SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the Month of November 2004
SHINHAN FINANCIAL GROUP CO., LTD.
(Translation of registrant's name into English)
120, 2-Ga, Taepyung-Ro, Jung-Gu, Seoul 100-102, Korea
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_______.
SUMMARY OF 2004 3RD QUARTER BUSINESS REPORT
On November 12, 2004, Shinhan Financial Group ("SFG") filed the 2004 3rd Quarter
business report (the "Business Report") with the Financial Supervisory Service
of the Republic of Korea ("Korea") pursuant to the Securities and Exchange Act
of Korea. This is the summary of the Business Report translated into English.
Non-material or previously disclosed information are omitted or abridged.
The financial information in this report has been prepared in accordance with
accounting principles generally accepted in Korea.
TABLE OF CONTENTS
1. Introduction of the Group
2. Business Results
3. Independent Accountant
4. Performance of Subsidiary Companies
5. Market Price Information of Our Equity Securities
6. Directors, Executive Officers and Employees
Exhibit 1. Independent Accountant's Review Report (Non Consolidated Financial
Statements)
2
1. INTRODUCTION OF THE GROUP
COMPANY HISTORY
- May 2000 Establishment of the Shinhan Financial Group announced.
- Oct. 2000 Secretariat for the incorporation of SFG established
- Jun. 2001 BOD of Shinhan Bank, Shinhan Securities, Shinhan Capital and
Shinhan ITM approved a transition to the holding company
structure / Signed a strategic alliance MOU with BNP Paribas
- Jul. 2001 Preliminary license granted
- Aug. 2001 Shareholders' Meeting of Shinhan Bank, Shinhan Securities,
Shinhan Capital and Shinhan ITM approved stock transfer
- Aug. 2001 Official license granted
- Sep. 2001 Registered SFG incorporation (Capital stock: KRW 1.4617
trillion) / e-Shinhan and Shinhan Macquarie Financial Advisory
co. became subsidiaries of the SFG
- Dec. 2001 Signed the strategic alliance agreement with BNP Paribas
- Apr. 2002 Announced the acquisition of the Good Morning Securities /
Established an Integration Committee to coordinate the merger
between Shinhan Securities and Good Morning Securities
- May 2002 Jeju Bank included as SFG subsidiary
- Jun. 2002 Credit card division of Shinhan Bank was spun off and
established as a wholly-owned subsidiary, Shinhan Card.
- Jul. 2002 Incorporated Shinhan Credit Information Co.,Ltd
- Aug. 2002 Good Morning-Shinhan Securities launched and subsequently
included as SFG subsidiary
- Aug. 2002 Signed a strategic alliance agreement with BNP Paribas for
investment trust business
- Aug. 2002 Shinhan Credit Information included as SFG subsidiary
- Sep. 2002 Sold 50%-1 shares of Shinhan ITMC to BNP Paribas Asset
Management Group / Shinhan-BNP Paribas ITMC launched
- Oct. 2002 SH&C Life Insurance, a bancassurance joint venture
incorporated and included as the Group subsidiary
- Jun. 2003 Sold 49% equity share of Shinhan Credit Information to Lone
Star Fund
- Aug. 2003 Acquired 80.04% equity ownership of Chohung Bank(CHB) from the
Korea Deposit Insurance Corporation
- Sep. 2003 SFG's inclusion of CHB as its subsidiary officially granted
3
- Sep. 2003 Registered with the U.S. Securities Exchange Commission and
listed on the New York Stock Exchange
- Nov. 2003 Acquired a bank holding company license in the US market from
the Federal Reserve Board
- Dec. 2003 Additional Capital injection into CHB (KRW 200billion)
- Mar. 2004 Shinhan Bank sold out 29,873,359 common shares (Common Shares)
or 10.15% of Shinhan Financial Group through the block trading
before market opens (The Common Shares used to be recognized
as treasury shares in our consolidated financial statements)
- Apr. 2004 Decided to acquire the minority common shares (135,548,285 or
18.85% of total common shares) of CHB by the end of June 2004
through the small-scale share swap
* Exchange ratio: 1 SFG common share = 0.1354 CHB common
share
- Apr. 2004 Provided a tender offer for the 20% or 27,109,657 shares of
the Chohung minority shares before the share swap
* Tender offer price : KRW 3,500 per share
* Tender offer period: April 26, 2004 ~ May 17, 2004
- Apr. 2004 Terminated the joint venture in the credit information
business and bought back Lone Star's 49% ownership in Shinhan
Credit Information.
- Jun. 2004 Small-scale share swap with CHB completed
- July 2004 Delisting of CHB from the Korea Stock Exchange
- Sep. 2004 Decided to acquire the minority common and preferred shares of
Good Morning Shinhan Securities by the end of December 2004
through the small-scale share swap and tender offer
4
PRINCIPAL SUBSIDIARIES UNDER KOREAN LAW AS OF SEPTEMBER 30, 2004
DIRECT SUBSIDIARIES
Subsidiaries Ownerships by SFG
------------ -----------------
Shinhan Bank 100.0%
Chohung Bank 100.0%
Good Morning Shinhan Securities 1) 59.02% 2)
Shinhan Card 100.0%
Shinhan Capital 100.0%
Shinhan BNP Paribas ITMC 50.0%
Jeju Bank 1) 62.4%
SH&C life Insurance 50.0%
e-Shinhan 73.7%
Shinhan Macquarie 51.0%
Shinhan Credit Information 3) 100.0%
-----------------
1. Good Morning Shinhan Securities, and Jeju Bank are listed on the Korea
Stock Exchange.
2. Represents our ownership percentage of voting equity securities of Good
Morning Shinhan Securities. Currently, both common and preferred stock of
Good Morning Shinhan Securities have voting rights. We own 60.5% of common
stock of Good Morning Shinhan Securities as of September 30, 2004.
3. On April 29, 2004 we decided to buy back Lone Star's 49 % ownership in
Shinhan Credit Information. With this transaction our equity ownership of
Shinhan Credit Information increased to 100%.
INDIRECT SUBSIDIARIES HELD THROUGH DIRECT SUBSIDIARIES
Ownerships by
Direct Subsidiaries Indirect Subsidiaries the Parent
------------------- --------------------- -------------
Shinhan Bank Shinhan Data System 100.0%
Shinhan Finance 100.0%
Chohung Bank Chohung ITM 79.8%
Chohung Finance 100.0%
CHB America Bank 100.0%
Chohung Bank GmbH 100.0%
Chohung Vina Bank 50.0%
CHB Valuemeet 2001 year 1st Securitization 50.0%
CHB Valuemeet 2001 year 2nd Securitization 50.0%
CHB Valuemeet 2002 year 1st Securitization 50.0%
Good Morning Shinhan Good Morning Shinhan Securities Europe 100.0%
Securities Good Morning Shinhan Securities USA 100.0%
5
CAPITALIZATION
The table below sets forth the changes to the number of issued and
outstanding shares of the Group since its incorporation on September 1, 2001.
Number of Par Subscription Total amount
Date of Purpose of Types of shares Value price per of capital
issuance issuance shares issued (KRW) share stock (KRW)
-------- ---------- -------- --------- ----- ------------ ------------
2001.Sept.01 Incorporation Common Shares 292,344,192 5,000 11,761 1,461,720,960,000
2002.Jun.06 Share Exchange (1) Common Shares 15,891 5,000 - 1,461,800,415,000
2002.Oct.01 Share Exchange (1) Common Shares 786 5,000 - 1,461,804,345,000
2002.Dec.31 Share Exchange (1) Common Shares 256 5,000 - 1,461,805,625,000
2003.Aug.19 Cash Subscription(2) Preferred Shares 6,000,000 5,000 150,000 1,491,805,625,000
2003.Aug.19 Share Exchange (3) Preferred Shares 46,583,961 5,000 18,086 1,724,725,430,000
2003.Aug.19 Share Exchange (4) Preferred Shares 44,720,603 5,000 18,086 1,948,328,445,000
2003.Sept.26 Cash Subscription(5) Common Shares 1,864,065 5,000 14,832 1,957,648,770,000
2003.Oct.01 Share Exchange (1) Common Shares 11,626 5,000 - 1,957,706,900,000
2003.Dec.31 Share Exchange (1) Common Shares 164,484 5,000 - 1,958,529,320,000
2004.Jun.22 Share Exchange (6) Common Shares 14,682,590 5,000 - 2,031,942,270,000
1. Issued in exchange for Shinhan Bank's common shares which were issued as a
result of an exercise of warrants by the holders of bonds with warrants.
2. Redeemable preferred shares issued to a third party to raise cash for the
Group's purchase of Chohung Bank shares which were held by Korean Deposit
Insurance Corporation.
3. Redeemable preferred shares issued as consideration for the Group's
purchase of Chohung Bank shares which were held by Korea Deposit Insurance
Corporation.
4. Redeemable convertible preferred shares issued as consideration for the
Group's purchase of Chohung Bank shares which were held by Korea Deposit
Insurance Corporation.
5. BNP Paribas Luxembourg subscribed for 1,864,065 shares of the Group's
common stock to maintain its 4% equity ownership on a fully diluted basis
taking into account the full conversion of the 44,720,603 shares of
redeemable convertible preferred shares issued by the Group to Korea
Deposit Insurance Corporation.
6. On June 22, 2004, we issued 14,682,590 of common shares in exchange for
Chohung Bank's 108,438,628 common shares. With the small-scale share swap,
our equity ownership in Chohung Bank increased from 84.95% to 100.00%.
6
NUMBER OF SHARES BY TYPE
The table below sets forth the number of the issued and outstanding shares of
the Group as of September 30, 2004.
Total amount of
Types of Shares Number of Shares par value
--------------- ---------------- ---------------
Common Shares 309,083,890 1,545,419,450,000
Redeemable Preferred Shares 52,583,961 262,919,805,000
Redeemable Convertible Preferred Shares 44,720,603 223,603,015,000
----------- -----------------
Total 406,388,454 2,031,942,270,000
----------- -----------------
TREASURY STOCK
On June 22, 2004, during the small-scale share swap with Chohung Bank, 18,979
fractional shares were issued because the share swap ratio was 0.1354, which
means that one common share of Chohung Bank was exchanged into 0.1354 common
share of SFG. On July 7, 2004, we acquired all of the 18,979 fractional shares
as treasury stock and paid KRW 17,000 per share to each relevant shareholders of
Chohung Bank. The share price was determined by the closing price of July 2,
2004 when our newly issued shares were listed on the Korea Stock Exchange. All
of the 18,979 shares of treasury stock were resold on September 24, 2004 with
resale price of KRW 20,100 per share.
STOCK OPTIONS
Numberof Number of Number of Exercise
Name of the Granted Exercised Exercisable Price
Grant date Guarantee Option (1) option option (KRW) Positions held at
---------- ----------- --------- --------- ----------- -------- -----------------
22-May-02 Ra, Eung-Chan 94,416 - 94,416 18,910 Shinhan Financial Group
22-May-02 Choi, Young Hwi 47,208 - 47,208 18,910 Shinhan Financial Group
22-May-02 Shin, Sang Hoon 28,325 - 28,325 18,910 Shinhan Financial Group
22-May-02 Choi, Bhang-Gil 18,883 - 18,883 18,910 Shinhan Financial Group
22-May-02 Lee, In-Ho 32,162 - 32,162 18,910 Shinhan Bank
22-May-02 Moon, Hong Soon 17,426 - 17,426 18,910 Shinhan Bank
22-May-02 Lee, Jae Woo 18,873 - 18,873 18,910 Shinhan Bank
22-May-02 Huh, Joong Ok 15,564 - 15,564 18,910 Shinhan Bank
22-May-02 Kim, Sahng-Dae 18,873 - 18,873 18,910 Shinhan Bank
22-May-02 Youn, Gwang Lim 18,873 - 18,873 18,910 Shinhan Bank
22-May-02 Oh, Young-Kook 8,041 - 8,041 18,910 Shinhan Bank
22-May-02 Nam, Kee Do 8,041 - 8,041 18,910 Shinhan Bank
22-May-02 Jang, Myoung-Kee 14,918 - 14,918 18,910 Shinhan Bank
22-May-02 Shin, Christoper 11,673 - 11,673 18,910 Shinhan Bank
22-May-02 Lee, Dae Woon 11,673 - 11,673 18,910 Shinhan Bank
22-May-02 Lee, Dong Girl 26,953 - 26,953 18,910 Shinhan Capital
22-May-02 Jung, Yun Kang 7,409 - 7,409 18,910 Shinhan Capital
22-May-02 Son, Woong Man 3,828 - 3,828 18,910 Shinhan Capital
22-May-02 Hwang, Jung Hun 3,828 - 3,828 18,910 Shinhan Capital
Song, Byung Kuk and
22-May-02 other 6 officers 13,325 - 13,325 18,910 Shinhan Financial Group
Kim, Duk Jung and
22-May-02 other 329 officers 449,929 - 449,929 18,910 -
15-May-03 Ra, Eung-Chan 100,000 - 100,000 11,800 Shinhan Financial Group
7
Numberof Number of Number of Exercise
Name of the Granted Exercised Exercisable Price
Grant date Guarantee Option (1) option option (KRW) Positions held at
---------- ----------- ---------- --------- ----------- -------- -----------------
15-May-03 Choi, Young Hwi 90,000 - 90,000 11,800 Shinhan Financial Group
15-May-03 Choi, Bhang-Gil 20,000 - 20,000 11,800 Shinhan Financial Group
15-May-03 Han, Min Ky 20,000 - 20,000 11,800 Shinhan Financial Group
15-May-03 Song, Youn Soo 20,000 - 20,000 11,800 Shinhan Financial Group
15-May-03 Shin, Sang Hoon 80,000 - 80,000 11,800 Shinhan Bank
15-May-03 Moon, Hong Soon 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Lee, Jae Woo 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Huh, Joong Ok 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Kim, Sahng-Dae 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Youn, Gwang Lim 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Cho, Woo Seop 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Kim, Hee Soo 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Han, Do Heui 20,000 - 20,000 11,800 Shinhan Bank
15-May-03 Shin, Christoper 15,000 - 15,000 11,800 Shinhan Bank
15-May-03 Lee, Dae Woon 15,000 - 15,000 11,800 Shinhan Bank
15-May-03 Hong Sung Kyun 30,000 - 30,000 11,800 Shinhan Card
15-May-03 Lee Tae Kyu 10,000 - 10,000 11,800 Shinhan Card
15-May-03 Kim Seong Won 10,000 - 10,000 11,800 Shinhan Card
15-May-03 Shim, Woo Yeob 10,000 - 10,000 11,800 Shinhan Card
15-May-03 Lee, Dong Girl 30,000 - 30,000 11,800 Shinhan Capital
15-May-03 Jung, Yun Kang 10,000 - 10,000 11,800 Shinhan Capital
15-May-03 Jang, Myoung-Kee 10,000 - 10,000 11,800 Shinhan Capital
15-May-03 Shim, Beom Seong 10,000 - 10,000 11,800 Shinhan Credit Information
15-May-03 Song, Byung Kuk and
other 7 officers 14,600 - 14,600 11,800 Shinhan Financial Group
15-May-03 Seo, Jin Won and
other 339 officers 501,700 - 501,700 11,800 -
25-Mar-04 Ra, Eung Chan 100,000 - 100,000 21,595 Shinhan Financial Group
25-Mar-04 Choi, Young Hwi 90,000 - 90,000 21,595 Shinhan Financial Group
25-Mar-04 Choi, Bhang Gil 30,000 - 30,000 21,595 Shinhan Financial Group
25-Mar-04 Hong, Chil Sun 20,000 - 20,000 21,595 Shinhan Financial Group
25-Mar-04 Kim, Hee Soo 20,000 - 20,000 21,595 Shinhan Financial Group
25-Mar-04 Cho, Byung Jae 20,000 - 20,000 21,595 Shinhan Financial Group
25-Mar-04 Lee, Baek Soon 20,000 - 20,000 21,595 Shinhan Financial Group
25-Mar-04 Shin, Sang Hoon 80,000 - 80,000 21,595 Shinhan Bank
25-Mar-04 Cho, Jae Ho 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Lee, Jae Woo 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Youn, Gwang Lim 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Cho, Woo Sup 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Han, Min Ky 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Song, Youn Soo 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Han, Do Heui 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Suh, Jin Won 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Yang, Shin Keun 20,000 - 20,000 21,595 Shinhan Bank
25-Mar-04 Oh, Sang Young 15,000 - 15,000 21,595 Shinhan Bank
25-Mar-04 Hong, Sung Kyun 30,000 - 30,000 21,595 Shinhan Card
25-Mar-04 Lee, Tae Gyu 10,000 - 10,000 21,595 Shinhan Card
25-Mar-04 Kim, Seong Won 10,000 - 10,000 21,595 Shinhan Card
25-Mar-04 Shim, Woo Yeop 10,000 - 10,000 21,595 Shinhan Card
25-Mar-04 Kim, Moon Han 10,000 - 10,000 21,595 Shinhan Card
25-Mar-04 Lee, Dong Girl 30,000 - 30,000 21,595 Shinhan Capital
25-Mar-04 Kim, Sahng Dae 10,000 - 10,000 21,595 Shinhan Capital
25-Mar-04 Oh, Seung Keun 10,000 - 10,000 21,595 Shinhan Capital
8
Numberof Number of Number of Exercise
Name of the Granted Exercised Exercisable Price
Grant date Guarantee Option (1) option option (KRW) Positions held at
---------- ----------- --------- --------- ----------- -------- -----------------
25-Mar-04 Shim, Beom Seong 10,000 - 10,000 21,595 Shinhan Credit Information
Song, Byung Kuk and
25-Mar-04 other 7 officers 13,900 - 13,900 21,595 Shinhan Financial Group
Kam, Hong Gon and
25-Mar-04 other 400 officer 582,700 - 582,700 21,595 -
------------------ --------- --------- --------- ------ ------------------------
TOTAL 417 persons 3,328,121 - 3,328,121 - -
------------------ --------- --------- --------- ------ ------------------------
1) Number of options granted on May 22, 2002 was adjusted to the current number
on May 21 2004 as terms of the exercise condition were finalized. For more
detailed information, please refer to our Form 6-Ks filed on May 24, 2004 and
June 4, 2004.
* The stock options granted in 2002 and 2003 are exercisable during the 4 year
period after the second anniversary from the grant date. The stock options
granted in 2004 are exercisable during 3 year period after the second
anniversary from the grant date.
EMPLOYEE STOCK OWNERSHIP ASSOCIATION
ENDING BALANCE
BEGINNING BALANCE (AS OF SEP. 30,
TYPE OF STOCK (AS OF JANUARY 1ST 2004) INCREASE DECREASE (2) 2004 (1) )
------------- ------------------------ -------- ------------ ---------------
Common Stock 357,888 292,655 -241 650,302
1) Shinhan Capital participated in the employee stock ownership plan in May
2004. Therefore, the ending balance as of September 30, 2004 consists of
as follows; 10,370 shares for Shinhan Financial Group, 633,085 shares for
Shinhan Bank, and 6,847 shares for Shinhan Capital.
2) The decrease is due to the retirement of 2 employees of Shinhan Bank under
the age limit.
2. BUSINESS RESULTS
OPERATIONAL RESULTS
2004 2003 2002
(Jan.1~Sep.30) (Jan.1~Dec.31) (Jan.1~Dec.31)
-------------- -------------- --------------
OPERATING REVENUE 910,923 617,147 645,367
GAIN USING THE EQUITY 822,981 519,360 620,697
METHOD OF ACCOUNTING
INTEREST INCOME 87,942 97,787 24,670
OPERATING EXPENSE 117,063 252,199 43,147
LOSS USING THE EQUITY
METHOD OF ACCOUNTING 1,530 130,719 2,007
OPERATING INCOME 793,860 364,948 602,220
9
SOURCE AND USE OF FUNDS
SOURCE OF FUNDS
(in millions of Korean Won)
2004 2003 2002
(Jan.1~Sep.30) (Jan.1~Dec.31) (Jan.1~Dec.31)
-------------- -------------- --------------
Average Ratio Average Ratio Average Ratio
Balance (1) (%) Balance (1) (%) Balance (1) (%)
---------- ----- ---------- ----- ---------- -----
Stockholders' Equity 6,526,300 73.18 4,768,492 73.82 3,877,215 89.45
Capital Stock 1,995,236 22.37 1,660,319 25.70 1,461,770 33.72
Capital Surplus 3,427,175 38.43 2,512,502 38.89 1,976,637 45.60
Retained Earnings 1,010,820 11.33 692,409 10.72 379,170 8.75
Capital Adjustment 93,069 1.04 (96,738) (1.50) 59,638 1.38
Borrowings 2,391,545 26.82 1,691,375 26.18 457,359 10.55
Debentures 2,035,245 22.82 1,434,951 22.21 359,240 8.29
Other liabilities 356,300 4.00 256,424 3.97 98,119 2.26
--------- ------ --------- ------ ---------- ------
Total 8,917,845 100.00 6,459,867 100.00 4,334 ,574 100.00
--------- ------ --------- ------ ---------- ------
1. The Average Balance was calculated by averaging the ending balance
of each quarter.
USE OF FUNDS
(in millions of Korean Won)
2004 2003 2002
(Jan.1~Sep.30) (Jan.1~Dec.31) (Jan.1~Dec.31)
-------------- -------------- --------------
Average Ratio Average Ratio Average Ratio
Balance(1) (%) Balance(1) (%) Balance(1) (%)
---------- ----- ---------- ----- ---------- -----
Investments on equity stock 6,812,804 76.40 5,882,011 77.81 3,874,018 89.38
Shinhan Bank 3,605,688 40.43 3,139,126 41.53 3,134,106 72.30
Chohung Bank (2) 2,292,080 25.70 1,831,964 24.24 - -
Good Morning Shinhan Securities(3) 551,839 6.19 537,265 7.11 447,117 10.32
Shinhan Card 160,796 1.80 191,094 2.53 149,800 3.46
Shinhan Capital 110,337 1.24 95,384 1.26 71,171 1.64
Shinhan BNP Paribas 22,342 0.25 22,109 0.29 39,010 0.90
E-Shinhan 2,550 0.03 3,331 0.04 4,281 0.10
Shinhan Macquarie 1,174 0.01 578 0.01 583 0.01
Jeju Bank 48,513 0.54 44,783 0.59 23,855 0.55
Shinhan Credit Information 4,070 0.05 2,392 0.03 1,169 0.03
SH&C Life Insurance 13,415 0.15 13,985 0.19 2,926 0.07
Investment on Bonds - 0.00 905 0.01 1,279 0.03
Loans 2,004,746 22.48 1,618,091 21.41 390,275 9.00
Fixed Assets 1,559 0.02 1,434 0.02 1,272 0.03
Intangible Assets 381 0.00 471 0.01 163 0.00
Cash Deposit in bank 61,426 0.69 25,326 0.34 57,241 1.32
Other Assets 36,932 0.41 30,808 0.41 10,325 0.24
--------- ------ --------- ------ --------- ------
Total 8,917,848 100.00 7,559,046 100.00 4,334,574 100.00
--------- ------ --------- ------ --------- ------
1. The Average Balance was calculated by averaging the ending balance of each
quarter.
2. The Average Balance of Good Morning Shinhan Securities for 2002 is the sum
of the pre-merger balances of Shinhan Securities and Good Morning
Securities.
10
OTHER FINANCIAL INFORMATION
REQUISITE CAPITAL RATIO
(in millions of Korean Won)
3rd Quarter of
2004 2003(2) 2002
-------------- ------- ----
Aggregate Amount of Equity Capital (A) 10,129,151 8,847,673 4,842,795
Requisite Capital (B) 7,857,715 7,472,030 3,698,754
Requisite Capital Ratio (A/B) (1) 128.91% 118.41% 130.93%
1. Under the guidelines issued by the Financial Supervisory Commission
applicable to financial holding companies, we, at the holding
company level, are required to maintain a minimum requisite capital
ratio of 100%.
2. The numbers for the 3rd Quarter of 2004 are provisional and are
subject to change.
WON LIQUIDITY RATIO
(in millions of Korean Won)
3rd Quarter
of 2004 2003 2002
----------- ---- ----
Won Assets due within 3 months (A) 223,899 16,687 14,945
Won Liabilities due within 3 months (B) 219,011 15,504 6,480
Won Liquidity Ratio (A/B) (1) 102.23% 107.63% 230.63%
1. Under the guidelines issued by the Financial Supervisory Commission,
we, at the holding company level, are required to maintain a Won
liquidity ratio of not less than 100%.
LIABILITIES TO EQUITY RATIO
(in millions of Korean Won)
3rd Quarter
of 2004 2003 2002
----------- ---- ----
Liabilities (A) 2,474,612 2,176,875 774,759
Adjusted Equity (B) (1) 6,963,049 6,117,555 4,010,220
Liabilities to Equity Ratio (A/B) 35.54% 35.58% 19.32%
1. Adjusted Equity was calculated by subtracting the amount of
intangible assets from total net assets.
CAPITAL ADEQUACY RATIO AND OTHER RATIOS OF CERTAIN SUBSIDIARIES
1) Total Capital Adequacy Ratio (%)
3rd Quarter of
2004 2003 2002
---- ---- ----
Shinhan Bank 11.60 10.49 10.91
Chohung Bank 8.94 8.87 8.66
Jeju Bank 10.50 10.96 11.71
11
* The Total Capital Adequacy Ratios are computed in accordance with
the guidelines issued by the Financial Supervisory Commission for
commercial banks. Under these guidelines, commercial banks are
required to maintain a minimum capital adequacy ratio of 8%.
* The numbers for the 3rd Quarter of 2004 are provisional and are
subject to change.
2) Net Capital Ratio
Sep.30 2004 Mar.31 2004 Mar.31 2003
----------- ----------- -----------
Good Morning Shinhan Securities 445.37% 480.7% 412.6%
*Net Capital Ratio is computed in accordance with the guidelines issued by
the Financial Supervisory Service for securities investment trust
businesses. Under these guidelines, Good Morning Shinhan Securities is
required to maintain a minimum net capital ratio of 100%.
3) Adjusted Equity Capital Ratio
3rd Quarter of 2004 2003 2002
------------------- ---- ----
Shinhan Card 14.48% 13.78% 10.86%
*The Adjusted Equity Capital Ratio represents the ratio of total adjusted
shareholder's equity to total adjusted assets and is computed in
accordance with the guidelines issued by the Financial Supervisory
Commission for credit card companies. Under these guidelines, Shinhan Card
is required to maintain a minimum adjusted equity capital ratio of 8%.
4) Non Performing Loans
(in 100 millions of Korean Won)
Dec.31. 2003 Dec.31. 2002
(March 31,2004 for GMS (March 31,2003 for GMS
Sep. 30. 2004 Securities) Securities)
------------- ----------------------- -----------
Balance of NPL to total Balance of NPL to total Balance of NPL to total
NPL Loans (%) NPL Loans (%) NPL Loans (%)
---------- ------------ ---------- ------------ ---------- ------------
Shinhan Bank 1) 4,764 0.89 3,985 0.82 2,983 0.69
Chohung Bank 1) 13,091 2.99 18,796 4.19 19,811 4.02
Jeju Bank 1) 508 3.93 298 2.27 238 1.86
G.MS Securities 2) 324 13.59 382 13.48 410 19
Shinhan Card 3) 468 5.40 747 6.34 714 2.82
1. Non-performing loans of banks are defined as those loans are past
due more than 90 days or those are placed on non-accrual status
according to the guidelines of the Financial Supervisory Service.
2. Under the guidelines of the Financial Supervisory Service, every
securities company shall classify its loans into five categories:
"normal", "precautionary", "substandard", "doubtful", and "estimated
loss". Under the Group's internal measures, non-
12
performing loans of Good Morning Shinhan Securities includes loans
classified as "substandard", "doubtful", and "estimated loss."
3. Under the guidelines of the Financial Supervisory Service, every
credit card company shall classify its loans into five categories:
"normal", "precautionary", "substandard", "doubtful", and "estimated
loss. Under the Group's internal measures, non-performing loans of
Shinhan Card includes loans classified as "substandard", "doubtful",
and "estimated loss."
5) Loan Loss Allowances & Write-offs for the period
(in 100 millions of Korean Won)
Jan.1,2004~ Jan. 1, 2003~ Jan.1,2002~
Sep.30, 2004 Dec.31, 2003 Dec.31, 2002
------------ ------------ ------------
Shinhan Bank Loan Loss Domestic 7,520 8,664 4,925
Allowance Overseas 728 745 733
------ ------ ------
Total 8,248 9,409 5,658
------ ------ ------
Write-offs 2,602 715 1,375
Chohung Loan Loss Domestic 12,516 16,026 16,988
Bank Allowance Overseas 547 563 563
------ ------ ------
Total 13,063 16,589 17,551
------ ------ ------
Write-offs 10,219 17,812 11,007
Jeju Bank Loan Loss Domestic 407 345 273
Allowance Overseas - - -
------ ------ ------
Total 407 345 273
------ ------ ------
Write-offs 181 179 240
GM Loan Loss Domestic 320 309 370
Shinhan Allowance Overseas - - -
Securities 1)
------ ------ ------
Total 320 309 370
------ ------ ------
Write-offs 412 - 75
Shinhan Card Loan Loss Domestic 576 946 961
2) Allowance Overseas - - -
------ ------ ------
Total 576 946 961
------ ------ ------
Write-offs 1,881 2,770 544
1. The fiscal year of Good Morning Shinhan Securities ends on March 31
of each year. Accordingly, the relevant periods for Good Morning
Shinhan Securities are adjusted as follows: (i) from April 1, 2004
to September 30, 2004, (ii) from April 1, 2003 to March 31, 2004,
and (iii) from April 1, 2002 to March 31 2003.
2. Shinhan Card was incorporated on July 1, 2002.
13
3. INDEPENDENT ACCOUNTANT
COMPENSATION TO THE INDEPENDENT AUDITOR FOR AUDIT AND REVIEW SERVICES
The following is a description of the fees for audit and review services
performed by our independent auditor for the last three years in connection with
our financial statements prepared in accordance with generally accepted
accounting principles in Korea.
Year Auditor Payment (KRW) Working hours
---- ------- ------------- -------------
450.0 hours(3Q)
2004(1) KPMG Samjong Accounting Corp. 300,000,000 450.5 hours(1H)
370.5 hours(1Q)
2003 KPMG Samjong Accounting Corp. 210,000,000 1,560 hours
2002 KPMG Samjong Accounting Corp. 150,000,000 1,484 hours
1) The payment for 2004 is an engagement amount, and therefore, it has not been
fully paid yet.
COMPENSATION FOR SERVICES OTHER THAN AUDIT AND REVIEW
The following is a description of the fees and commissions paid to our
independent auditor for the services set forth below for the last three years.
Year Month Service description Payment (KRW)
---- ----- ------------------- -------------
2004(1) Jan. Consulting services for disclosure control and
procedure & Internal control system 1,375,000,000
2003 Sept. Due diligence on the Chohung Bank 904,000,000
July Valuation of common shares of Chohung Bank 100,000,000
2002 - - -
14
4. PERFORMANCE OF SUBSIDIARY COMPANIES
CONDENSED FINANCIAL STATEMENTS OF SUBSIDIARIES
1) Balance sheets
Condensed balance sheets of subsidiaries as of September 30, 2004
are as follows:
(In millions of Korean Won)
-------------------------------------------------
Total
stockholders'
Subsidiaries Total assets Total liabilities equity
------------ ------------ ----------------- ------------
Shinhan Bank W 73,450,866 69,580,276 3,870,590
Chohung Bank 62,984,641 60,610,883 2,373,758
Good Morning Shinhan Securities 2,730,079 2,059,560 670,519
Shinhan Card 1,625,174 1,468,831 156,343
Shinhan Capital 1,373,246 1,259,348 113,898
Shinhan BNP Paribas ITMC 48,121 3,717 44,404
Jeju Bank 1,831,472 1,724,475 106,997
SH&C Life Insurance 230,047 201,487 28,560
e-Shinhan 3,943 854 3,089
Shinhan Macquarie 9,126 8,081 1,045
Shinhan Credit Information 8,485 1,994 6,491
------------ ----------- ---------
W144,295,200 136,919,506 7,375,694
============ =========== =========
2) Statements of Earnings
Condensed statements of earnings of subsidiaries for the 9 months
ended September 30, 2004 are as follows:
(In millions of Korean Won)
----------------------------------------------------------------------------
Operating Operating Operating Ordinary Net earnings
Subsidiaries revenue expense income (loss) income (loss) (loss)
------------ --------- --------- ------------- ------------- ------------
Shinhan Bank W4,143,614 3,329,525 814,089 988,089 693,413
Chohung Bank 4,054,923 3,822,668 232,255 190,896 188,826
Good Morning Shinhan Securities 555,676 526,234 29,442 40,772 38,330
Shinhan Card 318,325 319,256 (-)931 (-)1,293 (-)1,293
Shinhan Capital 143,530 117,147 26,383 26,750 18,686
Shinhan BNP Paribas ITMC 10,132 5,444 4,688 4,808 3,352
Jeju Bank 99,348 95,094 4,254 4,557 4,557
SH&C life Insurance 24,967 26,015 (-)1,048 (-)76 (-)76
e-Shinhan 1,828 2,464 (-)636 (-)610 (-)610
Shinhan Macquarie 10,720 9,455 1,265 1,447 876
Shinhan Credit Information 24,170 24,140 30 218 2,629
---------- --------- --------- --------- -------
W9,387,233 8,277,442 1,109,791 1,255,558 948,690
========== ========= ========= ========= =======
15
5. MARKET PRICE INFORMATION OF OUR EQUITY SECURITIES
COMMON SHARE TRADED IN KOREA STOCK EXCHANGE
(in Korean Won or number of shares)
-------------------------------------------------------------------------------
Apr.2004 May.2004 Jun.2004 Jul.2004 Aug.2004 Sep.2004
-------- -------- -------- -------- -------- --------
Price per High 23,250 21,550 18,800 17,400 20,000 21,250
share Low 20,450 16,200 15,700 15,200 16,800 19,900
Trading Volume 21,938,659 27,771,913 32,986,317 27,090,639 24,600,301 21,029,646
AMERICAN DEPOSITARY SHARES
Shinhan Financial Group listed its American Depositary Shares on the New
York Stock Exchange on September 16, 2003.
American Depositary Shares trade on the New York Stock Exchange
(in US Dollars or number of shares)
-----------------------------------------------------------------------------
Apr. 2004 May. 2004 Jun. 2004 Jul. 2004 Aug.2004 Sep.2004
--------- --------- --------- --------- -------- --------
Price per High 40.80 37.27 32.00 30.23 34.90 37.20
share Low 35.15 27.60 27.76 26.50 29.33 34.40
Trading Volume 90,700 110,300 110,800 174,500 189,100 71,500
6. CHANGES TO DIRECTORS, EXECUTIVE OFFICERS AND EMPLOYEES
DIRECTORS AND EXECUTIVE OFFICERS
1) Executive Directors
Our executive directors are as follows
Name Age Position
---- --- --------
Eung Chan Ra 65 Chairman of BOD
Chairman of the BOD Steering Committee
Young Hwi Choi 58 President & CEO
16
2) Non-Executive Directors
Currently, 13 non executive directors are in office, all of whom were
nominated by our BOD and appointed or reappointed pursuant to the approval of
general shareholders' meeting on March 25, 2004.
Our non-executive directors are as follows.
Name Age Position
---- --- --------
In Ho Lee 60 Non-Executive Directors
Young Seok Choi 75 Non-Executive Directors,
Audit Committee member,
Compensation Committee member
Yong Woong Yang 56 Non-Executive Directors
Pyung Joo Kim 65 Outside Director
BOD Steering Committee member
Chairman of Risk Management Committee
Il Sup Kim 58 Outside Director
Chairman of Audit Committee
Compensation Committee member
Sang Yoon Lee 61 Outside Director
Audit Committee member
Compensation Committee member
Yoon Soo Yoon 58 Outside Director
BOD Steering Committee member
Risk Management Committee member
Chairman of Compensation Committee
Sang Chul Lee 56 Outside Director
Compensation Committee member `
Byung Hun Park 75 Outside Director
BOD Steering Committee member
Moon Pil Oh 73 Outside Director
Audit Committee member
Young Soo Lee 70 Outside Director
Dong Hyun Kwon 67 Outside Director
Audit Committee member
Philippe Reynieix 55 Outside Director
Risk Management Committee member
For the personal profiles of the directors, please refer to our Form 6-K
filed on March 8, 2004, in which we included the resume of director candidates.
17
3) Executive Officers
In addition to the executive directors who are also our executive
officers, we currently have the following executive officers
Name Age Position
---- --- --------
Bhang Gil Choi 52 Senior Executive Vice President of Integration Coordination Team I and
II (taking charge of Chohung Bank related issues)
Chil Sun Hong 57 Senior Executive Vice President of Subsidiary Management Team II,
Public Relations Team, and Audit & Compliance Team
Hee Soo Kim 53 Senior Executive Vice President of Subsidiary Management Team I and
Integration Coordination Team I
Byung Jae Cho 53 Chief Financial Officer and Senior Executive Vice President of Planning
& Financial Management Team and Investor Relations Team
Baek Soon Lee 51 Senior Executive Vice President of General Service Team, Information &
Technology Planning Team and Integration Coordination Team II
EMPLOYEES
(As of September 30, 2004)
Total Salaries and wages paid for Average Payment
Number of 3rd Quarter 2004 per person (in mil.
Employees Average Tenure (in mil. of Korean Won) of Korean Won)
--------- -------------- --------------------------------- -------------------
Male 69 1 year & 7 months 5,175 75
Female 15 1 year & 7 months 462 25
Total 84 1 year & 7 months 5,637 64
EXHIBIT 1.
The Independent Accountant's Review Report (under Korean GAAP) to the
Non-consolidated Financial Statements of Shinhan Financial Group as of and for
the 9 month period ended September 30, 2004.
Page
----
- Independent Accountant's Review Report F-1
- Shinhan Financial Group Non-Consolidated Balance Sheets F-5
- Shinhan Financial Group Non-Consolidated Statements of Earnings F-6
- Shinhan Financial Group Non-Consolidated Statements of Cash Flows F-7
- Notes to Non-Consolidated Financial Statements F-9
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SHINHAN FINANCIAL GROUP CO., LTD.
By /s/ Byung Jae Cho
--------------------
Name: Byung Jae Cho
Title: Chief Financial Officer
Date : November 19, 2004
19