Company: SHG
Filing Date: 2025-04-23
Form Type: 20-F
Source: 0001193125-25-089950
Chunk: 263

Company: SHINHAN FINANCIAL GROUP CO LTD
Filing Date: 2025-04-23
Form: 20-F
Chunk 263
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 the fourth quarter of 2024, bringing the year-end base interest rate to 3%. The U.S. Federal Reserve is expected to adopt a cautious approach to base interest rate cuts due to concerns over persistent inflation in the U.S. The monetary policies of the Bank of Korea and the U.S. Federal Reserve remain uncertain and subject to change depending on shifts in the domestic and international political environment.

Recent Developments and Outlook for the Korean Financial Sector

Commercial Banking

Since the global financial crisis in 2008, the asset size of Korean commercial banks has consistently grown year over year, including in 2024. In 2024, commercial banks in Korea faced challenges due to rising loan delinquency rates, particularly in the small- and medium-sized enterprises and retail loans sectors, primarily as a result of increased uncertainty in the financial sectors.

With concerns over a domestic economic slowdown and a sluggish real estate market, the outlook for commercial banks in 2025 remains challenging. We expect demand for corporate loans to remain relatively strong as companies try to diversify their funding strategies amid financial market uncertainties, but demand for**

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retail loans are expected to slow down due to a variety of factors, including continuation of relatively high levels of inflation, volatility in the base interest rate and the Government’s continuing policies to control growth of household debt by regulating household mortgage and credit loans. Net interest margin may gradually decline, particularly if the Bank of Korea continues its monetary easing policy and lowers the base interest rate more than expected during 2025. In response to market volatility and increased risk of defaults on loan payments, particularly for loans to small- and medium-sized enterprises and to real estate project financings, many Korean commercial banks have preemptively set aside loan loss provisions to improve their resilience. However, if the trend of increasing loan loss provisions continues, it may have adverse effects on Korean commercial banks’ asset quality and capacity to supply new loans. For further details, see “Item 3.D. Risk Factors — Risks Relating to Our Banking Business — We have significant exposure to small- and medium-sized enterprises, and financial difficulties experienced by such enterprises may result in a deterioration of our asset quality.” Competition among banks, shadow banking financial institutions and fintech firms is expected to further intensify due to the accelerated transition to digital platforms and contactless financial services. We believe that strengthening risk management capabilities has continued to be increasingly important and have a direct impact on the financial performance of commercial banks in Korea.

Credit Cards

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