Company: SHG
Filing Date: 2025-04-23
Form Type: 20-F
Source: 0001193125-25-089950
Chunk: 140

Company: SHINHAN FINANCIAL GROUP CO LTD
Filing Date: 2025-04-23
Form: 20-F
Chunk 140
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 if we determine that it is not possible to recover principal and interest without enforcing the collateral on a financial asset. |

We use the following indicators when determining whether a borrower is in default:

| • |     | qualitative factors (e.g., breach of contract terms), |

| • |     | quantitative factors (e.g., if the same borrower does not perform more than one payment obligations to us, the number of days past due per payment obligation. However, in the case of a specific portfolio, we use the number of days past due for each financial instrument), and |

| • |     | internal and external data. |

The definition of default applied by us generally conforms to the definition of default defined for regulatory capital management purposes. However, depending on the situation, the information used to determine whether default has incurred and the extent thereof may vary. We measure expected credit losses on a forward-looking basis, and expected credit losses reflects information presented by internal experts based on a variety of sources. For purposes of estimating such forward-looking information, we utilize economic outlook and projections published by domestic and overseas research institutes or government and public agencies. We reflect future macroeconomic conditions anticipated from a bias-free, neutral standpoint in measuring expected credit losses. Expected credit losses in this respect reflect conditions that are most likely to occur and are based on the same assumptions that we use in our business plan and management strategy. Key variables used in measuring expected credit losses are as follows:

| • |     | Probability of default (PD) |

| • |     | Loss given default (LGD) |

| • |     | Exposure at default (EAD) |

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These variables have been estimated from historical experience data by using statistical techniques developed internally by Shinhan Bank and have been adjusted to reflect forward-looking information. When measuring expected credit losses on financial assets, Shinhan Bank reflects a period of expected credit loss measurement based on a contractual maturity. Shinhan Bank takes into consideration the extension rights held by a borrower when deciding the contractual maturity. Risk factors such as PD, LGD and EAD are collectively estimated according to the following criteria:

| • |     | Type of products, |

| • |     | Internal credit risk rating, |

| • |     | Type of collateral, |

| • |     | Loan-to-value ratio, |

| • |     | Industry that the borrower belongs to, |

| • |     | Location of the borrower or collateral, and |

| • |     | Days of delinquency. |

The criteria for classification of groups are