Company: SHG
Filing Date: 2025-04-23
Form Type: 20-F
Source: 0001193125-25-089950
Chunk: 265

Company: SHINHAN FINANCIAL GROUP CO LTD
Filing Date: 2025-04-23
Form: 20-F
Chunk 265
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 or additional base interest rate cuts, if they were to occur, would likely create additional opportunities for profits for securities firms. Meanwhile, the implementation of the final Basel III guidelines may prompt bank-affiliated securities firms to exercise caution in increasing credit risk-weighted assets in order to comply with capital regulations, which may gradually transform the competitive landscape of the domestic securities industry.

Life Insurance

In 2024, the life insurance industry’s overall profitability experienced continued pressure, due to aging population and low birthrates, slowing growth of the Korean economy, competition against tech companies who have been expanding into the life insurance market and volatility in the financial markets. Risk management and underwriting (risk takeover) capability became increasingly important factors in life insurance companies’ ability to strategically reduce business expenses. In addition, the demand for health insurance products and retirement pension insurance increased steadily, and as a result sales channels, products, and digital-based competitiveness have become increasingly important.

In 2025, major changes due to the implementation of IFRS 17 and K-ICS (requiring insurance companies to apply market price valuation to their assets and liabilities in calculating capital requirement ratios in line with the new IFRS 17 accounting standards), which contributed to increased volatility in insurance companies’ profits and losses and capital ratios, are expected to intensify competition to expand offerings of protection insurance products. As the line between financial and non-financial sectors become blurry and the life insurance market matures, we expect overall growth potential for the industry to be limited and the importance of developing differentiated products and services tailored to customers’ individualized needs and expanding digital-based customer services to become increasingly important.

Credit

In 2024, the unfavorable business environment continued throughout the year, primarily due to a decline in interest income triggered by instability in the real estate market, as well as increased uncertainty following the beginning of U.S. President Trump’s second administration and political issues in Korea. This uncertainty is expected to continue in 2025, which has resulted in downward revisions of economic growth forecasts and increased concerns about potential recession risks in Korea and other advanced economies, and presents challenges in achieving sustainable growth.

Asset Management

In 2025, diversification of investment strategies is expected to continue due to increased difficulty in generating profits from traditional assets as a result of increased interest rate volatility and uncertainties in global financial markets. In particular, direct investment and demand for alternative investment opportunities, such as real estate and alternative assets, is expected grow as investors seek to offset increases in base interest rates with high-yield investment products. In addition,