Greetings. I am Park Cheol Woo, Head of the IR. I would like to thank all the participants in our Business Results Presentation and begin the Shinhan Financial Group 2020 First Half Earnings Release. From Q1 we have been holding this website with only voice and without video to minimize the number of participants amidst the COVID situation. We ask for your understanding. We have here with us our CFO, Yu Sunghun, CSO, Park Sunghun, CRO, Pan Dongwan [ph] and Head of the Finance Management Team, Kim Tae-yeon. We will first hear the 2020 first half business results presentation by CFO, Yu Sunghun, and then engage in a Q&A session. I will now invite CFO, Yu Sunghun deliver the 2020 first half business results presentation.

Greetings. I am Yu Sunghun, CFO of Shinhan Financial Group. Thank you for participating in the 2020 first half business results presentation. Amidst concerns over spread of COVID-19, it is still cautious to have confidence in economic recovery. Since it is hard to look into the future at this time in this situation, it is important to make efforts to minimize future uncertainties. Shinhan Financial Group in Q2 continued financial support to customers to overcome COVID-19 and actively responded to the economic downturn cycles with additional provisioning. In addition, we have been working hard to recover trust by taking preemptive actions regarding customer losses related to financial investment products, including Lime and Heritage. It is evident that this is the most opaque business environment with many unusual factors. However, compared to Q1 with the stabilization effect of the financial market in Q2, recurring financial performance and business indicators improved, I will walk you through the related content from page five to page eight, and then elaborate on the group's first task performance. Let's go to page five. I will explain about our response to the COVID-19 crisis. Keeping in step with the government’s financial relief package for corporate and retail clients, we have been continuing our inclusive, compassionate financial policy so that prompt funding can be provided to our society and customers. Until July 3rd, we provided a cumulative KRW 16.7 of support for SME. We not only extended new loans, but have programs to extend maturity and differ principal repayments. Shinhan Bank supported around 135,000 cases. On the other hand, bank and card additionally provisioned KRW 180.6 billion against COVID-19 to preemptively respond to the uncertainty in the COVID-19 crisis, with the change in the RC value adjusting future outlooks data, including economic growth slowdown, bank and card additionally…

Thank you. We will now take questions. [Operator Instructions] First question, Mr. Kim Jin-Sang [ph] from HSBC. Please go ahead, sir.

Hello. Thank you very much for the detailed presentation. I have three questions. They are quite simple and short. And you mentioned 2 BP went down for bank NIM and 5 BP for card. And it seems that for your users, they - users were getting financing from the banks. So it seems that maybe it was temporary with the weakened financial products, the impact on the card, is that right, my assumption. You believe that after time passes, card NIM will have a turnaround. So your group NIM will recover more quickly compared to the bank NIM and be normalized? So that is my first question. And I also would like to know about the different quarterly NIM outlook. The second question is regarding the different government’s forbearance policies and amount wise, well, the amount is quite sizable, if it's KRW 170 trillion or so. So there will be credit risk or downward pressure on the margin because of the government support policies. I believe that it may be already embedded in your Q2 results, but if you - if they are not, can you have a breakdown for us regarding the different provisioning that may occur additionally. So, can you tell us about the burden that the government's policies may have going forward? The third question is about your asset growth. From Q1 to Q2 your total assets, it seems that hasn’t grown much and I know that you have solid loan growth and you have quite high quality asset growth. But number wise, it seems that your group's total assets haven't grown from Q1 to Q2. So if you can elaborate, it will be very helpful? Thanks.

Thank you for your questions. I'm the CFO and regarding the NIM, as you mentioned, it is true that compared to the bank, other having grown, and it seems that low cost deposits have grown much about 11% or so. So I think we had done very good ALM management. But in card, the NIM decline was steeper because of cash advanced services and others, which was impacted. But if this increases, then we believe that we will have recovery in card and others/ On the whole, regarding the NIM outlook, if there is no change to the BOK rate, we believe on a yearly level it will be mid 1.3% or so. So that will be the - the goal that we are going to aim for and manage.

I'm the CRO. Thank you for your questions. Regarding the credit risk, forecast going forward, I agree with what you said, that in the second half we will see more provisioning. And as was mentioned, we had provisioned more to prepare for credit loss. And going forward, we're going to have more detailed and sophisticated monitoring and with the results regarding the credit risk, we're going to have further plans to respond to the fluctuations. We believe that it may continue into next year and we're going to have short term and longer term plans going forward. Thank you.

I am the head of IR. And regarding the total assets, as you mentioned, our loan assets have grown, but on the whole, other than loan assets for FTE assets and trust, all of that are included and our loan assets grew, but trust and others did not grow as much. So, that is why the total assets seem to be at a standstill.

And we are still waiting for further questions to come up, please hold. Yes, the next question, Kim Dongha from [indiscernible] Investment. Please go ahead.

Hello, thank you for the opportunity. So, you have more recoverable amount than the prepaid amount, so it does not have impact on the net income. So what is your basis on concluding that you may recover more than 50% of the amount? And in relation to the Bank Lime [ph] and are there additional costs or provisions in bank or investment corp related to non - others then Lime and Heritage, any others in the second half? Thank you.

Thank you. This is the CFO. As for the Lime exposure in Shinhan Bank, 50% was decided to be paid in advance and provisioning was not considered. We are getting accounting reports from the auditor is end. The valuation amount of recoverable amount was 52%. Of course, due diligence cannot take place on site. So, through the accounting firm, we got the numbers and we requested for a second due diligence and we are basing our conclusion on this. And when the second report comes out, we could adjust the number, but we believe for the time being 52% will be the recoverable amount and if there is any change, we will let you know.

And this is the CSO answering the second part of the question. So any other entities in Lime and Heritage? Well, we have the biggest issue with Heritage KRW 400 billion, that's the amount sold and the underlying assets are all good assets. And there is some amounts, that margin call was not secured, because the market is not good. And we are continuing to discuss the issue with Hong Kong and we are coming up with additional measures to help the customers. Sorry, I am talking about Gen 2, not Heritage. I was talking about Gen 2. Thank you.

We'll take some extra questions from HSBC, Jaewoong Won. Please go ahead.

Congratulations on your performance. I have a question. And I read an article yesterday, which was about extension of the COVID-19 loans. But we couldn't know was just that much from the bank. Do you know in more detail about how long it will be extended, and if you can extend the loan until maturity? And is this going to be positive or negative? I think this will be positive. But can you tell us about the impact of low maturity extensions and others? And what kind of impact this will have on the bank?

I am Park Sunghun, the CSO. Yesterday, the Head of the Financial Securities Commission said after a luncheon [ph] meeting, breakfast meeting, that the maturity extension will be seen in a favorable light. Regarding the details about who's going to extend our loans and others? Well, they will also be decided by the bank. But it seems that the interest related amounts have not been recovered much. And we thought that more than KRW 10 trillion would come in, but only KRW 250 billion of interest income came in. So it means that interest deferral actually took place. And it seems that COVID-19 has not had a huge impact as we had - we're concerned about. Regarding the maturity extension, we need to also invigorate the economy and the infrastructure. So we also believe that this is quite positive. But there might be other suggestions from the government. So we believe that we still have some time left. So we will actually look into this issue more closely and respond.

I'm the CFO and regarding the maturity extensions, to elaborate, regarding the COVID-19 loans and the principal repayment extensions and the maturity extensions, I know that there are concerns in the market, but we believe that we have different thoughts, because even without the COVID-19 crisis, when there is the maturity extension, well, we need to look at the borrower situation and their credit rating. And we get sometimes an amount of principal recovered, and then we extend the loan. So that has been going on even before the COVID-19 crisis. So we don't feel that extensions will be a great burden to us. And we believe that the role that the financial institutions need to play at this time, however, when this gets bigger, we are going to vigilantly monitor the situation so that we can ride this crisis.

Yes. We'll take the next question from Korea Investment & Securities, Seok-Dong Hong [ph].

Thank you. I have a question about card asset quality and about the provisioning outlook for the second half. Shinhan Card for COVID-19 provisioning, you've provisioned about KRW 30 billion and in Q2 only provisioning set [ph] decreased 36% Q-o-Q. And I think many people will be in difficult situations. And is there any reason for the good asset quality in Shinhan Card? And in the second half at the group level, how much will be the provisioning? Do you have any ballpark figures? Thank you.

Hi, this is the CFO. As you mentioned, in the second quarter card, Shinhan Card had the provisioning on also a write back. Cash advance services has decreased, and as in the case of Shinhan Card, the operating assets in the first class is KRW 28 trillion. And it's a decrease of KRW 620 billion. And provisioning does look smaller Q-o-Q. And going forward, the second part of the question will be answered by the CRO.

Hello, this is the CRO. Provisioning in Shinhan Cards decreased with smaller assets. And this was also impacted by the release from the government, and with the release, people had liquidity and they did not rely much on the cash advance services. And in the second half the group's provisioning plan, well, as to that, as was mentioned earlier, in the first half, we adjusted TRC and provisioned conservatively. Now looking at the company, starting from the year 2017 they were difficult, they have difficulties in making profits and carrying out businesses and they were hard hit even more with the COVID-19 crisis. And so, this is the reality that the companies are faced with. And so, the economic situation is very challenging and the government policies may not be producing that effect and the monitoring interval is getting shorter and shorter. And so, we need to be more granular and monitor more closely and discover areas that are more challenging and consider more provisioning. We do not have a concrete plans to adjust the risk component yet. In other words, we will monitor taking a segmentation approach. Thank you.

We do not have any questions in the queue yet. So please hold.

With this, Shinhan Financial Group 2020 first half earnings release will be concluded. With the COVID-19 outbreak that is continuing, we would like to thank you for your participation. We hope for your good health in your homes and in your companies. Thank you.