SHINHAN FINANCIAL GROUP CO., LTD.
Separate Financial Statements
December 31, 2023 and 2022
(With Independent Auditor's Report Thereon)
Contents
Page | |
Independent Auditors' Report | 1 |
Separate Statements of Financial Position | 4 |
Separate Statements of Comprehensive Income | 5 |
Separate Statements of Changes in Equity | 6 |
Separate Statements of Cash Flows | 7 |
Notes to the Separate Financial Statements | 9 |
Independent Auditors' Report on Internal Control over Financial Reporting | 76 |
ICFR Operating Status Report by CEO and IAM | 78 |
152, Teheran-ro,Gangnam-gu, Seoul 06236
(Yeoksam-dong, Gangnam Finance Center 27th Floor)
Republic of Korea
Independent Auditors' Report
Based on a report originally issued in Korean
The Board of Directors and Stockholders
Shinhan Financial Group Co., Ltd.
Opinion
We have audited the separate financial statements of Shinhan Financial Group Co., Ltd. ("the Company"), which comprise the separate statement of financial position as of December 31, 2023, the separate statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of material accounting policies and other explanatory information.
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Company as of December 31, 2023, and its separate financial performance and its cash flows for the year then ended in accordance with Korean International Financial Reporting Standards ("KIFRS").
We have also audited, in accordance with Korean Standards on Auditing (KSAs), the Company's Internal Control over Financial Reporting ("ICFR") as of December 31, 2023 based on the criteria established in Conceptual Framework for Designing and Operating Internal Control over Financial Reporting issued by the Operating Committee of Internal Control over Financial Reporting in the Republic of Korea, and our report dated March 4, 2024 expressed an unmodified opinion on the effectiveness of the Company's internal control over financial reporting.
Basis for Opinion
We conducted our audit in accordance with KSAs. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Separate Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the separate financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
We have determined that there are no key audit matters to communicate in our report.
Other Matters
The procedures and practices utilized in the Republic of Korea to audit such separate financial statements may differ from those generally accepted and applied in other countries.
The separate financial statements of the Company for the year ended December 31, 2022 were audited by another auditor in accordance with KSAs, and their report thereon, dated March 6, 2023, expressed an unmodified opinion.
Responsibilities of Management and Those Charged with Governance for the Separate Financial Statements
Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditors' Responsibilities for the Audit of the Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate financial statements.
As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
- Evaluate the appropriateness of accounting policies used in the preparation of the separate financial statements and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in the internal controls that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditors' report is Min-Seon Chae.
KPMG Samjong Accounting Corp.
Seoul, Korea
March 4, 2024
This report is effective as of March 4, 2024, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
SHINHAN FINANCIAL GROUP CO., LTD.
Separate Statements of Financial Position
For the years ended December 31, 2023 and 2022
(In millions of won) | Note | 2023 | 2022 | |
Assets | ||||
Cash and due from banks at amortized cost | 5, 6, 8, 33 | W | 22 | 2,187 |
Financial assets at fair value through profit or loss | 5, 7, 33 | 1,985,760 | 1,778,475 | |
Loans at amortized cost | 5, 8, 33 | 4,051,004 | 4,009,467 | |
Property and equipment | 9, 11, 33 | 7,586 | 5,820 | |
Intangible assets | 10, 33 | 7,745 | 5,591 | |
Investments in subsidiaries | 12, 31 | 30,723,087 | 30,730,364 | |
Net defined benefit assets | 16 | 7,077 | 1,746 | |
Deferred tax assets | 29 | - | 18,311 | |
Other assets | 5, 8, 13, 33 | 507,274 | 904,353 | |
Total assets | W | 37,289,555 | 37,456,314 |
Liabilities | |||
Borrowings | 5, 14 | 223,722 | 20,000 |
Debt securities issued | 5, 15, 33 | 10,389,276 | 9,815,457 |
Deferred tax liabilities | 29 | 9,589 | - |
Other liabilities | 5, 17, 33 | 567,827 | 944,308 |
Total liabilities | 11,190,414 | 10,779,765 | |
Equity | 18 | ||
Capital stock | 2,969,641 | 2,969,641 | |
Hybrid bonds | 4,001,731 | 4,196,968 | |
Capital surplus | 11,350,744 | 11,350,819 | |
Capital adjustments | (148,464) | (46,114) | |
Accumulated other comprehensive loss | (6,642) | (5,210) | |
Retained earnings | 7,932,131 | 8,210,445 | |
Total equity | 26,099,141 | 26,676,549 | |
Total liabilities and equity | W | 37,289,555 | 37,456,314 |
See accompanying notes to the separate financial statements.
4
SHINHAN FINANCIAL GROUP CO., LTD.
Separate Statements of Comprehensive Income
For the years ended December 31, 2023 and 2022
(In millions of won, except earnings per share data) | Note | 2023 | 2022 | |
Interest income | 28, 33 | |||
Financial assets at amortized cost | W | 93,504 | 87,451 | |
Interest expense | 33 | (286,642) | (222,413) | |
Net interest expense | 20 | (193,138) | (134,962) | |
Fees and commission income | 28, 33 | 69,517 | 70,141 | |
Fees and commission expense | 33 | (439) | (548) | |
Net fees and commission income | 21 | 69,078 | 69,593 | |
Dividend income | 22, 28, 33 | 1,785,967 | 1,470,893 | |
Net gain (loss) on financial assets at fair | ||||
value through profit or loss | 24, 28 | 151,698 | (102,228) | |
Net foreign currency transaction gain | 28 | 27,525 | 46,983 | |
8, 23, 28, | ||||
Reversal of credit loss allowance | 33 | 1,363 | 2,082 | |
General and administrative expenses | 25, 33 | (135,853) | (134,923) | |
Operating income | 1,706,640 | 1,217,438 | ||
Non-operating income (expense) | 27 | (7,223) | 3,478 | |
Profit before income taxes | 1,699,417 | 1,220,916 | ||
Income tax expense (benefit) | 29 | 28,406 | (28,335) | |
Profit for the year | 1,671,011 | 1,249,251 | ||
Other comprehensive income (loss) for the | ||||
year, net of income tax | 16, 18 | (1,432) | 2,043 | |
Items that will not be reclassified | ||||
subsequently to profit or loss: | ||||
Re-measurements of the defined benefit | ||||
asset | (1,432) | 2,043 | ||
Total comprehensive income for the year | W | 1,669,579 | 1,251,294 | |
Basic and diluted earnings per | ||||
share in Korean won | 30 | W | 2,853 | 2,060 |
See accompanying notes to the separate financial statements.
5
SHINHAN FINANCIAL GROUP CO., LTD.
Separate Statements of Changes in Equity
For the years ended December 31, 2023 and 2022
Accumulated | |||||||
Capital | other | ||||||
(In millions of won) | Capital | Hybrid | Capital | adjust- | comprehe- | Retained | Total |
stock | bonds | surplus | ments | nsive loss | earnings | equity | |
Balance at January 1, 2022 | W2,969,641 | 3,334,531 | 11,350,819 | (45,797) | (7,253) | 8,803,435 | 26,405,376 |
Total comprehensive income | |||||||
for the period: | |||||||
Profit for the period | - | - | - | - | - | 1,249,251 | 1,249,251 |
Other comprehensive income | - | - | - | - | 2,043 | - | 2,043 |
- | - | - | - | 2,043 | 1,249,251 | 1,251,294 | |
Transactions with owners: | |||||||
Dividends | - | - | - | - | - | (747,705) | (747,705) |
Interim dividends | - | - | - | - | - | (637,598) | (637,598) |
Dividend to hybrid bonds | - | - | - | - | - | (156,277) | (156,277) |
Repayments to hybrid bonds | - | (134,683) | - | (317) | - | - | (135,000) |
Issuance of hybrid bonds | - | 997,120 | - | - | - | - | 997,120 |
Acquisition of treasury | - | - | - | (300,600) | - | - | (300,600) |
stock | |||||||
Retirement of treasury stock | - | - | - | 300,600 | - | (300,661) | (61) |
- | 862,437 | - | (317) | - | (1,842,241) | (980,121) | |
Balance at December 31, | |||||||
2022 | W2,969,641 | 4,196,968 | 11,350,819 | (46,114) | (5,210) | 8,210,445 | 26,676,549 |
Accumulated | |||||||
Capital | other | ||||||
Capital | Hybrid | Capital | adjust- | comprehe- | Retained | Total | |
stock | bonds | surplus | ments | nsive loss | earnings | equity |
Balance at January 1, 2023 | W |
Total comprehensive income | |
for the period: | |
Profit for the period | |
Other comprehensive income | |
Transactions with owners: | |
Dividends | |
Interim dividends | |
Dividend to hybrid bonds | |
Repayments to hybrid | |
bonds | |
Replacement of retained | |
earnings from hybrid | |
bond repayment losses | |
Issuance of hybrid bonds | |
Acquisition of treasury | |
stock | |
Retirement of treasury stock | |
Conversion of convertible | |
preferred stock into | |
common stock |
2,969,641 | 4,196,968 | 11,350,819 | (46,114) | (5,210) | 8,210,445 | 26,676,549 |
- | - | - | - | - | 1,671,011 | 1,671,011 |
- | - | - | - | (1,432) | - | (1,432) |
- | - | - | - | (1,432) | 1,671,011 | 1,669,579 |
- | - | - | - | - | (455,215) | (455,215) |
- | - | - | - | - | (817,122) | (817,122) |
- | - | - | - | - | (189,672) | (189,672) |
- | (1,092,883) | - | (102,667) | - | - | (1,195,550) |
- | - | - | 317 | - | (317) | - |
- | 897,646 | - | - | - | - | 897,646 |
- | - | - | (486,919) | - | - | (486,919) |
- | - | - | 486,919 | - | (486,999) | (80) |
- | - | (75) | - | - | - | (75) |
- | (195,237) | (75) | (102,350) | - | (1,949,325) | (2,246,987) | |
Balance at December 31, | |||||||
2023 | W2,969,641 | 4,001,731 | 11,350,744 | (148,464) | (6,642) | 7,932,131 | 26,099,141 |
See accompanying notes to the separate financial statements.
6
SHINHAN FINANCIAL GROUP CO., LTD.
Separate Statements of Cash Flows
For the years ended December 31, 2023 and 2022
(In millions of won) | Note | 2023 | 2022 |
Cash flows from operating activities | |||
Profit for the period | W | 1,671,011 | 1,249,251 |
Adjustments for: | |||
Interest income | 20 | (93,504) | (87,451) |
Interest expense | 20 | 286,642 | 222,413 |
Dividend income | 22 | (1,785,967) | (1,470,893) |
Corporate tax expense | 29 | 28,406 | (28,335) |
Net profit or loss on financial instruments at fair value | |||
through profit or loss | 24 | (99,802) | 124,937 |
Reversal of credit loss allowance | (1,363) | (2,082) | |
Employee costs | 7,012 | 5,636 | |
Depreciation and amortization | 25 | 4,066 | 3,226 |
Net foreign currency translation gain | (6,090) | (36,802) | |
Non-operating expense (income) | 7,269 | (4,832) | |
(1,653,331) | (1,274,183) | ||
Changes in assets and liabilities: | |||
Due from banks | - | 41,000 | |
Financial instruments at fair value through profit or loss | 196,722 | 122,223 | |
Other assets | (522) | (460) | |
Net defined benefit assets | (5,508) | (2,839) | |
Other liabilities | (3,074) | 3,255 | |
187,618 | 163,179 | ||
Interest received | 88,680 | 85,308 | |
Interest paid | (261,617) | (212,555) | |
Dividend received | 1,783,758 | 1,470,400 | |
Income tax paid | (640) | (3,487) | |
Net cash provided by operating activities | 1,815,479 | 1,477,913 | |
Cash flows from investing activities | |||
Acquisition of financial instruments at fair value through | |||
profit or loss | (300,000) | (400,000) | |
Lending of loans at amortized cost | (411,277) | (500,000) | |
Collection of loans at amortized cost | 400,000 | 568,000 | |
Acquisition of property and equipment | (2,770) | (3,360) | |
Acquisition of intangible assets | (1,489) | (144) | |
Increase in other assets | (525) | (1,229) | |
Decrease in other assets | 1,202 | 990 | |
Acquisition of investment in subsidiary | 11 | (374,126) | |
Disposal of investments in subsidiaries | - | 20,354 | |
Net cash used in investing activities | W | (314,848) | (689,515) |
7
SHINHAN FINANCIAL GROUP CO., LTD.
Separate Statements of Cash Flows (Continued)
For the years ended December 31, 2023 and 2022
(In millions of won) | Note | 2023 | 2022 | |
Cash flows from financing activities | ||||
Issuance of hybrid bonds | 897,646 | 997,120 | ||
Repayments of hybrid bonds | (1,195,550) | (135,000) | ||
Issuance of debt securities | 2,253,173 | 2,206,672 | ||
Repayments of debt securities | (1,709,626) | (2,036,000) | ||
Increase in borrowings | 371,713 | 20,000 | ||
Decrease in borrowings | (170,000) | - | ||
Convertible preferred stock conversion cost | (75) | - | ||
Dividends paid | (1,461,371) | (1,540,871) | ||
Acquisition of treasury stock | (486,919) | (300,600) | ||
Payment for disposal of treasury stock | (81) | (60) | ||
Repayments of lease liabilities | (1,708) | (1,431) | ||
Net cash outflow from financing activities | (1,502,798) | (790,170) | ||
Effect on the exchange rate changes of cash | ||||
equivalents in foreign currency | - | (3) | ||
Net decrease in cash and cash equivalents | (2,167) | (1,775) | ||
Cash and cash equivalents at the beginning of year | 32 | 2,186 | 3,961 | |
Cash and cash equivalents at the end of year | 32 | W | 19 | 2,186 |
See accompanying notes to the separate financial statements.
8
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Shinhan Financial Group Co. Ltd. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 14:57:03 UTC.