An investment in the American depositary shares (“ADSs”) representing our common shares involves a number of risks. You should carefully consider the following information about the risks we face, together with the other information contained in this annual report, in evaluating us and our business. Summary The following summarizes some, but not all, of the risks provided below. Please carefully consider all of the information discussed in this Item 3.D. “Risk Factors” in this annual report for a more thorough description of these and other risks: • Risks Relating to Our Overall Business • Difficult conditions and turbulence in the Korean and global economy and financial markets may adversely affect our business, asset quality, capital adequacy and earnings. • High rates of global inflation or the occurrence of a recession could have a material and adverse impact on our business, results of operations and financial condition. • Competition in the Korean financial services industry is intense, and may further intensify. • We and our subsidiaries need to maintain our capital ratios above minimum required levels, and failure to so maintain could result in the suspension of some or all of our operations. • Liquidity, funding management and credit ratings are critical to our ongoing performance. • Our business may be materially and adversely affected by legal claims and regulatory actions against us, including with respect to financial products sold by us or our subsidiaries. • Changes in interest rates, foreign exchange rates, bond and equity prices, and other market factors have affected and will continue to affect our business, results of operations and financial condition. • We may incur losses associated with our counterparty exposures. • Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, could adversely affect our results of operations and financial condition. 3 Table of Contents • Risks Relating to Our Banking Business • We have significant exposure to small- and medium-sized enterprises, and financial difficulties experienced by such enterprises may result in a deterioration of our asset quality. • A decline in the value of the collateral securing our loans or our inability to fully realize the collateral value may adversely affect our credit portfolio. • Real estate project financing exposure poses significant risks, and guarantees received in connection with such financing may not be sufficient to cover potential losses. • A limited portion of our credit exposure is concentrated in a relatively small number of large corporate borrowers, and future financial difficulties experienced by them may have an adverse impact on us. • The asset quality of our retail loan portfolio may deteriorate. • Any deterioration in the asset quality of our guarantees and acceptances will likely have a material adverse effect on our financial condition and results of operations. • Risks Relating to Our Credit Card Business • Future changes in market conditions as well as other factors, such as stricter regulation, may lead to reduced revenues and deterioration in the asset quality of our credit card receivables. • Risks Relating to Our Insurance Business • Our profitability may be adversely affected if actual benefits and claims amounts on our in-force insurance policies exceed the amounts that we have reserved, or we increase the amount of reserves due to a change in our underlying assumptions. • Our insurance subsidiaries may be required to raise additional capital or reduce their growth or business scale if their solvency ratios deteriorate or the applicable capital requirements change in the future. • Prolonged periods of declining or low interest rates or changes in related accounting standards may reduce or turn negative our investment margin on savings insurance products and result in an increase in the valuation of our liabilities associated with these products. • Risks Relating to Our Other Businesses • We may experience significant losses from our investments and, to a lesser extent, trading activities due to market fluctuations. • We may generate losses from our brokerage and other commission- and fee-based business. • We may fail to realize the anticipated benefits of and encounter significant risks in connection with mergers and acquisitions. • Other Risks Relating to Our Business and Operations • Our ability to continue to pay dividends and service debt will depend on the level of profits and cash flows of our subsidiaries. • Damage to our reputation could harm our business. • Our risk management policies and procedures may not be fully effective at all times. • Labor unrest may adversely affect our operations. • We may experience disruptions, delays and other difficulties relating to our information technology systems. • Our activities are subject to cybersecurity risk. 4 Table of Contents • Our customers may become victims to “voice phishing” or other financial scams, for which we may be required to make monetary compensation and suffer damage to our business and reputation. • We may be required to make transfers from our general banking operations to cover shortfalls in our guaranteed trust accounts, which could have an adverse effect on our results of operations. • Risks Relating to Law, Regulation and Government Policy • We are a heavily regulated entity and operate in a legal and regulatory environment that is subject to change, and violations could result in penalties and other regulatory actions. • The Government may encourage targeted lendings to, or investments in, certain sectors in furtherance of policy objectives, which we may take into account in making lending or investment decisions. • The level and scope of government oversight of our retail lending business, particularly regarding mortgage and home equity loans, may change depending on the economic or political climate. • We have engaged in limited settlement transactions involving Iran in the past, and we also engage in limited business in or related to Russia, which may subject us to legal or reputational risks. • Evolving regulatory framework for artificial intelligence and machine learning technology may have an adverse impact on our business, financial condition and results of operations. • Risks Relating to Korea • Unfavorable financial and economic conditions in Korea and globally may have a material adverse impact on our asset quality, liquidity and financial performance. • Escalations in tensions with North Korea could have an adverse effect on us, the price of our common shares and our ADSs. • Risks Relating to Our ADSs • There are restrictions on withdrawal and deposit of common shares under the depositary facility. • Ownership of our shares is restricted under Korean law. • Holders of our ADSs will not have preemptive rights in certain circumstances. • Holders of our ADSs will not be able to exercise dissent and appraisal rights unless they have withdrawn the underlying shares of our common stock and become our direct stockholders. • The market value of your investment in our ADSs may fluctuate due to the volatility of the Korean securities market. • Your dividend payments and the amount you may realize upon a sale of your ADSs will be affected by fluctuations in the exchange rate between the U.S. Dollar and the Won. • If the Government deems that certain emergency circumstances are likely to occur, it may restrict the depositary bank from converting and remitting dividends in U.S. Dollars. • Other Risks • We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries. • You may not be able to enforce a judgment of a foreign court against us. 5 Table of Contents Risks Relating to Our Overall Business Difficult conditions and turbulence in the Korean and global economy and financial markets may adversely affect our business, asset quality, capital adequacy and earnings. Most of our assets are located in, and we generate most of our income from, Korea. Accordingly, our business and profitability are largely dependent on the general economic and social conditions in Korea, including interest rates, inflation, exports, personal expenditures and consumption, unemployment, demand for business products and services, debt service burden of households and businesses, the general availability of credit, the asset value of real estate and securities and other factors affecting the financial well-being of our corporate and retail customers. The Korean economy is closely integrated with, and is significantly affected by, developments in the global economy. In light of elevated energy and commodity prices, ongoing global supply chain realignments, heightened geopolitical tensions, including the ongoing Russia-Ukraine war, the military conflicts between Iran and other countries, including the United States and Israel, and broader regional instability in the Middle East, continued shifts in monetary policy by major central banks, volatility in global financial markets, capital flow risks affecting emerging markets, credit risks associated with the Chinese real estate sector, ongoing trade tensions and tariff measures among major economies, and signs of economic slowdown in China and other key markets, among others, significant uncertainty remains as to the global economic prospects in general, which has adversely affected, and may continue to adversely affect, the Korean economy. The Korean economy also continues to face other difficulties, including subdued domestic consumption and investment, high levels of corporate and household debt, volatility in the real estate market, rising delinquencies and credit risk associated with project financing loans, demographic pressures arising from an aging population and persistently low birth rates, and labor market challenges, including youth unemployment. More recently, Korea has experienced heightened political uncertainty in recent years following the declaration of martial law by former President Yoon Suk-yeol in December 2024 that led to his impeachment and subsequent removal in April 2025 and the election of Mr. Lee Jae-myung as President in June 2025. Any future deterioration of the global and Korean economies could adversely affect our business, financial condition and results of operations. In particular, difficulties in financial and economic conditions could result in significant deterioration in the quality of our assets and accumulation of higher provisioning, allowance for credit losses on loans and charge-offs as an increasing number of our corporate and retail customers declare bankruptcy or insolvency or otherwise face increasing difficulties in meeting their debt obligations. For example, from time to time, difficulties in certain industries such as real estate and shipbuilding have led to increased delinquency among our corporate borrowers, including some Korean commercial conglomerates known as “chaebols,” and in certain cases, even insolvency, workouts, recovery proceedings and/or voluntary arrangements with creditors. Sustained downturns in the real estate market have also led to increased delinquency among our retail borrowers, and in particular, borrowers with collective loans for pre-sale of newly constructed apartment units. The Government has also led a number of initiatives for Korean financial institutions, including Shinhan Bank, aimed at enhancing the debt-servicing capacity of borrowers, such as a pre-workout program that provides maturity extensions and/or interest reductions to certain eligible retail borrowers with outstanding short-term debt in default. In addition, several policies for small business owners were announced in December 2024, including the introduction of customized debt restructuring, mutual prosperity guarantee and loan programs, consulting programs, and low-interest and long-term installment repayment programs for small business owners who have recently closed their businesses. Shinhan Bank’s delinquency ratio was 0.26% as of December 31, 2023, 0.27% as of December 31, 2024 and 0.28% as of December 31, 2025. Despite such financial support programs, there is no assurance that Shinhan Bank will not experience increased level of credit losses on loans from borrowers, particularly those in troubled industries, since the quality of loans to such borrowers may further deteriorate due to a continued slump in volatile industries resulting from sluggish economic conditions or for other reasons. Further, Government-led financial support programs or other countermeasures may not achieve their intended results and could also result in unintended consequences or otherwise adversely affect our business, financial condition and results of operations. 6 Table of Contents In addition, given the highly integrated nature of financial systems and economic relationships worldwide, there may be other unanticipated systemic or other risks that may not be presently predictable. Any of these risks, if materialized, may have a material adverse effect on our business, liquidity, financial condition and results of operations. High rates of global inflation or the occurrence of a recession could have a material and adverse impact on our business, results of operations and financial condition. Recently, the global markets have experienced higher rates of inflation driven by several market factors, including in the form of increased costs pertaining to labor, materials, shipping, tariffs and overhead costs. Furthermore, recent geopolitical tensions, including the military conflicts between Iran and other countries, including the United States and Israel, has resulted in higher oil prices and could lead to further increases in oil prices and inflation. Governments in many countries usually respond to such inflationary pressures by implementing tighter monetary policies, which could slow the growth rate of local economies and restrict the availability of credit. To the extent that inflationary pressures, shifts in fiscal or monetary policy, or financial market volatility results in slower economic growth or a recession, demand for our products and services could decline, which could materially and adversely affect our business, results of operations and financial condition, including by increasing general and administrative expenses as a percentage of total revenue. Moreover, in the event that a global recession were to occur, it could adversely affect the financial condition of our key counterparties, potentially reducing their demand for our products and services. Competition in the Korean financial services industry is intense, and may further intensify. Competition in the Korean financial services industry is, and is likely to remain, intense, including as a result of subdued domestic economic growth, the growing maturation and saturation of the industry as a whole, the entry of new market participants and regulatory changes, among others. In the banking sector, Shinhan Bank competes principally with other national commercial banks in Korea, but also faces competition from a number of additional banking institutions, including branches and subsidiaries of foreign banks operating in Korea, regional banks, Internet-only banks, government-owned development banks and Korea’s specialized banks, as well as various other types of financial service providers, including savings institutions (such as mutual savings and finance companies, credit unions and credit cooperatives), investment companies (such as securities brokerage firms, merchant banking corporations and asset management companies) and life insurance companies. As of December 31, 2025, Korea had seven major nationwide domestic commercial banks, five regional banks, three Internet-only banks and a number of branches and subsidiaries of foreign banks. Foreign financial institutions, many of which have greater experiences and resources than we do, may continue to enter the Korean market and compete with us in providing financial products and services either by themselves or in partnership with existing Korean financial institutions. In the small- and medium-sized enterprise and retail banking segments, which have been Shinhan Bank’s traditional core businesses, competition is expected to increase further. In recent years, Korean banks, including Shinhan Bank, have increasingly focused on stable asset growth based on quality credit, such as corporate borrowers with high credit ratings, loans to “small office/home office” enterprises (“SOHOs”) with high levels of collateralization, and mortgage and home equity loans within the limits of the prescribed loan-to-value ratios and debt-to-income ratios. This common shift in focus toward stable growth based on lower-risk assets has intensified competition as banks compete for the same limited pool of quality credit by engaging in price competition or by other means. In addition, such competition may result in lower net interest margin and reduced overall profitability. Even if interest rates were to increase, the effect on Shinhan Bank’s results of operations may not be as beneficial as expected, or at all, due to factors such as increased volatility of market interest rates and tighter regulations regarding SOHO loans. For additional details on the impact changes in interest rates have on our business, see “— Changes in interest rates, foreign exchange rates, bond and equity prices, and other market factors have affected and will continue to affect our business, results of operations and financial 7 Table of Contents condition.” Furthermore, if competing financial institutions seek to expand market share by lowering their lending rates, Shinhan Bank may suffer customer loss, especially among customers who select their lenders principally on the basis of lending rates. In response thereto or for other strategic reasons, Shinhan Bank may lower its lending rates to stay competitive, which could lead to a further decrease in its net interest margins and outweigh any potential positive impact on the net interest margin from a general rise in market interest rates. Any future decline in Shinhan Bank’s customer base or its net interest margins could have an adverse effect on our results of operations and financial condition. In the credit card sector, Shinhan Card competes principally with existing “monoline” credit card companies, the credit card divisions of commercial banks, consumer finance companies, other financial institutions and, recently, credit card service providers allied with mobile telecommunications service providers in Korea. Competition has been historically intense in this sector, and the market has shown signs of saturation as existing and new credit card service providers make significant investments and engage in aggressive marketing campaigns and promotions to acquire new customers and target customers with high credit quality. Despite stricter government regulations such as curbs on excessive marketing expenses, competition remains intense, and credit card issuers may continue to compete with Shinhan Card for customers by offering lower interest rates and fees, higher credit limits, more attractive promotions and incentives and alternative products such as credit card reward points, gift cards and low-interest consumer loan products. As a result, Shinhan Card may lose customers or service opportunities to competing credit card issuers and/or incur higher marketing expenses. Competition in the credit card sector is partially constrained by regulatory developments, including the reduction of the maximum interest rate on loans from 24% to 20% in 2021 and restrictions on debt collection activities under the Debtor Rehabilitation and Bankruptcy Act implemented in 2024, which have increased pressure on the profitability and operations of credit card companies, including Shinhan Card. These measures have contributed to challenges in collection activities, which may lead to higher delinquencies and increased operating costs. In addition, enhanced consumer protection and personal data protection guidelines introduced by the Government may result in additional compliance costs. Fee and interest rate pressure, customer attrition, higher marketing expenses, and potential deterioration in customer credit quality, together with broader social, economic and regulatory developments in Korea, could adversely affect Shinhan Card’s ability to compete effectively and put downward pressure on its growth, market share, profitability and asset quality. Similar competitive pressures exist across other financial services sectors in which our subsidiaries operate. Consolidation among our competitors and the Government’s privatization efforts may also add competition in the markets in which we and our subsidiaries conduct business. In January 2019, Woori Financial Group was established pursuant to a comprehensive stock transfer under the Korean Commercial Code whereby holders of the common stock of Woori Bank and certain of its subsidiaries transferred all of their shares to Woori Financial Group (the new financial holding company) and in return received shares of Woori Financial Group. As a result, Woori Bank and certain of its former wholly-owned subsidiaries became direct and wholly-owned subsidiaries of Woori Financial Group. The Korea Deposit Insurance Corp., which in 2021 owned 17.25% of the outstanding common stock of Woori Financial Group, has since sold all of its remaining shares and, as of the date of this annual report, holds no ownership interest in Woori Financial Group. In the asset management business sector, Woori Financial Group acquired two asset management companies, Tongyang Asset Management and ABL Global Asset Management (former Allianz Global Investors) in 2019. In the life insurance sector, KB Financial Group completed the acquisition of Prudential Life Insurance, the former Korean unit of Prudential Financial Inc., in August 2021, and Woori Financial Group acquired 75.3% of the shares of TONGYANG Life Insurance Co., Ltd. and 100.0% of the shares of ABL Life Insurance Co., Ltd. in July 2025. Any of these developments may place us at a competitive disadvantage and outweigh any potential benefit to us in the form of opportunities to attract new customers dissatisfied with the level of services at the newly reorganized entities or to provide credit facilities to corporate customers who wish to maintain relationships with a wide range of banks in order to diversify their sources of funding. We expect consolidation and other structural changes in the financial industry to continue, which may intensify competition as larger and more diversified institutions exert increased pricing pressure, potentially reducing margins and adversely affecting our future profitability. 8 Table of Contents In addition, online service providers and technology companies with large-scale user networks, such as Kakao Corp., NAVER and Samsung Electronics, have recently made significant inroads in providing virtual payment services through a system based on a growing convergence of financial services and technology commonly referred to as “fintech,” which has intensified competition for online customers among online and mobile payment service providers. Moreover, the introduction of Internet-only banks in Korea has led to an increase in competition in the Korean banking industry. For example, KT consortium’s Kbank, Kakao consortium’s Kakao Bank and Viva Republica consortium’s Toss Bank have been operating Internet-only banks since April 2017, July 2017 and October 2021, respectively. Internet-only banks have certain advantages over traditional banks as the former can pass savings in labor and overhead costs to their customers by offering higher interest rates on deposit accounts, lower loan costs and reduced service fees. Accordingly, commercial banks are facing increasing pressure to upgrade their service platforms to attract and maintain online users, which represents a growing customer base compared to traditional customers who have primarily conducted banking in-person at physical banking branches. Regulatory reforms and the general modernization of business practices in Korea have also led to increased competition among financial institutions in Korea. Since 2019, commercial banks, including Shinhan Bank, as well as fintech companies, have offered open banking services that allow customers to access, and transact on, accounts held at multiple financial institutions, reducing customer reliance on any single bank. In addition, the MyData service, which was launched in 2020, allows financial institutions that have been approved by the Financial Service Commission as MyData service providers to collect, aggregate and manage (upon the customers’ request and subject to compliance requirements) customers’ personal, credit and transaction data so that customers can easily access such data in one place. Shinhan Bank and Shinhan Card have each obtained a license from the Financial Services Commission to operate as a MyData service provider. Shinhan Bank launched its MyData business in January 2021, followed by Shinhan Card in December 2021. As of December 31, 2025, the Financial Services Commission has granted licenses to 60 companies to operate as MyData service providers, 19 of which are fintech or IT firms. In May 2023, the Government launched a platform where consumers can compare loan products from various financial institutions and apply for debt consolidation on a single platform, which was expanded in January 2024 to include mortgage and long-term deposit-based rental loans. Further expansion to additional loan products may further intensify competition among commercial banks in Korea. In recent years, the Financial Services Commission announced various measures designed to encourage competition within the banking industry, including its intention to issue more banking licenses (including those for Internet-only banks) and actively permitting the conversion of existing regional or savings banks into nationwide commercial banks. For example, in May 2024, the Financial Services Commission approved DGB Daegu Bank’s application to convert from a regional bank into a nationwide commercial bank. DGB Daegu Bank subsequently became Korea’s seventh commercial bank and rebranded itself as iM Bank in June 2024. Since the global financial crisis, the Government has subjected Korean financial institutions to stricter regulatory requirements and guidelines in areas of asset quality, capital adequacy, liquidity and residential and other lending practices. For further details of such capital adequacy requirements, see “— We and our subsidiaries need to maintain our capital ratios above minimum required levels, and failure to so maintain could result in the suspension of some or all of our operations.” There is no assurance that these measures will have the effect of curbing competition or that the Government will not reverse or reduce such measures or introduce other measures, which may further intensify competition in the Korean financial services industry. For further details on the capital requirements applicable to us, see “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Capital Adequacy.” If, despite our efforts to adapt to the changing macroeconomic environment while complying with new regulations, we are unable to compete effectively in the changing business and regulatory environment, our profit margin and market share may erode and our future growth opportunities may become limited, which could adversely affect our business, financial condition and results of operations. 9 Table of Contents We and our subsidiaries need to maintain our capital ratios above minimum required levels, and failure to so maintain could result in the suspension of some or all of our operations. We and our subsidiaries in Korea are required to maintain specified capital adequacy ratios. For example, since May 2024, we and our banking subsidiaries in Korea have been required to maintain a minimum common equity Tier I capital adequacy ratio of 9.0%, a Tier I capital adequacy ratio of 10.5% and a total capital (BIS) ratio of 12.5%. These ratios measure the respective regulatory capital as a percentage of risk-weighted assets on a consolidated basis and are determined based on guidelines of the Financial Services Commission. In addition, as further described below, Shinhan Bank is also required to maintain a capital conservation buffer and additional capital as a domestic systemically important bank and may be required to maintain a counter-cyclical capital buffer. Also, our subsidiaries Shinhan Card, Shinhan Life Insurance and Shinhan Securities are each required to maintain a consolidated adjusted equity capital ratio of 8.0%, a Korean-Insurance Capital Standard (“K-ICS”) ratio of 100% and a net capital ratio of 100%, respectively. The current capital adequacy requirements of the Financial Services Commission are derived from bank capital rules issued by the Basel Committee on Banking Supervision (the “Basel Committee”) in December 2010 in respect of (i) a global regulatory framework for more resilient banks and banking systems and (ii) an international framework for liquidity risk measurement, standards and monitoring, which together are commonly referred to as “Basel III.” Beginning in July 2013, the Financial Services Commission implemented the capital requirements of Basel III through a series of amendments to the Regulation on the Supervision of the Banking Business and the Detailed Regulation on the Supervision of the Banking Business. Pursuant to these regulations, commercial banks in Korea are required to maintain a minimum common equity Tier I ratio of 4.5%, a minimum Tier I capital ratio of 6.0% and a minimum total capital (BIS) ratio of 8.0% from January 1, 2015. The Regulation on the Supervision of the Banking Business was further amended in December 2014 to implement the liquidity coverage ratio requirements under Basel III in increments of 5% annually, from 80% as of January 1, 2015 to 100% as of January 1, 2019, and although the liquidity coverage ratio requirement was temporarily lowered during the COVID-19 pandemic, the liquidity coverage ratio requirement has been restored to 100% since January 1, 2025. Capital conservation buffer requirements have also been phased in from January 1, 2016, and accordingly, since January 1, 2019, commercial banks in Korea have been required to maintain a capital conservation buffer of 2.5%. Pursuant to the Regulation on the Supervision of the Banking Business and the Detailed Regulation on the Supervision of the Banking Business, the Financial Services Commission may designate banks with significant influence (based on size and connectivity with other financial institutions) on the domestic financial system as a domestic systemically important bank and require the accumulation of additional capital in accordance with the highest of: (i) ratio of common equity capital to risk-weighted assets, ranging from 0.0% to 2.0%, depending on the systematic importance evaluation score, (ii) if the bank’s holding company is a domestic systemically important bank holding company, the capital ratio corresponding to the additional capital required for the bank holding company under the Financial Holding Company Supervision Regulations, or (iii) if the bank is also a global systemically important bank, as defined by the Basel Committee, the capital ratio as required by the Basel Committee. Since January 1, 2019, the Financial Services Commission has required domestic systemically important banks to maintain an additional capital buffer of 1.00%, and we and Shinhan Bank have each been designated by the Financial Services Commission since July 2021 as a domestic systemically important bank holding company and domestic systemically important bank, respectively. Accordingly, we and Shinhan Bank are subject to this additional capital buffer of 1.00%. The Financial Services Commission may also, upon quarterly review, determine and require banks to accumulate a level of counter-cyclical capital buffer within the range of 0% to 2.5% of risk-weighted assets, taking into account factors such as the degree of increase in credit relative to the gross domestic product. As announced by the Financial Services Commission in May 2023, banks and their holding companies, including Shinhan Bank and us, have been required to accumulate a counter-cyclical capital buffer of 1.00% since May 1, 2024. The Financial Services Commission also announced in September 2024 the introduction of a stress buffer capital regulation, which may require banks and their holding companies to accumulate up to 2.5% of additional capital (in addition to, and separate from, the aforementioned minimum capital ratios) depending on the results of stress testing and evaluation of risk management status by the Financial Supervisory Service. In December 2024, the Financial 10 Table of Contents Services Commission initially announced that the introduction of the stress buffer capital regulation would be delayed until at least the second half of 2025, with the timing and other details to be determined in 2025. In December 2025, the Financial Services Commission announced further delays, stating that the stress buffer capital regulation would be implemented in June 2026 or later, with the specific timing and other implementation details to be determined in 2026. We and our banking subsidiaries are currently, and have been, in full compliance with Basel III requirements as implemented in Korea since its introduction in December 2013. Although we and our subsidiaries currently maintain capital adequacy ratios in excess of the respective required regulatory minimum levels, we or our subsidiaries may not be able to continue to satisfy the capital adequacy requirements for a number of reasons, including an increase in high-risk assets and provisioning expenses, substitution costs related to the disposal of problem loans, declines in the value of securities portfolios, adverse changes in foreign currency exchange rates, changes in the capital ratio requirements, the guidelines regarding the computation of capital ratios, or the framework set by the Basel Committee upon which the guidelines of the Financial Services Commission are based, or other adverse developments affecting our asset quality or equity capital. If the capital adequacy ratios of us or our subsidiaries were to fall below the required levels, the Financial Services Commission might impose penalties which may range from a warning to a suspension or revocation of our or our subsidiaries’ business licenses. In addition, additional capital requirements may increase our or our subsidiaries’ credit risk and require us or our subsidiaries to either improve asset quality or raise additional capital. In order to maintain the capital adequacy ratios above the required levels, we or our subsidiaries may be required to raise additional capital through equity financing, and there is no assurance that we or our subsidiaries will be able to do so on commercially favorable terms or at all and, even if successful, any such capital raising may have a dilutive effect on our shareholders with respect to their interest in us or on us with respect to our interest in our subsidiaries. Liquidity, funding management and credit ratings are critical to our ongoing performance. Liquidity is essential to our business as a financial intermediary, and we may seek additional funding in the near future to satisfy liquidity needs, meet regulatory requirements, enhance our capital levels or fund the growth of our operations as opportunities arise. For example, Basel III includes an international framework for liquidity risk measurement, standards and monitoring, as noted above, including a new minimum liquidity standard, known as the liquidity coverage ratio, which is designed to ensure that banks have an adequate stock of unencumbered high quality liquid assets (“HQLA”) that can be easily and speedily converted into cash in the private marketplace to withstand a significant stress scenario lasting 30 calendar days. The liquidity coverage ratio is computed as (a) the value of a banking organization’s HQLA, divided by (b) its total expected net cash outflows over the next 30 calendar days under stress scenarios. In January 2013, the Basel Committee released a revised formulation of the liquidity coverage ratio. The Regulation on the Supervision of the Banking Business was further amended in December 2014 to implement the liquidity coverage ratio requirements under Basel III in increments of 5% annually, from 80% as of January 1, 2015 to 100% as of January 1, 2019, and although the liquidity coverage ratio requirement was temporarily lowered during the COVID-19 pandemic, the liquidity coverage ratio requirement has been restored to 100% since January 1, 2025. A substantial part of the liquidity and funding requirements for our banking subsidiaries is met through short-term customer deposits, which typically roll over upon maturity. While the volume of our customer deposits has generally been stable over time, customer deposits have from time to time declined substantially due to the popularity of other, higher-yielding investment opportunities, primarily stocks and mutual funds, for example, during times of bullish stock markets. During such times, our banking subsidiaries were required to obtain alternative funding at higher costs. There is no assurance that a similar development will not occur in the future. In addition, in recent years, we have faced increasing pricing competition from our competitors with respect to our deposit products. If we do not continue to offer competitive interest rates to our deposit customers, 11 Table of Contents we may lose their business, which has traditionally provided a stable and low-cost source of funding. In addition, even if we are able to match our competitors’ pricing, doing so may result in an increase in our funding costs, which may have an adverse impact on our results of operations. We and our subsidiaries also raise funds in capital markets and borrow from other financial institutions, the cost of which depends on market rates and the general availability of credit and the terms of which may limit our ability to pay dividends, make acquisitions or subject us to other restrictive covenants. While we and our subsidiaries are not currently facing liquidity difficulties in any material respect, if we or our subsidiaries are unable to obtain the funding we need on terms commercially acceptable to us for an extended period of time for whatever reason, we may not be able to ensure our financial viability, meet regulatory requirements, implement our strategies or compete effectively. Credit ratings affect the cost and other terms upon which we and our subsidiaries are able to obtain funding. Domestic and international rating agencies regularly evaluate us and our subsidiaries, and their ratings of our and our subsidiaries’ long-term debt are based on a number of factors, including our financial strength as well as conditions affecting the financial services industry and the Korean economy in general. There can be no assurance that the rating agencies will maintain our current ratings or outlooks. There is no assurance that Shinhan Bank, Shinhan Card, any of our other major subsidiaries or our holding company will not experience a downgrade in their respective credit ratings and outlooks for reasons related to the general Korean economy or reasons specific to such entity. Any downgrades in the credit ratings and outlooks of us and our subsidiaries will likely increase our cost of funding, limit our access to capital markets and other borrowings, or require us to provide additional credit enhancement in financial transactions, any of which could adversely affect our liquidity, net interest margins and profitability, and in turn, our business, financial condition and results of operations. Our business may be materially and adversely affected by legal claims and regulatory actions against us, including with respect to financial products sold by us or our subsidiaries. In the ordinary course of our business, we are subject to risk of legal claims and regulatory actions. We are also subject to a variety of other lawsuits, claims, disputes, legal proceedings and government investigations in Korea and other jurisdictions where we are active, including with respect to financial products sold by us or our subsidiaries. For example, in the past there have been incidents of alleged improper sales of financial products, such as those involving Lime Asset Management Co., Ltd. products, Discovery Asset Management Co., Ltd. products and certain German Heritage derivative-linked securities. Although we have taken measures and strive to improve our risk management systems and internal controls to prevent similar incidents, including updating the internal controls and performance evaluation systems for Shinhan Bank and Shinhan Securities, no assurance can be given that similar incidents have not occurred or will not occur in the future or that such incidents will always be detected, deterred or prevented. We may be required to compensate purchasers of such financial products sold by us or suffer losses and record provisions in connection with such financial products, and we may also suffer harm to our and our subsidiaries’ reputation, any of which may increase our operational and compliance costs and subject us to greater scrutiny by regulators and other parties. These types of claims, disputes, proceedings or investigations may expose us to substantial monetary and/or reputational damages, legal defense costs, injunctive relief, criminal and civil penalties and the potential for regulatory restrictions on our businesses or sanctions against our management and employees. See “Item 8.A. Consolidated Statements and Other Financial Information — Legal Proceedings” and Note 48 of the notes to our consolidated financial statements included in this annual report. While we plan to rigorously defend our positions in such disputes, lawsuits or other regulatory proceedings against us, the outcome of these matters are highly uncertain and difficult to predict, and they could adversely affect our results of operation and future business. The total amount in dispute or subject to regulatory action may increase during the course of these legal claims and regulatory actions, and other lawsuits may be brought against us based on similar allegations. Accordingly, these legal claims and regulatory actions may have a material adverse effect on our business, financial condition, results of operations and reputation. 12 Table of Contents Changes in interest rates, foreign exchange rates, bond and equity prices, and other market factors have affected and will continue to affect our business, results of operations and financial condition. The most significant market risks we face are interest rate, foreign exchange and bond and equity price risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate margin realized between lending and borrowing costs. Changes in foreign currency exchange rates, particularly in the Korean Won to U.S. Dollar exchange rates, affect the value of our assets and liabilities denominated in foreign currencies, the reported earnings of our non-Korean subsidiaries and income from foreign exchange dealings, and substantial and rapid fluctuations in exchange rates may cause difficulty in obtaining foreign currency-denominated financing in the international financial markets on commercial terms acceptable to us or at all. The performance of financial markets may affect bond and equity prices and, therefore, cause changes in the value of our investment and trading portfolios. Moreover, because the secondary market for corporate bonds in Korea is not fully developed, the market value of many of our debt securities is determined by reference to suggested prices posted by Korean rating agencies or the Korea Financial Investment Association, which may differ significantly from the actual value that we could realize in the event we elect to sell these securities. While we have implemented risk management systems and risk thresholds to mitigate and control these and other market risks to which we are exposed, it is difficult to predict with accuracy changes in economic or market conditions and to anticipate the effects that such changes could have on our business, financial condition and results of operations. Historically, Korea, like many other countries, has experienced interest rate fluctuations, in part due to the Government’s policy to stabilize the economy through active rate-controlling measures. The Bank of Korea lowered its policy rate to 0.75% in March 2020 and to 0.50% in May 2020 in response to deteriorating economic conditions resulting from the COVID-19 pandemic. However, as the economy began to show signs of recovery from the COVID-19 pandemic starting from the second half of 2021, the Bank of Korea gradually raised its policy rate to pre-pandemic levels of 1.25% from August 2021 through January 2022. Furthermore, in response to rising levels of household debt and inflation in Korea as well as globally, the Bank of Korea continued to raise its policy rate to 3.50% from April 2022 through January 2023. More recently, however, the Bank of Korea lowered its policy rate to 3.25% in October 2024, 3.00% in November 2024, 2.75% in February 2025 and 2.50% in May 2025 in response to weak economic conditions in Korea. Interest rate movements, in terms of magnitude and timing as well as their relative impact on our assets and liabilities, have a significant impact on our net interest margin and profitability, particularly with respect to our financial products that are sensitive to such movements. For example, if the interest rates applicable to our loans (which are recorded as assets) increase at a slower pace or by a smaller margin than the interest rates applicable to our deposits (which are recorded as liabilities), our net interest margin will shrink and our profitability will be negatively affected. In addition, the relative size and composition of our variable rate loans and deposits (as compared to our fixed rate loans and deposits) may also impact our net interest margin. Furthermore, the difference in the average repricing frequency of our interest-earning assets (primarily loans) compared to our interest-bearing liabilities (primarily deposits) may also impact our net interest margin. For example, since our deposits tend to have longer terms, on average, than those of our loans, our deposits are on average less sensitive to movements in the base interest rates on which our deposits and loans tend to be pegged, and therefore, a decrease in the base interest rates tends to decrease our net interest margin while an increase in the base interest rates tends to have the opposite effect. While we continually manage our assets and liabilities to minimize our exposure to interest rate volatility, such efforts by us may not mitigate the impact of interest rate volatility in a timely or effective manner, and our net interest margin, and in turn our financial condition and results of operations, could suffer significantly. We cannot assure you as to when and to what extent the Bank of Korea will in the future adjust the base interest rate, to which the market interest rate correlates. A decision to adjust the base interest rate is subject to many policy considerations as well as market factors, including the general economic cycle, inflationary levels, interest rates in other economies and foreign currency exchange rates, among others. In general, a decrease in 13 Table of Contents interest rates adversely affects our interest income due to the different maturity structure for our assets and liabilities as discussed above. In contrast, a significant or sustained increase in interest rates, all else being equal, would lead to a decline in the value of traded debt securities and increase our funding costs, while reducing loan demand, especially among retail customers. Rising interest rates may therefore require us to re-balance our assets and liabilities in order to minimize the risk of potential mismatches in our asset liability management and to maintain our profitability. In addition, rising interest rates may adversely affect the Korean economy and the financial condition of our corporate and retail borrowers, including holders of our credit cards, which in turn may lead to a deterioration of the asset quality of our credit portfolio. Since most of our retail and corporate loans bear interest at rates that adjust periodically based on prevailing market rates, a sustained increase in interest rates will increase the funding costs of our borrowers and may adversely affect their ability to make payments on their outstanding loans. See “Item 5.A. Operating Results — Interest Rates.” We may incur losses associated with our counterparty exposures. We face the risk that counterparties will be unable to honor contractual obligations to us or our subsidiaries. These parties may default on their obligations to us or our subsidiaries due to bankruptcy, lack of liquidity, operational failure or other reasons. This risk may arise, for example, from entering into swaps or other derivative contracts under which counterparties have obligations to make payments to us or our subsidiaries or in executing currency or other trades that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries. Any realization of counterparty risk may adversely affect our business, operations and financial condition. Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, could adversely affect our results of operations and financial condition. In early 2023, financial troubles at several banks in the United States and Europe caused uncertainty and fear of instability in the global financial system generally, particularly in the banking sector. Such difficulties were caused, among others, by rising levels of inflation and rapid increase in base interest rates by the governments globally. Many financial institutions have experienced volatile stock prices and significant losses in their equity value, and many have faced heightened risk of bank runs. Any negative perceptions resulting from such developments concerning the soundness of savings banks, Internet-only banks or the banking system generally in Korea could affect customers’ decision on where to maintain their deposits, which may result in financial distress and closure for certain banks in Korea. Also in cases where such distress could pose a systemic risk, the Government may require us or Shinhan Bank, as one of the largest bank holding companies and commercial banks, respectively, in Korea, to actively participate in the Government’s initiative to mitigate such difficulties, which could strain our resources, divert our management’s attention and have an adverse impact on our results of operations and financial condition. Events involving limited liquidity, defaults, non-performance or other adverse developments that affect the financial services industry generally or financial institutions, transactional counterparties or other companies in the financial services industry, may in the future lead to market-wide liquidity problems or increase our risk in various dealings with its counterparties, among others. If, as a result of such developments, any parties with whom we conduct business are unable to access their deposits with a distressed financial institution or any of their other funds loaned to such distressed financial institution, including through financial instruments or lending arrangements, such parties’ credit quality, ability to pay their obligations to us, or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. In addition, our ability to access funding sources and other arrangements in amounts adequate to finance or capitalize our current and future business operations or to fulfill our financial obligations could also be affected by such disruptions or instability in the financial services industry or financial markets. Furthermore, we could be impacted by current or future negative perceptions, expectations or rumors about the prospects for the financial services industry, which could worsen over time and result in downward pressure on, and continued or accelerated volatility of, bank securities. Any of these developments resulting from the general instability of the financial services industry could materially adversely impact our results of operations and financial condition. 14 Table of Contents Risks Relating to Our Banking Business We have significant exposure to small- and medium-sized enterprises, and financial difficulties experienced by such enterprises may result in a deterioration of our asset quality. Our banking activities are conducted primarily through our wholly-owned subsidiary, Shinhan Bank. One of our core banking businesses has historically been and continues to be lending to small- and medium-sized enterprises (as defined in “Item 4.B. Business Overview — Our Principal Activities — Corporate Banking Services — Small- and Medium-sized Enterprises Banking”). Shinhan Bank’s loans (before allowance for credit losses and deferred loan origination costs and fees) to such enterprises amounted to W134,271 billion as of December 31, 2023, W145,327 billion as of December 31, 2024 and W150,048 billion as of December 31, 2025, representing 32.2%, 31.9% and 31.9%, respectively, of our total loan portfolio as of such dates. Compared to loans to large corporations, which tend to be better capitalized and better able to withstand business downturns, or loans to individuals and households, a majority of which are secured by residential properties and have historically exhibited lower delinquency ratios, loans to small- and medium-sized enterprises have historically had a relatively higher delinquency ratio. Many small- and medium-sized enterprises represent sole proprietorships or small businesses that are dependent on a relatively limited number of suppliers or customers and are generally affected to a greater extent than large corporate borrowers by fluctuations in the Korean and global economy. In addition, small- and medium-sized enterprises often maintain less sophisticated financial records than large corporate borrowers. Therefore, it is generally more difficult for banks to assess the level of risk inherent in lending to such enterprises, as compared to large corporations. In addition, many small- and medium-sized enterprises are dependent on business relationships with large corporations in Korea, primarily as suppliers. Difficulties encountered by large corporations could adversely affect the liquidity and financial condition of small- and medium-sized enterprises that engage in business relationships with such entities, including those to which we have exposure, which in turn may result in an impairment of their ability to repay loans. Financial difficulties experienced by small- and medium-sized enterprises as a result of, among other things, recent economic difficulties in Korea and globally and aggressive marketing and intense competition among banks to lend to this segment, despite our efforts to counter asset quality deterioration through a conservative lending policy, have led to a deterioration in the asset quality of our loans to this segment. As of December 31, 2023, 2024 and 2025, Shinhan Bank’s delinquent loans to small- and medium-sized enterprises were W542 billion, W645 billion and W730 billion, respectively, representing delinquency ratios (net of charge-offs and loan sales) of 0.40%, 0.44% and 0.49%, respectively. If the ongoing difficulties in the Korean or global economy were to continue or worsen, the delinquency ratio for our loans to small- and medium-sized enterprises may rise. In particular, we have exposure to the Korean real estate, leasing and service, and construction industries. As of December 31, 2025, Shinhan Bank had outstanding loans (before allowance for credit losses on loans and deferred loan origination costs and fees) to enterprises in the real estate, leasing and service, and construction industries (many of which are small- and medium-sized enterprises) of W53,232 billion and W5,219 billion, respectively, representing 13.2% and 1.3%, respectively, of its total loan portfolio as of such date. We also have other exposure to borrowers in these sectors of the Korean economy, including extending guarantees for the benefit of such companies and holding debt and equity securities issued by such companies. In addition, Shinhan Bank has exposure to borrowers in the shipbuilding and shipping industries, which have yet to stage a meaningful turnaround. Enterprises in the real estate development and construction industries in Korea, which are heavily concentrated in the housing market, may in turn face difficulties if the housing market experiences a downturn, for example, due to Government policy measures to stabilize the real estate market, oversupply of residential property, ongoing economic sluggishness in Korea and globally or demographic changes in the Korean population. We also have limited exposure to real estate project financing, particularly involving construction 15 Table of Contents companies that have built residential units in provinces outside the Seoul metropolitan area, where delinquency levels have recently increased primarily due to a relatively low rate of pre-sales, on which construction companies primarily rely as a key source for liquidity and cash flow. Any of the foregoing developments may result in deterioration in the asset quality of our banking subsidiaries. See “Item 4.B. Business Overview — Description of Assets and Liabilities — Loans — Credit Exposures to Companies in Workout and Recovery Proceedings.” We have been taking active steps to curtail delinquency among our small- and medium-sized enterprise customers, including by strengthening loan application review processes and closely monitoring borrowers in troubled sectors. Despite such efforts, there is no assurance that the delinquency ratio for our loans to small- and medium-sized enterprises will not increase in the future, especially if the Korean economy were to face additional difficulties and, as a result, the liquidity and cash flow of these borrowers deteriorate. A significant increase in the delinquency ratios among these borrowers may lead to increased charge-offs and higher provisioning and reduced interest and fee income, which would have a material adverse effect on our business, financial condition and results of operations. A decline in the value of the collateral securing our loans or our inability to fully realize the collateral value may adversely affect our credit portfolio. Most of our mortgage and home equity loans are secured by borrowers’ homes, other real estate, other securities and guarantees (which are principally provided by the Government and other financial institutions), and a substantial portion of our corporate loans are also secured, including by real estate. As of December 31, 2025, the secured portion of Shinhan Bank’s loans amounted to W278,115 billion, representing 68.7% of its total loans. No assurance can be given that the collateral value of such loans will not materially decline in the future. Shinhan Bank’s general policy for mortgage and home equity loans is to lend up to 40% to 85% of the appraised value of the collateral, but subject to the maximum loan-to-value ratio, debt-to-income ratio and debt service ratio requirements for mortgage loans implemented by the Government, and it periodically re-appraises such collateral. In order to mitigate its loss in the event of a decrease in the value of collateral, Shinhan Bank has made efforts to increase the proportion of installment principal repayment-based loans and manage the loan-to-value ratio of secured loans. As of December 31, 2025, installment principal repayment-based housing loans accounted for 39.0% of the housing loans extended by Shinhan Bank, and the loan-to-value ratio of mortgage and home equity loans of Shinhan Bank was 51.2%. Despite these efforts, however, if the real estate market in Korea experiences a downturn, the value of the collateral may fall below the outstanding principal balance of the underlying mortgage loans. Borrowers of such under-collateralized mortgages or loans may be forced to pay back all or a portion of such mortgage loans or, if unable to meet the collateral requirement through such repayment, sell the underlying collateral, which sales may lead to a further decline in the price of real estate in general and set off a chain reaction for other borrowers due to the further decline in the value of collateral. Declines in real estate prices reduce the value of the collateral securing our mortgage and home equity loans, and such reduction in the value of collateral may result in our inability to cover the uncollectible portion of our secured loans. A decline in the value of the real estate or other collateral securing our loans, or our inability to obtain additional collateral in the event of such decline, may result in the deterioration of our asset quality and require us to make additional loan loss provisions. In Korea, foreclosure on collateral generally requires a written petition to a Korean court. Foreclosure procedures in Korea generally take 7 to 12 months from initiation to collection depending on the nature of the collateral, and foreclosure applications may be subject to delays and administrative requirements, which may result in a decrease in the recovery value of such collateral. No assurance can be given that we will be able to realize the full value of collateral as a result of, among others, delays in foreclosure proceedings, defects in the perfection of collateral and general declines in collateral value. Our failure to recover the expected value of collateral could expose us to significant losses. Real estate project financing exposure poses significant risks, and guarantees received in connection with such financing may not be sufficient to cover potential losses. Primarily through Shinhan Bank, we, alone or together with other financial institutions, provide financing to real estate development projects, which are largely concentrated in the construction of residential complexes. As 16 Table of Contents of December 31, 2025, the total outstanding amount of our real estate project financing-related exposure, consisting of loan balances and debt guarantee commitments, was approximately W7.0 trillion, of which approximately W3.1 trillion was attributable to Shinhan Bank. These amounts were determined based on the feasibility evaluation criteria for real estate development projects set forth by the Financial Supervisory Service, as further discussed below. Real estate project financing involves inherent risks for lenders, including project delays, cost overruns, declines in real estate market conditions and deterioration in the financial condition of developers and contractors. These risks may be exacerbated by adverse changes in construction costs, disruptions in global supply chains affecting the availability or pricing of construction materials, including those arising from geopolitical conflicts such as the Russia-Ukraine war, and tightening financing conditions or reduced investor appetite for real estate development projects. In addition, developers involved in real estate project financing transactions are often relatively small and highly leveraged, which may increase the risk of project delays, financial distress or default. Deterioration in real estate market conditions or financing environments may therefore adversely affect the performance of such projects and the ability of borrowers to repay their obligations. We have designated real estate project financing exposure as a key risk management area and apply a unified risk management approach across relevant subsidiaries by establishing an annual Group-wide aggregate limit and allocating the applicable limits to each relevant subsidiary. We also evaluate the soundness of underlying real estate development projects in accordance with the enhanced feasibility evaluation criteria set forth by the Financial Supervisory Service in 2024. Under these criteria, projects are classified into four categories of soundness: normal, watch, caution and insolvency concern. We monitor projects classified as caution or warning more closely and, where appropriate, establish allowances for credit losses or recognize charge-offs. As of December 31, 2025, real estate project financing extended to real estate development projects classified as caution or insolvency concern represented 3.41% of our total real estate project financing exposure. Lenders in project financing transactions typically receive various forms of credit support, including completion guarantees from general contractors for the completion of development projects and payment guarantees for loans raised by special purpose financing vehicles established by developers. However, there can be no assurance that such guarantees will be sufficient to cover potential losses if a project fails, the guarantor experiences financial difficulties or the guarantor is otherwise unable to fulfill its obligations. Although we intend to continue our Group-wide efforts to prudently manage our real estate project financing exposure, if defaults under our existing real estate development project loans were to increase significantly, the quality of such loans were to deteriorate, or the relevant guarantors were unable to honor their guarantee obligations in an amount sufficient to cover the relevant financing, our business, financial condition and results of operations could be adversely affected. A limited portion of our credit exposure is concentrated in a relatively small number of large corporate borrowers, and future financial difficulties experienced by them may have an adverse impact on us. Of Shinhan Bank’s ten largest corporate exposures as of December 31, 2025, two were companies for which Shinhan Bank was a main creditor bank. All of the ten companies are members of the “main debtor groups” as identified by the Governor of the Financial Supervisory Service, which largely comprise the largest Korean commercial conglomerates known as “chaebols.” As of such date, the total amount of Shinhan Bank’s exposures to the ten companies was W43,797 billion, or 15.8%, of its total exposures. As of that date, Shinhan Bank’s single largest outstanding exposure to a main debtor group amounted to W7,038 billion, or 2.5%, of its total exposures. If the credit quality of Shinhan Bank’s exposure to large corporations, including those included in the main debtor groups, deteriorates, Shinhan Bank may be required to record additional loan loss provisions in respect of loans and impairment losses in respect of securities, which would adversely affect its financial condition, results of operations and capital adequacy. No assurance can be given that the allowances established by Shinhan Bank against these exposures will be sufficient to cover all future losses arising from such exposures, especially in the case of a prolonged or renewed economic downturn. 17 Table of Contents Some of the main debtor groups to which Shinhan Bank has credit exposure are, or may become in the future, subject to restructuring programs or are otherwise making significant efforts to improve their financial conditions, such as by obtaining intragroup loans and entering into agreements to further improve their capital structures. No assurance can be given that there will not be future restructuring with Shinhan Bank’s major corporate customers or that such restructuring will not result in significant losses to Shinhan Bank with less than full recovery. In addition, if the Government decides to pursue an aggressive restructuring policy with respect to distressed companies, Korean commercial banks, including Shinhan Bank, may face a temporary rise in delinquencies and intensified pressure for additional provisioning. Furthermore, bankruptcies or financial difficulties of large corporations, including chaebol groups, may lead to delinquencies in and/or impairment of Shinhan Bank’s loans to small- and medium-sized enterprises that supply parts or labor to such corporations. If Shinhan Bank experiences future losses from its exposure to large corporations, including chaebol groups, such losses may have a material adverse effect on Shinhan Bank’s business, financial condition and results of operations. The asset quality of our retail loan portfolio may deteriorate. In recent years, consumer debt, including borrowings by households and small unincorporated businesses, has continued to increase in Korea. As of December 31, 2025, Shinhan Bank’s retail loan portfolio (before allowance for credit losses and deferred loan origination costs and fees and excluding credit card loans) was W161,157 billion, representing 39.8% of its total loans outstanding. As of December 31, 2023, 2024 and 2025, Shinhan Bank’s non-performing retail loans (excluding credit card loans) were W377 billion, W446 billion and W474 billion, respectively, representing non-performing loan ratios (net of charge-offs and loan sales) of 0.27%, 0.29% and 0.29%, respectively. Our large exposure to consumer debt means that we are exposed to changes in economic conditions affecting Korean consumers. For example, a rise in unemployment, an increase in interest rates or a decline in housing prices in Korea could adversely affect the ability of consumers to make payments and increase the likelihood of potential defaults. Economic difficulties in Korea that hurt consumers could result in increasing delinquencies and a decline in the asset quality of our household loan portfolio, which may in turn require us to record higher provisions for credit losses and charge-offs and may materially and adversely affect our financial condition and results of operations. Any deterioration in the asset quality of our guarantees and acceptances will likely have a material adverse effect on our financial condition and results of operations. In the normal course of banking activities, primarily through Shinhan Bank, we make various commitments and incur certain contingent liabilities in the form of guarantees and acceptances. Financial guarantees, which are contracts that require us to make specified payments to reimburse the beneficiary of the guarantee for a loss such beneficiary incurs if the debtor in respect of which the guarantee is given fails to make payments when due in accordance with the terms of the relevant debt instrument, are recognized initially at fair value, and such initial fair value is amortized over the life of the financial guarantee. Other guarantees are recorded as off-balance sheet items in the notes to our financial statements, while those guarantees that we have confirmed to make payments are recorded on our statements of financial position. As of December 31, 2025, Shinhan Bank had aggregate guarantees and acceptances of W26,062 billion, for which it provided allowances for losses of W107.3 billion. If there is significant deterioration in the quality of assets underlying our guarantees and acceptances, our allowances may be insufficient to cover actual losses resulting from these liabilities. Risks Relating to Our Credit Card Business Future changes in market conditions as well as other factors, such as stricter regulation, may lead to reduced revenues and deterioration in the asset quality of our credit card receivables. As of December 31, 2023, 2024 and 2025, Shinhan Card’s income-generating assets, including credit card receivables, installment financing and leases, amounted to W39,388 billion, W40,199 billion and 18 Table of Contents W39,206 billion, respectively. Our large exposure to credit card and other consumer debt means that we are exposed to changes in economic conditions affecting Korean consumers in general. For example, a rise in unemployment, an increase in interest rates, a downturn in the real estate market, or a general contraction or other difficulties affecting the Korean economy may lead Korean consumers to reduce spending (a substantial portion of which is conducted through credit card transactions), which in turn would lead to reduced earnings for our credit card business, as well as to higher default rates on credit card loans, deterioration in the quality of our credit card assets and increased difficulties in recovering written-off assets from which a significant portion of Shinhan Card’s revenues is derived. Any of these developments could have a material adverse effect on our business, financial condition and results of operations. Increasing consumer and corporate spending and borrowing on our card products and growth in card lending balances depend in part on Shinhan Card’s ability to develop and issue new or enhanced card and prepaid products and increase revenue from such products and services, as well as the level of discretionary income among our cardholders, which is largely affected by macroeconomic factors beyond our control. In addition, credit card companies in Korea, including Shinhan Card, may not be able to enjoy any rapid growth in revenue over the long term due to the maturing nature of the credit card industry, in part due to oversaturation of credit card service providers. Shinhan Card’s future earnings and profitability also depend on its ability to attract new cardholders, reduce cardholder attrition, increase merchant coverage and capture a greater share of customers’ total credit card spending in Korea and abroad. Shinhan Card may not be able to manage and expand cardholder benefits in a cost-effective manner or contain the growth of marketing, promotion and reward expenses to a commercially reasonable level. If Shinhan Card is not successful in increasing customer spending, maintaining or expanding its market position and asset growth, or containing costs or cardholder benefits, its financial condition, results of operations and cash flow could be negatively affected. In addition, Government policies and regulations aimed at protecting small- and medium-sized enterprises, such as the reduction of fees chargeable to small- and medium-sized merchants, may have a material adverse effect on our revenues from Shinhan Card. Pursuant to the Specialized Credit Financial Business Act, the rates of fees chargeable to merchants are subject to review and revision every six years. Under the most recent adjustments made in early 2025, merchants with annual sales of less than W300 million are subject to merchant fees chargeable with respect to credit cards of 0.4%, merchants with annual sales of more than W300 million and up to W500 million are subject to merchant fees chargeable with respect to credit cards of 1.0%, merchants with annual sales of more than W500 million and up to W1 billion are subject to merchant fees chargeable with respect to credit cards of 1.15%, and merchants with annual sales of more than W1 billion and up to W3 billion are subject to merchant fees chargeable with respect to credit cards of 1.45%. Additionally, in 2018, the Seoul metropolitan and other regional governments launched “Zero Pay”, a government sponsored QR code-based mobile payment platform charging little to no transaction fees (up to 0.5% depending on volume of sales) and aimed at reducing transaction fees small businesses pay to credit card companies. The Financial Services Commission also announced its plans to establish an open banking system that would provide fintech firms access to banks’ payment systems at lower costs. Additional amendments to regulations requiring further downward adjustments on merchant fees or Government policies aimed at reducing transaction fees paid to credit card companies may be implemented in the future, placing further downward pressure on the results of operations for credit card companies, including Shinhan Card. Over the years, the Government has implemented various measures affecting the credit card industry, including restrictions on marketing practices and interest rates, as well as policies encouraging the use of check cards over credit cards. These measures have limited revenue growth opportunities for credit card companies by constraining pricing, marketing and interest income and may continue to adversely affect the revenues and results of operations of credit card companies, including Shinhan Card. In 2018, the Financial Services Commission introduced additional guidelines aimed at curtailing excessive marketing expenses for credit card companies, for example by limiting the benefits credit card companies may offer to large corporate credit card clients or merchants as well as requiring a reasonable level of annual service fees for credit card holders. Although these and similar Government initiatives and measures may result in a reduction in marketing expenses, which in turn 19 Table of Contents may help reduce the overall expenses of our credit card business, there is no assurance that Government measures will achieve their intended results, and such measures may result in a decline in the volume of credit card transactions or otherwise adversely affect our business, financial condition and results of operations. Risks Relating to Our Insurance Business Our profitability may be adversely affected if actual benefits and claims amounts on our in-force insurance policies exceed the amounts that we have reserved, or we increase the amount of reserves due to a change in our underlying assumptions. We operate our insurance business through Shinhan Life Insurance, our life insurance subsidiary, and Shinhan EZ General Insurance, Ltd., our non-life insurance subsidiary that we acquired in June 2022. With respect to our insurance operations, we establish and carry, as a liability, policy reserves based on the greater of statutory reserves and actuarial estimates of how much we will need to pay for future benefits and claims on our in-force life insurance and non-life insurance policies. The profitability of our insurance operations depends significantly upon the extent to which our actual claims results are consistent with the assumptions used in setting the prices for our insurance products and establishing the liabilities in our financial statements for our obligations for future insurance policy benefits and claims. We establish the liabilities for obligations for future insurance policy benefits and claims based on the expected payout of benefits, calculated through the use of assumptions for investment returns, mortality, morbidity, expenses and persistency, as well as certain macroeconomic factors such as inflation. We also use methods to analyze loss trends with respect to certain risk assumptions relating to natural disasters. These assumptions are based on our previous experience and published data from third party industry sources, as well as judgments made by our management. These assumptions and estimates may deviate from our actual experience due to various factors that are beyond our control, including as a result of unexpected changes in the scope of coverage by the Korean national health insurance program and advancements in health care that result in increased life expectancy and early detection of diseases, as well as re-interpretations of our insurance policy terms by Korean regulators or courts. In addition, the occurrence of unexpected catastrophic events in Korea, including pandemics or natural or man-made disasters, may result in claims that significantly exceed our expectations. As a result, we cannot determine with precision the ultimate amounts that we will pay for, or the timing of payment of, actual benefits and claims or whether the assets supporting the insurance policy liabilities will grow to the level we assume prior to payment of benefits or claims. These amounts may vary from the estimated amounts, particularly when those payments may not occur until well into the future. We evaluate the adequacy of our insurance policy liabilities periodically based on changes in the assumptions used to determine our best estimates of claims, expenses, persistency rates and interest rates, as well as based on our actual policy benefits and claims results. To the extent that trends in actual claims results are less favorable than our underlying assumptions used in establishing these liabilities, and our total insurance policy liabilities are considered to be inadequate to meet our future contractual obligations as and when they arise, we could be required to increase our liabilities. We record increases in our insurance policy liabilities as expenses in the period in which the liabilities are established or re-evaluated. If actual benefits and claims amounts exceed the amounts that we have reserved, or we increase the amount of insurance policy liabilities due to a change in our underlying assumptions, it could have a material adverse effect on our results of operations and financial condition. Our insurance subsidiaries may be required to raise additional capital or reduce their growth or business scale if their solvency ratios deteriorate or the applicable capital requirements change in the future. Pursuant to the solvency requirements implemented by the Financial Services Commission, insurance companies in Korea are required to maintain a statutory ratio of available capital to required capital of not less than 100% on a consolidated basis. In addition, under the Regulation on Supervision of Insurance Business, a K-ICS ratio of at least 130% (which was lowered from 150% in June 2025) currently applies to certain regulatory 20 Table of Contents matters, including early redemption conditions for subordinated obligations and certain licensing requirements. We believe that a K-ICS ratio of not less than 130% is generally considered standard in the Korean insurance industry. Furthermore, in January 2026, the Financial Services Commission announced new regulations to become effective on January 1, 2027, which would require the ratio of core capital to required capital to be maintained at 50% or higher. Solvency requirements require insurance companies to hold adequate capital to cover their exposures to life/long-term non-life insurance risk, general non-life insurance risk, market risk, credit risk and operational risk by reflecting such risks in their calculation of required capital. Shinhan Life Insurance and Shinhan EZ General Insurance, Ltd. had solvency ratios of 205.98% and 231.20%, respectively, as of December 31, 2025. Since the introduction of K-ICS by the Financial Supervisory Service in January 2023, insurance contract liabilities are measured based on market value, rather than book value, at the time of the computation of available capital. K-ICS has also introduced new risk subcategories, including those related to termination, business expenses, longevity, catastrophes and asset concentration, to be considered at the time of the computation of required capital. These changes, among others, have required a number of insurance companies in Korea with a large portfolio of high guaranteed rate of return products to obtain additional capital to meet their solvency requirements. However, the Financial Supervisory Service has allowed for a gradual deduction from available capital and a gradual recognition of risks in relation to required capital, for up to ten years (until 2032). In order to ease the burden on insurance companies, corrective measures will be withheld for up to five years (until 2027) even if the solvency ratio under K-ICS is less than 100%, if the risk-based capital adequacy ratio exceeds 100%. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Insurance Companies — Capital Adequacy.” There is no guarantee that our insurance subsidiaries will not be required to raise additional capital to sustain their solvency ratio above the required level in connection with the implementation of K-ICS. Any material deterioration in the solvency ratio of our insurance subsidiaries, as a result of the implementation of K-ICS or otherwise, could change their customers’ or business counterparties’ perception of their financial health, which in turn could adversely affect their business and profitability. Furthermore, if they grow rapidly or if their asset quality deteriorates in the future, our insurance subsidiaries may be required to raise additional capital, which we may need to provide in whole or in part, to meet their capital adequacy requirements. If we or our insurance subsidiaries are not able to raise any required additional capital, we may be forced to reduce the growth or scale of our insurance operations. Prolonged periods of declining or low interest rates or changes in related accounting standards may reduce or turn negative our investment margin on savings insurance products and result in an increase in the valuation of our liabilities associated with these products. We, principally through Shinhan Life Insurance, offer fixed rate insurance policies such as savings insurance products that include guaranteed benefits. These products expose us to the risk that changes in interest rates will reduce our investment margin, which is the difference between the amounts that we are required to pay under the contracts and the rate of return we earn on investments intended to support obligations under such contracts. During periods of declining or low interest rates, we may have to invest insurance cash flows and reinvest the cash flows we received as interest or return of principal on our investments in lower yielding instruments. In addition, during periods of declining or low interest rates, fixed rate policies may become relatively more attractive investments to consumers. This could result in an increase in payments we are required to pay on such products and higher percentage of such products remaining in-force from year to year, during a period when our new investments carry lower returns. During periods of sustained lower interest rates, our reserves for policy liabilities may not be sufficient to meet future policy obligations and may need to be strengthened. Significantly lower or negative investment margins may cause us to accelerate amortization, thereby reducing net income in the affected reporting period and potentially negatively affecting our credit instrument 21 Table of Contents covenants or rating agency assessment of our financial condition. In addition, under IFRS 17, which became effective beginning 2023, insurance contract liabilities are calculated in terms of their market value (representing the present value of future insurance cash flows with a provision for the associated risks) instead of their book value. As the applicable discount rate for such calculation reflects current interest rates rather than book yields, we may have a significantly higher debt balance under IFRS 17 due to higher insurance liabilities, thereby resulting in a decrease in our risk-based capital. Risks Relating to Our Other Businesses We may experience significant losses from our investments and, to a lesser extent, trading activities due to market fluctuations. We enter into and maintain large investment positions in fixed income products, primarily through our treasury and investment operations. These activities are described in “Item 4.B. Business Overview — Our Principal Activities — Other Banking Services.” We also maintain smaller trading positions, including equity and equity-linked securities and derivative financial instruments as part of our operations. Taking these positions entails making assessments about financial market conditions and trends. The revenues and profits we derive from many of these positions and related transactions are dependent on market prices, which are beyond our control. When we own assets such as debt or equity securities, a decline in market prices, for example, as a result of fluctuating market interest rates or stock market indices, can expose us to trading and valuation losses. If market prices move in a way that we have not anticipated, we may experience losses. In addition, when markets are volatile and subject to rapid changes in price directions, actual market prices may be contrary to our assessments and lead to lower than anticipated revenues or profits, or even result in losses, with respect to the related transactions and positions. We may generate losses from our brokerage and other commission- and fee-based business. We, through our investment and other subsidiaries, currently provide, and seek to expand the offerings of, brokerage and other commission- and fee-based services. Downturns in stock markets typically lead to a decline in the volume of transactions that we execute for our customers and, therefore, a decline in our non-interest revenues. In addition, because the fees that we charge for managing our clients’ portfolios are often based on the size of the assets under management, a downturn in the stock market, which has the effect of reducing the value of our clients’ portfolios or increasing the amount of withdrawals, also generally reduces the fees we receive from our securities brokerage, trust account management and other asset management services. Even in the absence of a market downturn, below-market performance by our securities, trust account or asset management subsidiaries may result in increased withdrawals and reduced cash inflows, which would reduce the revenue we receive from these businesses. In addition, protracted declines in asset prices can reduce liquidity for assets held by us and lead to material losses if we cannot close out or otherwise dispose of deteriorating positions in a timely way or at commercially reasonable prices. In July 2019, we made a capital contribution of W660 billion to Shinhan Securities by subscribing for new shares of its common stock, enabling Shinhan Securities to satisfy the W4 trillion capitalization requirement required to apply for designation as a mega-investment bank (“mega-IB”) by the Financial Services Commission. In December 2025, the Financial Services Commission designated Shinhan Securities as a mega-IB, allowing it to issue debt securities of up to 200% of its capitalization amount to fund corporate lending and other businesses. Although our capital contribution was made in line with our strategic initiative to strengthen our non-banking businesses and capital market activities, we cannot guarantee that such initiatives will be successful. In addition, we cannot assure that our capital contribution, the designation of Shinhan Securities as a mega-IB or any resulting developments will not have a negative impact on our business, financial condition or results of operations. 22 Table of Contents We may fail to realize the anticipated benefits of and encounter significant risks in connection with mergers and acquisitions. We continue to seek and evaluate opportunities for diversification and growth of our business, including through strategic acquisitions, and have experienced substantial growth through several mergers and acquisitions. Some of our notable strategic acquisitions in recent years include the following: • In February 2019, we acquired a 59.15% interest in Orange Life Insurance, the former Korean unit of ING Life Insurance, as part of our efforts to diversify and enhance our non-banking businesses. In January 2020, we acquired the remaining interests in Orange Life Insurance, which was subsequently merged with and into Shinhan Life Insurance in July 2021. • In September 2020, we acquired a 96.8% interest in Neoplux Co., Ltd. (“Neoplux”), a venture capital company formerly under the Doosan Group. We acquired the remaining interest in Neoplux in December 2020 and changed the company’s legal name to Shinhan Venture Investment Co., Ltd. in January 2021. • In June 2022, we acquired a 94.54% interest in BNP Paribas Cardif General Insurance, which then changed its name to Shinhan EZ General Insurance, Ltd. Following a paid-in capital increase in November 2022, our ownership interest in Shinhan EZ General Insurance, Ltd. has decreased to 85.1%. We expect to integrate these and any future acquisitions with our existing businesses and generate synergies and expand our business capabilities. However, we may encounter significant risks, including difficulty in successfully integrating acquired businesses, increased expenses such as working capital requirements or capital expenditures, regulatory risks and financial risks such as potential liabilities of the businesses we acquire. In addition, evaluating potential acquisitions may require us to incur significant expenses or divert management’s attention away from other business issues. As such, no assurance can be given that any completed or contemplated acquisitions will not have a negative effect on our business, financial condition and results of operations that outweigh any potential benefits. In addition, as part of our business strategy, we have been seeking opportunities to expand our operations in markets outside Korea, including through the opening of additional overseas branches and offices as well as strategic acquisitions and investments. However, the expansion of our operations abroad may be difficult due to the presence of established competitors in the relevant local markets. Moreover, overseas expansion and the management of international operations may require significant financial expenditures as well as management attention, and will subject us to the challenges of operating in an unfamiliar business environment with different regulatory, legal and taxation systems and political, economic and social risks. Accordingly, there is no guarantee that we will be successful in executing our overseas expansion strategy. The failure of our overseas expansion strategy could have an adverse impact on our business, results of operations and financial condition. Other Risks Relating to Our Business and Operations Our ability to continue to pay dividends and service debt will depend on the level of profits and cash flows of our subsidiaries. We are a financial holding company with minimal operating assets other than the shares of our subsidiaries. Our primary source of funding and cash flow is dividends from, or disposition of our interests in, our subsidiaries or our cash resources, most of which are currently the result of borrowings. Since our principal assets are the outstanding capital stock of our subsidiaries, our ability to pay dividends on our common and preferred shares and service debt will mainly depend on the dividend payments from our subsidiaries. Companies in Korea are subject to certain legal and regulatory restrictions with respect to payment of dividends. For example, under the Korean Commercial Code, dividends may only be paid out of distributable income, which is calculated by subtracting the aggregate amount of a company’s paid-in capital and certain 23 Table of Contents mandatory legal reserves from its net assets, in each case as of the end of the prior fiscal year. In addition, financial companies in Korea, including banks, credit card companies, securities companies and life insurers, such as our subsidiaries, must meet minimum capital requirements and capital adequacy ratios applicable to their respective industries before dividends can be paid. For example, under the Banking Act of 1950, as amended (the “Banking Act”), a bank is required to credit at least 10% of its net profit to a legal reserve each time it pays dividends on distributable income until such time when this reserve equals the amount of its total paid-in capital, and under the Banking Act, the Specialized Credit Financial Business Act and the regulations promulgated by the Financial Services Commission, if a bank or a credit card company fails to meet its required capital adequacy ratio or is otherwise subject to the management improvement measures imposed by the Financial Services Commission, then the Financial Services Commission may restrict the declaration and payment of dividend by such a bank or credit card company. In addition, if our or our subsidiaries’ capital adequacy ratios fall below the required levels, our ability to pay dividends may be restricted by the Financial Services Commission. Damage to our reputation could harm our business. We are one of the largest and most influential financial institutions in Korea by virtue of our financial track records, market share and the size of our operations and customer base. Our reputation is critical to maintaining our relationships with clients, investors, regulators and the general public. Our reputation can be damaged in numerous ways, including, among others, employee misconduct (including embezzlement), cyber or other security breaches, litigation, compliance failures, corporate governance issues, failure to properly address potential conflicts of interest, the activities of customers and counterparties over which we have limited or no control, prolonged or exacting scrutiny from regulatory authorities and customers regarding our trade practices, or uncertainty about our financial soundness and our reliability. If we are unable to prevent or properly address these concerns, we could lose our existing or prospective customers and investors, which could adversely affect our business, financial condition and results of operations. For details of the claims, disputes, legal proceedings and government investigations we are subject to, see “Item 8.A. Consolidated Statements and Other Financial Information — Legal Proceedings.” Our risk management policies and procedures may not be fully effective at all times. In the course of our operations, we must manage a number of risks, such as credit risks, market risks and operational risks. We seek to monitor and manage our risk exposures through a comprehensive risk management platform, encompassing centralized risk management organization and credit evaluation systems, reporting and monitoring systems, early warning systems and other risk management infrastructure, using a variety of risk management strategies and techniques. See “Item 4.B. Business Overview — Risk Management.” Although we devote significant resources to developing and improving our risk management policies and procedures and expect to continue to do so in the future, our risk management practices may not be fully effective at all times in eliminating or mitigating risk exposures in all market environments or against all types of risk, including risks that are unidentified or unanticipated. For example, in the past, a limited number of our and our subsidiaries’ personnel engaged in embezzlement of substantial amounts for an extended period of time before such activities were detected by our risk management systems. In response to these incidents, we have strengthened our internal control procedures by, among others, implementing a real-time monitoring system, but there is no assurance that such measures will be sufficient to prevent similar employee misconducts in the future. Management of credit, market and operational risk requires, among others, policies and procedures to record properly and verify a large number of transactions and events, and we cannot assure you that these policies and procedures will prove to be fully effective at all times against all the risks we face. Labor unrest may adversely affect our operations. Economic difficulties in Korea or increases in corporate reorganizations and bankruptcies could result in layoffs and higher unemployment. Such developments could lead to social unrest and substantially increase government expenditures for unemployment compensation and other costs for social programs. According to 24 Table of Contents statistics from the Korea National Statistical Office, the unemployment rate increased from 2.7% in 2023 to 2.8% in each of 2024 and 2025. Increases in unemployment and any resulting labor unrest in the future could adversely affect our operations, as well as the operations of many of our customers and their ability to repay their loans, and could adversely affect the financial condition of Korean companies in general, depressing the price of their securities. These developments would likely have an adverse effect on our financial condition and results of operations. We may experience disruptions, delays and other difficulties relating to our information technology systems. We rely on our information technology systems to seamlessly provide our wide-ranging financial services as well as for our daily operations, including billing, online and offline financial transactions settlement and record keeping. We continually upgrade, and make substantial expenditures to upgrade, our group-wide information technology system, including in relation to customer data-sharing and other customer relations management systems, particularly in light of the heightened cybersecurity risks from advances in technology. Despite our best efforts, however, we may experience disruptions, delays, cyber or other security breaches or other difficulties relating to our information technology systems, and may not timely upgrade our systems as currently planned. Any of these developments may have an adverse effect on our business, particularly if our customers perceive us to not be providing the best-in-class cybersecurity systems and failing to timely and fully rectify any glitches in our information technology systems. Our activities are subject to cybersecurity risk. Our activities have been, and will continue to be, subject to an increasing risk of cyber-attacks, the nature of which is continually evolving. Cybersecurity risks include unauthorized access, through system-wide “hacking” or other means, to privileged and sensitive customer information, including passwords and account information, and illegal use thereof. Cybersecurity risk is generally on the rise as a growing number of our customers increasingly rely on our Internet- and mobile phone-based banking services for various types of financial transactions. While we vigilantly protect customer data through encryption and other security programs and have made substantial investments to build and upgrade our systems and defenses to address the growing threats from cyber-attacks, there is no assurance that such data will not be subject to future security breaches. In addition, there can be no assurance that we will not experience a leakage of customer information or other security breaches as a result of illegal activities by our employees, outside consultants or hackers, or otherwise. Although we have not experienced any material security breaches or any similar large scale leakage of customer information recently, given the unpredictable and continually evolving nature of cybersecurity threats due to advances in technology or other reasons, there is no assurance that, notwithstanding our continual efforts to maintain robust cybersecurity systems, we will not be vulnerable to major cybersecurity attacks in the future. In recent years, regulatory authorities in Korea and globally have been placing greater emphasis on data protection by financial service providers, and cybersecurity and ensuring the confidentiality of customers’ information have become more important than ever for financial institutions. For example, under the Personal Information Protection Act, financial institutions, as personal information managers, may not collect, store, maintain, utilize or provide resident registration numbers of their customers, unless other laws or regulations specifically request or permit the management of resident registration numbers. Moreover, under the Use and Protection of Credit Information Act, a financial institution has a higher duty to protect credit information, including the information necessary to assess the creditworthiness of the counterparty to financial transactions and other commercial transactions. Such regulations have considerably restricted a financial institution’s ability to transfer or provide the information to its affiliates or holding company, and quintuple damages can be imposed on a financial institution for a leakage of such information. In addition, under the Electronic Financial Transaction Act, a financial institution is primarily responsible for compensating its customers harmed by a breach in the financial institution’s cybersecurity, even if the breach is not directly attributable to the financial institution. We maintain an integrated system that closely monitors customer information to ensure compliance with data protection laws and regulations as well as our internal policies. See “Item 16K. Cybersecurity.” 25 Table of Contents If a cybersecurity or other security breach were to happen with respect to us or any of our subsidiaries, it may result in litigation by affected customers or other third parties (including class actions), compensation for any losses suffered by victims of cybersecurity attacks, reputational damage, loss of customers, heightened regulatory scrutiny and related sanctions, imposition of more stringent compliance requirements with present and future regulatory restrictions, and other costs related to damage control, reparation and reinforcement of information security systems, any of which may have a material adverse effect on our business, results of operations and financial condition. Our customers may become victims to “voice phishing” or other financial scams, for which we may be required to make monetary compensation and suffer damage to our business and reputation. In recent years, financial scams known as voice phishing have been on the rise in Korea. While voice phishing takes many forms and has evolved over time in terms of sophistication, it typically involves the scammer making a phone call to a victim under false pretenses (for example, the scammer pretending to be a member of law enforcement, an employee of a financial institution or even an abductor of the victim’s child) and luring the victim to transfer money to an untraceable account controlled by the scammer. More recently, voice phishing has increasingly taken the form of the scammer “hacking” or otherwise wrongfully obtaining personal financial information of the victim (such as credit card numbers or Internet banking login information) over the telephone or other means and illegally using such information to obtain credit card loans or cash advances through automated telephone banking or Internet banking. In response to the growing incidents of voice phishing, regulatory authorities have undertaken a number of steps to protect consumers against voice phishing and other financial scams. Also in response to the heightened risk, Shinhan Card and our other subsidiaries have established fraud detection systems that identify questionable transactions based on deviations from a customer’s conventional transaction patterns. There is no assurance, however, that these regulatory activities and fraud detection systems will have the desired effect of substantially eradicating or even containing the incidents of voice phishing or other financial scams. Also given continual advances in technology and the increasing sophistication of the financial scammers, there is no assurance that we will be able to prevent future financial scams or that the frequency and scope of financial scams will not increase. If financial scams involving us and our subsidiaries were to continue or to become more prevalent, it may result in compensation for any losses suffered by victims thereof, reputational damage, loss of customers, heightened regulatory scrutiny and related sanctions, compliance with the present and future regulatory restrictions, and other costs related to damage control, reparation and reinforcement of our preventive measures, any of which may have a material adverse effect on our business, results of operations and financial condition. We may be required to make transfers from our general banking operations to cover shortfalls in our guaranteed trust accounts, which could have an adverse effect on our results of operations. We manage a number of money trust accounts through Shinhan Bank, our banking subsidiary. Under Korean law, trust account assets of a bank are required to be segregated from the assets of that bank’s general banking operations. Those assets are not available to satisfy the claims of a bank’s depositors or other creditors of its general banking operations. For most of the trust accounts that we manage, we guarantee the principal amount of the investor’s investment. If, at any time, the income from our guaranteed trust accounts is not sufficient to pay any guaranteed amount, we will have to cover the shortfall first from the special reserves maintained in these trust accounts, then from our fees from such trust accounts and finally from funds transferred from our general banking operations. As of December 31, 2025, we had W108 billion of special reserves in respect of trust accounts for which we provided guarantees of principal. There was no transfer from general banking operations to cover deficiencies in guaranteed trust accounts in 2023, 2024 and 2025. However, we may be required to make transfers from our general banking operations to cover shortfalls, if any, in our guaranteed trust accounts in the future. Such transfers may adversely impact our results of operations. 26 Table of Contents Risks Relating to Law, Regulation and Government Policy We are a heavily regulated entity and operate in a legal and regulatory environment that is subject to change, and violations could result in penalties and other regulatory actions. As a financial services provider, we are subject to a number of regulations that are designed to maintain the safety and soundness of Korea’s financial system, to ensure our compliance with economic and other obligations and to limit our risk exposure. These regulations may limit our activities, and changes in these regulations may increase our costs of doing business. Regulatory agencies frequently review regulations relating to our business and implement new regulatory measures, including by increasing the minimum required provisioning levels or capital adequacy ratios applicable to us and/or our subsidiaries from time to time. We expect the regulatory environment in which we operate to continue to change. Changes in regulations applicable to us, our subsidiaries and our or their business or changes in the implementation or interpretation of such regulations could affect us and our subsidiaries in unpredictable ways and could adversely affect our business, results of operations and financial condition. For example, the Financial Consumer Protection Act (the “FCP Act”), which became effective in March 2021, unifies the systems for the protection of consumers of financial products, which had been dispersed across various laws, while tightening the existing consumer protection systems to strengthen the rights afforded to consumers of financial products. Banks under the Banking Act are financial instrument distributors subject to the FCP Act, and deposit and loan products under the Banking Act are financial instruments subject to the FCP Act. Under the FCP Act, we, as a financial instrument distributor, are subject to heightened investor protection measures, including stricter distribution guidelines, improved financial dispute resolution procedures, increased liability for customer losses and newly imposed penalty surcharges. Following the enactment of the FCP Act, the financial regulators have published subordinate regulations to such Act, including the Enforcement Decree, Supervisory Regulations and Enforcement Rules to the Supervisory Regulations governing consumer protection within the financial industry. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Banks — The Financial Consumer Protection Act.” We and our subsidiaries have been proactively taking actions necessary to comply with the FCP Act, including the examination of our financial products and training of our officers and employees. However, no assurance can be given that the implementation of the FCP Act will not adversely affect us our subsidiaries’ businesses or lead to a material adverse effect on their reputation, business, results of operations or financial condition. We may also become subject to other restrictions on our operations as a result of future changes in laws and regulations, including more stringent liquidity and capital requirements under Basel III, which have been adopted in phases in Korea in consideration of, among others, the pace and scope of international adoption of such requirements. Any of these regulatory developments may have a material adverse effect on our ability to expand operations or adequately manage our risks and liabilities. For further details on the principal laws and regulations applicable to us as a holding company and our principal subsidiaries, see “Item 4.B. Business Overview — Supervision and Regulation.” In addition, violations of law and regulations could expose us to significant liabilities and sanctions. For example, the Financial Supervisory Service conducts periodic audits on us and, from time to time, we have received institutional warnings from the Financial Supervisory Service. If the Financial Supervisory Service determines as part of such audit or otherwise that our financial condition, including the financial conditions of our operating subsidiaries, is unsound or that we have violated applicable law or regulations, including Financial Services Commission orders, the Financial Supervisory Service may ask the Financial Services Commission to order, among other things, cancellations of authorization, permission or registration of the business, suspensions of a part or all of the business, closures of branch offices, recommendations for dismissal of officers or suspensions of officers from performing their duties, or may order, among other things, institutional warnings, institutional cautions, reprimanding warnings on officers, cautionary warnings on officers or cautions on officers. From time to time, our subsidiaries, including Shinhan Bank and Shinhan Card, have been subject to investigations and/or sanctions from the Financial Supervisory Service. See “Item 8.A. Consolidated Statements 27 Table of Contents and Other Financial Information — Legal Proceedings.” If any such measures are imposed on us or our subsidiaries as a result of unsound financial condition or failure to comply with minimum capital adequacy requirements or for other reasons, it will have a material adverse effect on us and our subsidiaries’ business, financial condition and results of operations. The Government may encourage targeted lendings to, or investments in, certain sectors in furtherance of policy objectives, which we may take into account in making lending or investment decisions. The Government has encouraged and may in the future encourage targeted lending to certain types of enterprises and individuals in furtherance of government initiatives. The Government, through its regulatory bodies such as the Financial Services Commission, from time to time announces lending policies to encourage Korean banks and financial institutions, including us and our subsidiaries, to lend to particular industries, business groups or customer segments, and, in certain cases, has provided lower cost funding through loans made by the Bank of Korea for further lending to specific customer segments. For example, the Government has taken and is taking various initiatives to support small- and medium-sized enterprises and low-income individuals. As part of these initiatives, the Financial Supervisory Service has encouraged banks, over the years, to increase lending to small- and medium-sized enterprises in order to ease the financial burden on such enterprises during times of deteriorating economic conditions. The financial regulators have also adopted several measures designed to improve certain lending practices of the commercial banks which practices were perceived as having an unduly prohibitive effect on extending loans to small- to medium-sized enterprises. Our participation in such Government initiatives may lead us to extend credit to small- and medium-sized enterprises that we would not otherwise extend, or offer terms on such credit that we would not otherwise offer, in the absence of such initiatives. There is no guarantee that the financial condition and liquidity of the small- and medium-sized enterprises benefiting from such initiatives will improve sufficiently for them to service their debt on a timely basis or at all. Accordingly, an increase in our exposure to small- and medium-sized enterprise borrowers resulting from such Government initiatives may have a material adverse effect on our financial condition and results of operations. In addition, amid concerns about increasing household debt, in 2020 the Financial Services Commission increased target proportions for fixed interest rate loans and installment principal repayment-based housing loans to 52.5% and 60.0%, respectively, which have remained the same through 2025. Fixed interest rate and installment principal repayment-based housing loans accounted for 62.5% and 66.5%, respectively, of the housing loans extended by Shinhan Bank as of December 31, 2025. Furthermore, in October 2025, the Government launched the New Leap Fund, a program under which unsecured debts in the aggregate amount of W50 million or less of low-income individuals and small businesses that have been delinquent for seven or more years may be purchased from financial institutions and subsequently extinguished or restructured based on an assessment of the borrowers’ repayment capacity. In November 2025, Korean banks, including Shinhan Bank, agreed to contribute an aggregate of W360 billion to such program, of which Shinhan Bank contributed W49.7 billion in December 2025. In 2025, the Government also advanced inclusive financial initiatives intended to improve access to low-income or financially vulnerable borrowers by encouraging banks to provide preferential lending to such borrowers. Our efforts to respond to such policy initiatives could require adjustments to our business practices that may increase the risk of defaults by our customers, which may in turn lead to an increase in our delinquency ratios and a deterioration in our asset quality. We, on a voluntary basis, may factor the existence of the Government’s policies and encouragements into consideration in making loans although the ultimate decision whether to make loans remains with us and is made based on our internal credit approval procedures and risk management systems independently of Government policies. In addition, in tandem with providing additional loans to small- and medium-sized enterprises and low-income individuals, Shinhan Bank takes active steps to mitigate the potential adverse impacts from making bad loans to enterprises or individuals with high risk profiles as a result of such arrangement, such as by strengthening its loan review and post-lending monitoring processes. However, we cannot assure you that such 28 Table of Contents arrangement did not or will not, or similar or other government-led initiatives in the future will not, result in a suboptimal allocation of our loan portfolio from a risk-reward perspective compared to what we would have allocated based on purely commercial decisions in the absence of such initiatives. The Government may implement similar or other initiatives in the future to spur the overall economy or encourage the growth of targeted industries or relief to certain segments of the population. Specifically, the Government may introduce lending-related initiatives or enforce existing ones in a heightened fashion during times when small- and medium-sized enterprises or low-income households on average are facing an increased level of financial distress or vulnerability due to an economic downturn, which makes lending to them in the volume and the manner suggested by the Government even riskier and less commercially desirable. Accordingly, such policy-driven lending may create enhanced difficulties for us in terms of risk management, deterioration of our asset quality and reduced earnings, compared to what would have been in the absence of such initiatives, which may have an adverse effect on our business, financial condition and results of operations. In addition to targeted lending, the Government may from time to time encourage or request the financial institutions in Korea, including us and our subsidiaries, to make investments in, or provide other forms of financial support to, certain institutions in furtherance of the Government’s policy objectives. In response thereto, we have made and will continue to make the ultimate decision on whether, how and to what extent we will comply with such encouragements or requests based on our internal risk assessment and in accordance with our risk management systems and policies. At the same time, as a leading member of the financial service industry in Korea and as a responsible corporate citizen, we will also fully give due consideration to such encouragements or requests of the Government, including in relation to the long-term benefits of furthering the policy objective of maintaining a sound financial system, even if complying with such requests may involve additional short-term costs and risks to a limited extent. No assurance can be made that any investments or financial support made in response to such policy objective or otherwise would not have an adverse effect on our business, financial condition and results of operations. The level and scope of government oversight of our retail lending business, particularly regarding mortgage and home equity loans, may change depending on the economic or political climate. Real estate comprises the most significant asset for a substantial number of households in Korea, and movements in housing prices have generally had a significant impact on the domestic economy. Accordingly, regulating housing prices, either in terms of attempting to stem actual or anticipated excessive speculation during times of a suspected housing price bubble and spur the pricing and/or volume of real estate transactions during times of a depressed real estate market by way of tax subsidy, guidelines to lending institutions or otherwise, has been a key policy initiative for the Government. The regulations on mortgage and home equity loans are susceptible to the changes in housing market cycles and have been revised from time to time. From 2017 to 2022, the Moon Jae In administration implemented a series of robust polices aimed at taming speculation and deterring the rise of housing prices. However, since the second half of 2022, the Yoon Suk-yeol administration implemented a series of policies to ease the demand-side regulations in the real estate market in order to prevent housing prices from crashing due to a recent hike in interest rates. Such measures included scaling back “regulated area” designations and relaxing high-priced home lending restrictions, among others. More recently, amid renewed housing market concerns, the Government tightened lending rules again and expanded regulated area designations, including by designating all of Seoul as regulated areas in October 2025 and imposing additional mortgage constraints. For a detailed description of the current regulations applicable to our mortgage and home equity loans, see “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Banks — Recent Regulations Relating to Retail Household Loans.” The Financial Services Commission also introduced a debt service ratio and a modified debt-to-income ratio in order to modernize credit review methods and stabilize the management of household debt. The modified debt-to-income ratio, which has been implemented beginning January 31, 2018 reflects (i) both principal and 29 Table of Contents interest payments on the applicable mortgage and home equity loan and existing mortgage and home equity loans and (ii) interest payments on other loans. Previously, debt-to-income ratio had only reflected (i) both principal and interest payments on the applicable mortgage and home equity loan and (ii) interest payments on existing mortgage and home equity loans. Debt service ratios reflect principal and interest payments on both the applicable loan and other loans and have been fully implemented since October 2018. The modified debt-to-income ratios are used as the primary reference index in the evaluation and approval process for mortgage and home equity loans, and debt service ratios are generally used as a supplementary reference index providing additional limits on mortgage and home equity loans. For example, debt service ratios applicable to a loan applicant with a total aggregate loan amount exceeding W100 million (including the applied but not yet extended loan amount) should not exceed 40% unless otherwise specified by the applicable regulations. Meanwhile, in December 2023, as a measure to help prevent excessive household debt, the Financial Services Commission introduced the “stress debt service ratio” system for floating rate loans, mixed rate loans (loans where a fixed interest rate shifts to a floating interest rate after a certain period of time), and periodic loans (loans where a fixed interest rate is adjusted periodically). The “stress debt service ratio” system imposes a certain level of interest rate spread (a stress rate) when calculating the debt service ratio, taking into consideration the possibility that a borrower of a floating rate loan may be subject to an increased burden when repaying principal and interest if the interest rate were to increase during the loan period. The “stress debt service ratio” system was initially implemented in February 2024 and applied to mortgage loans in the banking sector. In September 2024, the scope of such system was expanded to apply to mortgage loans across all financial institutions as well as credit facilities in the banking sector, and in July 2025, it was further expanded to apply to mortgage loans, credit facilities with outstanding balances exceeding W100 million and other household loans across all financial institutions. In June 2023, a special law aimed at protecting victims of lease fraud and ensuring housing stability came into effect. In connection therewith, the Financial Services Commission has decided to provide special treatment for victims of lease fraud, notwithstanding existing regulations on loan-to-value ratios, debt-to-income ratios and debt service ratios. Victims of lease fraud are eligible for a loan-to-value ratio of up to 80%, and in the case of mortgage loans obtained through auction winnings, the loan may be granted regardless of the regulatory status of the area, provided that the loan amount does not exceed W400 million. Furthermore, such victims may be exempt from the application of regulations on debt-to-income ratios and debt service ratios. On the other hand, the supervising authorities in Korea from time to time issue administrative instructions to Korean banks, which have the effect of regulating borrowers’ access to housing loans and, as such, demand for real estate properties. For example, the Financial Supervisory Service over time has issued administrative instructions to financial institutions (except in limited circumstances) to verify the borrower’s ability to repay based on proof of income prior to making a mortgage and home equity loan regardless of the type or value of the collateral or the location of the property, which has had the effect of practically barring the grant of any new mortgage and home equity loans to borrowers without verifiable income. Pursuant to the Regulation on the Supervision of the Banking Business, Shinhan Bank must maintain a loan to deposit ratio of no more than 100%. Since January 1, 2020, in calculating such loan to deposit ratio, retail loans and corporate loans have been subject to differential weighting, with retail loans weighted at 115% and corporate loans (excluding loans to SOHOs) weighted at 85%, thereby increasing the impact of retail loans and reducing the impact of corporate loans in calculating such ratio. In addition, effective April 1, 2026, the Financial Services Commission further lowered the risk weight applied to corporate loans to enterprises located in non-metropolitan areas (i.e., areas other than Seoul, Incheon and Gyeonggi Province), from 85% to 80%, while maintaining the risk weight for retail loans at 115%. There is no assurance that Government measures will achieve their intended results. While any Government measure that is designed to stimulate growth in the real estate sector may result in the growth of, and improved profitability for, our retail lending business (particularly with respect to mortgage and home equity loans) at least for the short term, such measure could also result in unintended consequences, including potentially excessive 30 Table of Contents speculation resulting in a “bubble” for the Korean real estate market and a subsequent market crash. In contrast, any Government measure changing the direction of its stimulus measures (for example, in order to preemptively curtail an actual or anticipated bubble in the real estate market) may result in a contraction of the real estate market, a decline in real estate prices and consequently, a reduction in the growth of, and profitability for, our retail and/or other lending businesses, as well as otherwise have an adverse effect on our business, financial condition and results of operations or profitability. See “— Risks Relating to Our Banking Business — A decline in the value of the collateral securing our loans or our inability to fully realize the collateral value may adversely affect our credit portfolio.” We have engaged in limited settlement transactions involving Iran in the past, and we also engage in limited business in or related to Russia, which may subject us to legal or reputational risks. The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) administers and enforces certain laws and regulations (“OFAC Sanctions”) that impose restrictions upon dealings with or related to certain countries, governments, entities and individuals that are the subject of OFAC Sanctions, including Iran and Russia, and maintains a list of specially designated nationals, whose assets are blocked and with whom U.S. persons are generally prohibited from dealing. OFAC Sanctions may apply to non-U.S. persons when there is a U.S. nexus. Non-U.S. persons can be held liable for violations of OFAC Sanctions on various legal grounds, such as causing U.S. persons to violate sanctions by routing transactions through the United States or the U.S. financial system. The European Union also enforces certain laws and regulations that impose restrictions upon nationals and entities of, and business conducted in, member states with respect to activities or transactions with certain countries, governments, entities and individuals that are the subject of such laws and regulations (“EU Sanctions”). The United Nations Security Council and other governmental authorities (including the United Kingdom and Korea) also impose similar sanctions. The United States also maintains so-called “Secondary Sanctions” authorities that allow for the imposition of OFAC Sanctions on non-U.S. persons that engage in targeted transactions or activities with no connection to U.S. jurisdiction, including the provision of material support to parties or sectors subject to OFAC Sanctions. OFAC has targeted a growing number of entities and individuals under Secondary Sanctions authorities in recent years, particularly with respect to transactions with Iran, Russia and North Korea. Iran has also been designated as a “jurisdiction of primary money laundering concern” under Section 311 of the USA PATRIOT Act, potentially subjecting banks dealing with Iranian financial institutions to increased regulatory scrutiny. Violations of OFAC Sanctions via transactions with a U.S. jurisdictional nexus can result in substantial civil or criminal penalties. Even when no such jurisdictional nexus exists, parties that engage in activities targeted by Secondary Sanctions authorities may themselves become the target of OFAC Sanctions, including, among other things, the blocking of any property subject to U.S. jurisdiction in which the sanctioned party has an interest, which would include a prohibition on transactions or dealings within U.S. jurisdiction involving securities of the sanctioned party. Financial institutions engaging in such targeted activities could in some instances be sanctioned by termination or restriction of their ability to maintain correspondent accounts in the United States. The imposition of sanctions against non-U.S. financial institutions pursuant to the Secondary Sanctions is discretionary and not automatic, requiring affirmative action by the U.S. administration. In August 2016, the Government authorized Shinhan Bank to act as a settlement bank for Euro-denominated transactions between Korean and Iranian businesses. Prior to the granting of this permission, payments for business activities were settled only in Korean Won and we did not participate in such settlements. From August 2016 through August 2017, Shinhan Bank processed ten such transactions that resulted in a minimal amount of revenue. Since August 2017, Shinhan Bank has ceased processing any such transactions and has no intention to process any such transactions in the future. We are committed to engaging only in lawful activities and in complying with all relevant OFAC Sanctions and EU Sanctions but cannot guarantee that actions taken by our employees will not violate such sanctions. 31 Table of Contents Shinhan Bank engages in certain limited lending activities in or related to Russia. In response to the Russia-Ukraine war, the U.S., EU, UK, Korean and other governments have imposed economic sanctions on Russia, Belarus and certain regions of Ukraine. Such sanctions target, among other persons, a wide range of Russian financial institutions as sanctioned parties as well as the Russian Central Bank and certain other state and state-owned entities. Such sanctions also target specific sectors of the Russian economy, including the technology, defense and related materiel, construction, aerospace, energy and manufacturing and other sectors. In December 2023, Executive Order 14114 authorized OFAC to impose Secondary Sanctions on foreign financial institutions when they conduct or facilitate significant Russia-related transactions or provide certain Russia-related services, in particular involving Russia’s military-industrial base, including all persons blocked pursuant to OFAC Sanctions against Russia, such as sanctioned Russian banks, as well as persons operating in targeted sectors or supporting the sale, supply, or transfer of critical items to Russia. Russia-related activities may subject us to sanctions and potential legal or reputational risk. While we have implemented policies and controls to comply with applicable sanctions, U.S. and other sanctions authorities are afforded wide discretion and there is no guarantee that our activities will not be found to have violated OFAC Sanctions, EU Sanctions or other applicable sanctions, or to have involved sanctionable activity under Secondary Sanctions. Sanctions and similar trade or restrictive measures, including those against Iran and Russia, continue to evolve rapidly, and future changes in law could also adversely affect us. Our business and reputation could be adversely affected if the U.S. government were to determine that our past or ongoing activities, including those relating to Iran or Russia, violated OFAC Sanctions or involved sanctionable activity under Secondary Sanctions, or if any other government were to determine that such activities violated applicable sanctions of other countries. For example, any prohibition or conditions placed on our use of U.S. correspondent accounts could effectively eliminate our access to the U.S. financial system, including U.S. dollar clearing transactions, which would adversely affect our business, and any other sanctions or civil or criminal penalties imposed could also adversely affect our business. We intend to take all necessary measures to the extent possible to ensure that such prohibitions or conditions are not placed on us. Evolving regulatory framework for artificial intelligence and machine learning technology may have an adverse impact on our business, financial condition and results of operations. We utilize artificial intelligence (“AI”) technology in various ways to enhance efficiency, security and customer experience, such as by providing customer support and personalized financial advice based on user behavior, as well as aiding our employees in routine tasks. The regulatory framework for AI and machine learning technology is evolving and remains uncertain. It is possible that new laws and regulations will be adopted, or existing regulations, notably those relating to data and copyright protection, may be interpreted in new ways that would affect our operations and the way in which we use AI and machine learning technology, including with respect to our digital platforms provided to our customers. Further, the cost of complying with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. Risks Relating to Korea Unfavorable financial and economic conditions in Korea and globally may have a material adverse impact on our asset quality, liquidity and financial performance. We are incorporated in Korea, where most of our assets are located and most of our income is generated. As a result, we are subject to political, economic, legal and regulatory risks specific to Korea, and our business, results of operations and financial condition are substantially dependent on developments relating to the Korean economy. As Korea’s economy is highly dependent on the health and direction of the global economy, and investors’ reactions to developments in one country can have adverse effects on the securities price of companies in other countries, we are also subject to the fluctuations of the global economy and financial markets. 32 Table of Contents Factors that determine economic and business cycles in the Korean or global economy are for the most part beyond our control and inherently uncertain. In addition to discussions of recent developments regarding the global economic and market uncertainties and the risks relating to us as provided elsewhere in this section, factors that could have an adverse impact on Korea’s economy in the future include, among others: • declines in consumer confidence and a slowdown in consumer spending in the Korean or global economy, including as a result of higher levels of market interest rates; • political uncertainty or increasing strife among or within political parties in Korea following the declaration of martial law by former President Yoon Suk-yeol in December 2024 that led to his impeachment and subsequent removal in April 2025 and the election of Mr. Lee Jae-myung as President in June 2025; • the imposition of significant tariffs on Korea’s exports by any of its major export markets, including the United States, as well as any countermeasures or policy responses adopted by the Government that may entail significant costs; • hostilities or political or social tensions involving countries in the Middle East (including those resulting from the hostilities in the Middle East following the military conflicts between Iran and other countries, including the United States and Israel) and Northern Africa and any material disruption in the global supply of oil or sudden increase in the price of oil; • rising inflationary pressures leading to increases in the costs of goods and services and a decrease in purchasing power; • the occurrence of severe health epidemics, such as the COVID-19 pandemic, in Korea or other parts of the world; • deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy; • adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe and Japan, or in emerging market economies in Asia or elsewhere, including as a result of the deterioration of economic and trade relations among such countries (including escalations of tariffs) and increased uncertainties in the global financial markets and industry; • adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the U.S. Dollar, Euro or Japanese Yen exchange rates or revaluation of the Chinese Renminbi), interest rates, inflation rates or stock markets; • hostilities, political or social tensions involving Russia (including the Russia-Ukraine war and the ensuing sanctions against Russia) and the resulting adverse effects on the global supply of oil and other natural resources and the global financial markets; • increased sovereign default risks in select countries and the resulting adverse effects on the global financial markets; • a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers in Korea; • a deterioration in the financial condition or performance of small- and medium-sized enterprises and other companies in Korea; • investigations of large Korean business groups and their senior management for possible misconduct; • shortages of imported raw materials, natural resources, rare earth minerals or component parts, including semiconductors, due to disruptions in the global supply chain; • social and labor unrest; 33 Table of Contents • substantial changes in the market prices of Korean real estate; • a substantial decrease in tax revenues or a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs, which could lead to a national budget deficit as well as an increase in the Government’s debt; • financial problems or lack of progress in the restructuring of chaebols, other large troubled companies (including those in the construction, shipbuilding, shipping and real estate project financing sectors) and their suppliers or the financial sector; • loss of investor confidence arising from corporate accounting irregularities or corporate governance issues at certain chaebols; • increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea; • a continued decrease in the population and birthrates in Korea; • the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements; • geo-political uncertainty and the risk of further attacks by terrorist groups around the world; • natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; • increased reliance on exports to service foreign currency borrowings, which could cause friction with Korea’s trading partners; • an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States; and • changes in financial regulations in Korea. Any future deterioration of the Korean economy could have an adverse effect on our business, financial condition and results of operations. Escalations in tensions with North Korea could have an adverse effect on us, the price of our common shares and our ADSs. Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between Korea and North Korea has fluctuated and may increase abruptly as a result of current and future events. In particular, there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon, ballistic missile and satellite programs as well as its hostile military actions against Korea. North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and has conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs and warheads that can be mounted on ballistic missiles. Over the years, North Korea has continued to conduct a series of missile tests, including missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. North Korea has increased the frequency of such activities since the beginning of 2022, firing numerous ballistic missiles, including intercontinental ballistic missiles, and in November 2023, successfully launched its first spy satellite. In response, the Government has repeatedly condemned North Korea’s provocations and flagrant violations of relevant United Nations Security Council resolutions. Over the years, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea, as did the United States and the European Union. 34 Table of Contents North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within North Korea. Although bilateral summit meetings were held between Korea and North Korea in April, May and September 2018 and between North Korea and the United States in June 2018, February 2019 and June 2019, there can be no assurance that the level of tensions affecting the Korean peninsula will not escalate in the future. Any increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between Korea and North Korea or between the United States and North Korea break down or military hostilities occur, could have a material adverse effect on the Korean economy and on our business, financial condition and results of operations and the market value of our common stock and ADSs. Risks Relating to Our ADSs There are restrictions on withdrawal and deposit of common shares under the depositary facility. Under the deposit agreement, holders of shares of our common stock may deposit those shares with the depositary bank’s custodian in Korea and obtain ADSs, and holders of ADSs may surrender ADSs to the depositary bank and receive shares of our common stock. However, under current Korean laws and regulations, the depositary bank is required to obtain our prior consent for the number of shares to be deposited in any given proposed deposit which exceeds the difference between (1) the aggregate number of shares deposited by us for the issuance of ADSs (including deposits in connection with the initial and all subsequent offerings of ADSs and stock dividends or other distributions related to these ADSs) and (2) the number of shares on deposit with the depositary bank at the time of such proposed deposit. We have consented to the deposit of outstanding shares of common stock as long as the number of ADSs outstanding at any time does not exceed 40,432,628. As a result, if you surrender ADSs and withdraw shares of common stock, you may not be able to deposit the shares again to obtain ADSs. Ownership of our shares is restricted under Korean law. Under the Financial Holding Companies Act, any single shareholder (together with certain persons in a special relationship with such shareholder) may acquire beneficial ownership of up to 10% of the total issued and outstanding shares with voting rights of a bank holding company controlling national banks such as us. In addition, any person, except for a “non-financial business group company” (as defined below), may acquire in excess of 10% of the total voting shares issued and outstanding of a financial holding company which controls a national bank, provided that a prior approval from the Financial Services Commission is obtained each time such person’s aggregate holdings exceed 10% (or 15% in the case of a financial holding company controlling regional banks only), 25% or 33% of the total voting shares issued and outstanding of such financial holding company. The Government and the Korea Deposit Insurance Corporation are exempt from this limit. Furthermore, certain non-financial business group companies (i.e., (i) any same shareholder group with aggregate net assets of all non-financial business companies belonging to such group of not less than 25% of the aggregate net assets of all members of such group; (ii) any same shareholder group with aggregate assets of all non-financial business companies belonging to such group of not less than W2 trillion; (iii) any mutual fund in which the same shareholder group identified in (i) or (ii) above owns more than 4% of the total shares issued and outstanding of such mutual fund; (iv) any private equity fund (a) where a person falling under any of items (i) through (ii) above is a limited partner holding not less than 10% of the total amount of contributions to the private equity fund, or (b) where a person falling under any of items (i) through (iii) above is a general partner, or (c) where the total equity of the private equity fund acquired by each affiliate belonging to several enterprise groups subject to the limitation on mutual investment is 30% or more of the total amount of contributions to the private equity fund; or (v) the investment purpose company concerned, where a private equity fund falling under item (iv) above acquires or holds stocks in excess of 4% of the shares or equity of such company or exercises de facto control over significant managerial matters of such company through appointment or dismissal of executives or in any other manner)) may not acquire beneficial ownership in us in excess of 4% of our outstanding voting shares, provided that such non-financial business group companies may acquire beneficial ownership of up to 10% of 35 Table of Contents our outstanding voting shares with the approval of the Financial Services Commission under the condition that such non-financial business group companies will not exercise voting rights in respect of such shares in excess of the 4% limit. See “Item 4.B. Business Overview — Supervision and Regulation — Principal Regulations Applicable to Financial Holding Companies — Restrictions on Financial Holding Company Ownership.” To the extent that the total number of shares of our common stock that you and your affiliates own together exceeds these limits, you will not be entitled to exercise the voting rights for the excess shares, and the Financial Services Commission may order you to dispose of the excess shares within a period of up to six months. Failure to comply with such an order would result in a fine of up to W100 million, plus an additional charge of up to 0.03% of the book value of such shares per day until the date of disposal. Holders of our ADSs will not have preemptive rights in certain circumstances. The Korean Commercial Code and our Articles of Incorporation require us, with some exceptions, to offer shareholders the right to subscribe for new shares in proportion to their existing ownership percentage whenever new shares are issued. If we offer any rights to subscribe for additional shares of our common stock or any rights of any other nature, the depositary bank, after consultation with us, may make the rights available to you or use reasonable efforts to dispose of the rights on your behalf and make the net proceeds available to you. The depositary bank, however, is not required to make available to you any rights to purchase any additional shares unless it deems that doing so is lawful and feasible and: • a registration statement filed by us under the U.S. Securities Act of 1933, as amended, is in effect with respect to those shares; or • the offering and sale of those shares is exempt from or is not subject to the registration requirements of the U.S. Securities Act. We are under no obligation to file any registration statement with the U.S. Securities and Exchange Commission. If a registration statement is required for you to exercise preemptive rights but is not filed by us, you will not be able to exercise your preemptive rights for additional shares and you will suffer dilution of your equity interest in us. Holders of our ADSs will not be able to exercise dissent and appraisal rights unless they have withdrawn the underlying shares of our common stock and become our direct stockholders. Under Korean law, in some limited circumstances, including the transfer of the whole or any significant part of our business and the merger or consolidation of us with another company, dissenting stockholders have the right to require us to purchase their shares under Korean law. However, under our deposit agreement, holders of our ADSs do not have, and may not instruct the depositary as to the exercise of, any dissenter’s rights provided to the holders of our common shares under Korean law. Therefore, if holders of our ADSs wish to exercise dissenting rights, they must withdraw the underlying common stock from the ADSs facility (and incur charges relating to that withdrawal) and become our direct stockholders prior to the record date of the shareholders’ meeting at which the relevant transaction is to be approved, in order to exercise dissent and appraisal rights. The market value of your investment in our ADSs may fluctuate due to the volatility of the Korean securities market. Our common stock is listed on the KRX Korea Composite Stock Price Index (“KOSPI”) Division of the Korea Exchange, which has a smaller market capitalization and is more volatile than the securities markets in the United States and many European countries. The market value of ADSs may fluctuate in response to the fluctuation of the trading price of shares of our common stock on the Stock Market Division of the Korea Exchange. The Stock Market Division of the Korea Exchange has experienced substantial fluctuations in the prices and volumes of sales of listed securities and the Stock Market Division of the Korea Exchange has prescribed a fixed range in which share prices are permitted to move on a daily basis. Like other securities 36 Table of Contents markets, including those in developed markets, the Korean securities market has experienced problems including market manipulation, insider trading and settlement failures. The recurrence of these or similar problems could have a material adverse effect on the market price and liquidity of the securities of Korean companies, including our common stock and ADSs, in both the domestic and international markets. The Government has the potential ability to exert substantial influence over many aspects of the private sector business community, and in the past has exerted that influence from time to time. For example, the Government has promoted mergers to reduce what it considers excess capacity in a particular industry and has also encouraged private companies to publicly offer their securities. Similar actions in the future could have the effect of depressing or boosting the Korean securities market, whether or not intended to do so. Accordingly, actions by the Government, or the perception that such actions are taking place, may take place or has ceased, may cause sudden movements in the market prices of the securities of Korean companies in the future, which may affect the market price and liquidity of our common stock and ADSs. Your dividend payments and the amount you may realize upon a sale of your ADSs will be affected by fluctuations in the exchange rate between the U.S. Dollar and the Won. Investors who purchase the ADSs will be required to pay for them in U.S. Dollars. Our outstanding shares are listed on the Korea Exchange and are quoted and traded in Won. Cash dividends, if any, in respect of the shares represented by the ADSs will be paid to the depositary bank in Won and then converted by the depositary bank into U.S. Dollars, subject to certain conditions. Accordingly, fluctuations in the exchange rate between the Won and the U.S. Dollar will affect, among other things, the amounts a registered holder or beneficial owner of the ADSs will receive from the depositary bank in respect of dividends, the U.S. Dollar value of the proceeds which a holder or owner would receive upon sale in Korea of the shares obtained upon surrender of ADSs and the secondary market price of the ADSs. If the Government deems that certain emergency circumstances are likely to occur, it may restrict the depositary bank from converting and remitting dividends in U.S. Dollars. If the Government deems that certain emergency circumstances are likely to occur, it may impose restrictions such as requiring foreign investors to obtain prior Government approval for the acquisition of Korean securities or for the repatriation of interest or dividends arising from Korean securities or sales proceeds from disposition of such securities. These emergency circumstances include any or all of the following: • sudden fluctuations in interest rates or exchange rates; • extreme difficulty in stabilizing the balance of payments; and • a substantial disturbance in the Korean financial and capital markets. The depositary bank may not be able to secure such prior approval from the government for the payment of dividends to foreign investors when the Government deems that there are emergency circumstances in the Korean financial markets. Other Risks We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries. Companies in Korea, including us, are subject to corporate governance standards applicable to Korean public companies which differ in many respects from standards applicable in other countries, including the United States. As a reporting company registered with the Securities and Exchange Commission and listed on the New York Stock Exchange, we are, and in the future will be, subject to certain corporate governance standards as mandated by the Sarbanes-Oxley Act of 2002. However, foreign private issuers, including us, are exempt from 37 Table of Contents certain corporate governance requirements under the Sarbanes-Oxley Act or under the rules of the New York Stock Exchange. For significant differences, see “Item 16G. Corporate Governance.” There may also be less publicly available information about Korean companies, such as us, than is regularly made available by public or non-public companies in other countries. Such differences in corporate governance standards and less public information could result in less than satisfactory corporate governance practices or disclosure to investors in certain countries. You may not be able to enforce a judgment of a foreign court against us. We are a corporation with limited liability organized under the laws of Korea. All or substantially all of our directors and officers and other persons named in this annual report reside in Korea, and all or a substantial portion of the assets of our directors and officers and other persons named in this annual report and substantially all of our assets are located in Korea. As a result, it may not be possible for holders of the American depository shares to effect service of process within the United States, or to enforce against them or us in the United States judgments obtained in United States courts based on the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Korea, either in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated on the United States federal securities laws. ITEM 4. INFORMATION ON THE COMPANY