Shinhan Financial Group Co., Ltd. Q4 FY2021 earnings call

• Net income: Record high KRW4,019.3 billion, with recurrent net income KRW4.5 trillion. • Interest income: Grew 11.0% to KRW9.053.065 trillion due to Bank margin improvement and SME loan growth. • Non-interest income: Up 7.7% Y-o-Y, with fee income and securities/FX derivative income contributing. • CIR: 45.3% Y-o-Y, but excluding ERP effects, 43.1%, a 1.3-percentage-point improvement. • Credit cost ratio: 27 bps, 14 bp improvement Y-o-Y. • Investment products: Recognized KRW467.6 billion in losses in 2021, with potential additional losses of KRW90 billion to KRW200 billion in next 2-3 years. • Digital strategy: Continued efforts to improve customer experience, with MAU of Bank SOL and Card pLay growing 25% and 28% Y-o-Y.

In 2021, Shinhan posted a record high net income of KRW4,019.3 billion, with recurrent net income at KRW4.5 trillion excluding non-recurring items. Interest income grew by KRW898.4 billion due to SME loan growth and margin improvement. Non-interest income was KRW9.638.1 billion, up 7.7% Y-o-Y, with fee income and securities/FX derivative income contributing. The non-Bank contribution to net profit was approximately 42%, and within non-banking, the capital market sector including Shinhan Capital and Investment contributed 40%.

• Interest income expected to increase further in 2022 due to rate hikes and asset growth. • CIR forecast for 2022 is 43.7%. • Expect margin improvement to be larger than previous year due to rate hikes and asset growth. • Potential additional investment product losses of KRW90 billion to KRW200 billion in next 2-3 years.

• Investment product losses that may occur in the next 2-3 years, up to KRW200 billion after tax. • Economic uncertainty including inflation and supply chain vulnerabilities. • Credit risks from termination of COVID-19 forbearance programs and uncertain economic outlook.

Q: About capital policy, including quarterly dividend and treasury shares, and digital platform investment growth.

A: Quarterly dividend is ongoing, share buyback plans not commented on yet. G&A expenses had extraordinary ERP costs last year, but excluding that, disciplined management; digital investment will continue with CIR pressure.

Q: On provisioning, why it's lower than peers, conservative assumptions, and management of COVID forbearance exposure.

A: Provisioning differs due to macro assumptions and provision standards. Conservative assumptions include expanding observation periods to include financial crisis eras. Exposure to COVID forbearance programs has been preemptively provisioned.

Q: Outlook for overseas subsidiaries, especially Vietnam post-pandemic.

A: Vietnam faced challenges due to COVID, but globally net income was high. Outlook for recovery in emerging markets like Vietnam and Indonesia, with plans for inorganic growth in advanced markets.

Q: On wealth management product booking and reversal timeframe.

A: No exact timeframe or conditions provided, but ballpark of potential losses KRW90 billion to KRW200 billion over 2-5 years.