Company: SHG
Filing Date: 2025-04-23
Form Type: 20-F
Source: 0001193125-25-089950
Chunk: 32

Company: SHINHAN FINANCIAL GROUP CO LTD
Filing Date: 2025-04-23
Form: 20-F
Chunk 32
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 decline in the price of real estate in general and set off a chain reaction for other borrowers due to the further decline in the value of collateral. Declines in real estate prices reduce the value of the collateral securing our mortgage and home equity loans, and such reduction in the value**

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**of collateral may result in our inability to cover the uncollectible portion of our secured loans. A decline in the value of the real estate or other collateral securing our loans, or our inability to obtain additional collateral in the event of such decline, may result in the deterioration of our asset quality and require us to make additional loan loss provisions. In Korea, foreclosure on collateral generally requires a written petition to a Korean court. Foreclosure procedures in Korea generally take 7 to 12 months from initiation to collection depending on the nature of the collateral, and foreclosure applications may be subject to delays and administrative requirements, which may result in a decrease in the recovery value of such collateral. No assurance can be given that we will be able to realize the full value of collateral as a result of, among others, delays in foreclosure proceedings, defects in the perfection of collateral and general declines in collateral value. Our failure to recover the expected value of collateral could expose us to significant losses.

Real estate project financing exposure poses significant risk, and guarantees received in connection with our real estate financing may not provide sufficient coverage.

Primarily through Shinhan Bank, we, alone or together with other financial institutions, provide financing to real estate development projects, which are concentrated largely in the construction of residential complexes as developers in Korea commonly use project financing to acquire land and pay for related project development costs. Exposure to such real estate project financing poses significant risk for banks and other financial institutions, including us and Shinhan Bank, particularly amidst the recent slowdown in market demand, demonstrated by an increase in unsold properties, and elevated interest rates. We have designated real estate project financing exposure as a key risk management area and take a unified approach across relevant subsidiaries by setting an annual Group-wide aggregate limit and subsequently allocating the limit applicable to each relevant subsidiary.

We evaluate the soundness of the underlying real estate development projects in accordance with the enhanced business feasibility evaluation criteria announced by the Financial Supervisory Service in 2024. According to such criteria, real estate development projects are classified into four classes of soundness – normal, average, caution, and warning. We pay particular attention to project financing provided to real estate development projects classified at caution or warning levels and, where necessary, set