Company: SHG
Filing Date: 2025-04-23
Form Type: 20-F
Source: 0001193125-25-089950
Chunk: 139

Company: SHINHAN FINANCIAL GROUP CO LTD
Filing Date: 2025-04-23
Form: 20-F
Chunk 139
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 each asset is classified as in one of the following three stages, which is used as the basis of calculating the loss allowances at the 12-monthexpected credit losses (“ECL”) or the lifetime ECL, depending on the stage.

| Category |     |                                                                                |     | Provision for credit loss allowance                                                                                  |
| Stage 1  |     | When credit risk has not increased significantly since the initial recognition |     | 12-months ECL: The ECL associated with the probability of default events occurring within the next 12 months         |
| Stage 2  |     | When credit risk has increased significantly since the initial recognition     |     | Lifetime ECL: A lifetime ECL associated with the probability of default events occurring over the remaining lifetime |
| Stage 3  |     | When assets are impaired                                                       |     |                                                                                                                      |

To make that assessment, we compare the risk of default of the financial instrument as at the reporting date with such risk of default as at the date of initial recognition, taking into account reasonable supporting 88

information that is available without undue cost or effort and is indicative of significant increases in credit risk since initial recognition. Supporting information also includes historical default data held by us and analysis conducted by internal credit risk rating specialists. We assign an internal credit risk rating to each individual exposure based on observable data and historical experiences that have been found to have a reasonable correlation with the risk of default. The internal credit risk rating is determined by considering both qualitative and quantitative factors that indicate the risk of default, which may vary depending on the nature of the exposure and the type of borrower. We accumulate information after analyzing the information regarding exposure to credit risk and default information by the type of product and borrower as well as results of internal credit risk assessment. For some portfolios, we use information obtained from external credit rating agencies when performing these analyses. We apply statistical techniques to estimate (i) the probability of default for the remaining life of the exposure from the accumulated data and (ii) the changes in the estimated probability of default over time. We use the indicators defined as per portfolio to determine the significant increase in credit risk. Such indicators generally consist of changes in the risk of default estimated from changes in the internal credit risk rating, qualitative factors, days of delinquency and others. We consider a financial asset to be in default if it meets one or more of the following conditions:

| • |     | if a borrower is overdue 90 days or more from the contractual payment date, or |

| • |     |