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(Mark One)
o		REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2004
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from           to

N/A		The Republic of Korea
(Translation of registrant’s name into English)		(Jurisdiction of incorporation or organization)

Title of Each Class:		Name of Each Exchange on Which Registered:
Common stock, par value Won 5,000 per share		New York Stock Exchange*
American depositary shares		New York Stock Exchange

*	Not for trading, but only in connection with the listing of American depositary shares on the New York Stock Exchange, pursuant to the requirements of the Securities and Exchange Commission.

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				Page
EXPLANATORY NOTE					3
CERTAIN DEFINED TERMS, CONVENTIONS AND CURRENCY OF PRESENTATION					3
FORWARD LOOKING STATEMENTS					3
ITEM 1.		IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS			5
		Directors and Senior Management			5
		Advisers			6
		Independent Registered Public Accounting Firms			6
ITEM 2.		OFFER STATISTICS AND EXPECTED TIMETABLE			6
ITEM 3.		KEY INFORMATION			7
		Selected Financial Data			7
		Exchange Rates			13
		Risk Factors			14
ITEM 4.		INFORMATION ON THE COMPANY			35
		History and Development of Shinhan Financial Group			35
		Our Acquisition and Integration of Chohung Bank			40
		Business Overview			46
		Description of Assets and Liabilities			79
		Supervision and Regulation			148
		Properties			172
ITEM 5.		OPERATING AND FINANCIAL REVIEW AND PROSPECTS			173
ITEM 6.		DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			235
		Directors and Senior Management			235
		Compensation			238
		Corporate Governance			238
		Board Practices			241
		Employees			242
		Share Ownership			242
ITEM 7.		MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS			247
		Major Shareholders			247
		Related Party Transactions			248
ITEM 8.		FINANCIAL INFORMATION			249
		Consolidated Financial Statements and Other Financial Information			249
ITEM 9.		THE OFFER AND LISTING			251
		Market Price Information and Trading Market			251
ITEM 10.		ADDITIONAL INFORMATION			257
		Articles of Incorporation			257
		Exchange Controls			265
		Taxation			269
		Documents On Display			276
ITEM 11.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			276
ITEM 12.		DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			276
		Description of American Depositary Receipts			276

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				Page
ITEM 13.		DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			284
ITEM 14.		MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			284
ITEM 15.		CONTROLS AND PROCEDURES			284
ITEM 16A.		AUDIT COMMITTEE FINANCIAL EXPERT			284
ITEM 16B.		CODE OF ETHICS			285
ITEM 16C.		PRINCIPAL ACCOUNTANT FEES AND SERVICES			285
ITEM 16D.		EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES			286
ITEM 17.		FINANCIAL STATEMENTS			286
ITEM 18.		FINANCIAL STATEMENTS			286
ITEM 19.		EXHIBITS			286
INDEX TO FINANCIAL STATEMENT					F-1
INDEX OF EXHIBITS					E-1
EX-8.1 LIST OF ALL SUBSIDIARIES
EX-12.1 CERTIFICATIONS OF CEO PER RULE 13A-14(A)
EX-12.2 CERTIFICATIONS OF CFO PER RULE 13A-14(A)
EX-13.1 CERTIFICATIONS OF CEO PER RULE 13A-14(B)
EX-13.2 CERTIFICATIONS OF CFO PER RULE 13A-14(B)
EX-15.1 KOREAN FINANCIAL HOLDING COMPANIES ACT
EX-15.4 KOREAN SECURITIES AND EXCHANGE ACT
EX-15.5 KOREAN TRUST BUSINESS ACT
EX-15.6 KOREA SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
EX-15.7 KOREAN ACT ON BUSINESS

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ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Name		Position
Eung Chan Ra		Chairman of the Board of Directors and Head of the Board Steering Committee
In Ho Lee		President and Chief Executive Officer and a member of the Board Steering Committee
Young Hwi Choi		Executive Director

Name		Position
Young Seok Choi		Non-Executive Director; Audit Committee member
Yong Woong Yang		Non-Executive Director
Pyung Joo Kim		Outside Director; Board Steering Committee member; Head of Risk Management Committee; Compensation Committee member
Il Sup Kim		Outside Director; Head of Audit Committee; Compensation Committee member
Sang Yoon Lee		Outside Director; Audit Committee member; Compensation Committee member
Yoon Soo Yoon		Outside Director; Risk Management Committee member; Compensation Committee member
Shee Yul Ryoo		Outside Director; Board Steering Committee member; Compensation Committee member
Byung Hun Park		Outside Director; Board Steering Committee member
Young Hoon Choi		Outside Director
Dong Hyun Kwon		Outside Director; Audit Committee member
Si Jong Kim		Outside Director; Audit Committee member
Philippe Reynieix		Outside Director; Risk Management Committee member

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Name		Position
Jae Woo Lee		Senior Executive Vice President of Subsidiary Management Team I, Integration Management Team and Integration Planning Team (Human Resource)
Chil Sun Hong		Senior Executive Vice President of Subsidiary Management Team II, Synergy Management Team, Audit & Compliance Team and Integration Planning Team (Business Process Reengineering, Basel II, and Customer Relation Management)
Byung Jae Cho		Chief Financial Officer and Senior Executive Vice President of Planning & Financial Management Team and Investor Relations Team
Baek Soon Lee		Senior Executive Vice President of Information & Technology Planning Team, Public Relations Team, General Service Team and Joint Procurement Planning Team

Name		Period				Address		Membership in Professional Bodies
Samil PricewaterhouseCoopers		As of and for the years ended December 31, 2002 and 2003				Kukje Center Building 15th Floor 191 Hangangro 2ga, Yongsan-gu, Seoul, Korea		Korean Institute of Certified Public Accountants
KPMG Samjong Accounting Corp.		As of and for the year ended December 31, 2004				Star Tower 10th Floor 737 YeokSam-dong, KangNam- gu, Seoul 135-984 Korea		Korean Institute of Certified Public Accountants

ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE

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ITEM 3.	KEY INFORMATION

	Consolidated Income Statement Data

			Year Ended December 31,
			2001				2002				2003				2004				2004
			(In billions of Won and millions of US$,
			except per common share data)
Interest and dividend income			W	3,694			W	3,735			W	5,331			W	7,712			$	7,450
Interest expense				2,439				2,305				2,998				4,138				3,997
	Net interest income			1,255				1,430				2,333				3,574				3,453
Provision for loan losses				411				236				1,011				195				188
Provision for guarantees and acceptances				(6	)			10				(46	)			(60	)			(58	)
Noninterest income				632				1,037				1,118				2,092				2,021
Noninterest expense				828				1,302				1,937				3,152				3,045
Income tax expense				223				320				248				764				739
Minority interest				(1	)			10				26				153				148
Income before extraordinary item and effect of accounting change				432				589				275				1,462				1,412
Extraordinary gain				64				—				—				28				27
Cumulative effect of a change in accounting principle, net of taxes				—				—				—				(23	)			(22	)
	Net income		W	496			W	589			W	275			W	1,467			$	1,417
Net income per common shares (in currency unit):
	Net income — basic(1)		W	1,948			W	2,246			W	1,024			W	4,875			$	4.71
	Net income — diluted(2)			1,663				2,243				984				4,347				4.20
Weighted average common shares outstanding-basic (in thousands of common shares)				254,680				262,480				262,987				292,465
Weighted average common shares outstanding-diluted (in thousands of common shares)				299,215				262,812				279,745				337,479

(1)	Basic earnings per share are calculated by dividing the net income available to common stockholders by the weighted average number of common shares issued and outstanding for the period.
(2)	Diluted earnings per share are computed in a manner consistent with that of basic earnings per share, while giving effect to the potential dilution that could occur if convertible securities, options or other contracts to issue common stock were converted into or exercised for common stock. We have three categories of potentially dilutive common shares: (i) shares issuable on exercise of stock option, (ii) shares issuable on bond with warrants and (iii) shares issuable on conversion of preferred shares.

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	Consolidated Balance Sheet Data

				As of December 31,
				2001				2002				2003				2004				2004
				(In billions of Won and millions of US$,
				except per common share data)
Assets
Cash and cash equivalents				W	580			W	282			W	1,897			W	2,444			$	2,361
Restricted cash					678				1,365				3,662				3,301				3,189
Interest-bearing deposits in banks					255				125				409				220				213
Call loans and securities purchased under resale agreements					1,816				576				1,898				1,591				1,537
Trading assets:
	Trading securities and other				858				926				2,857				4,639				4,481
	Derivatives assets				98				139				520				1,678				1,621
Securities:
	Available-for-sale securities				7,087				8,737				18,099				18,108				17,494
	Held-to-maturity securities				6,038				4,408				3,605				3,099				2,994
Loans (net of allowance for loan losses of W720 billion in 2001, W996 billion in 2002, W3,631 billion in 2003 and W2,311 billion in 2004)					32,997				44,139				91,791				94,868				91,651
Customers’ liability on acceptances					1,566				928				2,365				2,012				1,944
Premises and equipment, net					530				828				2,003				1,848				1,786
Goodwill and intangible assets					4				219				1,676				1,660				1,604
Security deposits					390				466				966				968				935
Other assets					2,205				1,648				4,601				7,072				6,832
		Total assets		W	55,102			W	64,786			W	136,349			W	143,508			$	138,642
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
	Interest-bearing			W	31,036			W	35,886			W	82,161			W	79,934			$	77,223
	Non-interest-bearing				1,184				1,163				1,328				2,746				2,653
Trading liabilities					119				131				513				1,758				1,698
Acceptances outstanding					1,566				928				2,365				2,012				1,944
Short-term borrowings					5,759				6,994				11,204				10,954				10,582
Secured borrowings					4,088				4,706				6,316				6,308				6,094
Long-term debt					4,876				8,235				21,218				23,617				22,816
Accrued expenses and other liabilities					3,562				3,193				6,555				9,713				9,385
		Total liabilities			52,190				61,236				131,660				137,042				132,395
Minority interest					2				288				583				66				63
Redeemable convertible preferred stock					—				—				711				736				711
Stockholders’ equity:
Common stock					1,462				1,462				1,472				1,596				1,542
Additional paid-in capital					1,041				1,048				1,073				1,658				1,602
Retained earnings					638				1,077				1,189				2,456				2,373
Accumulated other comprehensive income, net of taxes					164				70				58				158				153
Less: treasury stock, at cost					(395	)			(395	)			(397	)			(204	)			(197	)
		Total stockholders’ equity			2,910				3,262				3,395				5,664				5,473
		Total liabilities, minority interest, redeemable convertible preferred stock and stockholders’ equity		W	55,102			W	64,786			W	136,349			W	143,508			$	138,642

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	Dividends

			Year Ended December 31,
			2000(1)				2001(2)				2002(3)				2003(3)				2004(3)
			(In Won and US$, except ratios)
U.S. GAAP:
Cash dividends per common stock:(4)
	In Korean Won		W	400			W	750			W	600			W	600			W	600
	In U.S. dollars		$	0.34			$	0.63			$	0.50			$	0.50			$	0.50
Cash dividends per preferred stock
	In Korean Won			N/A				N/A				N/A				N/A			W	135.12
	In U.S. dollars			N/A				N/A				N/A				N/A			$	0.13
Stock dividends per common stock(4)				—				—				—				—				—
Korean GAAP:
Cash dividends per common stock:(5)
	In Korean Won		W	750			W	600			W	600			W	600			W	600
	In U.S. dollars		$	0.63			$	0.50			$	0.50			$	0.50			$	0.50
	Dividend ratio(6)			15.00	%			12.00	%			12.00	%			12.00	%			12.00	%
Cash dividends per preferred stock:
	In Korean Won		W	50				N/A				N/A				N/A			W	857
	In U.S. dollars		$	0.04				N/A				N/A				N/A			$	0.83
	Dividend ratio(6)			1.00	%			N/A				N/A				N/A				17.14	%
Stock dividends per common stock(5)				—				—				—				—				—

(1)	Represents dividends declared on common stock of Shinhan Bank.
(2)	Under U.S. GAAP, represents dividends declared on common stock of Shinhan Bank for the year ended December 31, 2000. Under Korean GAAP, represents dividends accrued in the period to which relates for the year ended December 31, 2001.
(3)	Represents dividends declared on common stock of Shinhan Financial Group for the year ended December 31, 2002, 2003 and 2004.
(4)	Represents dividends declared on common stock of Shinhan Financial Group in 2001 and 2002.
(5)	Represents dividends accrued in the period to which Shinhan Bank relates for 2000, represents dividends accrued in the period to which Shinhan Financial Group relates for the year ended December 31, 2001, and represents dividends declared on common stock of Shinhan Financial Group in 2002, 2003 and 2004. In connection with our holding company restructuring in 2001, common stock of Shinhan Bank was exchanged for common stock of Shinhan Financial Group on a 1:1 ratio.
(6)	Dividends declared and paid as a percentage of par value of W5,000 per share.

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	Profitability Ratios

				Year Ended December 31,
				2001				2002				2003				2004
				(Percentages)
Net income as a percentage of:
	Average total assets(1)				0.94	%			0.94	%			0.29	%			1.01	%
	Average stockholders’ equity(1)(2)				16.14				15.99				8.83				31.44
		Including redeemable convertible preferred stock(3)			N/A				N/A				8.15				27.22
		Including redeemable convertible preferred stock and redeemable preferred stock(3)			N/A				N/A				8.24				22.73
Dividend payout ratio(4)					38.91				25.59				57.20				15.87
Net interest spread(5)					2.28				2.39				2.48				2.63
Net interest margin(6)					2.66				2.58				2.65				2.78
Efficiency ratio(7)					43.88				52.78				56.13				55.63
Cost-to-average assets ratio(8)					1.57				2.08				2.01				2.18
Equity to average asset ratio(9):					5.84				5.89				3.24				3.22
		Including redeemable convertible preferred stock(3)			N/A				N/A				3.51				3.72
		Including redeemable convertible preferred stock and redeemable preferred stock(3)			N/A				N/A				4.04				4.83

(1)	Average balances are based on (a) daily balances for Shinhan Bank, Chohung Bank and Jeju Bank and (b) quarterly balances for other subsidiaries.
(2)	Does not include the redeemable preferred stock or the redeemable convertible preferred stock described below.
(3)	As consideration for our acquisition of Chohung Bank, on August 18, 2003, we issued to the Korea Deposit Insurance Corporation (i) 46,583,961 shares of our Redeemable Preferred Stock and (ii) 44,720,603 shares of our Redeemable Convertible Preferred Stock, which were convertible into 12.28% of our common shares as of December 31, 2004. Pursuant to the terms of the Redeemable Preferred Stock issued to Korea Deposit Insurance Corporation, we are required to redeem such shares in five equal annual installments commencing three years from the date of issuance. These Redeemable Preferred Stock are treated as debt under U.S. GAAP. Pursuant to the terms of the Redeemable Convertible Preferred Stock, we are required to redeem the full amount of such shares outstanding five years from the date of issuance to the extent not converted into our common shares. Each share of Redeemable Convertible Preferred Stock is convertible into one share of our common stock. The dividend ratios on the Redeemable Preferred Stock and the Redeemable Convertible Preferred Stock are 4.04% and 2.02%, respectively. In August 2003, we also raised W900 billion in cash through the issuance of 6,000,000 shares of redeemable preferred stock, all of which were sold in the domestic fixed-income market through Strider Securitization Specialty Co., Ltd., a special purpose vehicle. These redeemable preferred shares have terms that are different from the redeemable preferred shares issued to Korea Deposit Insurance Corporation. We are required to redeem these preferred shares issued to the special purpose vehicle in three installments in 2006, 2008 and 2010. See “Item 4. Information on the Company — Our Acquisition of Chohung Bank — Liquidity and Capital Resources” and “Item 10. Additional Information — Articles of Incorporation — Description of Capital Stock — Description of Redeemable Preferred Stock”.
(4)	Represents the ratio of total dividends declared on common stock as a percentage of net income.

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(5)	Represents the difference between the yield on average interest-earning assets and cost of average interest-bearing liabilities.
(6)	Represents the ratio of net interest income to average interest-earning assets.
(7)	Represents the ratio of noninterest expense to the sum of net interest income and noninterest income, a measure of efficiency for banks and financial institutions. Efficiency ratio may be reconciled to comparable line-items in our income statement for the periods indicated as follows:

			Year Ended December 31,
			2001				2002				2003				2004
			(In billions of Won, except percentages)
Non-interest expense(A)			W	828			W	1,302			W	1,937			W	3,152
Divided by
The sum of net interest income and noninterest income(B)				1,887				2,467				3,451				5,666
	Net interest income			1,255				1,430				2,333				3,574
	Noninterest income			632				1,037				1,118				2,092
Efficiency ratio ((A) as a percentage of(B))				43.88	%			52.78	%			56.13	%			55.63	%

(8)	Represents the ratio of noninterest expense to average total assets.
(9)	Represents the ratio of average stockholders’ equity (not including the redeemable preferred stock or the redeemable convertible preferred stock) to average total assets.

	Asset Quality Ratios

		As of December 31,
		2001				2002				2003				2004
		(In billions of Won, except percentages)
Total loans		W	33,665			W	45,052			W	95,295			W	97,080
Total allowance for loan losses			720				996				3,631				2,311
Allowance for loan losses as a percentage of total loans			2.14	%			2.21	%			3.81	%			2.38	%
Total non-performing loans(1)		W	530			W	518			W	1,844			W	1,750
Non-performing loans as a percentage of total loans			1.57	%			1.15	%			1.94	%			1.80	%
Non-performing loans as a percentage of total assets			0.96	%			0.80	%			1.35	%			1.22	%
Impaired loans(2)		W	1,492			W	1,263			W	3,488			W	2,646
Allowance for impaired loans			385				480				1,349				885
Impaired loans as a percentage of total loans			4.43	%			2.80	%			3.66	%			2.73	%
Allowance for impaired loans as a percentage of impaired loans			25.80	%			38.00	%			38.68	%			33.47	%

(1)	Non-performing loans are defined as those loans, both corporate and consumer, which are past due more than 90 days.
(2)	Impaired loans include loans that are classified as “substandard” or below according to the asset classification guidelines of the Financial Supervisory Commission, loans that are past due for 90 days or more and loans that qualify as “troubled debt restructurings” under U.S. GAAP.

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	Capital Ratios

			As of December 31,
			2001				2002				2003				2004
			(Percentages)
Requisite capital ratio(1)				134.43	%			130.93	%			118.41	%			129.41	%
Total capital adequacy ratio for Shinhan Bank(2)				11.99				10.92				10.49				11.94
	Tier I capital adequacy ratio(2)			8.24				6.81				6.34				7.45
	Tier II capital adequacy ratio(2)			3.75				4.11				4.15				4.49
Total capital adequacy ratio for Chohung Bank(3)				10.43				8.66				8.87				9.40
	Tier I capital adequacy ratio(3)			5.91				4.61				4.47				4.99
	Tier II capital adequacy ratio(3)			4.52				4.05				4.40				4.41
Adjusted equity capital ratio of Shinhan Card(4)				N/A				10.86				13.78				16.48

(1)	We were restructured as a financial holding company on September 1, 2001 and became subject to minimum capital requirements as reflected in the requisite capital ratio. Under the guidelines issued by the Financial Supervisory Commission applicable to financial holding companies, we, at the holding company level, are required to maintain a minimum requisite capital ratio of 100%. Requisite capital ratio represents the ratio of net aggregate amount of our equity capital to aggregate amounts of requisite capital (all of which are described in “Item 4. Information on the Company  — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Capital Adequacy”). This computation is based on our consolidated financial statements in accordance with Korean GAAP.
(2)	Shinhan Bank’s capital adequacy ratios are computed in accordance with the guidelines issued by the Financial Supervisory Commission, which was revised as of December 31, 2002 to take into account market risk as well as credit risk. The capital ratios as of December 31, 2002 were calculated using these revised guidelines. Under these guidelines, Shinhan Bank is required to maintain a minimum capital adequacy ratio of 8%. Applying the previous calculation, which only takes into account credit risks, Shinhan Bank’s total capital adequacy ratio as of December 31, 2002, 2003 and 2004 were 10.91%, 10.59% and 11.96%, respectively. This computation is based on Shinhan Bank’s consolidated financial statements prepared in accordance with Korean GAAP. See “Item 4. Information on the Company — Supervision and Regulation — Principal Regulations Applicable to Banks — Capital Adequacy.”
(3)	Chohung Bank’s capital adequacy ratios are computed in accordance with the guidelines issued by the Financial Supervisory Commission, which was revised in 2002 to take into account market risk as well as credit risk. The capital ratios as of December 31, 2004 were calculated using these revised guidelines. Under these guidelines, Chohung Bank is required to maintain a minimum capital adequacy ratio of 8%. Applying the previous calculation, which only takes into account credit risks, Chohung Bank’s total capital adequacy ratio as of December 31, 2003 and 2004 was 8.89% and 9.39%, respectively. This computation is based on the Chohung Bank’s consolidated financial statements prepared in accordance with Korean GAAP. See “Item 4. Information on the Company — Supervision and Regulation — Principal Regulations Applicable to Banks — Capital Adequacy.”
(4)	Represents the ratio of total adjusted shareholders’ equity to total adjusted assets and is computed in accordance with the guidelines issued by the Financial Supervisory Commission for credit card companies. Under these guidelines, Shinhan Card, which was established on June 4, 2002, is required to maintain a minimum adjusted equity capital ratio of 8%. This computation is based on Shinhan Card’s nonconsolidated financial statements prepared in accordance with Korean GAAP.

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Year Ended December 31,			At End of Period				Average(1)				High				Low
			(Won per US$1.00)
2000				1,267.00				1,130.90				1,267.00				1,105.50
2001				1,313.50				1,292.00				1,369.00				1,234.00
2002				1,186.30				1,250.31				1,332.00				1,160.60
2003				1,192.00				1,192.08				1,262.00				1,146.00
2004				1,035.10				1,139.30				1,195.10				1,035.1
2005 (through June 23)				1,010.50				1,014.80				1,058.00				997.00
	January			1,026.90				1,038.00				1,058.00				1,024.00
	February			1,000.90				1,023.10				1,044.00				1,000.90
	March			1,015.40				1,007.80				1,023.90				997.50
	April			997.00				1,010.10				1,019.00				997.00
	May			1,005.00				1,001.80				1,009.00				997.00
	June (through 23)			1,010.50				1,009.40				1,016.00				1,003.00

(1)	The average of the Noon Buying Rates over the relevant period.

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	We have significant exposure to small- and medium-sized enterprises including smaller enterprises, which may result in a deterioration of our asset quality to this segment and have an adverse impact on us.

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	We may not be able to sustain the high rate of growth in our mortgage and home equity lending. In addition, we cannot assure that the asset quality of our mortgage and home equity loans, in particular the long-term mortgage and home equity loans, will not deteriorate.

	A decline in the value of the collateral securing our loans and our inability to realize full collateral value may adversely affect our credit portfolio.

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	We may experience a further deterioration of the credit quality of our credit card and other consumer lending portfolios.

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	Developments adversely affecting the business and liquidity of credit card companies in Korea may result in losses in respect of our exposure to such companies.

	The recent announcement by the Korean National Tax Service relating to the tax treatment of certain deposit products may adversely affect our financial condition and results of operations.

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	We have significant exposure to LG Card, which is experiencing financial difficulties and which is in a workout program. If this program is not satisfactorily resolved, it may have a material adverse effect on us.

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	We have significant exposure to SK Networks, which is experiencing financial difficulties that it concealed through accounting irregularities and which is in a workout program. If this program is not satisfactorily resolved, it may have a material adverse effect on us.

	•	the purchase by SK Networks of approximately US$540 million of the US$563 million of total indebtedness of its overseas subsidiaries held by non-Korean institutions in exchange for 43% of the principal amount in promissory notes and 5% of the principal amount in the form of bonds with warrants;

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	•	the purchase or inclusion in the restructuring plan of SK Networks of all of the approximately US$126 million of indebtedness of its overseas subsidiaries held by Korean financial institutions; and
	•	the entering into a Memorandum of Understanding on the Corporate Restructuring Implementation, or Memorandum, in respect of the restructuring of the approximately US$2 billion of indebtedness to SK Networks.

	We have exposure to the largest Korean business conglomerates, known as “chaebols”, and, as a result, recent and any future financial difficulties of chaebols may have an adverse impact on us.

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	Future financial difficulties of chaebols may adversely affect the credit quality of our small- and medium-sized enterprise customers who serve chaebols.

	We have exposure to companies that are currently or may in the future be put in restructuring, and we may suffer losses as a result of additional loan loss provisions required and/or the adoption of restructuring plans with which we do not agree.

	The loss of deposit accounts maintained by Korean courts with Chohung Bank may adversely affect Chohung Bank’s financial position and results of operations.

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	Any deterioration in the asset quality of our guarantees and acceptances will likely have a material adverse affect on our financial condition and results of operations.

	As a holding company, we are dependant on receiving dividends from our subsidiaries in order to pay dividends on our common shares.

	•	Under the Korean Commercial Code, dividends may only be paid out of distributable income, an amount which is calculated by subtracting the aggregate amount of a company’s paid-in capital and certain mandatory legal reserves from its net assets, in each case as of the end of the prior fiscal year;
	•	Under the Bank Act, a bank also is required to credit at least 10% of its net profit to a legal reserve each time it pays dividends on distributable income until such time when this reserve equals the amount of its total paid-in capital; and
	•	Under the Bank Act and the requirements promulgated by the Financial Supervisory Commission, if a bank fails to meet its required capital adequacy ratio or otherwise subject to the management improvement measures imposed by the Financial Supervisory Commission, then the Financial Supervisory Commission may restrict the declaration and payment of dividend by such a bank.

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	We may need to raise additional capital, and adequate financing may not be available to us on acceptable terms, or at all.

	We may not succeed in improving customer service through the introduction of performance-based compensation.

	We may incur significant losses from our investment and, to a lesser extent, trading activities due to market fluctuations.

	Protracted market declines can reduce liquidity in the markets, making it harder to sell assets and leading to material losses.

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	We may generate lower revenue from brokerage and other commission- and fee-based business.

	Our Internet banking services are subject to security concerns relating to the commercial use of the Internet.

	We may experience disruptions, delays and other difficulties from our information technology systems.

	We are subject to operational risks which our current risk management system may not detect in time or at all.

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	We may fail to fully realize the anticipated benefits of the acquisition.

	•	unforeseen or latent risks in the operations or the loan portfolio of Chohung Bank;
	•	difficulties in managing the gradual integration of the two businesses during the transition period, including the harmonization of compensation levels and the implementation of a coordinated business plan;
	•	difficulties in operating the integrated information technology system, risk management and other systems;
	•	difficulties in integrating the managements of the two banks after the anticipated merger;
	•	difficulties in putting in place effective cost-cutting measures such as procurement systems and electronic banking systems;
	•	difficulties in harmonizing the two corporate cultures; and
	•	difficulties in securing and retaining the key personnel of Chohung Bank during the transition period and retaining key personnel after the anticipated merger.

	Labor opposition and unrest could delay or disrupt successful integration of Shinhan Bank and Chohung Bank or hinder our ability to realize the anticipated benefits of our acquisition of Chohung Bank.

	Competition in the Korean banking industry, in particular in the small- and medium-sized enterprises banking, retail banking and credit card operations, is intense, and we may experience declining margins as a result.

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	We are highly dependent on short-term funding sources that are susceptible to price competition, which dependence may adversely affect our operations.

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	We operate in a legal and regulatory environment that is subject to change, which may have an adverse effect on our business, financial condition and results of operations.

	Uncertainties surrounding the consumer debt workout programs recently announced by the Korean government may have an impact on our ability to recover and collect on non-performing loans.

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	Structural reforms occurring in the Korean economy and financial sector may have a substantial impact on our business.

	The Financial Supervisory Commission may impose supervisory measures if it deems us or our operating subsidiaries to be financially unsound.

	The Korean government may encourage lending to and investment in certain types of borrowers in furtherance of government initiatives, and we may take this factor into account.

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	Unfavorable financial and economic conditions in Korea and worldwide may have a material adverse impact on our asset quality, liquidity and financial performance.

	•	failure of restructuring of chaebols and accounting irregularities of and regulatory proceedings against chaebols, together with its negative effect on the Korean financial markets and on the small- and medium-sized enterprises market;
	•	failure of restructuring of large troubled companies, including LG Card and other troubled credit card companies and financial institutions;
	•	volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including continued weakness of the U.S. dollar or a depreciation of the Chinese renminbi or Japanese Yen), interest rates and stock markets;
	•	increased reliance on exports to service foreign currency debts, which could cause friction with Korea’s trading partners;
	•	adverse developments in the economies of countries to which Korea exports goods and services (such as the United States, China and Japan), or in emerging market economies in Asia or elsewhere that could result in a loss of confidence in the Korean economy;
	•	the continued emergence of China, to the extent its benefits (such as increased exports to China) are outweighed by its costs (such as competition in export markets or for foreign investment and relocation of the manufacturing base from Korea to China);
	•	social and labor unrest or declining consumer confidence or spending resulting from lay-offs, increasing unemployment and lower levels of income;
	•	a decrease in tax revenues and a substantial increase in the Korean government’s expenditures for unemployment compensation and other social programs that together could lead to an increased government budget deficit;
	•	political uncertainty or increasing strife among or within political parties in Korea, including as a result of the increasing polarization of the positions of the ruling progressive party and the conservative opposition; and

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	•	a deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including such deterioration resulting from trade disputes or disagreements in foreign policy.

	Tensions with North Korea could have an adverse effect on us and the price of our common stock and our American depositary shares.

	Korea’s new legislation allowing class action suits related to securities transactions may expose us to additional litigation risk.

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	Labor unrest may adversely affect the Korean economy and our operations.

	There are restrictions on withdrawal and deposit of common shares under the depositary facility.

	The value of your investment may be reduced by future sales of our common stock or our American depositary shares by the Korea Deposit Insurance Corporation or BNP Paribas, by other stockholders or holders of American depositary shares or by us.

	In certain cases, we must obtain the consent of the Korea Deposit Insurance Corporation to declare and pay dividends on our shares or our American depositary shares. If Korea Deposit Insurance Corporation declines to give such consent, holders of American depositary shares may be adversely affected.

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	Ownership of our shares is restricted under Korean law.

	Holders of American depositary shares will not have preemptive rights in certain circumstances.

	•	a registration statement filed by us under the US Securities Act of 1933, as amended, is in effect with respect to those shares; or
	•	the offering and sale of those shares is exempt from or is not subject to the registration requirements of the US Securities Act.

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	Your dividend payments and the amount you may realize upon a sale of your American depositary shares will be affected by fluctuations in the exchange rate between the Dollar and the Won.

	If the government deems that certain emergency circumstances are likely to occur, it may restrict the depositary bank from converting and remitting dividends in Dollars.

	•	sudden fluctuations in interest rates or exchange rates;
	•	extreme difficulty in stabilizing the balance of payments; and
	•	a substantial disturbance in the Korean financial and capital markets.

	Holders of American depositary shares may be required to pay a Korean securities transaction tax upon withdrawal of underlying common shares or the transfer of American depositary shares.

	We do not prepare interim financial information on a U.S. GAAP basis.

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	We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries.

	You may not be able to enforce a judgment of a foreign court against us.

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ITEM 4.	INFORMATION ON THE COMPANY

	•	Shinhan Bank, a nationwide commercial bank;
	•	Shinhan Securities Co., Ltd., a securities brokerage company;
	•	Shinhan Capital Co., Ltd., a leasing company; and
	•	Shinhan Investment Trust Management Co., Ltd., an investment trust management company.

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	•	in commercial banking, we have sought to achieve economies of scale by acquiring Chohung Bank, enabling us to, among other things, capitalize on greater mass market penetration and large corporate portfolio as a complement to Shinhan Bank’s greater emphasis on small- and medium-sized enterprises and high net worth individuals.
	•	in securities brokerage services, we have sought to achieve economies of scale and enhance brand image through our acquisition of Good Morning Securities.
	•	in credit cards, we have focused on and will continue to focus on improved credit initiation through higher credit scoring requirements, risk management through continued credit scoring reviews and improved collection results through coordinated call centers and increased collection staff, as well as enhanced marketing.
	•	in areas where we lack core competency as compared to the leading global financial institutions, we will continue to expand our relationships through affiliations and business cooperation with world class financial institutions such as BNP Paribas and Macquarie.

	•	integrating our physical and online distribution channels to offer products and services developed by all of our operating subsidiaries and businesses, including as follows:
	•	making banking, securities brokerage, insurance and other services available at each branch;
	•	enabling online cross access between commercial banking and our online securities brokerage service; and
	•	integrating the customer service call centers for our commercial banking, credit card and securities brokerages services.

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	•	focusing on retail and corporate customers with total financial solutions designed to meet their respective needs and utilizing specialized branches to provide convenient access and trained employees to offer and provide relevant products and services, including as follows:
	•	in retail banking, utilizing private banking centers to provide high net worth customers convenient access to total financial solutions that link banking to brokerage services, asset management and insurance; as well as penetrating the mass market penetration by enhancing brand and customer loyalty through focus on cross selling of products and strengthened customer relationship management;
	•	in corporate banking, expanding and enhancing the capabilities of our large corporate and small- and medium-sized enterprises specialist branch network and leveraging our increased large corporate customer base to provide total financial solutions that combine banking and non-banking financial products, such as asset backed securities, structured finance, M&A advice; syndication and equity derivatives, acting more as a financial advisor for larger, well established small- and-medium-sized enterprises by providing underwriting, rights offerings and offering related investment banking services in addition to lending, deposit and foreign exchange products and services and focusing on investment in corporate debt securities and initial public offerings for smaller businesses;
	•	developing and promoting integrated financial products customized to meet the needs and demands of our customer segments, such as Financial Network Accounts that combine banking services and securities brokerage services or that combine credit card services and securities brokerage services and Safe Loans that combine banking services and insurance services.
	•	enhancing customer loyalty by offering an “All Plus Points System” that combines customers’ banking, securities and credit card activities in a single report from which certain customer benefits are awarded.
	•	developing joint products and services and joint sales support and enhancing cross-selling by sharing customer information through integrated data-warehousing and customer relationship management systems.

	•	preventing overlapping investments in solution development, information technology related investments, new investments in distribution channels, hiring and training of employees; and
	•	identifying and realizing synergies such as combined information technology, call centers and shared customer services, distribution channels and new products and services;

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	•	total assets (from W60 trillion to W128 trillion; second largest in Korea), total loans (from W41 trillion to W89 trillion; second largest in Korea), deposits (from W37 trillion to W83 trillion; second largest in Korea), branches (from 334 to 780; second largest in Korea) and assets under management (from W5 trillion to W12 trillion; sixth largest in Korea);
	•	based on our estimates (and defining the market as the sum of eight largest financial institutions in Korea), market share in the retail banking sector (from 9% to 17%; second largest in Korea), small- and medium-sized enterprises sector (from 10% to 21%; second largest in Korea), large corporate sector (from 10% to 20%; second largest in Korea), and credit card sector (from 2% to 10%; fourth largest in Korea); and
	•	net interest margin (2.83% to 3.55%).

	•	We would retain our 80.04% ownership interest in Chohung Bank shares;
	•	There are no material adverse developments affecting Shinhan Bank’s or Chohung Bank’s loan portfolio post acquisition;
	•	Our net earnings would increase by approximately 10% per annum from 2004 and going forward, based on a projected asset growth of 9% — 10% per annum and assuming a stable net interest margin and a return on assets of 1% — 1.1%;
	•	Chohung Bank’s net earnings would increase by approximately 5% — 6% from 2004 and going forward, based on a projected asset growth of 7% — 8% per annum during the period from 2003 and 2006 assuming that strengthened risk management will moderate asset growth;
	•	No synergies, cost savings or restructuring costs were taken into account;

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	•	Goodwill amortization of approximately W800 billion over a ten year period using the straight line method;
	•	Income tax rate of 29.7%;
	•	All 44,720,603 shares of our redeemable convertible preferred stock owned by Korea Deposit Insurance Corporation are converted into our common shares, bringing our total outstanding shares of common stock to 337,081,728 shares; and
	•	Our redeemable preferred shares issued to Korea Deposit Insurance Corporation would pay a 4.04% dividend and our redeemable preferred shares issued to the market would pay a 6.5% dividend (the actual dividend payable on average is 7.2%).

	•	Our cash inflow consists of dividends paid only by Shinhan Bank and Chohung Bank;
	•	For Chohung Bank, we assumed that the dividends, at a dividend payout ratio of 40%, would be paid from 2005. For Shinhan Bank, we assumed that the dividends at a dividend payout ratio of 45% would be paid from 2003;
	•	For Shinhan Bank and Chohung Bank, we assumed that amounts available to pay dividends (other than amounts required to be reserved to maintain a Tier I capital adequacy ratio of 6.5%) would be paid as dividends;
	•	Dividends would be paid on our common shares at 15% of par value (or W750 per share) from 2003 through 2008 and at 20% of par value (or W1,000 per share) from 2009 through 2010; and
	•	Our redeemable preferred shares issued to Korea Deposit Insurance Corporation would be redeemed in equal installments from the third anniversary date of the issuance date until the seventh anniversary date, and our redeemable preferred shares issued to the market would be redeemed in the following amounts: W525 billion on the third anniversary date, W365 billion on the fifth anniversary date and W10 billion on the seventh anniversary date.

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	Strategy

	•	integrating the two information technology systems of Shinhan Bank and Chohung Bank by taking advantage of the fact that both banks utilize the same operating systems;
	•	introducing Shinhan Bank’s risk management and provisioning systems into Chohung Bank to improve the asset quality of Chohung Bank’s loan portfolio;
	•	unifying marketing strategy and branding to enhance overall market impact;
	•	unifying distribution and expanding our overall customer base by taking advantage of a greatly expanded nationwide branch network;
	•	unifying product and service development;
	•	capitalizing on Chohung Bank’s greater retail mass market penetration and large corporate portfolio as a complement to Shinhan Bank’s greater emphasis on small- and medium-sized enterprises and high net worth individuals;
	•	enhancing financial services activities, including by coordinating or combining credit card and investment management activities; and
	•	harmonizing employee compensation benchmarked to common productivity targets and enhancing operational efficiency primarily through normal and voluntary early retirement programs.

	Organization and Timetable

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			Due August
			2005				2006				2007				2008				2009				2010				Total
			(In millions of Won)
Redeemable Preferred Stock issued to KDIC			W	—			W	168,503			W	168,503			W	168,504			W	168,504			W	168,504			W	842,518
Redeemable Preferred Stock issued in the market through a special purpose vehicle				—				525,000				—				365,000				—				10,000				900,000
Redeemable Convertible Preferred Stock(1)				—				—				—				808,817				—				—				808,817
	Total		W	—			W	693,503			W	168,503			W	1,342,321			W	168,504			W	178,504			W	2,551,335

(1)	Assumes no conversion of the Redeemable Convertible Preferred Stock into our common stock.

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																							Good
			Shinhan Bank								Chohung Bank												Morning
																							Shinhan				Shinhan
			Retail				Corporate				Retail				Corporate				Jeju Bank				Securities				Card(1)				Total
Seoul and metropolitan				150				47				187				44				1				36				5				470
Kyunggi Province				69				14				72				15				—				11				1				182
Six major cities:				44				15				78				15				1				18				5				176
	Inchon			14				4				17				3				—				2				1				41
	Busan			10				5				24				4				1				5				1				50
	Kwangju			5				1				6				2				—				2				1				17
	Taegu			6				3				13				3				—				4				1				30
	Ulsan			4				1				8				1				—				2				—				16
	Taejon			5				1				10				2				—				3				1				22
	Sub-total			263				76				337				74				2				65				11				828
Others				23				10				107				15				29				14				2				200
	Total			286				86				444				89				31				79				13				1,028

(1)	Represents sales offices focusing on attracting new customers.

	Banking Branch Network

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	Retail Banking Branches

	Corporate Banking Branches

	Self-Service Terminals

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			For the Year Ended December 31,
			2002				2003				2004
Shinhan Bank:
	ATMs and cash dispensers			2,212				2,373				2,459
	Number of transactions (millions)			117				107				105
	Fee revenue (billions of Won)		W	19			W	20			W	20
Chohung Bank:
	ATMs and cash dispensers			5,011				4,655				4,397
	Number of transactions (millions)			338				281				262
	Fee revenue (billions of Won)		W	41			W	42			W	34

	Electronic Banking

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			For the Year Ended December 31,
			2002				2003				2004
Shinhan Bank:
Telephone banking(1):
	Number of users(2)			792,317				1,109,552				1,398,827
	Number of transactions (in thousands)			27,792				39,670				36,646
Internet banking(1):
	Number of users(2)			741,552				1,023,195				1,339,571
	Number of transactions (in thousands)(3)			224,652				306,667				359,160
Total fee revenue (millions of Won)			W	13,244			W	18,325			W	29,884
Chohung Bank:
Telephone banking(1):
	Number of users(2)			2,485,000				2,670,658				720,492
	Number of transactions (in thousands)(3)			119,429				120,931				108,745
Internet banking(1):
	Number of users			1,974,000				2,417,415				2,472,415
	Number of transactions (in thousands)(3)			121,094				141,196				166,937
Total fee revenue (millions of Won)			W	32,119			W	35,052			W	45,007

(1)	Includes customers simultaneously using both telephone banking and internet banking.
(2)	Includes customers using services of both Shinhan Bank and Chohung Bank.
(3)	Includes account inquiries and balance transfers.

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	Overseas Branch Network

					Year
					Established
Business Unit			Location		or Acquired
Subsidiary
	Shinhan Finance Limited		Hong Kong SAR, China		1990
Branches
	Tokyo		Japan		1988
	Osaka		Japan		1986
	Fukuoka		Japan		1997
	New York		U.S.A.		1989
	London		United Kingdom		1991
	Ho Chi Minh City		Vietnam		1995
	Tianjin		China		1996
	Shanghai		China		2003

					Year
					Established
Business Unit			Location		or Acquired
Subsidiaries
	Chohung Finance Ltd., Hong Kong		Hong Kong SAR, China		1982
	Chohung Bank (Deutschland) GmbH		Germany		1994
	CHB America Bank(1)		U.S.A.		2003
	Chohung Vina Bank		Vietnam		2000
Branches
	London		United Kingdom		1979
	Tokyo		Japan		1981
	Singapore		Singapore		1990
	Tianjin		China		1994
	Mumbai		India		1996
	New York		U.S.A.		1978

(1)	Created as a result of a merger between Chohung Bank of New York and California Chohung Bank in March 2003. CHB America Bank has offices in New York City, New York and Los Angeles, California.

	Credit Card Distribution Channels

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	Securities Brokerage Distribution Channels

	•	Commercial banking services, consisting of the following:

	•	Retail banking services;
	•	Corporate banking services, comprised of two divisions:

	•	Credit cards services;
	•	Treasury and securities investment

	•	Other banking services
	•	Securities brokerage services
	•	Other services, including leasing and equipment financing, investment trust management, regional banking, investment banking advisory, bancassurance and loan collection and credit reporting

	Deposit-Taking Activities

	•	Demand deposits, which either do not accrue interest or accrue interest at a lower rate than time or savings deposits. Demand deposits allow the customer to deposit and withdraw funds at any time and, if they are interest bearing, accrue interest at a fixed or variable rate depending on the period and the amount of deposit. Retail and corporate demand deposits constituted approximately 9.8% of our total deposits as of December 31, 2003 and paid average interest of 1.39% in 2003, and approximately 10.1% of our total deposits as of December 31, 2004 and paid average interest of 1.33% in 2004.
	•	Time deposits, which generally require the customer to maintain a deposit for a fixed term during which the deposit accrues interest at a fixed rate or variable rate based on certain financial indexes, including the Korea Composite Stock Price Index (KOSPI). If the amount of the deposit is withdrawn prior to the end of the fixed term, the customer will be paid a lower interest rate than that originally

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		offered. The term for time deposits typically ranges from one month to five years. Retail and corporate time deposits constituted approximately 49.1% of our total deposits as of December 31, 2003 and paid average interest of 4.19% in 2003, and approximately 47.7% of our total deposits as of December 31, 2004 and paid average interest of 3.83% in 2004.
	•	Mutual installment deposits, which generally require the customer to make periodic deposits of a fixed amount over a fixed term during which the deposit accrues interest at a fixed rate. If the amount of the deposit is withdrawn prior to the end of the fixed term, the customer will be paid a lower interest rate than that originally offered. The term for installment deposits typically ranges from six months to five years. Mutual installment deposits constituted approximately 3.2% of our total deposits as of December 31, 2003 and paid average interest of 5.36% in 2003, and approximately 2.9% of our total deposits as December 31, 2004 and paid average interest of 4.54% in 2004.
	•	Savings deposits, which allow the customer to deposit and withdraw funds at any time and accrue interest at an adjustable interest rate, which is lower than time or installment deposits. Currently, interest on savings deposits ranges from zero to 2.7%. Saving deposits constituted approximately 29.4% of our total deposits as of December 31, 2003 and paid average interest of 1.46% in 2003, and approximately 29.5% of our total deposits as of December 31, 2004 and paid average interest of 1.24% in 2004.
	•	Marketable deposits, consisting of certificates of deposit, cover bills and bonds sold under repurchase agreements that have maturities ranging from 30 days to two years. Interest rates on marketable deposits are determined based on the length of the deposit and prevailing market interest rates. Certificate of deposits are sold on a discount to their face value, reflecting the interest payable on the certificate of deposit. Under U.S. GAAP, cover bills sold are reflected as short-term borrowings and bonds sold under repurchase agreements are reflected under secured borrowings.
	•	Foreign currency deposits, which accrue interest at an adjustable rate and are available to Korean residents, nonresidents and overseas immigrants. Shinhan Bank offers foreign currency demand and time deposits and checking and passbook accounts in 15 currencies and Chohung Bank offers such accounts in 15 foreign currencies. Deposits in foreign currency constituted approximately 5.84% of our total deposits as of December 31, 2003 and paid average interest of 0.66% in 2003, and approximately 5.81% of our total deposits as of December 31, 2004 and paid average interest of 0.60% in 2004.

	•	Housing subscription time deposits, which are special purpose time deposit accounts providing the holder with a preferential right to subscribe for new private apartment units under the Housing Construction Promotion Law. This law is the basic law setting forth various measures supporting the purchase of houses and the supply of such houses by construction companies. If a potential home-buyer subscribes for these deposit products and holds them for a certain period of time as set forth in the Housing Construction Promotion Law, such deposit customers obtain the right to subscribe for new private apartment units on a priority basis under this law. Such preferential rights are neither transferable nor marketable in the open market. These products accrue interest at a fixed rate for one year and at an adjustable rate after one year, which are consistent with other time deposits. Deposit amounts per account range from W2 million to W15 million depending on the size and location of the dwelling unit. These deposit products target high and middle income households.
	•	Housing subscription installment savings deposits, which are monthly installment savings programs providing the holder with a preferential subscription right for new private apartment units under the Housing Construction Promotion Law. Such preferential rights are neither transferable nor marketable in the open market. These deposits require monthly installments of W50,000 to W500,000, have maturities between three and five years and accrue interest at fixed rates depending on the term, which are consistent with other installment savings deposits. These deposit products target low- and middle-income households.

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			As of December 31,
			2002				2003				2004
			(In thousands, except branches)
Shinhan Bank:
Retail deposit customers(1)				5,361				5,551				5,934
	Active retail deposit customers(2)			1,624				1,621				1,753
Corporate deposit customers				93				101				113
Domestic branches				341				354				372
Chohung Bank:
Retail deposit customers(1)				9,932				9,239				10,361
	Active retail deposit customers(3)			2,913				2,619				2,563
Corporate deposit customers				137				138				142
Domestic branches				536				557				533

(1)	Based on the classification for the purpose of customer management, retail deposit customers include individual deposit customers, foreigners, sole proprietorships and certain small- and medium-sized enterprises deposit customers classified as retail customers depending on a number of factors, including those small- and medium-sized enterprises to whom a credit of less than W1 billion has been extended and who are sole proprietors.
(2)	For Shinhan Bank, represents customers (i) whose average monthly account balance is W300,000 or more or (ii) who is 20 years of age or more, has an average loan balance during the year, and accordingly is required to maintain a deposit account with Shinhan Bank to service payment of interest on, and principal of, such loans.
(3)	For Chohung Bank, represents customers whose aggregate of outstanding balances of all accounts as of December 31 of each year was W100,000 or more.

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	Retail Banking Services

	Overview

	Consumer Lending Activities

	•	Mortgage and home equity loans, mostly comprised of mortgage loans which are loans to finance home purchases and are generally secured by the home being purchased; and
	•	Other consumer loans, which are loans made to customers for any purpose (other than mortgage and home equity loans) and the terms of which vary based primarily upon the characteristics of the borrower and which are either unsecured or secured or guaranteed by deposits or a third party.

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			As of December 31,
			2002				2003(1)				2004
			(In billions of Won, except percentages)
Consumer loans(2)
	Mortgage and home-equity		W	11,539			W	20,517			W	22,180
	Other consumer			4,962				14,580				15,546
Percentage of consumer loans to total gross loans				36.6	%			36.8	%			38.9	%

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(1)	The sharp increase in overall consumer loans in 2003 from 2002 is due primarily to our acquisition of Chohung Bank in 2003.
(2)	Before allowance for loans losses and excludes credit card accounts.

	Pricing

	Private Banking

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	Corporate Banking Services

	Overview

			As of December 31,
			2002								2003								2004
			(In billions of Won, except percentages)
Small- and medium-sized enterprises loans(1)			W	14,649				32.5	%		W	38,055				40.0	%		W	38,713				39.9	%
Large corporate loans(2)				11,139				24.7				16,031				16.8				15,909				16.4
	Total corporate loans		W	25,788				57.2	%		W	54,086				56.8	%		W	54,622				56.3	%

(1)	Represents the principal amount of loans extended to corporations meeting the definition of small- and medium-sized enterprises under the Basic Act on Small- and Medium-sized Enterprises and its Presidential Decree. Certain loans to sole proprietorships are included under retail lending.
(2)	Includes loans to government-controlled companies.

	Small- and medium-sized Enterprises Banking

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	•	positioned itself based on accumulated expertise. We believe Shinhan Bank has a better understanding of the credit risks embedded in this market segment and to develop loan and other products specifically tailored to the needs of this market segment;
	•	begun operating a relationship management system to provide targeted and tailored customer service to small-and medium-sized enterprises. Shinhan Bank has 83 corporate banking branches with relationship management teams. These relationship management teams market products and review and approve smaller loans that pose less credit risks; and
	•	begun to focus on cross-selling loan products with other products. For example, when Shinhan Bank lends to small- and medium-sized enterprises, it also explores opportunities to cross-sell consumer loans or deposit products to the employees of those companies or to provide financial advisory services.

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	Large Corporate Banking

	Corporate Lending Activities

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	Pricing

	Interest rate  =	(Shinhan Bank’s periodic market floating rate or reference rate) plus transaction cost plus a credit spread plus risk premium plus or minus a discretionary adjustment rate.

	Interest rate  =	Funds transfer pricing plus operating cost (or transaction cost) plus loan policy margin plus a credit spread plus a periodic spread plus risk premium plus estimated margin plus or minus a discretionary adjustment rate.

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	Electronic Corporate Banking

	Credit Card Services

	Overview

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	Products and Services

	•	offering cards that provide additional benefits such as frequent flyer miles and reward program points that can be redeemed by the customer for complementary services, prizes and cash;
	•	offering gold cards, platinum cards and other preferential members’ cards which have a higher credit limit and provide additional services in return for a higher annual membership fee;
	•	acquiring new customers through strategic alliances and cross-marketing with wholesalers and retailers;
	•	encouraging increased use of credit cards by existing customers through special offers for dormant customers;
	•	introducing new features to preferred customers, such as revolving credit cards, travel services and insurance;
	•	developing fraud detection and security systems to prevent the misuse of credit cards and to encourage the use of credit cards over the Internet; and
	•	issuing smart cards and preparing for a cardless business environment in which customers can use credit cards to make purchases by phone or over the Internet.

	•	general purchases of goods and services on credit, which are repayable on a lump-sum basis at the end of a monthly billing cycle;
	•	installment purchases, which require payment approximately within 17 to 47 days after purchase and are repayable on an even-payment installment basis over a period of time ranging from two months to three years and generally accrue interest;
	•	cash advances, which are repayable on a lump-sum basis at the end of a monthly billing cycle and generally accrue interest effective annual rates of approximately 11.8% to 26.95% for Shinhan Card and 18.0% to 26.97% for Chohung Bank; and
	•	payments on a revolving payment basis, which allow customers to roll over their balance into a revolving basis with fixed minimum percentage or amount of the total outstanding balance.

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	Customers and Merchants

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		As of December 31,
		2002				2003				2004
		(In thousands,
		except percentages)
Shinhan Card:
Number of credit card holders			2,548				2,773				3,002
Personal accounts			2,463				2,678				2,905
Corporate accounts			85				95				97
Active ratio(1)			49.1	%			56.6	%			50.7	%
Number of merchants			1,545				2,112				2,513
Chohung Bank:
Number of credit card holders			4,266				3,205				2,819
Personal accounts			4,196				3,138				2,756
Corporate accounts			70				66				63
Active ratio(1)			58.1	%			53.9	%			50.9	%
Number of merchants(2)			2,237				2,091				2,165

(1)	Represents the ratio of accounts used at least once within the last six months to total accounts as of year end.
(2)	Represents the number of merchants of BC Card’s merchant network.

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	Financial and Statistical Information

						As of or for the Year Ended December 31,
						2002								2003								2004
						Shinhan				Chohung				Shinhan				Chohung				Shinhan				Chohung
						Card(1)				Bank(2)				Card(1)				Bank(2)				Card(1)				Bank(2)
						(In billions of Won, except percentages)
Interest income:
	Installments					W	30			W	166			W	42			W	133			W	40			W	84
	Cash advances						185				492				164				354				30				212
	Card loans(3)						51				54				35				93				34				97
	Annual membership						8				11				5				6				2				5
	Revolving(4)						6				111				7				113				6				71
	Late payments						21				6				21				5				6				11
		Total				W	301			W	840			W	274			W	704			W	118			W	480
Credit card fees:
	Merchant fees(5)					W	110			W	250			W	176			W	195			W	146			W	200
	Other fees						12				7				4				23				8				2
		Total				W	122			W	257			W	180			W	218			W	154			W	202
Charge volume:(6)
	General purchases					W	6,969			W	5,341			W	3,695			W	5,484			W	4,835			W	5,519
	Installment purchases						772				4,341				1,143				2,505				1,247				2,099
	Cash advances						8,119				20,224				6,805				12,585				4,355				6,875
		Total				W	15,860			W	29,906			W	11,643			W	20,574			W	10,437			W	14,493
Outstanding balance (at year end):(7)
	General purchases					W	540			W	500			W	395			W	455			W	456			W	538
	Installment purchases						305				1,532				455				786				292				563
	Cash advances						965				2,124				725				1,025				474				653
	Revolving purchases						42				815				39				484				158				200
	Card loans						476				660				329				745				233				529
	Others						435				139				489				185				376				213
		Total				W	2,763			W	5,770			W	2,432			W	3,680			W	1,989			W	2,696
Average balance						W	2,371			W	5,845			W	2,212			W	4,957			W	2,186			W	3,288
Delinquent balances:(8)
	From 1 day to 1 month					W	231			W	827			W	173			W	376			W	67			W	109
	Over 1 month:
		From 1 month to 3 months				W	79			W	314			W	80			W	150			W	35			W	71
		From 3 months to 6 months					48				273				71				172				38				44
		Over 6 months					—				—				—				—				—				—
			Sub-total				127				587				151				322				73				115
				Total		W	358			W	1,414			W	324			W	698			W	140			W	224

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						As of or for the Year Ended December 31,
						2002								2003								2004
						Shinhan				Chohung				Shinhan				Chohung				Shinhan				Chohung
						Card(1)				Bank(2)				Card(1)				Bank(2)				Card(1)				Bank(2)
						(In billions of Won, except percentages)
Delinquency ratios:(9)
	From 1 day to 1 month						8.36	%			14.33	%			7.11	%			10.22	%			3.37	%			4.04	%
	Over 1 month:
		From 1 month to 3 months					2.86	%			5.44	%			3.29	%			4.08	%			1.76	%			2.63	%
		From 3 months to 6 months					1.74				4.73				2.92				4.67				1.91				1.63
		Over 6 months(10)					—				—				—				—				—				—
			Sub-total				4.60				10.17				6.21				8.75				3.67				4.27
				Total			12.96	%			24.50	%			13.32	%			18.97	%			7.04	%			8.33	%
Rewritten loans(11)						W	37			W	529			W	25			W	680			W	9			W	495
Gross charge-offs						W	60			W	493			W	290			W	1,304			W	223			W	649
Recoveries							17				28				32				58				20				35
	Net charge-offs					W	43			W	465			W	258			W	1,246			W	203			W	614
Gross charge-off ratio(12)							2.53	%			8.43	%			13.11	%			26.31	%			10.20	%			19.74	%
Net charge-off ratio(13)							1.81	%			7.96	%			11.66	%			25.14	%			9.29	%			18.67	%

	(1)	Prior to June 2002 when the credit card division of Shinhan Bank was spun off to create Shinhan Card, a separate credit card subsidiary, our credit card operation was conducted by Shinhan Bank. The 2002 data presents collective results of credit card operations of Shinhan Bank’s credit card division, Shinhan Card and Jeju Bank’s credit card division. The 2003 data presents collective results of credit card operations of Shinhan Bank’s credit card division, Shinhan Card, credit card operations underlying Shinhan Card’s assets securitization and Jeju Bank’s credit card division.
	(2)	Represents the credit card business of Chohung Bank, consisting of both BC Card and “Forever” Card, which we acquired in 2003.
	(3)	Card loans consist of loans that are provided on either a secured or unsecured basis to cardholders upon prior agreement. Payment of principal, fees and interest on such a loan can be due either in one payment or in installments after a fixed period.
	(4)	Revolving purchases were introduced in October 1998 for certain creditworthy credit card customers (e.g., customers who have not been delinquent for more than three times in the past one year) of Shinhan Card and in March 25, 2000 for certain creditworthy credit card customers of Chohung Bank.
	(5)	Merchant discount fees consist of merchant membership and maintenance fees, charges associated with prepayment by Shinhan Card or Chohung Bank (on behalf of customers) of sales proceeds to merchants, processing fees relating to sales and membership applications.
	(6)	Represents the aggregate cumulative amount charged during the year.
	(7)	Represents amounts before allowance for loan losses.
	(8)	Includes the unbilled balances of installment purchases.
	(9)	Represents the ratio of delinquent balances to outstanding balances for the year.

(10)	Our charge-off policy for both Shinhan Card and Chohung Bank is to charge off all credit card balances which are 180 days past due.
(11)	Represents delinquent credit card balances for purchase and cash advance which have been rewritten as credit card loans, thereby reducing the balance of delinquent accounts.

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(12)	Represents the ratio of gross charge-offs for the year to average balance for the year.
(13)	Represents the ratio of net charge-offs for the year to average balances for the year.

	Supervisory Statistical Information prepared in accordance with Korean GAAP

	Recent Regulatory Changes

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	Personal Workout and Debt Forgiveness Program

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	Treasury and Securities Investment

	•	treasury;
	•	securities investment and trading;
	•	derivatives trading; and
	•	international business.

	Recent Regulatory Changes

	•	A private equity fund is a limited partnership company that is incorporated in accordance with the Korean Commercial Code, which has not less than one general partner and not less than one limited partner.
	•	The minimum value of the equity investment by limited partners is W2 billion for an individual investor or W5 billion for a legal entity.
	•	Details of the private equity fund, such as its objective, name, location, term of existence, information concerning partners, a summary of the operation, shall be registered with the Financial Supervisory Service.
	•	A private equity fund shall apply 60% of its assets, within a year after capital injection by the partners, to (1) an investment in excess of 10/100 of the total number of shares issued by the target company or (2) an investment that makes it possible for the private equity fund to exercise de facto control over major corporate governance matters including appointments and dismissals of officers. In addition, a private equity fund shall hold the acquired shares for at least six months from the date of investment.
	•	As a special rule, if a private equity fund meets the above requirements for investment, for ten years from the date on which such requirements are met, (1) the provisions governing holding companies as provided for in the Monopoly Regulation and Fair Trade Act shall not apply and (2) the private equity fund shall not be deemed a financial holding company as provided for in the Financial Holding Companies Act.

	Treasury

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	Securities Investment and Trading

	Derivatives Trading

	•	Interest rate swaps and futures relating to Korean Won interest rate risks and LIBOR risks, respectively;
	•	Cross currency swaps largely for Korean Won against U.S. dollars, Japanese Yen and Euros;
	•	Foreign currency forwards, swaps and options;
	•	Credit derivatives; and
	•	KOSPI 200 indexed equity options.

	International Business

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	Other Banking Services

	Trust Account Management Services

	— Overview

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	— Trust Products

	•	Guaranteed Fixed Rate Trust Accounts. Guaranteed fixed rate trust accounts offer customers a fixed-rate of return and guaranteed principal. We receive any amounts remaining after taking into account the guaranteed return and all expenses of the trust accounts, including provisions for valuation losses on equity securities, loan losses and special reserves. We maintain two types of guaranteed fixed rate trust accounts: general unspecified money trusts and development money trusts. Korean banks, including Shinhan Bank and Chohung Bank, have been restricted from establishing new general unspecified money trusts since January 1, 1996, and development money trusts effective January 1, 1999. As a result, the size of general unspecified money trusts and development money trusts has decreased substantially and most of development money trusts matured by the end of 2001 and most of general unspecified money trusts matured by the end of 2002. As of December 31, 2002, 2003 and 2004, under Korean GAAP, Shinhan Bank’s development money trusts amounted to W0.9 billion, W0.2 billion and W0.04 billion, respectively, and general unspecified money trusts amounted to an aggregate of W0.3 billion, W0.3 billion and W0.2 billion, respectively. As of December 31, 2004, under Korean GAAP, Chohung Bank’s development trusts had no outstanding balance and general unspecified money trusts amounted to an aggregate of W8.9 billion. See Note 34 of our consolidated financial statements in “Item 18. Financial Statements — Notes to consolidated financial statements of Shinhan Financial Group”.
	•	Variable Rate Trust Accounts. Variable rate trust accounts are trust accounts for which we do not guarantee the return on the trust account but, in certain instances described below, the principal of the trust account is guaranteed. In respect of variable rate trust accounts, we are entitled to receive fixed rate of trust fees. We also receive fees upon the termination of trust accounts prior to their stated maturities. However, the recent trend has been to offer products with stated maturities that are significantly shorter than those offered in the past, resulting in lower fees from early termination.

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	— Distribution Channels and Marketing

	— Recent Regulatory Developments

	Merchant Banking

	•	short-term financing for both deposit and lending sides, including cash management accounts, factoring financing and bill discounting;
	•	investment banking and mergers and acquisitions advisory services focused on niche markets where Chohung Bank has competitive strength such as asset-backed securities offerings and project financing; and
	•	venture capital business to provide capital as well as necessary management support for high-tech start-up companies.

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	Securities Brokerage Services

	Overview

	Recent Regulatory Changes

	Products and Services

	•	Retail Business Division provides equity and bond brokerage, investment advisory and financial planning services to retail customers, with a focus on high net worth individuals. In 2004, revenues generated by the Retail Business Division represented approximately 68.0% of total revenues of our Securities Brokerage Services in 2004. The Retail Business Division earns fees by managing client assets as well as commissions as a broker for our clients in the purchase and sale of securities. In addition, we generate net interest revenue by financing customers’ securities transactions and other borrowing needs through security-based lending and also receive commissions and other sales and service revenues through the sale of proprietary and third-party mutual funds.
	•	Institutional & International Client and Research Division offers a variety of brokerage services, including brokerage of corporate bonds, futures and options, to our institutional and international customers. In addition, through our research center with more than 60 research analysts, we produce equity, bonds and derivatives research to serve both institutional and international investor clients.
	•	Capital Markets Division offers a wide array of investment banking services, including selling institutional financial products and trading equity and derivatives and, to a lesser extent, M&A advisory and underwriting, to our corporate customers.

	Other Services

	Leasing and Equipment Financing

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	Investment Trust Management Services

	Regional Banking Services

	Investment Banking and Advisory Services

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	Bancassurance

	Loan Collection and Credit Reporting

	Internet Portal Financial Services

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	•	building a customer-oriented system to provide customers with diversified and customized financial services;
	•	establishing a flexible platform which can quickly adapt to new financial products and services;
	•	introducing a group-wide strategic enterprise management system designed to facilitate swift managerial response;
	•	empowering the sales operation by a group-wide integrated enterprise data warehousing system and a group-wide integrated customer relationship management system, which are designed to provide us with comprehensive customer information, including transaction history, and thereby allow us to identify potential marketing and cross-marketing opportunities;
	•	upgrading our information system to be compatible with the New Basel Capital Accord (Basel II) proposed by the Basel Committee;
	•	upgrading our information reporting system to enable interim reporting under the U.S. GAAP;
	•	upgrading an intelligent sales supporting system to support the New Bank Channel strategy; and
	•	developing IT functions which support branch back office centralization to enhance branch productivity.

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	Loan Types

			As of December 31,
			2000				2001				2002				2003				2004
			(In billions of Won)
Corporate
	Commercial and industrial(1)		W	13,847			W	13,459			W	15,800			W	35,617			W	35,653
	Other commercial(2)			6,746				6,748				9,352				17,378				17,988
	Lease financing			—				598				636				1,091				981
Total — Corporate				20,593				20,805				25,788				54,086				54,622
Consumer Mortgages and home equity				2,376				7,253				11,539				20,517				22,180
	Other consumer(3)			3,330				3,537				4,962				14,580				15,546
	Credit cards			1,570				2,070				2,763				6,112				4,732
Total — Consumer				7,276				12,860				19,264				41,209				42,458
	Total gross loans(4)		W	27,869			W	33,665			W	45,052			W	95,295			W	97,080

(1)	Consists primarily of working capital loans, general purpose loans, bills purchased, trade-related notes and inter-bank loans.
(2)	Consists primarily of privately placed bonds, credit facility drawdowns and purchases of commercial paper or notes at a discount from its customers with recourse.
(3)	Consists of general unsecured loans and loans secured by collateral other than housing to retail customers.
(4)	As of December 31, 2002, 2003 and 2004, approximately 79.8%, 71.9% and 89.4% of our total gross loans, respectively, were Won-denominated.

	Loan Concentrations

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	Twenty Largest Exposures by Borrower

																											Amounts of
																											Impaired
																											Loans and
			Loans in				Loans in												Guarantees								Guarantees
			Won				Foreign				Equity				Debt				and				Total				and
Company			Currency				Currency				Securities				Securities				Acceptances				Exposure				Acceptances
			(In billions of Won)
Ministry of Finance and Economy			W	—			W	—			W	—			W	5,298			W	—			W	5,298			W	—
Korea Deposit Insurance Corporation				43				—				—				4,589				—				4,632				—
The Bank of Korea				—				—				—				3,982				—				3,982				—
Korea Highway Corporation				—				—				—				1,069				—				1,069				—
Korea Development Bank				—				—				4				978				—				982				—
Kookmin Bank				—				—				21				820				—				841				—
Samsung Electronics				297				260				150				—				—				707				—
SK Networks(1)				257				82				236				2				106				683				445
LG Electronics				308				191				13				33				102				647				—
SK Corp.				18				19				138				206				252				633				—
Korea Asset Management Corporation				—				—				4				509				—				513				—
Korea First Bank				—				—				—				501				—				501				—
Hyundai Motors				204				178				11				9				84				486				—
Samsung Card				325				21				—				122				—				468				—
Kia Motors				220				187				1				13				2				423				—
Local Governments				—				—				—				397				—				397				—
LG Card				148				—				183				4				—				335				148
Korea Exchange Bank				—				—				3				331				—				334				—
Woori Bank				—				10				—				315				—				325				—
Citibank Korea Inc.				—				—				—				312				—				312				—
	Total		W	1,820			W	948			W	764			W	19,490			W	546			W	23,568			W	593

(1)	Includes its offshore subsidiaries, SK Networks Hong Kong, SK Networks ASIA-PAC, SK Networks Europe and SK Networks America.

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	Exposure to Chaebols

																											Amounts of
																											Impaired
																											Loans and
			Loans in				Loans in												Guarantees								Guarantees
			Won				Foreign				Equity				Debt				and				Total				and
Chaebol			Currency				Currency				Securities				Securities				Acceptances				Exposure				Acceptances
			(In billions of Won)
Samsung				644				879				160				122				128				1,933				—
SK				393				246				394				262				480				1,775				448
Hyundai Motors				493				878				14				52				236				1,673				—
LG				184				819				58				38				121				1,220				—
Hanjin				76				191				6				25				21				319				—
Lotte				227				15				—				38				29				309				—
KT				78				17				5				194				5				299				—
Hyundai				30				242				—				—				—				272				—
Hanhwa				178				25				1				—				66				270				—
Doosan				44				22				—				—				51				117				—
	Total			2,347				3,334				638				731				1,137				8,187				448

	Exposure to LG Card

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	Exposures to the Credit Card Industry

							Securities
							Issued Through								Loans in				Loans in
			Debt				Asset-backed				Equity				Won				Foreign
Company			Securities				Securitization(1)				Securities				Currency				Currency				Total
			(In billions of Won)
Samsung Card(2)			W	122			W	—			W	—			W	325			W	21			W	468
LG Card				4				—				183				148				—				335
Hyundai Card				—				150				—				20				—				170
Lotte Card				60				—				—				—				—				60
KDB Capital(3)				—				20				—				20				4				44
	Total		W	186			W	170			W	183			W	513			W	25			W	1,077

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(1)	Securities issued by special purpose vehicles of credit card companies, established with credit card receivables as underlying assets. In general, these special purpose vehicles are entitled to credit or collateral support from such credit card companies.
(2)	It was recently announced that Samsung Card had recorded net income in the month of April 2005, which reflects a turnaround of its results of operations for the first time since November 2002. Samsung Card conducted a rights offering of W200 billion in May 2003, an offering of W800 billion of subordinated convertible bonds in June 2003, a rights offering of W1,500 billion in April 2004 and a rights offering of W1,167 billion in March 2005.
(3)	KDB Capital is a subsidiary of Korea Development Bank, which is owned and controlled by the Korean government.

	Exposures to SK Group Companies

	•	the purchase by SK Networks of approximately US$540 million of the US$563 million of total indebtedness of its overseas subsidiaries held by non-Korean institutions in exchange for 43% of the principal amount in promissory notes and 5% of the principal amount in the form of bonds with warrants;
	•	the purchase or inclusion in the restructuring plan of SK Networks of all of the approximately US$126 million of indebtedness of its overseas subsidiaries held by Korean financial institutions; and
	•	the entering into a Memorandum of Understanding on the Corporate Restructuring Implementation, or Memorandum, in respect of the restructuring of the approximately US$2 billion of indebtedness to SK Networks.

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																											Amounts of
																											Impaired
																											Loans and
			Loans in				Loans in												Guarantees								Guarantees
			Won				Foreign				Equity				Debt				and				Total				and
Company			Currency				Currency				Securities				Securities				Acceptances				Exposure				Acceptances
			(In billions of Won)
SK Networks			W	257			W	82			W	236			W	2			W	106			W	683			W	445
SK Corporation				18				19				138				206				252				633				—
SK Gas				3				26				—				—				80				109				—
SK Telecom Co., Ltd.				40				—				20				10				—				70				—
SK Chemical				1				25				—				8				18				52				—
SKC Co., Ltd.				5				18				—				26				3				52				—
SK Shipping Co., Ltd.				—				51				—				—				—				51				—
SK C&C Co., Ltd.				20				—				—				10				—				30				—
SK Teletech Co., Ltd.				—				3				—				—				13				16				—
Walkerhill				6				—				—				—				7				13				—
Choongnam City Gas Co., Ltd.				9				—				—				—				—				9				—
Daehan City Gas				8				—				—				—				—				8				—
Pohang City Gas Co., Ltd.				7				—				—				—				—				7				—
SK Telesys				—				7				—				—				—				7				—
Pusan City Gas				6				—				—				—				—				6				—
Dong Shin Pharm, Co., Ltd.				—				3				—				—				1				4				—
Vision Shipbuilding SA				—				4				—				—				—				4				—
Global Shipbuilding SA				—				4				—				—				—				4				—
Champion Shipbuilding SA				—				4				—				—				—				4				—
Chonnam City Gas Co., Ltd.				3				—				—				—				—				3				—
SG Wicus Corporation				3				—				—				—				—				3				3
SK Pharmaceutical				2				—				—				—				—				2				—
InnoAce Co., Ltd.				2				—				—				—				—				2				—
Iksan Energy Co., Ltd.				2				—				—				—				—				2				—
Kangwon Gas				1				—				—				—				—				1				—
Infosec Co., Ltd.				—				—				—				—				—				—				—
Cheongju City Gas Co., Ltd.				—				—				—				—				—				—				—
Kumi City Gas Co., Ltd.				—				—				—				—				—				—				—
	Total		W	393			W	246			W	394			W	262			W	480			W	1,775			W	448

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	Exposures to Ssangyong Group Companies

																											Amounts of
																											Impaired
																											Loans and
			Loans in				Loans in												Guarantees								Guarantees
			Won				Foreign				Equity				Debt				and				Total				and
Company			Currency				Currency				Securities				Securities				Acceptances				Exposure				Acceptances
			(In billions of Won)
Ssangyong Corporation			W	7			W	116			W	—			W	52			W	104			W	279			W	227
Ssangyong Cement Industrial				78				—				35				42				—				155				78
Ssangyong Engineering & Construction				—				—				13				—				—				13				—
Ssangyong Resources Development Co., Ltd.				6				—				—				—				—				6				—
Ssangyong Shipping				—				3				—				—				—				3				—
SSIC				—				1				—				—				1				2				—
	Total		W	91			W	120			W	48			W	94			W	105			W	458			W	305

(1)	Includes domestic and overseas subsidiaries of each company.

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	Loan Concentration by Industry

							Percentage of
			Aggregate Loan				Total Corporate
Industry			Balance				Loan Balance
			(In billions of				(Percentages)
			Won)
Manufacturing			W	22,921				41.97	%
Retail and wholesale				8,572				15.69
Real estate, leasing, and service				7,691				14.08
Construction				2,722				4.98
Hotel and leisure				2,082				3.81
Finance and insurance				2,751				5.04
Transportation, storage and communication				2,688				4.92
Other service				5,194				9.51
Other				1				0.00
	Total		W	54,622				100.00	%

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	Loan Concentration by Size of Loans

								Percentage of
				Aggregate Loan				Total Corporate
				Balance				Loan Balance
				(In billions of				(Percentages)
				Won)
Commercial and industrial
	Up to W10 million			W	137				0.14	%
	Over W10 million to W50 million				1,913				1.97
	Over W50 million to W100 million				2,383				2.45
	Over W100 million to W500 million				9,989				10.29
	Over W500 million to W1 billion				4,500				4.64
	Over W1 billion to W5 billion				8,348				8.60
	Over W5 billion to W10 billion				2,615				2.69
	Over W10 billion to W50 billion				4,325				4.46
	Over W50 billion to W100 billion				883				0.91
	Over W100 billion				560				0.58
		Sub-total		W	35,653				36.73	%
Other commercial
	Up to W10 million			W	73				0.08	%
	Over W10 million to W50 million				541				0.56
	Over W50 million to W100 million				641				0.66
	Over W100 million to W500 million				3,205				3.30
	Over W500 million to W1 billion				1,997				2.06
	Over W1 billion to W5 billion				4,696				4.84
	Over W5 billion to W10 billion				3,097				3.19
	Over W10 billion to W50 billion				3,217				3.31
	Over W50 billion to W100 billion				521				0.53
	Over W100 billion								0.00
		Sub-total		W	17,988				18.53	%

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									Percentage of
					Aggregate Loan				Total Corporate
					Balance				Loan Balance
					(In billions of				(Percentages)
					Won)
Lease financing
	Up to W10 million				W	4				0.00	%
	Over W10 million to W50 million					20				0.02
	Over W50 million to W100 million					26				0.03
	Over W100 million to W500 million					131				0.13
	Over W500 million to W1 billion					58				0.06
	Over W1 billion to W5 billion					288				0.30
	Over W5 billion to W10 billion					159				0.16
	Over W10 billion to W50 billion					295				0.31
	Over W50 billion to W100 billion									0.00
	Over W100 billion									0.00
		Sub-total			W	981				1.01	%
Mortgage and home equity
	Up to W10 million				W	373				0.38	%
	Over W10 million to W50 million					6,558				6.76
	Over W50 million to W100 million					6,693				6.89
	Over W100 million to W500 million					8,053				8.30
	Over W500 million to W1 billion					416				0.43
	Over W1 billion to W5 billion					87				0.09
	Over W5 billion to W10 billion									0.00
	Over W10 billion to W50 billion									0.00
	Over W50 billion to W100 billion									0.00
	Over W100 billion									0.00
		Sub-total			W	22,180				22.85	%
Other consumer
	Up to W10 million				W	3,489				3.59	%
	Over W10 million to W50 million					4,639				4.78
	Over W50 million to W100 million					2,515				2.59
	Over W100 million to W500 million					3,643				3.75
	Over W500 million to W1 billion					652				0.67
	Over W1 billion to W5 billion					588				0.61
	Over W5 billion to W10 billion					20				0.02
	Over W10 billion to W50 billion									0.00
	Over W50 billion									0.00
	Over W100 billion									0.00
			Sub-total		W	15,546				16.01	%

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									Percentage of
					Aggregate Loan				Total Corporate
					Balance				Loan Balance
					(In billions of				(Percentages)
					Won)
Credit cards
	Up to W10 million				W	3,454				3.56	%
	Over W10 million to W50 million					669				0.69
	Over W50 million to W100 million					64				0.07
	Over W100 million to W500 million					89				0.09
	Over W500 million to W1 billion					41				0.04
	Over W1 billion to W5 billion					113				0.12
	Over W5 billion to W10 billion					98				0.10
	Over W10 billion to W50 billion					119				0.12
	Over W50 billion to W100 billion					85				0.08
	Over W100 billion									0.00
		Sub-total			W	4,732				4.87	%
			Total		W	97,080				100.00	%

	Maturity Analysis

				As of December 31, 2004
								Over 1 Year but
				1 Year or				Not More Than				Over
				Less				5 Years				5 Years				Total
				(In billions of Won)
Corporate:
	Commercial and industrial			W	31,458			W	3,826			W	369			W	35,653
	Other commercial				12,973				4,346				669				17,988
	Lease financing				379				528				74				981
	Total corporate			W	44,810			W	8,700			W	1,112			W	54,622
Consumer:
	Mortgage and home equity			W	11,166			W	4,504			W	6,510			W	22,180
	Other consumer				12,115				3,285				146				15,546
	Credit cards				4,630				101				1				4,732
	Total consumer			W	27,911			W	7,890			W	6,657			W	42,458
		Total gross loans		W	72,721			W	16,590			W	7,769			W	97,080

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	Interest Rate Sensitivity

As of December 31, 2004

Due Within

Due After

1 Year

1 Year

Total

(In billions of Won)

Fixed rate loans(1)

W

32,185

W

5,033

W

37,218

Variable rate loans(2)

40,535

19,327

59,862

Total gross loans

W

72,720

W

24,360

W

97,080

(1)	Fixed rate loans are loans for which the interest rate is fixed for the entire term. Includes W16,066 billion of loans due within one year and W1,491 billion of loans due after one year, which are priced based on one or more reference rates which may vary at our discretion. However, it is not our practice to change such reference rates during the life of a loan.
(2)	Variable or adjustable rate loans are for which the interest rate is not fixed for the entire term.

	Nonaccrual Loans and Past Due Accruing Loans

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				As of December 31,
				2001				2002				2003				2004
				(In billions of Won)
Loans accounted for on a nonaccrual basis
	Corporate			W	834			W	741			W	1,536			W	1,681
	Consumer				78				111				580				479
	Credit cards				234				358				1,016				294
		Sub-total			1,146				1,210				3,132				2,454
Accruing loans which are contractually past due one day or more as to principal or interest
	Corporate(1)				29				32				196				55
	Consumer(2)				32				38				27				17
	Credit cards				—				—				—				76
		Sub-total			61				70				223				148
Total				W	1,207			W	1,280				3,355				2,602

(1)	Includes accruing loans which are contractually past due 90 days or more in the amount of W2 billion, W113 billion and W12 billion of corporate loans as of December 31, 2002, 2003 and 2004, respectively.
(2)	Includes accruing loans which are contractually past due 90 days or more in the amount of W10 billion, W7 billion and W6 billion of consumer loans as of December 31, 2002, 2003 and 2004, respectively.

	Troubled Debt Restructurings

		As of December 31,
		2001				2002				2003				2004
		(In billions of Won)
Loans not included in “nonaccrual and past due loans” which are classified as “troubled debt restructurings”		W	360			W	145			W	1,179			W	916

	Credit Exposures to Companies in Workout, Court Receivership and Composition

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	Workout

	Court Receivership

	Composition

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			Loans in				Loans in												Guarantees
			Won				Foreign				Equity				Debt				and				Total
Company			Currency				Currency				Securities				Securities				Acceptances				Exposure(1)
			(In billions of Won)
SK Networks			W	257			W	82			W	236			W	2			W	106			W	683
LG Card				148				—				183				4				—				335
Ssangyong Corporation				7				116				—				52				104				279
Ssangyong Cement Industrial				78				—				35				42				—				155
Daewoo International				—				36				16				—				62				114
Inchon Oil Refinery				99				—				5				—				—				104
Ssangyong Motors(2)				3				5				75				—				44				127
Hyundai Engineering & Construction				3				—				55				12				2				72
Daewoo Electronics				36				1				30				1				—				68
Daewoo Telecom				55				—				—				—				—				55
	Total		W	686			W	240			W	635			W	113			W	318			W	1,992

(1)	Only includes the portion of total exposure identified by us as troubled debt restructuring and excludes amount of loans or other exposures to the same borrower that are not subject to workouts, composition or court receivership.
(2)	In January 2005, the sale of 59,094,098 shares, or 48.92%, of Ssangyong Motors by the creditor group to Shanghai Automotive Group Co., Ltd. for W10,000 per share, or W122 billion in the aggregate, was consummated in January 2005. As a result, in January 2005, Ssangyong Motors graduated from the workout program.

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	Potential Problem Loans

	Provisioning Policy

	Loan Classifications

Loan Classification		Loan Characteristics
Normal		Loans made to customers whose financial position, future cash flows and nature of business are deemed financially sound. No problems in recoverability are expected.
Precautionary		Loans made to customers whose financial position, future cash flows and nature of business show potential weakness, although there is no immediate risk of nonrepayment.
Substandard		Loans made to customers whose adverse financial position, future cash flows and nature of business have a direct effect on the repayment of the loan.
Doubtful		Loans made to customers whose financial position, future cash flows and nature of business are so weak that significant risk exists in the recoverability of the loan, to the extent the outstanding amount exceeds any collateral pledged.
Estimated loss		Loans where write-off is unavoidable.

	Corporate Loans

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	•	loans classified as “substandard” or below according to the asset classification guidelines of the Financial Supervisory Commission;
	•	loans that are 90 days or more past due; and
	•	loans which are “troubled debt restructurings” as defined under U.S. GAAP.

	•	Prevailing economic and business conditions within Korea and foreign jurisdictions in which we operate;
	•	Industry concentrations;
	•	Changes in the size and composition of the relevant underlying portfolios;
	•	Changes in lending policies and procedures, including underwriting standards and collection, charge-offs, and recovery practices.

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		As of December 31,
		2002				2003				2004
		(Percentages)
Normal			2.09	%			2.35	%			1.87	%
Precautionary			15.05				23.72				8.25
Substandard			31.06				33.01				27.79
Doubtful			75.39				68.63				83.15
Estimated loss			99.09				90.11				92.58

	•	Mortgages;
	•	Home equity loans;
	•	Other consumer loans (consisting of unsecured and secured consumer loans); and
	•	Credit cards.

	•	Changes in economic and business conditions such as levels of unemployment and house prices;
	•	Change in the nature and volume of the portfolio, including any concentrations of credits;
	•	The effect of external factors such as regulatory or government requirements.

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	•	Delinquency levels of cardholders;
	•	Current government involvement within the credit card industry (such as the 2001 Government Amnesty Program);
	•	Key retail performance indicators (such as ratios of household debt to disposable income and household liabilities to financial assets).

	Loan Aging Schedule

										Past Due up to								Past Due								Past Due More
		Current								3 Months								3-6 Months								Than 6 Months
																																		Total
As of December 31,		Amount				%				Amount				%				Amount				%				Amount				%				Amount
		(In billions of Won, except percentages)
2000		W	27,049				97.06			W	413				1.48			W	79				0.28			W	328				1.18			W	27,869
2001			32,648				96.98				487				1.45				144				0.43				386				1.14				33,665
2002			43,962				97.58				572				1.27				121				0.27				397				0.88				45,052
2003			91,940				96.48				1,511				1.59				714				0.75				1,130				1.18				95,295
2004			94,480				97.32				855				0.88				431				0.45				1,314				1.35				97,080

	Non-Performing Loans

		As of December 31,
		2001				2002				2003				2004
		(In billions of Won, except percentages)
Total non-performing loans		W	530			W	518			W	1,844			W	1,750
As a percentage of total loans			1.57	%			1.15	%			1.94	%			1.80	%

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	Analysis of Non-Performing Loans

				As of December 31,
				2001												2002												2003												2004
												Ratio of												Ratio of												Ratio of												Ratio of
								Non-				Non-								Non-				Non-								Non-				Non-								Non-				Non-
				Total				Performing				Performing				Total				Performing				Performing				Total				Performing				Performing				Total				Performing				Performing
				Loans				Loans				Loans				Loans				Loans				Loans				Loans				Loans				Loans				Loans				Loans				Loans
				(In billions of Won, except percentages)
Corporate
	Commercial and industrial			W	13,459			W	342				2.54	%		W	15,800			W	211				1.34	%		W	35,617			W	739				2.07	%			35,653			W	898				2.52	%
	Other commercial				6,748				125				1.85				9,352				205				2.19				17,378				558				3.21				17,988				468				2.60
	Lease financing				598				3				0.50				636				1				0.16				1,091				8				0.73				981				19				1.94
		Total corporate			20,805				470				2.26				25,788				417				1.62				54,086				1,305				2.41				54,622				1,385				2.54
Consumer
	Mortgage and home Equity				7,253				28				0.39				11,539				34				0.29				20,517				133				0.65				22,180				126				0.57
	Other consumer				3,537				16				0.45				4,962				19				0.38				14,580				232				1.59				15,546				155				1.00
	Credit cards				2,070				16				0.77				2,763				48				1.74				6,112				174				2.85				4,732				84				1.78
		Total consumer			12,860				60				0.47				19,264				101				0.52				41,209				539				1.31				42,458				365				0.86
Total				W	33,665			W	530				1.57	%		W	45,052			W	518				1.15	%		W	95,295			W	1,844				1.94	%		W	97,080			W	1,750				1.80	%

	Top Twenty Non-Performing Loans

		As of December 31, 2004
				Gross				Allowance
				Principal				for Loan
		Industry		Outstanding				Losses
				(In billions of Won)
1  Borrower A		Manufacturing		W	99			W	14
2  Borrower B		Manufacturing			55				55
3  Borrower C		Manufacturing			42				26
4  Borrower D		Manufacturing			34				34
5  Borrower E		Manufacturing			34				—
6  Borrower F		Real estate, leasing and service			30				—
7  Borrower G		Manufacturing			27				19
8  Borrower H		Finance and insurance			19				—
9  Borrower I		Hotel and leisure			14				—
10  Borrower J		Other service			13				4
11  Borrower K		Construction			13				—
12  Borrower L		Real estate, leasing and service			12				—
13  Borrower M		Real estate, leasing and service			11				—
14  Borrower N		Manufacturing			9				—
15  Borrower O		Manufacturing			9				3
16  Borrower P		Transportation, storage and communication			8				1
17  Borrower Q		Manufacturing			8				3
18  Borrower R		Manufacturing			7				7
19  Borrower S		Retail and wholesale			7				7
20  Borrower T		Manufacturing			6				2
				W	457			W	175

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	Non-Performing Loan Strategy

	•	identifying loans subject to a proposed sale by assessing the estimated losses from such sale based on the estimated recovery value of collateral, if any, for such non-performing loans;
	•	identifying loans subject to charge-off based on the estimated recovery value of collateral, if any, for such non-performing loans and the estimated rate of recovery of unsecured loans; and
	•	on a limited basis, identifying commercial loans subject to normalization efforts based on the cash-flow situation of the borrower.

	•	making phone calls and paying visits to the borrower requesting payment;
	•	continuing to assess and evaluate assets of our borrowers; and
	•	if necessary, initiating legal action such as foreclosures, attachments and litigation.

	•	selling non-performing loans to third parties including the Korea Asset Management Corporation;
	•	entering into asset-backed securitization transactions with respect to non-performing loans;
	•	managing consumer loans that are three months or more past due through Shinhan Credit Information under an agency agreement in the case of Shinhan Bank and through Consumer Loan Collection Division in the case of Chohung Bank; and
	•	using third-party collection agencies including the Solomon Credit Information.

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	Allocation of Allowance for Loan Losses

				As of December 31,
				2001								2002								2003								2004
				(In billions of Won, except percentages)
Corporate
	Commercial and Industrial			W	323				44.86	%		W	341				34.24	%		W	1,383				38.09	%		W	1,065				46.08	%
	Other commercial				275				38.19				365				36.65				626				17.24				410				17.74
	Lease financing				35				4.86				22				2.21				45				1.24				24				1.04
		Total corporate			633				87.91				728				73.10				2,054				56.57				1,499				64.86
Consumer
	Mortgages and home equity				9				1.25				30				3.01				53				1.46				36				1.56
	Other consumer				22				3.06				59				5.92				659				18.15				368				15.92
	Credit cards				56				7.78				179				17.97				865				23.82				408				17.66
		Total consumer			87				12.09				268				26.90				1,577				43.43				812				35.14
Total allowance for loan losses				W	720				100.00	%		W	996				100.00	%		W	3,631				100.00	%		W	2,311				100.00	%

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	Analysis of the Allowance for Loan Losses

					As of December 31,
					2002				2003				2004
					(In billions of Won,
					except percentages)
Balance at the beginning of the period					W	720			W	996			W	3,631
Amounts charged against income						236				1,011				195
Allowance relating to loans repurchased from the Korea Asset Management Corporation						65				32				2
Gross charge-offs:
	Corporate:
		Commercial and industrial				105				255				465
		Other commercial				22				223				26
		Lease financing				10				6				—
	Consumer:
		Mortgage and home equity				2				12				18
		Other consumer				17				135				441
		Credit cards				60				765				872
			Total gross charge-offs			(216	)			(1,396	)			(1,822	)
Recoveries:
	Corporate:
		Commercial and industrial				53				82				105
		Other commercial				21				73				121
		Lease financing				2				—				2
	Consumer:
		Mortgage and home equity				—				1				1
		Other consumer				1				23				22
		Credit cards				17				69				56
			Total recoveries			94				248				307
Net charge-offs						(122	)			(1,148	)			(1,515	)
Acquisition of Chohung Bank										2,740
Acquisition of Jeju Bank						20				—				—
Acquisition of Good Morning Securities						77				—				—
Acquisition of Shinhan Capital						—				—				—
Acquisition of Shinhan Securities						—				—				—
Balance at the end of the period					W	996			W	3,631			W	2,311
Ratio of net charge-offs during the period to average loans outstanding during the period						0.30	%			1.74	%			1.52	%

	Loan Charge-Offs

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	Basic Principles

	Loans To Be Charged-Off

	•	loans for which collection is not foreseeable due to insolvency or bankruptcy, dissolution or the shutting down of the business of the debtor;
	•	loans for which collection is not foreseeable due to the death or disappearance of debtors;
	•	loans for which expenses of collection exceed the collectable amount;
	•	loans on which collection is not possible through legal or any other means;
	•	payments in arrears in respect of credit cards, which are overdue for more than six months;
	•	payments outstanding on unsecured consumer loans, which have been overdue for more than six months;
	•	payments in arrears in respect of leases, which have been overdue for more than twelve months; or
	•	the portion of loans classified as “estimated loss”, net of any recovery from collateral, which is deemed to be uncollectible.

	Procedure for Charge-off Approval

	Treatment of Loans Charged-Off

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	Treatment of Collateral

	U.S. GAAP Financial Statement Presentation

	Investment Policy

	•	maintain the stability and diversification of our assets;
	•	maintain adequate sources of back-up liquidity to match our funding requirements; and
	•	supplement income from our core lending activities.

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	Book Value and Market Value

				As of December 31,								As of December 31,								As of December 31,
				2002								2003								2004
				Book				Market				Book				Market				Book				Market
				Value				Value				Value				Value				Value				Value
				(In billions of Won)
Available-for-sale securities
Marketable equity securities				W	2,481			W	2,481			W	435			W	435			W	507			W	507
Debt securities:
	Korean treasury and governmental agencies				2,230				2,230				8,982				8,982				8,835				8,835
	Financial institutions				2,103				2,103				5,998				5,998				5,675				5,675
	Corporations				1,230				1,230				1,552				1,552				1,292				1,292
	Foreign government				8				8				13				13				57				57
	Mortgage-backed and asset-backed securities				685				685				1,119				1,119				1,742				1,742
Total — Available-for-sale					8,737				8,737				18,099				18,099				18,108				18,108
Held-to-maturity securities
Debt securities:
	Korean treasury and governmental agencies				3,132				3,253				2,351				2,472				1,662				1,814
	Financial institutions				563				572				553				574				1,219				1,268
	Corporations				439				454				365				376				218				225
	Mortgage-backed and asset-backed securities				274				279				336				339				—				—
Total — Held-to-maturity					4,408				4,558				3,605				3,761				3,099				3,307
Trading Securities
Marketable equity securities					196				196				279				279				312				312
Debt securities:
	Korean treasury and governmental agencies				346				346				1,152				1,152				1,995				1,995
	Financial institutions				204				204				1,013				1,013				1,322				1,322
	Corporations				180				180				369				369				965				965
	Mortgage-backed and asset-backed securities				—				—				40				40				20				20
Other trading assets(1)					—				—				4				4				25				25
		Total — Trading			926				926				2,857				2,857				4,639				4,639
Total securities				W	14,071			W	14,221			W	24,561			W	24,717			W	25,846			W	26,054

(1)	Consists of commodity indexed deposits.

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	Maturity Analysis

											Over 1 Year								Over 5 Years																Securities Not Due
			1 Year or Less								Through 5 Years								Through 10 Years								Over 10 Years								In a Single Maturity(1)								Total
							Weighted-								Weighted-								Weighted-								Weighted-								Weighted-								Weighted-
			Carrying				Average				Carrying				Average				Carrying				Average				Carrying				Average				Carrying				Average				Carrying				Average
			Amount				Yield(2)				Amount				Yield(2)				Amount				Yield(2)				Amount				Yield(2)				Amount				Yield(2)				Amount				Yield(2)
			(In billions of Won, except percentages)
Available-for-sale securities:
Korean treasury and governmental agencies			W	595				4.57	%		W	5,322				4.14	%		W	632				4.22	%		W	—				—	%		W	2,286				4.5	%		W	8,835				4.27	%
Financial institutions				2,772				3.77				2,671				3.87				232				6.29				—				—				—				—				5,675				3.93
Corporations				566				5.30				621				4.17				74				1.24				31				2.97				—				—				1,292				4.48
Foreign government				27				3.20				27				4.08				3				6.92				—				—				—				—				57				3.79
Mortgage-backed and asset-backed securities				362				3.71				1,287				1.62				93				3.94				—				—				—				—				1,742				2.19
	Total — Available for sale			4,322				4.07	%			9,928				3.74	%			1,034				4.49	%			31				2.97	%			2,286				4.5	%			17,601				3.97	%
Held-to-maturity securities:
Korean treasury and governmental agencies				266				6.28	%			1,241				6.20	%			155				5.11	%			—				—				—				—				1,662				6.11	%
Financial institutions				875				4.48				327				4.96				17				4.87				—				—				—				—				1,219				4.61
Corporations				139				8.56				79				4.80				—				0.00				—				—				—				—				218				7.19
	Total — Held-to- maturity			1,280				5.30	%			1,647				5.88	%			172				5.08	%			—				—								—				3,099				5.60	%
Trading securities:
Korean treasury and governmental agencies				73				4.08	%			1,696				3.67	%			196				3.62	%			—				—	%			30				4.6	%			1,995				3.69	%
Financial institutions				765				3.66				557				3.57				—				—				—				—				—				—				1,322				3.62
Corporations				965				0.86				—				—				—				—				—				—				—				—				965				0.86
Mortgage-backed and asset-backed securities				20				3.45				—				—				—				—				—				—				—				—				20				3.45
	Total — Trading			1,823				2.19	%			2,253				3.64	%			196				3.62	%			—				2.97	%			30				4.6	%			4,302				3.03	%
Total Securities			W	7,425							W	13,828							W	1,402							W	31							W	2,316							W	25,002

(1)	The principal repayment schedule for such securities is based on installment due on different maturity dates.
(2)	The weighted-average yield for the portfolio represents the yield to maturity for each individual security, weighted using its amortized cost.

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	Concentrations of Risk

			As of December 31, 2004
			Book Value				Market Value
			(In billions of Won)
Name of issuer:
Korean Government			W	5,711			W	5,761
Korea Deposit Insurance Corporation				4,589				4,634
Bank of Korea				3,982				3,988
Korea Highway Corporation				1,069				1,102
Korea Development Bank				982				989
Kookmin Bank				841				860
	Total		W	17,174			W	17,334

				As of December 31,
				2002				2003				2004
				(In billions of Won)
Commitments to extend credit:
	Corporate			W	29,008			W	32,922			W	39,323
	Credit cards(1)				7,827				17,207				23,606
	Consumer				1,753				3,752				5,961
Commercial letters of credit(2)					2,202				3,075				3,364
Standby letters of credit, other financial and performance guarantees and liquidity facilities to SPEs					2,812				4,686				3,407
		Total		W	43,602			W	61,642			W	75,661

(1)	Relates to the unused portion of credit card limits that may be cancelled by us after notice to the borrower if we determine that the borrower’s repayment ability is significantly impaired.
(2)	These are generally short-term and collateralized by the underlying shipments of goods to which they relate.

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				As of December 31, 2004
				Underlying Notional				Estimated Fair Value				Estimated Fair Value
				Amount(1)				Assets				Liabilities
				(In billions of Won)
Trading:
Foreign exchange contracts:
	Forward contracts			W	29,334			W	994			W	989
	Options purchased				2,144				61				—
	Options written				2,388				—				88
		Sub-total			33,866				1,055				1,077

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					As of December 31, 2004
					Underlying Notional				Estimated Fair Value				Estimated Fair Value
					Amount(1)				Assets				Liabilities
					(In billions of Won)
Interest rate contracts:
	Swaps(2)					20,782				209				190
	Futures					324				—				—
	Options purchased					20				—				—
	Options written					28				—				—
		Sub-total				21,154				209				190
Cross currency swaps						6,466				381				416
Equity contracts:
	Futures					2				—				—
	Option purchased					929				30				—
	Option written					930				—				36
		Sub-total				1,861				30				36
Other derivatives:
	Option purchased					318				3				—
	Option written					325				—				3
		Sub-total				643				3				3
Credit derivatives						130				—				—
			Total		W	64,120			W	1,678			W	1,722
Hedge accounting:
	Interest rate swaps					469				4				—
		Sub-total				469				4				—
Nontrading that do not qualify for hedge accounting
	Interest rate swaps					4,436				49				34
	Cross currency swaps					20				—				5
			Total		W	4,456			W	49			W	39

(1)	Notional amounts in foreign currencies were converted into Won at prevailing exchange rates as of December 31, 2004.
(2)	While we engage in derivatives trading activities to hedge the interest rate risk exposure that arise from our own assets and liabilities, as these nontrading derivative contracts do not qualify for hedge accounting under U.S. GAAP, they are accounted for as trading derivatives in the financial statements. As a result, includes interest rate swaps held for nontrading that do not qualify for hedge accounting treatment in the underlying notional amount, estimated fair value of assets and estimated fair value of liabilities of W4,456 billion, W49 billion and W39 billion, respectively.

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	Deposits

				2002								2003								2004
				Average				Average				Average				Average				Average				Average
				Balance(1)				Rate Paid				Balance(1)				Rate Paid				Balance(1)				Rate Paid
				(In billions of Won, except percentages)
Interest-bearing deposits:
	Interest-bearing demand deposits			W	432				1.39	%		W	2,653				1.39%			W	7,880				1.33	%
	Savings deposits				9,924				1.85				15,922				1.46				21,987				1.24
	Certificates of deposit				3,146				4.90				4,954				4.44				6,735				4.08
	Other time deposits				19,468				4.91				27,776				4.19				41,863				3.83
	Mutual installment deposits(2)				1,664				6.07				2,109				5.36				2,487				4.54
		Total interest-bearing deposits(3)		W	34,634				4.05	%		W	53,414				3.31%			W	80,952				2.93	%

(1)	Average balances are based on daily balances for our primary banking operation and quarterly balances for subsidiaries.
(2)	Mutual installment deposits are interest-bearing deposits offered by Shinhan Bank which enable customers to become eligible for loans while they maintain an account with us. The customer’s account does not have to secure loan amounts once made but is a requirement for loan eligibility. Prior to qualifying for a loan a customer must make required periodic deposits to the mutual installment account for a contracted term of less than five years. A customer is not required to fulfill the deposit term prior to requesting a loan from Shinhan Bank, but loan amounts and terms are not as favorable in the event of a loan request prior to completing the deposit contract term.
(3)	Under U.S. GAAP, does not include cover bills sold or bonds sold under repurchase agreements, which are offered to our customers as deposit products. These are reflected as short-term borrowings and secured borrowings, respectively.

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	Certificates of Deposit and Other Time Deposits

			As of December 31, 2004
											Mutual
			Certificates				Other Time				Installment
			of Deposit				Deposits				Deposits				Total
			(In billions of Won)
Maturing within three months				3,748				5,787				110				9,645
After three but within six months				2,226				3,184				58				5,468
After six but within 12 months				1,682				11,614				104				13,400
After 12 months				186				1,434				177				1,797
	Total			7,842				22,019				449				30,310

	Japanese Yen Deposits and Dispute with the Korean National Tax Service

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	Short-term Borrowings

		2002																				2003																				2004
										Highest				Weighted																Highest				Weighted																Highest				Weighted
						Average				Balances				Average				Year-end								Average				Balances				Average				Year-end								Average				Balances				Average				Year-end
		Balance				Balance				at Any				Interest				Interest				Balance				Balance				at Any				Interest				Interest				Balance				Balance				at Any				Interest				Interest
		Outstanding				Outstanding(1)				Month-end				Rate(2)				Rate				Outstanding				Outstanding(1)				Month-end				Rate(2)				Rate				Outstanding				Outstanding(1)				Month-end				Rate(2)				Rate
		(In billions of Won, except for percentages)
Borrowings from BOK(3)		W	334			W	1,067			W	1,374				2.34	%			1.39- 6.75	%		W	1,964			W	1,122			W	2,669				2.41%				1.12- 2.50	%		W	1,568			W	1,737			W	2,056				2.32%				2.00-2.50%
Call money			150				1,464				2,717				3.96				0.15- 4.50	%			179				1,803				3,742				3.55%				0.15- 3.65	%			1,156				3,512				5,238				3.30%				0.75-5.00%
Other borrowings(4)			6,510				4,695				6,928				3.60				0.19- 5.90	%			9,061				8,475				11,300				2.04%				0.05- 10.15	%			8,230				9,685				11,166				2.21%				0.04-18.00%
		W	6,994			W	7,226			W	11,019				3.50	%						W	11,204			W	11,400			W	17,711				2.82%							W	10,954			W	14,934			W	18,460				2.48%

(1)	Average outstanding balances have been calculated using daily balances for our primary banking operations and quarterly balances for subsidiaries.
(2)	Weighted-average interest rates during this year are calculated by dividing the total interest expenses by the average amount borrowed.
(3)	Borrowings from the Bank of Korea generally mature within one month for borrowings in Won and six months for borrowings on foreign currencies.
(4)	Other short-term borrowings included borrowings from trust accounts, bills sold, borrowings in domestic and foreign currencies and short-term debentures.

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	Overview

	•	identifying and managing all inherent risks;
	•	standardizing risk management process and methodology;
	•	ensuring supervision and control of risk management independent of business activities;
	•	continuously assessing risk preference;
	•	preventing risk concentration;
	•	operating a precise and comprehensive risk management system including statistical models; and
	•	balancing profitability and risk management through risk-adjusted profit management.

	Organization

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	Group Risk Management Committee

	•	establishing basic risk management policies consistent with business strategy;
	•	establishing risk limits appropriate for the group and each subsidiary;
	•	establishing and amending, as necessary, risk management regulations, which regulates risk management activities of the group as well as each subsidiary, establishes risk limits and provides risk management guidelines; and
	•	other risk management-related issues the board of directors or the Group Risk Management Committee see fit to discuss.

	Group Risk Management Council

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	•	changes in risk management policies and strategies for each subsidiary;
	•	matters warranting discussion of risk management at the group level and cooperation among the subsidiaries;
	•	the effect of externalities on the group’s risk; and
	•	other risk management-related matters.

	Credit Risk Management of Shinhan Bank

	•	achieve profit level corresponding to the level of risks involved;
	•	improve asset quality and achieve optimal industrial and rating loan portfolio;
	•	focus on the small- and medium-sized enterprises and markets;
	•	avoid excessive loan concentration to a particular borrower or sector;
	•	focus on borrower’s ability to repay the debt; and
	•	financially support our select customers’ growth.

	•	credit evaluation and approval;
	•	credit review and monitoring; and
	•	credit risk assessment and control.

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	Credit Evaluation and Approval

	— Consumer loans

	— Corporate loans

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	— Loan Approval Process

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Category				Approval Body		Approval Limit of Loan Amount
	1			Branch Manager (Individual Loans)
				Unsecured		W100 million or less
				Secured		W500 million W1 billion or less
	2			Branch Manager (Corporate loans)
				Unsecured		W300 million or less
				Secured		W2 billion or less
	3			Branch Manager and Credit Officer
				Unsecured		W500 million or less
				Secured		W3 billion or less
	4			Credit Officer Committee
				Unsecured		W1 billion or less
				Secured		W5 billion or less
	5			Senior Credit Officer Committee
				Unsecured		W5 billion or less
				Secured		W15 billion or less
	6			Credit Committee
				Unsecured		More than W5 billion
				Secured		More than W15 billion

	Credit Review and Monitoring

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	Credit Risk Assessment and Control

	Credit Card Approval Process of Shinhan Card

	Market Risk Management of Shinhan Bank

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	Market Risk Exposure from Trading Activities

	•	trading activities to realize short-term trading profits in debt and stock markets and foreign exchange markets based on Shinhan Bank’s short-term forecast of changes in market situation and customer demand, for its own account as well as for the account of the trust accounts of Shinhan Bank’s customers; and
	•	trading activities primarily to realize profits from arbitrage transactions in derivatives such as swap, forward, futures and option transactions, and, to a lesser extent, to sell derivative products to Shinhan Bank’s customers and to cover market risk incurred from those trading activities.

	— Interest Rate Risk

	— Foreign Exchange Risk

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			As of December 31,
Currency			2002				2003				2004
			(In millions of US$)
U.S. dollars			US$	(16.4	)		US$	4.6			US$	52.3
Japanese yen				(16.6	)			(8.7	)			(1.6	)
Euro				1.1				0.7				0.9
Others				0.9				1.0				(1.7	)
	Total		US$	(31.0	)		US$	(2.4	)		US$	51.9

	— Equity Risk

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	Management of Market Risk from Trading Activities

			Trading Portfolio VaR for the Year 2004(1)
															As of
			Average				Minimum				Maximum				December 31
			(In billions of Won)
Shinhan Bank:
	Interest rate		W	20.5			W	5.5			W	72.6			W	11.0
	Foreign exchange(2)			2.0				0.3				5.1				4.0
	Equities			22.0				10.2				33.8				24.0
	Less: portfolio diversification(3)			N/A				N/A				N/A				(9.0	)
	Total VaR(4)		W	32			W	12.3			W	83.1			W	31.0
Good Morning Shinhan Securities(5):
	Interest rate		W	0.3			W	0.1			W	0.9			W	0.2
	Equities			1.1				0.5				3.0				0.8
	Beneficiary certificates(7)			—	(6)			—	(6)			0.1				—	(6)
	Less: portfolio diversification(3)			N/A				N/A				N/A				(0.1	)
	Total VaR		W	1.1			W	0.5			W	2.9			W	0.9

(1)	One-day VaR results with a 99% confidence level.
(2)	Includes both trading and nontrading accounts as Shinhan Bank manages foreign exchange risk on a total position basis.
(3)	Calculation of portfolio diversification effects for the minimum and maximum VaRs as the minimum and maximum may occur on different days for different risk components. The average and December 31, 2004 VaRs are less than the sum of the VaRs due to offsets resulting from portfolio diversification.
(4)	Includes trading portfolio in Shinhan Bank’s bank accounts and assets in trust accounts for which it guarantees principal or fixed return.
(5)	The change in market value of Good Morning Shinhan Securities’ trading portfolio was W2.1 billion per day.
(6)	Less than W0.1 billion.
(7)	Beneficiary certificates that Good Morning Shinhan Securities holds temporarily in connection with its beneficiary certificate sales business. Most of market risk arising from the holding of these beneficiary certificates is interest rate risk and there is minimal amount of equity risk.

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	•	By its nature as a statistical approach, VaR estimates possible losses over a certain period at a particular confidence level using past market movement data. Past market movement, however, is not necessarily a good indicator of future events, particularly potential future events that are extreme in nature.
	•	This model may underestimate the probability of extreme market movements.
	•	The time periods used for the model, generally one or ten days, are assumed to be a sufficient holding period before liquidating the relevant underlying positions. If these holding periods are not sufficient, or too long, the VaR results may understate the potential loss.
	•	The use of a 99% confidence level, does not take account of, nor makes any statement about, any losses that might occur beyond this confidence level.
	•	Shinhan Bank calculates VaRs at the end of every month and therefore do not reflect market changes during a month until the end of the month.
	•	VaR does not capture all complex effects of various risk factors on the value of positions and portfolios and could underestimate potential losses.

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	— Hedging and Derivative Market Risk

	•	arbitrage transactions to make profits from short-term discrepancies between the spot and derivative markets or within the derivative markets;
	•	sales of tailor-made derivative products that meet various needs of our corporate customers, principally of Shinhan Bank and Good Morning Shinhan Securities, and related transactions to reduce its exposure resulting from those sales (in the case of Good Morning Shinhan Securities, these activities commenced from February 2003 when it acquired the relevant license);
	•	taking positions in limited cases when we expect short-swing profits based on its market forecasts; and
	•	trading to hedge our interest rate and foreign currency risk exposure as described above.

	Market Risk Management for Nontrading Activities

	— Interest Rate Risk

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	•	Earnings: interest rate fluctuations have an effect on Shinhan Bank’s net interest income by affecting its interest-sensitive operating income and expenses.
	•	Economic value of net assets: interest rate fluctuations influence Shinhan Bank’s net worth by affecting the present value of cash flows from the assets, liabilities and other transactions of Shinhan Bank.

	— Interest Rate Risk Management

	•	Interest Rate Gap Analysis: Interest rate gap analysis measures the difference in the amounts of interest-earning assets and interest-bearing liabilities at each maturity and re-pricing date for a specific time frame.
	•	Duration Gap Analysis: Duration gap analysis measures durations of Shinhan Bank’s interest-earning assets and interest-bearing liabilities, which are weighted average maturities of these assets and liabilities calculated based on discounted cash flows from these assets and liabilities using yield curves.
	•	Market Value Analysis: Market value analysis measures changes in the market value of Shinhan Bank’s interest-earning assets and interest-bearing liabilities based on the assumption of parallel shifts in interest rates.
	•	Net Interest Income Simulation Analysis: Net interest income simulation analysis uses deterministic analysis methodology to measure changes in Shinhan Bank’s annual net interest income (interest income less interest expenses) under the current maturity structure, using different scenarios for interest rates (assuming parallel shifts) and funding requirements.
	•	Earnings at Risk Analysis: Earnings-at-risk analysis, or “EaR” analysis, measures changes in Shinhan Bank’s annual pretax earnings from its interest-earning assets and interest-bearing liabilities at a 99% confidence level using Monte Carlo simulation. Currently, Shinhan Bank uses EaR analysis as a supplemental measure for interest rate risk management.

	— Interest Rate Gap Analysis

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	•	With respect to the maturities and re-pricing dates of Shinhan Bank’s assets, we assume that maturity of Shinhan Bank’s prime rate-linked loans the same as its fixed-rate loans. We also assume that the debt securities in Shinhan Bank’s trading accounts have maturities three months. Shinhan Bank excludes equity securities from interest-earning assets.
	•	With respect to the maturities and re-pricing of Shinhan Bank’s liabilities, we assume that money market deposit accounts and “non-core” demand deposits under the Financial Supervisory Commission guidelines have a maturity of three months or less. With respect to “core” demand deposits under the Financial Supervisory Commission guidelines, we assume a maturity of over three years.

			As of December 31, 2004
			0-3 Months				3-6 Months				6-12 Months				1-2 Years				2-3 Years				Over 3 Years				Total
			(In billions of Won, except percentages)
Interest-earning assets			W	32,938			W	9,064			W	4,513			W	3,601			W	869			W	3,805			W	54,791
	Fixed rates			6,799				2,697				3,716				3,391				832				2,823				20,258
	Floating rates			25,839				6,249				657				150				7				132				33,034
	Interest rate swaps			300				118				140				60				30				850				1,498
Interest-bearing liabilities			W	23,386			W	6,511			W	11,227			W	3,654			W	1,412			W	7,319			W	53,509
	Fixed liabilities			10,609				6,264				10,633				3,180				1,406				7,319				39,410
	Floating liabilities			11,327				199				594				474				6				—				12,601
	Interest rate swaps			1,450				48				—				—				—				—				1,498
Sensitivity gap				9,552				2,553				(6,714	)			(53	)			(543	)			(3,514	)			1,282
Cumulative gap				9,552				12,105				5,391				5,338				4,795				1,282
% of total assets				17.4	%			22.1	%			9.8	%			9.7	%			8.8	%			2.3	%

		As of December 31, 2004
		0-3 Months				3-6 Months				6-12 Months				1-3 Years				Over 3 Years				Total
		(In millions of US$, except percentages)
Interest-earning assets		$	6,796			$	1,283			$	368			$	36			$	23			$	8,506
Interest-bearing Liabilities			6,361				1,693				358				41				544				8,997
Sensitivity gap			435				(410	)			10				(5	)			(521	)			(491	)
Cumulative gap			435				25				35				30				(491	)
% of total assets			5.1	%			0.3	%			0.4	%			0.4	%			(5.8%	)

	— Duration and Market Value Analysis

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		Duration as of
		December 31,
		2004(1)
		(In months)
Interest-earning assets			8.4
Interest-bearing liabilities			13.6
Gap			5.2

		Market Value as of December 31, 2004(1)
		Actual				1% Point Increase				Changes
		(In billions of Won)
Interest-earning assets		W	57,388			W	57,093			W	(295	)
Interest-bearing liabilities			53,922				53,464				(458	)
Gap			3,466				3,629				(163	)

(1)	Includes interest rate swaps.

	— Net Interest Income Simulation

		Simulated Net Interest Income for 2005
		(For Nontrading Won-denominated Bank Accounts)(1)
														Change in Net Interest								Change in Net Interest
		Assumed Interest Rates												Income								Income
														Amount				% Change				Amount				% Change
						1% Point				1% Point				(1% Point				(1% Point				(1% Point				(1% Point
		No Change				Increase				Decrease				Increase)				Increase)				Decrease)				Decrease)
		(In billions of Won, except percentages)
Simulated interest income		W	3,137			W	3,524			W	2,751			W	387				12.3	%		W	386				(12.3	)%
Simulated interest expense			1,806				2,084				1,527				278				15.4				279				(15.4	)
Net interest income			1,331				1,440				1,224				109				8.2				107				(8.0	)

(1)	Includes interest rate swaps.

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	— Interest Rate VaRs for Nontrading Assets and Liabilities

VaR for the Year 2004(1)

As of

Average

Minimum

Maximum

December 31

(In billions of Won)

Interest rate — available-for-sale securities

W133.6

W101.9

W162.4

W103.4

Interest rate mismatch — other assets and liabilities

25.6

17.2

36.7

23.6

(1)	One-day VaR results with a 99% confidence level.

	— Equity Risk

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VaR for the Year 2004(1)

As of

Average

Minimum

Maximum

December 31

(In billions of Won)

Equities

W153

W10

W268

W268

(1)	One-day VaR results with a 99% confidence level.

	Liquidity Risk Management

	•	maintain an appropriate level of liquidity risk through liquidity risk management based on liquidity gap or debt-to-equity ratio at each maturity date;
	•	assess and monitor net cash flows by currency and by maturity and continuously evaluate available sources of funds and possibility of disposal of any liquid assets;
	•	diversify sources and uses of funds by product and by maturity to prevent excessive concentration in certain periods or products; and
	•	prepare contingency plans to cope with liquidity crisis.

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As of December 31, 2004

Over 3

Substandard

Won-denominated Accounts

0-3 Months

3-6 Months

6-12 Months

1-3 Years

Years

or Below

Total

(In billions of Won except percentage)

Assets:

W22,392

W9,395

W12,915

W8,980

W12,431

W628

W66,741

Liabilities:

18,036

7,690

14,568

6,245

14,449

60,988

For three months or less:

Liquidity gap

4,356

Liquidity ratio

124.1

%

Limit:

105.0

%

			As of December 31, 2004
			7 Days or				7 Days-												6-12				Over 1				Substandard
Foreign Currencies Denominated Accounts:			Less				1 Months				3 Months				3-6 Months				Months				Years				or Below				Total
			(In millions of US$ except percentage)
Assets:			$	2,863			$	2,264			$	3,614			$	2,108			$	2,002			$	2,252			$	92			$	15,195
Liabilities				2,770				2,098				3,620				2,214				1,786				3,084								15,572
For three months or less:
	Assets											8,741
	Liabilities											8,488
	Liquidity ratio											103.0	%
	Limit											85.0	%

	•	indices that reflect the market movements such as interest rates and stock prices;
	•	indices that reflect financial market psychology such as the size of money market funds; and
	•	indices that reflect our internal financial condition.

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	Operational Risk Management

	•	general audits, including full-scale audits performed annually for the overall operations, sectional audits of selected operations performed when necessary, and periodic and irregular spot audits;
	•	special audits, performed when the Audit Committee or standing auditor deems it necessary or pursuant to requests by the chief executive officer or supervisory authorities such as the Financial Supervisory Service;
	•	day-to-day audits, performed by the standing auditor for material transactions or operations that are subject to approval by the heads of Shinhan Bank’s operational departments or senior executives;
	•	real-time monitoring audits, performed by the computerized audit system to identify any irregular transactions and take any necessary actions; and
	•	self-audits as a self-check by each operational department to ensure its compliance with Shinhan Bank’s business regulations and policies, which include daily audits, monthly audits and special audits.

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	Risk Management of Chohung Bank

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	•	implemented in September 2000, the Credit Management System (CMS) measures default rates by credit rating and credit risk based on the default volatility in order to apply such results to credit portfolio management and management of credit risks limit for each business unit;
	•	implemented in September 2000, the Market Risk Management System measures Value-at-Risk (VaR) to be used for management of market risk;
	•	upgraded in December 2000, the Asset-Liability System for accurate cash flow management and for improved measurement of interest rate risk using Monte Carlo simulations; and
	•	implemented in April 2001, the Capital Allocation System and Risk Adjusted Performance Measurement System allocates risk adjusted capital, to set risk limits and to measure risk adjusted return on risk capital and economic value-added for risk adjusted performance measurement.

	Credit Risk Management

	— Credit Planning

	— Credit and Approval Limits

Level of Approval		Credit Limits
		(In billions of Won)
Headquarters level
Credit Review Committee(1)			More than W40
Credit Officer Committee(2)			W16 — W40
Review Team(3)			W5 — W15
Branch level
Collateralized Chief Relationship Manager			W2 — W5
Non-collateralized Chief Relationship Manager			W0.3 — W2

(1)	Consists of heads of the Credit Management Group, Treasury and International Business Group, Corporate Banking Group and the head of the relevant business group.
(2)	Consists of general managers of the Credit Assessment Division, Loan Recovery Division and Credit Planning Office.
(3)	Consists of three to four loan review officers.

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	— Loan Review

	•	evaluation of the validity of loan approval and credit ratings;
	•	evaluation of the validity and timeliness of the follow-up management of the borrowers subject to credit monitoring, the borrowers in workout plans and the borrowers who have non-performing loans; and
	•	evaluation of Chohung Bank’s credit portfolio based on various factors that affect asset quality.

	•	request a reclassification of the loan’s asset quality or its borrower’s credit rating;
	•	change the terms of the loan;
	•	transfer the loan to the Loan Recovery Division for special management if the loan is classified to be substandard or below; and
	•	request a special audit by the Internal Audit Division in respect of such loan if misconduct or negligence has been found during the review.

	— Credit Management System

	•	Credit Risk Control: A module consisting of two systems, a credit risk measurement system and a credit portfolio management system.
	•	Loan Approval Support: A module consisting of a financial analysis support system, credit risk rating system (CRRS), loan limit management system, collateral management system, loan pricing system, loan application support system and loan approval system.

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	•	Follow-up Management: This module includes a loan monitoring and review system, default/ delinquency information management system and credit information analysis system.

	— Total Exposure Management System

	— Credit Risk Rating System

	•	A standardized credit application form that contains detailed questions for credit evaluation;
	•	A comprehensive risk assessment framework that enables Chohung Bank’s relationship managers and credit officers to assess risks;

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	•	Quantitative risk scores calibrated to probability of defaults and recovery; and
	•	Risk premiums and loan loss provisions linked to such credit risk ratings.

	— Credit Scoring System

	Market Risk Management

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	Market Risk Exposure from Trading Activities

	•	Trading activities to realize short-term trading profits in debt and equity markets and foreign exchange markets based on its short-term forecasts of changes in market conditions and customer demand, for its proprietary account as well as for the trust accounts of its customers; and
	•	Trading activities primarily to realize profits from arbitrage transactions in derivatives such as swap, forward, futures and option transactions, and, to a lesser extent, to sell derivative products to its customers and to hedge market risk incurred from those trading activities.

	— Interest Rate Risk

	— Foreign Exchange Risk

			As of December 31,
Currency			2002				2003				2004
			(In millions of US$)
U.S. dollars			US$	(5.7	)		US$	8.4			US$	41.7
Japanese Yen				10.5				0.3				0.2
Euro				1.3				0.3				6.7
Others				7.9				9.0				10.5
	Total		US$	14.0			US$	18.0			US$	59.1

	— Equity Risk

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	Market Risk Management for Trading Activities

Trading Portfolio Ten-day VaR for the Year 2004(1)

As of

Average

Minimum

Maximum

December 31

(In billions of Won)

Chohung Bank:

Interest rate

W 96.6

W 20.0

W 212.8

W 156.6

Foreign exchange(2)

37.9

6.7

117.2

95.6

Equities

6.3

1.0

15.3

5.6

Total VaR(3)

W 10.7

W 32.9

W 223.8

W 194.1

(1)	Ten-day VaR results at a 99% confidence level.
(2)	Includes both trading and nontrading accounts as Chohung Bank manages foreign exchange risk on a total position basis.
(3)	Due to portfolio diversification effects, the total VaR figures are different from the simple additions of interest rate, foreign exchange and equity risks.

	•	a variance-covariance methodology called delta-normal method for its overall VaR calculations;
	•	a Monte Carlo simulation for its back testing and stress testing to measure nonlinear risk products such as options; and
	•	a historical simulation for its back testing.

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	•	By its nature as a statistical approach, VaR estimates possible losses over a certain period at a particular confidence level using past market movement data. Past market movement, however, is not necessarily a good indicator of future events, particularly potential future events that are extreme in nature.
	•	This model may underestimate the probability of extreme market movements.
	•	The time periods used for the model, generally one or ten days are assumed to be a sufficient holding period before liquidating the relevant underlying positions. If these holding periods are not sufficient, or too long, the VaR results may understate the potential loss.
	•	The use of a 99% confidence level, does not take account of, nor makes any statement about, any losses that might occur beyond this confidence level.
	•	VaR does not capture all complex effects of various risk factors on the value of positions and portfolios and could underestimate potential losses.

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	— Hedging and Derivative Market Risk

	•	arbitrage transactions to make profits from short-term discrepancies between the spot and derivative markets or within the derivative markets;
	•	sales of tailor-made derivatives products to meet various needs of Chohung Bank’s corporate customers and the related transactions to reduce its exposure resulting from those sales;
	•	taking positions in limited cases when Chohung Bank expects short-swing profits based on its market forecasts; and
	•	trading to hedge Chohung Bank’s interest rate and foreign currency risk exposure as described above.

	Market Risk Management for Nontrading Activities

	— Interest Rate Risk

	•	Earnings: interest rate fluctuations have an effect on Chohung Bank’s net interest income by affecting its interest-sensitive operating income and expenses.
	•	Economic value of net assets: interest rate fluctuations influence Chohung Bank’s net worth by affecting the present value of cash flows from the assets, liabilities and other transactions of Chohung Bank.

	— Interest Rate Risk Management

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	•	Interest Rate Gap Analysis: Interest rate gap analysis measures the difference in the amounts of interest-earning assets and interest-bearing liabilities at each maturity and re-pricing date for a specific time frame.
	•	Duration Gap Analysis: Duration gap analysis measures durations of Chohung Bank’s interest-earning assets and interest-bearing liabilities, which are weighted average maturities of these assets and liabilities calculated based on discounted cash flows from these assets and liabilities using yield curves.
	•	Market Value Analysis: Market value analysis measures changes in the market value of Chohung Bank’s interest-earning assets and interest-bearing liabilities based on the assumption of parallel shifts in interest rates.
	•	Net Interest Income Simulation Analysis: Net interest income simulation analysis uses statistical analysis methodology to measure changes in Chohung Bank’s annual net interest income (interest income less interest expenses) under the current maturity structure, using different scenarios for interest rates (assuming parallel shifts) and funding requirements.

	Earnings-at-Risk Analysis

Simulation Results for 2004

Minimum(1)

Average

EaR(1)

(In billions of Won)

Interest income (from interest-earning assets)

W3,418.2

W3,514.1

W95.9

Interest expense (from interest-bearing liabilities)

1,458.0

1,500.4

42.4

Net interest income

1,960.2

2,013.7

53.5

(1)	At a 99% confidence level.

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	— Interest Rate Gap Analysis

	•	With respect to the maturities and re-pricing dates of Chohung Bank’s assets, Chohung Bank assumes that maturity of Chohung Bank’s prime rate-linked loans are the same as its fixed-rate loans. For debt securities in its trading accounts, Chohung Bank assumes a maturity of three months. Chohung Bank excludes equity securities from interest-earning assets and also excluded assets classified as substandard or below from its interest rate gap analysis.
	•	With respect to the maturities and re-pricing of Chohung Bank’s liabilities, Chohung Bank assumes that money market deposit accounts and “non-core” demand deposits have a maturity of three months or less. With respect to “core” demand deposits under the Financial Supervisory Commission guidelines, Chohung Bank assumes a maturity of three years.

		As of December 31, 2004
		0-3 Months				3-6 Months				6-12 Months				1-3 Years				Over 3 Years				Total
		(In billions of Won, except percentages)
Interest-earning assets		W	30,948			W	3,170			W	3,513			W	4,913			W	4,129			W	46,673
(Including interest rate swaps)
Interest-bearing liabilities			16,017				6,405				6,765				3,718				9,331				42,236
(Including interest rate swaps)
Sensitivity gap			14,931				(3,234	)			(3,252	)			1,195				(5,202	)			4,437
Cumulative gap			15,331				11,670				8,444				9,639				4,854
% of total assets			25.86	%			(5.60	)%			(5.63	)%			2.07	%			(9.01	)%			7.68	%

		As of December 31, 2004
		0-3 Months				3-6 Months				6-12 Months				1-3 Years				Over 3 Years				Total
		(In millions of US$, except percentages)
Interest-earning assets		$	3,720			$	768			$	225			$	56			$	34			$	4,803
Interest-bearing liabilities			3,646				780				386				36				395				5,243
Sensitivity gap			74				(12	)			(161	)			20				(361	)			(440	)
Cumulative gap			74				62				(99	)			(79	)			(440	)
% of total assets			1.29	%			(0.21	)%			(2.78	)%			0.35	%			(6.22	)%			(7.58	)%

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	— Duration and Market Value Analysis

		Duration as of
		December 31,
		2004(1)
		(In months)
Interest-earning assets			0.51
Interest-bearing liabilities			0.82
Gap			(0.27	)

		Market Value as of December 31, 2004(1)
		Actual				1% Point Increase				Changes
		(In billions of Won)
Interest-earning assets			W43,620				W43,368				W(252	)
Interest-bearing liabilities			40,070				39,737				(333	)
Gap			3,550				3,631				81

(1)	Includes interest rate swaps.

	— Net Interest Income Simulation

		Simulated Net Interest Income for 2005
		(for Nontrading Won-denominated Bank Accounts)(1)
														Change in Net								Change in Net
														Interest Income								Interest Income
		Assumed Interest Rates
														Amount				% Change				Amount				% Change
						1% Point				1% Point				(1% Point				(1% Point				(1% Point				(1% Point
		No Change				Increase				Decrease				Increase)				Increase)				Decrease)				Decrease)
		(In billions of Won, except percentages)
Simulated interest income		W	3,517.7			W	3,728.8			W	3,306.1			W	211.1				6.00	%		W	211.6				6.02	%
Simulated interest expense			1,503.4				1,660.5				1,352.0				157.1				10.45				151.4				10.07
Net interest income			2,014.3				2,068.3				1,954.1				54.0				2.68				60.2				2.99

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(1)	Includes interest rate swaps.

	— Interest Rate VaRs for Nontrading Assets and Liabilities

Ten-day VaR for the Year 2004(1)

As of

Average

Minimum

Maximum

December 31

(In billions of Won)

Interest rate — available-for-sale securities

W

29.3

W

24.7

W

35.2

W

32.9

(1)	Ten-day VaR results at a 99% confidence level.

	— Equity Risk

Trading Portfolio Ten-day VaR for the Year 2004(1)

As of

Average

Minimum

Maximum

December 31

(In billions of Won)

Equities

W

221.8

W

121.7

W

303.5

W

251.3

(1)	Ten-day VaR results at a 99% confidence level.

	Liquidity Risk Management

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	•	maintain an appropriate level of liquidity risk through liquidity risk management based on liquidity gap or debt-to-equity ratio at each maturity date;
	•	assess and monitor net cash flows by currency and by maturity and continuously evaluate available sources of funds and the possibility of disposal of any liquid assets;
	•	diversify sources and uses of funds by product and by maturity to prevent excessive concentration in certain periods or products; and
	•	prepare contingency plans to cope with a potential liquidity crisis.

			As of December 31, 2004
																							Substandard
Won-denominated Accounts			0-3 Months				3-6 Months				6-12 Months				1-3 Years				Over 3 Years				or Below				Total
			(In billions of Won except percentage)
Assets:			W	29,842.9			W	10,685.9			W	14,657.9			W	4,665.0			W	11,312.9			W	820.8			W	71,985.4
Liabilities:				24,295.9				7,386.7				11,792.0				4,135.3				23,233.9				0				70,843.8
For three months or less:
	Liquidity gap			5,547.0
	Liquidity ratio			122.83	%
	Limit:			105.00	%

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			As of December 31, 2004
Foreign Currencies							7 Days-
Denominated Accounts:			7 Days or Less				1 Months				3 Months				3-6 Months				6-12 Months				Over 1 Years				Total
			(In millions of US$ except percentage)
Assets:			$	3,791.5			$	3,490.7			$	5,124.0			$	2,752.7			$	2,048.0			$	1,155.1			$	18,362.1
Liabilities				3,707.0				3,259.8				5,148.3				3,269.4				2,946.0				1,355.9				19,686.4
For three months or less:
	Assets										$	12,406.2
	Liabilities											12,115.1
	Liquidity ratio											102.40	%
	Limit											85.00	%

	•	indices that reflect the market movements such as interest rates and stock prices;
	•	indices that reflect financial market psychology such as the size of money market funds; and
	•	indices that reflect Chohung Bank’s internal financial condition.

	Operational Risk Management

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	Proposed Upgrades and Integration of Risk Management

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	General

	•	financially supporting its subsidiaries and the subsidiaries of its subsidiaries (the “direct and indirect subsidiaries”);
	•	raising capital necessary for the investment in subsidiaries or providing financial support to its direct and indirect subsidiaries;
	•	supporting the business of its direct and indirect subsidiaries for the joint development and marketing of new product and the joint utilization of facilities or IT systems; and
	•	any other businesses exempted from authorization, permission or approval under the applicable laws and regulations.

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	Capital Adequacy

	(a)  the sum of:

	(i)	in the case of a financial institution subsidiary (except for a financial holding company’s indirect subsidiary which is consolidated into a direct subsidiary of a financial holding company), that is subject to minimum capital requirements under the Financial Supervisory Commission regulations, the actual equity capital maintained by such financial institution (e.g., in the case of commercial banks and merchant banks, total Tier I and Tier II capital actually maintained by a bank or a merchant bank); and

(ii)  in the case of a financial holding company or a financial institution subsidiary (except for a financial holding company’s indirect subsidiary which is consolidated into a direct subsidiary of a financial holding company), that is not subject to minimum capital requirements under the Financial Supervisory Commission regulations, the total stockholders’ equity as recorded on its balance sheet less (x) intangible assets and (y) deferred tax assets, if any.

	(b)	less the sum of:

	(i)	the book value of investments among a financial holding company and its direct and indirect subsidiaries, if any; and
	(ii)	the book value of investments among direct and indirect subsidiaries, if any.

	2.	“Requisite Capital” means the sum of:

	(a)	in the case of a financial institution subsidiary (except for a financial holding company’s indirect subsidiary which is consolidated into a direct subsidiary of a financial holding company), that is subject to minimum capital requirements under the Financial Supervisory Commission regulations, the minimum equity capital amount necessary to meet such requirements (e.g., in the case of commercial banks and merchant banks, the amount of Total Tier I and Tier II capital necessary to meet the 8% minimum capital adequacy ratio requirement);
	(b)	in the case of a financial institution subsidiary (except for a financial holding company’s indirect subsidiary which is consolidated into a direct subsidiary of a financial holding company), that is not subject to minimum capital requirements under the Financial Supervisory Commission regulations, 8% of its total assets on its balance sheet (including off-balance assets, if any); and
	(c)	in the case of a financial holding company, 8% of its total assets on its balance sheet (including off-balance assets, if any, but excluding the book value of investments in and financial supports to its direct and indirect subsidiaries, if any).

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	Liquidity

	•	maintain a Won liquidity ratio (defined as Won assets due within three months, including marketable securities, divided by Won liabilities due within three months) of not less than 100%;
	•	maintain a foreign currency liquidity ratio (defined as foreign currency liquid assets due within three months divided by foreign currency liabilities due within three months) of not less than 80%;
	•	maintain a ratio of foreign currency liquid assets due within seven days less foreign currency liabilities due within seven days divided by total foreign currency assets of not less than 0%; and
	•	maintain a ratio of foreign currency liquid assets due within a month less foreign currency liabilities due within a month divided by total foreign currency assets of not less than negative 10%.

	Financial Exposure to Any Individual Customer and Major Shareholder

	(a)	the sum of:

	(i)	in case of a financial holding company, the net asset which is total assets less total liabilities on balance sheet as of the end of the most recent quarter;
	(ii)	in case of a bank, the capital amount as defined in article 2(1), item 5 of the Bank Act;
	(iii)	in case of a merchant bank, the capital amount as defined in article 2, item 3 of the Merchant Bank Act; and
	(iv)	in case of a securities company, the total asset amount less the total liability amount in the balance sheet as of the end of the recent financial year and adjusted as determined by the Financial Supervisory Commission, such as the amount of increase or decrease of paid-in capital after the end of the recent financial year;

	(b)	less the sum of:

	(i)	the amount of shares of direct and indirect subsidiaries held by the financial holding company;

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	(ii)	the amount of shares which are cross-held by each direct and indirect subsidiary that is a bank, merchant bank or securities company; and
	(iii)	the amount of shares of a financial holding company held by such direct and indirect subsidiaries which are banks, merchant banks

or securities companies.

	(a)	a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Financial Holding Companies Act) in excess of 10% (or in the case of a financial holding company controlling regional banks only, 15%) in the aggregate of the financial holding company’s total issued voting shares; or
	(b)	a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Financial Holding Companies Act) more than 4% in the aggregate of the total issued voting shares of the financial holding company controlling nationwide banks (excluding a financial holding company controlling regional banks only), excluding shares related to the shareholding restrictions on non-financial business group companies as described below, where such shareholder is the largest shareholder or has actual control over the major business affairs of the financial holding company through, for example, appointment and dismissal of the officers pursuant to the Presidential Decree of the Financial Holding Companies Act.

	Restrictions on Transactions Among Direct and Indirect Subsidiaries and Financial Holding Company

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	Disclosure of Management Performance

	Restrictions on Shareholdings in Other Companies

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	Restrictions on Shareholdings by Direct and Indirect Subsidiaries

	Restrictions on Transactions between a Financial Holding Company and its Major Shareholder

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	Restriction on Financial Holding Company Ownership

	(i)	any same shareholder group with aggregate net assets of all non-financial business companies belonging to such group of not less than 25% of the aggregate net assets of all members of such group;
	(ii)	any same shareholder group with aggregate assets of all non-financial business companies belonging to such group of not less than W2 trillion; or
	(iii)	any mutual fund in which a same shareholder group identified in (1) or (2) above owns more than 4% of the total shares issued and outstanding of such mutual fund.

	General

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	•	capital increases or reductions;
	•	stock cancellations or consolidations;
	•	transfers of a part or all of business;
	•	sales of assets;
	•	closures of branch offices;
	•	mergers or becoming a subsidiary under the Financial Holding Companies Act of a financial holding company;
	•	acquisition of a bank by a third party;
	•	suspensions of a part or all of business operation; or
	•	assignments of contractual rights and obligations relating to financial transactions.

	Capital Adequacy

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	Liquidity

	Financial Exposure to Any Individual Customer and Major Shareholders

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	•	a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Bank Act) in excess of 10% (or in the case of regional banks, 15%) in the aggregate of the bank’s total issued voting shares; or
	•	a shareholder holding (together with persons who have a special relationship with such shareholder as defined in the Presidential Decree of the Bank Act) more than 4% in the aggregate of the bank’s (excluding regional banks) total issued voting shares (excluding shares relating to the shareholding restrictions on non-financial group companies, which include:

	•	any same shareholder group with the aggregate net assets of all non-financial companies belonging to such group of not less than 25% of the aggregate net assets of all members that are company of such group;
	•	any same shareholder group with aggregate assets of all non-financial companies belonging to such group of not less than W2 trillion; or
	•	any mutual fund in which a same shareholder group identified in (1) or (2) above, owns more than 4% of the total shares issued and outstanding),

	where such shareholder is the largest shareholder or is able to actually control the major business affairs of the bank, for example, through appointment and dismissal of the chief executive officer or of the majority of the executives.

	Interest Rates

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	Lending to Small- and Medium-Sized Enterprises

	Disclosure of Management Performance

	•	loans bearing no profit made to a single business group in an amount exceeding 10% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month (where the loan exposure to such borrower is calculated as the sum of substandard credits, doubtful credits and estimated loss credits) except where the loan exposure to a single business group is not more than W4 billion;
	•	any financial incident involving embezzlement, malfeasance or misappropriation of funds the amount of which exceeds 1% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) occurs, unless the bank has lost or expects to lose not more than 1 billion as a result thereof, or the Governor of the Financial Supervisory Service has made a public announcement regarding such an occurrence;
	•	any loss due to court judgments or similar decisions in civil proceedings in an amount exceeding 1% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month except where the loss is not more than W 1 billion;
	•	any event which can cause a material change in the financial status, such as a capital increase or reduction, issuance of convertible bonds, bonds with warrants, exchangeable bonds, or depositary receipts, cancellation of shares with profit, and split or consolidation of shares;
	•	any event which can cause a material change in a bank’s management, such as knowledge of imposition of a fine (such as negligence fine, surcharges or collection charges) in an amount exceeding 1% (or 0.5% in the case of a large company whose total assets as of the end of the most recent fiscal year is W2 trillion or more (hereinafter the “Large Company”)) or more of the bank’s Tier I and Tier II capital, proposal or confirmation of a litigation that can have a material effect on the management of the bank such as litigation regarding appointment or dismissal of an officer, or a change in bank’s largest shareholder, representative director, major shareholder, affiliate company, or a business objective;
	•	any event which can cause a material change in the bank’s property, such as a natural disaster which causes damages in an amount exceeding 5% (or 2.5% in the case of a Large Company) or more of its total assets as of the end of the most recent fiscal year, or giving or receiving of a gift in excess of 1% (or 0.5% in the case of a Large Company) or more of the bank’s Tier I and Tier II capital;
	•	any event which can cause a material change in the bank’s credit or liability, such as dissolution or dishonoring of a bill or a check of an unlisted company in which the bank invested 3% (or 1.5% in the case of a Large Company) or more of the bank’s Tier I and Tier II capital, or commencement or termination of any court receivership of the bank or notification from the court thereof;
	•	any event which can cause a material change in the bank’s investment, such as acquisition or sale of fixed assets in an amount exceeding 5% (or 2.5% in the case of a Large Company) of its total assets, investment in other companies in an amount exceeding 5% (or 2.5% in the case of a Large Company)

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		or more of the bank’s Tier I and Tier II capital, becoming an oligopoly shareholder (meaning anyone owning 51% or more of the total issued and outstanding shares of a company, including the shares owned by specially related persons, as defined under the Framework Act on National Taxes) of a mutual savings bank or a change in such shareholder status;
	•	any event which can cause a material change in the bank’s profit or loss, such as an increase or decrease in profit or loss of 30% (or 15% in the case of a Large Company) or more when compared to the previous fiscal year, or profit or loss from derivative transaction representing 5% (or 2.5% in the case of a Large Company) or more of the bank’s Tier I and Tier II capital; and
	•	any other events which can have material effects on the bank’s operation, such as payment of cash dividend, changes in accounting policy, or distribution of stock option.

	Restrictions on Lending

	•	loans made for the purpose of speculation in commodities or securities;
	•	loans made directly or indirectly on the pledge of a bank’s own shares, or on the pledge of shares in excess of 20% of the issued and outstanding shares of any other corporation (subject to certain exceptions with respect to financing for infrastructure projects);
	•	loans made directly or indirectly to enable a natural or juridical person to buy the bank’s own shares;
	•	loans made directly or indirectly to finance political campaigns and other activities;
	•	loans made to any of the bank’s officers or employees other than petty loans of up to (1) W20 million in the case of a general loan, (2) W50 million in the case of a general loan plus a housing loan, or (3) W60 million in the aggregate for general loans, housing loans and loans to pay damages arising from wrongful acts of employees in financial transactions;
	•	credit (including loans) provided on the pledge of shares of a subsidiary corporation of the bank or to enable a natural or juridical person to buy shares of a subsidiary corporation of the bank; and
	•	loans made to any officers or employees of a subsidiary corporation of the bank other than petty loans of up to W20 million in the case of a general loan or W50 million in the aggregate in the case of general and housing loans.

	Restrictions on Investments in Property

	Restrictions on Shareholdings in Other Companies

	•	the company issuing such shares is engaged in category of financial businesses set forth by the Financial Supervisory Commission (including private equity funds); or
	•	the acquisition of shares by the bank is necessary for the corporate restructuring of the issuer and is approved by the Financial Supervisory Commission.

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	•	the total investment in companies in which the bank owns more than 15% of the outstanding shares with voting rights does not exceed 15% of the sum of Tier I and Tier II capital (less any capital deductions); or
	•	the acquisition satisfies the requirements determined by the Financial Supervisory Commission.

	Restrictions on Bank Ownership

	•	up to 10% of a nationwide bank’s outstanding voting shares with the approval of the Financial Supervisory Commission under the condition that such non-financial group companies will not exercise voting rights in respect of such shares in excess of the 4% limit; and
	•	in the event that a foreigner, as defined in the Foreign Investment Promotion Act, owns in excess of 4% of a nationwide bank’s outstanding voting shares, up to 10% of such bank’s outstanding voting shares without the approval of the Financial Supervisory Commission, and in excess of 10%, 25% or 33% of such bank’s outstanding voting shares, with the approval of the Financial Supervisory Commission, up to the number of shares owned by such foreigner.

	Deposit Insurance System

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	Restrictions on Foreign Exchange Position

	Trust Business

	•	under the Bank Act, assets accepted in trust by a bank in Korea must be segregated from its other assets in the accounts of such bank; accordingly, banks engaged in the banking and trust businesses must maintain two separate accounts, the “banking accounts” and the “trust accounts,” and two separate sets of records which provide details of their banking and trust businesses, respectively; and
	•	assets comprising the trust accounts are not available to depositors or other general creditors of such bank in the event the trustee is liquidated or is wound up.

	•	prohibitions against officers, directors and employees of one particular business operation from serving as an officer, director and employee in another business operation, except where an officer or a director (1) serving in two or more business operations with no significant conflict of interest in accordance with the Presidential Decree on the Act on Business of Operating Indirect Investment and Asset or

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		(2) serving in a trustee business or a custodian business and simultaneously serving in a general office administrator business in accordance with the Act on Business of Operating Indirect Investment and Asset;
	•	prohibitions against the joint use or sharing of computer equipment or office equipment; and
	•	prohibitions against the sharing of information by and among officers, directors and employees engaged in the different business operations.

	•	acting as trustee of an investment trust managed by such bank;
	•	purchasing with such bank’s own funds beneficiary certificates of an investment trust managed by such bank;
	•	using in its sales activities information relating to the trust property of an investment trust managed by such bank;
	•	selling through a financial institution established under the Bank Act beneficiary certificates of an investment trust managed by such bank;
	•	establishing a short-term financial indirect investment vehicle; and
	•	establishing a mutual fund.

	Laws and Regulations Governing Other Business Activities

	General

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	Restrictions on Scope of Business

	Capital Adequacy

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	Liquidity

	Restrictions on Funding

	Restrictions on Loans to Affiliate Companies

	Restrictions on Assistance to Other Companies

	Restrictions on Investment in Real Property

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	Restrictions on Shareholding in Other Companies

	Disclosure and Reports

	Risk of Loss due to Lost, Stolen, Forged or Altered Credit Cards

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	•	maximum limits for cash advances on credit cards;
	•	use restrictions on debit cards with respect to per day or per transaction usage; or
	•	aggregate issuance limits and maximum limits on the amount per card on pre-paid cards.

	Lending Ratio in Ancillary Business

	Issuance of New Cards and Solicitation of New Card Holders

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	Compliance Rules on Collection of Receivable Claims

	•	exerting violence or threat of violence;
	•	demanding payment or pressuring a Related Party (a guarantor of the debtor, blood relative or fiancée of the debtor, a person living in the same household as the debtor or a person working in the same workplace as the debtor) without just cause with respect to payment for the obligations of the debtor;
	•	providing false information relating to the debtor’s obligation to the debtor or his/her Related Party;
	•	threatening to sue or suing the debtor for fraud despite lack of affirmative evidence to establish that the debtor has submitted forged or false documentation with respect to his/her capacity to make payment;
	•	visiting or telephoning the debtor during late hours between 21:00 — 08:00 hours; and
	•	utilizing other uncustomary methods to collect the receivables thereby injuring the privacy or the peacefulness in the workplace of the debtor or his/her related party.

	General

	•	capital increase or reduction;
	•	a stock cancellation or consolidation;
	•	a transfer of business;
	•	closing of branch offices;
	•	acquisition of such company by a third party;
	•	a merger with any other entity or becoming a subsidiary (under the Financial Holding Companies Act) of a financial holding company;
	•	a suspension or assignment of a part or all of business operation; or
	•	an assignment of contractual rights and obligations relating to financial transactions.

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	Scope of Business

	•	brokerage, dealing, or underwriting business of equity of undisclosed association (as defined under the Korean Commercial Code) or limited partnership and certain derivative securities linked with prices, interest rates, indices and indicators relating to securities (under the Securities and Exchange Act and the Presidential Decree), foreign securities of similar character, currencies, commodities (under the Futures and Exchange Act), or linked with credit risks;
	•	trust business under the Trust Business Act or over-the-counter derivative trading linked with credit risks, if the company obtains necessary license from the Financial Supervisory Commission. A securities company intending to engage in the business of over-the-counter derivative trading will be subject to the limit of 30% of its equity capital as the total amount of risks from over-the-counter derivative trading, and further subject to the limit of 5% of equity capital for the amount of risks from a credit-linked derivative transaction with a person or a company (including specially-related person of such person or company), with the W100 billion minimum equity capital requirement in order to conduct over-the-counter derivative trading; and
	•	ancillary businesses such as (1) real estate brokerage or consulting business on real estates owned by clients who are being provided with services relating to brokerage on mergers and acquisitions or business management and financing consulting, (2) selling books, reports or electronic documents containing securities-related information and (3) arranging loans to customers of securities companies based on business alliances established with such securities companies.

	Regulations on Financial Soundness — Capital Adequacy

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	Other Provisions on Financial Soundness

	•	restrictions on the holdings by a securities company of securities issued by another company which is the largest shareholder or the major shareholder (each as defined under the Securities and Exchange Act) of such securities company;
	•	restrictions on providing money or credit to the largest shareholder (including specially-related persons of such shareholder), major shareholders, officers and specially-related persons of the securities company; and
	•	special provisions concerning the payment guarantee by a securities company. For instance, a securities company is not allowed to provide payment guarantees for third parties other than its overseas subsidiaries. Also, a securities company is prohibited from providing new guarantees for corporate bonds, except for roll-over guarantees in connection with repayment of bonds previously guaranteed by the securities company with certain restrictions.

	Business Conduct Rules

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	Disclosure and Reports

	Customer Protection

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				Area (Square Meters)
								Site
Type of Facility		Location		Building				(If Different)
Registered office and corporate headquarters		120, 2-Ga, Taepyung-Ro, Jung-Gu, Seoul 100- 102, Korea			59,743				4,416
Good Morning Shinhan Securities		23-2, Yoido-Dong, Youngdungpo-Gu, Seoul, Korea 150-312			70,170				4,765
Chohung Bank headquarters		14, 1-Ga, Namdaemun-Ro, Jung-Gu, Seoul, Korea			20,379				6,724
Chohung Centennial Building		117, Samgak-Dong, Jung-Gu, Seoul, Korea			19,697				1,389
Chohung Myongdong Branch		53-1, 1-Ga, Myong-Dong, Jung-Gu, Seoul, Korea			8,936				1,014
Chohung Youngdungpo Branch		57, 4-Ga, Youngdungpo-Dong, Youngdungpo- Gu, Seoul, Korea			6,171				1,983
Shinhan IT center		781, Janghang-Dong, Ilsan-Gu, Goyang-Si, Kyunggi Province, Korea			24,496				5,856
Chohung IT center		731, Yoksam-Dong, Kangnam-Gu, Seoul, Korea			23,374				7,964
Chohung Cheongju IT back-up center		1704-Ga, Yongam-Dong, Sangdang-Gu, Cheongju-Si, Chungcheongbuk-Do			5,756				6,398

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ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS

	The Korean Economy

	Government Regulation and Policy

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	Market Developments

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										Certificate
		Corporate				Treasury				of Deposit
		Bond Rates(1)				Bond Rates(2)				Rates(3)
June 30, 1998			16.00				N/A				16.30
December 31, 1998			8.00				6.95				7.70
June 30, 1999			7.96				7.20				6.35
December 31, 1999			9.95				9.03				7.34
June 30, 2000			9.37				8.31				7.18
December 31, 2000			8.13				6.70				6.87
June 30, 2001			7.10				5.93				5.57
December 31, 2001			7.04				5.91				4.86
June 30, 2002			6.59				5.66				4.91
December 31, 2002			5.68				5.11				4.90
June 30, 2003			5.45				4.16				4.30
December 31, 2003			5.58				4.82				4.36
June 30, 2004			4.84				4.24				3.93
December 31, 2004			3.72				3.28				3.43
March 31, 2005			4.33				3.90				3.54

(1)	Measured by the yield on three-year AA- rated corporate bonds.
(2)	Measured by the yield on three-year treasury bonds.
(3)	Measured by the yield on certificates of deposit (with maturity of 91 days).

	Financial Holding Company Restructuring

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	Financial Impact of Acquisitions

	Acquisition of Chohung Bank

			From September 1 to
			December 31,
			2003				2003
			(In billions of Won
			and millions of US$,
			except per common
			share data)
Interest and dividend income			W	1,286			$	1,079
Interest expense				574				482
	Net interest income			712				597
Provision for loan losses				427				358
Provision for guarantees and acceptances				(19	)			(16	)
Non interest income				163				137
Non interest expense				558				468
Income tax expense				19				16
Minority interest				1				1
	Net loss		W	(111	)		$	(93	)

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		As of December 31,
		2003				2003
		(In billions of Won and
		millions of US$)
Assets
Cash and cash equivalents		W	1,276			$	1,070
Restricted cash			502				421
Interest-bearing deposits in banks			159				133
Call loans and securities purchased under resale agreements			392				329
Trading assets:
Trading securities			1,191				999
Derivatives instruments			156				131
Securities:
Available-for-sale securities			7,274				6,102
Held-to-maturity securities			—				—
Loans (net of allowance for loan losses of W2,498 billion in 2003)			41,233				34,592
Customers’ liability on acceptances			1,107				928
Premises and equipment, net			1,164				977
Goodwill and intangible assets			35				29
Security deposits			483				405
Other assets			2,138				1,796
Total assets		W	57,110			$	47,912
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Interest-bearing		W	38,917			$	32,649
Noninterest-bearing			322				270
Trading liabilities			128				107
Acceptances outstanding			1,107				928
Short-term borrowings			4,804				4,030
Secured borrowings			1,432				1,201
Long-term debt			6,504				5,456
Accrued expenses and other liabilities			2,628				2,206
Total liabilities			55,842				46,847
Minority interest			15				12
Stockholders’ equity:
Common stock			3,596				3,016
Additional paid-in capital			1,722				1,445
Accumulated deficit			(4,300	)			(3,607	)
Accumulated other comprehensive income, net of taxes			235				199
Total stockholders’ equity			1,253				1,053
Total liabilities, minority interest and stockholders’ equity		W	57,110			$	47,912

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	Acquisition of Good Morning Securities

	•	the uncertainties of the global economy following the terrorist attack in Bali, Indonesia and as the Iraqi war began to unfold;
	•	the uncertainties of the Korean economy due to the presidential election in late 2002 and increased tensions on the Korean peninsula with North Korea reported to have resumed its nuclear program; and
	•	significant deterioration of the financial market and a 40% decline in the share price of Good Morning Shinhan Securities since the acquisition.

	Acquisition of Jeju Bank

	Spin-off of Shinhan Card

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	Allowance for Credit Losses

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	•	loans classified as “substandard” or below according to the asset classification guidelines of the Financial Supervisory Commission;
	•	loans that are 90 days or more past due; and
	•	loans which are “troubled debt restructuring” as defined under U.S. GAAP.

	Fair Value of Financial Instruments

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	Goodwill and Other Intangible Assets

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	Consolidation

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	Contingent Liabilities

	Stock Based Compensation

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	Income Taxes

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	Average Balance Sheet and Related Interest

					Year Ended December 31,
					2002												2003												2004
									Interest												Interest												Interest
					Average				Income/				Yield/				Average				Income/				Yield/				Average				Income/				Yield/
					Balance(1)				Expense				Rate				Balance(1)				Expense				Rate				Balance(1)				Expense				Rate
					(In billions of Won, except percentages)
Assets:
Interest-bearing deposits in banks					W	1,181			W	49				4.15	%		W	1,618			W	66				4.08	%		W	1,322			W	44				3.33	%
Call loans and securities purchased under resale agreements						1,150				42				3.65				1,609				48				2.98				3,012				93				3.09
Trading assets						967				52				5.38				1,824				102				5.59				3,666				168				4.58
Securities(2)						11,143				749				6.72				17,053				928				5.44				20,924				1,265				6.05
Loans:(3)
	Commercial and industrial					14,690				822				5.60				25,294				1,279				5.06				35,753				1,876				5.25
	Other commercial					8,616				631				7.32				13,434				851				6.33				21,632				1,311				6.06
	Lease financing					617				62				10.05				786				70				8.91				1,039				62				5.97
		Total corporate				23,923				1,515				6.33				39,514				2,200				5.57				58,424				3,249				5.56
	Mortgage and home equity					9,973				627				6.29				12,076				697				5.77				21,408				1,138				5.32
	Credit cards					2,371				301				12.70				3,568				495				13.87				5,575				609				10.92
	Other consumer					4,530				390				8.61				10,747				795				7.40				14,481				1,146				7.91
		Total consumer				16,874				1,318				7.81				26,391				1,987				7.53				41,464				2,893				6.98
			Total loans			40,797				2,833				6.94				65,905				4,187				6.35				99,888				6,142				6.15
Other interest-earning assets						154				10				6.49				—				—				—				—				—				—
Total interest-earning assets					W	55,392			W	3,735				6.74	%		W	88,009			W	5,331				6.06	%		W	128,812			W	7,712				5.99	%
Non-interest-earning assets:
	Cash and cash equivalents					1,201				—								2,165				—								3,467				—
	Other assets					5,951				—								5,990				—								12,507				—
	Total assets				W	62,544			W	3,735							W	96,164			W	5,331							W	144,786			W	7,712
Liabilities:
Interest-bearing deposits:
	Interest-bearing demand deposits				W	432			W	6				1.39	%		W	2,653			W	37				1.39	%		W	7,880			W	105				1.33	%
	Savings deposits					9,924				184				1.85				15,922				232				1.46				21,987				272				1.24
	Certificates of deposit					3,146				154				4.90				4,955				220				4.44				6,735				275				4.08
	Other time deposits					19,468				956				4.91				27,780				1,164				4.19				41,863				1,605				3.83
	Mutual installment deposits					1,664				101				6.07				2,110				113				5.36				2,487				113				4.54
		Total interest-bearing deposits				34,634				1,401				4.05				53,420				1,766				3.31				80,952				2,370				2.93

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				Year Ended December 31,
				2002												2003												2004
								Interest												Interest												Interest
				Average				Income/				Yield/				Average				Income/				Yield/				Average				Income/				Yield/
				Balance(1)				Expense				Rate				Balance(1)				Expense				Rate				Balance(1)				Expense				Rate
				(In billions of Won, except percentages)
Short-term borrowings					7,226				253				3.50				11,400				322				2.82				14,934				370				2.48
Secured borrowings					4,508				243				5.39				5,331				207				3.88				7,102				299				4.21
Long-term debt					6,184				391				6.32				13,736				703				5.12				20,136				1,099				5.46
Other interest-bearing liabilities					384				17				4.43				—				—				—				—				—				—
Total interest bearing liabilities				W	52,936			W	2,305				4.35	%		W	83,887			W	2,998				3.57	%		W	123,124			W	4,138				3.36	%
Non-interest-bearing liabilities:
	Non-interest-bearing deposits				982				—								1,002				—								2,287				—
	Trading liabilities				424				—								290				—								668				—
	Acceptance outstanding				2,515				—								1,416				—								1,539				—
	Accrued expenses and other liabilities				2,003				—								5,765				—								11,455				—
	Minority interest				—				—								428				—								324				—
	Redeemable convertible preferred stock				—				—								263				—								723				—
	Stockholders’ equity				3,684				—								3,113				—								4,666				—
		Total liabilities and stockholders’ equity		W	62,544			W	2,305							W	96,164			W	2,998							W	144,786			W	4,138
Net interest spread(4)									2.39	%											2.48	%											2.63	%
Net interest margin(5)									2.58	%											2.65	%											2.78	%
Average asset liability ratio(6)									104.64	%											104.91	%											104.62	%

(1)	Average balances are based on (a) daily balances for Shinhan Bank, Chohung Bank and Jeju Bank and (b) quarterly balances for other subsidiaries.
(2)	The average balance and yield on securities are based on amortized cost. The yield on the available-for-sale portfolio is based on average historical cost balances, therefore, the yield information does not give effect to changes in fair value that are reflected as a component of stockholders’ equity.
(3)	Non-accruing loans are included in the respective average loan balances. Income on such non-performing loans is no longer recognized from the date the loan is placed on nonaccrual status. We reclassify loans as accruing when interest (including default interest) and principal payments are current.
(4)	The difference between the average rate of interest earned on interest-earning assets and the average rate of interest paid on interest-bearing liabilities.
(5)	The ratio of net interest income to average interest-earning assets.
(6)	The ratio of average interest-earning assets to average interest-bearing liabilities.

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					From 2002 to 2003
					Interest Increase (Decrease)
					Due to Change in
					Volume				Rate				Change
					(In billions of Won)
Increase (decrease) in interest income
Interest-bearing deposits in banks					W	18			W	(1	)		W	17
Call loans and securities purchased under resale agreements						15				(9	)			6
Trading assets						48				2				50
Securities						342				(163	)			179
Loans:
	Commercial and industrial					543				(86	)			457
	Other commercial					314				(94	)			220
	Lease financing					16				(8	)			8
		Total corporate				873				(188	)			685
	Mortgage and home equity					124				(54	)			70
	Credit cards					164				30				194
	Other consumer					467				(62	)			405
		Total consumer				755				(86	)			669
			Total loans			1,628				(274	)			1,354
Other interest-earning assets						(10	)			—				(10	)
	Total interest income					2,041				(445	)			1,596
Increase (decrease) in interest expense
Interest bearing deposits:
	Demand deposits					31				—				31
	Savings deposits					94				(46	)			48
	Certificates of deposit					81				(15	)			66
	Other time deposits					364				(156	)			208
Mutual installment deposits						25				(13	)			12
	Total interest-bearing deposits					595				(230	)			365
Short-term borrowings						125				(56	)			69
Secured borrowings						39				(75	)			(36	)
Long-term debt						399				(87	)			312
Other interest-bearing liabilities						(17	)			—				(17	)
	Total interest expense					1,141				(448	)			693
Net increase (decrease) in net interest income					W	900			W	3			W	903

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					From 2003 to 2004
					Interest Increase (Decrease)
					Due to Change in
					Volume				Rate				Change
					(In billions of Won)
Increase (decrease) in interest income
Interest-bearing deposits in banks					W	(11	)		W	(11	)		W	(22	)
Call loans and securities purchased under resale agreements						43				2				45
Trading assets						87				(21	)			66
Securities						226				111				337
Loans:
	Commercial and industrial					547				50				597
	Other commercial					498				(38	)			460
	Lease financing					19				(27	)			(8	)
		Total corporate				1,064				(15	)			1,049
	Mortgage and home equity					500				(59	)			441
	Credit cards					235				(121	)			114
	Other consumer					292				59				351
		Total consumer				1,027				(121	)			906
			Total loans			2,091				(136	)			1,955
Other interest-earning assets						—				—				—
		Total interest income				2,436				(55	)			2,381
Increase (decrease) in interest expense
Interest bearing deposits:
	Demand deposits					70				(2	)			68
	Savings deposits					79				(39	)			40
	Certificates of deposit					74				(19	)			55
	Other time deposits					547				(106	)			441
	Mutual installment deposits					19				(19	)			—
		Total interest-bearing deposits				789				(185	)			604
	Short-term borrowings					91				(43	)			48
	Secured borrowings					73				19				92
	Long-term debt					347				49				396
	Other interest-bearing liabilities					—				—				—
		Total interest expense				1,300				(160	)			1,140
Net increase (decrease) in net interest income					W	1,136			W	105			W	1,241

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	2004 Compared to 2003

	Net Interest Income

				Year Ended December 31,
				2003				2004				% Change
				(In billions of Won,
				except percentages)
Interest and dividend income:
	Interest and fees on loans			W	4,187			W	6,142				46.7	%
	Interest and dividends on securities				928				1,265				36.3
	Trading assets				102				168				64.7
	Other interest income				114				137				20.2
		Total interest and dividend income		W	5,331			W	7,712				44.7
Interest expense:
	Interest on deposits			W	1,766			W	2,370				34.2	%
	Interest on short-term borrowings				315				341				8.3
	Interest on secured borrowings				207				299				44.4
	Interest on long-term debt				703				1,099				56.3
	Other interest expense				7				29				314.3
		Total interest expense			2,998				4,138				38.0
Net interest income				W	2,333			W	3,574				53.2	%
Net interest margin(1)					2.65	%			2.78	%

(1)	The ratio of net interest income to average interest earning assets. See “— Average Balance Sheet and Volume and Rate Analysis — Average Balance Sheet and Related Interest.”

	•	a 41.3% increase in commercial and industrial loans from W25,294 billion in 2003 to W35,753 billion in 2004, and an increase by 19 basis points in the average yield on such loans from 5.06% in 2003 to 5.25% in 2004;
	•	a 61.0% increase in other commercial loans from W13,434 billion in 2003 to W21,632 billion in 2004, partially offset by a decline of 27 basis points in the average yield on such loans from 6.33% in 2003 to 6.06% in 2004;
	•	a 77.3% increase in mortgage and home equity loans from W12,076 billion in 2003 to W21,408 billion in 2004, partially offset by a decline of 45 basis points in the average yield on such loans from 5.77% in 2003 to 5.32% in 2004; and
	•	a 34.7% increase in other consumer loans from W10,747 billion in 2003 to W14,481 billion in 2004, and an increase by 51 basis points in the average yield on such loans from 7.40% in 2003 to 7.91% in 2004.

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	Provision for Loan Losses

		As of December 31,
		2003				2004				% Change
		(In billions of Won,
		except percentages)
Corporate		W	428			W	(293	)			N/M
Mortgages and home equity			1				(1	)			N/M
Other consumer			63				130				106.4	%
Credit cards			519				359				(30.8	)
Total provision for loan losses		W	1,011			W	195				(80.7	)%

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	Noninterest Income

			As of December 31,
			2003				2004				% Change
			(In billions of Won,
			except percentages)
Commissions and fees from non-trust management:
	Brokerage fees and commissions(1)		W	260			W	232				(10.8	)%
	Other fees and commissions(2)			580				947				63.3
Net trust management fees(3)				59				84				42.4
Net trading profits				72				143				98.6
Net gains (losses) on securities				(128	)			(77	)			(39.8	)
Other(4)				275				763				177.5
	Total noninterest income		W	1,118			W	2,092				87.1	%

(1)	Consists of commissions, fees and markup on securities brokerage activities.
(2)	Includes commissions received on remittance, commissions received on imports and export letters of credit and commissions received from foreign exchange transactions.
(3)	Consists principally of fees from management of trust accounts in our banking operations.
(4)	Includes primarily gain on disposal of premise and equipment and gain on foreign exchange spot contracts.

	Noninterest Expenses

			Year Ended December 31,
			2003				2004				% Change
			(In billions of Won,
			except percentages)
Employee compensation and severance benefits			W	544			W	884				62.5	%
Depreciation and amortization				247				429				73.7
General and administrative expenses				553				876				58.4
Impairment loss on intangible asset				—				2				—
Write-down of other investments				40				16				(60.0	)
Credit card fees				90				147				63.3
Other(1)				463				798				72.4
	Total noninterest expenses		W	1,937			W	3,152				62.7	%

(1)	Includes other taxes, fees and losses from sale of tangible assets.

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	Income Tax Expense

	Net Income Before Extraordinary Item

	2003 Compared to 2002

	Net Interest Income

				Year Ended December 31,
				2002				2003				% Change
				(In billions of Won,
				except percentages)
Interest and dividend income:
	Interest and fees on loans			W	2,833			W	4,187				47.8	%
	Interest and dividends on securities				749				928				23.9
	Trading assets				52				102				96.2
	Other interest income				101				114				12.9
		Total interest and dividend income		W	3,735			W	5,331				42.7	%
Interest expense:
	Interest on deposits			W	1,401			W	1,766				26.1	%
	Interest on short-term borrowings				253				315				24.5
	Interest on secured borrowings				243				207				(14.8	)
	Interest on long-term debt				391				703				79.8
	Other interest expense				17				7				(58.8	)
		Total interest expense			2,305				2,998				30.1
Net interest income				W	1,430			W	2,333				63.1	%
Net interest margin(1)					2.58	%			2.65	%

(1)	The ratio of net interest income to average interest earning assets. See “— Average Balance Sheet and Volume and Rate Analysis — Average Balance Sheet and Related Interest.”

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	•	a 72.2% increase in commercial and industrial loans from W14,690 billion in 2002 to W25,294 billion in 2003, partially offset by a decline of 54 basis points in the average yield on such loans from 5.60% in 2002 to 5.06% in 2003.
	•	a 137.2% increase in other consumer loans from W4,530 billion in 2002 to W10,747 billion in 2003, partially offset by a decline of 121 basis points in the average yield on such loans from 8.61% in 2002 to 7.40% in 2003.

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	Provision for Loan Losses

		As of December 31,
		2002				2003				% Change
		(In billions of Won,
		except percentages)
Corporate		W	(6	)		W	428				N/M
Mortgages and home equity			23				1				(95.7	)%
Other consumer			53				63				18.9
Credit cards			166				519				212.7
Total provision for loan losses		W	236			W	1,011				328.4	%

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	Noninterest Income

			As of December 31,
			2002				2003				% Change
			(In billions of Won,
			except percentages)
Commissions and fees from non-trust management:
	Brokerage fees and commissions(1)		W	170			W	260				52.9	%
	Other fees and commissions(2)			304				580				90.8
Net trust management fees(3)				129				59				(54.3	)
Net trading profits				88				72				(18.2	)
Net gains (losses) on securities				143				(128	)			N/M
Other(4)				203				275				35.5
	Total noninterest income		W	1,037			W	1,118				7.8	%

(1)	Consists of commissions, fees and markup on securities brokerage activities.
(2)	Includes commissions received on remittance, commissions received on imports and export letters of credit and commissions received from foreign exchange transactions.
(3)	Consists principally of fees from management of trust accounts in our banking operations.
(4)	Includes primarily gain on disposal of premise and equipment and gain on foreign exchange spot contracts.

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	•	a 54.3% decrease in net trust management fees due primarily to a shift in trust account volume from trust account products that carry higher management fees such as household long-term trusts to those with lower management fees such as specified money trusts; and
	•	our recording a W128 billion of net loss on securities in 2003 as compared to a W143 billion of net gain in 2002, primarily reflecting impairment losses in 2003 relating to our securities exposure to LG Card, Hyundai Engineering & Construction and Ssangyong Cement Industrial and unusually large gains from dispositions of securities in 2002 which did not recur in 2003.

	Noninterest Expenses

			Year Ended December 31,
			2002				2003				% Change
			(In billions of Won,
			except percentages)
Employee compensation and severance benefits			W	357			W	544				52.4	%
Depreciation and amortization				104				247				137.5
General and administrative expenses				410				553				34.9
Impairment loss on goodwill				137				—				(100.0	)
Write-down of other investments				31				40				29.0
Credit card fees				45				90				100.0
Other(1)				218				463				112.4
	Total noninterest expenses		W	1,302			W	1,937				48.8	%

(1)	Includes other taxes, fees and losses from sale of tangible assets.

	•	a 34.9% increase in general and administrative expenses primarily attributable to increases in employee welfare expenses and advertisement and marketing expenses to promote our corporate brand image as an integrated financial holding company;
	•	a 52.4% increase in employee compensation and severance benefits primarily due to an increase in our labor force following our acquisition of Chohung Bank and the introduction of employee stock ownership plans by our holding company in 2003; and
	•	a 112.4% increase in other expenses, primarily reflecting commissions paid on collection of over due loans and deposit insurance premiums paid to the Korea Deposit Insurance Corporation,

	Income Tax Expense

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	Net Income Before Extraordinary Item

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	•	Shinhan Bank, further consisting of the following:

	•	Chohung Bank, further consisting of the following:

	•	securities brokerage services of Good Morning Shinhan Securities;
	•	credit card services of Shinhan Card; and
	•	others.

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				Segment Results(1)												Total Revenues(2)
				Year Ended December 31,
				2002				2003				2004				2002				2003				2004
				(In billions of Won, except percentages)
Shinhan Bank:
	Retail banking			W	422			W	560			W	655			W	923			W	1,221			W	1,401
	Corporate banking				351				212				550				641				749				1,006
	Treasury and securities investment				103				62				82				737				904				1,292
	Other banking services				(190	)			(148	)			(87	)			348				339				469
Chohung Bank:(3)
	Retail banking				—				30				132				—				513				1,395
	Corporate banking				—				(58	)			185				—				133				333
	Treasury and international business				—				(53	)			(5	)			—				208				2,611
	Credit card				—				(89	)			(320	)			—				237				590
	Other banking services				—				(50	)			275				—				(3	)			498
Good Morning Shinhan Securities					35				69				44				581				656				697
Shinhan Card					158				(90	)			6				291				322				348
Other subsidiaries					34				36				10				208				305				355
		Total(4)		W	913			W	481			W	1,527			W	3,729			W	5,584			W	10,995

(1)	Represents income per segment before income taxes.
(2)	Represents net interest income plus noninterest income.
(3)	As we acquired Chohung Bank in August 2003, the segment results for Chohung Bank only reflect the results of operations from the date of our acquisition to December 31, 2003 and is not available on a meaningful comparative basis.
(4)	Before elimination or adjustments.

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	Shinhan Bank’s Retail Banking

			Year Ended December 31,												% Change
			2002				2003				2004				2002/2003				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	718			W	782			W	844				8.9	%			7.9	%
Noninterest income				205				439				557				114.1				26.9
	Total revenues			923				1,221				1,401				32.3				14.7
Provision for loan losses(1)				(46	)			(64	)			(30	)			39.1				(53.1	)
Noninterest expense including depreciation and amortization				(455	)			(597	)			(716	)			31.2				19.9
Segment results(2)			W	422			W	560			W	655				32.7	%			17.0	%

(1)	Includes provision for guarantees and acceptances of W(0.5) billion in 2002. We recorded no such provision in 2003 and 2004.
(2)	Net income per segment before income taxes.

	Comparison of 2004 to 2003

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	Comparison of 2003 to 2002

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	Shinhan Bank’s Corporate Banking

			Year Ended December 31,												% Change
			2002				2003				2004				2002/2003				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	366			W	434			W	530				18.6	%			22.1	%
Noninterest income				275				315				476				14.5				51.1
	Total revenues			641				749				1,006				16.8				34.3
Provision for loan losses(1)				(15	)			(273	)			(66	)			(1,720.0	)			(75.8	)
Noninterest expense including depreciation and amortization				(275	)			(264	)			(390	)			(4.0	)			47.7
Segment results(2)			W	351			W	212			W	550				(39.6	)%			159.4	%

(1)	Includes provision for guarantees and acceptances of W(8.4) billion in 2002. We recorded no such provision in 2003 and 2004.
(2)	Net income per segment before income taxes.

	Comparison of 2004 to 2003

	Comparison of 2003 to 2002

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	Shinhan Bank’s Treasury and Securities Investment

			Year Ended December 31,												% Change
			2002				2003				2004				2002/2003				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	54			W	65			W	4				20.4	%			(93.8	)%
Noninterest income				683				839				1,288				22.8	%			53.5	%
	Total revenues			737				904				1,292				22.7	%			42.9	%
Provision for loan losses				20				11				(8	)			(45.0	)%			N/M
Noninterest expense including depreciation and amortization				(654	)			(853	)			(1,202	)			30.4	%			40.9	%
Segment results(1)			W	103			W	62			W	82				(39.8	)%			32.3	%

(1)	Net income per segment before income taxes.

	Comparison of 2004 to 2003

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	Comparison of 2003 to 2002

	Shinhan Bank’s Other Banking Services

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			Year Ended December 31,												% Change
			2002				2003				2004				2002/2003				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	179			W	212			W	182				18.4	%			(14.2	)%
Noninterest income				169				127				287				(24.9	)			126.0
	Total revenues			348				339				469				(2.6	)			38.3
Provision for loan losses(1)				(129	)			(109	)			(98	)			(15.5	)			(10.1	)
Noninterest expense including depreciation and amortization				(409	)			(378	)			(458	)			(7.6	)			21.2
Segment results(2)			W	(190	)		W	(148	)		W	(87	)			(22.1	)%			(41.2	)%

(1)	Includes provision for guarantees and acceptances of W(0.5) billion, W(0.3) billion and W(1.0) billion in 2002, 2003 and 2004, respectively.
(2)	Net income per segment before income taxes.

	Comparison of 2004 to 2003

	Comparison of 2003 to 2002

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	Chohung Bank’s Retail Banking

			From September 1				Year Ended
			to December 31,				December 31,				% Change
			2003				2004				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	418			W	1,107				164.8	%
Noninterest income				95				288				203.2
	Total revenues			513				1,395				171.9
Provision for loan losses				(150	)			(466	)			210.7
Noninterest expense including depreciation and amortization				(333	)			(797	)			139.3
Segment results(1)			W	30			W	132				340.0	%

(1)	Net income per segment before income taxes.

	Chohung Bank’s Corporate Banking

			From September 1				Year Ended
			to December 31,				December 31,				% Change
			2003				2004				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	62			W	258				316.1	%
Noninterest income				71				75				5.6
	Total revenues			133				333				150.4
Provision for loan losses(1)				(145	)			12				N/M
Noninterest expense including depreciation and amortization				(46	)			(160	)			247.8
Segment results(2)			W	(58	)		W	185				419.0	%

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(1)	Includes provision for guarantees and acceptances of W(35) billion in 2003 and W(22) billion in 2004.
(2)	Net income per segment before income taxes.

	Chohung Bank’s Treasury and International Business

			From September 1				Year Ended
			to December 31,				December 31,				% Change
			2003				2004				2003/ 2004
			(In billions of Won)
Income statement data
Net interest income			W	(26	)		W	(1	)			(96.2	)%
Noninterest income				234				2,612				1,016.2
	Total revenues			208				2,611				1,155.3
Provision for loan losses				—				13				N/M
Noninterest expense including depreciation and amortization				(261	)			(2,629	)			907.3
Segment results(1)			W	(53	)		W	(5	)			(90.6	)%

(1)	Net income per segment before income taxes.

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	Chohung Bank’s Credit Card

			From September 1				Year Ended
			to December 31,				December 31,				% Change
			2003				2004				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	237			W	588				148.1	%
Noninterest income				—				2				N/M
	Total revenues			237				590				148.9
Provision for loan losses				(199	)			(673	)			238.2
Noninterest expense including depreciation and amortization				(127	)			(237	)			86.6
Segment results(1)			W	(89	)		W	(320	)			259.6	%

(1)	Net income per segment before income taxes.

	Chohung Bank’s Other Banking Services

			From September 1				Year Ended
			to December 31,				December 31,				% Change
			2003				2004				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	(10	)		W	138				N/M
Noninterest income				7				360				5,042.9	%
	Total revenues			(3	)			498				N/M
Provision for loan losses				—				83				N/M
Noninterest expense including depreciation and amortization				(47	)			(306	)			551.1
Segment results(1)			W	(50	)		W	275				N/M

(1)	Net income per segment before income taxes.

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	Securities Brokerage Services

			Year Ended December 31,												% Change
			2002				2003				2004				2002/2003				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	22			W	34			W	54				54.5	%			58.8	%
Noninterest income				559				622				643				11.3				3.4
	Total revenues			581				656				697				12.9				6.3
Provision for loan losses				6				—				5				—				N/M
Noninterest expense including depreciation and amortization				(552	)			(587	)			(658	)			6.3				12.1
Segment results(1)			W	35			W	69			W	44				97.1	%			(36.2	)%

(1)	Net income per segment before income taxes.

	Comparison of 2004 to 2003

	Comparison of 2003 to 2002

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	Credit Card Services of Shinhan Card

			Year Ended December 31,												% Change
			2002				2003				2004				2002/2003				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	291			W	322			W	348				10.7	%			8.1	%
Noninterest income				—				—				—				—				N/M
	Total revenues			291				322				348				10.7				8.1
Provision for loan losses				(63	)			(236	)			(176	)			274.6				(25.4	)
Noninterest expense including depreciation and amortization				(70	)			(176	)			(166	)			151.4				(5.7	)
Segment results(1)			W	158			W	(90	)		W	6				N/M				N/M

(1)	Net income per segment before income taxes.

	Comparison of 2004 to 2003

	Comparison of 2003 to 2002

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	Other

			Year Ended December 31,												% Change
			2002				2003				2004				2002/2003				2003/2004
			(In billions of Won)
Income statement data
Net interest income			W	108			W	198			W	155				83.3	%			(21.7	)%
Noninterest income				100				107				200				7.0				86.9
	Total revenues			208				305				355				46.6				16.4
Provision for loan losses				(21	)			9				(33	)			N/M				N/M
Noninterest expense
including depreciation
and amortization				(153	)			(278	)			(312	)			81.7				12.2
Segment results(1)			W	34			W	36			W	10				5.9	%			(72.2	)%

(1)	Net income per segment before income taxes.

	Comparison of 2004 to 2003

	Comparison of 2003 to 2002

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	Assets

					As of December 31,												% Change
					2002				2003				2004				2002/2003				2003/2004
					(In billions of Won, except percentages)
Cash and cash equivalents					W	282			W	1,897			W	2,444				572.7	%			28.8	%
Restricted cash						1,365				3,662				3,301				168.3				(9.9	)
Interest-bearing deposits in banks						125				409				220				227.2				(46.2	)
Call loans and securities purchased under resale agreements						576				1,898				1,591				229.5				(16.2	)
Trading assets:
	Trading securities					926				2,857				4,639				208.5				62.4
	Derivative assets					139				520				1,678				274.1				222.7
Securities:
	Available-for-sale securities					8,737				18,099				18,108				107.2				0.1
	Held-to-maturity securities					4,408				3,605				3,099				(18.2	)			(14.0	)
Loans:
	Corporate					25,788				54,086				54,622				109.7				1.0
	Consumer					19,264				41,209				42,458				113.9				3.0
		Total loans, gross				45,052				95,295				97,080				111.5				1.9
		Deferred origination costs				83				127				99				53.0				(22.0	)
		Less allowance for loan losses				996				3,631				2,311				264.6				(36.4	)
			Total loans, net			44,139				91,791				94,868				108.0				3.4
Customers’ liability on acceptances						928				2,365				2,012				154.8				(14.9	)
Premises and equipment, net						828				2,003				1,848				141.9				(7.7	)
Goodwill and intangible assets						219				1,676				1,660				665.3				(1.0	)
Security deposits						466				966				968				107.3				0.2
Other assets						1,648				4,601				7,072				179.2				53.7
			Total assets		W	64,786			W	136,349			W	143,508				110.5	%			5.3	%

	2004 Compared to 2003

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	2003 Compared to 2002

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	Liabilities and Stockholders’ Equity

				As of December 31,												% Change
				2002				2003				2004				2002/2003				2003/2004
				(In billions of Won, except percentages)
Deposits:
	Interest bearing			W	35,886			W	82,161			W	79,934				129.0	%			(2.7	)%
	Noninterest bearing				1,163				1,328				2,746				14.2				106.8
Trading liabilities					131				513				1,758				291.6				242.7
Acceptances outstanding					928				2,365				2,012				154.8				(14.9	)
Short-term borrowings					6,994				11,204				10,954				60.2				(2.2	)
Secured borrowings					4,706				6,316				6,308				34.2				(0.1	)
Long-term debt					8,235				21,218				23,617				157.7				11.3
Accrued expenses and other liabilities					3,193				6,555				9,713				105.3				48.2
	Total liabilities				61,236				131,660				137,042				115.0				4.1
Minority interest					288				583				66				102.4				(88.7	)
Redeemable convertible preferred stock					—				711				736				N/M				3.5
Stockholders’ equity					3,262				3,395				5,664				4.1				66.8
		Total liabilities, minority interest and stockholders’ equity		W	64,786			W	136,349			W	143,508				110.5	%			5.3	%

	2004 Compared to 2003

	2003 Compared to 2002

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			As of
			December 31, 2004
			(In billions of
			Won)
Deposits			W	82,680
Long-term debt(1)				23,617
Call money				1,156
Borrowings from the Bank of Korea				1,568
Other short-term borrowings				8,230
Asset securitizations				6,308
Redeemable convertible preferred stock				736
Stockholders’ equity				5,664
	Total		W	129,959

(1)	Long-term debt includes redeemable preferred stock.

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		As of June 30, 2005
		S&P				Moody’s
Shinhan Bank			BBB+				Baa1
Chohung Bank			BBB+				Baa1

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	•	a request by the government for credit card companies to effect capital increase in the aggregate amount of W4.6 trillion, as part of their self-rescue efforts;
	•	banks and other financial institutions agreeing with each other to extend the maturity of all debt securities of credit card companies that they hold;
	•	asset management companies agreeing with each other to extend the maturity of 50% of the aggregate amount of the debt securities of credit card companies that they hold which are schedule to mature by June 2003; and
	•	with respect to the remaining 50% of such credit card company debt securities, banks and other financial institutions agreeing with each other to contribute an aggregate amount of W5.6 trillion to purchase such debt securities from asset management companies.

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	Contractual cash obligations

			December 31, 2004
			Payments Due by Period
			Up to				Between 1				Between 3				Beyond
			1 Year				and 3 Years				and 5 Years				5 Years				Total
			(In billions of Won)
Long-term debt(1)			W	10,280			W	6,544			W	3,655			W	3,353			W	23,832
Lease obligations				37				28				7				—				72
Secured borrowings				4,775				710				818				5				6,308
Provisions for accrued severance indemnities(2)				9				3				5				159				176
Deposits(3)				43,058				5,048				793				987				49,886
	Total		W	58,159			W	12,333			W	5,278			W	4,504			W	80,274

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(1)	Long-term debt includes senior debt, subordinated debt and redeemable preferred stock.
(2)	In accordance with our policy and the Korean Labor Standard Law, employees with one year or more of service are entitled, upon termination of employment, to receive a lump sum severance payment based upon the length of their service and the average of the last three months’ wages. We make provisions for accrued severance indemnities based upon the assumption that all employees terminate their employment with us at the same time.
(3)	Deposits include certificate of deposits, other time deposits and mutual installment deposits.

	Commitments and Guarantees

				As of December 31, 2004
				Commitment Expiration by Period
				Up to				Between 1				Beyond
				1 Year				and 5 Years				5 Years				Total
				(In billions of Won)
Commitments to extend credit:
	Corporate			W	36,922			W	1,259			W	1,142			W	39,323
	Credit card lines(1)				10,899				12,707				—				23,606
	Consumer(2)				5,648				312				—				5,961
Commercial letters of credit(3)					3,202				162				—				3,364
Financial Standby letters of credit					252				87				11				351
Other Financial guarantees					692				125				2				819
Performance letters of credit and guarantees					619				251				142				1,012
Liquidity facilities to SPEs					405				780				40				1,225
Acceptances					2,012				—				—				2,012
Loans sold with recourse					—				—				22				20
Market value guarantee on trust accounts					423				317				2,385				3,125
		Total		W	61,074			W	16,000			W	3,744			W	80,818

(1)	Relates to the unused portion of credit card limits that may be cancelled by us after notice to the borrower if we determine that the borrower’s repayment ability is significantly impaired.
(2)	Excludes credit cards.
(3)	These are generally short-term and collateralized by the underlying shipments of goods to which they relate.

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	•	Trading and investment securities;
	•	Deferred taxation;
	•	Guarantees and acceptances (including allowances for losses); and
	•	Provision for loan loss allowances.

	Consolidated Income Statement Data

		Year Ended December 31,
										2002(2)				2003(2)				2004(2)				2004(2)(3)
		2000(1)				2001(1)
										Shinhan				Shinhan				Shinhan				Shinhan
		Shinhan				Shinhan				Financial				Financial				Financial				Financial
		Bank				Bank				Group				Group				Group				Group
		(In billions of Won and millions of US$, except per share data)
Interest income		W	3,627			W	3,607			W	3,646			W	4,996				W7,016			$	6,778
Interest expense			2,734				2,542				2,352				2,997				3,986				3,851
Net interest income			893				1,065				1,294				1,999				3,030				2,927
Provision for loan losses			510				510				193				1,150				1,317				1,272
Net interest income after provision for loan losses			383				555				1,101				849				1,713				1,655
Noninterest revenue(4)			1,173				1,206				2,284				3,076				7,327				7,079
Noninterest expenses(5)			1,094				1,309				2,446				3,139				7,570				7,313
Operating income			462				452				939				786				1,470				1,421
Non-operating income (loss), net			93				44				(86	)			(155	)			(136	)			(131	)
Net income before income tax Expense			555				496				853				631				1,334				1,290
Income tax expenses			182				149				255				254				213				206
Net income before consolidation Adjustment			373				347				598				377				1,121				1,084
Minority interest in loss (earnings) of consolidated subsidiaries			(4	)			—				4				(14	)			(71	)			(69	)
Net income		W	369			W	347			W	602			W	363				W1,050			$	1,015
Per common share data (in currency unit):
Earnings per share-basic		W	1,428			W	1,365			W	2,294			W	1,022				W3,197			$	3,089
Earnings per share-diluted			1,143				1,160				—				1,063				2,820				2,724
Cash dividends per common share			750				1,000				600				600				750				725

(1)	Represents the consolidated income statement of Shinhan Bank for the periods indicated.

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(2)	Represents the consolidated income statement of Shinhan Financial Group for the periods indicated.
(3)	Won amounts are expressed in U.S. dollars at the rate of W1,035.10 per US$1.00, the noon buying rate in effect on December 31, 2004 as quoted by the Federal Reserve Bank of New York in the United States.
(4)	Noninterest revenue includes fees & commissions income, dividends on securities, gains on security valuations and disposals, gains on foreign currency transaction and gains from derivative transactions.
(5)	Noninterest expense is composed of fees & commissions paid or payable, general and administrative expenses, losses on securities valuations and disposals, losses on foreign currency transactions and losses from derivative transactions.

	Consolidated Balance Sheet Data

		Year Ended December 31,
														2003(2)				2004(2)				2004(2)(3)
		2000(1)				2001(1)				2002(1)
														Shinhan				Shinhan				Shinhan
		Shinhan				Shinhan				Shinhan				Financial				Financial				Financial
		Bank				Bank				Bank				Group				Group				Group
		(In billions of Won and millions of US$)
Cash and due from banks		W	2,394			W	2,144			W	2,817			W	6,418			W	6,859			$	6,626
Loans(4)			30,604				35,382				46,030				97,757				99,276				95,910
Less allowance for doubtful accounts(5)			709				602				786				2,836				1,917				1,852
Trading securities			2,481				2,042				2,076				4,877				7,065				6,825
Investment securities			12,260				13,403				13,408				23,127				20,469				19,775
Premises and equipments(6)			684				604				1,101				2,854				2,922				2,823
Other assets(7)			1,854				2,590				2,122				7,024				12,186				11,773
Total assets			49,568				55,563				66,768				139,221				146,860				141,880
Deposits			29,712				34,217				38,722				87,593				87,529				84,561
Borrowings(8)			11,812				9,674				11,352				17,209				14,895				14,390
Debentures			1,722				3,513				8,395				17,748				20,114				19,432
Other liabilities(9)			3,233				4,988				4,337				10,552				16,487				15,928
Total liabilities			46,479				52,392				62,806				133,102				139,025				134,311
Minority interests in consolidated subsidiaries			65				—				321				596				88				85
Stockholders’ equity			3,024				3,171				3,641				5,523				7,747				7,484
Total liabilities, minority interest and stockholders’ Equity		W	49,568			W	55,563			W	66,768			W	139,221			W	146,860			$	141,880

(1)	Represents the consolidated balance sheet data of Shinhan Bank as of the dates indicated.
(2)	Represents the consolidated balance sheet data of Shinhan Financial Group as of the dates indicated. The balance sheet as of December 31, 2003 include restatements to retroactively apply the adoption of SKAS No. 15, Equity Method of Accounting, and prior period adjustments that were not material.
(3)	Won amounts are expressed in U.S. dollars at the rate of W1,035.10 per US$1.00, noon buying rate in effect on December 31, 2004 as quoted by the Federal Reserve Bank of New York in the United States.
(4)	Loans represent the gross amount of loans, before adjustment for the allowance for loan losses. Accrued interest income is included within other assets. The amount of credit card loans was W1,586 billion, W2,093 billion, W2,796 billion, W4,931 billion and W4,248 billion in 2000, 2001, 2002, 2003 and 2004 respectively. The amount of payment in guarantees was W50 billion, W39 billion, W90 billion, W108 billion and W31 billion in 2000, 2001, 2002, 2003 and 2004, respectively. The amount of bonds

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	purchased under the resale agreement was W900 billion, W7 billion, W0 billion, W470 billion and W160 billion in 2000, 2001, 2002, 2003 and 2004, respectively.
(5)	Pursuant to the regulations promulgated by the Financial Supervisory Commission, loans are classified as normal, precautionary, substandard, doubtful or estimated loss, and the allowance for loan losses is determined by applying a percentage within a certain range to those classifications.
(6)	Accumulated depreciation is recorded as a deduction from premises and equipment.
(7)	Other assets include leasehold deposits, accounts receivables, accrued interest income, prepaid expenses and unsettled debit of domestic exchange (which represents outstanding balances due from other banks generated in the process of fund settlements of domestic exchange, such as checks, bills, drafts, remittance exchange, ATM use and credit card network). Leasehold deposits are recorded as other assets on the balance sheet.
(8)	Borrowings consist mainly of borrowings from Bank of Korea, the Korean government and banking institutions.
(9)	Under Korean GAAP, effective as of December 31, 1999, contingent losses with respect to guarantees and acceptances are recognized by applying the same classification methods and provision percentages used in determining the allowance for loan losses. Provisions are only applied to acceptances and guarantees classified as substandard, doubtful and estimated loss. The amounts of provisions as of December 31, 2000, 2001, 2002, 2003 and 2004 were W12 billion, W13 billion, W4 billion, W57 billion and W37 billion, respectively. These amounts are included in other liabilities.

	Profitability Ratios

				Year Ended December 31,
												2002(2)				2003(2)				2004(2)
				2000(1)				2001(1)
												Shinhan				Shinhan				Shinhan
				Shinhan				Shinhan				Financial				Financial				Financial
				Bank				Bank				Group				Group				Group
				(Percentages)
Net income as a percentage of:
	Average total assets(3)				0.81	%			0.67	%			0.91	%			0.37	%			0.72	%
	Average stockholders’ equity(3):
		Common shares only			13.94				11.76				17.12				9.97				14.52
		Including redeemable preferred shares(4)			12.56				11.21				N/A				8.42				14.08
Dividend payout ratio(5)					51.59				43.45				26.15				66.34				22.16
Net interest spread(6)					1.36				1.67				1.63				2.25				2.09
Net interest margin(7)					2.06				2.15				2.08				2.30				2.28
Efficiency ratio(8)					52.98				57.65				68.38				61.85				73.09
Cost-to average assets ratio(9)					2.38				2.50				3.67				3.19				5.18
Equity to average asset ratio(10):					6.40				5.91				5.27				4.38				5.10
		Common shares only			5.76				5.63				5.27				3.70				4.95
		Including redeemable preferred shares(4)			6.40				5.91				N/A				4.38				5.10

	(1)	Represents the profitability ratios of Shinhan Bank for the periods indicated.
	(2)	Represents the profitability ratios of Shinhan Financial Group for the periods indicated.
	(3)	Average balances are based on (a) daily balances for Shinhan Bank, Chohung Bank and Jeju Bank and (b) quarterly balances for other subsidiaries.
	(4)	In 2000 and 2001, Shinhan Bank had W292.5 billion of redeemable preferred stock outstanding that it had issued to the Korea Deposit Insurance Corporation in connection with its acquisition of the assets

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		and liabilities of Dongwha Bank, one of the failed banks in Korea, in 1998. These redeemable preferred stock was redeemed in 2001. As consideration for our acquisition of Chohung Bank, on August 19, 2003, we issued to the Korea Deposit Insurance Corporation (i) 46,583,961 shares of our Redeemable Preferred Stock and (ii) 44,720,603 shares of our Redeemable Convertible Preferred Stock convertible into 12.28% of our common shares as of December 31, 2004. Pursuant to the terms of the Redeemable Preferred Stock issued to Korea Deposit Insurance Corporation, we are required to redeem such shares in five equal annual installments commencing three years from the date of issuance and, pursuant to the terms of the Redeemable Convertible Preferred Stock, we are required to redeem the full amount of such shares outstanding five years from the date of issuance to the extent not converted into our common shares. Each share of Redeemable Convertible Preferred Stock is convertible into one share of our common stock. The dividend ratios on the Redeemable Preferred Stock and the Redeemable Convertible Preferred Stock are 4.04% and 2.02%, respectively. In August 2003, we also raised W900 billion in cash through the issuance of 6,000,000 shares of redeemable preferred stock, all of which were sold in the domestic fixed-income market through Strider Securitization Specialty Co., Ltd., a special purpose vehicle. These redeemable preferred shares have terms that are different from the preferred shares issued to Korea Deposit Insurance Corporation. We are required to redeem these preferred shares issued to the special purpose vehicle in three installments in 2006, 2008 and 2010. See “Item 4. Information on the Company — Our Acquisition of Chohung Bank — Liquidity and Capital Resources” and “Item 10. Additional Information — Articles of Incorporation — Description of Capital Stock — Description of Redeemable Preferred Stock”. Under Korean GAAP, all of these redeemable preferred stock are included in stockholder’s equity.

(5)	The dividend payout ratio represent the ratio of total dividends paid on common stock as a percentage of net income attributable to common stock.
(6)	Net interest spread represents the difference between the yield on average interest earning assets and cost of average interest bearing liabilities.
(7)	Net interest margin represents the ratio of net interest income to average interest earning assets.
(8)	Represents the ratio of noninterest expense to the sum of net interest income and noninterest income, a measure of efficiency for banks and financial institutions. Efficiency ratio may be reconciled to comparable line-items in our income statement for the periods indicated as follows:

			Year Ended December 31,
											2002				2003				2004
			2000				2001
											Shinhan				Shinhan				Shinhan
			Shinhan				Shinhan				Financial				Financial				Financial
			Bank				Bank				Group				Group				Group
			(In billions of Won, except percentages)
Non-interest expense(A)			W	1,094			W	1,309			W	2,446			W	3,139			W	7,570
Divided by
The sum of net interest income and noninterest income(B)				2,066				2,271				3,578				5,075				10,357
	Net interest income			893				1,065				1,294				1,999				3,030
	Noninterest revenue			1,173				1,206				2,284				3,076				7,327
Efficiency ratio ((A) as a percentage of(B))				52.98	%			57.65	%			68.38	%			61.85	%			73.09	%

(9)	Cost-to-average-assets ratio, a measure of cost of funding used by banks and financial institutions, represents the ratio of noninterest expense to average total assets.

(10)	Represents the ratio of average stockholders’ equity to average total assets

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	Capital Ratios

			As of or for the Year Ended December 31,
			2000				2001				2002				2003				2004
			(Percentages)
Requisite capital ratio(1)				N/A				134.43	%			130.93	%			118.41	%			129.41	%
Total capital adequacy (BIS) ratio of Shinhan
	Bank(2)			12.30	%			11.99				10.92				10.49				11.94
	Tier I(2)			9.24				8.24				6.81				6.34				7.45
	Tier II(2)			3.06				3.75				4.11				4.15				4.49
Total capital adequacy (BIS) ratio of Chohung
	Bank(2)			9.78				10.43				8.66				8.87				9.40
	Tier I(2)			5.24				5.91				4.61				4.47				4.99
	Tier II(2)			4.54				4.52				4.05				4.40				4.41
Adjusted equity capital ratio of Shinhan Card(3)				N/A				N/A				10.86				13.78				16.48

(1)	We were restructured as a financial holding company on September 1, 2001 and became subject to minimum capital requirements as reflected in the requisite capital ratio. Under the guidelines issued by the Financial Supervisory Commission applicable to financial holding companies, We, at the holding company level, are required to maintain a minimum requisite capital ratio of 100%. Requisite capital ratio represents the ratio of net aggregate amount of our equity capital to aggregate amounts of requisite capital. This computation is based on our consolidated financial statement in accordance with Korean GAAP. See “Item 4. Information on the Company — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Capital Adequacy”.
(2)	Shinhan Bank comprised 48.9% of our total assets and Chohung Bank comprises 45.6% of our total assets as of December 31. 2004. The capital adequacy ratios of Shinhan Bank and Chohung Bank are computed in accordance with the guidelines issued by the Financial Supervisory Commission, which was revised as of December 31, 2002 to take into account market risk as well as credit risk. For Shinhan Bank, the capital ratios as of December 31, 2001 were recalculated using these revised guidelines but the capital ratios as of December 31, 2000 do not reflect the revised guidelines. For Chohung Bank, the capital ratios as of December 31, 2002 were calculated using these revised guidelines but the capital ratios as of December 31, 2000 and 2001 do not reflect the revised guidelines. Under the guidelines of the Financial Supervisory Commission, each of Shinhan Bank and Chohung Bank is required to maintain a minimum capital adequacy ratio of 8%. Applying the previous calculation, which only takes into account credit risks, Shinhan Bank’s total capital adequacy ratio as of December 31, 2001, 2002, 2003 and 2004 would have been 12.02%, 10.91%, 10.59% and 11.96%, respectively. Applying the previous calculation, which only takes into account credit risks, Chohung Bank’s total capital adequacy ratio as of December 31, 2002, 2003 and 2004 would have been 8.64%, 8.89% and 9.39%, respectively. This computation is based on consolidated financial statements prepared in accordance with Korean GAAP of Shinhan Bank and Chohung Bank, as the case may be. See “Item 4. Information on the Company — Supervision and Regulation — Principal Regulations Applicable to Banks — Capital Adequacy.”
(3)	Represents the ratio of total adjusted stockholders’ equity to total adjusted assets and are computed in accordance with the guidelines issued by the Financial Supervisory Service for credit card companies. Under these guidelines, Shinhan Card is required to maintain a minimum adjusted equity capital ratio of 8%. This computation is based on Shinhan Card’s nonconsolidated financial statements prepared in accordance with Korean GAAP.

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	Asset Quality Ratios

		As of December 31,
		2000(1)				2001(1)				2002(2)				2003(2)				2004(2)
		(In billions of Won, except percentages)
Substandard and below loans(3)		W	1,351			W	540			W	843			W	3,207			W	1,660
Substandard and below loans as a percentage of total loans			4.63	%			1.52	%			1.83	%			3.37	%			1.70	%
Substandard and below loans as a percentage of total assets			2.73				0.97				1.26				2.30				1.13
Precautionary loans as a percentage of total loans(4)			5.23				2.74				1.72				3.55				3.18
Precautionary and below loans as a percentage of total loans(4)			9.86				5.17				3.55				6.92				4.88
Precautionary and below loans as a percentage of total assets(4)			5.80				3.30				2.45				4.73				3.25
Allowance for loan losses as a percentage of substandard and below loans			52.47				81.01				35.25				85.85				112.63
Allowance for loan losses as a percentage of precautionary and below loans(4)			18.41				22.51				25.38				41.80				39.21
Allowance for loan losses as a percentage of total loans			2.42				1.74				1.71				2.89				1.91
Substandard and below credits as a percentage of total credits(5)			2.31				1.44				1.00				3.57				1.66
Loans in Korean Won as a percentage of deposits in Korean Won(6)			74.94				83.36				96.35				99.37				99.30

(1)	Represents the asset quality ratios of Shinhan Bank as of the dates indicated.
(2)	Represents the asset quality ratios of Shinhan Financial Group as of the dates indicated.
(3)	Substandard and below loans are defined in accordance with regulatory guidance in Korea, except excludes loans provided from Shinhan Bank’s trust accounts and confirmed guarantees and acceptances (including bills purchased and privately placed debentures). In 1999, as well as classifying credit quality into five categories, which are normal, precautionary, substandard, doubtful and estimated loss, in accordance with standards defined by the Financial Supervisory Commission, we also took into account the repayment capability of borrowers. See “Item 4. Information on the Company — Supervision and Regulation — Principal Regulations Applicable to Banks”.
(4)	As defined by the Financial Supervisory Commission.
(5)	Credits include loans provided from our trust accounts (including bills purchased and privately placed debentures) and confirmed guarantees and acceptances, as well as the total loan portfolio of the banking accounts.
(6)	Under Korean GAAP, loans in Korean Won do not include bills bought in Won, advances for customers, credit card accounts, bonds purchased under resale agreements, call loans, private placement corporate bonds and loans in restructurings that have been swapped for equity in the restructured borrower.

	FIN No. 46 and FIN No. 46R, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51”

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	Statement of Position No. 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer”

	SFAS No. 123 (revised 2004), “Share-Based Payment”

	EITF No. 03-01, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments”

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	Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments”

				2004
				(In millions of
				Won)
U.S. GAAP net income					W1,466,870
	1. Provision for loan losses				(741,268	)
	2. Sale of loans and related recourse obligations to the Korea Asset Management Corporation				(13,976	)
	3. Deferred loan origination fees and costs				26,250
	4. Write-off of other assets and receivables				(16,556	)
	5. Securities and derivatives for nontrading purposes
		a. Changes in foreign exchange rates on available-for-sale securities			(132,914	)
		b. Impairment loss and reclassification of securities			(68,446	)
		c. Reversal of hedge accounting treatment for derivatives			10,724
	6. Stock based compensation				2,351
	8. Reclassification of leases				1,293
	9. Equity method				(11,056	)
	10. Foreign currency translation				(5,635	)
	11. Derecognition and amortization and impairment of goodwill				(81,292	)
	13. Negative goodwill				685
	14. Amortization of intangible assets				212,510
	15. Recognition of minority interest				(82,594	)
	16. Reversal of asset revaluation				(15,957	)
	17. Adjustments for Redeemable Preferred Stock				128,233
	18. Sale-leaseback				(10,471	)
	19. Others				(41,313	)
Total of adjustments					(839,432	)
Tax effect of adjustments					422,857
Korean GAAP net income					W1,050,295

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				2004
				(In millions of
				Won)
U.S. GAAP stockholders’ equity					W5,664,719
	1. Allowance for loan losses				(600,065	)
	2. Sale of loans and related recourse obligations to the Korea Asset Management Corporation				(29,269	)
	3. Deferred loan origination fees and costs				(28,881	)
	4. Write-off of other assets and receivables				42,883
	5. Securities and derivatives for nontrading purposes
		a. Changes in foreign exchange rates on available-for-sale securities			107
		b. Impairment loss and reclassification of securities			122,572
		c. Reversal of hedge accounting treatment for derivatives			36,331
	6. Stock based compensation				(3,868	)
	7. Formation of Shinhan Financial Group				(43,053	)
	8. Reclassification of leases				(180,410	)
	9. Equity method				(11,554	)
	10. Foreign currency translation				(4,070	)
	11. Derecognition and amortization and impairment of goodwill				(118,781	)
	12. Sale of Shinhan Securities				(10,642	)
	13. Negative goodwill				75,930
	14. Amortization of intangible assets				280,588
	15. Minority interest				65,540
	16. Reversal of asset revaluation				114,387
	17. Adjustments for Redeemable Preferred Stock				1,944,194
	18. Sale-leaseback				21,519
	19. Others				(15,837	)
Total of adjustments					1,657,621
Tax effect of adjustments					512,884
Korean GAAP stockholders’ equity					W7,835,224

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		Shinhan Bank								Chohung Bank
		Corporate				Consumer				Corporate				Consumer
		(Percentage)								(Percentage)
Normal			0.20-2.0				0.75				0.5				0.75
Precautionary			4.0				8.0				2.0				8.0
Substandard			20				20				20				20
Doubtful			95				55				95				55
Estimated Loss			100				100				100				100

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ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Name		Age				Position		Director Since		Date Term Ends
Eung Chan Ra			67			Chairman of the Board of Directors and Head of Board Steering Committee		September 1, 2001		March 25, 2007
In Ho Lee			62			President and Chief Executive Officer and a member of the Board Steering Committee		September 1, 2001		March 25, 2007
Young Hwi Choi			60			Executive Director		March 31, 2003		March 25, 2007

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Name

Age

Position

Director Since

Date Term Ends(1)

Young Seok Choi

76

Non-Executive Director

March 31, 2003

March 25, 2007

Yong Woong Yang

57

Non-Executive Director

March 25, 2004

March 25, 2007

Pyung Joo Kim

67

Outside Director

September 1, 2001

March 30, 2006

Il Sup Kim

59

Outside Director

March 31, 2003

March 30, 2006

Sang Yoon Lee

63

Outside Director

March 25, 2004

March 30, 2006

Yoon Soo Yoon

60

Outside Director

March 25, 2004

March 30, 2006

Shee Yul Ryoo

66

Outside Director

March 30, 2005

March 30, 2006

Byung Hun Park

77

Outside Director

September 1, 2001

March 30, 2006

Young Hoon Choi

76

Outside Director

March 30, 2005

March 30, 2006

Dong Hyun Kwon

69

Outside Director

March 25, 2004

March 30, 2006

Si Jong Kim

68

Outside Director

March 30, 2005

March 30, 2006

Philippe Reynieix

56

Outside Director

March 25, 2004

March 30, 2006

(1)	The date on which each term will end will be the date of the general stockholders’ meeting in the relevant year.

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Name		Age				Position
Jae Woo Lee			54			Senior Executive Vice President of Subsidiary Management Team I, Integration Management Team and Integration Planning Team (regarding Human Resource)
Chil Sun Hong			59			Senior Executive Vice President of Subsidiary Management Team II, Synergy Management Team, Audit & Compliance Team and Integration Planning Team (regarding Business Process Reengineering, Basel II and Customer Relation Management)
Byung Jae Cho			54			Chief Financial Officer and Senior Executive Vice President of Planning & Financial Management Team and Investor Relations Team
Baek Soon Lee			52			Senior Executive Vice President of Information & Technology Planning Team, Public Relations Team, General Service Team and Joint Procurement Planning Team

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	Majority of Independent Directors on the Board

	Executive Sessions

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	Nominating and Corporate Governance Committee

	Compensation Committee

	Establish Corporate Governance Guidelines and Adopt Code of Business Conduct and Ethics

	Shareholder Approval of Equity Compensation Plans

	Annual Certification of Compliance

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	•	the Board Steering Committee;
	•	the Risk Management Committee;
	•	the Audit Committee
	•	the Outside Director Nomination Committee; and
	•	the Compensation Committee.

	Board Steering Committee

	Risk Management Committee

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	Audit Committee

	Outside Director Recommendation Committee

	Compensation Committee

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						Exercise Period												Number of				Percentage				Number of
														Exercise				Granted				of Shares				Exercised
Name and Position		Grant Date				From				To				Price				Options				Outstanding				Options
														(In Won)								(Percentage)
Shinhan Financial Group
Eung Chan Ra (Chairman of Board of Directors)			5/22/2002				5/23/2004				5/22/2008				W18,910				94,416				0.03	%			0
			5/15/2003				5/16/2005				5/15/2009				11,800				95,390				0.03				0
			3/25/2004				3/25/2006				3/24/2009				21,595				100,000				0.03				0
			3/30/2005				3/30/2008				3/29/2012				28,006				100,000				0.03				0
In Ho Lee (President & CEO)			5/22/2002				5/23/2004				5/22/2008				18,910				32,162				0.01				0
Young Hwi Cho (Executive Director)			5/22/2002				5/23/2004				5/22/2008				18,910				47,208				0.02				0
			5/15/2003				5/16/2005				5/15/2009				11,800				85,851				0.03				0
			3/25/2004				3/25/2006				3/24/2009				21,595				90,000				0.03				0
			3/30/2005				3/30/2008				3/29/2012				28,006				90,000				0.03				0
Pyung Joo Kim (Outside Director)			3/30/2005				3/30/2008				3/29/2012				28,006				10,000				0.00				0
Il Sup Kim (Outside Director)			3/30/2005				3/30/2008				3/29/2012				28,006				10,000				0.00				0
Sang Hoon Lee (Outside Director)			3/30/2005				3/30/2008				3/29/2012				28,006				10,000				0.00				0
Yoon Soo Yoon (Outside Director)			3/30/2005				3/30/2008				3/29/2012				28,006				10,000				0.00				0
Shee Yul Ryoo (Outside Director)			3/30/2005				3/30/2008				3/29/2012				28,006				10,000				0.00				0
Jae Woo Lee (Senior Executive Vice President)			5/22/2002				5/23/2004				5/22/2008				18,910				18,873				0.01				0
			5/15/2003				5/16/2005				5/15/2009				11,800				19,290				0.01				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Chil Sun Hong (Senior Executive Vice President)			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Byung Jae Cho (Senior Executive Vice President)			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0

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						Exercise Period												Number of				Percentage				Number of
														Exercise				Granted				of Shares				Exercised
Name and Position		Grant Date				From				To				Price				Options				Outstanding				Options
														(In Won)								(Percentage)
Baek Soon Lee (Senior Executive Vice President)			5/22/2002				5/23/2004				5/22/2008				18,910				1,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				2,200				0.00				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Shinhan Bank
Sang Hoon Shin (President & CEO)			5/22/2002				5/23/2004				5/22/2008				18,910				28,325				0.01				0
			5/15/2003				5/16/2005				5/15/2009				11,800				77,160				0.03				0
			3/25/2004				3/25/2006				3/24/2009				21,595				80,000				0.03				0
			3/30/2005				3/30/2008				3/29/2012				28,006				80,000				0.03				0
Jae Ho Cho (Director & Standing Auditor)			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Gwang Lim Youn (Deputy President)			5/22/2002				5/23/2004				5/22/2008				18,910				18,873				0.01				0
			5/15/2003				5/16/2005				5/15/2009				11,800				19,290				0.01				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Min Ky Han (Deputy President)			5/22/2002				5/23/2004				5/22/2008				18,910				1,000				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				19,078				0.01				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Do Heui Han (Deputy President)			5/22/2002				5/23/2004				5/22/2008				18,910				2,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				19,290				0.01				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Jin Won Suh (Deputy President)			5/22/2002				5/23/2004				5/22/2008				18,910				2,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				2,200				0.00				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Shin Keun Yang (Deputy President)			5/22/2002				5/23/2004				5/22/2008				18,910				2,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				2,200				0.00				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Sang Young Oh (Executive Vice President)			5/22/2002				5/23/2004				5/22/2008				18,910				2,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				2,200				0.00				0
			3/25/2004				3/25/2006				3/24/2009				21,595				15,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0

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						Exercise Period												Number of				Percentage				Number of
														Exercise				Granted				of Shares				Exercised
Name and Position		Grant Date				From				To				Price				Options				Outstanding				Options
														(In Won)								(Percentage)
Hyu Won Lee (Executive Vice President)			5/22/2002				5/23/2004				5/22/2008				18,910				2,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				2,200				0.00				0
			3/25/2004				3/25/2006				3/24/2009				21,595				1,800				0.00				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Sang Woon Choi (Executive Vice President)			5/22/2002				5/23/2004				5/22/2008				18,910				2,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				2,200				0.00				0
			3/25/2004				3/25/2006				3/24/2009				21,595				1,800				0.00				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Eun Sik Kim (Executive Vice President)			5/22/2002				5/23/2004				5/22/2008				18,910				1,000				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				1,700				0.00				0
			3/25/2004				3/25/2006				3/24/2009				21,595				1,800				0.00				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Chohung Bank
Dong Soo Choi (President & CEO)			3/30/2005				3/30/2008				3/29/2012				28,006				80,000				0.01				0
Jee Hong Yoo (Director & Standing Auditor)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Bhang Gil Choi (Deputy President)			5/22/2002				5/23/2004				5/22/2008				18,910				18,883				0.01				0
			5/15/2003				5/16/2005				5/15/2009				11,800				19,078				0.01				0
			3/25/2004				3/25/2006				3/24/2009				21,595				30,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Hee Soo Kim (Deputy President)			5/22/2002				5/23/2004				5/22/2008				18,910				2,500				0.00				0
			5/15/2003				5/16/2005				5/15/2009				11,800				19,290				0.01				0
			3/25/2004				3/25/2006				3/24/2009				21,595				20,000				0.01				0
			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Kwang Yub Chung (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Hong Hee Chae (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Yong Uk O (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Jeong Woo Chang (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Jae Yoo Kim (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
In Joon Chaey (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Chang Seong Moon (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Sung Yoon Kim (Deputy President)			3/30/2005				3/30/2008				3/29/2012				28,006				20,000				0.01				0
Total																			2,108,757				0.66	%			0

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						Exercise Period												Number of				Percentage				Number of
														Exercise				Granted				of Shares				Exercised
Grant Date				Position (Name)		From				To				Price				Options				Outstanding				Options
														(In Won)								(Percentage)
Shinhan Financial Group
	3/27/2000			Senior Executive Vice President			3/28/2003				3/27/2006				W5,000				5,678				0.00	%			0
	3/9/2001			(Chil Sun Hong)			3/10/2004				3/9/2007				5,000				714				0.00				0
	3/29/2002						3/30/2004				3/29/2007				5,600				15,600				0.00				0
	3/29/2002						3/30/2004				3/29/2007				5,860				1,508				0.00				0
	3/28/2003						3/29/2005				3/28/2008				5,260				6,450				0.00				0
	3/28/2003						3/29/2005				3/28/2008				5,000				3,150				0.00				0
Chohung Bank
	3/27/2000			President & CEO			3/28/2003				3/27/2006				5,000				15,897				0.00				0
	3/25/2004			(Dong Soo Choi)			3/26/2006				3/25/2009				5,000				100,000				0.01				0
				Director & Standing Auditor
	3/25/2004			(Ji Hong Yoo)			3/26/2006				3/25/2009				5,000				30,000				0.00				0
				Deputy President
	3/25/2004			(Kwang Yub Chung)			3/26/2006				3/25/2009				5,000				30,000				0.00				0
				Deputy President
	3/25/2004			(Hong Hee Chae)			3/26/2006				3/25/2009				5,000				30,000				0.00				0
				Deputy President
	3/25/2004			(Yong Uk O)			3/26/2006				3/25/2009				5,000				30,000				0.00				0
				Deputy President
	3/25/2004			(Jeong Woo Chang)			3/26/2006				3/25/2009				5,000				30,000				0.00				0
				Deputy President
	3/25/2004			(Jae Yoo Kim)			3/26/2006				3/25/2009				5,000				30,000				0.00				0
				Total															328,997				0.05	%			0

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ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

			Number of Common				Percentage of Total
Name of Shareholder			Shares Held				Common Shares
Korea National Pension Fund				16,498,516				5.17%
BNP Paribas				13,557,832				4.25%
Euro-Pacific Growth Fund				12,570,230				3.94%
Emerging Market Growth				10,516,430				3.29%
Chohung Bank(1)				8,985,567				2.81%
Capital World Growth				8,155,100				2.55%
Templeton Foreign Fund				7,605,410				2.38%
Others				241,429,926				75.61%
	Total(2)			319,319,011				100.00%

(1)	In June 2004, we acquired 108,438,628 shares of common stock of Chohung Bank that we previously did not own through a cash tender offer and a small-scale share swap pursuant to Korean laws. In connection with the share swap transaction, we issued 14,682,590 new shares of our common stock to the existing shareholders of Chohung Bank in exchange for the shares of Chohung Bank’s common stock, of which 8,985,567 shares of our common stock was issued to Chohung Bank in exchange for its treasury shares. Chohung Bank acquired these treasury shares from its shareholders who dissented to the share swap at Chohung Bank’s shareholders’ meeting pursuant to the exercise by those dissenting shareholders the right to request Chohung Bank to purchase their shares in accordance with Korean law. Following this transaction, the total number of shares of our common stock increased to 309,083,890 shares. Under the Financial Holding Companies Act of Korea, the voting rights relating to the 8,985,567 shares of our common stock currently held by Chohung Bank in treasury are restricted. The newly issued 14,682,590 shares of our common stock were listed on the Stock Market Division of the Korea Exchange in July 2004.
(2)	Includes 10,235,121 shares of our common stock issued in exchange for the equity shares (both common and preferred shares) of Good Morning Shinhan Securities in connection with our obtaining the then minority interest in Good Morning Shinhan Securities in December 2004 through a cash tender offer and a small-scale share swap pursuant to Korean laws, of which 1,444 shares of our common stock was issued to Good Morning Shinhan Securities in exchange for its treasury shares. Good Morning Shinhan Securities acquired these treasury shares from its shareholders who dissented to the share swap at Good Morning Shinhan Securities’s shareholders’ meeting pursuant to the exercise by those dissenting shareholders the right to request Good Morning Shinhan Securities to purchase their shares in accordance with Korean law. Good Morning Shinhan Securities sold the 1,444 shares of our common stock that it held in March 2005. Following this transaction, the total number of shares of our common stock increased to 319,319,011 shares. The newly issued 10,235,121 shares of our common stock were listed on the Stock Market Division of the Korea Exchange in January 2005.

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			Number of Preferred				Percentage of Total
Name of Shareholder			Shares Held				Preferred Shares
Korea Deposit Insurance Corporation				46,583,961				88.59	%
Strider Securitization Specialty Co., Ltd.				6,000,000				11.41
	Total			52,583,961				100.00	%

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ITEM 8.	FINANCIAL INFORMATION

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ITEM 9.	THE OFFER AND LISTING

			Korea Exchange												New York Stock Exchange
			Closing Price per												Closing Price per
			Common Stock												ADS
											Average Daily												Average Daily
			High				Low				Trading Volume				High				Low				Trading Volume
											(Shares)												(ADSs)
2001 (from September 10)				W17,550			W	9,400				1,654,506				—				—				—
	Third Quarter (from September 10)			11,650				9,400				1,180,076				—				—				—
	Fourth Quarter			17,550				10,100				1,771,170				—				—				—
2002				20,600				11,450				1,639,306				—				—				—
	First Quarter			20,450				16,300				2,050,143				—				—				—
	Second Quarter			20,600				16,150				1,745,556				—				—				—
	Third Quarter			18,150				13,850				1,152,088				—				—				—
	Fourth Quarter			14,650				11,450				1,631,030				—				—				—
2003				19,700				9,500				1,408,358				—				—				—
	First Quarter			13,650				9,500				1,504,051				—				—				—
	Second Quarter			13,900				10,100				1,592,993				—				—				—
	Third Quarter(1)			18,300				12,500				1,341,422			$	31.40			$	27.40				2,944
	Fourth Quarter			19,700				15,650				1,200,222				32.75				27.70				2,900
2004				23,400				15,200				1,372,443				45.65				26.50				6,039
	First Quarter			23,050				18,000				1,894,713				39.63				30.80				6,566
	Second Quarter			21,250				15,700				1,355,687				40.80				27.60				5,111
	Third Quarter			23,400				15,200				1,154,295				37.20				26.50				6,798
	Fourth Quarter			23,750				20,500				1,117,511				45.65				35.90				5,655
2005 (through June 23)				29,750				23,400				1,216,454				60.43				44.00				12,102
	January			26,150				23,400				1,475,594				51.30				44.00				9,100
	February			29,750				25,550				1,468,088				60.40				50.50				14,468
	March			29,650				26,900				1,135,699				60.43				51.26				17,818
	April			27,650				25,750				1,122,803				55.65				50.50				11,171
	May			25,800				24,100				1,148,780				53.00				48.51				10,219
	June (through June 23)			27,350				25,750				925,892				54.14				51.55				9,065

(1)	Trading of our American depositary shares on the New York Stock Exchange commenced on September 16, 2003.

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	The Korea Exchange

	•	Any person’s ownership of shares in the Korea Exchange is limited to 5% or less except for an investment trust company or investment company established under the Act on Business of Operating Indirect Investment and Assets, or the Korean government. However, upon prior approval from the Financial Supervisory Commission, more than 5% ownership in Korea Exchange is permitted if necessary for forming strategic alliance with a foreign stock or futures exchange;
	•	The number of outside directors on the board of directors of the Korea Exchange shall be more than half of the number of total directors;
	•	Any amendment to the articles of incorporation, transfer or consolidation of business, business split, stock swap in its entirety or transfer of shares in its entirety of the Korea Exchange will receive prior approval from the Ministry of Finance and Economy; and
	•	In the event the minister of Ministry of Finance and Economy determines that the chief executive officer of the Korea Exchange is not appropriate for the position, the minister of the Ministry of Finance and Economy can request the Korea Exchange upon reasonable cause, within one month from the chief executive officer’s election, to dismiss the chief executive officer. Subsequently, the chief executive officer will be suspended from performing his duties and the Korea Exchange will elect a new chief executive officer within two months from the request.

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		Opening				High				Low				Closing
1980			100.00				119.36				100.00				106.87
1981			97.95				165.95				93.14				131.37
1982			123.60				134.49				106.00				127.31
1983			122.52				134.46				115.59				121.21
1984			116.73				142.46				114.37				142.46
1985			139.53				163.37				131.40				163.37
1986			161.40				279.67				153.85				272.61
1987			264.82				525.11				264.82				525.11
1988			532.04				922.56				527.89				907.20
1989			919.61				1,007.77				844.75				909.72
1990			908.59				928.82				566.27				696.11
1991			679.75				763.10				586.51				610.92
1992			624.23				691.48				459.07				678.44
1993			697.41				874.10				605.93				866.18
1994			879.32				1,138.75				855.37				1,027.37
1995			1,013.57				1,016.77				847.09				882.94
1996			888.85				986.84				651.22				651.22
1997			653.79				792.29				350.68				376.31
1998			385.49				579.86				280.00				562.46
1999			587.57				1,028.07				498.42				1,028.07
2000			1,059.04				1,059.04				500.60				504.62
2001			520.95				704.50				468.76				693.70
2002			724.95				937.61				584.04				627.55
2003			635.17				822.16				515.24				810.71
2004			821.26				936.06				719.59				895.92
2005 (through June 23)			893.71				1,022.79				870.84				1,010.80

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		Rounded Down
Previous Day’s Closing Price		to Won
Less than 5,000			5
5,000 to less than 10,000			10
10,000 to less than 50,000			50
50,000 to less than 100,000			100
100,000 to less than 500,000			500
500,000 or more			1,000

						Total Market Capitalization								Average Daily Trading Volume, Value
		Number of
		Listed				(Millions of				(Thousands of				Thousands of				(Millions of				(Thousands of
Year		Companies				Won)				Dollars)(1)				Shares				Won)				Dollars)(1)
1979			355			W	2,609,414			$	5,391,351				5,382			W	4,579			$	4,641
1980			352				2,526,553				3,828,691				5,654				3,897				5,905
1981			343				2,959,057				4,224,207				10,565				8,708				12,433
1982			334				3,000,494				4,407,711				9,704				6,667				8,904
1983			328				3,489,654				4,386,743				9,325				5,941				7,468
1984			336				5,148,460				6,222,456				14,847				10,642				12,862
1985			342				6,570,404				7,380,818				18,925				12,315				13,834
1986			355				11,994,233				13,924,115				31,755				32,870				38,159
1987			389				26,172,174				33,033,162				20,353				70,185				88,584
1988			502				64,543,685				94,348,318				10,367				198,364				289,963
1989			626				95,476,774				140,489,660				11,757				280,967				414,431
1990			669				79,019,676				110,301,055				10,866				183,692				256,500
1991			686				73,117,833				96,182,364				14,022				214,263				281,850
1992			688				84,711,982				107,502,515				24,028				308,246				391,175
1993			693				112,665,260				139,419,948				35,130				574,048				676,954
1994			699				151,217,231				191,729,721				36,862				776,257				984,223
1995			721				141,151,399				182,201,367				26,130				487,762				629,614
1996			760				117,369,988				139,031,021				26,571				486,834				575,733

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						Total Market Capitalization								Average Daily Trading Volume, Value
		Number of
		Listed				(Millions of				(Thousands of				Thousands of				(Millions of				(Thousands of
Year		Companies				Won)				Dollars)(1)				Shares				Won)				Dollars)(1)
1997			776				70,988,897				50,161,742				41,525				555,759				392,707
1998			748				137,798,451				114,090,455				97,716				660,429				471,432
1999			725				349,503,966				305,137,040				278,551				3,481,620				3,039,654
2000			704				188,041,490				148,393,204				306,154				2,602,159				2,053,796
2001			589				255,850,070				192,934,221				473,241				1,947,420				1,506,236
2002			683				258,680,756				215,445,465				857,245				3,041,598				2,533,820
2003			684				355,362,626				298,121,331				542,010				2,216,636				1,859,594
2004			683				412,588,139				398,597,371				372,895				2,232,109				2,156,419
2005 (through June 23)			679				469,504,884				446,934,683				439,760				2,454,600				2,336,602

(1)	Converted at the Market Average Exchange Rate at the end of the periods indicated.

	Further Opening of the Korean Securities Market

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	Protection of Customer’s Interest in Case of Insolvency of Securities Companies

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ITEM 10.	ADDITIONAL INFORMATION

	General

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	Dividends

	Distribution of Free Shares

258

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	Preemptive Rights and Issuance of Additional Shares

	General Meeting of Shareholders

259

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	Voting Rights

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	Rights of Dissenting Shareholders

	Register of Shareholders and Record Dates

	Description of Redeemable Preferred Stock

	Description of Series 1/2/3/4/5 Redeemable Preferred Stock

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	Description of Redeemable Convertible Preferred Stock

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	Description of Series 6/7/8 Redeemable Preferred Stock

	Annual Report

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	Transfer of Shares

	Acquisition of our Shares

	Liquidation Rights

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	•	odd-lot trading of shares;
	•	acquisition of shares by foreign companies as a result of a merger;
	•	acquisition of shares (which we refer to as “Converted Shares”) by exercise of warrants, conversion rights or exchange rights under bonds with warrants, convertible bonds or exchangeable bonds or withdrawal rights under depositary receipts issued outside of Korea by a Korean company;
	•	acquisition of shares as a result of inheritance, donation, bequest or exercise of stockholders’ rights, including preemptive rights or rights to participate in free distributions and receive dividends;
	•	sale or purchase of securities through a public bidding among large number of bidders;
	•	acquisition of shares by exercising rights granted under a covered warrant;
	•	over-the-counter transactions between foreigners of a class of shares for which the ceiling on aggregate acquisition by foreigners, as explained below, has been reached or exceeded subject to certain exceptions; and
	•	acquisition or disposition of shares in connection with a tender offer.

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	•	a resident of Korea;
	•	a corporation organized under Korean law; or
	•	engaged in a trade or business in Korea through a permanent establishment or a fixed base.

	Dividends on Shares of Common Stock or American Depositary Shares

	Taxation of Capital Gains

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	Inheritance Tax and Gift Tax

	Securities Transaction Tax

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	•	a bank;
	•	a dealer in securities or currencies;
	•	a financial institution or an insurance company
	•	a regulated investment company;
	•	a real estate investment trust;
	•	a tax-exempt entity;
	•	a trader in securities that has elected to use a mark-to-market method of accounting for your securities holdings;
	•	a person holding shares or American depositary receipts as part of a hedging, conversion, constructive sale or integrated transaction or a straddle;
	•	a person liable for the alternative minimum tax;
	•	an investor in a pass-through entity;

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	•	a person who owns 10% or more of our voting stock; or
	•	a person whose functional currency is not the U.S. dollar.

	American Depositary Receipts

	Distributions on Shares or American Depositary Receipts

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	Disposition of Shares or American Depositary Receipts

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	Passive Foreign Investment Company Rules

	•	at least 75% of our gross income is passive income, or
	•	at least 50% of the value of our assets is attributable to assets that produce or are held for the production of passive income.

	•	the excess distribution or gain will be allocated ratably over your holding period for our shares or American depositary shares,
	•	the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we are a passive foreign investment company, will be treated as ordinary income, and
	•	the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

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	Estate and Gift Taxation

	Information Reporting and Backup Withholding

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ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

	American Depositary Shares

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	Dividends and Distributions

	— Distributions of Cash

	— Distributions of Shares

	— Distributions of Rights

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	•	We do not timely request that the rights be distributed to you or we request that the rights not be distributed to you; or
	•	We fail to deliver satisfactory documents to the depositary bank; or
	•	It is not reasonably practicable to distribute the rights.

	— Elective Distributions

	— Other Distributions

	•	We do not request that the property be distributed to you or if we ask that the property not be distributed to you; or
	•	We do not deliver satisfactory documents to the depositary bank; or
	•	The depositary bank determines that all or a portion of the distribution to you is not reasonably practicable.

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	Changes Affecting Shares

	Issuance of ADSs upon Deposit of Shares

	•	The Shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained.
	•	All preemptive (and similar) rights, if any, with respect to such Shares have been validly waived or exercised.
	•	You are duly authorized to deposit the Shares.
	•	The Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and are not, and the ADSs issuable upon such deposit will not be, “restricted securities” (as defined in the deposit agreement).
	•	The Shares presented for deposit have not been stripped of any rights or entitlements.

	Transfer, Combination and Split Up of ADRs

	•	ensure that the surrendered ADR certificate is properly endorsed or otherwise in proper form for transfer;

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	•	provide such proof of identity and genuineness of signatures as the depositary bank deems appropriate;
	•	provide any transfer stamps required by the State of New York or the United States; and
	•	pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR holders pursuant to the terms of the deposit agreement, upon the transfer of ADRs.

	Withdrawal of Shares Upon Cancellation of ADSs

	•	Temporary delays that may arise because (i) the transfer books for the Shares or ADSs are closed, or (ii) Shares are immobilized on account of a shareholders’ meeting or a payment of dividends.
	•	Obligations to pay fees, taxes and similar charges.
	•	Restrictions imposed because of laws or Principal Regulations Applicable to ADSs or the withdrawal of securities on deposit.

	Voting Rights

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	Fees and Charges

Service		Fees
• Issuance of ADSs		Up to U.S. 5¢ per ADS issued
• Cancellation of ADSs		Up to U.S. 5¢ per ADS canceled
• Exercise of rights to purchase additional ADSs		Up to U.S. 2¢ per ADS held
• Distribution of cash dividends		No fee (so long as prohibited by NYSE)
• Distribution of ADSs pursuant to stock dividend or other free stock distributions		No fee (so long as prohibited by NYSE)
• Distributions of cash proceeds (i.e., upon sale of rights or other entitlements)		Up to U.S. 2¢ per ADS held
• Distribution of securities other than ADSs or rights to purchase additional ADSs		Up to U.S. 5¢ per share (or share equivalent) distributed
• Annual Depositary Services Fee		Annually up to U.S. 2¢ per ADS held at the end of each calendar year, except to the extent of any cash dividend fee(s) charged during such calendar year or unless prohibited by NYSE

	•	Fees for the transfer and registration of Shares charged by the registrar and transfer agent for the Shares in Korea (i.e., upon deposit and withdrawal of Shares).
	•	Expenses incurred for converting foreign currency into U.S. dollars.
	•	Expenses for cable, telex and fax transmissions and for delivery of securities.
	•	Taxes and duties upon the transfer of securities (i.e., when Shares are deposited or withdrawn from deposit).
	•	Fees and expenses incurred in connection with the delivery or servicing of Shares on deposit.

	Amendments and Termination

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	•	for a period of six months after termination, you will be able to request the cancellation of your ADSs and the withdrawal of the Shares represented by your ADSs and the delivery of all other property held by the depositary bank in respect of those Shares on the same terms as prior to the termination. During such six months’ period the depositary bank will continue to collect all distributions received on the Shares on deposit (i.e., dividends) but will not distribute any such property to you until you request the cancellation of your ADSs.
	•	After the expiration of such six months’ period, the depositary bank may sell the securities held on deposit. The depositary bank will hold the proceeds from such sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, the depositary bank will have no further obligations to holders other than to account for the funds then held for the holders of ADSs still outstanding.

	Books of Depositary

	Limitations on Obligations and Liabilities

	•	We and the depositary bank are obligated only to take the actions specifically stated in the deposit agreement without negligence or bad faith.
	•	The depositary bank disclaims any liability for any failure to carry out voting instructions, for any manner in which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms of the deposit agreement.
	•	The depositary bank disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of any document forwarded to you on our behalf or for the accuracy of any translation of such a document, for the investment risks associated with investing in Shares, for the validity or worth of the Shares, for any tax consequences that result from the ownership of ADSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the deposit agreement, for the timeliness of any of our notices or for our failure to give notice.
	•	We and the depositary bank will not be obligated to perform any act that is inconsistent with the terms of the deposit agreement.
	•	We and the depositary bank disclaim any liability if we are prevented or forbidden from acting on account of any law or regulation, any provision of our Articles of Incorporation, any provision of any securities on deposit or by reason of any act of God or war or other circumstances beyond our control.

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	•	We and the depositary bank disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for the deposit agreement or in our Articles of Incorporation or in any provisions of securities on deposit.
	•	We and the depositary bank further disclaim any liability for any action or inaction in reliance on the advice or information received from legal counsel, accountants, any person presenting Shares for deposit, any holder of ADSs or authorized representatives thereof, or any other person believed by either of us in good faith to be competent to give such advice or information.
	•	We and the depositary bank also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other benefit which is made available to holders of Shares but is not, under the terms of the deposit agreement, made available to you.
	•	We and the depositary bank may rely without any liability upon any written notice, request or other document believed to be genuine and to have been signed or presented by the proper parties.
	•	We and the depositary bank also disclaim liability for any consequential or punitive damages for any breach of the terms of the deposit agreement.

	Pre-Release Transactions

	Taxes

	Foreign Currency Conversion

	•	Convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for whom the conversion and distribution is lawful and practical.

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	•	Distribute the foreign currency to holders for whom the distribution is lawful and practical.
	•	Hold the foreign currency (without liability for interest) for the applicable holders.

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

ITEM 14.	MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

ITEM 15.	CONTROLS AND PROCEDURES

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ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT

ITEM 16B.	CODE OF ETHICS

ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

			Aggregate Fees Billed
			During the Year Ended
			December 31,
Type of Services			2003				2004				Nature of Services
			(In millions of Won)
Audit fees			W	9,116			W	4,451			Audit service for Shinhan Financial Group and its subsidiaries.
Audit-related fees				1,713				28			Accounting advisory service.
Tax fees				52				209			Tax return and consulting advisory service.
All other fees				85				—			All other services which do not meet the three categories above.
	Total		W	10,966			W	4,688

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ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

ITEM 17.	FINANCIAL STATEMENTS

ITEM 18.	FINANCIAL STATEMENTS

ITEM 19.	EXHIBITS

	(a)	List of Financial Statements:

		Page
Audited consolidated financial statements of Shinhan Financial Group prepared in accordance with U.S. GAAP
Report of KPMG Samjong Accounting Corp., Independent Registered Public Accounting Firm, on the consolidated financial statements of Shinhan Financial Group			F-2
Report of Samil PricewaterhouseCoopers, Independent Registered Public Accounting Firm, on the consolidated financial statements of Shinhan Financial Group			F-3
Consolidated balance sheets as of December 31, 2003 and 2004 of Shinhan Financial Group			F-4
Consolidated statements of income for the years ended December 31, 2002, 2003 and 2004 of Shinhan Financial Group			F-6
Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2002, 2003 and 2004 of Shinhan Financial Group			F-8
Consolidated statements of cash flows for the years ended December 31, 2002, 2003 and 2004			F-10
Notes to the consolidated financial statements of Shinhan Financial Group			F-13

	(b)	Exhibits

	1.1			Articles of Incorporation (in English and Korean)**
	2.1			Form of Common Stock Certificate (in English and Korean)***
	2.2			Form of Deposit Agreement to be entered into among Shinhan Financial Group, Citibank, N.A., as depositary, and all owners and holders from time to time of American depositary receipts issued thereunder, including the form of American depositary receipt***

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	2.3			Long-term debt instruments of Shinhan Financial Group, Shinhan Bank and other consolidated subsidiaries for which financial statements are required to be filed are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. Shinhan Financial Group agrees to furnish the Commission on request a copy of any instrument defining the rights of holders of its long-term debt and that of any subsidiary for which consolidated or unconsolidated financial statements are required to be filed.***
	4.1			Stock Purchase Agreement by and between Korea Deposit Insurance Corporation and Shinhan Financial Group dated July 9, 2003****
	4.2			Investment Agreement by and between Shinhan Financial Group and Korea Deposit Insurance Corporation dated July 9, 2003***
	4.3			Agreed Terms, dated June 22, 2004, by and among the President of Korea Deposit Insurance Corporation, CEO of Shinhan Financial Group, CEO of Chohung Bank, Chairman of the National Financial Industry Labor Union of Korea and the Head of the Chohung Bank Chapter of the National Financial Industry Labor Union***
	8.1			List of all Subsidiaries of Shinhan Financial Group
	12.1			Certifications of our Chief Executive Officer required by Rule 13a-14(a) of the Exchange Act
	12.2			Certifications of our Chief Financial Officer required by Rule 13a-14(a) of the Exchange Act
	13.1			Certifications of our Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of the United States Code (18 U.S.C. 1350)
	13.2			Certifications of our Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of the United States Code (18 U.S.C. 1350)
	15.1			Korean Financial Holding Companies Act (in English)*
	15.2			Korean Bank Act (in English and Korean)***
	15.3			Korean Commercial Code (in English and Korean)***
	15.4			Korean Securities and Exchange Act (in English)*
	15.5			Korean Trust Business Act (in English)*
	15.6			Korean Specialized Credit Financial Business Act (in English)*
	15.7			Korean Act on Business of Operating Indirect Investment and Assets (in English)*

	*	A fair and accurate translation from Korean into English.

	**	Incorporated by reference to the registrant’s previous filing on Form 20-F (No. 001-31798), filed on June 30, 2004.

	***	Incorporated by reference to the registrant’s previous filing on Form 20-F (No. 001-31798), filed on September 15, 2003.

****	Incorporated by reference to the registrant’s previous filing on Form 20-F (No. 001-31798), filed on September 15, 2003. Confidential treatment were requested for certain portions of the Stock Purchase Agreement.

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	Shinhan Financial Group Co, Ltd.

	By:	/s/ In Ho Lee

	Name: In Ho Lee
	Title:  President & Chief Executive Officer

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		Page
Index to financial statements			F-1
Report of KPMG Samjong Accounting Corp., Independent Registered Public Accounting Firm, on the consolidated financial statements of Shinhan Financial Group			F-2
Report of Samil PricewaterhouseCoopers, Independent Registered Public Accounting Firm, on the consolidated financial statements of Shinhan Financial Group			F-3
Consolidated balance sheets as of December 31, 2003 and 2004 of Shinhan Financial Group			F-4
Consolidated statements of income for the years ended December 31, 2002, 2003 and 2004 of Shinhan Financial Group			F-6
Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2002, 2003 and 2004 of Shinhan Financial Group			F-8
Consolidated statements of cash flows for the years ended December 31, 2002, 2003 and 2004			F-10
Notes to the consolidated financial statements of Shinhan Financial Group			F-13

F-1

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	/s/ KPMG Samjong Accounting Corp.

F-2

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	/s/ Samil PricewaterhouseCoopers

F-3

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			2003				2004				2004
											(See Note 1)
											(In thousands
			(In millions of Korean Won,								of US$, except
			except share data)								share data)
ASSETS
Cash and cash equivalents			W	1,896,797			W	2,443,900				$2,361,028
Restricted cash (Note 4)				3,661,997				3,300,710				3,188,784
Interest-bearing deposits in banks				409,038				220,478				213,002
Call loans and securities purchased under resale agreements (Note 5)				1,898,219				1,591,095				1,537,141
Trading assets (Note 6)				3,377,295				6,316,341				6,102,156
Securities:
	Available-for-sale securities (Note 7)			18,098,535				18,108,229				17,494,183
	Held-to-maturity securities (Note 7)			3,604,810				3,099,322				2,994,225
Loans (net of allowance for loan losses of W3,630,728 in 2003 and W2,310,555 in 2004) (Note 8)				91,791,255				94,868,094				91,651,139
Customers’ liability on acceptances				2,364,656				2,012,499				1,944,255
Premises and equipment, net (Note 9)				2,002,724				1,848,053				1,785,386
Intangible assets (Note 10)				1,173,551				1,043,756				1,008,362
Goodwill (Note 10)				502,389				615,915				595,029
Security deposits				966,341				967,783				934,966
Other assets (Note 11)				4,601,724				7,071,847				6,832,042
	Total Assets		W	136,349,331			W	143,508,022				$138,641,698

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				2003				2004				2004
												(See Note 1)
												(In thousands
				(In millions of Korean Won,								of US$, except
				except share data)								share data)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits:
	Interest-bearing (Note 12)			W	82,160,939			W	79,933,558				$77,223,030
	Noninterest-bearing (Note 12)				1,328,203				2,745,925				2,652,811
Trading liabilities (Note 6)					513,061				1,757,577				1,697,978
Acceptances outstanding					2,364,656				2,012,499				1,944,255
Short-term borrowings (Note 13)					11,204,739				10,953,555				10,582,122
Secured borrowings (Note 14)					6,316,260				6,308,093				6,094,187
Long-term debt (Notes 15 and 21)					21,217,708				23,616,683				22,815,847
Accrued expenses and other liabilities (Note 16)					6,554,588				9,714,129				9,384,725
	Total Liabilities				131,660,154				137,042,019				132,394,955
Commitments and contingencies (Note 20)					—				—				—
Minority interest					582,645				65,540				63,318
Redeemable convertible preferred stock, W5,000 par value, 44,720,603 shares authorized, 44,720,603 shares issued and outstanding in 2003 and 2004 (Note 21)					711,134				735,744				710,795
Stockholders’ equity
Common stock, W5,000 par value, 1 billion shares authorized, 294,401,300 shares issued and 264,415,141 shares outstanding in 2003, and 319,319,011 shares issued and 310,320,994 shares outstanding in 2004 (Note 20)					1,472,007				1,596,595				1,542,455
Additional paid-in capital					1,073,307				1,658,189				1,601,960
Retained earnings (Note 22)					1,188,688				2,455,893				2,372,614
Accumulated other comprehensive income, net of taxes (Note 36)					58,096				157,873				152,520
Less: treasury stock, at cost, 29,986,159 shares in 2003 and 8,998,017 shares in 2004 (Note 20)					(396,700	)			(203,831	)			(196,919	)
		Total stockholders’ equity			3,395,398				5,664,719				5,472,630
	Total liabilities, minority interest, redeemable convertible preferred stock and stockholders’ equity			W	136,349,331			W	143,508,022				$138,641,698

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				2002				2003				2004				2004
																(See Note 1)
																(In thousands
				(In millions of Korean Won,												of US$, except
				except per share data)												per share data)
Interest and dividend income
	Interest and fees on loans			W	2,832,910			W	4,187,380			W	6,142,356			$	5,934,071
	Interest and dividends on investment securities (Note 7)				749,111				927,354				1,264,839				1,221,949
	Trading assets				52,376				102,206				168,152				162,450
	Other interest income				100,903				114,002				136,558				131,927
		Total interest income			3,735,300				5,330,942				7,711,905				7,450,397
Interest expense
	Interest on deposits				1,401,348				1,765,509				2,369,936				2,289,572
	Interest on short-term borrowings				252,912				315,116				340,733				329,179
	Interest on secured borrowings				242,663				207,446				299,173				289,028
	Interest on long-term debt				390,760				702,603				1,099,175				1,061,903
	Other interest expense				17,445				7,379				28,976				27,994
		Total interest expense			2,305,128				2,998,053				4,137,993				3,997,676
Net interest income					1,430,172				2,332,889				3,573,912				3,452,721
Provision for loan losses (Note 8)					236,219				1,011,366				195,446				188,818
Provision (reversal) for losses on guarantees and acceptances (Note 8)					9,841				(45,779	)			(60,032	)			(57,996	)
Net interest income after provision for loan losses and losses on guarantees and acceptances					1,184,112				1,367,302				3,438,498				3,321,899
Noninterest income
	Commissions and fees (Note 17)				473,895				840,469				1,178,814				1,138,841
	Net trust management fees				128,918				58,985				84,496				81,630
	Net trading profits (Note 6)				88,027				72,077				142,562				137,728
	Net gains (losses) on securities (Note 7)				143,347				(127,799	)			(77,115	)			(74,500	)
	Other (Note 18)				203,118				274,622				763,936				738,031
		Total noninterest income			1,037,305				1,118,354				2,092,693				2,021,730
Noninterest expenses
	Employee compensation and severance benefits (Note 26)				357,149				544,087				883,821				853,851
	Depreciation and amortization				104,238				247,016				428,835				414,293
	General and administrative expenses				409,531				552,944				875,625				845,933
	Impairment loss on goodwill (Note 10)				137,002				—				—				—
	Impairment loss on intangible assets (Note 10)				—				—				1,893				1,829
	Impairment loss on other investments				31,133				39,541				15,521				14,995
	Credit card fees				44,635				89,535				147,190				142,199
	Minority interest				10,155				25,846				153,428				148,225
	Other (Note 18)				217,836				463,967				798,016				770,955
		Total noninterest expenses			1,311,679				1,962,936				3,304,329				3,192,280

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			2002				2003				2004				2004
															(See Note 1)
															(In thousands
			(In millions of Korean Won,												of US$, except
			except per share data)												per share data)
Income before income tax expense, extraordinary item and cumulative effect of change in accounting principle				909,738				522,720				2,226,862				2,151,349
Income tax expense (Note 24)				320,316				247,402				764,451				738,529
Income before extraordinary item and cumulative effect of change in accounting principle				589,422				275,318				1,462,411				1,412,820
Extraordinary item (Note 19)				—				—				27,508				26,575
Cumulative effect of change in accounting principle, net of taxes				—				—				(23,049	)			(22,267	)
Net income			W	589,422			W	275,318			W	1,466,870			$	1,417,128
Net income per share of common stock (Note 25)
Basic
	Income before extraordinary item and cumulative effect of change in accounting principle		W	2,246			W	1,024			W	4,860			$	4.70
	Extraordinary item			—				—				94				0.09
	Cumulative effect of change in accounting principle, net of taxes			—				—				(79	)			(0.08	)
	Net income per share		W	2,246			W	1,024			W	4,875			$	4.71
Diluted
	Income before extraordinary item and cumulative effect of change in accounting principle		W	2,243			W	984			W	4,333			$	4.19
	Extraordinary item			—				—				82				0.08
	Cumulative effect of change in accounting principle, net of taxes			—				—				(68	)			(0.07	)
	Net income per share		W	2,243			W	984			W	4,347			$	4.20
Average common shares issued and outstanding				262,480,071				262,986,588				292,464,924
Average diluted common shares issued and outstanding				262,812,163				279,744,926				337,479,411

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																				Accumulated
																				Other
				Common Stock								Additional								Comprehensive								Total
												Paid-In				Retained				Income,				Treasury				Stockholders’
				Shares				Amount				Capital				Earnings				Net of Taxes				Stock				Equity
				(In millions of Korean Won and in thousands
				of US$, except share and per share data)
Balance at January 1, 2002					292,344,192			W	1,461,721			W	1,040,777			W	638,296			W	163,434			W	(394,545	)		W	2,909,683
Comprehensive income:
	Net income				—				—				—				589,422				—				—				589,422
	Foreign currency translation adjustments				—				—				—				—				(6,199	)			—				(6,199	)
	Net unrealized losses on available-for-sale securities				—				—				—				—				(86,874	)			—				(86,874	)
		Total comprehensive income			—				—				—				589,422				(93,073	)			—				496,349
Issuance of common stock					16,933				85				(25	)			—				—				—				60
Cash dividends declared (W600 per share)					—				—				—				(150,812	)			—				—				(150,812	)
Acquisition of treasury stock					—				—				—				—				—				(6	)			(6	)
Grant of stock options					—				—				6,779				—				—				—				6,779
Other					—				—				554				—				—				—				554
Balance at December 31, 2002					292,361,125			W	1,461,806			W	1,048,085			W	1,076,906			W	70,361			W	(394,551	)		W	3,262,607
Balance at January 1, 2003					292,361,125			W	1,461,806			W	1,048,085			W	1,076,906			W	70,361			W	(394,551	)		W	3,262,607
Comprehensive income:
	Net income				—				—				—				275,318				—				—				275,318
	Foreign currency translation adjustments				—				—				—				—				(1,956	)			—				(1,956	)
	Net unrealized losses on available-for-sale securities				—				—				—				—				(10,309	)			—				(10,309	)
		Total comprehensive income			—				—				—				275,318				(12,265	)			—				263,053
Issuance of common stock					2,040,175				10,201				18,183				—				—				—				28,384
Cash dividends declared (W600 per share)					—				—				—				(157,493	)			—				—				(157,493	)
Dividends on redeemable convertible preferred stock					—				—				—				(6,043	)			—				—				(6,043	)
Acquisition of treasury stock					—				—				—				—				—				(2,149	)			(2,149	)
Grant of stock options					—				—				7,038				—				—				—				7,038
Other					—				—				1				—				—				—				1
Balance at December 31, 2003					294,401,300			W	1,472,007			W	1,073,307			W	1,188,688			W	58,096			W	(396,700	)		W	3,395,398

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																				Accumulated
																				Other
				Common Stock								Additional								Comprehensive								Total
												Paid-In				Retained				Income,				Treasury				Stockholders’
				Shares				Amount				Capital				Earnings				Net of Taxes				Stock				Equity
				(In millions of Korean Won and in thousands
				of US$, except share and per share data)
Balance at January 1, 2004					294,401,300			W	1,472,007			W	1,073,307			W	1,188,688			W	58,096			W	(396,700	)		W	3,395,398
Comprehensive income:
	Net income				—				—				—				1,466,870				—				—				1,466,870
	Foreign currency translation adjustments				—				—				—				—				(18,462	)			—				(18,462	)
	Net unrealized gains on available-for-sale securities				—				—				—				—				118,239				—				118,239
		Total comprehensive income			—				—				—				1,466,870				99,777				—				1,566,647
Issuance of common stock					24,917,711				124,588				427,305				—				—				—				551,893
Cash dividends declared (W600 per share)					—				—				—				(158,717	)			—				—				(158,717	)
Dividends and accretion of discount on redeemable convertible preferred stock					—				—				—				(40,948	)			—				—				(40,948	)
Acquisition of treasury stock					—				—				—				—				—				(203,827	)			(203,827	)
Sale of treasury stock					—				—				158,361				—				—				396,696				555,057
Grant of stock options					—				—				(784	)			—				—				—				(784	)
Balance at December 31, 2004					319,319,011			W	1,596,595			W	1,658,189			W	2,455,893			W	157,873			W	(203,831	)		W	5,664,719
Balance at January 1, 2004					294,401,300				$1,422,091				$1,036,911				$1,148,380				$56,126				$(383,248	)			$3,280,260
Comprehensive income:
	Net income				—				—				—				1,417,128				—				—				1,417,128
	Foreign currency translation adjustments				—				—				—				—				(17,835	)			—				(17,835	)
	Net unrealized gains on available-for-sale securities				—				—				—				—				114,229				—				114,229
		Total comprehensive income			—				—				—				1,417,128				96,394				—				1,513,522
Issuance of common stock					24,917,711				120,364				412,815				—				—				—				533,179
Cash dividends declared ($0.60 per share)					—				—				—				(153,335	)			—				—				(153,335	)
Dividends and accretion of discount on redeemable convertible preferred stock					—				—				—				(39,559	)			—				—				(39,559	)
Acquisition of treasury stock					—				—				—				—				—				(196,915	)			(196,915	)
Sale of treasury stock					—				—				152,991				—				—				383,244				536,235
Grant of stock options					—				—				(757	)			—				—				—				(757	)
Balance at December 31, 2004					319,319,011				$1,542,455				$1,601,960				$2,372,614				$152,520				$(196,919	)			$5,472,630

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					2002				2003				2004				2004
																	(See Note 1)
																	(In thousands
					(In millions of Korean Won)												of US$)
Cash flows from operating activities
Net income					W	589,422			W	275,318			W	1,466,870			$	1,417,129
Adjustments to reconcile net income to net cash provided by operating activities:
	Provision for loan losses					236,219				1,011,366				195,446				188,818
	Provision (reversal) for losses on guarantees and acceptances					9,841				(45,779	)			(60,032	)			(57,996	)
	Depreciation and amortization					104,238				247,016				428,835				414,293
	Accretion of discounts on long-term debt					593				583,869				324,866				313,850
	Amortization on deferred loan fees and origination costs					52,941				87,820				92,399				89,266
	Amortization on investment debt securities					20,338				20,740				16,482				15,923
	Net (gain) loss on equity investments					8,683				12,992				(16,004	)			(15,461	)
	Net loss on valuation of trading assets					18,888				18,680				(141,819	)			(137,010	)
	Net (gain) loss on sale of available-for-sale securities					(185,914	)			2,550				(73,786	)			(71,284	)
	Impairment loss on investment securities					42,567				125,249				150,901				145,784
	Net gain on sale of premises and equipment					(39,716	)			(13,938	)			(15,275	)			(14,757	)
	Net (gain) loss on sales of subsidiaries					(20,760	)			378				—				—
	Net gain on sales of other assets					—				—				(14,678	)			(14,180	)
	Net unrealized foreign exchange (gain) loss					47,888				(91,337	)			(151,351	)			(146,219	)
	Minority interest in net income of subsidiaries					10,155				25,846				153,428				148,225
	Grant of stock option					7,715				5,688				(1,604	)			(1,550	)
	Impairment loss on goodwill					137,002				—				—				—
	Impairment loss on intangible assets					—				—				1,893				1,829
	Impairment loss on other investments					31,133				39,541				15,521				14,995
	Cumulative effect of change in accounting principle					—				—				23,049				22,267
	Extraordinary gain					—				—				(27,508	)			(26,575	)
	Net gain on sale of loans													(1,032	)			(997	)
	Net gain on retirement of bonds					—				—				(10,922	)			(10,552	)
	Net changes in:
		Restricted cash				(271,930	)			(1,620,257	)			361,287				349,036
		Trading assets				28,167				71,774				(2,797,829	)			(2,702,955	)
		Other assets				731,655				972,715				(2,466,414	)			(2,382,777	)
		Trading liabilities				12,257				(137,904	)			1,244,516				1,202,315
		Accrued expenses and other liabilities				(550,318	)			(767,410	)			3,030,857				2,928,081
			Net cash provided by operating activities			1,021,064				824,917				1,728,096				1,669,498

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				2002				2003				2004				2004
																(See Note 1)
																(In thousands
				(In millions of Korean Won)												of US$)
Cash flows from investing activities
	Net change in interest-bearing deposits in banks			W	214,284			W	(56,570	)		W	189,962			$	183,520
	Net change in call loans and securities purchased under resale agreements				1,309,410				317,103				295,274				285,261
	Proceeds from sales of available-for-sale securities				10,554,089				11,032,423				12,071,514				11,662,172
	Purchases of available-for-sale securities				(11,985,755	)			(12,153,357	)			(11,845,324	)			(11,443,652	)
	Proceeds from maturities, prepayments and calls of held-to-maturity securities				2,819,108				3,630,392				2,142,497				2,069,845
	Purchases of held-to-maturity securities				(1,179,957	)			(2,833,074	)			(1,596,763	)			(1,542,617	)
	Loan originations and principal collections, net				(10,260,858	)			(6,030,212	)			(3,773,137	)			(3,645,191	)
	Payments for repurchase of loans from Korea Asset Management Corporation				(51,769	)			(37,470	)			(24,031	)			(23,216	)
	Proceeds from sales of premises and equipment				71,327				54,414				29,546				28,544
	Purchases of premises and equipment				(204,229	)			(213,882	)			(222,825	)			(215,269	)
	Net change in security deposits				(20,622	)			(22,731	)			1,757				1,697
	Cash acquired from acquisitions				35,278				1,125,128				1,553				1,500
	Sale of equity interest in subsidiaries				30,795				1,529				—				—
	Acquisition of equity interest in subsidiaries				(446,051	)			(928,423	)			(99,293	)			(95,926	)
	Dividends from equity investees				—				—				4,220				4,077
	Net change in other investments				—				—				10,360				10,009
		Net cash used in investing activities			(9,114,950	)			(6,114,730	)			(2,814,690	)			(2,719,246	)
Cash flows from financing activities
	Net increase (decrease) in interest-bearing deposits				3,205,377				5,338,968				(2,103,071	)			(2,031,756	)
	Net increase (decrease) in noninterest-bearing deposits				(69,376	)			(124,905	)			1,417,722				1,369,647
	Net increase (decrease) in secured borrowings				574,064				266,164				(8,167	)			(7,890	)
	Net increase (decrease) in short-term borrowings				1,043,586				(2,974,990	)			(230,353	)			(222,542	)
	Proceeds from issuance of long-term debt				7,740,273				12,244,298				9,385,571				9,067,308
	Repayment of long-term debt				(4,546,953	)			(7,707,107	)			(7,059,193	)			(6,819,817	)
	Proceeds from issuance of common stock				2,124				27,504				—				—
	Purchases of treasury stock				(6	)			(2,149	)			(204,150	)			(197,227	)
	Reissuance of treasury stock				—				—				622,190				601,092
	Cash dividends paid on common stock				(150,812	)			(157,493	)			(166,670	)			(161,018	)
	Cash payment on capital reduction of subsidiary				(937	)			—				(1,750	)			(1,691	)
		Net cash provided by financing activities			7,797,340				6,910,290				1,652,128				1,596,106
Effect of exchange rate changes on cash					(1,297	)			(6,004	)			(18,432	)			(17,807	)
Net increase (decrease) in cash and cash equivalents					(297,843	)			1,614,473				547,103				528,551
Cash and cash equivalents
Beginning of year					580,167				282,324				1,896,797				1,832,477
End of year				W	282,324			W	1,896,797			W	2,443,900			$	2,361,028

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			2002				2003				2004				2004
															(See Note 1)
															(In thousands
			(In millions of Korean Won)												of US$)
Supplemental disclosure of cash flow information
Acquisitions:
	Fair value of net assets acquired		W	298,169			W	2,012,190			W	1,048,736			$	1,013,174
	Cash paid for acquisition of subsidiaries			446,051				928,423				99,293				95,926
Cash paid for interest				2,384,377				3,316,251				4,088,833				3,950,182
Cash paid for income taxes				329,420				240,174				431,537				416,904
Supplemental disclosure of noncash investing and financing activities
Loans repurchased from Korea Asset Management Corporation in exchange for held-to-maturity securities				75,288				1,593				—				—
Securities and other investments received in connection with loan restructuring				25,866				307,545				214,758				207,476
Preferred stocks acquired from Hanmaum Financial Company in exchange for non-performing loans				—				—				3,618				3,495
Increase (decrease) in cumulative translation adjustments, net of taxes				(6,199	)			(1,956	)			18,461				17,835
Increase (decrease) in unrealized gains (losses) on available-for-sale securities, net of taxes				(86,874	)			(10,309	)			118,240				114,231
Issuance of redeemable preferred stock and redeemable convertible preferred stock for net assets acquired				—				1,425,037				—				—
Acquisition of subsidiaries by exchange of stock				—				—				551,893				533,178

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	Business

						Percentage of
						Ownership(1)
		Country of
		Incorporation				2002				2003				2004
Shinhan Bank			Korea				100	%			100	%			100	%
Chohung Bank			Korea				—				81.15	%			100	%
Good Morning Shinhan Securities Co., Ltd.			Korea				60.47	%			60.47	%			100	%
Shinhan Card Co., Ltd.			Korea				100	%			100	%			100	%
Shinhan Capital Co., Ltd.			Korea				100	%			100	%			100	%
Jeju Bank			Korea				62.42	%			62.42	%			62.42	%
Shinhan Credit Information Co., Ltd.			Korea				51.00	%			51.00	%			100	%
Shinhan Private Equity Inc.			Korea				—				—				100	%

(1)	Direct and indirect ownership are combined.
(2)	All holdings are in the common stock of the respective subsidiaries.

	Basis of Presentation and Principles of Consolidation

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	Foreign Currency Translation

	Use of Estimates

	Cash and Cash Equivalents

	Securities Purchased under Resale Agreements and Securities Sold under Repurchase Agreements

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	Trading Assets and Liabilities

	Derivatives and Hedging Activities

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	Securities

	Other Investments

	Loans

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	Allowance for Credit Losses

	•	Loans classified as “substandard” or below according to asset classification guidelines of the Financial Supervisory Commission (“FSC”);
	•	Loans that are 90 days or more past due; and
	•	Loans which are “troubled debt restructurings” under US GAAP.

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	Deferred Loan Fees and Origination Costs

	Foreclosed Assets

	Securitizations and Retained Interests

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	Premises and Equipment

Buildings			40 years
Equipment and furniture			4 – 5  years
Leasehold improvements			5 years
Operating lease assets			3 – 5  years
Capitalized software costs			4 – 5  years

	Goodwill and Other Intangible Assets

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			Actual				Pro Forma
			(In millions of Won,
			except per share data)
2002
Income before extraordinary gain			W	589,422			W	585,418
	Basic net income per share of common stock			2,246				2,230
	Diluted net income per share of common stock			2,243				2,228
Net income				589,422				585,418
	Basic net income per share of common stock			2,246				2,230
	Diluted net income per share of common stock			2,243				2,228
2003
Income before extraordinary gain				275,318				256,972
	Basic net income per share of common stock			1,024				954
	Diluted net income per share of common stock			984				919
Net income				275,318				256,972
	Basic net income per share of common stock			1,024				954
	Diluted net income per share of common stock			984				919
2004
Income before extraordinary gain				1,462,411				1,462,411
	Basic net income per share of common stock			4,860				4,860
	Diluted net income per share of common stock			4,333				4,333
Net income				1,466,870				1,489,919
	Basic net income per share of common stock			4,875				4,954
	Diluted net income per share of common stock			4,347				4,415

	Impairment

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	Interest-Bearing Deposits in Banks

	Interest Expense

	Stock-Based Compensation

	Commissions and Fees

	Net Trust Management Fees

	Co-branding Credit Card Arrangements

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	Dormant accounts

	Income Taxes

	Other Comprehensive Income

	Convenience Translation

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2.	Accounting Changes and Future Application of Accounting Standards

	SFAS No. 141, Business Combinations

	SFAS No. 142, Goodwill and Other Intangible Assets

	SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets

	SFAS No. 147, Acquisitions of Certain Financial Institutions

	SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities

	SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity

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	FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees

	FIN 46 and FIN 46R, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51

	Staff Accounting Bulletin No. 105, Application of Accounting Principles to Loan Commitments

	SFAS No. 132R (revised 2003), Employers’ Disclosure about Pensions and Other Postretirement Benefits

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	Statement of Position No. 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer

	EITF No. 03-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments

	SFAS No. 123 (revised 2004), Share — Based Payment

3.	Business Changes and Developments

	Formation of Shinhan Financial Group

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						Number of
						Shares of the Group’s
		Exchange				Common Stock
		Ratio				Issued
Shinhan Bank			1				275,182,814
Shinhan Capital			0.3048				4,877,424
Shinhan Securities			0.3594				8,570,322
Shinhan ITM			0.4642				3,713,632

	Acquisition of Jeju Bank

	Spin-off of Shinhan Card Co., Ltd

	Acquisition of Good Morning Securities Co., Ltd. (“Good Morning Securities”)

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	Disposal of Shinhan ITM

	Acquisition of Chohung Bank

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			(In Millions of
			Korean Won)
Cash and cash equivalents			W	900,552
Deposits				723,630
Call loans				1,322,150
Trading assets				1,617,579
Securities				6,651,839
Loans, net of allowance for loan losses				34,547,592
Premises and equipment, net				1,008,855
Other assets				4,144,543
	Total assets			50,916,740
Due to depositors				33,076,845
Borrowings and debentures				12,671,215
Other liabilities				4,285,705
Minority interest at book value				11,675
	Total liabilities			50,045,440
Fair value of net assets of Chohung Bank			W	871,300

				(In Millions of
				Korean Won)
Market value of consideration				W	2,325,038
Direct acquisition costs					28,423
		Total purchase price		W	2,353,461	(1)
Allocation of purchase price:
	Fair value of net assets of Chohung Bank (excluding effect of deferred taxes)			W	1,329,932
	Deferred tax				(458,632	)
	Core deposit intangible asset				770,705
	Court deposit intangible asset				186,093
	Credit card relationship intangible asset				184,092
	Goodwill				341,271
		Total purchase price		W	2,353,461

(1)	The total purchase price is approximately W2,353,461 million, which comprised of the following:

	1.	Cash of W900,000 million;
	2.	46,583,961 newly issued shares of the Group’s redeemable preferred stock (“RPS”) with an aggregate estimated fair value of W710,258 million;

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	3.	44,720,603 newly issued shares of the Group’s redeemable convertible preferred stock (“RCPS”) with an aggregate estimated fair value of W714,780 million; and
	4.	Direct acquisition costs of W28,423 million.

	Asset Indemnity

	General Indemnity

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	Profit Earn-out

				(In Millions of
				Korean Won)
Cash				W	94,884
Stock exchange					331,263
Direct acquisition cost					565
		Total purchase price		W	426,712
Allocation of purchase price:
	Fair value of net assets of Chohung Bank			W	403,111
	Core deposit intangible asset				133,151
	Court deposit intangible asset				115,364
	Credit card relationship intangible asset				35,264
	Negative goodwill				(260,178	)
		Total purchase price		W	426,712

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Premises and equipment			W	169,040
Core deposit intangible asset				89,067
Court deposit intangible asset				77,170
Credit card relationship intangible asset				23,589
Deferred tax				(98,688	)
	Total allocation		W	260,178

4.	Restricted Cash

		2003				2004
		(In millions of Won)
Reserve deposits with the BOK		W	2,407,401			W	2,615,574
Cash restricted for investment activities			1,038,879				199,183
Deposits with insurance companies			78,826				—
Other			136,891				485,953
		W	3,661,997			W	3,300,710

5.	Call Loans and Securities Purchased under Resale Agreements

		2003				2004
		(In millions of Won)
Call loans		W	1,427,919			W	1,431,095
Securities purchased under resale agreements			470,300				160,000
		W	1,898,219			W	1,591,095

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6.	Trading Activities

			2003				2004
			(In millions of Won)
Debt securities:
	Korean treasury and governmental agencies		W	1,152,257			W	1,994,688
	Corporations			368,667				964,837
	Mortgage-backed and asset-backed securities			39,854				20,003
	Financial institutions			1,012,823				1,322,329
Equity securities				278,864				311,636
Derivative instruments:
	Foreign exchange derivatives			212,082				1,435,690
	Interest rate derivatives			163,312				208,814
	Equity derivatives			145,042				29,875
	Credit derivatives			—				38
	Commodity derivatives			—				3,159
Other trading assets — commodity indexed deposits				4,394				25,272
			W	3,377,295			W	6,316,341

			2003				2004
			(In millions of Won)
Derivative instruments:
	Foreign exchange derivatives		W	217,389			W	1,493,120
	Interest rate derivatives			134,997				190,234
	Equity derivatives			153,066				35,888
	Credit derivatives			358				50
	Commodity derivatives			—				3,154
Other trading liabilities — commodity indexed deposits				7,251				35,131
			W	513,061			W	1,757,577

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			2002				2003				2004
			(In millions of Won)
Debt securities			W	8,365			W	(2,292	)		W	97,844
Equity securities				(4,401	)			35,025				14,703
Derivative instruments				84,063				38,905				29,272
Other trading activities — commodity indexed deposits				—				439				743
	Net trading profits		W	88,027			W	72,077			W	142,562

7.	Securities

			2003																2004
							Gross				Gross												Gross				Gross
			Amortized				Unrealized				Unrealized								Amortized				Unrealized				Unrealized
			Cost				Gains				Losses				Fair Value				Cost				Gains				Losses				Fair Value
			(In millions of Won)
Available-for-sale securities
Debt securities:
	Korean treasury and governmental agencies		W	8,984,274			W	43,333			W	46,088			W	8,981,519			W	8,724,892			W	128,443			W	18,318			W	8,835,017
	Corporations			1,547,169				25,290				20,282				1,552,177				1,275,621				17,979				848				1,292,752
	Financial institutions			5,975,412				40,139				17,113				5,998,438				5,644,618				30,419				326				5,674,711
	Foreign governments			12,693				340				79				12,954				56,599				—				99				56,500
	Mortgage-backed and asset-backed securities			1,118,834				1,570				1,567				1,118,837				1,733,939				8,643				3				1,742,579
Marketable equity securities				394,917				47,049				7,356				434,610				442,232				67,936				3,498				506,670
			W	18,033,299			W	157,721			W	92,485			W	18,098,535			W	17,877,901			W	253,420			W	23,092			W	18,108,229
Held-to-maturity securities
Debt securities:
	Korean treasury and governmental agencies		W	2,351,053			W	121,317			W	247			W	2,472,123			W	1,661,777			W	152,210			W	59			W	1,813,928
	Corporations			364,689				11,589				121				376,157				218,424				7,092				416				225,100
	Financial institutions			552,904				22,108				1,082				573,930				1,219,121				49,188				52				1,268,257
	Mortgage-backed and asset-backed securities			336,164				2,853				17				339,000				—				—				—				—
			W	3,604,810			W	157,867			W	1,467			W	3,761,210			W	3,099,322			W	208,490			W	527			W	3,307,285

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			2002				2003				2004
			(In millions of Won)
Available-for-sale securities			W	41,427			W	125,249			W	150,901
Held-to-maturity securities				1,140				—				—
	Total other-than-temporary impairment losses		W	42,567			W	125,249			W	150,901

			Less Than 12 Months								12 Months or Longer								Total
							Gross								Gross								Gross
							Unrealized								Unrealized								Unrealized
			Fair Value				Losses				Fair Value				Losses				Fair Value				Losses
			(In millions of Won)
Available-for-sale securities
Debt securities:
	Korean treasury and governmental agencies		W	2,765,373			W	(15,142	)		W	339,685			W	(3,176	)		W	3,105,058			W	(18,318	)
	Corporations			115,851				(769	)			320				(80	)			116,171				(849	)
	Financial institutions			216,992				(245	)			19,452				(80	)			236,444				(325	)
	Foreign governments			5,432				(99	)			—				—				5,432				(99	)
	Mortgage-backed and asset-backed securities			37,534				(3	)			—				—				37,534				(3	)
Marketable equity securities				47,618				(3,455	)			52				(43	)			47,670				(3,498	)
			W	3,188,800			W	(19,713	)		W	359,509			W	(3,379	)		W	3,548,309			W	(23,092	)
Held-to-maturity securities
Debt securities:
	Korean treasury and governmental agencies		W	3,994			W	(10	)		W	57			W	(49	)		W	4,051			W	(59	)
	Corporations			2,193				(416	)			—				—				2,193				(416	)
	Financial institutions			5,167				(52	)			—				—				5,167				(52	)
	Mortgage-backed and asset-backed securities			—				—				—				—				—				—
			W	11,354			W	(478	)		W	57			W	(49	)		W	11,411			W	(527	)
Total temporary impaired securities			W	3,200,154			W	(20,191	)		W	359,566			W	(3,428	)		W	3,559,720			W	(23,619	)

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	•	Identification and evaluation of investments that have indications of possible impairment
	•	Analysis of individual investments that have fair values less than 80% of amortized cost, including consideration of the length of time the investment has been in an unrealized loss position
	•	Discussion of evidential matter, including an evaluation of factors or triggers that would or could cause individual investments to qualify as having other-than-temporary impairments and those that would not support other-than-temporary impairment
	•	Documentation of the results of these analyses, as required under business policies

		2002				2003				2004
		(In millions of Won)
Interest income		W	747,332			W	923,222			W	1,200,356
Dividends			1,779				4,132				64,483
		W	749,111			W	927,354			W	1,264,839

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		Available-for-sale								Held-to-maturity
		Debt Securities								Debt Securities
		Amortized Cost				Fair Value				Amortized Cost				Fair Value
		(In millions of Won)
Within 1 year		W	4,304,587			W	4,322,117			W	1,279,521			W	1,321,224
Over 1 year through 5 years			9,773,101				9,928,055				1,647,354				1,800,947
Over 5 years through 10 years			1,017,099				1,033,858				172,447				185,114
Over 10 years			31,562				31,576				—				—
Securities not due at a single maturity date			2,309,320				2,285,952				—				—
		W	17,435,669			W	17,601,558			W	3,099,322			W	3,307,285

8.	Loans

				2003				2004
				(In millions of Won)
Commercial:
	Commercial and industrial			W	35,616,698			W	35,653,127
	Other commercial				17,377,842				17,988,288
	Lease financing				1,091,330				981,002
Consumer:
	Mortgage and home equity				20,517,109				22,180,112
	Credit cards				6,112,409				4,731,913
	Other consumer				14,579,758				15,545,796
		Total loans, gross			95,295,146				97,080,238
		Deferred loan origination costs			126,837				98,411
					95,421,983				97,178,649
		Less: Allowance for loan losses			3,630,728				2,310,555
		Total loans, net		W	91,791,255			W	94,868,094

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		2003				2004
		(In millions of Won)
Impaired loans with an allowance		W	3,113,325			W	2,268,924
Impaired loans without an allowance			374,711				376,606
		W	3,488,036			W	2,645,530
Allowance for impaired loans		W	1,349,272			W	885,332
Average balance of impaired loans during the year			2,867,370				2,057,663
Interest income recognized on impaired loans			51,986				90,548

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			2003												2004
							Guarantees and												Guarantees and
			Loans				Acceptances(1)				Total				Loans				Acceptances(1)				Total
			(In millions of Won)
Balance at beginning of the year			W	995,725			W	81,512			W	1,077,237			W	3,630,728			W	176,653			W	3,807,381
Reclassification of accounts to other liability				—				—				—				—				(1,005	)			(1,005	)
Provision for loan losses				1,011,366				—				1,011,366				195,446				—				195,446
Provision for guarantees and acceptances				—				(45,779	)			(45,779	)			—				(60,032	)			(60,032	)
Allowance relating to:
	Acquisition of Chohung Bank			2,739,297				140,920				2,880,217				—				—				—
	Loans reacquired from Korea Asset Management Corporation subject to recourse			31,831				—				31,831				1,900				—				1,900
				2,771,128				140,920				2,912,048				1,900				—				1,900
Charge-offs				(1,395,907	)			—				(1,395,907	)			(1,824,897	)			—				(1,824,897	)
Recoveries				248,416				—				248,416				307,378				—				307,378
Balance at end of the year			W	3,630,728			W	176,653			W	3,807,381			W	2,310,555			W	115,616			W	2,426,171

(1)	The allowance for losses on guarantees and acceptances has been included in other liabilities.

		2003				2004
		(In millions of Won)
Gross lease payments receivable		W	1,204,486			W	1,056,681
Estimated unguaranteed residual values			41,144				31,125
Unearned income			(154,300	)			(106,804	)
		W	1,091,330			W	981,002

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		(In millions of
Years Ending		Won)
2005		W	371,530
2006			260,160
2007			148,592
2008			77,575
2009			49,318
Thereafter			73,827
		W	981,002

9.	Premises and Equipment

			2003				2004
			(In millions of Won)
Land			W	952,548			W	942,717
Building				750,115				697,075
Equipment and furniture				538,984				594,132
Capitalized software costs				97,568				106,320
Leasehold improvements				97,387				108,312
Construction in progress				2,093				2,781
Operating lease assets				147,147				173,634
	Total premises and equipment, gross			2,585,842				2,624,971
	Less: Accumulated depreciation and amortization			(583,118	)			(776,918	)
	Total premises and equipment, net		W	2,002,724			W	1,848,053

10.	Goodwill and Intangible Assets

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						Good Morning
		Chohung				Shinhan				Shinhan
		Bank				Securities				Capital				Total
		(In millions of Won)
Balance at January 1, 2003		W	—			W	145,364			W	1,616			W	146,980
Acquisition			355,409				—				—				355,409
Disposition			—				—				—				—
Impairment loss			—				—				—				—
Balance at December 31, 2003			355,409				145,364				1,616				502,389
Acquisition			—				—				—				—
Disposition			—				—				—				—
Impairment loss			—				—				—				—
Other			113,526				—				—				113,526
Balance at December 31, 2004		W	468,935			W	145,364			W	1,616			W	615,915

										Treasury &								Other				Securities
		Retail				Corporate				International				Credit				Banking				Brokerage
		Banking				Banking				Business				Card				Services				Services				Other				Total
		(In millions of Won)
Balance at January 1, 2003		W	—			W	—			W	—			W	—			W	—			W	129,285			W	17,695			W	146,980
Acquisition			223,200				32,345				20,489				51,500				5,439				—				22,436				355,409
Disposition			—				—				—				—				—				—				—				—
Impairment loss			—				—				—				—				—				—				—				—
Balance at December 31, 2003			223,200				32,345				20,489				51,500				5,439				129,285				40,131				502,389
Acquisition			—				—				—				—				—				—				—				—
Disposition			—				—				—				—				—				—				—				—
Impairment loss			—				—				—				—				—				—				—				—
Other			71,295				1,072				6,545				16,450				10,997				—				7,167				113,526
Balance at December 31, 2004		W	294,495			W	33,417			W	27,034			W	67,950			W	16,436			W	129,285			W	47,298			W	615,915

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			2003												2004
			Gross Carrying				Accumulated				Net Carrying				Gross Carrying				Accumulated				Net Carrying
			Amount				Amortization				Amount				Amount				Amortization				Amount
			(In millions of Won)
Core deposit of Jeju Bank(1)			W	5,004			W	(1,046	)		W	3,958			W	2,508			W	(2,508	)		W	—
Brokerage customer relationship				68,266				(37,476	)			30,791				68,266				(64,551	)			3,715
KSFC deposit				10,941				(6,093	)			4,848				10,941				(10,415	)			526
Core deposit of Chohung Bank				781,393				(18,956	)			762,437				825,477				(156,342	)			669,135
Credit card relationship of Chohung Bank				186,645				(5,579	)			181,066				198,320				(54,693	)			143,627
	Total intangible assets subject to amortization			1,052,249				(69,149	)			983,100				1,105,512				(288,509	)			817,003
KSFC borrowing(2)				2,293				—				2,293				400				—				400
Court deposit of Chohung Bank				188,158				—				188,158				226,353				—				226,353
	Total indefinite-lived intangible assets			190,451				—				190,451				226,753				—				226,753
			W	1,242,700			W	(69,149	)		W	1,173,551			W	1,332,265			W	(288,509	)		W	1,043,756

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(1)	The change of gross carrying amount of W2,496 million is due to the decrease caused by realization of net operating losses carry-forwarded from 2001.
(2)	The change of gross carrying amount of W1,893 million is due to impairment loss recognized in 2004.

		(In Millions of
Years Ending		Won)
2005		W	181,584
2006			155,189
2007			129,362
2008			103,535
2009			78,283
Thereafter			169,050
		W	817,003

11.	Other Assets

		2003				2004
		(In millions of Won)
Accrued interest and dividends receivable		W	631,007			W	455,262
Receivables for foreign exchange spot contracts			940,285				2,463,992
Accounts receivable			554,408				2,042,601
Accrued interest income			164,331				64,358
Deferred tax assets			1,152,620				829,276
Other investments			1,060,476				1,076,326
Prepaid expenses			33,524				56,183
Others			65,073				83,849
		W	4,601,724			W	7,071,847

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12.	Deposits

			2003								2004
							Weighted-								Weighted-
							Average								Average
			Balance				Interest Rate				Balance				Interest Rate
			(In millions of Won, except percentages)
Interest-bearing deposits
	Demand deposits		W	6,863,834				1.39	%		W	5,620,644				1.33	%
	Savings deposits			24,558,760				1.46	%			24,427,179				1.24	%
	Certificate of deposits			7,069,321				4.44	%			8,051,525				4.08	%
	Other time deposits			40,999,776				4.19	%			39,449,288				3.83	%
	Mutual installment deposits			2,669,248				5.36	%			2,384,922				4.54	%
				82,160,939				3.31	%			79,933,558				2.93	%
Noninterest-bearing deposits
	Demand deposits			1,328,203				—				2,745,925				—
			W	83,489,142				3.25	%		W	82,679,483				2.85	%

		(In Millions of
Years Ending		Won)
2005		W	43,058,499
2006			3,205,607
2007			1,842,119
2008			396,760
2009			396,235
Thereafter			986,515
		W	49,885,735

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13.	Short-Term Borrowings

		2003								2004
						Weighted-								Weighted-
						Average								Average
		Balance				Interest Rate				Balance				Interest Rate
		(In millions of Won, except percentages)
Borrowings from BOK		W	1,963,755				2.41	%		W	1,567,708				2.32	%
Borrowings in foreign currencies			5,318,558				1.26	%			3,999,173				1.09	%
Borrowings from trust accounts			868,569				4.28	%			706,578				3.84	%
Call money			179,279				3.55	%			1,155,569				3.30	%
Other borrowings(1)			2,874,578				5.72	%			3,524,527				3.41	%
		W	11,204,739							W	10,953,555

(1)	The majority of other borrowings relate to borrowings from other financial institutions.

14.	Secured Borrowings

							2003												2004
											Collateral												Collateral
							Secured												Secured
			Maturity				Borrowings				Loans(1)				Securities				Borrowings				Loans(1)				Securities
			(In millions of Won)
Shinhan 1st Securitization Specialty L.L.C.				2004			W	12,100			W	—			W	5,283			W	—			W	—			W	—
	6.57%-15.00% collateralized bond obligation
Shinhan 2nd Securitization Specialty L.L.C.				2011				25,725				25,097				5,798				10,737				19,303				7,549
	7.85% collateralized bond obligation
Shinhan 4th Securitization Specialty L.L.C.				2011				250				29,469				7,022				250				19,074				3,371
	20.00% collateralized bond obligation
Sprout I ABS Specialty Co., Ltd.				2013				772,940				787,848				—				407,186				791,405				—
	1M Libor+0.60% collateralized bond obligation
Shinhan Fun and Joy 2nd Securitization				2006				49,827				343				—				27,953				9				—
	Specialty L.L.C. 5.20%-5.69% collateralized bond obligation
Good & Secure Co., Ltd.				2005				81,521				—				95,927				81,522				—				73,142
	3.68%-7.00% Asset-Backed Commercial Papers
Goldwing Co., Ltd.				2006				332,050				95,000				315,000				383,167				94,140				320,023
	3.47%-3.95% Asset-Backed Commercial Papers

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								2003												2004
												Collateral												Collateral
								Secured												Secured
				Maturity				Borrowings				Loans(1)				Securities				Borrowings				Loans(1)				Securities
				(In millions of Won)
Shinhan Card 2003-1 Securitization Specialty L.L.C.					2009				406,086				784,728				—				406,086				801,694				—
	4.65% Type 1 beneficiary certificate
CHB NPL 1st ABS Specialty Co., Ltd.					2004				81,867				267,433				17,021				—				—				—
	10%-25% collateralized bond obligation
CSC 1st Securitization Specialty L.L.C.					2005				99,700				—				100,135				59,700				—				100,576
	CD+1.57% Asset-Backed Commercial Papers
Shinhan 5th Securitization Specialty L.L.C.					2006				—				—				—				44,888				131,287				—
	3.75%-3.86% collateralized bond obligation
CHB NPL 2004-1 ABS Specialty Co., Ltd.					2007				—				—				—				89,759				197,116				—
	4.23%-4.92% collateralized bond obligation
CHB NPL 2004-2 ABS Specialty Co., Ltd.					2007				—				—				—				104,679				276,813				556
	3.56%-4.15% collateralized bond obligation
Auto 1st ABS Specialty Co., Ltd.					2008				—				—				—				72,500				—				71,000
	CD+0.70%-7.00% ABCP and collateralized bond obligation
KTF 3rd ABS Specialty Co., Ltd.					2007				—				—				—				199,740				—				200,000
	5.67% collateralized bond obligation
Dongbu Hannong Chemical 1st ABS Specialty Co.					2005				—				—				—				96,980				—				97,000
	3.65%-6.75% ABCP and collateralized
		bond Obligation
Dogong 1st ABS Specialty Co., Ltd.					2006				—				—				—				326,499				—				326,500
	3.38%-7.00% ABCP and collateralized bond Obligation
Enclean 3rd ABS Specialty Co., Ltd.					2007				—				—				—				155,498				—				200,433
	CD+0.70%-30% ABCP and collateralized bond obligation
Miraedon Co., Ltd.					2005				—				—				—				120,000				—				157,776
	4.01%-4.04% Asset-Backed Commercial Papers
Work and Joy 2004-1 ABS Specialty Co., Ltd.					2007				—				—				—				149,592				—				150,000
	3.75% collateralized bond obligation
Other secured borrowings					2008				28,521				49,290				4,720				40,182				3,904				21,187
	5.85%-25% collateralized bond obligation
Securities sold under repurchase agreements					2006				4,425,673				—				6,421,404				3,531,175				—				7,094,006
	1.997%-7.10%							W	6,316,260			W	2,039,208			W	6,972,310			W	6,308,093			W	2,334,745			W	8,823,119

(1)	Represents the carrying amounts, exclusive of the related specific allowance for loan losses.

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15.	Long-Term Debt

				Interest
				Rates (%)				Maturity				2003				2004
												(In millions of Won)
Senior
Won-denominated
	Notes payable to the Small Business Corporation				2.00-5.25				2005-2013			W	364,884			W	703,641
	Notes payable to the Industrial Bank of Korea				1.84-5.00				2006-2009				—				22,501
	Notes payable to the Institute of Information Technology Assessment				0.95-6.25				2005-2009				96,122				233,091
	Notes payable to the Korea Energy Management Corporation				0.75-6.50				2006-2019				103,724				225,641
	Notes payable to other Korean Government Funds				1.00-7.45				2005-2019				228,077				177,610
	Fixed and floating rate debentures(1)(2)				1.20-11.95				2005-2014				13,608,065				14,229,164
	Other notes payable				1.59-8.12				2005-2012				640,310				388,063
		Subtotal											15,041,182				15,979,711
Foreign currency-denominated
	Floating rate debentures(1)				1.20-7.73				2005-2008				1,554,693				599,386
	Other floating rate notes payable(1)				0.50-11.88				2005-2014				16,991				1,400,962
		Subtotal											1,571,684				2,000,348
		Total senior debt											16,612,866				17,980,059
Subordinated
Won-denominated
	Hybrid bonds(3)				5.70-7.80				2033-2034				272,564				495,033
	Other fixed rate debentures(4)				5.46-14.45				2005-2010				3,040,292				3,325,202
		Subtotal											3,312,856				3,820,235
Foreign currency-denominated
	Floating rate debentures(1)				4.67				2014				—				52,190
	Other fixed rate notes payable				6.25				2013				250				260,950
		Subtotal											250				313,140
		Total subordinated debt											3,313,106				4,133,375

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				Interest
				Rates (%)				Maturity				2003				2004
												(In millions of Won)
Redeemable preferred stock (5)
	Series 1 Redeemable preferred stock				4.04				2006				153,336				168,503
	Series 2 Redeemable preferred stock				4.04				2007				148,167				168,503
	Series 3 Redeemable preferred stock				4.04				2008				143,386				168,504
	Series 4 Redeemable preferred stock				4.04				2009				138,962				168,504
	Series 5 Redeemable preferred stock				4.04				2010				134,871				168,504
	Series 6 Redeemable preferred stock				7.00				2006				506,652				525,000
	Series 7 Redeemable preferred stock				7.46				2008				354,318				365,000
	Series 8 Redeemable preferred stock				7.86				2010				9,869				10,000
		Total redeemable preferred stock											1,589,561				1,742,518
Long-term debt, gross													21,515,533				23,855,952
Less: Unamortized discounts													(297,825	)			(239,269	)
Long-term debt, net												W	21,217,708			W	23,616,683

(1)	Interest rates on floating rate debt were those rates in effect at December 31, 2004
(2)	Majority of these debentures related to miscellaneous bank borrowings from individual lenders.
(3)	Chohung Bank and Shinhan Bank have a call option that can be exercised 5 years after the issuance date, or earlier with the approval of the Financial Supervisory Service. The call options mature in 30 years from the issuance date, but may be extended by Chohung Bank and Shinhan Bank at any time.
(4)	Majority of these debentures related to miscellaneous bank borrowings from corporate lenders and Korean governmental entities.
(5)	See Note 21 for the terms of the RPS.

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		(In millions of
Years Ending		Won)
2005			W10,295,154
2006			4,362,355
2007			2,189,977
2008			2,093,177
2009			1,562,041
Thereafter			3,353,248
Long-term debt, gross			23,855,952
Less: Unamortized discount			(239,269	)
Long-term debt, net			W23,616,683

16.	Accrued Expenses and Other Liabilities

		2003				2004
		(In millions of Won)
Accrued interest and dividend payables		W	1,716,234			W	1,778,560
Payables for foreign exchange spot contracts			940,215				3,918,113
Accrued severance benefits			205,768				74,835
Accrued expenses			72,095				85,491
Accounts payable			623,888				968,328
Unearned income			162,680				157,192
Income tax payable			117,370				277,818
Withholding value-added tax and other taxes			83,112				43,114
Deferred tax liabilities			465,648				525,407
Guarantee deposits received			259,948				305,649
Due to agencies			1,008,097				938,465
Allowance for losses on guarantees and acceptances			176,653				115,616
Utility bill payments received on behalf of government			419,386				108,035
Other			303,494				417,506
		W	6,554,588			W	9,714,129

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17.	Commissions and Fees

				2002				2003				2004
				(In millions of Won)
Brokerage fees and commissions				W	170,160			W	260,412			W	231,520
Other fees and commissions:
	Credit card fees				122,038				255,775				360,624
	Commissions received on remittance				40,878				59,685				78,657
	Commissions received on import and export letters of credit				34,816				51,166				80,528
	Financial guarantee fees				10,459				9,102				24,916
	Commissions received in foreign exchange activities				17,671				30,273				68,391
	Commission received as agency				2,966				5,987				49,132
	Commission received as electronic charge receipt				13,396				42,583				74,232
	Commission received as early repayment				27,452				36,350				33,958
	Other fees				34,059				89,136				176,856
		Total other fees and commissions			303,735				580,057				947,294
				W	473,895			W	840,469			W	1,178,814

18.	Other Noninterest Income and Other Noninterest Expenses

		2002				2003				2004
		(In millions of Won)
Net gain on foreign exchange spot contracts		W	110,667			W	91,337			W	352,696
Gain on sale of premises and equipment			1,013				22,609				30,408
Income from operating leases			22,913				39,922				52,787
Rental income			8,077				11,924				15,199
Extinguished prescription of deposits			5,106				16,053				13,353
Gain on other investments			21,099				27,527				53,356
Other			34,243				65,250				246,137
		W	203,118			W	274,622			W	763,936

		2002				2003				2004
		(In millions of Won)
Miscellaneous taxes		W	75,748			W	61,844			W	92,096
Loss on sale of premises and equipment			11,487				8,670				15,134
Loss on sale of other real estate			5,556				3,199				1,448
Other fees and commissions			81,525				250,483				363,918
Other			43,520				139,771				325,420
		W	217,836			W	463,967			W	798,016

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19.	Extraordinary Gain

			(In millions of
			Won)
Fair value of net assets of Good Morning Shinhan Securities			W	301,334
KSFC deposit intangible asset				6,276
Brokerage customer relationship intangible asset				50,956
KSFC borrowing intangible asset				262
Negative goodwill				(149,791	)
	Total purchase price		W	209,037

			(In millions of
			Won)
Premises and equipment			W	111,172
KSFC deposit intangible asset				6,276
Brokerage customer relationship intangible asset				50,956
KSFC borrowing intangible asset				262
Deferred tax asset				(46,383	)
Extraordinary gain				27,508
	Total allocation		W	149,791

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20.	Common Stock

	Issuances of common stock

	Treasury stock

21.	Redeemable Preferred Stock and Redeemable Convertible Preferred Stock

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RPS issued to KDIC (Series 1 to 5)				4.04	%
RPS issued to Strider:
	Series 6			7.00	%
	Series 7			7.46	%
	Series 8			7.86	%

		(In millions of
Years Ending		Won)
2005		W	—
2006			—
2007			—
2008			808,817
Discount on RCPS			(73,073	)
		W	735,744

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22.	Retained Earnings

		2003				2004
		(In millions of Won)
Appropriated retained earnings for legal reserves under Korean GAAP		W	82,469			W	118,692
Unappropriated retained earnings under US GAAP			1,106,219				2,337,201
		W	1,188,688			W	2,445,893

23.	Regulatory Requirements

		2003				2004
		(In millions of Won,
		except capital ratio)
Equity Capital		W	8,847,673			W	9,867,854
Requisite Capital			7,472,031				7,625,261
Requisite Capital Ratio			118.41	%			129.41	%

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				Shinhan Bank								Chohung Bank
				2003				2004				2003				2004
				(In millions of Won, except capital ratio)
Tier 1 capital				W	2,984,770			W	3,618,254			W	1,800,933			W	2,023,051
Tier 2 capital					2,196,264				2,183,527				1,782,405				2,023,051
Less: Treasury stock, etc.					(244,554	)			(257	)			(10,940	)			(230,373	)
		Total risk-adjusted capital		W	4,936,480			W	5,801,524			W	3,572,398			W	3,815,729
Risk-weighted assets
	On-balance sheet assets			W	42,459,960			W	44,603,127			W	38,859,601			W	38,841,232
	Off-balance sheet assets				4,154,792				3,886,979				1,339,435				1,796,797
		Total risk-weighted assets		W	46,614,752			W	48,490,106			W	40,199,036			W	40,638,029
Capital adequacy ratio					10.59	%			11.96	%			8.89	%			9.39	%
	Tier 1 capital ratio				6.40	%			7.46	%			4.48	%			4.98	%
	Tier 2 capital ratio				4.71	%			4.50	%			4.43	%			4.98	%

				Shinhan Bank								Chohung Bank
				2003				2004				2003				2004
				(In millions of Won, except capital ratio)
Tier 1 capital				W	2,984,770			W	3,618,254			W	1,800,933			W	2,023,051
Tier 2 capital					1,951,710				2,183,270				1,771,465				1,792,678
		Total risk-adjusted capital		W	4,936,480			W	5,801,524			W	3,572,398			W	3,815,729
		Total risk-weighted assets		W	47,064,938			W	48,578,597			W	40,260,877			W	40,580,874
Capital adequacy ratio					10.49	%			11.94	%			8.87	%			9.40	%
	Tier 1 capital ratio				6.34	%			7.45	%			4.47	%			4.99	%
	Tier 2 capital ratio				4.15	%			4.49	%			4.40	%			4.41	%

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24.	Income Taxes

				2002				2003				2004
				(In millions of Won)
Current tax expense
	National			W	299,473			W	218,340			W	392,306
	Local				29,947				21,834				39,231
		Total current tax expense			329,420				240,174				431,537
Deferred tax expense (benefit)
	National				(8,276	)			6,571				302,649
	Local				(828	)			657				30,265
		Total deferred tax expense (benefit)			(9,104	)			7,228				332,914
		Total tax expense		W	320,316			W	247,402			W	764,451

		2002				2003				2004
		(In millions of Won, except tax rates)
Statutory tax rate			29.7	%			29.7	%			29.7	%
Income before income tax expense, minority interest, extraordinary item and cumulative effect of a change in accounting principle		W	919,893			W	548,566			W	2,380,290
Income tax calculated at the statutory tax rate			273,208				162,924				706,946
Income not assessable for tax purposes			(5,134	)			(8,939	)			(75,926	)
Expenses not deductible for tax purposes			6,086				19,880				171,556
Impairment loss on goodwill			40,690				—				—
Foreign tax rate differentials			(1,473	)			(359	)			(205	)
Adjustment for double taxation of subsidiaries and branches			—				291				13,502
Change in statutory tax rate(1)			—				56,462				(33,688	)
Change in valuation allowance			1,720				15,507				(18,125	)
Other			5,219				1,636				391
Income tax expense		W	320,316			W	247,402			W	764,451

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(1)	In December 2003, the Korean government reduced the corporate income tax rate from 29.7% to 27.5%, effective from January 1, 2005.

			2003				2004
			(In millions of Won)
Deferred income tax assets
	Allowance for loan losses		W	424,152			W	276,859
	Allowance for guarantees and acceptances			78,338				51,376
	Valuation of trading assets			25,237				15,733
	Premises and equipment			61,303				58,942
	Available-for-sale securities			283,193				233,868
	Other assets			2,069				26,906
	Long-term debt			41,306				33,492
	Other temporary differences			25,564				9,819
	Net operating loss carry forwards			346,780				177,905
				1,287,942				884,900
	Less: Valuation allowance			(135,322	)			(55,624	)
	Deferred income tax assets			1,152,620				829,276
Deferred income tax liabilities
	Valuation of trading assets			(2,232	)			(1,701	)
	Foreign exchange contracts and derivative instruments			(3,254	)			(566	)
	Allowance for loan losses			(63,208	)			(78,424	)
	Accrued interest and dividend receivable			(102,114	)			(73,952	)
	Accrued interest and dividend payable			(1,105	)			—
	Other assets			(258,589	)			(354,922	)
	Long-term debt			(14,247	)			(8,594	)
	Other temporary differences			(20,899	)			(7,248	)
	Deferred income tax liabilities			(465,648	)			(525,407	)
Net deferred income tax assets			W	686,972			W	303,869

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		(In millions of
Years Ending		Won)
2005		W	3,695
2006			109,585
2007			27,355
2008			504,698
2009			4,764
		W	650,097

25.	Earnings Per Share

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				2002				2003				2004
				(In millions of Won, except per share data)
Basic EPS
Net income before extraordinary gain and cumulative effect of a change in accounting principle				W	589,422			W	275,318			W	1,462,411
	Extraordinary gain, net of taxes				—				—				27,508
	Cumulative effect of a change in accounting principle, net of taxes				—				—				(23,049	)
	Accretion and dividends on redeemable convertible preferred stock				—				(6,043	)			(40,948	)
	Net income attributable to common stock shareholders			W	589,422			W	269,275			W	1,425,922
	Weighted-average number of common stocks outstanding (in thousands)				262,480				262,987				292,465
Net earnings per share
	Net income before extraordinary gain and cumulative effect of a change in accounting principle			W	2,246			W	1,024			W	4,860
	Extraordinary gain				—				—				94
	Cumulative effect of a change in accounting principle				—				—				(79	)
		Basic net income per share		W	2,246			W	1,024			W	4,875
Diluted EPS
Net income before extraordinary gain and cumulative effect of a change in accounting principle for purposes of computing diluted net income per share				W	589,422			W	275,318			W	1,462,411
	Extraordinary gain, net of taxes				—				—				27,508
	Cumulative effect of a change in accounting principle, net of taxes				—				—				(23,049	)
	Net income attributable to common stock shareholders			W	589,422			W	275,318			W	1,466,870
	Weighted-average number of common stocks outstanding (in thousands)				262,480				262,987				292,465
	Diluted effect of redeemable convertible preferred stock (in thousands)				—				16,540				44,721
	Diluted effect of bond with warrants (in thousands)				288				212				—
	Diluted effect of stock options (in thousands)				44				6				294
	Weighted-average number of common stock outstanding, Assuming dilution (in thousands)				262,812				279,745				337,480
Net earnings per share
	Net income before extraordinary gain and cumulative effect of a change in accounting principle			W	2,243			W	984			W	4,333
	Extraordinary gain				—				—				82
	Cumulative effect of a change in accounting principle				—				—				(68	)
		Diluted net income per share		W	2,243			W	984			W	4,347

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26.	Employee Severance Plans

		2003				2004
		(In millions of Won)
Balance at beginning of the year		W	222,365			W	348,264
Severance benefits			77,685				94,914
Balance from the acquisition of subsidiaries			73,881				—
Plan payments			(25,667	)			(267,317	)
			348,264				175,861
Less: Balance of payments remaining with National Pension Fund and severance insurance deposit			(142,496	)			(101,026	)
Balance at end of the year		W	205,768			W	74,835

		(In millions of
Years Ending		Won)
2005		W	11,809
2006			2,054
2007			2,736
2008			4,170
2009			5,127
2010-2014			68,962

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27.	Employee Stock Option Plans

		Shinhan Financial Group
		2002				2003				2004
Risk-free interest rate			6.33%				4.21%				4.39%
Expected lives			4.01  years				4.01  years				3.50  years
Expected volatility			58.39%				45.10%				42.26%
Expected dividend rate			4.21%				5.83%				2.82%

		Chohung Bank
		2003				2004
Risk-free interest rate			4.57%				4.39%
Expected lives			3.50  years				3.50  years
Expected volatility			82.51%				66.04%
Expected dividend rate			0.00%				0.00%

	Shinhan Financial Group Plan

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	Shinhan Bank Plan

	Chohung Bank Plan

		Shinhan Financial Group								Shinhan Bank
						Weighted-								Weighted-
						Average								Average
						Exercise								Exercise
		Number of				Price Per				Number of				Price Per
		shares				Share				shares				Share
						(in Won)								(in Won)
Outstanding at January 1, 2002			—			W	—				529,094			W	12,802
Granted			1,004,200				18,910				—				—
Forfeited			—				—				(56,551	)			13,770
Outstanding at December 31, 2002			1,004,200				18,910				472,543				12,686
Granted			1,156,300				11,800				—				—
Forfeited			(113,955	)			16,483				—				—
Outstanding at December 31, 2003			2,046,545				15,028				472,543				12,686
Granted			1,301,600				21,595				—				—
Exercised			(3,500	)			18,910				(469,043	)			12,693
Forfeited			(247,703	)			16,219				—				—
Outstanding at December 31, 2004			3,096,942				17,698				3,500				11,700
Exercisable at December 31, 2004			864,576								3,500

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		Chohung Bank
						Weighted-
						Average
						Exercise
		Number of				Price Per
		shares				Share
						(in Won)
Outstanding at September 1, 2003			934,286			W	5,033
Granted			—				—
Forfeited			(365,580	)			4,856
Outstanding at December 31, 2003			568,706				5,147
Granted			340,000				5,000
Forfeited			(5,316	)			5,000
Outstanding at December 31, 2004			903,390				5,093
Exercisable at December 31, 2004			433,876

Shinhan Financial Group

Options Outstanding

Options Exercisable

Weighted-

Average

Weighted-

Weighted-

Remaining

Average

Average

Number

Contractual

Exercise

Number

Exercise

Exercise Price

Outstanding

Life(1)

Price

Exercisable

Price

(In Won)

(In Won)

W18,910

864,576

3.39 years

W

18,910

864,576

W

18,910

W11,800

995,121

4.38 years

11,800

—

—

W21,595

1,237,245

4.24 years

21,595

—

—

3,096,942

4.05 years

W

17,698

864,576

W

18,910

Shinhan Bank

Options Outstanding

Options Exercisable

Weighted-

Average

Weighted-

Weighted-

Remaining

Average

Average

Number

Contractual

Exercise

Number

Exercise

Exercise Price

Outstanding

Life(1)

Price

Exercisable

Price

(In Won)

(In Won)

W11,700

3,500

1.24 years

W

11,700

3,500

W

11,700

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Chohung Bank

Options Outstanding

Options Exercisable

Weighted-

Average

Weighted-

Weighted-

Remaining

Average

Average

Number

Contractual

Exercise

Number

Exercise

Exercise Prices

Outstanding

Life(1)

Price

Exercisable

Price

(In Won)

(In Won)

W4,559

99,054

3.24 years

W

4,559

—

W

—

W5,000

599,040

1.24-4.23  years

5,000

228,580

5,000

W5,598

187,200

2.24 years

5,598

187,200

5,598

W5,860

18,096

2.24 years

5,860

18,096

5,860

903,390

2.67 years

W

5,093

433,876

W

5,294

(1)	Contractual life indicates the sum of service (vesting) period and exercisable period.

	Employee Stock Ownership Association

28.	Fair Value of Financial Instruments

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			2003								2004
			Carrying								Carrying
			Amount				Fair Value				Amount				Fair Value
			(In millions of Won)
Financial assets:
	Financial assets for which carrying value approximates fair value		W	8,314,036			W	8,314,036			W	8,758,750			W	8,758,750
	Interest-bearing deposits in banks			409,038				409,038				220,478				220,478
	Trading assets			3,377,295				3,377,295				6,316,341				6,316,341
	Securities			21,703,345				21,859,745				21,207,551				21,415,514
	Loans			91,791,255				92,368,132				94,868,094				95,261,537
	Nonmarketable equity investments included in other assets			1,060,476				1,074,650				1,076,326				1,217,285
Financial liabilities:
	Financial liabilities for which carrying value approximates fair value			6,742,044				6,742,044				2,934,129				2,934,129
	Deposits			83,489,142				83,991,573				82,679,483				83,034,668
	Trading liabilities			513,061				513,061				1,757,577				1,757,577
	Short-term borrowings			11,204,739				11,204,739				10,935,555				10,935,555
	Secured borrowings			6,316,260				6,593,583				6,308,093				6,388,404
	Long-term debt			21,217,708				21,995,231				23,616,683				25,398,145
Redeemable convertible preferred stock				711,134				711,134				735,744				816,547

29.	Derivative Instruments and Hedging Activities

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30.	Commitments and Contingencies

	Legal and Tax Contingencies

	Lease Commitments

		(In millions of
Years Ending		Won)
2005		W	20,934
2006			12,082
2007			7,814
2008			4,738
2009			1,881
Thereafter			210
		W	47,659

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	Credit Commitments and Guarantees

			2003				2004
			(In millions of Won)
Commitments to extend credit:
	Corporate		W	32,921,969			W	39,322,638
	Credit card lines			17,206,936				23,605,859
	Consumer(1)			3,752,176				5,960,613
Commercial letters of credit				3,075,180				3,364,005
			W	56,956,261			W	72,253,115

(1)	excluding credit card

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																						Maximum
										Total				Current				Amount of				Potential
										Notional				Carrying				Recourse or				Amount of
		Expire within				Expire after				Amount				Liability				Collateral				Future
		One Year				One Year				Outstanding				Amount				Held				Payments
		(In millions of Won)
Financial stand-by letters of credit		W	251,998			W	98,826			W	350,824			W	4,417			W	84,318			W	350,824
Other financial guarantees			691,968				127,203				819,171				11,211				229,643				819,171
Performance letters of credit and guarantees			619,379				392,656				1,012,035				12,542				240,946				1,012,035
Liquidity facilities to SPEs			405,237				819,771				1,225,008				13,362				—				1,225,008
Loans sold with recourse			—				20,267				20,267				8,735				12,038				20,267
Market value guarantees on trust accounts			422,596				2,701,834				3,124,430				—				—				3,124,430
Credit derivatives			—				26,095				26,095				50				—				26,095
		W	2,391,178			W	4,186,652			W	6,577,830			W	50,317			W	566,945			W	6,577,830

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	Pledged Assets

		2003				2004
		(In millions of Won)
Short-term and long-term deposits		W	85,080			W	21,314
Trading securities			—				423,243
Available-for-sale securities			6,610,948				12,683,355
Held-to-maturity securities			3,493,435				758,446
Loans			2,473,204				2,975,468
Real estate			15,481				29,326
Other assets			25,218				31,362
		W	12,703,366			W	16,922,514

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31.	Concentrations of Geographic and Credit Risks

	Geographic Risk

	Credit Risk

		2003												2004
						On-Balance				Off-Balance								On-Balance				Off-Balance
		Credit Exposure				Sheet				Sheet				Credit Exposure				Sheet				Sheet
		(In millions of Won)
Commercial and industrial		W	62,729,823			W	35,616,698			W	27,113,125			W	58,789,035			W	35,653,127			W	23,135,908
Other commercial			30,947,577				17,377,842				13,569,735				40,946,060				17,988,288				22,957,772
Lease financing			1,091,330				1,091,330				—				981,002				981,002				—
Mortgage and home equity			20,901,790				20,517,109				384,681				22,439,050				22,180,112				258,938
Credit cards			23,319,345				6,112,409				17,206,936				28,337,772				4,731,913				23,605,859
Other consumer			17,947,253				14,579,758				3,367,495				21,247,470				15,545,796				5,701,674
		W	156,937,118			W	95,295,146			W	61,641,972			W	172,740,389			W	97,080,238			W	75,660,151

32.	Related Party Transactions

	Trust Accounts

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	Loans to Executives, Directors and Affiliated Parties

		2003				2004
		(In millions of Won)
Loans at beginning of the year		W	194,008			W	132,410
New loans			40,867				108,893
Repayments			(102,465	)			(28,033	)
Loans at end of the year		W	132,410			W	213,270

		2002								2003								2004
						Executives,								Executives,								Executives,
						Directors and								Directors and								Directors and
		Trust				Affiliated				Trust				Affiliated				Trust				Affiliated
		Accounts				Parties				Accounts				Parties				Accounts				Parties
		(In millions of Won)
Loans		W	—			W	194,008			W	—			W	132,410			W	—			W	213,270
Accrued expenses and other assets			127,381				—				27,659				—				91,624				—
Short-term borrowings			338,950				—				859,974				—				600,924				—
Other liabilities			626				—				—				—				669				—
Other interest income			1,388				—				—				—				768				—
Net trust management fees			120,268				—				50,177				—				115,711				—
Interest expense on short-term borrowings			9,401				—				10,910				—				16,985				—
Interest on loans							5,044								5,526								6,828

33.	Segment Reporting

	•	Retail banking — Activities within this segment include savings and demand deposits, consumer loans and mortgages of individual customers and sole proprietors who borrowed W1,000 million or less.
	•	Corporate banking — Activities within this segment include loans, overdrafts, other credit facilities, deposits in foreign currencies and other foreign currency activities. The corporate banking segment’s

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		assets and liabilities are mainly from transactions with customers including small and medium sized private companies, publicly traded enterprises and sole proprietors who borrowed more than W1,000 million.
	•	Securities brokerage services — Activities within this segment include a full range of brokerage services, investment advice and financial planning to retail customers, and various investment banking services to corporate customers conducted through Good Morning Shinhan Securities.
	•	Credit card — Activities within this segment include processing domestic as well as overseas credit and debit card operations conducted through Shinhan Card and Chohung Bank. The credit card segment’s assets and liabilities are mainly from transactions with individual or corporate cardholders and card merchants.
	•	Treasury and securities investment — Activities within this segment include Shinhan Bank’s internal asset and liability management, proprietary trading in securities and derivatives, and proprietary investment in security portfolios using Shinhan Bank’s capital.
	•	Treasury and international business — Activities within this segment include Chohung Bank’s internal asset and liability management, proprietary trading in securities and derivatives, proprietary investment in security portfolios using Chohung Bank’s capital, and operation of Chohung Bank’s overseas branches.
	•	Other banking services — Activities within this segment include Shinhan Bank’s impaired loan management, administration of Shinhan Bank and Chohung Bank operations, and operation of Shinhan Bank’s overseas branches.

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				2002
				Shinhan Bank																Holding Company and Other Subsidiaries
												Treasury &				Other				Securities												Subtotal
				Retail				Corporate				Securities				Banking				Brokerage												before				US GAAP				Inter-Segment
				Banking				Banking				Investment				Services				Services				Credit Card				Other				Elimination				Adjustments				Transactions(1)				Total
				(In millions of Won)
Net interest income				W	717,988			W	366,275			W	53,761			W	178,751			W	22,192			W	290,685			W	107,736			W	1,737,388			W	(233,938	)		W	(73,278	)		W	1,430,172
Noninterest income					205,415				274,594				683,418				168,857				559,424				253				718,694				2,610,655				(360,456	)			(1,212,894	)			1,037,305
		Total revenues			923,403				640,869				737,179				347,608				581,616				290,938				826,430				4,348,043				(594,394	)			(1,286,172	)			2,467,477
Provision for loan losses					46,387				23,288				(20,379	)			129,105				(5,679	)			63,273				20,728				256,723				1,515				(22,019	)			236,219
Provision for losses on guarantees and acceptances					(523	)			(8,351	)			—				(544	)			—				—				—				(9,418	)			19,259				—				9,841
Noninterest expense					426,662				271,931				654,408				378,677				535,120				69,471				119,448				2,455,717				(121,737	)			(1,126,539	)			1,207,441
Depreciation and amortization					28,502				2,979				686				30,635				17,191				—				33,944				113,937				132,222				(141,921	)			104,238
		Net income (loss) before tax			422,375				351,022				102,464				(190,265	)			34,984				158,194				652,310				1,531,084				(625,653	)			4,307				909,738
Income tax expense (benefit)					92,761				104,457				44,590				(41,427	)			11,288				47,040				11,461				270,170				42,566				7,580				320,316
		Net income (loss)			329,614				246,565				57,874				(148,838	)			23,696				111,154				640,849				1,260,914				(668,219	)			(3,273	)			589,422
US GAAP adjustments					(112,999	)			115,726				159,619				4,284				(144,824	)			(77,302	)			(612,723	)			(668,219	)			—				—				—
Intersegment transactions					(110,051	)			(82,360	)			40,381				61,696				(1,247	)			59,147				29,161				(3,273	)			—				—				—
		Consolidated net income (loss)		W	106,564			W	279,931			W	257,874			W	(82,858	)		W	(122,375	)		W	92,999			W	57,287			W	589,422				—				—			W	589,422
	Segments’ total assets			W	21,255,161			W	19,005,811			W	14,300,455			W	4,327,975			W	1,570,244			W	2,473,694			W	8,572,749			W	71,506,089			W	(4,624,869	)		W	(2,095,090	)		W	64,786,130

Note:

(1)	Includes eliminations for consolidation, intersegment transactions and certain differences in classification under management reporting system.

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			2003
			Shinhan Bank																								Chohung Bank
											Treasury &				Other				Securities																Treasury &								Other								Subtotal
			Retail				Corporate				Securities				Banking				Brokerage				Credit				Retail				Corporate				International				Credit				Banking								before				US GAAP				Inter-Segment
			Banking				Banking				Investment				Services				Services(1)				Card(2)				Banking				Banking				Business				Card				Services				Other				Elimination				Adjustments				Transactions(3)				Total
			(In millions of Won)
Net interest income			W	781,600			W	433,993			W	64,630			W	211,695			W	34,272			W	321,686			W	418,054			W	62,404			W	(26,154	)		W	236,974			W	(10,425	)		W	197,907			W	2,726,636			W	(401,139	)		W	7,392			W	2,332,889
Noninterest income				439,446				314,895				839,330				127,300				621,902				636				94,601				70,855				234,214				577				7,317				495,552				3,246,625				(103,211	)			(2,025,060	)			1,118,354
	Total revenues			1,221,046				748,888				903,960				338,995				656,174				322,322				512,655				133,259				208,060				237,551				(3,108	)			693,459				5,973,261				(504,350	)			(2,017,668	)			3,451,243
Provision for loan losses				63,765				272,639				(10,841	)			109,753				(26	)			235,936				150,000				180,030				—				199,454				300				(8,797	)			1,192,213				(168,544	)			(12,303	)			1,011,366
Provision for losses on guarantees and acceptance				—				—				—				(265	)			—				—				—				(34,993	)			—				—				—				—				(35,258	)			(10,521	)							(45,779	)
Noninterest expense				562,619				261,096				851,750				344,475				564,012				176,449				296,062				33,330				249,639				120,378				39,686				234,475				3,733,971				(6,667	)			(2,011,384	)			1,715,920
Depreciation and amortization				34,971				3,194				592				33,385				23,575				—				36,962				13,385				11,106				6,785				7,119				42,074				213,148				33,653				215				247,016
	Net income (loss) before tax			559,691				211,959				62,459				(148,353	)			68,613				(90,063	)			29,631				(58,493	)			(52,685	)			(89,066	)			(50,213	)			425,707				869,187				(352,271	)			5,804				522,720
Income tax expense (benefit)				166,228				62,952				18,550				(37,997	)			32,801				(239	)			26,883				711				2,436				(8,370	)			3,171				3,042				270,168				11,040				(33,806	)			247,402
	Net income (loss)			393,463				149,007				43,909				(110,356	)			35,812				(89,824	)			2,748				(59,204	)			(55,121	)			(80,696	)			(53,384	)			422,665				599,019				(363,311	)			39,610				275,318
US GAAP adjustments				32,708				57,164				(37,207	)			(8,013	)			(2,633	)			62,440				156,506				141,382				(116,432	)			(22,170	)			(45,687	)			(581,369	)			(363,311	)			—				—				—
Intersegment transactions				(141,024	)			(181,445	)			9,971				209,100				15,387				114,660				—				(4,135	)			20,345				—				—				(3,249	)			39,610				—				—				—
	Consolidated net income (loss)		W	285,147			W	24,726			W	16,673			W	90,731			W	48,566			W	87,276			W	159,254			W	78,043			W	(151,208	)		W	(102,866	)		W	(99,071	)		W	(161,953	)		W	275,318				—				—			W	275,318
Segments’ total assets			W	24,851,188			W	21,757,503			W	18,421,101			W	5,041,401			W	2,928,017			W	1,778,191			W	23,837,861			W	14,938,062			W	11,308,167			W	3,569,073			W	3,111,520			W	14,979,278			W	146,521,362			W	(1,358,680	)		W	(8,813,351	)		W	136,349,331

Notes:

(1)	Securities brokerage business is conducted through Good Morning Shinhan Securities.
(2)	Credit card business is conducted through Shinhan Card.
(3)	Includes eliminations for consolidation, intersegment transactions and certain differences in classification under management reporting system.

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			2004
			Shinhan Bank																								Chohung Bank
											Treasury &				Other				Securities																Treasury &								Other								Subtotal
			Retail				Corporate				Securities				Banking				Brokerage				Credit				Retail				Corporate				International				Credit				Banking								before				US GAAP				Inter-Segment
			Banking				Banking				Investment				Services				Services(1)				Card(2)				Banking				Banking				Business				Card				Services				Other				Elimination				Adjustments				Transactions(3)				Total
			(In millions of Won)
Net interest income			W	844,382			W	529,838			W	3,662			W	182,097			W	54,043			W	347,968			W	1,107,296			W	257,782			W	(718	)		W	587,550			W	137,663			W	(2,607	)		W	4,048,956			W	(541,271	)		W	66,227			W	3,573,912
Noninterest income(4)				557,114				475,536				1,288,449				286,953				643,209				—				287,694				74,997				2,612,061				2,350				360,342				1,710,856				8,299,561				(5,974,088	)			(205,272	)			2,120,201
	Total revenues			1,401,496				1,005,374				1,292,111				469,050				697,252				347,968				1,394,990				332,779				2,611,343				589,900				498,005				1,708,249				12,348,517				(6,515,359	)			(139,045	)			5,694,113
Provision for loan losses				29,712				65,943				7,820				98,563				(4,696	)			175,799				465,565				10,287				(12,631	)			672,851				(83,472	)			23,956				1,449,697				(1,220,796	)			(33,454	)			195,447
Provision for losses on guarantees and acceptance				—				—				—				(958	)			—				—				—				(22,463	)			—				—				—				21				(23,400	)			(36,632	)			—				(60,032	)
Noninterest expense(5)				684,550				386,902				1,201,264				422,726				642,572				160,998				744,102				158,775				2,627,917				235,565				266,068				508,387				8,039,826				(4,921,411	)			(219,872	)			2,898,543
Depreciation and amortization				30,981				2,832				632				35,126				15,560				5,348				53,215				1,489				768				1,263				39,982				46,458				233,654				195,181				—				428,835
	Net income (loss) before tax			656,253				549,697				82,395				(86,407	)			43,816				5,823				132,108				184,691				(4,711	)			(319,779	)			275,427				1,129,427				2,648,740				(531,701	)			114,281				2,231,320
Income tax expense(benefit)				194,907				163,260				24,471				(24,813	)			240				—				1,233				1,723				(44	)			(2,984	)			2,570				32,202				392,765				300,093				71,593				764,451
	Net income (loss)			461,346				386,437				57,924				(61,594	)			43,576				5,823				130,875				182,968				(4,667	)			(316,795	)			272,857				1,097,225				2,255,975				(831,793	)			42,688				1,466,870
US GAAP adjustments				(54,683	)			159,677				(43,514	)			(6,867	)			15,784				35,602				(48,736	)			423,706				(83,376	)			199,194				(176,632	)			(1,251,948	)			(831,793	)			—				—				—
Intersegment transactions				(1,185	)			(93,011	)			(622	)			(239	)			9,849				110,954				(5,893	)			57,452				(3,871	)			(576	)			(2,114	)			(28,056	)			42,688				—				—				—
	Consolidated net income (loss)		W	405,478			W	453,103			W	13,788			W	(68,700	)		W	69,209			W	152,379			W	76,246			W	664,126			W	(91,914	)		W	(118,177	)		W	94,111			W	(182,779	)		W	1,466,870				—				—			W	1,466,870
Segments’ total assets			W	28,076,926			W	21,648,284			W	14,734,042			W	5,666,668			W	2,956,183			W	1,469,925			W	25,363,826			W	11,894,605			W	16,584,883			W	2,486,816			W	9,058,969			W	18,816,473			W	158,757,600			W	(4,932,814	)		W	(10,316,764	)		W	143,508,022

Notes:

(1)	Securities brokerage business is conducted through Good Morning Shinhan Securities.
(2)	Credit card business is conducted through Shinhan Card.
(3)	Includes eliminations for consolidation, intersegment transactions and certain differences in classification under management reporting system.
(4)	Includes extraordinary gain of W27,507 million.
(5)	Includes cumulative effect of change in accounting principle of W23,049 million.

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			2003				2004
			(In millions of Won)
Segments’ total assets			W	146,521,362			W	158,757,600
US GAAP adjustments				(1,358,680	)			(4,932,814	)
Intersegment transactions				(8,813,351	)			(10,316,764	)
	Consolidated total assets		W	136,349,331			W	143,508,022

			2002				2003				2004
			(In millions of Won)
Segments’ total revenues			W	4,348,043			W	5,973,261			W	12,348,517
US GAAP adjustments				(594,394	)			(504,350	)			(6,515,359	)
Intersegment transactions				(1,286,172	)			(2,017,668	)			(139,045	)
	Consolidated total revenues		W	2,467,477			W	3,451,243			W	5,694,113

34.	Trust Accounts

35.	Variable Interest Entities

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		2003				2004
		(In millions of Won)
Loans		W	2,245,745			W	2,527,651
Securities			2,912,655				4,115,372
Other assets			468,595				416,940
		W	5,626,995			W	7,059,963

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36.	Other Comprehensive Income

		Foreign				Net Unrealized				Accumulated
		Currency				Gain on				Other
		Translation				Available-for-				Comprehensive
		Adjustments				Sale Securities				Income
		(In millions of Won)
Balance at January 1, 2002		W	14,194			W	149,240			W	163,434
Foreign currency translation adjustment, net of tax effect of W2,619			(6,199	)			—				(6,199	)
Unrealized gain on available-for-sale securities, net of tax effect of W332			—				787				787
Less: Reclassification adjustment for net realized gain included in income, net of tax effect W37,034			—				87,661				87,661
Balance at December 31, 2002			7,995				62,366				70,361
Foreign currency translation adjustment, net of tax effect of W742			(1,956	)			—				(1,956	)
Unrealized gain on available-for-sale securities, net of tax effect of W5,518			—				14,549				14,549
Less: Reclassification adjustment for net realized gain included in income, net of tax effect W9,428			—				24,858				24,858
Balance at December 31, 2003			6,039				52,057				58,096
Foreign currency translation adjustment, net of tax effect of W7,003			(18,462	)			—				(18,462	)
Unrealized gain on available-for-sale securities, net of tax effect of W47,851			—				128,195				128,195
Less: Reclassification adjustment for net realized gain included in income, net of tax effect W3,776			—				9,956				9,956
Balance at December 31, 2004		W	(12,423	)		W	170,296			W	157,873

37.	Subsequent Events

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38.	Shinhan Financial Group Co., Ltd.

			2002				2003				2004
			(In millions of Won)
Cash dividends paid by:
	Consolidated subsidiaries		W	638,287			W	185,896			W	252,807
	Equity method investees			2,484				1,000				3,730
			W	640,771			W	186,896			W	256,537

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				2003				2004
				(In millions of Korean Won)
Assets
Deposits with banking subsidiary				W	5,353			W	31,145
Advances to, and receivables from, subsidiaries:
	Banking subsidiaries				70,000				73,140
	Nonbanking subsidiaries				1,874,905				1,685,609
Investment (at equity) in subsidiaries:
	Banking subsidiaries				5,273,312				7,546,185
	Nonbanking subsidiaries				665,344				1,064,808
Premises and equipment					2,021				2,165
Other assets					45,866				63,559
		Total assets		W	7,936,801			W	10,466,611
Liabilities and stockholders’ equity
Short-term debt				W	94,000			W	50,000
Long-term debt					3,570,104				3,688,841
Accrued expenses and other liabilities					166,165				327,307
		Total liabilities			3,830,269				4,066,148
Redeemable convertible preferred stock					711,134				735,744
Stockholders’ equity					3,395,398				5,664,719
		Total liabilities, redeemable convertible preferred stock and stockholder’s equity		W	7,936,801			W	10,466,611

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				2002				2003				2004
				(In millions of Korean Won)
Income
	Dividends from banking subsidiaries			W	623,780			W	185,896			W	244,807
	Dividends from non banking subsidiaries				16,991				1,000				11,730
	Interest income from banking subsidiaries				6,581				6,007				6,111
	Interest income from non banking subsidiaries				18,027				91,819				108,153
	Other interest income				352				961				—
	Other income				14,808				735				19,253
		Total income			680,539				286,418				390,054
Expenses
	Interest expense				21,632				136,889				247,711
	Salaries and employee benefits				7,927				9,998				15,328
	Other expense				9,930				16,712				32,490
		Total expenses			39,489				163,599				295,529
Income before income tax expense and undistributed net income (loss) of subsidiaries					641,050				122,819				94,525
Income tax expense					3,423				5,682				46,480
Income before undistributed net income (loss) of subsidiaries					637,627				117,137				48,045
Equity in undistributed net income (loss) of subsidiaries:
	Banking subsidiaries				154,684				252,766				1,259,134
	Nonbanking subsidiaries				(202,889	)			(94,585	)			159,691
Net income				W	589,422			W	275,318			W	1,466,870

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					2002				2003				2004
					(In millions of Korean Won)
Cash flows from operating activities
	Net income				W	589,422			W	275,318			W	1,466,870
	Less: Net income of subsidiaries					(592,567	)			(345,077	)			(1,675,362	)
	Parent Company net income (loss)					(3,145	)			(69,759	)			(208,492	)
	Depreciation on premises and equipment					513				696				763
	Grant of stock options					4,625				6,802				1,988
	Cash dividends from subsidiaries					640,771				186,896				256,537
	Loss on sale of investment (at equity) in subsidiaries					—				378				—
	Loss (gain) on sale of available-for-sales securities					(11,159	)			1,755				—
	Interest expense					1,175				42,936				42,919
	Unrealized foreign exchange gain					(3,645	)			(231	)			(18,141	)
	Unrealized foreign exchange loss					3,645				231				18,132
	Other assets, net					(14,843	)			(35,921	)			53,937
	Accrued expenses and other liabilities, net					9,071				166,385				94,656
			Net cash provided by operating activities			627,008				300,168				242,299
Cash flows from investing activities
	Repayments (Advances) from subsidiaries					(625,572	)			(1,176,009	)			168,024
	Purchases of investment (at equity) in subsidiaries					(466,152	)			(1,128,423	)			(111,894	)
	Disposition of investment (at equity) in subsidiaries					23,631				1,529				—
	Net change in premises and equipment					—				—				(1,706	)
	Available-for-sales securities:
		Purchases				(1,785	)			—				—
		Proceeds from sales				—				1				—
			Net cash provided by (used in) investing activities			(1,069,878	)			(2,302,902	)			54,424
Cash flows from financing activities
	Net change in short-term debt					—				—				(44,000	)
	Proceeds from issuance of long-term debt					623,583				2,146,129				246,036
	Repayments of long-term debt					(20,000	)			(18,666	)			(230,921	)
	Proceeds from issuance of common stock and stock related awards					—				27,504				—
	Net change in treasury stock					—				—				59
	Cash dividends paid					(150,812	)			(157,493	)			(242,105	)
			Net cash provided by (used in) financing activities			452,771				1,997,474				(270,931	)
Net increase (decrease) in cash and due from banks						9,901				(5,260	)			25,792
Cash and due from banks, beginning of the year						712				10,613				5,353
Cash and due from banks, end of the year					W	10,613			W	5,353			W	31,145
Cash paid for interest					W	20,457			W	93,952			W	204,791

F-82

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Table of Contents

	1.1			Articles of Incorporation (in English and Korean)**
	2.1			Form of Common Stock Certificate (in English and Korean)***
	2.2			Form of Deposit Agreement to be entered into among Shinhan Financial Group, Citibank, N.A., as depositary, and all owners and holders from time to time of American depositary receipts issued thereunder, including the form of American depositary receipt***
	2.3			Long-term debt instruments of Shinhan Financial Group, Shinhan Bank and other consolidated subsidiaries for which financial statements are required to be filed are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. Shinhan Financial Group agrees to furnish the Commission on request a copy of any instrument defining the rights of holders of its long-term debt and that of any subsidiary for which consolidated or unconsolidated financial statements are required to be filed.***
	4.1			Stock Purchase Agreement by and between Korea Deposit Insurance Corporation and Shinhan Financial Group dated July 9, 2003****
	4.2			Investment Agreement by and between Shinhan Financial Group and Korea Deposit Insurance Corporation dated July 9, 2003***
	4.3			Agreed Terms, dated June 22, 2004, by and among the President of Korea Deposit Insurance Corporation, CEO of Shinhan Financial Group, CEO of Chohung Bank, Chairman of the National Financial Industry Labor Union of Korea and the Head of the Chohung Bank Chapter of the National Financial Industry Labor Union***
	8.1			List of all Subsidiaries of Shinhan Financial Group
	12.1			Certifications of our Chief Executive Officer required by Rule 13a-14(a) of the Exchange Act
	12.2			Certifications of our Chief Financial Officer required by Rule 13a-14(a) of the Exchange Act
	13.1			Certifications of our Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of the United States Code (18 U.S.C. 1350)
	13.2			Certifications of our Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of the United States Code (18 U.S.C. 1350)
	15.1			Korean Financial Holding Companies Act (in English)*
	15.2			Korean Bank Act (in English and Korean)***
	15.3			Korean Commercial Code (in English and Korean)***
	15.4			Korean Securities and Exchange Act (in English)*
	15.5			Korean Trust Business Act (in English)*
	15.6			Korean Specialized Credit Financial Business Act (in English)*
	15.7			Korean Act on Business of Operating Indirect Investment and Assets (in English)*

	*	A fair and accurate translation from Korean into English.

	**	Incorporated by reference to the registrant’s previous filing on Form 20-F (No. 001-31798), filed on June 30, 2004.

	***	Incorporated by reference to the registrant’s previous filing on Form 20-F (No. 001-31798), filed on September 15, 2003.

****	Incorporated by reference to the registrant’s previous filing on Form 20-F (No. 001-31798), filed on September 15, 2003. Confidential treatment has been requested for certain portions of the Stock Purchase Agreement.

E-1