SHINHAN FINANCIAL GROUP CO LTD

Shinhan Bank provides corporate banking services, specifically focusing on Small- and Medium-sized Enterprises (SMEs). The bank's loans to these enterprises, before accounting for credit losses and deferred loan costs, totaled W 134,271 billion as of December 31, 2023, W 145,327 billion as of December 31, 2024, and W 150,048 billion as of December 31, 2025. These amounts represented 32.2%, 31.9%, and 31.9% of Shinhan Bank's total loan portfolio on those respective dates. Loans to SMEs have historically shown a relatively higher delinquency ratio compared to loans to large corporations or individuals and households. SMEs, often sole proprietorships or small businesses, are generally more susceptible to fluctuations in the Korean and global economy and may have less sophisticated financial records, making risk assessment more challenging for banks. Many SMEs also rely on business relationships with large corporations in Korea, primarily as suppliers. Recent economic difficulties in Korea and globally, coupled with aggressive marketing and intense competition among banks in this segment, have contributed to a deterioration in the asset quality of Shinhan Bank's loans to SMEs, despite the bank's conservative lending policy.