - |
| 49,791 |
| 1,721 |
| - |
| - |
| 51,512 |
NH-Amundi US Infrastructure Private Fund2(*2) |
| - |
| 24,647 |
| 783 |
| - |
| - |
| 25,430 |
KB Distribution Private Real Estate1(*2) |
| - |
| 29,984 |
| 714 |
| - |
| - |
| 30,698 |
SHBNPP Jigae Namsan BTO professional Investment Type Private Special Asset Investment Trust [Infra business](*2) |
| - |
| 19,968 |
| 744 |
| - |
| - |
| 20,712 |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No.2 [Loan-Derivative](*2) |
| - |
| 28,251 |
| 898 |
| - |
| - |
| 29,149 |
Kakao-Shinhan 1st TNYT Fund |
| - |
| 6,000 |
| (319) |
| - |
| - |
| 5,681 |
IMM Special Situation 1-2 PRIVATE EQUITY FUND |
| - |
| 10,000 |
| 870 |
| - |
| - |
| 10,870 |
Pacific Private Placement Real Estate Fund No.40 |
| - |
| 11,273 |
| 374 |
| - |
| - |
| 11,647 |
Mastern Private Real Estate Loan Fund No.2 |
| - |
| 5,740 |
| (48) |
| - |
| - |
| 5,692 |
LB Scotland Amazon Fulfillment Center Fund 29 |
| - |
| 30,753 |
| 429 |
| - |
| - |
| 31,182 |
JR AMC Hungary Budapest Office Fund 16 |
| - |
| 11,380 |
| 824 |
| - |
| - |
| 12,204 |
IGIS 372 Real Estate Professional Private |
| - |
| 58,200 |
| (1,365) |
| - |
| - |
| 56,835 |
KoFC-Neoplux R&D-Biz Creation 2013-1 Venture Capital Fund(*4) |
| - |
| 4,058 |
| (228) |
| - |
| - |
| 3,830 |
Future-Creation Neoplux Venture Capital Fund(*4) |
| - |
| 4,204 |
| (408) |
| - |
| - |
| 3,796 |
Gyeonggi-Neoplux Superman Fund(*4) |
| - |
| 7,665 |
| (1,266) |
| - |
| - |
| 6,399 |
NewWave 6th Fund(*4) |
| - |
| 6,242 |
| (92) |
| - |
| - |
| 6,150 |
Neoplux No.3 Private Equity Fund(*4) |
| - |
| 10,825 |
| (530) |
| - |
| - |
| 10,295 |
PCC Amberstone Private Equity Fund I(*2) |
| - |
| 22,066 |
| 414 |
| - |
| - |
| 22,480 |
KIAMCO POWERLOAN TRUST 4TH |
| - |
| 43,390 |
| 565 |
| - |
| - |
| 43,955 |
Mastern Opportunity Seeking Real Estate Fund II |
| - |
| 19,508 |
| 291 |
| - |
| - |
| 19,799 |
AION ELFIS PROFESSIONAL PRIVATE 1 |
| - |
| 5,000 |
| 528 |
| - |
| - |
| 5,528 |
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business |
| - |
| 4,500 |
| (47) |
| - |
| - |
| 4,453 |
Neoplux Market-Frontier Secondary Fund(*4) |
| - |
| 10,974 |
| 571 |
| - |
| - |
| 11,545 |
Synergy Green New Deal 1st New Technology Business Investment Fund |
| - |
| 10,000 |
| 8 |
| - |
| - |
| 10,008 |
KAIM Real-estate Private Investment Trust 20 |
| - |
| 5,000 |
| 98 |
| - |
| - |
| 5,098 |
KIAMCO Vietnam Solar Special Asset Private Investment Trust |
| - |
| 8,150 |
| (202) |
| - |
| - |
| 7,948 |
CSQUARE SNIPER PROFESSIONAL PRIVATE 10 |
| - |
| 3,125 |
| - |
| - |
| - |
| 3,125 |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1 |
| - |
| 44,780 |
| (9) |
| (177) |
| - |
| 44,594 |
153
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2 |
| - |
| 44,780 |
| (9) |
| (177) |
| - |
| 44,594 |
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45 |
| - |
| 16,000 |
| (145) |
| - |
| - |
| 15,855 |
IGIS Professional Investors Private Investment Real Estate Investment LLC No.395 |
| - |
| 30,000 |
| (356) |
| - |
| - |
| 29,644 |
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2 |
| - |
| 21,142 |
| - |
| - |
| - |
| 21,142 |
Eum Private Equity Fund No.7 |
| - |
| 7,872 |
| - |
| - |
| - |
| 7,872 |
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund |
| - |
| 5,034 |
| - |
| - |
| - |
| 5,034 |
Kiwoom Hero No.4 Private Equity Fund |
| - |
| 4,707 |
| - |
| - |
| - |
| 4,707 |
Vogo Canister Professional Trust Private Fund I(*2) |
| - |
| 43,975 |
| - |
| - |
| - |
| 43,975 |
Others |
| 85,517 |
| 25,964 |
| 19,814 |
| (5) |
| - |
| 131,292 |
|
| 1,452,861 |
| 1,056,236 |
| 159,533 |
| (1,457) |
| (9,407) |
| 2,657,768 |
(*1) The Group has stopped recognizing its equity method income or loss due to carrying amount of '0'.
(*2) Classified as investments in associates without cash transactions.
(*3) For the year ended December 31, 2020, it is incorporated into the consolidation target as it held control due to increased equity ratio.
(*4) For the year ended December 31, 2020, it is incorporated into the investments in associates as Neoplux Co., Ltd.. is incorporated into the consolidation target.
154
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2019 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
BNP Paribas Cardif Life Insurance |
| 49,816 |
| (373) |
| (517) |
| 3,660 |
| - |
| 52,586 |
Songrim Partners.(*1) |
| - |
| - |
| - |
| - |
| - |
| - |
Neoplux Technology Valuation Investment Fund |
| 18,738 |
| (1,661) |
| (693) |
| - |
| - |
| 16,384 |
Partners 4th Growth Investment Fund |
| 16,612 |
| (1,219) |
| (476) |
| - |
| - |
| 14,917 |
KTB Newlake Global Healthcare PEF |
| 9,885 |
| 1,500 |
| (105) |
| - |
| - |
| 11,280 |
Daekwang Semiconductor Co., Ltd. |
| 3,334 |
| - |
| 52 |
| 2 |
| - |
| 3,388 |
Shinhan-Neoplux Energy Newbiz Fund |
| 3,974 |
| 4,200 |
| (294) |
| - |
| - |
| 7,880 |
Shinhan-Albatross tech investment Fund |
| 8,908 |
| - |
| 132 |
| (306) |
| - |
| 8,734 |
KCLAVIS Meister Fund No.17 |
| 3,083 |
| (1,801) |
| (84) |
| - |
| - |
| 1,198 |
Plutus-SG Private Equity Fund |
| 4,252 |
| (132) |
| 111 |
| - |
| - |
| 4,231 |
SG ARGES Private Equity Fund No.1 |
| 4,341 |
| (4,796) |
| 455 |
| - |
| - |
| - |
Eum Private Equity Fund No.3 |
| 4,889 |
| (2,476) |
| 1,161 |
| - |
| - |
| 3,574 |
KTB Confidence Private Placement |
| 5,302 |
| (215) |
| 980 |
| - |
| - |
| 6,067 |
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund |
| 5,432 |
| (1,266) |
| 90 |
| - |
| - |
| 4,256 |
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund |
| 8,429 |
| 242 |
| 245 |
| - |
| - |
| 8,916 |
VOGO Debt Strategy Qualified INV Private R/E INV TR 4 |
| 4,831 |
| 4,820 |
| 279 |
| - |
| - |
| 9,930 |
Platform Partners brick save Private Investment trust |
| 8,120 |
| (8,197) |
| 77 |
| - |
| - |
| - |
Shinhan-Midas Donga Secondary Fund |
| 2,061 |
| 1,750 |
| (325) |
| - |
| - |
| 3,486 |
ShinHan – Soo Young Entrepreneur Investment Fund No.1 |
| 2,554 |
| 1,968 |
| 27 |
| - |
| - |
| 4,549 |
Synergy-Shinhan Mezzanine New Technology Investment Fund |
| 10,149 |
| (6,492) |
| 255 |
| - |
| - |
| 3,912 |
Shinhan Praxis K-Growth Global Private Equity Fund |
| 16,527 |
| (8,745) |
| 2,520 |
| - |
| - |
| 10,302 |
Credian Healthcare Private Equity Fund II |
| 4,553 |
| (2,526) |
| 350 |
| - |
| - |
| 2,377 |
Kiwoom Milestone Professional Private Real Estate Trust 19 |
| 10,419 |
| (241) |
| 229 |
| - |
| - |
| 10,407 |
AIP EURO Green Private Real Estate Trust No.3 |
| 20,544 |
| (1,248) |
| 1,588 |
| - |
| - |
| 20,884 |
Brain Professional Private Trust No.4 |
| 5,244 |
| (5,175) |
| (69) |
| - |
| - |
| - |
Hanhwa US Equity Strategy Private Real Estate Fund No.1 |
| 26,232 |
| (1,866) |
| 1,598 |
| - |
| - |
| 25,964 |
Brain KS Qualified Privately Placed Fund No.6 |
| 5,097 |
| (5,041) |
| (56) |
| - |
| - |
| - |
Shinhan Global Healthcare Fund 1 |
| 3,285 |
| - |
| (76) |
| - |
| - |
| 3,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
155
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2019 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
JB Power TL Investment Type Private Placement Special Asset Fund 7 |
| 17,484 |
| (1,513) |
| 829 |
| - |
| - |
| 16,800 |
IBK AONE convertible 1 |
| 5,906 |
| - |
| 171 |
| - |
| - |
| 6,077 |
Rico synergy collabo Multi-Mezzanine 3 |
| 5,290 |
| (2,501) |
| 428 |
| - |
| - |
| 3,217 |
KB NA Hickory Private Special Asset Fund |
| 34,360 |
| 445 |
| 1,125 |
| - |
| - |
| 35,930 |
GB Professional Private Investment Trust 6 |
| 8,588 |
| (8,588) |
| - |
| - |
| - |
| - |
Koramco Europe Core Private Placement Real Estate Fund No.2-2 |
| 18,616 |
| (1,458) |
| 2,404 |
| - |
| - |
| 19,562 |
SHBNPP Private Korea Equity Long-Short Professional Feeder |
| 14,370 |
| (14,325) |
| (45) |
| - |
| - |
| - |
Shinhan-Stonebridge Petro PEF |
| 18,681 |
| (19,589) |
| 909 |
| - |
| - |
| 1 |
BNP Paribas Cardif General Insurance |
| 3,423 |
| - |
| (1,296) |
| (14) |
| - |
| 2,113 |
Axis Global Growth New Technology Investment Association |
| 4,875 |
| (1,592) |
| (78) |
| - |
| - |
| 3,205 |
Polaris No7 Start up and Venture Private Equity Fund |
| 4,338 |
| (2,300) |
| 265 |
| - |
| - |
| 2,303 |
Hermes Private Investment Equity Fund |
| 7,065 |
| - |
| (689) |
| - |
| - |
| 6,376 |
SHC ULMUS Fund No.1 |
| 2,890 |
| - |
| 259 |
| - |
| - |
| 3,149 |
Shinhan-Nvestor Liquidity Solution Fund |
| 2,689 |
| 2,700 |
| (524) |
| - |
| - |
| 4,865 |
Shinhan AIM FoF Fund 1a |
| 4,351 |
| 2,363 |
| 528 |
| - |
| - |
| 7,242 |
Daishin Heim Qualified Investor Private Investment Trust No.1808 |
| 10,126 |
| (10,297) |
| 171 |
| - |
| - |
| - |
Heungkuk High Class Professional Trust Private Fund 37 |
| 9,438 |
| (9,505) |
| 67 |
| - |
| - |
| - |
IGIS Global Credit Fund 150-1 |
| 8,896 |
| 781 |
| 41 |
| - |
| - |
| 9,718 |
GX Shinhan Intervest 1st Private Equity Fund |
| 31,831 |
| - |
| 1,335 |
| - |
| - |
| 33,166 |
Soo Commerce Platform Growth Fund |
| 6,378 |
| - |
| (35) |
| - |
| - |
| 6,343 |
Partner One Value up I Private Equity Fund |
| 11,939 |
| - |
| (48) |
| - |
| - |
| 11,891 |
Genesis No.1 Private Equity Fund |
| 45,758 |
| 404 |
| 4,988 |
| - |
| - |
| 51,150 |
GMB ICT New Technology Investment Fund |
| 7,934 |
| - |
| (80) |
| - |
| - |
| 7,854 |
Korea Omega Project Fund III |
| 1,992 |
| - |
| 1,024 |
| - |
| - |
| 3,016 |
Soo Delivery Platform Growth Fund |
| 8,983 |
| (171) |
| 110 |
| - |
| - |
| 8,922 |
Genesis North America Power Company No.1 PEF |
| 20,824 |
| (4,035) |
| 1,486 |
| - |
| - |
| 18,275 |
Hyungje art printing(*1) |
| - |
| - |
| - |
| - |
| - |
| - |
156
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2019 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 6,204 |
| 14,147 |
| 361 |
| - |
| - |
| 20,712 |
Shinhan-Rhinos 1 Fund |
| - |
| 3,000 |
| 29 |
| - |
| - |
| 3,029 |
Pacific Private Investment Trust No.20 |
| - |
| 3,819 |
| 257 |
| - |
| - |
| 4,076 |
Susung Mezzanine project P1 Private Investment Trust |
| - |
| 4,000 |
| 1,128 |
| - |
| - |
| 5,128 |
Korea Finance Security (*2) |
| - |
| 3,448 |
| (213) |
| - |
| - |
| 3,235 |
MIEL CO.,LTD(*3) |
| - |
| - |
| - |
| - |
| - |
| - |
AIP Transportation Specialized Privately Placed Fund Trust #1 |
| - |
| 31,136 |
| 444 |
| - |
| - |
| 31,580 |
Lime Neptune Professional Private 6 |
| - |
| 5,000 |
| 63 |
| - |
| - |
| 5,063 |
PCC S/W 2nd Fund |
| - |
| 3,000 |
| 1 |
| - |
| - |
| 3,001 |
E&Healthcare Investment Fund No.6 |
| - |
| 7,030 |
| 746 |
| - |
| - |
| 7,776 |
One Shinhan Global Fund 1 |
| - |
| 4,520 |
| (79) |
| - |
| - |
| 4,441 |
Kiwoom-Shinhan Innovation Fund I |
| - |
| 7,500 |
| (216) |
| - |
| - |
| 7,284 |
Daishin-K&T New Technology Investment Fund |
| - |
| 7,000 |
| 57 |
| - |
| - |
| 7,057 |
Midas Asset Global CRE Debt Private Fund No.6 |
| - |
| 23,194 |
| 537 |
| - |
| - |
| 23,731 |
Richmond Private Investment Trust No.82 |
| - |
| 14,569 |
| 551 |
| - |
| - |
| 15,120 |
Tiger Alternative Real Estate Professional Private5 |
| - |
| 19,876 |
| (56) |
| - |
| - |
| 19,820 |
Samchully Midstream Private Placement Special Asset Fund 5-4 |
| - |
| 29,436 |
| 1,306 |
| - |
| - |
| 30,742 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| - |
| 52,048 |
| 1,783 |
| - |
| - |
| 53,831 |
AUCTUS FITRIN Corporate Recovery Private Equity Fund |
| - |
| 14,250 |
| 108 |
| - |
| - |
| 14,358 |
NH-Amundi Global Infrastructure Trust 14 |
| - |
| 17,769 |
| 728 |
| - |
| - |
| 18,497 |
Pacific Private Real Estate Fund Investment Trust No.30 |
| - |
| 14,236 |
| 580 |
| - |
| - |
| 14,816 |
Jarvis Memorial Private Investment Trust 1 |
| - |
| 9,888 |
| 278 |
| - |
| - |
| 10,166 |
Mastern Private Private Investment Trust 68 |
| - |
| 9,764 |
| 235 |
| - |
| - |
| 9,999 |
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 |
| - |
| 4,434 |
| (37) |
| - |
| - |
| 4,397 |
Milestone Private Real Estate Fund 3 (Derivative Type) |
| - |
| 17,016 |
| 170 |
| - |
| - |
| 17,186 |
IGIS Private Real Estate Investment Trust 286 (2 class) |
| - |
| 10,100 |
| (332) |
| - |
| - |
| 9,768 |
Nomura-Rifa Private Real Estate Investment Trust 31 (2 class) |
| - |
| 9,018 |
| (104) |
| - |
| - |
| 8,914 |
Lime Pricing Private Equity Fund |
| - |
| 8,400 |
| (100) |
| - |
| - |
| 8,300 |
157
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(b) Changes in investments in associates for the years ended December 31, 2020 and 2019 are as follows
(continued):
|
| December 31, 2019 | ||||||||||
Investees |
| Beginning balance |
|
Investment and dividend |
| Equity method income (loss) |
| Change in other comprehensive income |
| Impairment loss |
| Ending balance |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2 |
| - |
| 39,376 |
| 2,615 |
| - |
| - |
| 41,991 |
DS Solid.II Hedge Fund |
| - |
| 4,300 |
| (177) |
| - |
| - |
| 4,123 |
Hana Semiconductor New Technology Fund |
| - |
| 13,000 |
| (144) |
| - |
| - |
| 12,856 |
J&Magnet Startup Venture Specialized Private Equity Fund |
| - |
| 6,000 |
| (21) |
| - |
| - |
| 5,979 |
Cape IT Fund No.3 |
| - |
| 10,000 |
| (33) |
| - |
| - |
| 9,967 |
Vogo Realty Partners Private Real Estate Fund V |
| - |
| 10,611 |
| (235) |
| - |
| - |
| 10,376 |
IL GU FARM CO.,LTD |
| - |
| - |
| - |
| - |
| - |
| - |
Korea Credit Bureau(*2) |
| - |
| 4,500 |
| 2,312 |
| - |
| - |
| 6,812 |
SBC PFV Co., Ltd |
| - |
| 20,000 |
| - |
| - |
| - |
| 20,000 |
Sprott Global Renewable Private Equity Fund II |
| - |
| 20,131 |
| (1,115) |
| - |
| - |
| 19,016 |
NH-amundi global infra private fund 16 |
| - |
| 49,530 |
| (1,372) |
| - |
| - |
| 48,158 |
IMM Global Private Equity Fund |
| - |
| 28,945 |
| (20) |
| - |
| - |
| 28,925 |
HANA Alternative Estate Professional Private122 |
| - |
| 28,487 |
| (2,282) |
| - |
| - |
| 26,205 |
Hanwha-Incus Plus New Technology Fund No.1 |
| - |
| 5,500 |
| (1) |
| - |
| - |
| 5,499 |
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7[Bond] |
| - |
| 51,293 |
| - |
| - |
| - |
| 51,293 |
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust |
| - |
| 146,045 |
| 4,272 |
| - |
| - |
| 150,317 |
PSA EMP Private Equity Fund |
| - |
| 10,000 |
| (73) |
| - |
| - |
| 9,927 |
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24 |
| - |
| 28,314 |
| 1,149 |
| - |
| - |
| 29,463 |
SHBNPP Peace of Mind TDF 2035 Security Investment Trust [Equity Balanced-FoF] |
| - |
| 5,727 |
| - |
| - |
| - |
| 5,727 |
SHBNPP Peace of Mind TDF 2040 Security Investment Trust [Equity Balanced-FoF] |
| - |
| 5,729 |
| - |
| - |
| - |
| 5,729 |
BRAIN DO PROFESSIONALE PRIVATE No. 27 |
| - |
| 3,000 |
| 65 |
| - |
| - |
| 3,065 |
VISION US Muni US Local Debt Opportunities Professional Private1(S) |
| - |
| 9,500 |
| 369 |
| - |
| - |
| 9,869 |
Others |
| 81,490 |
| (14,513) |
| 18,954 |
| - |
| - |
| 85,931 |
|
| 671,330 |
| 724,902 |
| 53,287 |
| 3,342 |
| - |
| 1,452,861 |
(*1) The Group has stopped recognizing its equity method income or loss due to carrying amount of '0'.
(*2) Classified as investments in associates without cash transactions.
(*3) No gains or losses from the equity method investees have been recognized after the acquisition of a debt-equity swap in 2019.
158
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows:
|
| December 31, 2020 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
BNP Paribas Cardif Life Insurance |
| 3,526,148 |
| 3,188,562 |
| 38,669 |
| (6,555) |
| (7,052) |
| (13,607) |
Songrim Partners |
| 1,003 |
| 1,065 |
| 548 |
| - |
| - |
| - |
Partners 4th Growth Investment Fund |
| 48,678 |
| 846 |
| 7,231 |
| 6,059 |
| - |
| 6,059 |
KTB Newlake Global Healthcare PEF |
| 31,005 |
| 225 |
| 598 |
| 244 |
| - |
| 244 |
Daekwang Semiconductor Co., Ltd. |
| 23,682 |
| 6,339 |
| 3,836 |
| 1,163 |
| - |
| 1,163 |
Shinhan-Neoplux Energy Newbiz Fund |
| 44,615 |
| 25 |
| 4,221 |
| 1,749 |
| - |
| 1,749 |
Shinhan-Albatross tech investment Fund |
| 27,685 |
| 385 |
| 982 |
| 594 |
| - |
| 594 |
Eum Private Equity Fund No.3 |
| 20 |
| 4 |
| 13,445 |
| 9,875 |
| - |
| 9,875 |
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund |
| 1 |
| 1 |
| 89 |
| 89 |
| - |
| 89 |
Meritz AI-SingA330-B Investment Type Private Private Placement Special Asset Fund |
| 2 |
| 2 |
| 363 |
| 361 |
| - |
| 361 |
VOGO Debt Strategy Qualified INV Private |
| 43,540 |
| 28 |
| 6,361 |
| 2,359 |
| - |
| 2,359 |
Shinhan-Midas Donga Secondary Fund |
| 9,504 |
| - |
| 365 |
| 233 |
| - |
| 233 |
ShinHan – Soo Young Entrepreneur Investment Fund No.1 |
| 41,532 |
| - |
| 16,561 |
| 16,349 |
| - |
| 16,349 |
Shinhan Praxis K-Growth Global Private Equity Fund |
| 52,890 |
| 183 |
| 201 |
| (2,306) |
| - |
| (2,306) |
Credian Healthcare Private Equity Fund II |
| 17,141 |
| 15 |
| 25,926 |
| 24,638 |
| - |
| 24,638 |
Kiwoom Milestone Professional Private Real Estate Trust 19 |
| 58,393 |
| 38,558 |
| 2,772 |
| (449) |
| - |
| (449) |
AIP EURO Green Private Real Estate Trust No.3 |
| 98,866 |
| 86 |
| 6,893 |
| 6,231 |
| - |
| 6,231 |
Hanhwa US Equity Strategy Private Real Estate Fund No.1 |
| 5,798 |
| 721 |
| 32,667 |
| 7,180 |
| - |
| 7,180 |
Shinhan Global Healthcare Fund 1 |
| 55 |
| 2,104 |
| 1,034 |
| (74,736) |
| - |
| (74,736) |
JB Power TL Investment Type Private Placement Special Asset Fund 7 |
| 48,605 |
| 45 |
| 23,547 |
| 2,251 |
| - |
| 2,251 |
KB NA Hickory Private Special Asset Fund |
| 93,236 |
| 69 |
| 13,464 |
| 4,312 |
| - |
| 4,312 |
Koramco Europe Core Private Placement Real Estate Fund No.2-2 |
| 46,239 |
| 3,948 |
| 4,920 |
| 877 |
| - |
| 877 |
BNP Paribas Cardif General Insurance |
| 85,278 |
| 33,063 |
| 23,632 |
| (7,972) |
| (161) |
| (8,133) |
Hermes Private Investment Equity Fund |
| 20,919 |
| 8 |
| 11 |
| (948) |
| - |
| (948) |
Shinhan-Nvestor Liquidity Solution Fund |
| 18,032 |
| - |
| 2,704 |
| 2,537 |
| - |
| 2,537 |
Shinhan AIM FoF Fund 1a |
| 35,060 |
| 20 |
| 4,378 |
| 777 |
| - |
| 777 |
IGIS Global Credit Fund 150-1 |
| 29,153 |
| 24 |
| 10,076 |
| 6,263 |
| - |
| 6,263 |
Soo Commerce Platform Growth Fund |
| 4,661 |
| 3 |
| 13,172 |
| 13,314 |
| - |
| 13,314 |
Partner One Value up I Private Equity Fund |
| 42,205 |
| - |
| 457 |
| (329) |
| - |
| (329) |
Genesis No.1 Private Equity Fund |
| 382,353 |
| 31,024 |
| 158,070 |
| 125,312 |
| - |
| 125,312 |
159
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
Korea Omega Project Fund III |
| 15,141 |
| - |
| 2,383 |
| 2,323 |
| - |
| 2,323 |
Soo Delivery Platform Growth Fund |
| 13,563 |
| 3 |
| 11,300 |
| 10,249 |
| - |
| 10,249 |
Genesis North America Power Company No.1 PEF |
| 48,221 |
| 5,727 |
| 6,976 |
| 6,449 |
| - |
| 6,449 |
Hyungje art printing |
| 866 |
| 1,130 |
| 253 |
| - |
| - |
| - |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 46,514 |
| 1,164 |
| 11,240 |
| 2,846 |
| - |
| 2,846 |
Shinhan-Rhinos 1 Fund |
| 11,561 |
| 1 |
| 2,784 |
| 2,554 |
| - |
| 2,554 |
Pacific Private Investment Trust No.20 |
| 13,805 |
| 11 |
| 974 |
| 974 |
| - |
| 974 |
Susung Mezzanine project P1 Private Investment Trust |
| 3,220 |
| - |
| 3,412 |
| (373) |
| - |
| (373) |
Korea Finance Security |
| 37,522 |
| 17,032 |
| 118,906 |
| (1,174) |
| - |
| (1,174) |
Multimedia Tech Co.Ltd |
| 593 |
| 662 |
| 555 |
| (158) |
| - |
| (158) |
MIEL CO.,LTD |
| 474 |
| 559 |
| 585 |
| (169) |
| - |
| (169) |
AIP Transportation Specialized Privately Placed Fund Trust #1 |
| 92,454 |
| 101 |
| 17,221 |
| 132 |
| - |
| 132 |
DB Epic Convertiblebond Private Trust No.2 |
| 11,382 |
| 34 |
| 1,169 |
| 1,021 |
| - |
| 1,021 |
E&Healthcare Investment Fund No.6 |
| 72,023 |
| - |
| 36,332 |
| 33,844 |
| - |
| 33,844 |
One Shinhan Global Fund1 |
| 22,244 |
| - |
| 92 |
| (406) |
| - |
| (406) |
Kiwoom-Shinhan Innovation Fund I |
| 32,096 |
| 158 |
| 2,984 |
| 2,371 |
| - |
| 2,371 |
Daishin-K&T New Technology Investment Fund |
| 55,501 |
| 33,101 |
| 64 |
| (183) |
| - |
| (183) |
Midas Asset Global CRE Debt Private Fund No.6 |
| 115,240 |
| 118 |
| 7,041 |
| 5,153 |
| - |
| 5,153 |
Richmond Private Investment Trust No.82 |
| 49,961 |
| 24,879 |
| 1,658 |
| 1,306 |
| - |
| 1,306 |
Tiger Alternative Real Estate Professional Private5 |
| 38,064 |
| 86 |
| 7,827 |
| 113 |
| - |
| 113 |
Samchully Midstream Private Placement Special Asset Fund 5-4 |
| 67,177 |
| 36 |
| 8,012 |
| (2,228) |
| - |
| (2,228) |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 327,973 |
| 56 |
| 13,607 |
| 12,656 |
| - |
| 12,656 |
NH-Amundi Global Infrastructure Trust 14 |
| 62,729 |
| 1 |
| 7,216 |
| 2,606 |
| - |
| 2,606 |
Jarvis Memorial Private Investment Trust 1 |
| 10,147 |
| 4 |
| 651 |
| 647 |
| - |
| 647 |
Mastern Private Private Invetstment Trust 68 |
| 18,620 |
| - |
| 878 |
| 877 |
| - |
| 877 |
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 |
| 59,422 |
| 20 |
| 6,374 |
| 1,224 |
| - |
| 1,224 |
Milestone Private Real Estate Fund 3 |
| 57,792 |
| 2 |
| 7,083 |
| 6,797 |
| - |
| 6,797 |
IGIS Private Real Estate Investment Trust 286 |
| 74,406 |
| 53,065 |
| 5,298 |
| 696 |
| - |
| 696 |
Nomura-Rifa Private Real Estate Investment Trust 31 |
| 98,291 |
| 71,442 |
| 7,584 |
| 1,356 |
| - |
| 1,356 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2 |
| 62,682 |
| 45 |
| 6,511 |
| 6,169 |
| - |
| 6,169 |
160
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
Hana Semiconductor New Technology Fund |
| 111,661 |
| 12,346 |
| 70,303 |
| 56,926 |
| - |
| 56,926 |
J&Magnet Startup Venture Specialized Private Equity Fund |
| 24,381 |
| 50 |
| 8,291 |
| 8,638 |
| - |
| 8,638 |
Cape IT Fund No.3 |
| 32,448 |
| 75 |
| 4,145 |
| 3,837 |
| - |
| 3,837 |
FuturePlay-Shinhan TechInnovation Fund 1 |
| 8,621 |
| 31 |
| 5 |
| (469) |
| - |
| (469) |
Stonebridge Corporate 1st Fund |
| 7,342 |
| 1 |
| 679 |
| 584 |
| - |
| 584 |
Vogo Realty Partners Private Real Estate Fund V |
| 50,139 |
| 99 |
| 8,137 |
| 4,701 |
| - |
| 4,701 |
Korea Credit Bureau |
| 114,571 |
| 37,062 |
| 93,275 |
| 3,992 |
| - |
| 3,992 |
Goduck Gangil1 PFV Co., Ltd |
| 334,349 |
| 348,276 |
| - |
| (10,065) |
| - |
| (10,065) |
SBC PFV Co., Ltd |
| 119,994 |
| 7,199 |
| - |
| (7,169) |
| - |
| (7,169) |
NH-amundi global infra private fund 16 |
| 87,908 |
| 230 |
| 20,499 |
| (6,215) |
| - |
| (6,215) |
IMM Global Private Equity Fund |
| 367,570 |
| 1,368 |
| 17,222 |
| 2,995 |
| - |
| 2,995 |
HANA Alternative Estate Professional Private122 |
| 39,449 |
| 38 |
| 6,836 |
| 5,487 |
| - |
| 5,487 |
Hanwha-Incus Plus New Technology Fund No.1 |
| 25,860 |
| - |
| 13,169 |
| 12,961 |
| - |
| 12,961 |
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7[Bond] |
| 198,644 |
| 87,218 |
| 4,479 |
| 3,329 |
| - |
| 3,329 |
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust |
| 395,815 |
| - |
| 14,737 |
| 11,688 |
| - |
| 11,688 |
PSA EMP Private Equity Fund |
| 33,953 |
| 97 |
| 8 |
| (393) |
| - |
| (393) |
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24 |
| 57,026 |
| 784 |
| 13,342 |
| 339 |
| - |
| 339 |
BRAIN DO PROFESSIONALE PRIVATE No. 27 |
| 11,827 |
| 12 |
| 1,414 |
| 1,292 |
| - |
| 1,292 |
UI Venture Fund 7th |
| 13,466 |
| 21 |
| 2,044 |
| 1,145 |
| - |
| 1,145 |
Sparklabs-Shinhan Opportunity Fund 1 |
| 9,760 |
| - |
| - |
| (340) |
| - |
| (340) |
BNW Tech-Innovation Private Equity Fund |
| 20,119 |
| 213 |
| 45 |
| (194) |
| - |
| (194) |
IGIS Real-estate Private Investment Trust No.33 |
| 88,319 |
| 53,812 |
| 1,570 |
| 378 |
| - |
| 378 |
Findvalue PreIPO 6th Professional Investment Type Private Investment Trust |
| 9,505 |
| - |
| 5 |
| 5 |
| - |
| 5 |
WWG Global Real Estate Investment Trust no.4 |
| 60,083 |
| 12 |
| 8,431 |
| 2,971 |
| - |
| 2,971 |
Fidelis Global Private Real Estate Trust No.2 |
| 24,901 |
| 2 |
| 1,902 |
| 1,214 |
| - |
| 1,214 |
IGIS PRIVATE REAL ESTATE TRUST NO.331 |
| 57,655 |
| 45,417 |
| 20 |
| (388) |
| - |
| (388) |
AIP EURO PRIVATE REAL ESTATE TRUST No. 12 |
| 173,538 |
| 783 |
| 40,882 |
| 13,425 |
| - |
| 13,425 |
Pebblestone CGV Private Real Estate Trust No.1 |
| 63,907 |
| 36,405 |
| 7,451 |
| 1,141 |
| - |
| 1,141 |
Shinhan AIM Real Estate Fund No.2 |
| 75,018 |
| 138 |
| 7,611 |
| (45,741) |
| - |
| (45,741) |
Shinhan AIM Real Estate Fund No.1 |
| 223,471 |
| 28 |
| 22,855 |
| 7,284 |
| - |
| 7,284 |
161
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows(continued):
|
| December 31, 2020 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
SHBNPP Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust [Infra business] |
| 149,686 |
| 75 |
| 3,342 |
| 3,117 |
| - |
| 3,117 |
SHBNPP Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust [Infra business] |
| 71,774 |
| 169 |
| 4,948 |
| (3,773) |
| - |
| (3,773) |
SHBNPP Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2 |
| 9,380 |
| 12 |
| 576 |
| (814) |
| - |
| (814) |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No. 1 [Equity securities-Derivative] |
| 61,389 |
| 45,239 |
| 47,240 |
| (46) |
| - |
| (46) |
Korea Omega-Shinhan Project Fund I |
| 11,861 |
| - |
| - |
| (139) |
| - |
| (139) |
New Green Shinhan Mezzanine Fund |
| 12,538 |
| 1 |
| 2,387 |
| 2,337 |
| - |
| 2,337 |
KORAMKO-Daum Professional Private Investment Trust No.12 |
| 22,740 |
| 157 |
| 1,949 |
| 1,792 |
| - |
| 1,792 |
Samsung SRA Real Estate Professional Private 45[FoFs] |
| 42,895 |
| 230 |
| 4,155 |
| (355) |
| - |
| (355) |
IBK Global New Renewable Energy Special Asset Professional Private2 |
| 116,284 |
| 4,679 |
| 19,514 |
| 10,943 |
| - |
| 10,943 |
VS Cornerstone Fund |
| 8,413 |
| - |
| 2 |
| (87) |
| - |
| (87) |
Aone Mezzanine Opportunity Professional Private |
| 14,530 |
| 40 |
| 2,507 |
| 2,390 |
| - |
| 2,390 |
KiwoomUnicorn3New Technology Business Investment Fund |
| 20,132 |
| - |
| 6,112 |
| 6,031 |
| - |
| 6,031 |
Multi Asset The United States Thortons Professional Private1 |
| 165,775 |
| 15 |
| 2,111 |
| 671 |
| - |
| 671 |
Kiwoom Milestone US Real Estate Professional Private20 |
| 68,591 |
| 157 |
| 3,508 |
| 2,286 |
| - |
| 2,286 |
NH-Amundi US Infrastructure Private Fund2 |
| 99,409 |
| 1,248 |
| 16,758 |
| 3,025 |
| - |
| 3,025 |
KB Distribution Private Real Estate1 |
| 50,013 |
| 500 |
| 1,174 |
| 1,151 |
| - |
| 1,151 |
SHBNPP Jigae Namsan BTO professional Investment Type Private Special Asset Investment Trust [Infra business] |
| 71,647 |
| 54 |
| 2,677 |
| 2,571 |
| - |
| 2,571 |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No.2 [Loan-Derivative] |
| 97,412 |
| 248 |
| 5,176 |
| 2,993 |
| - |
| 2,993 |
Kakao-Shinhan 1st TNYT Fund |
| 12,014 |
| 331 |
| 2 |
| (657) |
| - |
| (657) |
IMM Special Situation 1-2 PRIVATE EQUITY FUND |
| 54,328 |
| 33 |
| 4,378 |
| 4,344 |
| - |
| 4,344 |
Pacific Private Placement Real Estate Fund No.40 |
| 145,123 |
| 98,029 |
| 2,554 |
| 1,511 |
| - |
| 1,511 |
Mastern Private Real Estate Loan Fund No.2 |
| 17,156 |
| 201 |
| 98 |
| (143) |
| - |
| (143) |
LB Scotland Amazon Fulfillment Center Fund 29 |
| 44,483 |
| 28 |
| 1,975 |
| 612 |
| - |
| 612 |
JR AMC Hungary Budapest Office Fund 16 |
| 38,581 |
| 1,112 |
| 2,531 |
| 2,531 |
| - |
| 2,531 |
162
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows(continued) :
|
| December 31, 2020 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
IGIS 372 Real Estate Professional Private |
| 628,769 |
| 428,577 |
| 10,221 |
| (4,808) |
| - |
| (4,808) |
KoFC-Neoplux R&D-Biz Creation 2013-1 Venture Capital Fund |
| 18,460 |
| 2,824 |
| 1,673 |
| 240 |
| - |
| 240 |
Future-Creation Neoplux Venture Capital Fund |
| 27,271 |
| 4,137 |
| 7,270 |
| 4,300 |
| - |
| 4,300 |
Gyeonggi-Neoplux Superman Fund |
| 31,898 |
| 186 |
| 533 |
| (212) |
| - |
| (212) |
NewWave 6th Fund |
| 20,501 |
| - |
| 2,757 |
| 1,528 |
| - |
| 1,528 |
Neoplux No.3 Private Equity Fund |
| 103,712 |
| 756 |
| 9,114 |
| (7,108) |
| - |
| (7,108) |
PCC Amberstone Private Equity Fund I |
| 104,930 |
| 1,194 |
| 12,280 |
| 5,501 |
| - |
| 5,501 |
KIAMCO POWERLOAN TRUST 4TH |
| 92,817 |
| 23 |
| 815 |
| 1,193 |
| - |
| 1,193 |
Mastern Opportunity Seeking Real Estate Fund II |
| 99,087 |
| 93 |
| 1,391 |
| 1,453 |
| - |
| 1,453 |
AION ELFIS PROFESSIONAL PRIVATE 1 |
| 27,672 |
| 30 |
| 2,710 |
| 2,642 |
| - |
| 2,642 |
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business |
| 15,074 |
| 73 |
| - |
| (160) |
| - |
| (160) |
Neoplux Market-Frontier Secondary Fund |
| 56,363 |
| 1,636 |
| 1,359 |
| (339) |
| - |
| (339) |
Synergy Green New Deal 1st New Technology Business Investment Fund |
| 35,539 |
| 12 |
| 39 |
| 27 |
| - |
| 27 |
KAIM Real-estate Private Investment Trust 20 |
| 13,254 |
| - |
| 254 |
| 254 |
| - |
| 254 |
KIAMCO Vietnam Solar Special Asset Private Investment Trust |
| 15,902 |
| 6 |
| - |
| (404) |
| - |
| (404) |
CSQUARE SNIPER PROFESSIONAL PRIVATE 10 |
| 5,010 |
| 10 |
| 10 |
| - |
| - |
| - |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1 |
| 45,582 |
| 9 |
| - |
| (9) |
| - |
| (9) |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2 |
| 45,582 |
| 9 |
| - |
| (9) |
| - |
| (9) |
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45 |
| 141,811 |
| 93,336 |
| 1 |
| 1,290 |
| - |
| 1,290 |
IGIS Professional Investors Private Investment Real Estate Investment LLC No.395 |
| 116,853 |
| 66,459 |
| - |
| (605) |
| - |
| (605) |
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2 |
| 70,487 |
| 14 |
| 194 |
| 180 |
| - |
| 180 |
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund |
| 20,174 |
| 40 |
| 4,210 |
| 4,134 |
| - |
| 4,134 |
Kiwoom Hero No.4 Private Equity Fund |
| 22,359 |
| 1 |
| - |
| 3,358 |
| - |
| 3,358 |
Vogo Canister Professional Trust Private Fund I |
| 119,968 |
| 76 |
| 17,022 |
| 4,148 |
| - |
| 4,148 |
(*) Excluded the financial information of associates that are not subject to equity method due to disposal or of which the financial information is not available as of end of the year.
163
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows(continued):
|
| December 31, 2019 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
BNP Paribas Cardif Life Insurance |
| 3,896,875 |
| 3,545,682 |
| 37,067 |
| (3,919) |
| 24,402 |
| 20,483 |
Neoplux Technology Valuation Investment Fund |
| 49,890 |
| 738 |
| 3,953 |
| (2,078) |
| - |
| (2,078) |
Partners 4th Growth Investment Fund |
| 60,775 |
| 1,106 |
| 14 |
| (1,904) |
| - |
| (1,904) |
KTB Newlake Global Healthcare PEF |
| 37,187 |
| 151 |
| 387 |
| (349) |
| - |
| (349) |
Daekwang Semiconductor Co., Ltd. |
| 23,507 |
| 7,328 |
| 1,248 |
| 248 |
| 9 |
| 257 |
Shinhan-Neoplux Energy Newbiz Fund |
| 33,791 |
| 18 |
| 26 |
| (1,259) |
| - |
| (1,259) |
Shinhan-Albatross tech investment Fund |
| 17,681 |
| 182 |
| 1,263 |
| 551 |
| (917) |
| (366) |
KCLAVIS Meister Fund No.17 |
| 4,689 |
| 96 |
| 425 |
| (322) |
| - |
| (322) |
Plutus-SG Private Equity Fund |
| 16,006 |
| 138 |
| 700 |
| 419 |
| - |
| 419 |
Eum Private Equity Fund No.3 |
| 17,243 |
| 27 |
| 6,305 |
| 5,604 |
| - |
| 5,604 |
KTB Confidence Private Placement |
| 19,369 |
| 64 |
| 7,328 |
| 3,122 |
| - |
| 3,122 |
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund |
| 17,821 |
| 1 |
| 1,280 |
| 377 |
| - |
| 377 |
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund |
| 44,228 |
| 2 |
| 3,445 |
| 1,217 |
| - |
| 1,217 |
VOGO Debt Strategy Qualified INV Private R/E INV TR 4 |
| 49,683 |
| 33 |
| 4,198 |
| 1,391 |
| - |
| 1,391 |
Shinhan-Midas Donga Secondary Fund |
| 6,973 |
| 1 |
| 88 |
| (651) |
| - |
| (651) |
ShinHan – Soo Young Entrepreneur Investment Fund No.1 |
| 18,963 |
| 9 |
| 1,656 |
| 113 |
| - |
| 113 |
Synergy-Shinhan Mezzanine New Technology Investment Fund |
| 8,266 |
| 51 |
| 834 |
| 535 |
| - |
| 535 |
Shinhan Praxis K-Growth Global Private Equity Fund |
| 54,786 |
| 185 |
| 27,588 |
| 13,361 |
| - |
| 13,361 |
Credian Healthcare Private Equity Fund II |
| 7,001 |
| 24 |
| 1,542 |
| 1,031 |
| - |
| 1,031 |
Kiwoom Milestone Professional Private Real Estate Trust 19 |
| 59,559 |
| 38,744 |
| 3,100 |
| 470 |
| - |
| 470 |
AIP EURO Green Private Real Estate Trust No.3 |
| 98,221 |
| 86 |
| 18,362 |
| 7,462 |
| - |
| 7,462 |
Hanhwa US Equity Strategy Private Real Estate Fund No.1 |
| 59,652 |
| 1,750 |
| 14,838 |
| 3,742 |
| - |
| 3,742 |
Shinhan Global Healthcare Fund 1 |
| 73,388 |
| 701 |
| 5,480 |
| (1,722) |
| - |
| (1,722) |
164
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows (continued):
|
| December 31, 2019 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
JB Power TL Investment Type Private Placement Special Asset Fund 7 |
| 50,468 |
| 66 |
| 15,476 |
| 2,487 |
| - |
| 2,487 |
IBK AONE convertible 1 |
| 12,861 |
| 0 |
| 1,515 |
| 410 |
| - |
| 410 |
Rico synergy collabo Multi-Mezzanine 3 |
| 6,433 |
| 2 |
| 1,296 |
| 856 |
| - |
| 856 |
KB NA Hickory Private Special Asset Fund |
| 96,289 |
| 476 |
| 16,132 |
| 2,489 |
| - |
| 2,489 |
Koramco Europe Core Private Placement Real Estate Fund No.2-2 |
| 46,742 |
| 2,304 |
| 9,328 |
| 5,462 |
| - |
| 5,462 |
Shinhan-Stonebridge Petro PEF |
| 1,388 |
| 1,350 |
| 52,928 |
| 49,878 |
| - |
| 49,878 |
BNP Paribas Cardif General Insurance |
| 43,064 |
| 21,936 |
| 17,613 |
| (12,962) |
| (136) |
| (13,098) |
Axis Global Growth New Technology Investment Association |
| 10,064 |
| - |
| 1 |
| (244) |
| - |
| (244) |
Polaris No7 Start up and Venture Private Equity Fund |
| 8,113 |
| 52 |
| 1,037 |
| 928 |
| - |
| 928 |
Hermes Private Investment Equity Fund |
| 21,954 |
| 95 |
| 45 |
| (2,366) |
| - |
| (2,366) |
SHC ULMUS Fund No.1 |
| 10,706 |
| - |
| 1,073 |
| 881 |
| - |
| 881 |
Shinhan-Nvestor Liquidity Solution Fund |
| 19,524 |
| - |
| 209 |
| (2,101) |
| - |
| (2,101) |
Shinhan AIM FoF Fund 1a |
| 28,987 |
| 20 |
| 5,556 |
| 2,111 |
| - |
| 2,111 |
IGIS Global Credit Fund 150-1 |
| 38,912 |
| 38 |
| 2,674 |
| 166 |
| - |
| 166 |
GX Shinhan Intervest 1st Private Equity Fund |
| 131,237 |
| - |
| 6,689 |
| 5,283 |
| - |
| 5,283 |
Soo Commerce Platform Growth Fund |
| 25,765 |
| 3 |
| 36 |
| (140) |
| - |
| (140) |
Partner One Value up I Private Equity Fund |
| 42,602 |
| - |
| 457 |
| (173) |
| - |
| (173) |
Genesis No.1 Private Equity Fund |
| 224,322 |
| 7 |
| 23,180 |
| 21,872 |
| - |
| 21,872 |
GMB ICT New Technology Investment Fund |
| 29,359 |
| - |
| 2 |
| (298) |
| - |
| (298) |
Korea Omega Project Fund III |
| 12,818 |
| - |
| 4,432 |
| 4,351 |
| - |
| 4,351 |
Soo Delivery Platform Growth Fund |
| 29,743 |
| 3 |
| 675 |
| 367 |
| - |
| 367 |
Genesis North America Power Company No.1 PEF |
| 46,041 |
| 281 |
| 4,323 |
| 3,756 |
| - |
| 3,756 |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 89,450 |
| 687 |
| 4,262 |
| 1,546 |
| - |
| 1,546 |
Shinhan-Rhinos 1 Fund |
| 13,474 |
| - |
| 143 |
| 129 |
| - |
| 129 |
Pacific Private Investment Trust No.20 |
| 18,764 |
| 15 |
| 1,247 |
| 1,187 |
| - |
| 1,187 |
Susung Mezzanine project P1 Private Investment Trust |
| 10,023 |
| 351 |
| 22 |
| (91) |
| - |
| (91) |
165
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows (continued):
|
| December 31, 2019 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
Korea Finance Security |
| 32,079 |
| 10,386 |
| 64,964 |
| (1,297) |
| - |
| (1,297) |
AIP Transportation Specialized Privately Placed Fund Trust #1 |
| 94,437 |
| 6,042 |
| 12,473 |
| 1,242 |
| - |
| 1,242 |
Lime Neptune Professional Private 6 |
| 10,166 |
| 41 |
| 460 |
| 125 |
| - |
| 125 |
PCC S/W 2nd Fund |
| 10,154 |
| - |
| 151 |
| 4 |
| - |
| 4 |
E&Healthcare Investment Fund No.6 |
| 38,181 |
| 2 |
| 4,405 |
| 3,664 |
| - |
| 3,664 |
One Shinhan Global Fund 1 |
| 22,244 |
| - |
| 92 |
| (406) |
| - |
| (406) |
Kiwoom-Shinhan Innovation Fund I |
| 14,719 |
| 151 |
| 13 |
| (432) |
| - |
| (432) |
Daishin-K&T New Technology Investment Fund |
| 55,686 |
| 33,103 |
| 1,292 |
| 183 |
| - |
| 183 |
Midas Asset Global CRE Debt Private Fund No.6 |
| 118,438 |
| 70 |
| 3,907 |
| 2,677 |
| - |
| 2,677 |
Richmond Private Investment Trust No.82 |
| 50,079 |
| 24,879 |
| 1,155 |
| 919 |
| - |
| 919 |
Tiger Alternative Real Estate Professional Private5 |
| 40,792 |
| 103 |
| 1,628 |
| (116) |
| - |
| (116) |
Samchully Midstream Private Placement Special Asset Fund 5-4 |
| 71,680 |
| 55 |
| 14,423 |
| 3,015 |
| - |
| 3,015 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 269,203 |
| 48 |
| 8,854 |
| 8,289 |
| - |
| 8,289 |
AUCTUS FITRIN Corporate Recovery Private Equity Fund |
| 67,222 |
| 218 |
| 1,187 |
| 449 |
| - |
| 449 |
NH-Amundi Global Infrastructure Trust 14 |
| 61,696 |
| 39 |
| 7,404 |
| 2,427 |
| - |
| 2,427 |
Pacific Private Real Estate Fund Investment Trust No.30 |
| 39,779 |
| 270 |
| 1,817 |
| 1,547 |
| - |
| 1,547 |
Jarvis Memorial Private Investment Trust 1 |
| 10,279 |
| 12 |
| 293 |
| 281 |
| - |
| 281 |
Mastern Private Private Investment Trust 68 |
| 18,600 |
| 2 |
| 533 |
| 437 |
| - |
| 437 |
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 |
| 7,336 |
| 7 |
| 214 |
| (61) |
| - |
| (61) |
Milestone Private Real Estate Fund 3 (Derivative Type) |
| 53,610 |
| 3 |
| 603 |
| 532 |
| - |
| 532 |
IGIS Private Real Estate Investment Trust 286 (2 class) |
| 75,372 |
| 51,870 |
| 2,838 |
| (798) |
| - |
| (798) |
Nomura-Rifa Private Real Estate Investment Trust 31 (2 class) |
| 99,976 |
| 71,507 |
| 2,383 |
| (331) |
| - |
| (331) |
Lime Pricing Private Equity Fund |
| 32,231 |
| 118 |
| 10 |
| (388) |
| - |
| (388) |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2 |
| 197,536 |
| 119 |
| 12,963 |
| 12,296 |
| - |
| 12,296 |
DS Solid.II Hedge Fund |
| 15,042 |
| - |
| 4 |
| (605) |
| - |
| (605) |
166
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(c) The statement of financial information as of and for the years ended December 31, 2020 and 2019 are as
follows (continued) :
|
| December 31, 2019 | ||||||||||
Investees |
| Asset |
| Liability |
| Operating revenue |
| Net profit (loss) |
| Other comprehen- sive income (loss) |
| Total comprehen- sive income (loss) |
Hana Semiconductor New Technology Fund |
| 52,905 |
| - |
| 73 |
| (595) |
| - |
| (595) |
J&Magnet Startup Venture Specialized Private Equity Fund |
| 24,513 |
| - |
| - |
| (87) |
| - |
| (87) |
Cape IT Fund No.3 |
| 30,333 |
| 35 |
| - |
| (101) |
| - |
| (101) |
Vogo Realty Partners Private Real Estate Fund V |
| 47,992 |
| 34 |
| 281 |
| (1,084) |
| - |
| (1,084) |
Korea Credit Bureau |
| 95,764 |
| 20,075 |
| 66,314 |
| 10,604 |
| - |
| 10,604 |
SBC PFV Co., Ltd |
| 120,000 |
| 40,000 |
| - |
| - |
| - |
| - |
Sprott Global Renewable Private Equity Fund II |
| 82,721 |
| 3 |
| 1,416 |
| (4,833) |
| - |
| (4,833) |
NH-amundi global infra private fund 16 |
| 100,513 |
| 4,197 |
| 4,128 |
| (2,744) |
| - |
| (2,744) |
IMM Global Private Equity Fund |
| 90,870 |
| 63 |
| - |
| (63) |
| - |
| (63) |
HANA Alternative Estate Professional Private122 |
| 34,897 |
| 45 |
| 1,561 |
| (3,035) |
| - |
| (3,035) |
Hanwha-Incus Plus New Technology Fund No.1 |
| 12,900 |
| 1 |
| - |
| (1) |
| - |
| (1) |
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7[Bond] |
| 127,339 |
| 15,732 |
| - |
| - |
| - |
| - |
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust |
| 402,633 |
| 141,200 |
| 10,036 |
| 7,256 |
| - |
| 7,256 |
PSA EMP Private Equity Fund |
| 34,535 |
| 285 |
| 1 |
| (250) |
| - |
| (250) |
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24 |
| 57,088 |
| 728 |
| 2,735 |
| 2,198 |
| - |
| 2,198 |
SHBNPP Peace of Mind TDF 2035 Security Investment Trust [Equity Balanced-FoF] |
| 22,926 |
| 641 |
| - |
| - |
| - |
| - |
SHBNPP Peace of Mind TDF 2040 Security Investment Trust [Equity Balanced-FoF] |
| 23,865 |
| 1,329 |
| - |
| - |
| - |
| - |
BRAIN DO PROFESSIONALE PRIVATE No. 27 |
| 10,305 |
| 10 |
| 58 |
| (5) |
| - |
| (5) |
VISION US Muni US Local Debt Opportunities Professional Private1(S) |
| 39,175 |
| 80 |
| 1,440 |
| 1,088 |
| - |
| 1,088 |
(*) Excluded the associates’ financial information that are not subject to recognizing equity method income or loss or financial information is not available.
167
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows:
| December 31, 2020 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
BNP Paribas Cardif Life Insurance |
| 337,586 |
| 14.99 |
| 50,632 |
| (32) |
| - |
| 50,600 |
Songrim Partners(*1) |
| (62) |
| 35.34 |
| (22) |
| - |
| 22 |
| - |
Partners 4th Growth Investment Fund |
| 47,832 |
| 25.00 |
| 11,958 |
| - |
| - |
| 11,958 |
KTB Newlake Global Healthcare PEF(*2) |
| 30,780 |
| 30.00 |
| 9,234 |
| - |
| 170 |
| 9,404 |
Daekwang Semiconductor Co., Ltd. |
| 17,343 |
| 20.94 |
| 3,631 |
| - |
| - |
| 3,631 |
Shinhan-Neoplux Energy Newbiz Fund |
| 44,590 |
| 31.66 |
| 14,470 |
| - |
| - |
| 14,470 |
Shinhan-Albatross tech investment Fund |
| 27,300 |
| 49.97 |
| 13,322 |
| - |
| - |
| 13,322 |
Eum Private Equity Fund No.3 |
| 16 |
| 20.76 |
| 3 |
| - |
| - |
| 3 |
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund |
| - |
| 23.89 |
| - |
| - |
| - |
| - |
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund |
| - |
| 20.16 |
| - |
| - |
| - |
| - |
VOGO Debt Strategy Qualified INV Private |
| 43,512 |
| 20.00 |
| 8,702 |
| - |
| - |
| 8,702 |
Shinhan-Midas Donga Secondary Fund |
| 9,504 |
| 50.00 |
| 4,752 |
| - |
| - |
| 4,752 |
ShinHan – Soo Young Entrepreneur Investment Fund No.1 |
| 41,532 |
| 24.00 |
| 9,968 |
| - |
| - |
| 9,968 |
Shinhan Praxis K-Growth Global Private Equity Fund |
| 52,707 |
| 18.87 |
| 9,945 |
| - |
| - |
| 9,945 |
Credian Healthcare Private Equity Fund II |
| 17,126 |
| 34.07 |
| 5,835 |
| - |
| - |
| 5,835 |
Kiwoom Milestone Professional Private Real Estate Trust 19 |
| 19,835 |
| 50.00 |
| 9,918 |
| - |
| - |
| 9,918 |
AIP EURO Green Private Real Estate Trust No.3 |
| 98,780 |
| 21.28 |
| 21,021 |
| - |
| - |
| 21,021 |
Hanhwa US Equity Strategy Private Real Estate Fund No.1 |
| 5,077 |
| 44.84 |
| 2,277 |
| - |
| - |
| 2,277 |
Shinhan Global Healthcare Fund 1 |
| (2,049) |
| 4.41 |
| (90) |
| - |
| 90 |
| - |
JB Power TL Investment Type Private Placement Special Asset Fund 7 |
| 48,560 |
| 33.33 |
| 16,186 |
| - |
| - |
| 16,186 |
KB NA Hickory Private Special Asset Fund |
| 93,167 |
| 37.50 |
| 34,938 |
| - |
| - |
| 34,938 |
Koramco Europe Core Private Placement Real Estate Fund No.2-2 |
| 42,291 |
| 44.02 |
| 18,618 |
| - |
| - |
| 18,618 |
BNP Paribas Cardif General Insurance |
| 52,215 |
| 7.46 |
| 3,895 |
| - |
| - |
| 3,895 |
Hermes Private Investment Equity Fund |
| 20,911 |
| 29.17 |
| 6,099 |
| - |
| - |
| 6,099 |
Shinhan-Nvestor Liquidity Solution Fund |
| 18,032 |
| 24.92 |
| 4,493 |
| - |
| - |
| 4,493 |
Shinhan AIM FoF Fund 1a |
| 35,040 |
| 25.00 |
| 8,760 |
| - |
| - |
| 8,760 |
IGIS Global Credit Fund 150-1 |
| 29,129 |
| 25.00 |
| 7,282 |
| - |
| - |
| 7,282 |
Soo Commerce Platform Growth Fund |
| 4,658 |
| 24.62 |
| 1,147 |
| - |
| - |
| 1,147 |
Partner One Value up I Private Equity Fund |
| 42,205 |
| 27.91 |
| 11,779 |
| - |
| - |
| 11,779 |
Genesis No.1 Private Equity Fund |
| 351,329 |
| 22.80 |
| 80,113 |
| - |
| - |
| 80,113 |
168
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows:
| December 31, 2020 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
Korea Omega Project Fund III |
| 15,141 |
| 23.53 |
| 3,563 |
| - |
| - |
| 3,563 |
Soo Delivery Platform Growth Fund |
| 13,560 |
| 30.00 |
| 4,068 |
| - |
| - |
| 4,068 |
Genesis North America Power Company No.1 PEF |
| 42,494 |
| 39.96 |
| 16,983 |
| - |
| - |
| 16,983 |
Hyungje art printing(*1) |
| (264) |
| 31.54 |
| (83) |
| - |
| 83 |
| - |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 45,350 |
| 23.33 |
| 10,582 |
| - |
| - |
| 10,582 |
Shinhan-Rhinos 1 Fund |
| 11,560 |
| 22.48 |
| 2,599 |
| - |
| - |
| 2,599 |
Pacific Private Investment Trust No.20 |
| 13,794 |
| 21.74 |
| 2,999 |
| - |
| - |
| 2,999 |
Susung Mezzanine project P1 Private Investment Trust |
| 3,220 |
| 41.31 |
| 1,345 |
| - |
| - |
| 1,345 |
Korea Finance Security |
| 20,490 |
| 14.91 |
| 3,055 |
| - |
| - |
| 3,055 |
Multimedia Tech Co.Ltd.(*1) |
| (69) |
| 21.06 |
| (15) |
| - |
| 15 |
| - |
MIEL CO.,LTD(*1) |
| (85) |
| 28.77 |
| (25) |
| - |
| 25 |
| - |
AIP Transportation Specialized Privately Placed Fund Trust #1 |
| 92,353 |
| 35.73 |
| 32,993 |
| - |
| - |
| 32,993 |
DB Epic Convertiblebond Private Trust No.2 |
| 11,348 |
| 50.98 |
| 5,785 |
| - |
| - |
| 5,785 |
E&Healthcare Investment Fund No.6 |
| 72,023 |
| 21.05 |
| 15,163 |
| - |
| - |
| 15,163 |
One Shinhan Global Fund1 |
| 22,244 |
| 19.96 |
| 4,029 |
| - |
| - |
| 4,029 |
Kiwoom-Shinhan Innovation Fund I |
| 31,938 |
| 50.00 |
| 15,969 |
| - |
| - |
| 15,969 |
Daishin-K&T New Technology Investment Fund |
| 22,400 |
| 31.25 |
| 7,000 |
| - |
| - |
| 7,000 |
Midas Asset Global CRE Debt Private Fund No.6 |
| 115,122 |
| 41.16 |
| 47,389 |
| - |
| - |
| 47,389 |
Richmond Private Investment Trust No.82 |
| 25,082 |
| 60.00 |
| 15,049 |
| - |
| - |
| 15,049 |
Tiger Alternative Real Estate Professional Private5 |
| 37,978 |
| 48.71 |
| 18,499 |
| - |
| - |
| 18,499 |
Samchully Midstream Private Placement Special Asset Fund 5-4 |
| 67,141 |
| 42.92 |
| 28,818 |
| - |
| - |
| 28,818 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 327,917 |
| 20.00 |
| 65,616 |
| - |
| - |
| 65,616 |
NH-Amundi Global Infrastructure Trust 14 |
| 62,728 |
| 30.00 |
| 18,819 |
| - |
| - |
| 18,819 |
Jarvis Memorial Private Investment Trust 1 |
| 10,143 |
| 99.01 |
| 10,043 |
| - |
| - |
| 10,043 |
Mastern Private Private Invetstment Trust 68 |
| 18,620 |
| 53.76 |
| 10,010 |
| - |
| - |
| 10,010 |
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 |
| 59,402 |
| 60.00 |
| 35,641 |
| - |
| - |
| 35,641 |
Milestone Private Real Estate Fund 3 |
| 57,790 |
| 32.06 |
| 18,528 |
| - |
| - |
| 18,528 |
IGIS Private Real Estate Investment Trust 286 |
| 21,341 |
| 41.44 |
| 8,844 |
| - |
| - |
| 8,844 |
Nomura-Rifa Private Real Estate Investment Trust 31 |
| 26,849 |
| 31.31 |
| 8,407 |
| - |
| - |
| 8,407 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2 |
| 62,637 |
| 21.27 |
| 13,323 |
| - |
| - |
| 13,323 |
169
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows:
| December 31, 2020 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
Hana Semiconductor New Technology Fund |
| 99,315 |
| 24.30 |
| 24,131 |
| - |
| - |
| 24,131 |
J&Magnet Startup Venture Specialized Private Equity Fund |
| 24,331 |
| 24.39 |
| 5,935 |
| - |
| - |
| 5,935 |
Cape IT Fund No.3 |
| 32,373 |
| 32.89 |
| 10,649 |
| - |
| - |
| 10,649 |
FuturePlay-Shinhan TechInnovation Fund 1 |
| 8,590 |
| 50.00 |
| 4,295 |
| - |
| - |
| 4,295 |
Stonebridge Corporate 1st Fund |
| 7,341 |
| 44.12 |
| 3,239 |
| - |
| - |
| 3,239 |
Vogo Realty Partners Private Real Estate Fund V |
| 50,040 |
| 21.64 |
| 10,827 |
| - |
| - |
| 10,827 |
Korea Credit Bureau |
| 77,509 |
| 9.00 |
| 6,976 |
| - |
| - |
| 6,976 |
Goduck Gangil1 PFV Co., Ltd(*1) |
| (13,927) |
| 1.04 |
| (145) |
| - |
| 145 |
| - |
SBC PFV Co., Ltd |
| 112,795 |
| 25.00 |
| 18,208 |
| - |
| - |
| 18,208 |
NH-amundi global infra private fund 16 |
| 87,678 |
| 50.00 |
| 43,839 |
| - |
| - |
| 43,839 |
IMM Global Private Equity Fund |
| 366,202 |
| 33.00 |
| 120,855 |
| - |
| - |
| 120,855 |
HANA Alternative Estate Professional Private122 |
| 39,411 |
| 75.19 |
| 29,631 |
| - |
| - |
| 29,631 |
Hanwha-Incus Plus New Technology Fund No.1 |
| 25,860 |
| 42.64 |
| 11,026 |
| - |
| - |
| 11,026 |
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7[Bond] |
| 111,426 |
| 45.96 |
| 51,210 |
| - |
| - |
| 51,210 |
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust |
| 395,815 |
| 72.39 |
| 286,531 |
| - |
| - |
| 286,531 |
PSA EMP Private Equity Fund |
| 33,856 |
| 28.99 |
| 9,814 |
| - |
| - |
| 9,814 |
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24 |
| 56,242 |
| 52.28 |
| 29,401 |
| - |
| - |
| 29,401 |
BRAIN DO PROFESSIONALE PRIVATE No. 27 |
| 11,815 |
| 29.13 |
| 3,441 |
| - |
| - |
| 3,441 |
UI Venture Fund 7th |
| 13,445 |
| 24.39 |
| 3,279 |
| - |
| - |
| 3,279 |
Sparklabs-Shinhan Opportunity Fund 1 |
| 9,760 |
| 49.50 |
| 4,832 |
| - |
| - |
| 4,832 |
BNW Tech-Innovation Private Equity Fund |
| 19,906 |
| 29.85 |
| 5,942 |
| - |
| - |
| 5,942 |
IGIS Real-estate Private Investment Trust No.33 |
| 34,507 |
| 40.86 |
| 14,099 |
| - |
| - |
| 14,099 |
Findvalue PreIPO 6th Professional Investment Type Private Investment Trust. |
| 9,505 |
| 31.58 |
| 3,002 |
| - |
| - |
| 3,002 |
WWG Global Real Estate Investment Trust no.4 |
| 60,071 |
| 29.55 |
| 17,752 |
| - |
| - |
| 17,752 |
Fidelis Global Private Real Estate Trust No.2 |
| 24,899 |
| 78.26 |
| 19,485 |
| - |
| - |
| 19,485 |
IGIS PRIVATE REAL ESTATE TRUST NO.331 |
| 12,238 |
| 30.77 |
| 3,765 |
| - |
| - |
| 3,765 |
AIP EURO PRIVATE REAL ESTATE TRUST No. 12 |
| 172,755 |
| 28.70 |
| 48,344 |
| - |
| - |
| 48,344 |
Pebblestone CGV Private Real Estate Trust No.1 |
| 27,502 |
| 48.53 |
| 13,346 |
| - |
| - |
| 13,346 |
Shinhan AIM Real Estate Fund No.2 |
| 74,880 |
| 30.00 |
| 22,464 |
| - |
| - |
| 22,464 |
Shinhan AIM Real Estate Fund No.1 |
| 223,443 |
| 21.01 |
| 46,945 |
| - |
| - |
| 46,945 |
170
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows:
| December 31, 2020 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
SHBNPP Daegu Green Power Cogeneration System Professional Investment Type Private Special Asset Investment Trust [Infra business] |
| 149,611 |
| 22.02 |
| 32,944 |
| - |
| - |
| 32,944 |
SHBNPP Sangju YC Expressway Professional Investment Type Private Special Asset Investment Trust [Infra business] |
| 71,605 |
| 29.19 |
| 20,902 |
| - |
| - |
| 20,902 |
SHBNPP Global Infrastructure Professional Investment Type Private Special Asset Investment Trust No.7-2 |
| 9,368 |
| 71.43 |
| 6,692 |
| - |
| - |
| 6,692 |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No. 1 [Equity securities-Derivative] |
| 16,150 |
| 30.00 |
| 4,845 |
| - |
| - |
| 4,845 |
Korea Omega-Shinhan Project Fund I |
| 11,861 |
| 50.00 |
| 5,931 |
| - |
| - |
| 5,931 |
New Green Shinhan Mezzanine Fund |
| 12,537 |
| 39.22 |
| 4,916 |
| - |
| - |
| 4,916 |
KORAMKO-Daum Professional Private Investment Trust No.12 |
| 22,583 |
| 33.33 |
| 7,528 |
| - |
| - |
| 7,528 |
Samsung SRA Real Estate Professional Private 45[FoFs] |
| 42,665 |
| 25.00 |
| 10,666 |
| - |
| - |
| 10,666 |
IBK Global New Renewable Energy Special Asset Professional Private2 |
| 111,605 |
| 28.98 |
| 32,349 |
| - |
| - |
| 32,349 |
VS Cornerstone Fund |
| 8,413 |
| 41.18 |
| 3,464 |
| - |
| - |
| 3,464 |
Aone Mezzanine Opportunity Professional Private |
| 14,490 |
| 66.12 |
| 9,580 |
| - |
| - |
| 9,580 |
KiwoomUnicorn3New Technology Business Investment Fund |
| 20,132 |
| 21.28 |
| 4,283 |
| - |
| - |
| 4,283 |
Multi Asset The United States Thortons Professional Private1(*2) |
| 165,760 |
| 25.00 |
| 41,440 |
| - |
| - |
| 41,440 |
Kiwoom Milestone US Real Estate Professional Private20 |
| 68,434 |
| 75.27 |
| 51,512 |
| - |
| - |
| 51,512 |
NH-Amundi US Infrastructure Private Fund2(*2) |
| 98,161 |
| 25.91 |
| 25,430 |
| - |
| - |
| 25,430 |
KB Distribution Private Real Estate1(*2) |
| 49,513 |
| 62.00 |
| 30,698 |
| - |
| - |
| 30,698 |
SHBNPP Jigae Namsan BTO professional Investment Type Private Special Asset Investment Trust [Infra business](*2) |
| 71,593 |
| 28.93 |
| 20,712 |
| - |
| - |
| 20,712 |
SHBNPP Japan Photovoltaic Private Special Asset Investment Trust No.2 [Loan-Derivative](*2) |
| 97,164 |
| 30.00 |
| 29,149 |
| - |
| - |
| 29,149 |
Kakao-Shinhan 1st TNYT Fund |
| 11,683 |
| 48.62 |
| 5,681 |
| - |
| - |
| 5,681 |
IMM Special Situation 1-2 PRIVATE EQUITY FUND |
| 54,295 |
| 20.02 |
| 10,870 |
| - |
| - |
| 10,870 |
Pacific Private Placement Real Estate Fund No.40 |
| 47,094 |
| 24.73 |
| 11,647 |
| - |
| - |
| 11,647 |
Mastern Private Real Estate Loan Fund No.2 |
| 16,955 |
| 33.57 |
| 5,692 |
| - |
| - |
| 5,692 |
LB Scotland Amazon Fulfillment Center Fund 29 |
| 44,455 |
| 70.14 |
| 31,182 |
| - |
| - |
| 31,182 |
JR AMC Hungary Budapest Office Fund 16 |
| 37,469 |
| 32.57 |
| 12,204 |
| - |
| - |
| 12,204 |
IGIS 372 Real Estate Professional Private |
| 200,192 |
| 28.39 |
| 56,835 |
| - |
| - |
| 56,835 |
KoFC-Neoplux R&D-Biz Creation 2013-1 Venture Capital Fund |
| 15,636 |
| 19.00 |
| 3,830 |
| - |
| - |
| 3,830 |
Future-Creation Neoplux Venture Capital Fund |
| 23,134 |
| 16.25 |
| 3,796 |
| - |
| - |
| 3,796 |
Gyeonggi-Neoplux Superman Fund |
| 31,712 |
| 21.76 |
| 6,399 |
| - |
| - |
| 6,399 |
NewWave 6th Fund |
| 20,501 |
| 30.00 |
| 6,150 |
| - |
| - |
| 6,150 |
171
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
| December 31, 2020 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
Neoplux No.3 Private Equity Fund |
| 102,956 |
| 10.00 |
| 10,295 |
| - |
| - |
| 10,295 |
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows (continued):
| December 31, 2020 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
PCC Amberstone Private Equity Fund I |
| 103,736 |
| 21.67 |
| 22,480 |
| - |
| - |
| 22,480 |
KIAMCO POWERLOAN TRUST 4TH |
| 92,794 |
| 47.37 |
| 43,955 |
| - |
| - |
| 43,955 |
Mastern Opportunity Seeking Real Estate Fund II |
| 98,994 |
| 20.00 |
| 19,799 |
| - |
| - |
| 19,799 |
AION ELFIS PROFESSIONAL PRIVATE 1 |
| 27,642 |
| 20.00 |
| 5,528 |
| - |
| - |
| 5,528 |
T&F 2020 SS Private Equity Fund Specializing in Start-up and Venture Business |
| 15,001 |
| 29.68 |
| 4,453 |
| - |
| - |
| 4,453 |
Neoplux Market-Frontier Secondary Fund |
| 54,727 |
| 19.74 |
| 11,545 |
| - |
| - |
| 11,545 |
Synergy Green New Deal 1st New Technology Business Investment Fund |
| 35,527 |
| 28.17 |
| 10,008 |
| - |
| - |
| 10,008 |
KAIM Real-estate Private Investment Trust 20 |
| 13,254 |
| 38.46 |
| 5,098 |
| - |
| - |
| 5,098 |
KIAMCO Vietnam Solar Special Asset Private Investment Trust |
| 15,896 |
| 50.00 |
| 7,948 |
| - |
| - |
| 7,948 |
CSQUARE SNIPER PROFESSIONAL PRIVATE 10 |
| 5,000 |
| 62.50 |
| 3,125 |
| - |
| - |
| 3,125 |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-1 |
| 45,573 |
| 97.85 |
| 44,594 |
| - |
| - |
| 44,594 |
IGIS GLIP Professional Investment Private Real Estate Investment Trust No. 1-2 |
| 45,573 |
| 97.85 |
| 44,594 |
| - |
| - |
| 44,594 |
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45 |
| 48,475 |
| 25.00 |
| 15,855 |
| - |
| - |
| 15,855 |
IGIS Professional Investors Private Investment Real Estate Investment LLC No.395 |
| 50,394 |
| 58.82 |
| 29,644 |
| - |
| - |
| 29,644 |
SHBNPP Green New Deal Energy Professional Investment Type Private Special Asset Investment Trust No.2 |
| 70,473 |
| 30.00 |
| 21,142 |
| - |
| - |
| 21,142 |
Kiwoom Private Equity Ant-Man Startup Venture Specialized Private Equity Fund |
| 20,134 |
| 25.00 |
| 5,034 |
| - |
| - |
| 5,034 |
Kiwoom Hero No.4 Private Equity Fund |
| 22,358 |
| 21.05 |
| 4,707 |
| - |
| - |
| 4,707 |
Vogo Canister Professional Trust Private Fund I |
| 119,892 |
| 36.68 |
| 43,975 |
| - |
| - |
| 43,975 |
Others |
| 519,091 |
|
|
| 139,466 |
| - |
| - |
| 139,466 |
|
| 8,101,037 |
|
|
| 2,657,552 |
| (32) |
| 550 |
| 2,657,768 |
(*1) Other adjustments represent the unrecognized equity method losses because the Group has stopped recognizing its equity method losses as the balance of the investment has been reduced to zero.
(*2) Other represents the adjustments of fair value when acquired.
172
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows (continued):
| December 31, 2019 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
BNP Paribas Cardif Life Insurance |
| 351,193 |
| 14.99 |
| 52,665 |
| (79) |
| - |
| 52,586 |
Songrim Partners.(*1) |
| (62) |
| 35.34 |
| (22) |
| - |
| 22 |
| - |
Neoplux Technology Valuation Investment Fund |
| 49,152 |
| 33.33 |
| 16,384 |
| - |
| - |
| 16,384 |
Partners 4th Growth Investment Fund |
| 59,669 |
| 25.00 |
| 14,917 |
| - |
| - |
| 14,917 |
KTB Newlake Global Healthcare PEF(*2) |
| 37,036 |
| 30.00 |
| 11,110 |
| - |
| 170 |
| 11,280 |
Daekwang Semiconductor Co., Ltd. |
| 16,179 |
| 20.94 |
| 3,388 |
| - |
| - |
| 3,388 |
Shinhan-Neoplux Energy Newbiz Fund |
| 33,773 |
| 23.33 |
| 7,880 |
| - |
| - |
| 7,880 |
Shinhan-Albatross tech investment Fund |
| 17,499 |
| 50.00 |
| 8,734 |
| - |
| - |
| 8,734 |
KCLAVIS Meister Fund No.17 |
| 4,593 |
| 26.09 |
| 1,198 |
| - |
| - |
| 1,198 |
Plutus-SG Private Equity Fund |
| 15,868 |
| 26.67 |
| 4,231 |
| - |
| - |
| 4,231 |
Eum Private Equity Fund No.3 |
| 17,216 |
| 20.76 |
| 3,574 |
| - |
| - |
| 3,574 |
KTB Confidence Private Placement |
| 19,305 |
| 31.43 |
| 6,067 |
| - |
| - |
| 6,067 |
Meritz AI-SingA330-A Investment Type Private Placement Special Asset Fund |
| 17,820 |
| 23.89 |
| 4,256 |
| - |
| - |
| 4,256 |
Meritz AI-SingA330-B Investment Type Private Placement Special Asset Fund |
| 44,226 |
| 20.16 |
| 8,916 |
| - |
| - |
| 8,916 |
VOGO Debt Strategy Qualified INV Private R/E INV TR 4 |
| 49,650 |
| 20.00 |
| 9,930 |
| - |
| - |
| 9,930 |
Shinhan-Midas Donga Secondary Fund |
| 6,972 |
| 50.00 |
| 3,486 |
| - |
| - |
| 3,486 |
ShinHan – Soo Young Entrepreneur Investment Fund No.1 |
| 18,954 |
| 24.00 |
| 4,549 |
| - |
| - |
| 4,549 |
Synergy-Shinhan Mezzanine New Technology Investment Fund |
| 8,215 |
| 47.62 |
| 3,912 |
| - |
| - |
| 3,912 |
Shinhan Praxis K-Growth Global Private Equity Fund |
| 54,601 |
| 18.87 |
| 10,302 |
| - |
| - |
| 10,302 |
Credian Healthcare Private Equity Fund II |
| 6,977 |
| 34.07 |
| 2,377 |
| - |
| - |
| 2,377 |
Kiwoom Milestone Professional Private Real Estate Trust 19 |
| 20,816 |
| 50.00 |
| 10,407 |
| - |
| - |
| 10,407 |
AIP EURO Green Private Real Estate Trust No.3 |
| 98,135 |
| 21.28 |
| 20,884 |
| - |
| - |
| 20,884 |
Hanhwa US Equity Strategy Private Real Estate Fund No.1 |
| 57,901 |
| 44.84 |
| 25,964 |
| - |
| - |
| 25,964 |
Shinhan Global Healthcare Fund 1 |
| 72,687 |
| 4.41 |
| 3,209 |
| - |
| - |
| 3,209 |
JB Power TL Investment Type Private Placement Special Asset Fund 7 |
| 50,402 |
| 33.33 |
| 16,800 |
| - |
| - |
| 16,800 |
IBK AONE convertible 1 |
| 12,861 |
| 47.25 |
| 6,077 |
| - |
| - |
| 6,077 |
Rico synergy collabo Multi-Mezzanine 3 |
| 6,431 |
| 50.03 |
| 3,217 |
| - |
| - |
| 3,217 |
KB NA Hickory Private Special Asset Fund |
| 95,813 |
| 37.50 |
| 35,930 |
| - |
| - |
| 35,930 |
Koramco Europe Core Private Placement Real Estate Fund No.2-2 |
| 44,438 |
| 44.02 |
| 19,562 |
| - |
| - |
| 19,562 |
Shinhan-Stonebridge Petro PEF |
| 38 |
| 1.82 |
| 1 |
| - |
| - |
| 1 |
BNP Paribas Cardif General Insurance |
| 21,128 |
| 10.00 |
| 2,113 |
| - |
| - |
| 2,113 |
173
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows (continued):
| December 31, 2019 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
Axis Global Growth New Technology Investment Association |
| 10,064 |
| 31.85 |
| 3,205 |
| - |
| - |
| 3,205 |
Polaris No7 Start up and Venture Private Equity Fund |
| 8,061 |
| 28.57 |
| 2,303 |
| - |
| - |
| 2,303 |
Hermes Private Investment Equity Fund |
| 21,859 |
| 29.17 |
| 6,376 |
| - |
| - |
| 6,376 |
SHC ULMUS Fund No.1 |
| 10,706 |
| 29.41 |
| 3,149 |
| - |
| - |
| 3,149 |
Shinhan-Nvestor Liquidity Solution Fund |
| 19,524 |
| 24.92 |
| 4,865 |
| - |
| - |
| 4,865 |
Shinhan AIM FoF Fund 1a |
| 28,967 |
| 25.00 |
| 7,242 |
| - |
| - |
| 7,242 |
IGIS Global Credit Fund 150-1 |
| 38,874 |
| 25.00 |
| 9,718 |
| - |
| - |
| 9,718 |
GX Shinhan Intervest 1st Private Equity Fund |
| 131,237 |
| 25.27 |
| 33,166 |
| - |
| - |
| 33,166 |
Soo Commerce Platform Growth Fund |
| 25,762 |
| 24.62 |
| 6,343 |
| - |
| - |
| 6,343 |
Partner One Value up I Private Equity Fund |
| 42,602 |
| 27.91 |
| 11,891 |
| - |
| - |
| 11,891 |
Genesis No.1 Private Equity Fund |
| 224,315 |
| 22.80 |
| 51,150 |
| - |
| - |
| 51,150 |
GMB ICT New Technology Investment Fund |
| 29,359 |
| 26.75 |
| 7,854 |
| - |
| - |
| 7,854 |
Korea Omega Project Fund III |
| 12,818 |
| 23.53 |
| 3,016 |
| - |
| - |
| 3,016 |
Soo Delivery Platform Growth Fund |
| 29,740 |
| 30.00 |
| 8,922 |
| - |
| - |
| 8,922 |
Genesis North America Power Company No.1 PEF |
| 45,759 |
| 39.92 |
| 18,275 |
| - |
| - |
| 18,275 |
Hyungje art printing(*1) |
| (264) |
| 31.54 |
| (83) |
| - |
| 83 |
| - |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 88,763 |
| 23.33 |
| 20,712 |
| - |
| - |
| 20,712 |
Shinhan-Rhinos 1 Fund |
| 13,474 |
| 22.48 |
| 3,029 |
| - |
| - |
| 3,029 |
Pacific Private Investment Trust No.20 |
| 18,749 |
| 21.74 |
| 4,076 |
| - |
| - |
| 4,076 |
Susung Mezzanine project P1 Private Investment Trust |
| 9,672 |
| 41.18 |
| 5,128 |
| - |
| - |
| 5,128 |
Korea Finance Security |
| 21,693 |
| 14.91 |
| 3,235 |
| - |
| - |
| 3,235 |
MIEL CO.,LTD(*1) |
| (119) |
| 28.77 |
| (34) |
| - |
| 34 |
| - |
AIP Transportation Specialized Privately Placed Fund Trust #1 |
| 88,395 |
| 35.73 |
| 31,580 |
| - |
| - |
| 31,580 |
Lime Neptune Professional Private 6 |
| 10,125 |
| 50.00 |
| 5,063 |
| - |
| - |
| 5,063 |
PCC S/W 2nd Fund |
| 10,154 |
| 29.56 |
| 3,001 |
| - |
| - |
| 3,001 |
E&Healthcare Investment Fund No.6 |
| 38,179 |
| 20.37 |
| 7,776 |
| - |
| - |
| 7,776 |
One Shinhan Global Fund 1 |
| 22,244 |
| 19.98 |
| 4,441 |
| - |
| - |
| 4,441 |
Kiwoom-Shinhan Innovation Fund I |
| 14,568 |
| 50.00 |
| 7,284 |
| - |
| - |
| 7,284 |
Daishin-K&T New Technology Investment Fund |
| 22,583 |
| 31.25 |
| 7,057 |
| - |
| - |
| 7,057 |
Midas Asset Global CRE Debt Private Fund No.6 |
| 118,368 |
| 20.05 |
| 23,731 |
| - |
| - |
| 23,731 |
Richmond Private Investment Trust No.82 |
| 25,200 |
| 60.00 |
| 15,120 |
| - |
| - |
| 15,120 |
Tiger Alternative Real Estate Professional Private5 |
| 40,689 |
| 48.71 |
| 19,820 |
| - |
| - |
| 19,820 |
174
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows (continued):
| December 31, 2019 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
Samchully Midstream Private Placement Special Asset Fund 5-4 |
| 71,625 |
| 42.92 |
| 30,742 |
| - |
| - |
| 30,742 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| 269,155 |
| 20.00 |
| 53,831 |
| - |
| - |
| 53,831 |
AUCTUS FITRIN Corporate Recovery Private Equity Fund |
| 67,004 |
| 21.43 |
| 14,358 |
| - |
| - |
| 14,358 |
NH-Amundi Global Infrastructure Trust 14 |
| 61,657 |
| 30.00 |
| 18,497 |
| - |
| - |
| 18,497 |
Pacific Private Real Estate Fund Investment Trust No.30 |
| 39,509 |
| 37.50 |
| 14,816 |
| - |
| - |
| 14,816 |
Jarvis Memorial Private Investment Trust 1 |
| 10,267 |
| 99.01 |
| 10,166 |
| - |
| - |
| 10,166 |
Mastern Private Private Investment Trust 68 |
| 18,598 |
| 53.76 |
| 9,999 |
| - |
| - |
| 9,999 |
Vestas Qualified Investors Private Real Estate Fund Investment Trust No.37 |
| 7,329 |
| 60.00 |
| 4,397 |
| - |
| - |
| 4,397 |
Milestone Private Real Estate Fund 3 (Derivative Type) |
| 53,608 |
| 32.06 |
| 17,186 |
| - |
| - |
| 17,186 |
IGIS Private Real Estate Investment Trust 286 (2 class) |
| 23,502 |
| 41.56 |
| 9,768 |
| - |
| - |
| 9,768 |
Nomura-Rifa Private Real Estate Investment Trust 31 (2 class) |
| 28,469 |
| 31.31 |
| 8,914 |
| - |
| - |
| 8,914 |
Lime Pricing Private Equity Fund |
| 32,113 |
| 25.85 |
| 8,300 |
| - |
| - |
| 8,300 |
SHBNPP Senior Loan Professional Investment Type Private Mixed Asset Investment Trust No.2 |
| 197,417 |
| 21.27 |
| 41,991 |
| - |
| - |
| 41,991 |
DS Solid.II Hedge Fund |
| 15,042 |
| 27.41 |
| 4,123 |
| - |
| - |
| 4,123 |
Hana Semiconductor New Technology Fund |
| 52,905 |
| 24.30 |
| 12,856 |
| - |
| - |
| 12,856 |
J&Magnet Startup Venture Specialized Private Equity Fund |
| 24,513 |
| 24.39 |
| 5,979 |
| - |
| - |
| 5,979 |
Cape IT Fund No.3 |
| 30,298 |
| 32.89 |
| 9,967 |
| - |
| - |
| 9,967 |
Vogo Realty Partners Private Real Estate Fund V |
| 47,958 |
| 21.64 |
| 10,376 |
| - |
| - |
| 10,376 |
IL GU FARM CO.,LTD(*1) |
| (316) |
| 28.47 |
| (90) |
| - |
| 90 |
| - |
Korea Credit Bureau |
| 75,689 |
| 9.00 |
| 6,812 |
| - |
| - |
| 6,812 |
SBC PFV Co., Ltd |
| 80,000 |
| 25.00 |
| 20,000 |
| - |
| - |
| 20,000 |
Sprott Global Renewable Private Equity Fund II |
| 82,718 |
| 23.10 |
| 19,016 |
| - |
| - |
| 19,016 |
NH-amundi global infra private fund 16 |
| 96,316 |
| 50.00 |
| 48,158 |
| - |
| - |
| 48,158 |
IMM Global Private Equity Fund |
| 90,807 |
| 31.85 |
| 28,925 |
| - |
| - |
| 28,925 |
HANA Alternative Estate Professional Private122 |
| 34,853 |
| 75.19 |
| 26,205 |
| - |
| - |
| 26,205 |
Hanwha-Incus Plus New Technology Fund No.1 |
| 12,899 |
| 42.64 |
| 5,499 |
| - |
| - |
| 5,499 |
175
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(d) Reconciliation of the financial information to the carrying values of its interests in the associates as of December 31, 2020 and 2019 are as follows (continued):
| December 31, 2019 | |||||||||||
Investees |
| Net assets (a) |
| Ownership (%)(b) |
| Interests in the net assets (a)*(b) |
| Intra-group transactions |
| Other |
| Carrying Value |
SHBNPP Corporate Professional Investment Type Private Security Investment Trust No.7[Bond] |
| 111,607 |
| 45.96 |
| 51,293 |
| - |
| - |
| 51,293 |
SHBNPP BNCT Professional Investment Type Private Special Asset Investment Trust |
| 261,433 |
| 57.50 |
| 150,317 |
| - |
| - |
| 150,317 |
PSA EMP Private Equity Fund |
| 34,250 |
| 28.99 |
| 9,927 |
| - |
| - |
| 9,927 |
Deutsche Global Professional Investment Type Private Real Estate Investment Trust No. 24 |
| 56,360 |
| 52.28 |
| 29,463 |
| - |
| - |
| 29,463 |
SHBNPP Peace of Mind TDF 2035 Security Investment Trust [Equity Balanced-FoF] |
| 22,285 |
| 25.70 |
| 5,727 |
| - |
| - |
| 5,727 |
SHBNPP Peace of Mind TDF 2040 Security Investment Trust [Equity Balanced-FoF] |
| 22,536 |
| 25.42 |
| 5,729 |
| - |
| - |
| 5,729 |
BRAIN DO PROFESSIONALE PRIVATE No. 27 |
| 10,295 |
| 29.13 |
| 3,065 |
| - |
| - |
| 3,065 |
VISION US Muni US Local Debt Opportunities Professional Private1(S) |
| 39,095 |
| 25.00 |
| 9,869 |
| - |
| - |
| 9,869 |
Other |
| 337,794 |
| - |
| 85,931 |
| - |
| - |
| 85,931 |
|
| 4,951,196 |
| - |
| 1,452,541 |
| (79) |
| 399 |
| 1,452,861 |
(*1) Other adjustments represent the unrecognized equity method losses because the Group has stopped recognizing its equity method losses as the balance of the investment has been reduced to zero.
(*2) Other represents the adjustments of fair value when acquired.
176
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
15. Investments in associates (continued)
(e) The unrecognized equity method losses as of and for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||
Investees |
| Unrecognized equity method losses |
| Cumulative unrecognized equity method losses |
Songrim Partners. |
| - |
| (22) |
Multimedia Tech Co.Ltd |
| (15) |
| (15) |
Hyungje art printing |
| (83) |
| (83) |
MIEL CO.,LTD |
| (25) |
| (25) |
Goduck Gangil1 PFV Co., Ltd |
| (145) |
| (145) |
|
| (268) |
| (290) |
|
| December 31, 2019 | ||
Investees |
| Unrecognized equity method losses |
| Cumulative unrecognized equity method losses |
Songrim Partners. |
| (14) |
| (22) |
Hyungje art printing |
| (45) |
| (83) |
MIEL CO.,LTD |
| (34) |
| (34) |
IL GU FARM CO.,LTD |
| (90) |
| (90) |
|
| (183) |
| (229) |
177
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
16. Investment properties
(a) Investment properties as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Acquisition cost |
| 767,118 |
| 605,773 |
Accumulated depreciation |
| (151,883) |
| (117,163) |
Carrying value |
| 615,235 |
| 488,610 |
(b) Changes in investment properties for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Beginning balance |
| 488,610 |
| 474,820 |
Acquisition |
| 244,100 |
| 2,767 |
Disposal |
| (92,337) |
| (73,588) |
Depreciation |
| (20,165) |
| (17,565) |
Amounts transferred from (to) property and equipment |
| (4,064) |
| 104,573 |
Amounts transferred to assets held for sale(*) |
| (910) |
| (15,795) |
Foreign currency adjustment |
| 1 |
| (169) |
Business combination (Note 47) |
| - |
| 13,567 |
Ending balance |
| 615,235 |
| 488,610 |
(*) Comprise land and buildings, etc.
(c) Income and expenses on investment property for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Rental income |
| 23,890 |
| 43,777 |
Direct operating expenses for investment properties that generated rental income |
| 11,951 |
| 12,107 |
(d) The fair value of investment property as of December 31, 2020 and 2019 is as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Land and buildings(*) |
| 1,254,149 |
| 1,062,195 |
(*) Fair value of investment properties is estimated based in the recent market transaction conditions with an independent third party and certain significant unobservable inputs. Accordingly, fair value of investment properties is classified as level 3.
178
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
17. Other assets
(a) Other assets as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Accounts receivable |
| 12,511,880 |
| 9,355,388 |
Domestic exchange settlement debit |
| 4,055,744 |
| 4,337,628 |
Guarantee deposits |
| 1,145,045 |
| 1,184,572 |
Present value discount on guarantee deposits |
| (33,062) |
| (45,316) |
Accrued income |
| 2,535,847 |
| 2,612,823 |
Prepaid expense |
| 202,218 |
| 193,849 |
Suspense payments |
| 183,935 |
| 71,764 |
Sundry assets |
| 106,341 |
| 93,766 |
Separate account assets |
| 9,267,722 |
| 8,253,351 |
Advance payments |
| 203,023 |
| 317,365 |
Unamortized deferred acquisition cost |
| 979,942 |
| 907,868 |
Other |
| 1,118,926 |
| 661,998 |
Allowances for credit loss of other assets |
| (82,895) |
| (66,775) |
|
| 32,194,666 |
| 27,878,281 |
(b) Changes in deferred acquisition cost by insurance type for the year ended December 31, 2020 are as follows:
|
| December 31, 2020 | |||||||||||
|
| Beginning balance |
| Acquisition cost incurred |
| Amortiza -tion |
| Ending balance | |||||
Cost |
| Expensed |
| Deferral | |||||||||
Individual insurance |
|
|
|
|
|
|
|
|
|
|
|
| |
Survival insurance |
| 67,856 |
| 11,602 |
| (6,450) |
| 5,152 |
| (35,504) |
| 37,504 | |
Mortality insurance |
| 834,415 |
| 771,973 |
| (298,355) |
| 473,618 |
| (375,111) |
| 932,922 | |
Endowment insurance |
| 4,764 |
| 19,024 |
| (11,001) |
| 8,023 |
| (3,862) |
| 8,925 | |
|
| 907,035 |
| 802,599 |
| (315,806) |
| 486,793 |
| (414,477) |
| 979,351 | |
Group insurance |
|
|
|
|
|
|
|
|
|
|
|
| |
Protection type |
| 833 |
| 343 |
| (164) |
| 179 |
| (421) |
| 591 | |
|
| 907,868 |
| 802,942 |
| (315,970) |
| 486,972 |
| (414,898) |
| 979,942 |
179
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
18. Leases
(a) Gross investment and present value of minimum lease payment of finance lease as of December 31, 2020 and 2019, are as follows:
|
| December 31, 2020 | |||||
|
| Gross investment |
| Unearned finance income |
| Present value of minimum lease payment |
|
Not later than 1 year |
| 678,790 |
| 73,230 |
| 605,560 |
|
1 ~ 2 years |
| 527,757 |
| 43,701 |
| 484,056 |
|
2 ~ 3 years |
| 391,447 |
| 21,169 |
| 370,278 |
|
3 ~ 4 years |
| 219,040 |
| 6,089 |
| 212,951 |
|
4 ~ 5 years |
| 93,975 |
| 432 |
| 93,543 |
|
Later than 5 years |
| 6,320 |
| 53 |
| 6,267 |
|
|
| 1,917,329 |
| 144,674 |
| 1,772,655 |
|
(*) Interest income on finance lease receivables recognized for the year ended December 31, 2020 is W76,742 million.
|
| December 31, 2019 | |||||
|
| Gross investment |
| Unearned finance income |
| Present value of minimum lease payment |
|
Not later than 1 year |
| 529,326 |
| 94,809 |
| 434,517 |
|
1 ~ 2 years |
| 443,708 |
| 63,226 |
| 380,482 |
|
2 ~ 3 years |
| 469,754 |
| 37,725 |
| 432,029 |
|
3 ~ 4 years |
| 289,798 |
| 16,773 |
| 273,025 |
|
4 ~ 5 years |
| 150,811 |
| 4,225 |
| 146,586 |
|
Later than 5 years |
| 16,782 |
| 44 |
| 16,738 |
|
|
| 1,900,179 |
| 216,802 |
| 1,683,377 |
|
(*) Interest income on finance lease receivables recognized for the year ended December 31, 2019 is W74,933 million.
180
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
18. Leases (continued)
(b) Minimum lease payment receivable schedule for lease contracts of the Group as lessor as of December 31, 2020 and 2019 are as follows:
i) Finance lease
|
| December 31, 2020 | |||||
|
| Minimum lease payment |
| Present value adjustment |
| Present value of minimum lease payment |
|
Not later than 1 year |
| 678,790 |
| 73,230 |
| 605,560 |
|
1 ~ 2 years |
| 527,757 |
| 43,701 |
| 484,056 |
|
2 ~ 3 years |
| 391,447 |
| 21,169 |
| 370,278 |
|
3 ~ 4 years |
| 219,040 |
| 6,089 |
| 212,951 |
|
4 ~ 5 years |
| 93,975 |
| 432 |
| 93,543 |
|
Later than 5 years |
| 6,320 |
| 53 |
| 6,267 |
|
|
| 1,917,329 |
| 144,674 |
| 1,772,655 |
|
|
| December 31, 2019 | |||||
|
| Minimum lease payment |
| Present value adjustment |
| Present value of minimum lease payment |
|
Not later than 1 year |
| 529,326 |
| 94,809 |
| 434,517 |
|
1 ~ 2 years |
| 443,708 |
| 63,226 |
| 380,482 |
|
2 ~ 3 years |
| 469,754 |
| 37,725 |
| 432,029 |
|
3 ~ 4 years |
| 289,798 |
| 16,773 |
| 273,025 |
|
4 ~ 5 years |
| 150,811 |
| 4,225 |
| 146,586 |
|
Later than 5 years |
| 16,782 |
| 44 |
| 16,738 |
|
|
| 1,900,179 |
| 216,802 |
| 1,683,377 |
|
ii) Operating lease
|
| Minimum lease payment | |||
|
| December 31, 2020 |
| December 31, 2019 | |
Not later than 1 year |
| 276,590 |
| 142,140 | |
1 ~ 2 years |
| 233,443 |
| 118,781 | |
2 ~ 3 years |
| 182,261 |
| 76,379 | |
3 ~ 4 years |
| 124,556 |
| 37,047 | |
4 ~ 5 years |
| 52,997 |
| 14,984 | |
Later than 5 years |
| 95,414 |
| 83 | |
|
| 965,261 |
| 389,414 |
181
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
18. Leases (continued)
(c) Changes in operating lease assets for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 | |
Beginning balance |
| 549,741 |
| 370,868 | |
Acquisition |
| 681,607 |
| 411,971 | |
Disposal |
| (54,042) |
| (134,810) | |
Depreciation |
| (163,006) |
| (98,288) | |
Ending balance |
| 1,014,300 |
| 549,741 |
(d) The details of the right-of-use assets by the lessee’s underlying asset type as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Acquisition cost |
| Accumulated depreciation |
| Carrying value |
Real estate |
| 953,135 |
| (396,716) |
| 556,419 |
Vehicle |
| 36,680 |
| (16,059) |
| 20,621 |
Others |
| 26,368 |
| (12,991) |
| 13,377 |
|
| 1,016,183 |
| (425,766) |
| 590,417 |
|
| December 31, 2019 | ||||
|
| Acquisition cost |
| Accumulated depreciation |
| Carrying value |
Real estate |
| 1,306,759 |
| (228,956) |
| 1,077,803 |
Vehicle |
| 30,051 |
| (8,057) |
| 21,994 |
Others |
| 20,396 |
| (7,397) |
| 12,999 |
|
| 1,357,206 |
| (244,410) |
| 1,112,796 |
(e) The details of the changes in the right-of-use assets for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Real estate |
| Vehicle |
| Others |
| Total |
Beginning balance |
| 1,077,803 |
| 21,994 |
| 12,999 |
| 1,112,796 |
Acquisition |
| 286,981 |
| 12,556 |
| 6,421 |
| 305,958 |
Disposal |
| (21,763) |
| (2,394) |
| (16) |
| (24,173) |
Depreciation |
| (268,376) |
| (11,625) |
| (6,027) |
| (286,028) |
Substitution |
| (513,437) |
| - |
| - |
| (513,437) |
Effects of foreign currency movements |
| (5,375) |
| (5) |
| - |
| (5,380) |
Business combination (Note 47) |
| 586 |
| 95 |
| - |
| 681 |
Ending balance |
| 556,419 |
| 20,621 |
| 13,377 |
| 590,417 |
|
| December 31, 2019 | ||||||
|
| Real estate |
| Vehicle |
| Others |
| Total |
Beginning balance |
| 554,478 |
| 16,528 |
| 12,570 |
| 583,576 |
Acquisition |
| 781,097 |
| 16,523 |
| 8,163 |
| 805,783 |
Disposal |
| (10,808) |
| (1,638) |
| (149) |
| (12,595) |
Depreciation |
| (280,691) |
| (10,094) |
| (7,753) |
| (298,538) |
Effects of foreign currency movements |
| 2,890 |
| 91 |
| - |
| 2,981 |
Business combination |
| 30,837 |
| 584 |
| 168 |
| 31,589 |
Ending balance |
| 1,077,803 |
| 21,994 |
| 12,999 |
| 1,112,796 |
182
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
18. Leases (continued)
(f) The details of the maturity of the lease liability as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||
|
| 1 month or less |
| 1 month ~ 3 months or less |
| 3 months ~ 6 months or less |
| 6 months ~ 1 year or less |
| 1 year ~ 5 years or less |
| More than 5 years |
| Total |
Real estate |
| 22,560 |
| 36,746 |
| 49,746 |
| 90,057 |
| 287,932 |
| 69,083 |
| 556,124 |
Vehicle |
| 3,404 |
| 1,840 |
| 2,490 |
| 4,765 |
| 11,632 |
| - |
| 24,131 |
Others |
| 520 |
| 806 |
| 1,203 |
| 2,031 |
| 9,345 |
| 1 |
| 13,906 |
|
| 26,484 |
| 39,392 |
| 53,439 |
| 96,853 |
| 308,909 |
| 69,084 |
| 594,161 |
|
| December 31, 2019 | ||||||||||||
|
| 1 month or less |
| 1 month ~ 3 months or less |
| 3 months ~ 6 months or less |
| 6 months ~ 1 year or less |
| 1 year ~ 5 years or less |
| More than 5 years |
| Total |
Real estate |
| 20,967 |
| 34,357 |
| 47,644 |
| 86,228 |
| 848,699 |
| 28,973 |
| 1,066,868 |
Vehicle |
| 1,378 |
| 1,542 |
| 2,178 |
| 4,108 |
| 14,410 |
| - |
| 23,616 |
Others |
| 959 |
| 994 |
| 1,288 |
| 2,057 |
| 8,477 |
| - |
| 13,775 |
|
| 23,304 |
| 36,893 |
| 51,110 |
| 92,393 |
| 871,586 |
| 28,973 |
| 1,104,259 |
(*) The above amounts are based on undiscounted cash flows, and have been classified at the earliest maturity that the Group has the obligation to pay.
(g) The lease payments for low-value assets and short-term leases for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Low-value assets |
| 6,181 |
| 5,045 |
Short-term lease (*) |
| 836 |
| 907 |
Total |
| 7,017 |
| 5,952 |
(*) The payments for leases with terms less than 1 month are included.
183
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
19. Pledged assets
(a) Assets pledged as collateral as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
| Reasons for collateral |
|
|
|
|
|
|
|
Loans at amortized cost |
| - |
| 128,163 |
| Borrowings |
Securities: |
|
|
|
|
|
|
Securities at FVTPL |
| 15,328,573 |
| 15,016,057 |
| Customer RP |
Securities at FVOCI |
| 4,058,033 |
| 2,387,555 |
| Borrowings, Settlement security for Bank of Korea, Borrowing securities, etc |
Securities at amortized cost |
| 14,516,567 |
| 12,791,744 |
| Borrowings, Settlement security for Bank of Korea, Customer RP, etc |
|
| 33,903,173 |
| 30,195,356 |
|
|
|
|
|
|
|
|
|
Deposits at amortized cost |
| 784,626 |
| 1,090,161 |
| Borrowings |
Property and Equipment (real estate) |
| 301,098 |
| 121,446 |
| Set for near mortgage, etc |
Other financial assets |
| 355 |
| 404 |
| Performance guarantee, etc |
|
| 34,989,252 |
| 31,535,530 |
|
|
(*) The carrying amounts of assets pledged that the pledgees have the right to sell or re-pledge regardless of the Group’s default as of December 31, 2020 and 2019 are W11,190,218 million and W9,696,487 million, respectively.
(b) The fair value of collateral held that the Group has the right to sell or re-pledge regardless of the pledger’s default as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
|
| ||
|
| Collateral held |
| The fair value of collateral sold or re-provided as collateral | ||
|
| Assets pledged as collateral |
| Assets received as collateral |
| |
Securities |
| 10,487,095 |
| 2,871,910 |
| - |
|
| December 31, 2019 |
|
| ||
|
| Collateral held |
| The fair value of collateral sold or re-provided as collateral | ||
|
| Assets pledged as collateral |
| Assets received as collateral |
| |
Securities |
| 9,240,573 |
| 2,007,036 |
|
|
184
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
20. Deposits
Deposits as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Demand deposits: |
|
|
|
|
Korean won |
| 132,444,929 |
| 103,048,895 |
Foreign currencies |
| 16,280,268 |
| 13,233,812 |
|
| 148,725,197 |
| 116,282,707 |
Time deposits: |
|
|
|
|
Korean won |
| 137,719,464 |
| 139,824,896 |
Foreign currencies |
| 20,114,427 |
| 18,602,551 |
|
| 157,833,891 |
| 158,427,447 |
Negotiable certificates of deposits |
| 5,946,704 |
| 9,707,791 |
Note discount deposits |
| 6,226,937 |
| 4,579,587 |
CMA |
| 4,006,319 |
| 3,987,372 |
Others |
| 3,677,820 |
| 1,889,352 |
|
| 326,416,868 |
| 294,874,256 |
185
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
21. Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Securities sold: |
|
|
|
|
Stocks |
| 387,857 |
| 298,008 |
Bonds |
| 503,920 |
| 825,942 |
Others |
| 5,352 |
| 40,747 |
|
| 897,129 |
| 1,164,697 |
Gold/silver deposits |
| 539,565 |
| 467,760 |
|
| 1,436,694 |
| 1,632,457 |
22. Financial liabilities designated at fair value through profit or loss
Financial liabilities designated at fair value through profit or loss as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
| Reason for designation |
Equity-linked securities sold |
| 6,556,288 |
| 6,880,811 |
| Combined instrument |
Securities sold with embedded derivatives |
| 1,899,436 |
| 2,528,645 |
| |
|
| 8,455,724 |
| 9,409,456 |
|
|
(*) The Group designated the financial liabilities at the initial recognition(or subsequently) in accordance with paragraph 6.7.1 of K-IFRS No. 1109 as financial liabilities at fair value through profit or loss.
Maximum credit risk exposure of the financial liabilities designated at fair value through profit or loss amounts to W8,455,724 million as of December 31, 2020. Decrease in values of the liability due to credit risk changes is W9,689 million for the year ended December 31, 2020 and the accumulated changes in values are W(-)7,133 million as of December 31, 2020.
186
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
23. Borrowings
Borrowings as of December 31, 2020 and 2019 are as follows:
| December 31, 2020 |
| December 31, 2019 | ||||
| Interest rate (%) |
| Amount |
| Interest rate (%) |
| Amount |
|
|
|
|
|
|
|
|
Borrowings in Korean won: |
|
|
|
|
|
|
|
Borrowings from Bank of Korea | 0.25~0.25 |
| 5,351,110 |
| 0.50~0.75 |
| 2,429,346 |
Others | 0.00~6.20 |
| 16,375,272 |
| 0.00~6.00 |
| 14,202,096 |
|
|
| 21,726,382 |
|
|
| 16,631,442 |
Borrowings in foreign currencies: |
|
|
|
|
|
|
|
Overdraft due to banks | 0.00 |
| 71,309 |
| 0.00 |
| 86,791 |
Borrowings from banks | 0.00~8.00 |
| 5,423,571 |
| 0.11~7.50 |
| 6,576,849 |
Others | 0.00~12.45 |
| 1,538,021 |
| 1.94~13.65 |
| 1,748,031 |
|
|
| 7,032,901 |
|
|
| 8,411,671 |
|
|
|
|
|
|
|
|
Call money | 0.35~ 0.55 |
| 1,760,042 |
| 0.00~ 5.25 |
| 712,247 |
Bill sold | 0.00~ 1.10 |
| 10,706 |
| 0.80~ 1.60 |
| 19,070 |
Bonds sold under repurchase agreements: | 0.00~ 5.15 |
| 11,065,584 |
| 0.95~ 5.40 |
| 9,089,736 |
Deferred origination costs |
|
| (1,551) |
|
|
| (1,010) |
|
|
| 41,594,064 |
|
|
| 34,863,156 |
187
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
24. Debt securities issued
Debt securities issued as of December 31, 2020 and 2019 are as follows:
| December 31, 2020 |
| December 31, 2019 | ||||
| Interest |
| Amount |
| Interest |
| Amount |
Debt securities issued in Korean won: |
|
|
|
|
|
|
|
Debt securities issued | 0.67~8.00 |
| 59,816,756 |
| 0.71~8.00 |
| 60,501,093 |
Subordinated debt securities issued | 2.20~4.60 |
| 4,370,125 |
| 2.20~4.60 |
| 4,370,145 |
Loss on fair value hedges | - |
| (63,652) |
| - |
| (87,692) |
Discount on debt securities issued | - |
| (39,309) |
| - |
| (66,334) |
|
|
| 64,083,920 |
|
|
| 64,717,212 |
Debt securities issued in foreign currencies: |
|
|
|
|
|
|
|
Debt securities issued | 0.25~7.59 |
| 7,182,619 |
| 0.01~7.59 |
| 6,750,085 |
Subordinated debt securities issued | 3.34~5.10 |
| 3,598,624 |
| 3.34~5.10 |
| 3,797,536 |
Gain on fair value hedges | - |
| 309,880 |
| - |
| 141,264 |
Discount on debt securities issued | - |
| (40,649) |
| - |
| (42,733) |
|
|
| 11,050,474 |
|
|
| 10,646,152 |
|
|
| 75,134,394 |
|
|
| 75,363,364 |
25. Defined benefit assets
(a) Defined benefit obligations and plan assets
The Group has operated a defined benefit plan and calculates defined benefit obligations based on the employee's pension compensation benefits and service period.
Defined benefit obligations and plan assets as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Present value of defined benefit obligations |
| 2,182,464 |
| 2,063,102 |
Fair value of plan assets |
| (2,138,324) |
| (1,943,644) |
Recognized liabilities for defined benefit obligations(*) |
| 44,140 |
| 119,458 |
(*) The net defined benefit obligation of W44,140 million as of December 31, 2020 is the net defined benefit liability of W62,514 million less the net plan assets of W18,374 million. In addition, the net defined benefit obligation of W119,458 million as of December 31, 2019 is the net defined benefit liability of W121,140 million less the net plan assets of W1,682 million.
188
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
25. Defined benefit assets (continued)
(b) Changes in the present value of defined benefit obligation and plan assets for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Defined benefit obligation |
| Plan assets |
| Net defined benefit liability |
Beginning balance |
| 2,063,102 |
| (1,943,644) |
| 119,458 |
Included in profit or loss: |
|
|
|
|
|
|
Current service cost |
| 179,390 |
| - |
| 179,390 |
Past service cost |
| 9,069 |
| - |
| 9,069 |
Interest expense (income) |
| 57,674 |
| (55,466) |
| 2,208 |
Settlement expense |
| (306) |
| - |
| (306) |
|
| 245,827 |
| (55,466) |
| 190,361 |
Included in other comprehensive income: |
|
|
|
|
|
|
Remeasurement loss (gain): |
|
|
|
|
|
|
- Actuarial gains (losses) arising from : |
|
|
|
|
|
|
Demographic assumptions |
| 18 |
| - |
| 18 |
Financial assumptions |
| (44,424) |
| - |
| (44,424) |
Experience adjustment |
| 2,957 |
| - |
| 2,957 |
- Return on plan assets excluding interest income |
| - |
| 20,027 |
| 20,027 |
|
| (41,449) |
| 20,027 |
| (21,422) |
Other: |
|
|
|
|
|
|
Benefits paid by the plan |
| (83,614) |
| 77,567 |
| (6,047) |
Contributions paid into the plan |
| (268) |
| (239,570) |
| (239,838) |
Settlement gain or loss |
| (2,695) |
| 4,053 |
| 1,358 |
Business combination (Note 47) |
| 2,139 |
| (1,291) |
| 848 |
Effect of movements in exchange rates |
| (578) |
| - |
| (578) |
|
| (85,016) |
| (159,241) |
| (244,257) |
Ending balance |
| 2,182,464 |
| (2,138,324) |
| 44,140 |
(*) Profit and loss related to defined benefit plans are included in the general administrative expense.
189
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
25. Defined benefit assets (continued)
(b) Changes in the present value of defined benefit obligation and plan assets for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||
|
| Defined benefit obligation |
| Plan assets |
| Net defined benefit liability |
Beginning balance |
| 1,841,982 |
| (1,714,634) |
| 127,348 |
Included in profit or loss: |
|
|
|
|
|
|
Current service cost |
| 172,490 |
| - |
| 172,490 |
Past service cost |
| (1,588) |
| - |
| (1,588) |
Interest expense (income) |
| 57,253 |
| (54,336) |
| 2,917 |
Settlement expense (income) |
| (29) |
| - |
| (29) |
|
| 228,126 |
| (54,336) |
| 173,790 |
Included in other comprehensive income: |
|
|
|
|
|
|
Remeasurement loss (gain): |
|
|
|
|
|
|
- Actuarial gains (losses) arising from : |
|
|
|
|
|
|
Demographic assumptions |
| (7,584) |
| - |
| (7,584) |
Financial assumptions |
| 53,475 |
| - |
| 53,475 |
Experience adjustment |
| 8,001 |
| - |
| 8,001 |
- Return on plan assets excluding interest income |
| - |
| 21,719 |
| 21,719 |
|
| 53,892 |
| 21,719 |
| 75,611 |
Other: |
|
|
|
|
|
|
Benefits paid by the plan |
| (87,066) |
| 80,063 |
| (7,003) |
Contributions paid into the plan |
| - |
| (252,858) |
| (252,858) |
Settlement gain or loss |
| 216 |
| - |
| 216 |
Business combination (Note 47) |
| 25,965 |
| (23,598) |
| 2,367 |
Effect of movements in exchange rates |
| (13) |
| - |
| (13) |
|
| (60,898) |
| (196,393) |
| (257,291) |
Ending balance |
| 2,063,102 |
| (1,943,644) |
| 119,458 |
(*) Profit and loss related to defined benefit plans are included in the general administrative expense.
190
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
25. Defined benefit assets (continued)
(c) The composition of plan assets as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Plan assets comprise: |
|
|
|
|
Equity securities |
| 74,631 |
| 256,353 |
Debt securities |
| 23,713 |
| 28,094 |
Due from banks |
| 1,900,963 |
| 1,577,274 |
Others |
| 139,017 |
| 81,923 |
|
| 2,138,324 |
| 1,943,644 |
(d) Actuarial assumptions as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
| Description |
Discount rate |
| 2.68%~3.30% |
| 2.71%~3.17% |
| AA0 corporate bond yields |
Future salary increase rate |
| 1.90%~4.00% + Upgrade rate |
| 1.80%~4.00% + Upgrade rate |
| Average for 5 years |
Weighted average maturity |
| 7.6 years~ 15.4 years |
| 8.2 years~ 16.2 years |
|
|
(e) Sensitivity analysis
As of December 31, 2020 and 2019, reasonably possible changes in one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
|
| December 31, 2020 | ||
|
| Defined benefit obligation | ||
|
| Increase |
| Decrease |
Discount rate (1%p movement) |
| (207,093) |
| 233,570 |
Future salary increase rate (1%p movement) |
| 232,892 |
| (210,305) |
|
| December 31, 2019 | ||
|
| Defined benefit obligation | ||
|
| Increase |
| Decrease |
Discount rate (1%p movement) |
| (201,770) |
| 233,057 |
Future salary increase rate (1%p movement) |
| 231,967 |
| (204,242) |
(f) The Group's estimated contribution is W 188,055 million as of December 31, 2021
26. Provisions
(a) Provisions as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Asset retirement obligations |
| 65,659 |
| 64,922 |
Expected loss related to litigation |
| 12,468 |
| 8,789 |
Unused credit commitments |
| 305,719 |
| 263,752 |
Financial guarantee contracts issued |
| 83,851 |
| 100,430 |
Others |
| 337,039 |
| 119,131 |
|
| 804,736 |
| 557,024 |
191
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
26. Provisions (continued)
(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the years ended December 31, 2020 and 2019 are as follows:.
|
| December 31, 2020 | ||||||||||||
|
| Unused credit commitments |
| Financial guarantee contracts issued |
| Total | ||||||||
|
| 12 months expected |
| Life time expected |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected |
| Impaired financial asset |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning allowance |
| 132,028 |
| 119,839 |
| 11,885 |
| 68,467 |
| 5,569 |
| 811 |
| 338,599 |
Transfer to 12 months expected credit loss |
| 63,818 |
| (55,295) |
| (8,523) |
| 2,059 |
| (2,059) |
| - |
| - |
Transfer to life time expected credit loss |
| (9,883) |
| 11,365 |
| (1,482) |
| (3,951) |
| 3,951 |
| - |
| - |
Transfer to impaired financial asset |
| (244) |
| (875) |
| 1,119 |
| - |
| - |
| - |
| - |
Provided (reversed) |
| (20,377) |
| 65,455 |
| (1,564) |
| 8,258 |
| 1,845 |
| (822) |
| 52,795 |
FX change |
| (1,195) |
| (352) |
| - |
| (1,335) |
| (223) |
| (49) |
| (3,154) |
OtOthers (*) |
| - |
| - |
| - |
| (18,948) |
| (1,748) |
| 70 |
| (20,626) |
Ending balance |
| 164,147 |
| 140,137 |
| 1,435 |
| 54,550 |
| 7,335 |
| 10 |
| 367,614 |
(*) Others include effects of the provision from the new financial guarantee contracts measured at fair value, and the expired contracts, and the change of discount rate.
192
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
26. Provisions (continued)
(b) Changes in provision for unused credit commitments and financial guarantee contracts issued for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||||||
|
| Unused credit commitments |
| Financial guarantee contracts issued |
| Total | ||||||||
|
| 12 months expected |
| Life time expected |
| Impaired financial asset |
| 12 months expected credit loss |
| Life time expected |
| Impaired financial asset |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning allowance |
| 126,402 |
| 100,808 |
| 5,137 |
| 64,194 |
| 5,904 |
| 1,757 |
| 304,202 |
Transfer to 12 months expected credit loss |
| 42,838 |
| (42,728) |
| (110) |
| 2,629 |
| (2,629) |
| - |
| - |
Transfer to life time expected credit loss |
| (9,286) |
| 9,314 |
| (28) |
| (1,245) |
| 1,245 |
| - |
| - |
Transfer to impaired financial asset |
| (229) |
| (752) |
| 981 |
| (12) |
| - |
| 12 |
| - |
Provided (reversed) |
| (28,611) |
| 53,076 |
| 5,905 |
| (4) |
| 96 |
| (943) |
| 29,519 |
FX change |
| 914 |
| 121 |
| - |
| 1,302 |
| 323 |
| 102 |
| 2,762 |
OtOthers (*) |
| - |
| - |
| - |
| 1,603 |
| 630 |
| (117) |
| 2,116 |
Ending balance |
| 132,028 |
| 119,839 |
| 11,885 |
| 68,467 |
| 5,569 |
| 811 |
| 338,599 |
(*) Others include effects of the provision from the new financial guarantee contracts measured at fair value, and the expired contracts, and the change of discount rate.
193
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
26. Provisions (continued)
(c) Changes in provisions for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||
|
| Asset retirement |
| Litigation |
| Guarantee |
| Other |
| Total |
Beginning balance |
| 64,922 |
| 8,789 |
| 25,583 |
| 119,131 |
| 218,425 |
Provision(reversal) |
| 898 |
| 4,317 |
| (2,709) |
| 261,983 |
| 264,489 |
Provision used |
| (2,463) |
| (638) |
| - |
| (46,654) |
| (49,755) |
Foreign exchange translation |
| (3) |
| - |
| (1,030) |
| 570 |
| (463) |
Others(*) |
| 2,305 |
| - |
| 112 |
| 1,814 |
| 4,231 |
Business combination (Note 47) |
| - |
| - |
| - |
| 195 |
| 195 |
Ending balance |
| 65,659 |
| 12,468 |
| 21,956 |
| 337,039 |
| 437,122 |
(*)Others include the effects of unwinding and changes in discount rate.
|
| December 31, 2019 | ||||||||
|
| Asset retirement |
| Litigation |
| Guarantee |
| Other |
| Total |
Beginning balance |
| 49,183 |
| 25,554 |
| 43,470 |
| 86,007 |
| 204,214 |
Provision(reversal) |
| (1,280) |
| (981) |
| (19,329) |
| (5,753) |
| (27,343) |
Provision used |
| (1,930) |
| (17,365) |
| - |
| (47,217) |
| (66,512) |
Foreign exchange translation |
| - |
| - |
| 1,420 |
| 382 |
| 1,802 |
Others(*) |
| 4,476 |
| - |
| 22 |
| 3,784 |
| 8,282 |
Business combination (Note 47) |
| 14,473 |
| 1,581 |
| - |
| 81,928 |
| 97,982 |
Ending balance |
| 64,922 |
| 8,789 |
| 25,583 |
| 119,131 |
| 218,425 |
(*)Others include the effects of unwinding and changes in discount rate.
(d) Asset retirement obligation liabilities represent the estimated cost to restore the existing leased properties which is discounted to the present value using the appropriate discount rate at the end of the reporting period.
Disbursements of such costs are expected to incur at the end of lease contract. Such costs are reasonably estimated using the average lease year and the average restoration expenses. The average lease year is calculated based on the past ten-year historical data of the expired leases. The average restoration expense is calculated based on the actual costs incurred for the past three years using the three-year average inflation rate.
(e) Allowance for guarantees and acceptances as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Outstanding guarantees and acceptances |
| 10,249,827 |
| 9,317,412 |
Contingent guarantees and acceptances |
| 3,433,953 |
| 3,669,681 |
ABS and ABCP purchase commitments |
| 1,604,958 |
| 2,116,354 |
Endorsed bill |
| 1,650 |
| 11,287 |
|
| 15,290,388 |
| 15,114,734 |
Allowance for loss on guarantees and acceptances |
| 83,851 |
| 100,430 |
Ratio | % | 0.55 |
| 0.66 |
194
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts
(a) Insurance liabilities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Policy reserve |
| 53,391,401 |
| 52,086,132 |
Policyholder’s equity adjustment |
| 68,829 |
| 77,285 |
|
| 53,460,230 |
| 52,163,417 |
(b) Policy reserve as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Interest rate linked |
| 29,977,303 |
| 30,058,020 |
Fixed interest rate |
| 23,414,098 |
| 22,028,112 |
|
| 53,391,401 |
| 52,086,132 |
195
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(c) The details of policy reserves as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||||
|
| Individual insurance |
| Group insurance |
|
| ||||||||||
|
| Pure endowment |
| Death |
| Endowment |
| Subtotal |
| Pure protection |
| Savings |
| Subtotal |
| Total |
Premium reserve |
| 14,597,735 |
| 26,634,537 |
| 9,981,880 |
| 51,214,152 |
| 18,430 |
| 62 |
| 18,492 |
| 51,232,644 |
Guarantee reserve |
| 28,168 |
| 267,154 |
| 762 |
| 296,084 |
| - |
| - |
| - |
| 296,084 |
Unearned premium reserve |
| 1 |
| 1,640 |
| - |
| 1,641 |
| 13 |
| - |
| 13 |
| 1,654 |
Reserve for outstanding claims |
| 240,324 |
| 1,111,052 |
| 363,688 |
| 1,715,064 |
| 15,384 |
| - |
| 15,384 |
| 1,730,448 |
Interest rate difference guarantee reserve |
| 1,937 |
| 141 |
| 9 |
| 2,087 |
| - |
| - |
| - |
| 2,087 |
Mortality gains reserve |
| 7,865 |
| 37,553 |
| 124 |
| 45,542 |
| 1 |
| - |
| 1 |
| 45,543 |
Interest gains reserve |
| 23,651 |
| 256 |
| 14 |
| 23,921 |
| - |
| - |
| - |
| 23,921 |
Expense gains reserve |
| 6,606 |
| 8,336 |
| - |
| 14,942 |
| - |
| - |
| - |
| 14,942 |
Long term duration dividend reserve |
| 28,737 |
| 13,775 |
| 12 |
| 42,524 |
| - |
| - |
| - |
| 42,524 |
Reserve for policyholder’s profit dividend |
| 1,080 |
| - |
| - |
| 1,080 |
| - |
| - |
| - |
| 1,080 |
Reserve for losses on dividend insurance contract |
| 474 |
| - |
| - |
| 474 |
| - |
| - |
| - |
| 474 |
|
| 14,936,578 |
| 28,074,444 |
| 10,346,489 |
| 53,357,511 |
| 33,828 |
| 62 |
| 33,890 |
| 53,391,401 |
196
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(c) The details of policy reserves as of December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||||||||
|
| Individual insurance |
| Group insurance |
|
| ||||||||||
|
| Pure endowment |
| Death |
| Endowment |
| Subtotal |
| Pure protection |
| Savings |
| Subtotal |
| Total |
Premium reserve |
| 14,668,777 |
| 24,979,936 |
| 10,443,287 |
| 50,092,000 |
| 21,912 |
| 60 |
| 21,972 |
| 50,113,972 |
Guarantee reserve |
| 29,400 |
| 249,845 |
| 744 |
| 279,989 |
| - |
| - |
| - |
| 279,989 |
Unearned premium reserve |
| 2 |
| 945 |
| - |
| 947 |
| 291 |
| - |
| 291 |
| 1,238 |
Reserve for outstanding claims |
| 212,641 |
| 1,084,472 |
| 233,259 |
| 1,530,372 |
| 16,858 |
| - |
| 16,858 |
| 1,547,230 |
Interest rate difference guarantee reserve |
| 2,158 |
| 149 |
| 10 |
| 2,317 |
| - |
| - |
| - |
| 2,317 |
Mortality gains reserve |
| 8,945 |
| 42,173 |
| 153 |
| 51,271 |
| 2 |
| - |
| 2 |
| 51,273 |
Interest gains reserve |
| 24,486 |
| 267 |
| 17 |
| 24,770 |
| - |
| - |
| - |
| 24,770 |
Expense gains reserve |
| 6,211 |
| 9,434 |
| 1 |
| 15,646 |
| - |
| - |
| - |
| 15,646 |
Long term duration dividend reserve |
| 31,202 |
| 15,388 |
| 13 |
| 46,603 |
| - |
| - |
| - |
| 46,603 |
Reserve for policyholder’s profit dividend |
| 2,268 |
| - |
| - |
| 2,268 |
| - |
| - |
| - |
| 2,268 |
Reserve for losses on dividend insurance contract |
| 826 |
| - |
| - |
| 826 |
| - |
| - |
| - |
| 826 |
|
| 14,986,916 |
| 26,382,609 |
| 10,677,484 |
| 52,047,009 |
| 39,063 |
| 60 |
| 39,123 |
| 52,086,132 |
197
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(d) Changes in insurance contract liabilities
Changes in insurance contract liabilities for the year ended December 31, 2020 are as follows:
|
| December 31, 2020 | |||||
|
| Insurance contracts with fixed-interest |
| Insurance contracts with variable-interest |
| Total | |
Beginning balance |
| 22,028,112 |
| 30,058,020 |
| 52,086,132 | |
Reserve (*) |
| 1,385,986 |
| (80,717) |
| 1,305,269 | |
Business combination |
| - |
| - |
| - | |
Ending balance |
| 23,414,098 |
| 29,977,303 |
| 53,391,401 |
(*) This is the amount of provision for insurance contract liabilities less changes in reinsurance assets.
(e) Changes in insurance contract liabilities by insurance risk classification
Changes in insurance contract liabilities by insurance risk classification for the year ended December 31, 2020 are as follows:
|
| December 31, 2020 | |||||||||||||||
|
| Individual insurance |
| Group insurance |
| ||||||||||||
|
| Survival |
| Morta -lity |
| Endow -ment |
| Sub-total |
| Protec -tion |
| Sav -ings |
| Sub-total |
| Total | |
Beginning balance |
| 14,986,916 |
| 26,382,609 |
| 10,677,484 |
| 52,047,009 |
| 39,063 |
| 60 |
| 39,123 |
| 52,086,132 | |
Reserve (reversal) (*) |
| (50,338) |
| 1,691,835 |
| (330,995) |
| 1,310,502 |
| (5,235) |
| 2 |
| (5,233) |
| 1,305,269 | |
Ending balance |
| 14,936,578 |
| 28,074,444 |
| 10,346,489 |
| 53,357,511 |
| 33,828 |
| 62 |
| 33,890 |
| 53,391,401 |
(*) This is the amount of provision for insurance contract liabilities less changes in reinsurance assets.
198
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(f) Reinsurance credit risk as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 | ||||
|
| Reinsurance assets |
| Reinsurance account receivable |
| Reinsurance assets |
| Reinsurance account receivable |
AAA |
| 10,611 |
| 47,690 |
| 11,477 |
| 18,192 |
AA- to AA+ |
| 29,294 |
| 23,348 |
| 34,498 |
| 46,302 |
A- to A+ |
| 2,375 |
| 4,018 |
| 2,287 |
| 4,113 |
|
| 42,280 |
| 75,056 |
| 48,262 |
| 68,607 |
(g) Income or expenses on insurance for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Insurance income: |
|
|
|
|
Premium income |
| 7,037,308 |
| 7,386,854 |
Reinsurance income |
| 152,892 |
| 146,564 |
Separate account income |
| 57,553 |
| 36,007 |
|
| 7,247,753 |
| 7,569,425 |
Insurance expenses: |
|
|
|
|
Claims paid |
| 5,564,875 |
| 5,436,069 |
Reinsurance premium expenses |
| 167,215 |
| 165,979 |
Provision for policy reserves (*) |
| 1,311,252 |
| 1,724,816 |
Separate account expenses |
| 57,553 |
| 36,007 |
Discount charge |
| 1,087 |
| 657 |
Acquisition costs |
| 802,942 |
| 805,508 |
Collection expenses |
| 18,835 |
| 19,049 |
Deferred acquisition costs |
| (486,972) |
| (495,534) |
Amortization of deferred acquisition costs |
| 414,898 |
| 373,800 |
|
| 7,851,685 |
| 8,066,351 |
|
|
|
|
|
Net loss on insurance |
| (603,932) |
| (496,926) |
(*) Provision for insurance contract liabilities recognized for life insurance include interest expenses for W 1,866,609 million and W 1,907,954 million accumulatively as of December 31, 2020 and 2019.
199
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(h) Maturity of premium reserve as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||
|
| Less than or equal to 1 year |
| 1 ~ 3 years |
| 3 ~ 7 years |
| 7 ~ 10 years |
| 10 ~ 20 years |
| More than 20 years |
| Total |
Interest rate linked |
| 929,268 |
| 1,944,710 |
| 1,819,554 |
| 820,964 |
| 2,056,906 |
| 19,729,536 |
| 27,300,938 |
Fixed interest rate |
| 164,890 |
| 418,574 |
| 983,635 |
| 594,667 |
| 2,090,669 |
| 19,679,271 |
| 23,931,706 |
Ending balance |
| 1,094,158 |
| 2,363,284 |
| 2,803,189 |
| 1,415,631 |
| 4,147,575 |
| 39,408,807 |
| 51,232,644 |
|
| December 31, 2019 | ||||||||||||
|
| Less than or equal to 1 year |
| 1 ~ 3 years |
| 3 ~ 7 years |
| 7 ~ 10 years |
| 10 ~ 20 years |
| More than 20 years |
| Total |
Interest rate linked |
| 845,304 |
| 2,079,125 |
| 2,118,652 |
| 941,413 |
| 2,236,313 |
| 20,732,909 |
| 28,953,716 |
Fixed interest rate |
| 213,892 |
| 329,647 |
| 1,032,366 |
| 572,153 |
| 2,058,859 |
| 16,953,339 |
| 21,160,256 |
Ending balance |
| 1,059,196 |
| 2,408,772 |
| 3,151,018 |
| 1,513,566 |
| 4,295,172 |
| 37,686,248 |
| 50,113,972 |
(i) Liability adequacy test, LAT – Shinhan Life Insurance Co., Ltd.
i) Scope
Liability adequacy tests are performed on the premium reserve, unearned premium reserve and guarantee reserve for the contracts held at December 31, 2020 and 2019. The premium reserve considered the amount net level premium reserve less, where appropriate, deferred acquisition cost in accordance with the article 6-3 of Regulation on Supervision of Insurance Business Act.
ii) Output overview
In the debt appraisal system, the insurance premium surplus method is applied to calculate premium deficits.
Premium deficiency refers to deficiency when the amount of accumulated reserve is insufficient due to a decrease in the interest rate after the sale of the product or an increase in the risk rate compared with the expected basic rate at the time of product development.
The insurance premium standard inspection method is a method of calculating the reserve amount based on the present value of total income reflecting the interest rate, the risk rate, the business ratio, the cancellation rate, etc. and the present value of the total expenditure, that is, (discount rate), business ratio, risk rate, and cancellation rate calculated based on the Group’s own experience, which reflects company-specific characteristics, and does not reflect subjective factors such as management's willingness to improve management.
200
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(i) Liability adequacy test, LAT – Shinhan Life Insurance Co., Ltd. (continued)
iii) The assumptions of the current estimation used to assessment and their basis for calculation is as follows:
|
| Assumptions |
|
| ||||
|
| December 31, 2020 |
| December 31, 2019 |
| January 1, 2019 |
| Measurement basis |
Discount rate |
| 1.30% ~ 12.01% |
| 1.04% ~ 5.79% |
| 2.10% ~ 7.45% |
| The scenario adding liquidity premium to risk-free rate, which is suggested from Financial Supervisory Service |
Mortality rate |
| 10.38% ~ 585.90% |
| 11.36% ~ 497.99% |
| 2.58% ~ 247.65% |
| Ratio by claims paid per premium paid on risk premium based on experience-based rate by products, collateral of last 5 years. |
Operating expense rate |
| Acquisition cost - The first time : 90.00% ~ 1,022.75% - From the second time : 0.00% ~ 193.50% Maintenance expense (each case): 1,559 won ~ 4,675 won Collection expenses (on gross premium): 0.06% ~ 1.28%
|
| Acquisition cost - The first time : 90.00% ~ 1,022.75% - From the second time : 0.00% ~ 193.50% Maintenance expense (each case): 1,229 won ~ 3,332 won Collection expenses (on gross premium): 0.05% ~ 1.27% |
| Acquisition cost - The first time : 90.00% ~ 982.70% - From the second time : 0.00% ~ 193.50% Maintenance expense (each case): 207 won ~ 3,531 won Collection expenses (on gross premium): 0.04% ~ 1.10% |
| Business rate on insurance premium or expenses per contract based on experience-based rate of last 1 year |
Surrender ratio |
| 0.53% ~ 29.83% |
| 0.76% ~ 33.03% |
| 0.95% ~ 48.35% |
| Surrender ratio by elapsed period, classes of sales channel, product of last 5 years |
iv) The result of liability adequacy test as of December 31, 2020 and 2019, and January 1, 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Provisions for test |
| LAT base |
| Premium surplus (loss) |
Participating: |
|
|
|
|
|
|
Fixed interest |
| 598,793 |
| 1,301,878 |
| (703,085) |
Variable interest |
| 7,230,482 |
| 3,543,525 |
| 3,686,957 |
Non- Participating: |
|
|
|
|
|
|
Fixed interest |
| 915,382 |
| 1,013,181 |
| (97,799) |
Variable interest |
| 14,456,394 |
| 12,882,865 |
| 1,573,529 |
Variable type |
| 165,259 |
| 36,127 |
| 129,132 |
|
| 23,366,310 |
| 18,777,576 |
| 4,588,734 |
201
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(i) Liability adequacy test, LAT – Shinhan Life Insurance Co., Ltd. (continued)
iv) The result of liability adequacy test as of December 31, 2020 and 2019 and January 1, 2019 are as follows (continued):
|
| December 31, 2019 | ||||||
|
| Provisions for test |
| LAT base |
| Premium surplus (loss) | ||
Participating: |
|
|
|
|
|
| ||
Fixed interest |
| 595,317 |
| 1,307,717 |
| (712,400) | ||
Variable interest |
| 6,608,221 |
| 3,168,333 |
| 3,439,888 | ||
Non- Participating: |
|
|
|
|
|
| ||
Fixed interest |
| 900,378 |
| 1,039,624 |
| (139,246) | ||
Variable interest |
| 14,481,697 |
| 13,045,229 |
| 1,436,468 | ||
Variable type |
| 155,751 |
| 33,678 |
| 122,073 | ||
|
| 22,741,364 |
| 18,594,581 |
| 4,146,783 |
|
| January 1, 2019 | ||||||
|
| Provisions for test |
| LAT base |
| Premium surplus (loss) | ||
Participating: |
|
|
|
|
|
| ||
Fixed interest |
| 589,618 |
| 1,382,718 |
| (793,100) | ||
Variable interest |
| 6,009,771 |
| 2,850,853 |
| 3,158,918 | ||
Non- Participating: |
|
|
|
|
|
| ||
Fixed interest |
| 859,858 |
| 962,368 |
| (102,510) | ||
Variable interest |
| 14,008,270 |
| 12,532,933 |
| 1,475,337 | ||
Variable type |
| 143,230 |
| (122,055) |
| 265,285 | ||
|
| 21,610,747 |
| 17,606,817 |
| 4,003,930 |
202
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(j) Liability adequacy test, LAT – Orange Life Insurance Co., Ltd.
i) Scope
Liability adequacy tests are performed on the premium reserve, unearned premium reserve and guarantee reserve for the contracts held at December 31, 2020 and 2019. The premium reserve considered the amount net level premium reserve less, where appropriate, deferred acquisition cost in accordance with the article 6-3 of Regulation on Supervision of Insurance Business Act.
ii) Output overview
In the debt appraisal system, the insurance premium surplus method is applied to calculate premium deficits.
Premium deficiency refers to deficiency when the amount of accumulated reserve is insufficient due to a decrease in the interest rate after the sale of the product or an increase in the risk rate compared with the expected basic rate at the time of product development.
The insurance premium standard inspection method is a method of calculating the reserve amount based on the present value of total income reflecting the interest rate, the risk rate, the business ratio, the cancellation rate, etc. and the present value of the total expenditure, that is, (discount rate), business ratio, risk rate, and cancellation rate calculated based on the Group’s own experience, which reflects company-specific characteristics, and does not reflect subjective factors such as management's willingness to improve management.
203
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(j) Liability adequacy test, LAT – Orange Life Insurance Co., Ltd. (continued)
iii) The assumptions of the current estimation used to assessment and their basis for calculation is as follows:
|
| Assumptions |
|
| ||||
|
| December 31, 2020 |
| December 31, 2019 |
| January 1, 2019 |
| Measurement basis |
Discount rate |
| 0.79% ~ 10.54% |
| 1.26% ~ 10.60% |
| 1.95% ~ 8.57% |
| The scenario adding liquidity premium to risk-free rate, which is suggested from Financial Supervisory Service |
Mortality rate |
| 15.00% ~ 255.00% |
| 20.00% ~ 255.00% |
| 20.00% ~ 210.00% |
| Ratio by claims paid per premium paid on risk premium based on experience-based rate by products, collateral of last 5 years. |
Operating expense rate |
| Acquisition cost (each case): 0 won ~ 1,547,000 won - Proportional to annualized premium: 0.00% ~ 15.99% Maintenance expense (each case): 0 won ~ 36,000 won - Proportional to premium income: 0.12% ~ 0.85% - Proportional to surrender value: 0.12% |
| Acquisition cost (each case): 5,500 won ~ 1,227,000 won - Proportional to annualized premium: 0.00% ~ 12.55% Maintenance expense (each case): 50 won ~ 32,500 won - Proportional to premium income: 0.42% ~ 3.45% - Proportional to surrender value: 0.12% |
| Acquisition cost (each case): 9,000 won ~ 959,000 won - Proportional to annualized premium: 0.64% ~ 7.05% Maintenance expense (each case): 2,000 won ~ 34,500 won - Proportional to premium income: 0.48% ~ 0.60% - Proportional to surrender value: 0.12% |
| Based on the recent one-year experience statistics, the Company reflects the company's future business cost policy to calculate the unit business cost by cost driver by division (new contract cost / maintenance cost) and sales channel. However, temporary expenses incurred unusually is excluded. |
Surrender ratio |
| 0.00% ~ 61.00% |
| 0.00% ~ 50.00% |
| 0.00% ~ 50.00% |
| Based on experience statistics for the last five years or more, annual premiums are calculated based on product group, payment method, channel, and elapsed period. Payment status (full payment and pension initiation) and tax benefits are included. |
204
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
27. Liability under insurance contracts (continued)
(j) Liability adequacy test, LAT – Orange Life Insurance Co., Ltd. (continued)
iv) The result of liability adequacy test as of December 31, 2020 and 2019 and January 1, 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Provisions for test |
| LAT base |
| Premium surplus (loss) |
Participating: |
|
|
|
|
|
|
Fixed interest |
| 745,614 |
| 694,536 |
| 51,078 |
Variable interest |
| 1,174,807 |
| 1,649,073 |
| (474,266) |
|
| 1,920,421 |
| 2,343,609 |
| (423,188) |
Non- Participating: |
|
|
|
|
|
|
Fixed interest |
| 10,061,004 |
| 4,810,110 |
| 5,250,894 |
Variable interest |
| 9,190,507 |
| 8,743,848 |
| 446,659 |
Performance allocation type |
| (15,032) |
| (1,589,500) |
| 1,574,468 |
|
| 19,236,479 |
| 11,964,458 |
| 7,272,021 |
|
| 21,156,900 |
| 14,308,067 |
| 6,848,833 |
December 31, 2020 | ||||||||||||
|
| Provisions for test |
| LAT base |
| Premium surplus (loss) | ||||||
|
| After |
| Before |
| After |
| Before |
| After |
| Before |
Participating: |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed interest |
| 716,607 |
| 716,607 |
| 697,291 |
| 644,715 |
| 19,316 |
| 71,892 |
Variable interest |
| 1,134,245 |
| 1,134,245 |
| 1,620,247 |
| 1,541,967 |
| (486,002) |
| (407,722) |
|
| 1,850,852 |
| 1,850,852 |
| 2,317,538 |
| 2,186,682 |
| (466,686) |
| (335,830) |
Non- Participating: |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed interest |
| 9,296,542 |
| 9,296,542 |
| 5,150,200 |
| 4,629,266 |
| 4,146,342 |
| 4,667,276 |
Variable interest |
| 9,236,730 |
| 9,236,730 |
| 8,924,855 |
| 8,635,022 |
| 311,875 |
| 601,708 |
Performance allocation type |
| (54,457) |
| (268,818) |
| (1,692,928) |
| (1,882,573) |
| 1,638,471 |
| 1,613,755 |
|
| 18,478,815 |
| 18,264,454 |
| 12,382,127 |
| 11,381,715 |
| 6,096,688 |
| 6,882,739 |
|
| 20,329,667 |
| 20,115,306 |
| 14,699,665 |
| 13,568,397 |
| 5,630,002 |
| 6,546,909 |
January 1, 2020 | ||||||||||||
|
| Provisions for test |
| LAT base |
| Premium surplus (loss) | ||||||
|
| After |
| Before |
| After |
| Before |
| After |
| Before |
Participating: |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed interest |
| 688,330 |
| 687,732 |
| 644,225 |
| 659,900 |
| 44,105 |
| 27,832 |
Variable interest |
| 1,097,211 |
| 1,096,934 |
| 1,472,060 |
| 1,490,867 |
| (374,849) |
| (393,933) |
|
| 1,785,541 |
| 1,784,666 |
| 2,116,285 |
| 2,150,767 |
| (330,744) |
| (366,101) |
Non- Participating: |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed interest |
| 8,603,714 |
| 8,573,992 |
| 5,070,060 |
| 5,134,552 |
| 3,533,654 |
| 3,439,440 |
Variable interest |
| 9,380,809 |
| 9,372,747 |
| 8,806,781 |
| 8,880,657 |
| 574,028 |
| 492,090 |
Performance allocation type |
| (98,279) |
| (315,565) |
| (1,744,683) |
| (1,937,570) |
| 1,646,404 |
| 1,622,005 |
|
| 17,886,244 |
| 17,631,174 |
| 12,132,158 |
| 12,077,639 |
| 5,754,086 |
| 5,553,535 |
|
| 19,671,785 |
| 19,415,840 |
| 14,248,443 |
| 14,228,406 |
| 5,423,342 |
| 5,187,434 |
205
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
28. Other liabilities
Other liabilities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Lease liabilities(*) |
| 594,161 |
| 1,104,259 |
Accounts payable |
| 14,568,962 |
| 11,894,764 |
Accrued expenses |
| 3,054,247 |
| 3,502,538 |
Dividend payable |
| 32,508 |
| 31,599 |
Advance receipts |
| 164,885 |
| 173,850 |
Unearned income |
| 317,283 |
| 294,710 |
Withholding value-added tax and other taxes |
| 692,719 |
| 720,053 |
Securities deposit received |
| 2,198,722 |
| 1,903,119 |
Foreign exchange remittances pending |
| 259,138 |
| 243,532 |
Domestic exchange remittances pending |
| 5,745,338 |
| 1,452,955 |
Borrowing from trust account |
| 5,086,459 |
| 5,350,285 |
Due to agencies |
| 790,486 |
| 744,660 |
Deposits for subscription |
| 148,506 |
| 60,500 |
Separate account liabilities |
| 10,120,258 |
| 8,700,695 |
Sundry liabilities |
| 1,617,449 |
| 1,968,823 |
Others |
| 185,027 |
| 151,056 |
Present value discount |
| (49,935) |
| (59,840) |
|
| 45,526,213 |
| 38,237,558 |
(*) As of December 31, 2020, the Group accounts for the lease liabilities as other liabilities. For the year ended December 31, 2020, the amount of variable lease payments that are not included in the measurement of lease liabilities is W114 million, cash outflows from leases are W788,532 million, and interest expense on lease liabilities is W14,504 million.
206
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
29. Equity
(a) Equity as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Capital stock: |
|
|
|
|
Common stock(*1) |
| 2,608,176 |
| 2,370,998 |
Preferred stock |
| 361,465 |
| 361,465 |
|
| 2,969,641 |
| 2,732,463 |
|
|
|
|
|
Hybrid bond |
| 2,179,934 |
| 1,731,235 |
|
|
|
|
|
Capital surplus: |
|
|
|
|
Share premium |
| 11,352,924 |
| 10,155,150 |
Others |
| 882,015 |
| 410,203 |
|
| 12,234,939 |
| 10,565,353 |
|
|
|
|
|
Capital adjustments |
| (687,935) |
| (1,116,770) |
|
|
|
|
|
Accumulated other comprehensive income, net of tax: |
|
|
|
|
Gain on financial assets at fair value through other comprehensive income |
| 226,811 |
| 306,470 |
Gain(Loss) on financial assets at fair value through profit or loss (Overlay approach) |
| 161,919 |
| 71,621 |
Equity in other comprehensive income of associates |
| 4,849 |
| 8,177 |
Foreign currency translation adjustments for foreign operations |
| (377,061) |
| (217,465) |
Net loss from cash flow hedges |
| (48,171) |
| (33,711) |
Other comprehensive income of separate account |
| 18,423 |
| 14,539 |
Actuarial losses |
| (385,780) |
| (401,532) |
Changes in own credit risk on financial liabilities designated under fair value option |
| (5,171) |
| (8,255) |
|
| (404,181) |
| (260,156) |
|
|
|
|
|
Retained earnings(*2)(*3)(*4) |
| 27,777,169 |
| 25,525,821 |
|
|
|
|
|
Non-controlling interest(*5)(*6) |
| 2,287,291 |
| 2,752,435 |
|
| 46,356,858 |
| 41,930,381 |
207
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won, except per share data)
29. Equity (continued)
(a) Equity as of December 31, 2020 and 2019 are as follows (continued):
(*1) For the year ended December 31, 2020, it increased due to common stock and third-party allocation paid-in capital increase issued when Orange Life Insurance Co., Ltd and Neoplux Co, Ltd acquired residual shares. The cost deducted from the issuing capital is W13,300 million. Affinity Equity Partners and Baring Private Equity Asia who have participated in third-party allocation-based capital increase have a right to practically appoint one director, respectively.
(*2) As of December 31, 2020 and 2019, profits reserved by the Group as of Article 53 of the Financial Holding Companies Act amounted to W2,304,595 million and W2,191,677 million, respectively.
(*3) As of December 31, 2020 and 2019, the regulatory reserves for loan losses the Group appropriated in retained earnings are W11,988 million and W8,728 million, respectively.
(*4) As of December 31, 2020, profit dividends within retained earnings of subsidiaries of the Group subject to a restricted dividend in accordance with laws, etc. are amounted to W6,824,002 million.
(*5) The non-controlling interest of W1,330,337 million decreased due to taking over for Orange Life Insurance Co.,Ltd. for the year ended December 31, 2020.
(*6) As of December 31, 2020 and 2019, the total amounts of hybrid bonds that Shinhan Bank, Jeju Bank and Shinhan Capital have recognized as non-controlling interests are W2,035,762 million and W1,147,635 million, respectively. And, for the years ended December 31, 2020 and 2019, the amounts of dividends paid for the hybrid bonds by Shinhan Bank, Jeju Bank, and Shinhan Capital, W54,619 million and W36,729 million, respectively, are allocated to profit attributed to non-controlling interest.
(b) Capital stock
Capital stock of the Group as of December 31, 2020 and 2019 are as follows:
Number of authorized shares |
| 1,000,000,000 |
Par value per share in won |
| 5,000 |
Number of issued common stocks outstanding as of December 31, 2020 |
| 516,599,554 |
Number of issued common stocks outstanding as of December 31, 2019 |
| 474,199,587 |
Number of issued preferred stocks outstanding as of December 31, 2020 and 2019 |
| 17,482,000 |
The details of changes in the average number of common shares outstanding as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
Beginning balance |
| 460,317,525 |
Increase |
| 60,626,827 |
Decrease |
| (5,049,594) |
Ending balance |
| 515,894,758 |
(c) The details of preferred stock are as follows:
|
| The number of shares |
| Contracted dividend rate |
| Conversion request period(*) |
Convertible preferred stock |
| 17,482,000 |
| 4.0% per year based on issue price (non-cumulative participating) |
| 2020.05.01~2023.04.30 |
(*) Preferred stocks that have not been converted for 4 years from the issuance date and until the expiration date of the period of existence are automatically converted to common stocks at the expiration date of the period of existence.
208
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won, except per share data)
29. Equity (continued)
(d) Hybrid bonds
Hybrid bonds classified as other equity instruments as of December 31, 2020 and December 31, 2019 are as follows:
Issue date | Currency | Maturity date |
| Interest rate (%) |
| December 31, 2020 |
| December 31, 2019 |
June 25, 2015 | KRW | June 25, 2045 |
| 4.38 |
| 199,455 |
| 199,455 |
September 15, 2017 | 〃 | - |
| 3.77 |
| 134,683 |
| 134,683 |
September 15, 2017 | 〃 | - |
| 4.25 |
| 89,783 |
| 89,783 |
April 13, 2018 | 〃 | - |
| 4.08 |
| 134,678 |
| 134,678 |
April 13, 2018 | 〃 | - |
| 4.56 |
| 14,955 |
| 14,955 |
August 29, 2018 | 〃 | - |
| 4.15 |
| 398,679 |
| 398,679 |
June 28, 2019 | 〃 | - |
| 3.27 |
| 199,476 |
| 199,476 |
September 17, 2020 | 〃 | - |
| 3.12 |
| 448,699 |
| - |
August 13, 2018 | USD | - |
| 5.88 |
| 559,526 |
| 559,526 |
|
|
|
|
|
| 2,179,934 |
| 1,731,235 |
(*) For the year ended December 31, 2020, the deduction for capital related to hybrid bonds issued is W1,302 million.
The hybrid bonds above can be repaid early after 5 or 10 years from the date of issuance, and the controlling company has an unconditional right to extend the maturity under the same condition. In addition, if no dividend is to be paid for common stocks, the agreed interest is also not paid.
(e) Capital adjustments
Changes in capital adjustments for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Beginning balance |
| (1,116,770) |
| (552,895) |
Acquisition of treasury stocks |
| (150,467) |
| (444,077) |
Disposal and Retirement of treasury stocks |
| 601,809 |
| - |
The Acqusition commitment amount for subsidiaries’ remaining shares |
| (22,019) |
|
(125,830) |
Other transactions with owners |
| (488) |
| 6,032 |
Ending balance |
| (687,935) |
| (1,116,770) |
209
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
29. Equity (continued)
(e) Accumulated other comprehensive income
Changes in accumulated other comprehensive income for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||||||||||||||
|
|
|
| Items that are or may be reclassified to profit or loss |
| Items that will never be reclassified to profit or loss |
| Total | ||||||||||||||
|
| Gain (loss) on financial asset at fair value through other comprehensive income |
| Gain (loss) on valuation of financial asset measured at FVTPL (overlay approach) |
| Equity in other comprehensive income of associates |
| Foreign currency translation adjustments for foreign operations |
| Net gain (loss) from cash flow hedges |
| Other comprehend-sive income of separate account |
| Remeasure -ments of the defined benefit plans |
| Equity in other comprehensive income of associates |
| Gain (loss) on |
| Gain (loss) on financial Liabilities measured at FVTPL |
| |
Beginning balance |
| 233,328 |
| 71,621 |
| 8,193 |
| (217,465) |
| (33,711) |
| 14,539 |
| (401,532) |
| (16) |
| 73,142 |
| (8,255) |
| (260,156) |
Change due to fair value |
| (3,601) |
| 125,298 |
| (1,080) |
| - |
| - |
| 5,358 |
| - |
| (15) |
| (19,133) |
| (9,689) |
| 97,138 |
Reclassification: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change due to impairment or disposal |
| (105,274) |
| - |
| - |
| 5,858 |
| - |
| - |
| - |
| - |
| - |
| 13,942 |
| (85,474) |
Effect of hedge accounting |
| - |
| - |
| - |
| - |
| 144,750 |
| - |
| - |
| - |
| - |
| - |
| 144,750 |
Hedging |
| (4,395) |
| - |
| - |
| 45,083 |
| (164,708) |
| - |
| - |
| - |
| - |
| - |
| (124,020) |
Effects from changes in foreign exchange rate |
| - |
| 74 |
| (355) |
| (219,306) |
| - |
| - |
| - |
| - |
| 721 |
| - |
| (218,866) |
Remeasurements of the defined benefit plans |
| - |
| - |
| - |
| - |
| - |
| - |
| 21,422 |
| - |
| - |
| - |
| 21,422 |
Deferred income taxes |
| 26,486 |
| (35,074) |
| (1,883) |
| 7,000 |
| 5,498 |
| (1,474) |
| (5,610) |
| 5 |
| (2,573) |
| (1,169) |
| (8,794) |
Transfer to other account |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 27,825 |
| - |
| 27,825 |
Non-controlling interests |
| 285 |
| - |
| - |
| 1,769 |
| - |
| - |
| (60) |
| - |
| - |
| - |
| 1,994 |
Ending balance |
| 146,829 |
| 161,919 |
| 4,875 |
| (377,061) |
| (48,171) |
| 18,423 |
| (385,780) |
| (26) |
| 79,982 |
| (5,171) |
| (404,181) |
210
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
29. Equity (continued)
(e) Accumulated other comprehensive income (continued)
Changes in accumulated other comprehensive income for the years ended December 31, 2020 and 2019 are as follows (continued):
|
| December 31, 2019 | ||||||||||||||||||||
|
|
|
| Items that are or may be reclassified to profit or loss |
| Items that will never be reclassified to profit or loss |
| Total | ||||||||||||||
|
| Gain (loss) on financial asset at fair value through other comprehensive income |
| Gain (loss) on valuation of financial asset measured at FVTPL (overlay approach) |
| Equity in other comprehensive income of associates |
| Foreign currency translation adjustments for foreign operations |
| Net gain (loss) from cash flow hedges |
| Other comprehend-sive income of separate account |
| Remeasure -ments of the defined benefit plans |
| Equity in other comprehensive income of associates |
| Gain (loss) on |
| Gain (loss) on financial Liabilities measured at FVTPL |
| |
Beginning balance |
| (51,300) |
| (79,057) |
| 4,891 |
| (321,853) |
| (17,751) |
| 4,112 |
| (346,682) |
| (8) |
| 54,258 |
| 170 |
| (753,220) |
Change due to fair value |
| 491,953 |
| 225,706 |
| 3,353 |
| - |
| - |
| 14,382 |
| - |
| (11) |
| 19,935 |
| (11,621) |
| 743,697 |
Reclassification: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change due to impairment or disposal |
| (23,281) |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (23,281) |
Effect of hedge accounting |
| - |
| - |
| - |
| - |
| (75,020) |
| - |
| - |
| - |
| - |
| - |
| (75,020) |
Hedging |
| (731) |
| - |
| - |
| (49,361) |
| 50,083 |
| - |
| - |
| - |
| - |
| - |
| (9) |
Effects from changes in foreign exchange rate |
| - |
| - |
| - |
| 147,899 |
| - |
| - |
| - |
| - |
| 293 |
| - |
| 148,192 |
Remeasurements of the defined benefit plans |
| - |
| - |
| - |
| - |
| - |
| - |
| (75,595) |
| - |
| - |
| - |
| (75,595) |
Deferred income taxes |
| (115,856) |
| (62,739) |
| (51) |
| 7,233 |
| 6,348 |
| (3,955) |
| 20,951 |
| 3 |
| (7,204) |
| 3,196 |
| (152,074) |
Transfer to other account |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 5,860 |
| - |
| 5,860 |
Non-controlling interests |
| (67,457) |
| (12,289) |
| - |
| (1,383) |
| 2,629 |
| - |
| (206) |
| - |
| - |
| - |
| (78,706) |
Ending balance |
| 233,328 |
| 71,621 |
| 8,193 |
| (217,465) |
| (33,711) |
| 14,539 |
| (401,532) |
| (16) |
| 73,142 |
| (8,255) |
| (260,156) |
211
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
29. Equity (continued)
(f) Appropriation of retained earnings
Statements of appropriation of retained earnings for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Date of appropriation: |
| March 25, 2021 |
| March 26, 2020 |
Unappropriated retained earnings: |
|
|
|
|
Balance at beginning of year |
| 5,251,413 |
| 5,184,339 |
Retirement of treasury stock |
| (150,325) |
| - |
Dividend to hybrid bonds |
| (85,327) |
| (61,993) |
Net income |
| 1,274,443 |
| 1,129,173 |
|
| 6,290,204 |
| 6,251,519 |
Appropriation of retained earnings: |
|
|
|
|
Legal reserve |
| (127,444) |
| (112,917) |
Dividends |
|
|
|
|
Dividends on common stocks paid |
| (773,839) |
| (851,587) |
Dividends on preferred stocks paid |
| (29,999) |
| (32,342) |
Regulatory reserve for loan losses |
| (3,564) |
| (3,260) |
|
| (934,846) |
| (1,000,106) |
Unappropriated retained earnings to be carried over to subsequent year |
| 5,355,358 |
| 5,251,413 |
|
|
|
|
|
(*) These statements of appropriation of retained earnings are based on the separate financial statements of Shinhan Finance Group.
(g) Regulatory reserve for loan losses
In accordance with Regulations for the Supervision of Financial Institutions, the Group reserves the difference between allowance for credit losses by K-IFRS and that as required by the Regulations at the account of regulatory reserve for loan losses in retained earnings.
i) Changes in regulatory reserve for loan losses including non-controlling interests as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Beginning balance |
| 3,161,170 |
| 2,844,690 |
Business combination |
| - |
| 25,608 |
Planned regulatory reversal of loan losses |
| 168,729 |
| 290,872 |
Ending balance |
| 3,329,899 |
| 3,161,170 |
212
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won, except per share data)
29. Equity (continued)
(g) Regulatory reserve for loan losses (continued)
ii) Profit attributable to equity holders of Shinhan Financial Group and earnings per share after factoring in regulatory reserve for loan losses for the years ended December 31, 2020 and 2019 are as follows:
(*1) The increase in reserve for credit losses, W25,608 million, due to the business combination with Orange Life insurance and Asia Trust. during the year is excluded.
(*2) Dividends for hybrid bonds are deducted.
(h) Treasury stock
The acquisitions of treasury stock for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020(*) |
| December 31, 2019 | ||||
|
| The number of share |
| Carrying value |
| The number of share |
| Carrying value |
Beginning balance |
| 13,882,062 |
| 600,000 |
| 3,648,659 |
| 155,923 |
Acquisition |
| 5,049,594 |
| 150,467 |
| 10,233,403 |
| 444,077 |
Disposal |
| 13,191,202 |
| (572,252) |
| - |
| - |
Retirement |
| 5,035,658 |
| (150,000) |
| - |
| - |
Ending balance |
| 704,796 |
| 28,215 |
| 13,882,062 |
| 600,000 |
(*) Changes in equity shares due to the exchange of shares with Orange Life Insurance Co., Ltd. and Neoplux Co, Ltd. are included in the acquisition and disposal for treasury stock. Shares of Shinhan Financial Group Co., Ltd. is owned by Orange Life Insurance Co., Ltd. and Neoplux Co, Ltd. are included in its own shares.
213
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won, except per share data)
30. Dividends
(a) Details of dividends recognized as distributions to stockholders for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020(*1) |
| December 31, 2019 |
Common Stock: |
|
|
|
|
Total number of shares issued and outstanding |
| 516,599,554 |
| 474,199,587 |
Par value per share in won |
| 5,000 |
| 5,000 |
Dividend per share in won |
| 1,500 |
| 1,850 |
Dividends(*2) |
| 773,839 |
| 851,587 |
Dividend rate per share | % | 30.0 |
| 37.0 |
Preferred Stock: | ||||
Total number of shares issued and outstanding |
| 17,482,000 |
| 17,482,000 |
Par value per share in won |
| 5,000 |
| 5,000 |
Dividend per share in won |
| 1,716 |
| 1,850 |
Dividends |
| 29,999 |
| 32,342 |
Dividend rate per share | % | 34.3 |
| 37.0 |
(*1) The current dividend(plan) will be decided on March 25, 2021. The amount of dividends not recognized as a distribution to the owner during the period.
(*2) Dividends on own shares held by the Group are excluded.
(b) Dividends for hybrid bond is calculated as follows for the years ended December 31, 2020 and 2019:
|
| December 31, 2020 |
| December 31, 2019 |
Amount of hybrid bond |
| 2,188,150 |
| 1,738,150 |
Interest rate | % | 3.12 ~ 5.88 |
| 3.27 ~ 5.88 |
Dividends |
| 85,327 |
| 61,993 |
214
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
31. Net interest income
Net interest income for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Interest income: |
|
|
|
|
Cash and deposits at amortized cost |
| 128,023 |
| 210,415 |
Deposits at FVTPL |
| 13,888 |
| 31,506 |
Securities at FVTPL |
| 742,958 |
| 740,378 |
Securities at FVOCI |
| 957,817 |
| 1,077,995 |
Securities at amortized cost |
| 1,076,849 |
| 1,061,262 |
Loans at amortized cost |
| 11,697,775 |
| 12,435,302 |
Loans at FVTPL |
| 73,991 |
| 56,961 |
Others |
| 82,695 |
| 93,543 |
|
| 14,773,996 |
| 15,707,362 |
Interest expense: |
|
|
|
|
Deposits |
| 2,842,625 |
| 3,644,632 |
Borrowings |
| 426,607 |
| 551,416 |
Debt securities issued |
| 1,554,544 |
| 1,666,257 |
Others |
| 67,520 |
| 107,093 |
|
| 4,891,296 |
| 5,969,398 |
|
|
|
|
|
Net interest income |
| 9,882,700 |
| 9,737,964 |
215
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
32. Net fees and commission income
Net fees and commission income for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Fees and commission income: |
|
|
|
|
Credit placement fees |
| 94,836 |
| 66,666 |
Commission received as electronic charge receipt |
| 143,449 |
| 151,584 |
Brokerage fees |
| 546,236 |
| 353,382 |
Commission received as agency |
| 145,162 |
| 140,484 |
Investment banking fees |
| 161,439 |
| 151,031 |
Commission received in foreign exchange activities |
| 239,467 |
| 244,325 |
Asset management fees |
| 255,043 |
| 307,167 |
Credit card fees |
| 1,170,078 |
| 1,234,239 |
Operating lease fees(*) |
| 245,173 |
| 142,025 |
Others |
| 813,591 |
| 766,110 |
|
| 3,814,474 |
| 3,557,013 |
Fees and commission expense: |
|
|
|
|
Credit-related fee |
| 46,456 |
| 42,023 |
Credit card fees |
| 849,256 |
| 915,521 |
Others |
| 535,829 |
| 458,950 |
|
| 1,431,541 |
| 1,416,494 |
|
|
|
|
|
Net fees and commission income |
| 2,382,933 |
| 2,140,519 |
(*) Among operating lease fees recognized during the current and prior periods, there is no variable lease fee income which does not vary by index or rate.
33. Dividend income
Dividend income for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Securities at FVTPL |
| 76,453 |
| 65,572 |
Securities at FVOCI |
| 21,503 |
| 16,586 |
|
| 97,956 |
| 82,158 |
216
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
34. Net gain (loss) on financial instruments measured at fair value through profit or loss
Net gain (loss) on financial instruments measured at fair value through profit or loss for the ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Net gain (loss) on deposits measured at FVTPL |
|
|
|
|
Gain (loss) on valuation |
| 1,267 |
| 87,374 |
Gain on sale |
| 28,461 |
| 13,400 |
|
| 29,728 |
| 100,774 |
Net gain (loss) on loans measured at FVTPL |
|
|
|
|
Gain (loss) on valuation |
| (204,702) |
| (248,032) |
Gain on sale |
| 17,516 |
| 10,395 |
|
| (187,186) |
| (237,637) |
Net gain (loss) on securities measured at FVTPL |
|
|
|
|
Debt securities |
|
|
|
|
Gain on valuation |
| 41,208 |
| 137,181 |
Gain on sale |
| 72,338 |
| 125,431 |
Other gains |
| 331,837 |
| 297,024 |
|
| 445,383 |
| 559,636 |
Equity securities |
|
|
|
|
Gain on valuation |
| 134,922 |
| 141,246 |
Gain (loss) on sale |
| 283,265 |
| 183,969 |
|
| 418,187 |
| 325,215 |
Other |
|
|
|
|
Gain on valuation |
| 22,690 |
| 28,803 |
|
| 886,260 |
| 913,654 |
|
|
|
|
|
Net gain (loss) on financial liabilities measured at FVTPL |
|
|
|
|
Debt securities |
|
|
|
|
Loss on valuation |
| (48,261) |
| (16,810) |
Gain (loss) on disposal |
| 82,724 |
| (35,710) |
|
| 34,463 |
| (52,520) |
Other |
|
|
|
|
Loss on valuation |
| (83,316) |
| (91,025) |
Gain on disposal |
| 8,313 |
| 4,169 |
|
| (75,003) |
| (86,856) |
|
| (40,540) |
| (139,376) |
Derivatives: |
|
|
|
|
Gain (loss) on valuation |
| 245,681 |
| 388,880 |
Gain on transaction |
| (661,113) |
| 359,187 |
|
| (415,432) |
| 748,067 |
|
| 272,830 |
| 1,385,482 |
217
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
35. Net gain (loss) on financial instruments designated at fair value through profit or loss
Net gain (loss) on financial instruments designated at fair value through profit or loss for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Financial liabilities designated at fair value through profit or loss: |
|
|
|
|
Borrowings: |
|
|
|
|
Gain (loss) on valuation |
| 241,066 |
| (33,871) |
Loss on sale and redemption |
| (42,827) |
| (812,175) |
|
| 198,239 |
| (846,046) |
36. Provision for allowance for credit loss
Provision for allowance for credit loss on financial assets for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
|
|
|
|
|
Loans at amortized cost |
| (1,290,695) |
| (910,898) |
Other financial assets at amortized cost |
| (33,785) |
| (33,945) |
Securities at fair value through other comprehensive income |
| (3,829) |
| (5,787) |
Unused credit line and financial guarantee |
| (52,795) |
| (29,519) |
Securities at amortized cost |
| (1,075) |
| (543) |
|
| (1,382,179) |
| (980,692) |
37. General and administrative expenses
General and administrative expenses for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Employee benefits: |
|
|
|
|
Salaries |
| 3,034,543 |
| 2,918,065 |
Severance benefits: |
|
|
|
|
Defined contribution |
| 36,660 |
| 35,972 |
Defined benefit |
| 184,753 |
| 168,732 |
Termination benefits |
| 94,723 |
| 122,732 |
|
| 3,350,679 |
| 3,245,501 |
|
|
|
|
|
Entertainment |
| 34,963 |
| 36,931 |
Depreciation |
| 475,506 |
| 479,657 |
Amortization |
| 129,976 |
| 99,208 |
Taxes and dues |
| 197,996 |
| 197,691 |
Advertising |
| 204,308 |
| 265,739 |
Research |
| 20,271 |
| 17,742 |
Others |
| 798,774 |
| 792,205 |
|
| 5,212,473 |
| 5,134,674 |
218
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won, except per share data)
38. Share-based payments
(a) Stock options granted as of December 31, 2020 are as follows:
|
| 6th grant(*) |
| 7th grant(*) |
|
|
|
|
|
Type |
| Cash payment |
| Cash payment |
|
|
|
|
|
Grant date |
| March 20, 2007 |
| March 19, 2008 |
|
|
|
|
|
Exercise price in Korean won |
|
|
|
|
|
|
|
|
|
Number of shares granted |
| 1,301,050 |
| 808,700 |
|
|
|
|
|
Options’ expiry dates |
| August 19, 2020 |
| May 17, 2021 / September 17, 2021 |
| ||||
Changes in number of shares granted: | ||||
Beginning balance |
| 58,764 |
| 36,162 |
Exercised and cancelled |
| 58,764 |
| - |
Ending balance |
| - |
| 36,162 |
|
|
|
|
|
Fair value per share in Korean won |
|
|
|
|
(*) All of stock options have vested as of December 31, 2020, and the weighted average exercise price for 36,162 stock options outstanding as of December 31, 2020 is W49,053.
219
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won, except per share data)
38. Share-based payments (continued)
(b) Performance shares granted as of December 31, 2020 are as follows:
|
| Expired |
| Not expired |
|
|
| ||
Type |
| Cash-settled share-based payment | ||
|
|
| ||
Performance conditions(*1) |
| Relative stock price linked (20.0%), management index (80.0%) | ||
|
|
| ||
Exercising period |
| 4 years from the commencement date of the year to which the grant date belongs (5 years in the case of deferred payment) | ||
|
|
|
|
|
Estimated number of shares vested at December 31, 2020 |
| 468,013 |
| 1,601,729 |
|
|
|
|
|
Fair value per share in Korean won (*2) |
|
|
|
|
(*1) Starting from 2020, Shinhan Financial Group and Shinhan Bank will apply relative stock price linked (20.0%), management index (60.0%), and prudential index (20.0%).
(*2) Based on performance-based stock compensation, the reference stock price (the arithmetic average of the weighted average share price of transaction volume for the past two month, the previous one month, and the past one week) of four years(In the case of deferred quantity for after five years) after the commencement of the grant year is paid in cash, and the fair value of the reference stock to be paid in the future is assessed as the closing price of the settlement.
220
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
38. Share-based payments (continued)
(c) Share-based compensation costs for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Employees of |
|
| ||
|
| The controlling company |
| The subsidiaries |
| Total |
Stock options granted: |
|
|
|
|
|
|
6th |
| (1) |
| (4) |
| (5) |
7th |
| (18) |
| (26) |
| (44) |
Performance share |
| (257) |
| (3,902) |
| (4,159) |
|
| (276) |
| (3,932) |
| (4,208) |
|
| December 31, 2019 | ||||
|
| Employees of |
|
| ||
|
| The controlling company |
| The subsidiaries |
| Total |
Stock options granted: |
|
|
|
|
|
|
5th |
| - |
| 9 |
| 9 |
6th |
| (3) |
| (15) |
| (18) |
7th |
| (5) |
| (6) |
| (11) |
Performance share |
| 4,678 |
| 32,646 |
| 37,324 |
|
| 4,670 |
| 32,634 |
| 37,304 |
221
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
38. Share-based payments (continued)
(d) Accrued expenses and the intrinsic value as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||
|
| Accrued expenses(*) | ||||
|
| Employees of |
|
| ||
|
| The controlling company |
| The subsidiaries |
| Total |
Stock options granted: |
|
|
|
|
|
|
7th |
| 1 |
| 1 |
| 2 |
Performance share |
| 7,201 |
| 60,241 |
| 67,442 |
|
| 7,202 |
| 60,242 |
| 67,444 |
(*) The intrinsic value of share-based payments is W 67,442 million as of December 31, 2020. For the calculation, the quoted market price W 32,050 per share is used for stock options and the fair value is considered as intrinsic value for performance shares, respectively.
|
| December 31, 2019 | ||||
|
| Accrued expenses(*) | ||||
|
| Employees of |
|
| ||
|
| The controlling company |
| The subsidiaries |
| Total |
Stock options granted: |
|
|
|
|
|
|
6th |
| 1 |
| 4 |
| 5 |
7th |
| 19 |
| 27 |
| 46 |
Performance share |
| 10,003 |
| 81,352 |
| 91,355 |
|
| 10,023 |
| 81,383 |
| 91,406 |
(*) The intrinsic value of share-based payments is W91,355 million as of December 31, 2019. For calculating, the quoted market price W43,350 per share is used for stock options and the fair value is considered as intrinsic value for performance shares, respectively.
222
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
39. Net other operating expense
Other operating income and other operating expense for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Other operating income |
|
|
|
|
Gain on sale of assets: |
|
|
|
|
Loans at amortized cost |
| 21,348 |
| 18,298 |
Others: |
|
|
|
|
Gain on hedged items |
| 536,768 |
| 564,438 |
Reversal of allowance for acceptances and guarantee |
| 2,709 |
| 19,329 |
Gain on trust account |
| - |
| 27 |
Reversal of other allowance |
| 850 |
| 11,194 |
Others |
| 164,999 |
| 97,777 |
|
| 705,326 |
| 692,765 |
|
| 726,674 |
| 711,063 |
Other operating expense |
|
|
|
|
Loss on sale of assets: |
|
|
|
|
Loans at amortized cost |
| 18,675 |
| 27,291 |
Others: |
|
|
|
|
Loss on hedged items |
| 605,808 |
| 596,533 |
Contribution |
| 367,993 |
| 311,336 |
Provision for other allowance |
| 16,862 |
| 6,939 |
Depreciation of operating lease assets |
| 163,006 |
| 98,288 |
Others |
| 924,796 |
| 857,918 |
|
| 2,078,465 |
| 1,871,014 |
|
| 2,097,140 |
| 1,898,305 |
|
|
|
|
|
Net other operating expenses |
| (1,370,466) |
| (1,187,242) |
223
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
40. Net other non-operating income |
|
Other non-operating income and other non-operating expense for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Other non-operating income |
|
|
|
|
Gain on disposal of assets: |
|
|
|
|
Property and equipment (*) |
| 64,427 |
| 1,452 |
Investment property |
| 20,701 |
| 12,640 |
Assets held for sale |
| 1,147 |
| - |
Lease assets |
| 2,712 |
| 1,681 |
Right-of-use assets |
| 3,415 |
| 1,112 |
Others |
| 24 |
| 407 |
|
| 92,426 |
| 17,292 |
|
|
|
|
|
Gain on disposal of Investments in associates |
| 11,325 |
| 3,461 |
Others: |
|
|
|
|
Rental income on investment property |
| 23,890 |
| 43,777 |
Reversal of impairment losses on intangible asset |
| 119 |
| 438 |
Gain from assets contributed |
| 4 |
| 86 |
Others |
| 66,268 |
| 82,879 |
|
| 90,281 |
| 127,180 |
|
| 194,032 |
| 147,933 |
|
|
|
|
|
Other non-operating expense |
|
|
|
|
Loss on disposal of assets: |
|
|
|
|
Property and equipment (*) |
| 5,884 |
| 870 |
Lease assets |
| 5,538 |
| 3,221 |
Right-of-use assets |
| 1,195 |
| 306 |
Others |
| 64 |
| - |
|
| 12,681 |
| 4,397 |
|
|
|
|
|
Loss on disposal of investments in associates |
| 5,754 |
| 3,974 |
Impairment loss on investments in associates |
| 9,407 |
| - |
|
| 15,161 |
| 3,974 |
Others: |
|
|
|
|
Donations |
| 86,608 |
| 94,937 |
Depreciation of investment properties |
| 20,165 |
| 17,565 |
Impaired loss on intangible assets |
| 41,429 |
| 152,081 |
Write-off of intangible assets |
| 474 |
| 9,221 |
Collecting of written-off expenses |
| 7,978 |
| 7,322 |
Others |
| 344,934 |
| 46,465 |
|
| 501,588 |
| 327,591 |
|
| 529,430 |
| 335,962 |
|
|
|
|
|
Net other non-operating loss |
| (335,398) |
| (188,029) |
(*) Lease disposal profit and disposal loss after sale are included in property, plant and equipment disposal profit and disposal loss and investment property disposal profit, respectively. The profit from the lease disposal after sale is W 9,761 million.
224
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
41. Income tax expense
(a) Income tax expense for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Current income tax expense |
| 1,131,254 |
| 1,115,724 |
Temporary differences |
| 131,862 |
| 296,244 |
Income tax recognized in other comprehensive income |
| (7,321) |
| (142,844) |
Income tax expenses |
| 1,255,795 |
| 1,269,124 |
(b) Income tax expense calculated by multiplying net income before tax with the tax rate for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Profit before income taxes |
| 4,753,871 |
| 4,911,508 |
|
|
|
|
|
Income taxes at statutory tax rates |
| 1,301,836 |
| 1,345,187 |
Adjustments: |
|
|
|
|
Non-taxable income |
| (4,932) |
| 8,500 |
Non-deductible expense |
| 14,529 |
| 18,461 |
Tax credit |
| (88) |
| (2,289) |
Others |
| (55,550) |
| (100,735) |
Income tax expense |
| 1,255,795 |
| 1,269,124 |
|
|
|
|
|
Effective tax rate | % | 26.42 |
| 25.84 |
225
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
41. Income tax expense (continued)
(c) Deferred tax expenses by origination and reversal of deferred assets and liabilities and temporary differences for the years ended December 31, 2020 and 2019 are as follows:
| December 31, 2020 | |||||||||
|
| Beginning Balance |
| Business combination |
| Profit or loss |
| Other comprehensive income |
| Ending Balance(*) |
Unearned income |
| (331,679) |
| - |
| 3,401 |
| - |
| (328,278) |
Account receivable |
| (26,324) |
| - |
| (2,754) |
| - |
| (29,078) |
Financial assets at fair value through profit or loss |
| (101,577) |
| 1,750 |
| (28,950) |
| (13,308) |
| (142,085) |
Investment in associates and etc |
| 18,758 |
| - |
| 144,390 |
| (1,878) |
| 161,270 |
Valuation and depreciation of property and equipment |
| (151,046) |
| 7 |
| 253 |
| - |
| (150,786) |
Derivative asset (liability) |
| 21,005 |
| - |
| (80,357) |
| 3,762 |
| (55,590) |
Deposits |
| 30,641 |
| - |
| (3,009) |
| - |
| 27,632 |
Accrued expenses |
| 145,494 |
| 441 |
| (5,071) |
| - |
| 140,864 |
Defined benefit obligation |
| 506,132 |
| 209 |
| 39,072 |
| (6,759) |
| 538,654 |
Plan assets |
| (507,140) |
| - |
| (47,934) |
| 1,167 |
| (553,907) |
Other provisions |
| 213,055 |
| - |
| 99,223 |
| - |
| 312,278 |
Allowance for acceptances and guarantees |
| 80,014 |
| - |
| 8,036 |
| - |
| 88,050 |
Allowance related to asset revaluation |
| (49,713) |
| - |
| - |
| - |
| (49,713) |
Allowance for expensing depreciation |
| (401) |
| - |
| 64 |
| - |
| (337) |
Deemed dividend |
| - |
| - |
| - |
| - |
| - |
Accrued contributions |
| 36,818 |
| - |
| (20,200) |
| - |
| 16,618 |
Financial instruments designated at fair value through profit of loss |
| 42,817 |
| - |
| (71,043) |
| - |
| (28,226) |
Allowances |
| 38,068 |
| - |
| 185,583 |
| - |
| 223,651 |
Fictitious dividend |
| 1,341 |
| - |
| 14,950 |
| - |
| 16,291 |
Liability under insurance contracts |
| 24,147 |
| - |
| (22,408) |
| - |
| 1,739 |
Deficit carried over |
| - |
| - |
| 311 |
| - |
| 311 |
Others |
| (543,770) |
| 451 |
| (304,112) |
| 9,695 |
| (837,736) |
|
| (553,360) |
| 2,858 |
| (90,555) |
| (7,321) |
| (648,378) |
Expired unused tax losses: |
|
|
|
|
|
|
|
|
|
|
Extinguishment of deposit and insurance liabilities |
| 320,011 |
| - |
| (35,944) |
| - |
| 284,067 |
|
| (233,349) |
| 2,858 |
| (126,499) |
| (7,321) |
| (364,311) |
(*) Deferred tax assets from overseas subsidiaries are increased by W1,960 million due to foreign exchange rate movements.
226
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
41. Income tax expense (continued)
(c) Deferred tax expenses by origination and reversal of deferred assets and liabilities and temporary differences for the years ended December 31, 2020 and 2019 are as follows (continued) :
| December 31, 2019 | |||||||||
|
| Beginning Balance |
| Business combination |
| Profit or loss |
| Other comprehensive income |
| Ending Balance(*) |
Unearned income |
| (255,336) |
| (62,077) |
| (14,266) |
| - |
| (331,679) |
Account receivable |
| (24,139) |
| - |
| (2,185) |
| - |
| (26,324) |
Financial assets at fair value through profit or loss |
| 48,277 |
| 9,284 |
| (20,972) |
| (56,654) |
| (20,065) |
Securities at fair value through other comprehensive income |
| 177,358 |
| (554,017) |
| 425,491 |
| (130,344) |
| (81,512) |
Investment in associates |
| 24,743 |
| - |
| (5,937) |
| (48) |
| 18,758 |
Valuation and depreciation of property and equipment |
| (161,996) |
| - |
| 10,950 |
| - |
| (151,046) |
Derivative asset (liability) |
| 111,751 |
| (1,132) |
| (97,147) |
| 7,533 |
| 21,005 |
Deposits |
| 28,036 |
| - |
| 2,605 |
| - |
| 30,641 |
Accrued expenses |
| 132,689 |
| 15,298 |
| (2,493) |
| - |
| 145,494 |
Defined benefit obligation |
| 447,658 |
| 4,805 |
| 33,321 |
| 20,348 |
| 506,132 |
Plan assets |
| (446,323) |
| (4,610) |
| (57,165) |
| 958 |
| (507,140) |
Other provisions |
| 194,475 |
| 2,283 |
| 16,297 |
| - |
| 213,055 |
Allowance for acceptances and guarantees |
| 29,157 |
| 42,234 |
| 8,623 |
| - |
| 80,014 |
Allowance related to asset revaluation |
| (49,713) |
| - |
| - |
| - |
| (49,713) |
Allowance for expensing depreciation |
| (465) |
| - |
| 64 |
| - |
| (401) |
Deemed dividend |
| - |
| - |
| - |
| - |
| - |
Accrued contributions |
| 21,711 |
| - |
| 15,107 |
| - |
| 36,818 |
Financial instruments designated at fair value through profit of loss |
| (87,408) |
| - |
| 130,225 |
| - |
| 42,817 |
Allowances |
| 48,784 |
| - |
| (10,716) |
| - |
| 38,068 |
Fictitious dividend |
| 1,325 |
| - |
| 16 |
| - |
| 1,341 |
Liability under insurance contracts |
| 22,593 |
| - |
| 1,554 |
| - |
| 24,147 |
Deficit carried over |
| - |
| - |
| - |
| - |
| - |
Others |
| (225,676) |
| 204,351 |
| (537,808) |
| 15,363 |
| (543,770) |
|
| 37,501 |
| (343,581) |
| (104,436) |
| (142,844) |
| (553,360) |
Expired unused tax losses: |
|
|
|
|
|
|
|
|
|
|
Extinguishment of deposit and insurance liabilities |
| 367,444 |
| - |
| (47,433) |
| - |
| 320,011 |
|
| 404,945 |
| (343,581) |
| (151,869) |
| (142,844) |
| (233,349) |
(*) Deferred tax assets from overseas subsidiaries are increased by W1,530 million due to foreign exchange rate movements.
227
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
41. Income tax expense (continued)
(d) Deferred tax assets and liabilities that are directly charged or credited to equity for the years ended December 31, 2020 and 2019 are as follows:
|
| January 1, 2020 |
| Changes |
| December 31, 2020 | ||||||
|
| OCI |
| Tax effect |
| OCI |
| Tax effect |
| OCI |
| Tax effect |
Gain (loss) on valuation of financial assets measured at FVOCI |
| 439,370 |
| (132,901) |
| (103,570) |
| 23,912 |
| 335,800 |
| (108,989) |
Gain (loss) on financial liabilities measured at FVTPL attributable to changes in credit risk |
| (11,386) |
| 3,131 |
| 4,253 |
| (1,170) |
| (7,133) |
| 1,961 |
Foreign currency translation adjustments for foreign operations |
| (208,348) |
| (9,117) |
| (166,596) |
| 7,000 |
| (374,944) |
| (2,117) |
Gain (loss) on cash flow hedge |
| (47,977) |
| 14,266 |
| (19,958) |
| 5,498 |
| (67,935) |
| 19,764 |
Equity in other comprehensive income of associates |
| 8,300 |
| (122) |
| (1,450) |
| (1,878) |
| 6,850 |
| (2,000) |
The accumulated other comprehensive income in separate account(*) |
| 20,054 |
| (5,515) |
| 5,358 |
| (1,473) |
| 25,412 |
| (6,988) |
Remeasurements of the defined benefit liability |
| (553,538) |
| 152,006 |
| 21,362 |
| (5,610) |
| (532,176) |
| 146,396 |
Gain (loss) on valuation of financial asset measured at FVTPL (Overlay approach) |
| 98,678 |
| (27,057) |
| 125,371 |
| (35,073) |
| 224,049 |
| (62,130) |
|
| (254,847) |
| (5,309) |
| (135,230) |
| (8,794) |
| (390,077) |
| (14,103) |
|
| January 1, 2019 |
| Changes |
| December 31, 2019 | ||||||
|
| OCI |
| Tax effect |
| OCI |
| Tax effect |
| OCI |
| Tax effect |
Gain (loss) on valuation of financial assets measured at FVOCI |
| 11,713 |
| (8,754) |
| 427,657 |
| (124,147) |
| 439,370 |
| (132,901) |
Gain (loss) on financial liabilities measured at FVTPL attributable to changes in credit risk |
| 235 |
| (65) |
| (11,621) |
| 3,196 |
| (11,386) |
| 3,131 |
Foreign currency translation adjustments for foreign operations |
| (306,766) |
| (15,087) |
| 98,418 |
| 5,970 |
| (208,348) |
| (9,117) |
Gain (loss) on cash flow hedge |
| (24,485) |
| 6,733 |
| (23,492) |
| 7,533 |
| (47,977) |
| 14,266 |
Equity in other comprehensive income of associates |
| 4,957 |
| (74) |
| 3,343 |
| (48) |
| 8,300 |
| (122) |
The accumulated other comprehensive income in separate account(*) |
| 5,672 |
| (1,560) |
| 14,382 |
| (3,955) |
| 20,054 |
| (5,515) |
Remeasurements of the defined benefit liability |
| (477,382) |
| 130,700 |
| (76,156) |
| 21,306 |
| (553,538) |
| 152,006 |
Gain (loss) on valuation of financial asset measured at FVTPL (Overlay approach) |
| (108,655) |
| 29,597 |
| 207,333 |
| (56,654) |
| 98,678 |
| (27,057) |
|
| (894,711) |
| 141,490 |
| 639,864 |
| (146,799) |
| (254,847) |
| (5,309) |
(*) Deferred tax effects, which are originated from the accumulated other comprehensive income in separate account, are included in the other liabilities of principle and interest guaranteed separate account's financial statement.
228
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
41. Income tax expense (continued)
(e)There is no the amount of deductible temporary differences, unused tax losses, and unused tax credits that are not recognized as deferred tax assets as of December 31, 2020 and 2019.
(f) The amount of temporary difference regarding investment in subsidiaries that are not recognized as deferred tax liabilities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Investment in associates |
| (897,110) |
| (766,888) |
(g) The Group set off a deferred tax asset against a deferred tax liability of the same taxable entity if, and only if, they relate to income taxes levied by the same taxation authority and the entity has a legally enforceable right to set off current tax assets against current tax liabilities. Deferred tax assets and liabilities presented on a gross basis prior to any offsetting as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Deferred tax assets |
| 440,430 |
| 518,337 |
Deferred tax liabilities |
| (804,741) |
| (751,686) |
229
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won, except per share data)
42. Earnings per share
(a) Basic and diluted earnings per share for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Profit attributable to equity holders of Shinhan Financial Group |
| 3,414,595 |
| 3,403,497 |
Less: |
|
|
|
|
Dividends to hybrid bond |
| (85,327) |
| (61,993) |
|
|
|
|
|
Net profit available for common stock |
| 3,329,268 |
| 3,341,504 |
|
|
|
|
|
Weighted average number of common shares outstanding(*) |
| 500,343,324 |
| 477,346,731 |
|
|
|
|
|
Basic and diluted earnings per share in won |
| 6,654 |
| 7,000 |
(*1) The number of basic ordinary shares outstanding is 516,599,554 shares and the above weighted-average stocks are calculated by reflecting treasury stocks issued and 17,482,000 shares of convertible preferred shares issued on May 1, 2019.
(*2) Treasury stock has retired on June 1, 2020.
(b) The calculation details of the weighted average number of ordinary shares are as follows:
|
| December 31, 2020 | ||
|
| Number of shares |
| Number of days |
Number of common shares issued |
| 516,599,554 |
| 178,880,869,852 |
Shares of convertible preferred stock |
| 17,482,000 |
| 6,398,412,000 |
Shares of treasury stock |
| (704,796) |
| (2,153,625,403) |
Average number of ordinary shares |
| 533,376,758 |
| 183,125,656,449 |
Days |
|
|
| 366 days |
Weighted average number of ordinary shares |
|
|
| 500,343,324 |
230
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
43. Commitments and contingencies
(a) Guarantees, acceptances and credit commitments as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Guarantees: |
|
|
|
|
Outstanding guarantees |
| 10,249,827 |
| 9,319,885 |
Contingent guarantees |
| 3,433,953 |
| 3,669,697 |
|
| 13,683,780 |
| 12,989,582 |
Commitments to extend credit: |
|
|
|
|
Loan commitments in won |
| 80,598,639 |
| 74,393,722 |
Loan commitments in foreign currency |
| 19,319,903 |
| 22,542,776 |
ABS and ABCP commitments |
| 1,604,958 |
| 2,116,354 |
Others |
| 87,718,227 |
| 81,387,165 |
|
| 189,241,727 |
| 180,440,017 |
Endorsed bills: |
|
|
|
|
Secured endorsed bills |
| 1,650 |
| 11,287 |
Unsecured endorsed bills |
| 7,324,559 |
| 6,737,097 |
|
| 7,326,209 |
| 6,748,384 |
Loans sold with repurchase agreement |
| - |
| 2,099 |
|
| 210,251,716 |
| 200,180,082 |
231
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
43. Commitments and contingencies (continued)
(b) Pending litigations
The Group’s pending lawsuits as a defendant as of December 31, 2020 are as follows:
Case |
| Number of claim |
| Claim amount |
| Description |
| Status |
Claim for the payment to execute the assignment order
|
| 1 |
| 7,099 |
| For the deposits at the Group owned by one of the debtor, the plaintiff has received a provisional seizure order, bond seizure and an assignment order that assigned the Bank as a third party debtor. Accordingly, the plaintiff filed a claim against the Bank for the debt payment to execute the assignment order. |
| In progress for the first order. |
Deposit return |
| 1 |
| 5,575 |
| Hanwha Savings Bank, a party to the lender of Meat Loan, filed a lawsuit against all creditors to confirm deposit accounts for the sale of frozen meat. As a result, the lawsuit has been commissioned by HYUN, the legal firm, proceed a Matron's private lawsuit related the Group. |
| In progress for the first order. |
Gampo Ramada |
| 1 |
| 5,658 |
| The plaintiff has requested the intermediate loan of the repayment of loans until now because the Group planned for a three months extension of the maturity of the intermediate loan and have made a commitment to repay the principal and interest of the unpaid intermediate payment loan to the plaintiff after three months. |
| The Group lost the first and second order(2021.01.14) and the third order is ongoing. |
Others |
| 530 |
| 301,460 |
| It includes various cases, such as compensation for loss claim. | ||
|
| 533 |
| 319,792 |
|
|
|
As of the December 31, 2020, the Group has recorded W12,468 million and W3,453 million, respectively, as other provisions and insurance contract liabilities (reserve for claims) for litigations, etc., The outcome of the lawsuits is not expected to have a material impact on the consolidated financial statements, but additional losses may result from future litigation.
(c) The Group entered into an agreement between shareholders with Asia Trust Co., Ltd. (60% of its total shares) to acquire remaining stake. In accordance with the agreement, the Group has the right to purchase shares held by the shareholders of Asia Trust Co., Ltd. In response, the shareholders of Asia Trust Co., Ltd. have the right to demand to purchase the shares to the Group.
(d) In relation to Asia Trust Co., Ltd.,(“Asia Trust”) a subsidiary of the Group, a number of complaints have arisen due to misuse of the seals discarded by employees prior to the Group’s acquisition of Asia Trust. Some of them filed a lawsuit against the Group (claim amount of W49.6 billion) during the current year, and a special inspection is conducted by the Financial Supervisory Service in February 2019. The Group did not reflect these financial effects in the consolidated financial statements as of December 31, 2020 because the Group could not reliably measure the likelihood of loss and extent of loss.
(e) Regarding the currency option contracts, the Group has received the dispute arbitration request from the Financial Dispute Arbitration Committee on December 19, 2019; the Group will proceed with Board of Directors’ decision. The Group's management anticipates that the result of the adjustment will not have a significant impact on the Group's financial position.
232
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
43. Commitments and contingencies (continued)
(f) As a Prime Brokerage Service operator, the Group entered into a total return swap agreement (TRS, derivatives that exchange profits and losses from underlying assets such as stocks, bonds and funds) with a fund operated by Lime Asset Management ("Lime Fund"). Through TRS with the Group, the Lime Fund invested approximately $200 million in IIG Global Trade Finance Fund, IIG Trade Finance Fund, and IIG Trade Finance Fund-FX Hedged ("IIG Fund") from May 2017 to September 2017.
The Group invested the IIG Fund in LAM Enhanced Finance III L.P. ("LAM III Fund") in kind and acquired the LAM III Fund's beneficiary certificates in accordance with the management instructions of Lime Asset Management in 2019. The recoverable value of the LAM III Fund beneficiary certificates is affected by the recoverable value of the IIG Fund invested in kind. Meanwhile, IIG Fund received cancellation of registration and asset freeze from the US Securities and Exchange Commission in November 2019. The Financial Supervisory Service (FSS) announced in its interim inspection of Lime Fund in February 2020 that the Group is charged of being involved in poor concealment and fraud of Lime Fund while operating TRSs with Lime Fund, and a related prosecution investigation has been under way since then.
The Financial Supervisory Service has notified advance notice that is a result of the inspection on the Lime Trade Financial Fund and Lime CI Fund to the Group. In addition, regarding the Lime Trade Financial Fund, the Financial Supervisory Service Sanctions Review Committee and the Financial Services Commission Securities Futures Commission reviewed and voted on the sanctions of former executives and institutions. It will be finalized by the Financial Services Commission in the future, and the Lime CI Fund is currently undergoing a Financial Supervisory Service Sanctions Review Committee.
The prosecution arrested and indicted the former director of Prime Brokerage Services on fraud charges. On September 25, the former director of Prime Brokerage Service was convicted in the first trial for fraud for violation of the Capital Market and Financial Investment Services Act. The former director of Prime Brokerage Services submitted an appeal on October 5, 2020.
The prosecution indicted the Group and the former director of Prime Brokerage Services on January 22, 2021 for violating FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT. It is expected that the criminal trial will determine whether the Group is legally responsible or not. The Group has determined the present obligation that the Group may liable for the charge of involvement in the fraud is not significant.
Meanwhile, as of December 31, 2020, there is an international dispute over some beneficiary certificates acquired under the management order of Lime Asset Management.
Considering the board's voluntary compensation decision and the results of the Financial Supervisory Service's dispute settlement committee, the Group conducted the compensation and liquidity supply for some of the Lime Fund sales. Supervision authorities are currently conducting inspections on Lime Asset Management, and depending on the inspection results, procedures for dispute settlement and damage relief measures for incomplete sales may be carried out.
(g) The Group sold approximately W390.7 billion of German Heritage DLS trust products from May 2017 to December 2018. As of December 31, 2020, the repayment of W379.9 billion has been delayed. Accordingly, the supervisory authorities are conducting an inspection on the incomplete sale of trust products. The Financial Supervisory Service has notified advance notice that is a result of the inspection to the Group. In addition, the Financial Supervisory Service Sanctions Review Committee and the Financial Services Commission Securities Futures Commission reviewed and voted on the sanctions of staffs and institutions. However, it will be finalized by the Financial Services Commission in the future.
(h) The Group has sold Gen2 related trust instruments from May 2014 to November 2019. As of December 31, 2020, approximately W287.1 billion, expired amount, of W420.0 billion, outstanding balance, is suspended from redemption and delayed in repayment.
233
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
44. Statement of cash flows
(a) Cash and cash equivalents in the consolidated statements of cash flows as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Cash and due from banks at amortized cost |
| 33,420,549 |
| 28,435,818 |
Adjustments: |
| (2,488,156) |
| (3,349,719) |
Due from financial institutions with a maturity over three months from date of acquisition |
| (21,969,411) |
| (16,506,925) |
Restricted due from banks |
| (24,457,567) |
| (19,856,644) |
|
| 8,962,982 |
| 8,579,174 |
(b) Significant non-cash activities for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Debt-equity swap |
| 58,528 |
| 224,093 |
Transfers from construction-in-progress to property and equipment |
| 56,575 |
| 76,004 |
Transfers between property and equipment and investment property |
| 4,064 |
| 104,573 |
Transfers between assets held for sale to property and equipment |
| 31,633 |
| 455 |
Transfers between investment property and assets held for sale |
| 910 |
| 15,795 |
Accounts payable for purchase of intangible assets, etc. |
| 137,476 |
| 472,798 |
Transaction for right-of-use assets |
| 281,785 |
| 1,376,764 |
Exchange of shares related to acquisition of subsidiaries |
| 629,449 |
| - |
Exchange of shares related to disposal of treasury stocks |
| 287,669 |
| - |
234
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
44. Statement of cash flows (continued)
(c) Changes in assets and liabilities arising from financing activities for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||||
|
| Derivative assets |
| Borrowings |
| Debentures |
| Lease liabilities |
| Total |
Beginning balance |
| 5,822 |
| 34,863,156 |
| 75,363,364 |
| 1,104,259 |
| 111,336,601 |
Changes from cash flows |
| (43,676) |
| 7,465,106 |
| (28,372) |
| (781,867) |
| 6,611,191 |
Changes from non-cash flows |
|
|
|
|
|
|
|
|
|
|
Amortization of discount on borrowings and debentures |
| - |
| 22,836 |
| 437,627 |
| 14,504 |
| 474,967 |
Changes in foreign currency |
| - |
| 271,179 |
| (417,151) |
| - |
| (145,972) |
Others |
| 126,638 |
| (1,037,213) |
| (221,074) |
| 256,426 |
| (875,223) |
Business combination(Note47) |
| - |
| 9,000 |
| - |
| 839 |
| 9,839 |
Ending balance |
| 88,784 |
| 41,594,064 |
| 75,134,394 |
| 594,161 |
| 117,411,403 |
|
| December 31, 2019 | ||||||||
|
| Derivative assets |
| Borrowings |
| Debentures |
| Lease liabilities |
| Total |
Beginning balance |
| (77,102) |
| 29,818,542 |
| 63,227,699 |
| 536,842 |
| 93,505,981 |
Changes from cash flows |
| 21,958 |
| 5,017,269 |
| 11,201,673 |
| (269,362) |
| 15,971,538 |
Changes from non-cash flows |
|
|
|
|
|
|
|
|
|
|
Amortization of discount on borrowings and debentures |
| - |
| 58,320 |
| 352,524 |
| 11,291 |
| 422,135 |
Changes in foreign currency exchange rate |
| - |
| 173,623 |
| 282,534 |
| - |
| 456,157 |
Others |
| 60,966 |
| (204,598) |
| 298,934 |
| 792,901 |
| 948,203 |
Business combination |
| - |
| - |
| - |
| 32,587 |
| 32,587 |
Ending balance |
| 5,822 |
| 34,863,156 |
| 75,363,364 |
| 1,104,259 |
| 111,336,601 |
235
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
45. Related parties
Intra-group balances, and income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. In accordance with K-IFRS No. 1024, the Group defines the retirement benefit plans of the associates, key management and their families, the consolidation group and related parties as the scope of related parties. The amount of profit and loss, bond and debt balance between the Group and the related parties are disclosed. For details of the subsidiaries, refer to 'Note 15'.
(a) Balances with the related parties as of December 31, 2020 and 2019 are as follows:
Related party |
| Account |
| December 31, 2020 |
| December 31, 2019 |
Investments in associates: |
|
|
|
|
|
|
BNP Paribas Cardif Life Insurance |
| Other assets |
| 76 |
| 92 |
〃 |
| Credit card loans |
| 81 |
| 173 |
〃 |
| Deposits |
| 13,941 |
| 402 |
Partners 4th Growth Investment Fund |
| Deposits |
| 2,802 |
| 1,443 |
BNP Paribas Cardif General Insurance |
| Credit card loans |
| 21 |
| 26 |
〃 |
| Other assets |
| - |
| 401 |
〃 |
| Deposits |
| 41 |
| 17 |
Shinhan Praxis K-Growth Global Private Equity Fund |
| Other assets |
| - |
| 91 |
Dream High Fund Ⅲ |
| Deposits |
| 4 |
| 5 |
Credian Healthcare Private Equity Fund II |
| Deposits |
| 2 |
| 4 |
Midas Dong-A Snowball Venture Fund 2 |
| Deposits |
| 1,739 |
| 233 |
Eum Private Equity Fund No.3 |
| Deposits |
| 20 |
| 353 |
Incorporated association Finance Saving Information Center |
| Deposits |
| 7 |
| 6 |
GX Shinhan interest 1st Private Equity Fund |
| Unearned revenue |
| - |
| 248 |
Nomura investment property trust No.19 |
| Loans |
| 11,976 |
| 11,973 |
〃 |
| Other assets |
| 44 |
| 42 |
SHBNPP MAIN Professional Investment Type Private Mixed Asset Investment Trust No.3 |
| Other assets |
| 1,160 |
| 678 |
Shinhan-Stonebridge Petro Private Equity Fund(*) |
| Other assets |
| - |
| 810 |
Korea Finance Security |
| Deposits |
| 568 |
| 362 |
SHINHAN-CORE TREND GLOBAL FUND 1 |
| Unearned revenue |
| 16 |
| 9 |
Hermes Private Investment Equity Fund |
| Deposits |
| 352 |
| 275 |
Multimedia Tech Co.Ltd |
| Deposits |
| - |
| 3 |
Korea Credit Bureau |
| Deposits |
| 2,088 |
| 80 |
Goduck Gangil1 PFV Co., Ltd |
| Loans |
| 24,000 |
| 24,000 |
〃 |
| ACL |
| (71) |
| (78) |
SBC PFV Co., Ltd |
| Deposits |
| 8,011 |
| 5,142 |
GMG Development Co,. Ltd(*) |
| Deposits |
| - |
| 300 |
Sprott Global Renewable Private Equity Fund I |
| Deposits |
| 258 |
| 342 |
IMM Global Private Equity Fund |
| Loans |
| 800 |
| 800 |
〃 |
| ACL |
| (2) |
| (3) |
〃 |
| Deposits |
| 10,820 |
| 7,598 |
Goduck Gangil10 PFV Co., Ltd |
| Loans |
| 9,400 |
| - |
〃 |
| ACL |
| (19) |
| - |
〃 |
| Deposits |
| 2,718 |
| - |
Shinhan Global Healthcare Fund 2 |
| Deposits |
| 1 |
| - |
One Shinhan Global Fund 1 |
| Unearned revenue |
| 122 |
| - |
IGIS PRIVATE REAL ESTATE TRUST NO.331 |
| Loans |
| 9,919 |
| - |
〃 |
| Accrued income |
| 121 |
| - |
〃 |
| Unearned revenue |
| 22 |
| - |
236
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
45. Related parties (continued)
(a) Balances with the related parties as of December 31, 2020 and 2019 are as follows (continued):
Related party |
| Account |
| December 31, 2020 |
| December 31, 2019 |
Investments in associates (continued): |
|
|
|
|
|
|
COSPEC BIM tech |
| Loans |
| 151 |
| - |
〃 |
| ACL |
| (95) |
| - |
〃 |
| Deposits |
| 1 |
| - |
IMM Special Situation 1-2 PRIVATE EQUITY FUND |
| Deposits |
| 117 |
| - |
EDNCENTRAL Co.,Ltd. |
| Loans |
| 19,450 |
| - |
〃 |
| Accrued income |
| 9 |
| - |
〃 |
| Unearned revenue |
| 578 |
| - |
KoFC-Neoplux R&D-Biz Creation 2013-1 Investment |
| Account receivables |
| 2,823 |
| - |
Future-Creation Neoplux Venture Capital Fund |
| Account receivables |
| 4,137 |
| - |
Neoplux Market-Frontier Secondary Fund |
| Account receivables |
| 1,630 |
| - |
Gyeonggi-Neoplux Superman Fund |
| Account receivables |
| 186 |
| - |
Shinhan-Neoplux Energy Newbiz Fund |
| Account receivables |
| 25 |
| - |
SHINHAN-NEO Core Industrial Technology Fund |
| Account receivables |
| 3 |
| - |
KTC-NP Growth Champ 2011-2 Private Equity Fund |
| Account receivables |
| 4,528 |
| - |
Neoplux No.3 Private Equity Fund |
| Account receivables |
| 748 |
| - |
NV Station Private Equity Fund |
| Deposits |
| 100 |
| - |
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45 |
| Unearned revenue |
| 76 |
| - |
IGIS Private Real Estate Investment Trust 286 |
| Other loans |
| 436 |
| - |
Genesis North America Power Company No.1 PEF |
| Other loans |
| 2,171 |
| - |
Key management personnel and their immediate relatives: |
| Loans |
| 5,144 |
| 4,426 |
|
| Assets |
| 98,927 |
| 43,431 |
|
| Liabilities |
| 44,328 |
| 16,822 |
(*) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2020
237
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
45. Related parties (continued)
(b) Transactions with the related parties for the years ended December 31, 2020 and 2019 are as follows:
Related party |
| Account |
| December 31, 2020 |
| December 31, 2019 |
Investments in associates |
|
|
|
|
|
|
BNP Paribas Cardif Life Insurance |
| Fees and commission income |
| 3,390 |
| 4,230 |
〃 |
| Reversal of credit losses |
| - |
| 3 |
〃 |
| Other expense |
| (5) |
| (1) |
〃 |
| General and administrative expenses |
| (4) |
| (9) |
Shinhan Praxis K-Growth Global Private Equity Fund |
| Fees and commission income |
| 361 |
| 448 |
BNP Paribas Cardif General Insurance |
| Fees and commission income |
| 10 |
| 11 |
〃 |
| Other operating income |
| 333 |
| 468 |
Midas Dong-A Snowball Venture Fund (*1) |
| Fees and commission income |
| - |
| 119 |
〃 |
| Interest expense |
| - |
| (1) |
IBKS-Shinhan Creative Economy(*1) |
| Fees and commission income |
| - |
| 8 |
SM New Technology Business Investment Fund I |
| Fees and commission income |
| - |
| 14 |
Partners 4th Growth Investment Fund |
| Interest expense |
| (4) |
| (7) |
Shinhan-Albatross Technology Investment Fund |
| Fees and commission income |
| 54 |
| 216 |
SHBNPP Private Korea Equity Long-Short Professional Feeder(*2) |
| Fees and commission income |
| - |
| 363 |
KDBC Midas Dong-A Snowball Venture Fund No.2 |
| Interest expense |
| (2) |
| - |
Shinhan Fintech New Technology Fund No.1(*1) |
| Fees and commission income |
| - |
| 38 |
Shinhan Global Healthcare Fund 1 |
| Fees and commission income |
| - |
| 360 |
Shinhan capital-Cape FN Fund No.1(*1) |
| Fees and commission income |
| - |
| 101 |
SHC-K2 Global Material Fund |
| Fees and commission income |
| 19 |
| 19 |
Synergy-Shinhan Mezzanine New Technology Investment Fund |
| Fees and commission income |
| 50 |
| 94 |
Shinhan-Midas Dong-A Secondary Venture Fund |
| Fees and commission income |
| 63 |
| 187 |
GX Shinhan interest 1st Private Equity Fund(*3) |
| Fees and commission income |
| 454 |
| 545 |
Shinhan-Nvestor Liquidity Solution Fund |
| Fees and commission income |
| 361 |
| 361 |
SHC ULMUS Fund No.1(*3) |
| Fees and commission income |
| 39 |
| 76 |
Shinhan-PS Investment Fund No.1 |
| Fees and commission income |
| 20 |
| 20 |
Nomura investment property trust No.19 |
| Interest income |
| 525 |
| 519 |
〃 |
| Other operating income |
| 3 |
| 7 |
BNPMAIN investment trust No.3 |
| Fees and commission income |
| 2,501 |
| 2,694 |
Shinhan-Stonebridge Petro Private Equity Fund |
| Fees and commission income |
| - |
| 1,762 |
|
|
|
|
|
|
|
238
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
45. Related parties (continued)
(b) Transactions with the related parties for the years ended December 31, 2020 and 2019 are as follows:
Related party |
| Account |
| December 31, 2020 |
| December 31, 2019 |
Investments in associates (continued) |
|
|
|
|
|
|
KOREA FINANCE SECURITY |
| Fees and commission income |
| 10 |
| 10 |
` |
| Interest expense |
| (1) |
| - |
ShinHan – Soo Young Entrepreneur Investment Fund |
| Fees and commission income |
| 206 |
| 275 |
Shinhan-Rhinos 1 Fund |
| Fees and commission income |
| 64 |
| 64 |
SHINHAN-CORE TREND GLOBAL FUND1 |
| Fees and commission income |
| 100 |
| 45 |
Kiwoom-Shinhan Innovation Fund I |
| Fees and commission income |
| 240 |
| 67 |
One Shinhan Global Fund1 |
| Fees and commission income |
| 399 |
| 151 |
Open-Shinhan Portfolio Investment Association No. 1 |
| Fees and commission income |
| 59 |
| 59 |
FuturePlay-Shinhan TechInnovation Fund 1 |
| Fees and commission income |
| 218 |
| 7 |
WON JIN HOME PLAN CO.,LTD |
| Interest income |
| - |
| 186 |
Korea Credit Bureau |
| Fees and commission income |
| 13 |
| 13 |
〃 |
| Interest expense |
| (12) |
| (5) |
Goduck Gangil1 PFV Co., Ltd |
| Interest income |
| 915 |
| 328 |
〃 |
| Fees and commission income |
| - |
| 1,120 |
〃 |
| Provision for credit loss |
| 7 |
| (78) |
SBC PFV Co., Ltd |
| Fees and commission income |
| 732 |
| - |
〃 |
| Interest expense |
| (5) |
| (3) |
IMM Global Private Equity Fund |
| Interest income |
| 25 |
| 28 |
〃 |
| Interest expense |
| (13) |
| (25) |
〃 |
| Provision for credit loss |
| - |
| (3) |
Goduck Gangil10 PFV Co., Ltd |
| Interest income |
| 299 |
| - |
〃 |
| Fees and commission income |
| 793 |
| - |
〃 |
| Interest expense |
| (4) |
| - |
〃 |
| Provision for credit loss |
| (19) |
| - |
IGIS PRIVATE REAL ESTATE TRUST NO.331 |
| Interest income |
| 731 |
| - |
〃 |
| Other operating expense |
| (67) |
| - |
〃 |
| Fees and commission income |
| 478 |
| - |
COSPEC BIM tech |
| Provision for credit loss |
| (95) |
| - |
Korea Omega Project Fund I |
| Fees and commission income |
| 131 |
| - |
New Green Shinhan Mezzanine Fund |
| Fees and commission income |
| 42 |
| - |
239
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
45. Related parties (continued)
(b) Transactions with the related parties for the years ended December 31, 2020 and 2019 are as follows:
Related party |
| Account |
| December 31, 2020 |
| December 31, 2019 | |
Investments in associates (continued) |
|
|
|
|
|
| |
Sparklabs-Shinhan Opportunity Fund 1 |
| Fees and commission income |
| 174 |
| - | |
EDNCENTRAL Co.,Ltd. |
| Interest income |
| 649 |
| - | |
〃 |
| Fees and commission income |
| 578 |
| - | |
〃 |
| Other operating expense |
| (121) |
| - | |
Shinhan Western T&D Consignment Management Real Estate Investment Co., Ltd(*3) |
| Fees and commission income |
| 300 |
| - | |
Kakao-Shinhan 1st TNYT Fund |
| Fees and commission income |
| 165 |
| - | |
KoFC-Neoplux R&D-Biz Creation 2013-1 Investment |
| Interest income |
| 9 |
| - | |
〃 |
| Fees and commission income |
| 44 |
| - | |
Future-Creation Neoplux Venture Capital Fund |
| Interest income |
| 14 |
| - | |
〃 |
| Fees and commission income |
| 116 |
| - | |
Neoplux Market-Frontier Secondary Fund |
| Fees and commission income |
| 416 |
| - | |
Gyeonggi-Neoplux Superman Fund |
| Fees and commission income |
| 149 |
| - | |
Shinhan-Neoplux Energy Newbiz Fund |
| Fees and commission income |
| 308 |
| - | |
NewWave 6th Fund |
| Fees and commission income |
| 303 |
| - | |
SHINHAN-NEO Core Industrial Technology Fund |
| Fees and commission income |
| 3 |
| - | |
KTC-NP Growth Champ 2011-2 Private Equity Fund |
| Interest income |
| 5 |
| - | |
〃 |
| Fees and commission income |
| 86 |
| - | |
Neoplux No.3 Private Equity Fund |
| Fees and commission income |
| 748 |
| - | |
Pacific Sunny Professional Investors Private Placement Real Estate Investment Company No.45 |
| Fees and commission income |
| 1,412 |
| - | |
CREDIAN T&F 2020 CORPORATE FINANCIAL STABILITY PRIVATE EQUITY FUND(*3) |
| Interest expense |
| (1) |
| - | |
Key management personnel and their immediate relatives | |||||||
Interest income |
|
| 126 |
| 161 | ||
|
|
| 18,897 |
| 15,045 |
(*1) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2019
(*2) As the Group does not have significant influence to this entity, this has been removed from the related parties for the year ended December 31, 2019.
(*3) Excluded from the associates due to disposal and liquidation for the year ended December 31, 2020.
240
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
45. Related parties (continued)
(c) Key management personnel compensation
Key management personnel compensation for the years ended December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Short-term employee benefits |
| 23,468 |
| 21,237 |
Severance benefits |
| 651 |
| 731 |
Share-based payment transactions(*) |
| 2,628 |
| 12,343 |
|
| 26,747 |
| 34,311 |
(*) The expenses of share-based payment transactions are the renumeration expenses during the vesting period.
(d) The guarantees provided between the related parties as of December 31, 2020 and 2019 are as follows:
|
|
|
| Amount of guarantees |
|
| ||
Guarantor |
| Guaranteed Parties |
| December 31, 2020 |
| December 31, 2019 |
| Account |
Shinhan Bank |
| BNP Paribas Cardif Life Insurance |
| 10,000 |
| 10,000 |
| Unused credit line |
(*) Among the associates, the amount of the securities purchase agreement for structured entities is W 135,459 million as of December 31, 2020.
(e) Details of collaterals provided by the related parties as of December 31, 2020 and 2019 are as follows:
Provided to |
| Provided by |
| Pledged assets |
| December 31, 2020 |
| December 31, 2019 |
Shinhan Bank |
| BNP Paribas Cardif Life Insurance |
| Government bonds |
| 12,000 |
| 12,000 |
| Hyungje art printing |
| Properties |
| 120 |
| 120 | |
| Goduck Gangil1 PFV Co., Ltd |
| Guarantee insurance policy |
| 28,800 |
| 28,800 | |
| Goduck Gangil10 PFV Co., Ltd |
| Guarantee insurance policy |
| 13,000 |
| - | |
|
|
|
|
|
| 53,920 |
| 40,920 |
241
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
45. Related parties (continued)
(f) Details of significant loan transactions with related parties as of December 31, 2020 and 2019 are as follows:
|
|
|
| December 31, 2020 | ||||||||
Classification |
| Company |
| Beginning |
| Loan |
| Recover |
| Others(*1) |
| Ending |
Investments in associates |
| Nomura investment property trust No.19 |
| 11,973 |
| - |
| - |
| - |
| 11,973 |
IGIS PRIVATE REAL ESTATE TRUST NO.331 |
| - |
| 10,000 |
| - |
| (312) |
| 9,688 | ||
EDNCENTRAL Co.,Ltd. |
| - |
| 20,000 |
| - |
| (619) |
| 19,381 | ||
Goduck Gangil1 PFV Co., Ltd |
| 24,000 |
| - |
| - |
| - |
| 24,000 | ||
Goduck Gangil10 PFV Co., Ltd |
| - |
| 28,200 |
| (18,800) |
| - |
| 9,400 | ||
IMM Global Private Equity Fund |
| 800 |
| - |
| - |
| - |
| 800 | ||
COSPEC BIM tech(*2) |
| - |
| - |
| - |
| 151 |
| 151 | ||
Total |
| 36,773 |
| 58,200 |
| (18,800) |
| (780) |
| 75,393 |
(*1) The effect on changes in allowance for credit loss is included.
(*2) For the year ended December 31, 2020, it is incorporated as a related party, and has marked the balance as of December 31, 2020.
|
|
|
| December 31, 2019 | ||||||||
Classification |
| Company |
| Beginning |
| Loan |
| Recover |
| Others(*) |
| Ending |
Investments in associates |
| Nomura investment property trust No.19 |
| 11,966 |
| - |
| - |
| 7 |
| 11,973 |
| Goduck Gangil1 PFV Co., Ltd |
| - |
| 24,000 |
| - |
| - |
| 24,000 | |
| IMM Global Private Equity Fund |
| - |
| 800 |
| - |
| - |
| 800 | |
Total |
| 11,966 |
| 24,800 |
| - |
| 7 |
| 36,773 |
(*) The effect on changes in allowance for credit loss is included.
242
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
46. Interests in unconsolidated structured entities
(a)The nature and extent of interests in unconsolidated structured entities
The Group involved in assets-backed securitization, structured financing, beneficiary certificates (primarily investment funds) and other structured entities and characteristics of these structured entities are as follows:
|
| Description |
|
|
|
Assets-backed securitization |
| Securitization vehicles are established to buy assets from originators and issue asset-backed securities in order to facilitate the originators’ funding activities and enhance their financial soundness. The Group is involved in the securitization vehicles by purchasing (or committing to purchase) the asset-backed securities issued and/or providing other forms of credit enhancement.
The Group does not consolidate a securitization vehicle if (i) the Group is unable to make or approve decisions as to the modification of the terms and conditions of the securities issued by such vehicle or disposal of such vehicles’ assets, (ii) (even if the Group is so able) if the Group does not have the exclusive or primary power to do so, or (iii) if the Group does not have exposure, or right, to a significant amount of variable returns from such entity due to the purchase (or commitment to purchase) of asset-backed securities so issued or subordinated obligations or by providing other forms of credit support. |
|
|
|
Structured financing |
| Structured entities for project financing are established to raise funds and invest in a specific project such as M&A (mergers and acquisitions), BTL (build-transfer-lease), shipping finance, etc. The Group is involved in the structured entities by originating loans, investing in equity, or providing credit enhancement. |
|
|
|
Investment fund |
| Investment fund means an investment trust, a PEF (private equity fund) or a partnership which invests in a group of assets such as stocks or bonds by issuing a type of beneficiary certificates to raise funds from the general public, and distributes its income and capital gains to their investors. The Group manages assets by investing in shares of investment fund or playing a role of an operator or a GP (general partner) of investment fund, on behalf of other investors. |
The size of unconsolidated structured entities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 |
| December 31, 2019 |
Total assets: |
|
|
|
|
Asset-backed securitization |
| 253,958,036 |
| 208,441,947 |
Structured financing |
| 257,475,395 |
| 195,374,046 |
Investment fund |
| 203,863,889 |
| 215,371,530 |
|
| 715,297,320 |
| 619,187,523 |
243
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
46. Interests in unconsolidated structured entities (continued)
(b) Nature of risks
i) The carrying amounts of the assets and liabilities relating to its interests in unconsolidated structured entities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Assets-backed securitization |
| Structured financing |
| Investment fund |
| Total |
Assets: |
|
|
|
|
|
|
|
|
Loans measured at fair value through profit or loss |
| 10,007 |
| 396,006 |
| - |
| 406,013 |
Loan at amortized cost |
| 882,708 |
| 11,631,322 |
| 80,166 |
| 12,594,196 |
Securities at fair value through profit or loss |
| 4,703,527 |
| 200,966 |
| 9,403,611 |
| 14,308,104 |
Derivate assets |
| 10,353 |
| 1,050 |
| - |
| 11,403 |
Securities at fair value through other comprehensive income |
| 2,105,239 |
| 122,664 |
| - |
| 2,227,903 |
Securities at amortized cost |
| 6,294,228 |
| - |
| - |
| 6,294,228 |
Other assets |
| 2,019 |
| 59,980 |
| 4,936 |
| 66,935 |
|
| 14,008,081 |
| 12,411,988 |
| 9,488,713 |
| 35,908,782 |
Liabilities: |
|
|
|
|
|
|
|
|
Derivate liabilities |
| 582 |
| - |
| - |
| 582 |
Other liabilities |
| 2,610 |
| 21,421 |
| - |
| 24,031 |
|
| 3,192 |
| 21,421 |
| - |
| 24,613 |
|
| December 31, 2019 | ||||||
|
| Assets-backed securitization |
| Structured financing |
| Investment fund |
| Total |
Assets: |
|
|
|
|
|
|
|
|
Loans measured at fair value through profit or loss |
| 10,646 |
| 69,727 |
| - |
| 80,373 |
Loan at amortized cost |
| 785,134 |
| 10,207,866 |
| 664,024 |
| 11,657,024 |
Securities at fair value through profit or loss |
| 3,705,565 |
| 70,407 |
| 9,378,374 |
| 13,154,346 |
Derivate assets |
| 21,494 |
| 1,027 |
| - |
| 22,521 |
Securities at fair value through other comprehensive income |
| 2,144,846 |
| 188,429 |
| - |
| 2,333,275 |
Securities at amortized cost |
| 4,894,942 |
| - |
| - |
| 4,894,942 |
Other assets |
| 3,244 |
| 14,776 |
| 58,948 |
| 76,968 |
|
| 11,565,871 |
| 10,552,232 |
| 10,101,346 |
| 32,219,449 |
Liabilities: |
|
|
|
|
|
|
|
|
Other liabilities |
| 682 |
| 10,457 |
| - |
| 11,139 |
244
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
46. Interests in unconsolidated structured entities (continued)
(b) Nature of risks (continued)
ii) Exposure to risk relating to its interests in unconsolidated structured entities as of December 31, 2020 and 2019 are as follows:
|
| December 31, 2020 | ||||||
|
| Assets-backed securitization |
| Structured financing |
| Investment fund |
| Total |
Assets held |
| 14,008,081 |
| 12,411,988 |
| 9,488,713 |
| 35,908,782 |
ABS and ABCP commitments |
| 932,113 |
| 2,300 |
| 1,923,035 |
| 2,857,448 |
Loan commitments |
| 618,030 |
| 707,860 |
| - |
| 1,325,890 |
Guarantees |
| 87,293 |
| - |
| - |
| 87,293 |
Others |
| - |
| 123,210 |
| 5,887 |
| 129,097 |
|
| 15,645,517 |
| 13,245,358 |
| 11,417,635 |
| 40,308,510 |
|
| December 31, 2019 | ||||||
|
| Assets-backed securitization |
| Structured financing |
| Investment fund |
| Total |
Assets held |
| 11,565,871 |
| 10,552,232 |
| 10,101,346 |
| 32,219,449 |
ABS and ABCP commitments |
| 1,208,707 |
| 2,300 |
| 868,498 |
| 2,079,505 |
Loan commitments |
| 845,904 |
| 855,520 |
| - |
| 1,701,424 |
Guarantees |
| 139,522 |
| 4,000 |
| - |
| 143,522 |
Others |
| - |
| 118,969 |
| - |
| 118,969 |
|
| 13,760,004 |
| 11,533,021 |
| 10,969,844 |
| 36,262,869 |
245
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
47. Business combination
(a) Neoplux Co., Ltd.
i) General information
As of September 29, 2020, the Group gained control of Neoplux Co., Ltd. as a subsidiary by acquiring a 96.77% (97.08% stake of voting rights) stake and reporting to the Financial Services Commission about the transfer of subsidiary. As of December 30, 2020, the Group acquired the remaining shares, and Neoplux Co., Ltd. became a wholly owned subsidiary of the Group. The main reason forbusiness combination is to promote investment financing and secure new business opportunities in the investment banking sector.
ii) Identifiable net assets
Fair values of assets acquired and liabilities assumed as of acquisition date are as follows:
|
| Amount(*) |
Assets: |
|
|
Cash and due from banks at amortized cost |
| 179 |
Investment assets in the long-term |
| 463 |
Venture capital investment assets |
| 38,800 |
Private equity investment company investment assets |
| 12,230 |
Property and equipment |
| 835 |
Intangible assets(*2) |
| 1,254 |
Other assets(*3) |
| 18,911 |
|
| 72,672 |
Liabilities: |
|
|
Borrowings |
| 9,000 |
Other liabilities |
| 4,804 |
|
| 13,804 |
Fair value of the identifiable net assets |
| 58,868 |
(*1) The accounting for the acquisition of Neoplux Co., Ltd. is tentatively determined using the identifiable assets and liabilities recognized by Neoplux Co., Ltd. at the time of business combination. For the year ended December 31, 2020, the acquisition has not completed the identification of intangible assets for allocation and the fair value assessment of identifiable assets and liabilities. The goodwill may vary depending on the results of the fair value assessment of the identifiable assets and liabilities for the allocation of the consideration.
(*2) The contract balance recognized as a business combination includes W 793 million. The contract balance that Neoplux Co., Ltd. has is considered an important asset that can generate additional revenue in the future. Therefore, it is assessed at fair value through the Multi-period Excess Earning Method.
(*3) During the business combination, the Group has acquired receivables that are fair value of W 15,803 million, and the total contract amount is W 15,803 million. There is no contractual cash flow that is not expected to be recovered from the receivables.
246
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
47. Business combination (continued)
(a) Neoplux Co., Ltd (continued)
iii) Goodwill
Goodwill recognized as a result of business combination is as follows:
|
| Amount |
Consideration paid in cash |
| 71,128 |
Fair value of identifiable net assets |
| (58,868) |
Non-controlling interests |
| 1,718 |
Goodwill |
| 13,978 |
(*) For the year ended December 31, 2020, the non-controlling interests for Neoplux Co., Ltd. are measured at proportionate shares of non-controlling interests in the acquiree's identifiable net assets for Neoplux Co.,Ltd. At the business combination, the goodwill is generated because the transfer price includes the premium of corporate control paid to acquire Neoplux Co.,Ltd. The transfer price for the business combination includes expected synergies, future market growth, and the amount related to human resources. These benefits are not recognized separately from goodwill because it does not meet the recognition requirements for identifiable intangible assets.
iv) Cost related to business combination
The Group incurred a cost of W2,207 million, including legal fees and due diligence fees, in connection with the business combination and recognized the fee as the fee expense in the consolidated statement of comprehensive income of the Group.
v) Net cash outflows due to business combination
Net cash outflows due to business combination for the year ended December 31, 2020 are as follows:
|
| Amount |
Consideration transferred in cash |
| 71,128 |
Acquired cash and cash equivalents |
| (174) |
|
| 70,954 |
(*) The amount of cash and cash equivalents acquired is the amount of cash and amortized cost measurement deposits minus the amount of restricted deposits.
vi) If Has Neoplux Co., Ltd. consolidated as of January 1, 2020, the consolidated operating income and profit for the period of the Group, which would have been included in the consolidated statement of comprehensive loss, are W 1,938 million and W 863 million, respectively.
247
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
48. Uncertainty due to changes in domestic and global economic conditions
The rapid spread of the COVID-19 is negatively affecting the global economy. The Group uses forward-looking information to estimate expected credit losses in accordance with Korean IFRS No.1109 ‘Financial Instruments’ and there have been significant changes in forward-looking information due to the spread of the COVID-19 for the year ended December 31, 2020. Accordingly, the forecast default rate for the year ended December 31, 2020 is re-estimated using changed forward-looking information on economic growth rate, consumer price index, KOSPI, which are major variables to compute the default rate. The Group will continue to monitor the impact of the COVID-19 on the economy.
Risk exposures by major consolidated subsidiaries due to COVID-19 are as follows:
(a) Shinhan Bank
|
| December 31, 2020 | ||||||||||||||
|
| Airlift passenger |
| Lodging |
| Oil/petroleum refinery |
| Art-related |
| Movie theater |
| Clothing manufacturing |
| Travel |
| Total |
Loans at amortized cost |
| 120,854 |
| 3,445,269 |
| 685,336 |
| 244,036 |
| 95,240 |
| 1,763,741 |
| 112,647 |
| 6,467,123 |
Securities at fair value through profit or loss |
| - |
| - |
| 3,088 |
| - |
| - |
| 3,060 |
| - |
| 6,148 |
Securities at fair value through other comprehensive income |
| 52,878 |
| 2,611 |
| 224,894 |
| - |
| 6,539 |
| 9,797 |
| - |
| 296,719 |
Off-balance accounts |
| 404,767 |
| 289,948 |
| 3,058,516 |
| 9,630 |
| 111,266 |
| 938,705 |
| 60,171 |
| 4,873,003 |
|
| 578,499 |
| 3,737,828 |
| 3,971,834 |
| 253,666 |
| 213,045 |
| 2,715,303 |
| 172,818 |
| 11,642,993 |
(b) Shinhan Card Co., Ltd.
|
| Retails | |||||||
|
| Credit sales |
| Short term card loan |
| Long term card loan |
| Total | |
Loans at amortized cost |
| 357,589 |
| 142,252 |
| 283,150 |
| 782,991 | |
Off-balance accounts |
| 702,124 |
| 702,124 |
248
SHINHAN FINANCIAL GROUP CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
(In millions of won)
48. Uncertainty due to changes in domestic and global economic conditions (continued)
Risk exposures by major consolidated subsidiaries due to COVID-19 are as follows: (continued)
(c) Jeju Bank
|
| December 31, 2020 | ||||||||||||||
|
| Lodging |
| Manufacturing |
| Retail |
| Construction Industry |
| Leisure related service industry |
| Transportation Business |
| Etc |
| Total |
Loans at amortized cost |
| 599,875 |
| 30,095 |
| 517,843 |
| 85,640 |
| 57,677 |
| 29,679 |
| 92,373 |
| 1,413,182 |
Off-balance accounts |
| 20,658 |
| 563 |
| 18,691 |
| 7,100 |
| 1,053 |
| 2,103 |
| 3,082 |
| 53,250 |
|
| 620,533 |
| 30,658 |
| 536,534 |
| 92,740 |
| 58,730 |
| 31,782 |
| 95,455 |
| 1,466,432 |
As of December 31, 2020, the exposure of the borrowers who applied for moratorium of interest payments and moratorium of repayment in installments by Shinhan Bank is as follows:
|
| Exposure |
Moratorium of interest payments |
| 242,794 |
Moratorium of repayment in installments |
| 1,067,502 |
Moratorium of interest payments and moratorium of repayment in installments |
| 80,581 |
|
| 1,390,877 |
249