Edgar Filing: SHINHAN FINANCIAL GROUP CO LTD

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

For the Month of November 2016

SHINHAN FINANCIAL GROUP CO., LTD.

(Translation of registrant’s name into English)

20, Sejong-daero 9-gil, Jung-gu, Seoul 04513, Korea

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- n/a .

Summary of FY2016 3Q Business Report

On November 14, 2016, Shinhan Financial Group (“SFG”) filed its FY2016 3Q Business Report (the “Business Report”) with the Financial Services Commission of Korea and the Korea Exchange pursuant to the Financial Investment Services and Capital Market Act of Korea. This is the summary of the Business Report translated into English. Non-material or previously disclosed information are omitted or abridged.

The financial information in this report has been prepared in accordance with Korean International Financial Reporting Standards.

Table of Contents


1. Introduction of the Group

2. Business Results

3. Independent Auditor

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

5. Directors, Executive Officers and Employees

6. Related Party Transactions

1. Introduction of the Group

Company History in 2010 through 2016

•

Jan. 2010 : Shinhan Data System became a direct subsidiary of SFG

•

Aug. 2010 : Shinhan Macquarie Financial Advisory was disaffiliated from SFG

•

Oct. 2010 : Shinhan Maritime Private Equity Fund I became an indirect subsidiary of SFG

•

Dec. 2010 : KOFC Shinhan Frontier Champ 2010-4 PEF Investment Corp. became an indirect subsidiary of SFG

•

Feb. 2011 : Shinhan BNP Paribas Asset Management (Hong Kong) Limited became an indirect subsidiary of SFG

•

Nov. 2011 : Shinhan Bank Vietnam was merged with Shinhan Vina Bank

•

Dec. 2011 : Shinhan Savings Bank became a direct subsidiary of SFG

•

Nov. 2012 : Shinhan AITAS Co., Ltd. joined SFG as a direct subsidiary

•

Jan. 2013 : Yehanbyoul Savings Bank joined SFG as a direct subsidiary

•

Apr. 2013 : Shinhan Savings Bank merged with Yehanbyoul Savings Bank. As a result of the integration, Shinhan Savings Bank has been liquidated and Yehanbyoul Savings Bank now exists under the name of “Shinhan Savings Bank” as an existing legal entity

•

Nov. 2014 : LLP MFO Shinhan Finance (Kazakhstan) became an indirect subsidiary of SFG

•

Jul. 2015 : Shinhan Securities Vietnam Co., ltd became an indirect subsidiary of SFG

•

Oct. 2015 : Banco Shinhan de Mexico became an indirect subsidiary of SFG

•

Nov. 2015 : PT Bank Shinhan Indonesia became an indirect subsidiary of SFG

•

Dec. 2015 : PT. Shinhan Indo Finance became an indirect subsidiary of SFG

•

Dec. 2015 : PT Centratama Nasional Bank became an indirect subsidiary of SFG

•

Mar. 2016 : Shinhan Microfinance Co.,ltd. became an indirect subsidiary of SFG

•

Jul. 2016 : PT Shinhan Sekuritas Indonesia became an indirect subsidiary of SFG

Principal Subsidiaries under Korean Law (as of Sep. 30, 2016)

Direct Subsidiaries


Subsidiaries	Ownership by SFG
Shinhan Bank		100.0	%
Shinhan Card		100.0	%
Shinhan Investment Corp.		100.0	%
Shinhan Life Insurance		100.0	%
Shinhan BNP Paribas Asset Management		65.0	%
Shinhan Capital		100.0	%
Jeju Bank ¹⁾		68.9	%
Shinhan Savings Bank ²⁾		100.0	%
Shinhan Data System		100.0	%
Shinhan AITAS ³⁾		99.8	%
Shinhan Credit Information		100.0	%
Shinhan Private Equity		100.0	%
SHC Management ⁴⁾		100.0	%

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

2)	On January 30, 2013, Yehanbyoul Savings Bank joined SFG as a direct subsidiary.

On April 1, 2013, Shinhan Savings Bank merged with Yehanbyoul Savings Bank, both of which were direct subsidiaries of Shinhan Financial Group. As a result of the integration of the two savings banks, the previous Shinhan Savings Bank has been liquidated and is thus no longer a subsidiary of Shinhan Financial Group and instead, Yehanbyoul Savings Bank now exists under the name of “Shinhan Savings Bank” as an existing legal entity constituting a member of Shinhan Financial Group.

3)	On November 30, 2012, Shinhan AITAS Co., Ltd. joined SFG as a direct subsidiary. Prior to November 30, 2012, Shinhan AITAS was an indirect subsidiary of SFG under Shinhan Bank, a wholly-owned bank subsidiary of SFG.

4)	Currently in liquidation proceedings

Indirect subsidiaries held through direct subsidiaries (as of Sep. 30, 2016)


Direct Subsidiaries	Indirect Subsidiaries	Ownership by the Parent
Shinhan Bank	Shinhan Asia Limited		100.0	%
	Shinhan Bank America		100.0	%
	Shinhan Bank Europe		100.0	%
	Shinhan Khmer Bank Limited ¹⁾		90.0	%
	Shinhan Bank Kazakhstan		100.0	%
	Shinhan Bank China Limited		100.0	%
	Shinhan Bank Canada		100.0	%
	Shinhan Bank Japan		100.0	%
	Shinhan Bank Vietnam		100.0	%
	Banco Shinhan de Mexico		100.0	%
	PT Bank Shinhan Indonesia		97.76	%
	PT Centratama Nasional Bank		75.0	%

Shinhan Card	LLP MFO Shinhan Finance		100.0	%
	PT. Shinhan Indo Finance		50.0	%
	Shinhan Microfinance Co.,ltd.		100.00	%

Shinhan Investment Corp.	Shinhan Investment Corp. USA Inc.		100.0	%
	Shinhan Investment Corp. Asia Inc.		100.0	%
	Shinhan Maritime Private Equity Fund I		7.1	%
	KOFC Shinhan Frontier Champ 2010-4 PEF²⁾		8.5	%
	Shinhan Praxis K-Growth Global Private Equity Fund ³⁾		14.1	%
	Shinhan Securities Vietnam Co., ltd		100.0	%
	PT Shinhan Sekuritas Indonesia		99.0	%

Shinhan BNP Paribas Asset Management	Shinhan BNP Paribas Asset Management (Hong Kong) Limited		100.0	%
Shinhan BNP Paribas Asset Management

Shinhan Private Equity	Shinhan NPS Private Equity Fund 1st ⁴⁾		5.0	%
	Shinhan Private Equity Fund 2nd ⁵⁾		2.2	%
	Shinhan-Stonebridge Petro Private Equity Fund ⁶⁾		0.6	%

1)	Shinhan Financial Group and its subsidiaries currently own 93.3% of Shinhan Khmer Bank Limited.

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

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

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

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

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

Number of Shares (as of Sep. 30, 2016)


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

Total		474,199,587

*	On April 21, 2016, we redeemed all of the Series 12 redeemable preferred shares.

2. Business Results

Operation Results


					(KRW billion)
	2016 3Q (Jan. 1 ~ Sep. 30)		2015 3Q (Jan. 1 ~ Sep. 30)		FY2015 (Jan. 1 ~ Dec. 31)		FY2014 (Jan. 1 ~ Dec. 31)
Operating income		2,482.5		2,417.4		2,973.1		2,654.8
Equity method income		5.9		14.0		21.0		30.6
Other non-operating income		48.4		152.9		146.5		182.2
Profit before income taxes		2,536.8		2,584.3		3,140.6		2,867.6
Income tax expense		326.3		561.1		694.6		668.0

Consolidated net income		2,210.5		2,023.2		2,446.0		2,199.6
Net income attributable to equity holders of the Group		2,162.7		1,963.1		2,367.2		2,081.1
Net income attributable to non-controlling interest		47.8		60.0		78.8		118.5

Notes :

•

Some of the totals may not sum due to rounding.

Source and Use of Funds


Consolidated Basis (KRW billion, %)		FY2016								FY2015								FY2014
		Jan. 1 ~ Sep. 30								Jan. 1 ~ Dec. 31								Jan. 1 ~ Dec. 31
		Average Balance¹⁾		Proportions (%)		Interest Paid		Interest Rate (%)		Average Balance¹⁾		Proportions (%)		Interest Paid		Interest Rate (%)		Average Balance¹⁾		Proportions (%)		Interest Paid		Interest Rate (%)
	Deposits		224,802.5		58.5		1,965.2		1.17		203,910.5		57.3		2,861.0		1.40		186,086.1		57.2		3,449.5		1.85
	Borrowings		14,791.9		3.9		131.9		1.19		13,492.9		3.8		150.7		1.12		12,145.2		3.7		190.0		1.56
	Debt Securities Issued		42,406.8		11.0		820.7		2.58		39,334.8		11.0		1,183.8		3.01		36,609.9		11.3		1,301.9		3.56
Source	Other Liabilities		71,152.2		18.5		—		—		68,378.1		19.2		—		—		60,397.7		18.6		—		—

	Total Liabilities		353,153.3		91.8		—		—		325,116.3		91.3		—		—		295,238.9		90.8		—		—

	Total Stockholder’s Equity		31,438.2		8.2		—		—		31,063.1		8.7		—		—		30,023.9		9.2		—		—

	Total Liabilities & SE		384,591.5		100.0		—		—		356,179.4		100.0		—		—		325,262.8		100.0		—		—

	Cash & Due from Banks		21,309.2		5.5		142.3		0.89		21,993.4		6.2		225.6		1.03		19,646.5		6.0		236.9		1.21
	Loans		250,412.6		65.1		6,892.5		3.67		231,889.2		65.1		9,031.6		3.89		212,237.2		65.3		9,722.5		4.58
	Loans in KRW		196,740.6		51.2		4,882.2		3.31		180,410.1		50.7		6,479.5		3.59		164,597.9		50.6		7,092.5		4.31
	Loans in Foreign Currency		14,645.8		3.8		353.8		3.22		13,528.2		3.8		415.0		3.07		11,598.8		3.6		403.0		3.47
Use	Credit Card Accounts		18,642.8		4.9		1,277.5		9.14		17,819.5		5.0		1,635.3		9.18		17,575.1		5.4		1,702.5		9.69
	Others		20,383.5		5.3		378.9		2.48		20,131.5		5.7		501.9		2.49		18,465.4		5.7		524.5		2.84
	AFS Financial Assets		29,818.3		7.8		455.5		2.04		26,830.0		7.5		654.4		2.44		26,801.5		8.2		814.8		3.04
	HTM Financial Assets		16,810.8		4.4		416.5		3.30		14,961.0		4.2		539.0		3.60		12,076.7		3.7		521.7		4.32
	Other Assets		66,240.6		17.2		—		—		60,505.8		17.0		—		—		54,500.9		16.8		—		—

	Total Assets		384,591.5		100.0		—		—		356,179.4		100.0		—		—		325,262.8		100.0		—		—

1)	The “Average Balance” is the arithmetic mean of the ending balance of each quarter.

Other Financial Information

*	The main serial financial figures and indices for Sep. 30, 2016 listed herein may be subject to change.

1) Capital Adequacy

Consolidated BIS Ratio (Shinhan Financial Group)


					(KRW billion)
	Sep. 30, 2016(e)			Dec. 31, 2015			Dec. 31, 2014
Aggregate Amount of Equity Capital (A)		29,075.4			27,216.4			25,938.0
Risk-Weighted Assets (B)		209,668.5			203,274.5			198,832.9
BIS Ratio (A/B)		13.87	%		13.39	%		13.05	%

Note) based on Basel III

Capital Adequacy Ratios (Subsidiaries)


						(%)
Subsidiary	Capital Adequacy Ratio	Sep. 30, 2016(e)		Dec. 31, 2015		Dec. 31, 2014
Shinhan Bank	BIS Capital Adequacy Ratio		15.1		14.8		15.4
Shinhan Card	Adjusted Equity Capital Ratio		25.4		28.9		29.7
Shinhan Investment Corp.	Net Capital Ratio		956.1		387.2		461.8
Shinhan Life Insurance	Risk Based Capital Ratio		204.8		204.2		230.7
Shinhan BNP Paribas Asset Management	Equity Capital (KRW billion)		147.8		157.3		159.0
	Minimum Capital Requirement (KRW billion)		24.1		23.2		22.1
Shinhan Capital	Adjusted Equity Capital Ratio		15.9		16.8		15.5
Jeju Bank	BIS Capital Adequacy Ratio		12.6		12.6		14.3
Shinhan Savings Bank	BIS Capital Adequacy Ratio		15.1		16.3		16.3

Notes :

•

The BIS Capital Adequacy Ratio is computed in accordance with the guidelines issued by the FSS for commercial banks. Under these guidelines, commercial banks are required to maintain a minimum capital adequacy ratio of 8%.

•

Basel III FIRB was applied in calculating Shinhan Bank’s BIS Capital Adequacy Ratio.

•

Basel III TSA was applied in calculating Jeju Bank’s BIS Capital Adequacy Ratio.

•

Basel I was applied in calculating Shinhan Savings Bank’s BIS Capital Adequacy Ratio.

•

The Adjusted Equity Capital Ratio represents the ratio of total adjusted shareholder’s equity to total adjusted assets and is computed in accordance with the guidelines issued by FSS. Under these guidelines, Shinhan Card and Shinhan Capital are required to maintain a minimum adjusted equity capital ratio of 8%.

•

Net Capital Ratio is computed in accordance with the guidelines issued by the FSS. Under these guidelines, Shinhan Investment Corporation is required to maintain a minimum net capital ratio of 100%.

•

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

•

Under the guidelines issued by the FSS, Shinhan BNP Paribas Asset Management is required to hold Equity Capital that exceeds the Minimum Capital Requirement.

2) Liquidity

Won Liquidity Ratio


													(KRW billion, %)
Company	Sep. 30, 2016						Dec. 31, 2015						Dec. 31, 2014
Company	Won Assets		Won Liabilities		Won Liquidity Ratio(%)		Won Assets		Won Liabilities		Won Liquidity Ratio(%)		Won Assets		Won Liabilities		Won Liquidity Ratio(%)
Shinhan Financial Group		422.3		35.8		1,178.6		624.1		216.0		288.9		76.1		41.4		183.9
Shinhan Bank		—		—		—		—		—		—		55,338.0		45,258.5		122.3
Shinhan Card		15,291.8		4,684.4		326.4		14,588.0		3,845.4		379.4		14,583.7		3,014.5		483.8
Shinhan Investment Corp.		15,590.3		10,515.8		148.3		11,546.7		6,525.0		177.0		17,500.5		11,305.5		154.8
Shinhan Life Insurance		1,344.3		497.5		270.2		1,189.5		486.7		244.4		1,302.2		472.6		275.6
Shinhan Capital		491.4		390.2		125.9		784.7		355.4		220.8		567.6		161.1		352.3
Jeju Bank		—		—		—		—		—		—		798.2		716.9		111.3
Shinhan Savings Bank		235.6		222.5		105.9		144.2		103.1		139.9		242.0		94.9		255.0

Notes :

•

Shinhan Financial Group, Shinhan Bank and Jeju Bank: Due within 1 month

•

Shinhan Life Insurance: (Won assets due within 3 months /3 months average of Claim payments )*100

•

Shinhan Card, Shinhan Investment Corp., Shinhan Capital, and Shinhan Savings Bank : Due within 3 months

•

Liquidity Ratio for Shinhan Bank and Jeju Bank have been replaced by Liquidity Coverage Ratio from Mar 31, 2015 to reflect the recent amendments to detailed regulations on supervision of banking business.

Liquidity Coverage Ratio


													(KRW billion, %)
Company	Sep. 30, 2016						Dec. 31, 2015						Dec. 31, 2014
Company	High Quality Liquid Assets		Net Cash Outflows		Liquidity Coverage Ratio(%)		High Quality Liquid Assets		Net Cash Outflows		Liquidity Coverage Ratio(%)		High Quality Liquid Assets		Net Cash Outflows		Liquidity Coverage Ratio(%)
Shinhan Bank		36,192.8		38,018.7		95.2		37,421.5		38,253.3		97.8		—		—		—
Jeju Bank		571.2		430.7		132.6		546.3		352.0		155.2		—		—		—

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

Foreign Currency (FC) Liquidity Ratio


													(USD millions, %)
Company	Sep. 30, 2016						Dec. 31, 2015						Dec. 31, 2014
Company	FC Assets		FC Liabilities		FC Liquidity Ratio(%)		FC Assets		FC Liabilities		FC Liquidity Ratio(%)		FC Assets		FC Liabilities		FC Liquidity Ratio(%)
Shinhan Financial Group		—		—		—		—		—		—		—		—		—
Shinhan Bank		36,975.8		33,477.9		110.5		31,925.0		27,205.6		117.4		25,309.1		19,472.6		130.0
Shinhan Investment Corp.		7,663.8		7,133.7		107.4		1,875.7		1,793.8		104.6		1,195.7		871.5		137.2
Shinhan Capital		55.1		51.1		107.8		83.1		73.4		113.2		73.8		49.6		148.8
Jeju Bank		14.4		11.0		130.1		15.2		9.7		156.3		9.8		6.1		160.0

Notes :

•

Foreign currency liquidity ratios are computed with assets and liabilities due within 3 months.

•

Shinhan Bank’s foreign currency liquidity ratio reflected securitization weight with the guidelines issued by the FSS.

•

Shinhan Financial Group figures are based on the separate basis.

3) Asset Quality

SFG Consolidated Basis


	(KRW billion)
	Sep. 30, 2016			Dec. 31, 2015			Dec. 31, 2014
Total Loans		258,348.1			246,487.6			226,503.2
Substandard & Below		2,248.9			2,171.6			2,595.3
Substandard & Below Ratio		0.87	%		0.88	%		1.15	%
Non-Performing Loans		1,912.4			1,691.5			2,031.7
NPL Ratio		0.74	%		0.69	%		0.90	%
Substandard & Below Coverage Ratio		201.70	%		191.22	%		168.88	%
Loan Loss Allowance ¹⁾		4,536.0			4,152.5			4,383.0
Substandard & Below Loans		2,248.9			2,171.6			2,595.3

1)	Including reserve for credit losses.

Separate Basis


																		(	%)
	Sep. 30, 2016						Dec. 31, 2015						Dec. 31, 2014
	Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio ¹⁾		Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio ¹⁾		Substandard & Below Ratio		NPL Ratio		Substandard & Below Coverage Ratio ¹⁾
Shinhan Financial Group		—		—		—		—		—		—		—		—		—
Shinhan Bank		0.79		0.69		178		0.80		0.61		173		1.03		0.78		154
Shinhan Card		1.18		0.77		377		1.24		0.81		355		1.69		1.21		295
Shinhan Investment Corp.		0.12		0.12		615		0.15		0.15		485		1.37		1.36		208
Shinhan Life Insurance		0.09		0.09		890		0.09		0.09		927		0.1		0.09		867
Shinhan Capital		3.38		3.99		87		3.06		3.58		86		2.87		4.08		96
Jeju Bank		1.27		1.27		103		0.87		0.50		141		2.04		1.84		80
Shinhan Savings Bank		5.20		3.96		58		6.51		5.37		58		12.15		10.27		33

1)	Including reserve for credit losses.

4) Debt to Equity Ratios

Shinhan Financial Group (Separate Basis)


	(KRW billion)
	Sep. 30, 2016			Dec. 31, 2015			Dec. 31, 2014
Debt		6.781.9			6,894.5			6,859.4
Equity		20,512.4			20,781.0			20,235.1
Debt to Equity Ratio		33.06	%		33.18	%		33.90	%

Twenty Largest Exposures by Borrower


							(KRW billion)
As of Sep. 30, 2016 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Ministry of Strategy & Finance		0.0		—		9,091.0		—		—		9,091.0
Bank of Korea		1,400.0		—		6,116.3		0.1		—		7,516.4
Korea Housing Finance Corporation		0.0		—		4,634.7		—		—		4,634.8
Korea Development Bank		15.6		74.5		4,444.2		—		0.2		4,534.6
Industrial Bank of Korea		664.8		142.5		1,545.5		—		—		2,352.9
Korea Deposit Insurance Corporation		—		—		1,681.1		—		—		1,681.1
Korea Securities Finance Corporation		24.6		—		1,457.1		—		—		1,481.7
Hana Bank		163.1		326.7		935.7		0.0		—		1,425.4
NongHyup Bank		475.6		123.9		819.1		4.3		—		1,422.9
Samsung Electronics co., ltd.		0.2		1,308.2		16.0		—		—		1,324.4
Woori Bank		227.3		—		1,043.9		0.6		—		1,271.8
Kookmin Bank		421.8		—		770.3		—		—		1,192.1
National Agricultural Cooperative Federation		682.8		15.4		455.3		—		—		1,153.4
Korea Land & Housing Corporation		—		—		1,084.5		—		—		1,084.5
Export-Import Bank of Korea		—		—		1,075.4		0.6		—		1,076.1
Hyundai Heavy Industries Co., Ltd.		78.2		79.6		13.5		856.1		—		1,027.4
Samsung Heavy Industries Co., Ltd.		150.0		—		10.0		579.8		—		739.8
LG Electronics Inc.		128.5		51.7		111.5		401.6		—		693.2
National Federation of Fisheries Cooperatives		2.1		60.8		624.4		—		—		687.3
Korea Investment & Securities Co., Ltd		558.8		—		60.1		—		—		618.9

Total		4,993.2		2,183.2		35,989.7		1,843.1		0.2		45,009.5

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

Exposure to ten Main Debtor Groups


							(KRW billion)
As of Sep. 30, 2016 Consolidated basis	Loans in Won		Loans in Foreign Currency		Securities		Guarantees and Acceptances		Others		Total Exposures
Samsung		546.9		1,891.2		1,239.4		1,251.4		0.1		4,928.9
Hyundai Motors		1,004.7		1,194.9		912.2		292.8		3.2		3,407.8
Lotte		469.7		884.2		1,067.4		412.7		0.0		2,834.0
SK		496.9		287.1		601.3		852.4		0.0		2,237.7
Hyundai Heavy Industries		182.5		138.3		293.6		1,576.4		—		2,190.9
LG		513.7		406.4		344.1		662.9		0.0		1,927.0
LS		91.4		316.2		400.3		546.7		0.0		1,354.6
Hanwha		436.0		243.9		358.9		206.1		0.1		1,244.9
GS		361.2		77.1		335.6		129.9		0.0		903.8
Hyosung		174.5		395.1		32.6		172.1		0.0		774.3

Total		4,277.5		5,834.2		5,585.5		6,103.3		3.4		21,803.9

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

Loans, Due from banks and Securities Concentration by Industry


	(KRW billion)
As of Sep. 30, 2016 Consolidated basis	Total Exposures
As of Sep. 30, 2016 Consolidated basis	Amount		Weight (%)
Finance and Insurance		71,250.2		20.3	%
Manufacturing		41,557.1		11.9	%
Retail and wholesale		16,591.8		4.7	%
Real Estate, leasing and service		21,960.9		6.3	%
Construction		4,010.3		1.1	%
Hotel and Restaurant		5,288.7		1.5	%
Others		55,808.9		15.9	%
Consumers		133,983.3		38.2	%

Total		350,451.2		100.0	%

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

Top Twenty Non-Performing Loans


		(KRW billion)
Borrower	Industry	Gross Principal Outstanding		Substandard & Below		Allowance for Loan Losses
A	Manufacture of Cold Rolled, Drawn and Extruded Iron or Steel Products		114.2		114.2		30.8
B	Construction of Highways, Streets and Roads		88.1		88.1		0.0
C	Manufacture of Distilling Machinery, Heat exchange unit and Gas Generators		81.0		81.0		55.9
D	Manufacture of Synthetic Resin and Other Plastic Materials		58.0		58.0		26.1
E	Manufacture of Plastic Products for Fabricating of Machine		55.4		55.4		41.1
F	Wholesale of Non-Specialized Goods		48.4		48.4		32.9
G	Building of Steel Ships		43.3		43.3		0.4
H	Manufacture of Sections for Ships		42.7		40.4		25.4
I	Renting of Non-Residential Buildings		31.5		31.5		0.0
J	Development and Subdividing of Residential Buildings		30.0		30.0		22.2
K	Other Civil Engineering Construction		29.9		29.9		11.7
L	Building of Steel Ships		26.0		26.0		12.7
M	Manufacture of Sections for Ships		27.3		25.8		0.0
N	Building of Steel Ships		21.9		21.9		0.7
O	Construction of Highways, Streets and Roads		17.8		17.8		10.3
P	Apartment Building Construction		16.9		16.9		2.8
Q	Apartment Building Construction		17.6		16.6		11.0
R	Apartment Building Construction		16.0		16.0		2.4
S	Manufacture of Sections for Ships		15.9		15.9		0.0
T	Freight Transport Brokerage, Agency and Other Supporting Transport Services		15.7		15.7		11.5

	Total		797.6		792.8		298.0

Notes :

•

Consolidated basis as of Sep. 30, 2016.

•

Some of the totals may not sum due to rounding.

3. Independent Auditor

Audit Opinion for the last 3 years

2016 3Q

FY2015

FY2014

Audit Opinion

—

Unqualified

* For the third quarter of 2016, the independent accountant conducted a review for our financial statements instead of auditing them.

Compensation to the Independent Auditor for Audit and Review Services

The following is a description of the fees for audit and review services performed by our independent auditor for the last three years in connection with our financial statements preparation.


Year	Auditor	Payment ¹⁾ (KRW mil.)	Details	Working hours
FY2016	KPMG Samjong Accounting Corp.	581 (annualized basis)	Review/Audit of Financial Statements	3,770 Hours
FY2016	KPMG Samjong Accounting Corp.	73 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	479 Hours
FY2015	KPMG Samjong Accounting Corp.	561 (annualized basis)	Review/Audit of Financial Statements	8,236 Hours
	KPMG Samjong Accounting Corp.	73 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	895 Hours
	KPMG Samjong Accounting Corp.	12 (annualized basis)	Non-statutory audit of subsidiaries under the consolidated corporate tax system for CY2015	282 hours
FY2014	KPMG Samjong Accounting Corp.	500 (annualized basis)	Review/Audit of Financial Statements	6,564 Hours
	KPMG Samjong Accounting Corp.	73 (annualized basis)	K-IFRS Report Package Audit for Shinhan Savings Bank	845 Hours
	KPMG Samjong Accounting Corp.	12 (annualized basis)	Non-statutory audit of subsidiaries under the consolidated corporate tax system for CY2014	182 hours

1)	Excluding value-added taxes.

In addition to above mentioned description of fees for audit and review services, KPMG Samjong Accounting Corp. also provided services related to US listing and ICOFR audit in accordance with the standards of the PCAOB which we agreed to pay KRW1,302 million (excluding value-added taxes) for FY2016.

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

Major Shareholders¹⁾ of Shinhan Financial Group as of Sep. 30, 2016


Name	No. of Common Shares owned²⁾		Ownership%
National Pension Service		43,881,041		9.25	%
BNP Paribas		25,356,276		5.35	%

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

2)	Based on the results of shareholder registry closing as of December 31, 2015

Share ownership of Employee Stock Ownership Association


					(Number of shares, %)
*Share ownership*	Beginning Balance (Jan. 1, 2016)		Increase		Decrease		Ending Balance (Sep. 30, 2016)		Ownership%¹⁾ (Sep. 30, 2016)
Employee Stock Ownership		21,200,687		2,861,237		1,631,748		22,430,176		—
ESOA account		72,686		42,137		—		114,823		—

Total		21,273,373		2,903,374		1,631,748		22,544,999		4.75%

1) Common share basis.

Common Share Traded on the Korea Exchange


								(KRW, number of shares)
		Apr.2016		May.2016		Jun.2016		Jul.2016		Aug.2016		Sep.2016
Price per share	High		42,900		40,700		40,300		40,350		41,050		41,500
	Low		39,350		39,150		37,050		37,300		39,450		39,500
	Avg.		41,298		39,785		38,521		38,743		40,441		40,566
Trading Volume			20,310,571		13,151,793		17,854,427		14,316,441		13,120,803		12,441,477
Highest Daily Trading Volume			3,245,943		1,270,825		1,410,049		1,104,791		1,006,658		1,044,950
Lowest Daily Trading Volume			593,312		332,958		422,564		386,030		265,512		447,025

American Depositary Receipts traded on the New York Stock Exchange


								(USD, number of shares)
		Apr.2016		May.2016		Jun.2016		Jul.2016		Aug.2016		Sep.2016
Price per share	High		38.23		35.81		34.68		35.69		37.45		37.70
	Low		34.19		33.16		30.66		31.82		35.43		35.15
	Avg.		36.20		33.90		32.89		33.78		36.43		36.31
Trading Volume			3,408,447		1,901,607		1,914,258		1,342,910		1,081,119		1,083,707
Highest Daily Trading Volume			395,760		159,994		158,772		116,971		105,227		106,438
Lowest Daily Trading Volume			52,419		42,364		44,737		40,129		20,504		24,042

Note) 1 ADR = 1 Common Shares

5. Directors, Executive Officers and Employees

Directors and Executive Officers

1) Executive Director


				(As of Sep. 30, 2016)
Name	Month and Year of Birth		Position	Service Term
Han Dongwoo		November. 1948	- Chairman of Shinhan Financial Group - Board Steering Committee Chair - Corporate Governance & CEO Recommendation Committee member - Outside Director Recommendation Committee member - Corporate Social Responsibility Committee member	6 years starting from March 23, 2011

2) Non-Executive Directors

Currently, 11 non-executive directors are in office, 9 of which outside directors who are nominated by our Outside Director Recommendation Committee and appointed pursuant to the approval of general shareholders’ meeting.

6 outside directors were appointed as board of directors at the 15th Annual General Meeting of Shareholders on March 24, 2016, of which 3 directors renewed their terms and 3 directors were newly appointed.

Our non-executive directors are as follows:


					(As of Sep. 30, 2016)
Name	Month and Year of Birth	Outside Director		Sub-Committees	Service Term

Ko Boo-in	December. 1941		O	Corporate Social Responsibility Committee member Corporate Governance & CEO Recommendation Committee member	4 years starting from March 28, 2013

Park Cheul	April. 1946		O	Chairman of Board of Directors Risk Management Committee Chair Compensation Committee Chair Corporate Governance & CEO Recommendation Committee member	2 years starting from March 25, 2015

Lee Manwoo	November. 1954		O	Audit Committee Chair Corporate Social Responsibility Committee member Outside Director Recommendation Committee member	3 years starting from March 26, 2014

Lee Sang-kyung	September. 1945		O	Corporate Governance & CEO Recommendation Committee Chair Audit Committee member Compensation Committee member Board Steering Committee member	5 years starting from March 29, 2012

Lee Sung-ryang	August. 1955		O	Outside Director Recommendation Committee Chair Audit Committee member Board Steering Committee member Compensation Committee member	2 years starting from March 24, 2016

Lee Jung-il	August. 1952		O	Compensation Committee member Outside Director Recommendation Committee member	2 years starting from March 24, 2016

Lee Heun-ya	September. 1959		O	Risk Management Committee member Outside Director Recommendation Committee member	2 years starting from March 24, 2016

Yuki Hirakawa	October. 1960		O	Corporate Social Responsibility Committee member Board Steering Committee member Corporate Governance & CEO Recommendation Committee member	2 years starting from March 25, 2015

Philippe Avril	April. 1960		O	Risk Management Committee member Corporate Governance & CEO Recommendation Committee member	2 years starting from March 25, 2015

Cho Yong-byoung	June. 1957		X	-	2 years starting from March 25, 2015

Namkoong Hoon	June. 1947		X	Corporate Social Responsibility Committee Chair Risk Management Committee member Board Steering Committee member Corporate Governance & CEO Recommendation Committee member	1 years starting from March 24, 2016

3) Executive Officers

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


			(As of Sep. 30, 2016)
Name	Month and Year of Birth	Position	In charge of
Kim Hyung-jin	August. 1958	Deputy President & Chief Strategy Officer	- Strategic Planning Team - Global Business Strategy Team - Corporate Culture Development Team - Future Strategy Research Institute - Digital Strategy Team

Lim Young-jin	November. 1960	Deputy President	- Synergy Management Team - Public Relations Team - CSR Team - Management Support Team

Yim Bo-hyuk	March. 1961	Deputy President & Chief Financial Officer	- Finance Management Team - Investor Relations Team - HR Team - Information & Communication Technology Planning Team

Lee Chang-goo	January. 1961	Executive Vice President	- Wealth Management Planning Office

Woo Young-woong	March. 1960	Executive Vice President	- Corporate & Investment Banking Business Department

Park Woo-gyun	March. 1959	Executive Director	- Compliance Team

Kim Im-geun	July. 1963	Executive Director	- Risk Management Team

Compensation to Directors

1) Total Amount Approved at the Meeting of Shareholders

Total number of persons

Total amount approved

at shareholders’ meeting

(KRW millions)

Notes

Directors (Outside directors)

12(9)

3,500

—

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

2) Total Amount Paid


							(As of Sep. 30, 2016)
	Total number of Persons		Total Compensation (KRW millions)		Average Compensation per person (KRW millions)		Notes
Registered Directors		3		1,419		526	Excluding outside directors
Outside Directors		6		237		40	Excluding Audit committee members
Audit committee members or internal auditor		3		150		45

Total		12		1,806		151

Notes :

•

Represents the total number of applicable persons as of Sep. 30, 2016.

Stock Options


					(As of Sep. 30, 2016)
	No. of Granted Options (A)		No. of Exercised Options (B)		No. of Cancelled Options (C)		No. of Exercisable Options (D = A – B – C)		Exercise Price (KRW)
Granted in 2005		2,620,331		2,266,642		251,300		102,389		28,006
Granted in 2006		3,206,173		2,617,517		480,300		108,356		38,829
Granted in 2007		1,231,169		967,092		205,313		58,764		54,560
Granted in 2008		805,174		574,150		185,396		45,628		49,053

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

Notes :

•

The weighted-average exercise price of outstanding exercisable options as of Sep. 30, 2016 is KRW 39,726

•

The closing price of our common stock was KRW 40,150 on Sep. 30, 2016.

•

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

Employees


							(As of Sep. 30, 2016	)
Gender	Number of Employees		Average length of Service	Total Salaries and wages paid in 2016 (KRW million)		Average Payment per person (KRW million)
Male		120	2 yrs 10 mths (13 yrs 9 mths)¹⁾		10,503		87
Female		27	5 yrs 9 mths (9 yrs 9 mths)¹⁾		1,640		60

Total		147	3 yrs 4 mths (13 yrs)¹⁾		12,143		82

1)	Average length of service including service within group subsidiaries

6. Related Party Transactions

Loans to Subsidiaries


														(KRW billion)
Subsidiary	Loan Type	Origination Date		Maturity Date		Lending Rate			Beginning Balance (Jan. 1, 2016)		Decrease		Increase		Ending Balance (Sep. 30, 2016)
Shinhan Investment Corp.	Loans in KRW		2012-01-30		2017-01-30		4.11	%		100		100		—		—
Shinhan Investment Corp.	Loans in KRW		2012-06-28		2017-06-28		3.84	%		100		100		—		—
Shinhan Card	Loans in KRW		2011-01-28		2016-01-28		4.91	%		100		100		—		—
	Loans in KRW		2011-02-24		2016-02-24		4.82	%		250		250		—		—
	Loans in KRW		2011-05-17		2016-05-17		4.47	%		100		100		—		—
	Loans in KRW		2012-03-14		2017-03-14		4.12	%		150		—		—		150
	Loans in KRW		2016-01-26		2021-01-26		1.98	%		—		—		150		150
	Loans in KRW		2016-02-24		2021-02-24		1.84	%		—		—		150		150
Shinhan Capital	Loans in KRW		2011-04-29		2016-04-29		4.65	%		100		100		—		—
	Loans in KRW		2011-05-17		2016-05-17		4.47	%		50		50		—		—
	Loans in KRW		2012-03-14		2017-03-14		4.12	%		50		—		—		50
	Loans in KRW		2012-12-14		2017-12-14		3.33	%		50		—		—		50
	Loans in KRW		2013-01-18		2018-01-18		3.18	%		50		—		—		50
	Loans in KRW		2013-09-05		2018-09-05		3.61	%		80		—		—		80
	Loans in KRW		2014-01-27		2019-01-27		3.60	%		50		—		—		50
	Loans in KRW		2016-03-16		2021-03-16		1.90	%				—		50		50
	Loans in KRW		2016-04-27		2019-04-27		1.63	%				—		100		100
Shinhan Private Equity	Loans in KRW		2015-11-25		2016-11-23		2.12	%		5		—		—		5
Shinhan Savings Bank	Loans in KRW		2016-06-17		2021-06-17		1.61	%		—		—		50		50

Total										1,235		800		500		935

Exhibit 99.1

Independent Auditors’ Review Report (Separate Financial Statements) of Shinhan Financial Group as of Sep. 30, 2016

Exhibit 99.2

Independent Auditors’ Review Report (Consolidated Financial Statements) of Shinhan Financial Group as of Sep. 30, 2016

SIGNATURES

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

SHINHAN FINANCIAL GROUP CO., LTD.

/s/ Yim Bo-hyuk

Name: Yim Bo-hyuk

Title: Chief Financial Officer

Date: November 14, 2016