Exhibit 99.2

WOORI BANK

SEPARATE FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2016 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

ATTACHMENT: INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

WOORI BANK

	Deloitte Anjin LLC
	9F., One IFC, 10, Gukjegeumyung-ro Youngdeungpo-gu, Seoul 07326, Korea Tel: +82 (2) 6676 1000 Fax: +82 (2) 6674 2114 www.deloitteanjin.co.kr

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

English Translation of a Report Originally Issued in Korean

To the Shareholders and the Board of Directors of

Woori Bank

Report on the Separate Financial Statements

We have reviewed the accompanying separate interim financial statements of Woori Bank (the “Bank”). The financial statements consist of the separate statements of financial position as of September 30, 2016, the related separate statements of comprehensive income for the three and nine months ended September 30, 2016 and 2015, respectively, the related separate statements of changes in equity and cash flows for the nine months ended September 30, 2016 and 2015, respectively, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Separate Interim Financial Statements

The Bank’s management is responsible for the preparation and fair presentation of the accompanying separate interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) and for such internal control as management determines is necessary to enable the preparation of separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Independent Accountants’ Responsibility

Our responsibility is to express a conclusion on the accompanying separate interim financial statements based on our reviews.

We conducted our reviews in accordance with standards for review of interim financial statements in the Republic of Korea. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data, and this provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Review Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying separate interim financial statements of the Bank are not presented fairly, in all material respects, in accordance with K-IFRS 1034, Interim Financial Reporting.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”),

its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities.

DTTL (also referred to as “Deloitte Global”) does not provide services to clients.

Please see www.deloitte.com/kr/about for a more detailed description of DTTL and its member firms.

Member of Deloitte Touche Tohmatsu Limited

Others

We audited the separate statement of financial position as of December 31, 2015, and the related separate statements of comprehensive income, changes in equity and cash flows for the year ended December 31, 2015 (not presented in the accompanying separate interim financial statements), all expressed in Korean Won, in accordance with auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion in our independent auditors’ report dated on March 4, 2016. The separate statement of financial position as of December 31, 2015 presented as a comparative purpose in the accompanying interim financial statements does not differ, in all material respects, from the audited separate statement of financial position as of December 31, 2015.

November 14, 2016

Notice to Readers

This report is effective as of November 14, 2016, the independent accountants’ review report date. Certain subsequent events or circumstances may have occurred between the review report date and the time the report is read. Such events or circumstances could significantly affect the separate financial statements and may result in modifications to the independent accountants’ review report.

WOORI BANK

SEPARATE FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2016 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

The accompanying separate interim financial statements including all footnote disclosures were prepared by and are the responsibility of the management of the Bank.

Kwang Goo Lee

Chairman and Chief Executive Officer

Main Office Address:	(Road Name Address)	51 Sogong-ro, Jung-gu, Seoul
	(Phone Number)	02-2002-3000

WOORI BANK

SEPARATE STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2016 AND DECEMBER 31, 2015

	September 30, 2016		December 31, 2015
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Note 6)		7,321,197		5,440,326
Financial assets at fair value through profit or loss (Notes 4, 7, 11, 12, 18 and 26)		4,090,330		3,569,625
Available-for-sale financial assets (Notes 4, 8, 11, 12 and 18)		17,331,491		15,869,654
Held-to-maturity financial assets (Notes 4, 9, 11, 12 and 18)		13,735,813		13,527,452
Loans and receivables (Notes 4, 10, 11, 12, 18, 44 and 45)		245,715,586		231,083,160
Investments in subsidiaries and associates (Note 13)		3,579,582		3,730,247
Investment properties (Note 14)		358,506		344,892
Premises and equipment (Note 15)		2,318,969		2,341,506
Intangible assets (Note 16)		201,329		187,520
Assets held for sale (Note 17)		13,989		17,904
Deferred tax assets (Note 42)		60,988		172,368
Derivative assets (Notes 4, 11, 12 and 26)		273,499		183,128
Other assets (Notes 19 and 45)		176,983		109,126
Total assets		295,178,262		276,576,908
LIABILITIES
Financial liabilities at fair value through profit or loss (Notes 4, 11, 12, 20 and 26)		3,713,079		3,448,180
Deposits due to customers (Notes 4, 11, 21 and 45)		212,077,602		201,353,128
Borrowings (Notes 4, 11, 12 and 22)		15,056,318		18,760,947
Debentures (Notes 4, 11 and 22)		18,174,443		17,259,749
Provisions (Notes 23 and 44)		365,985		467,887
Net defined benefit liability (Note 24)		6,759		45,678
Current tax liabilities (Note 42)		33,844		77,190
Derivative liabilities (Notes 4, 11, 12 and 26)		25,175		—
Other financial liabilities (Notes 4, 11, 12 and 25)		25,512,321		16,111,469
Other liabilities (Notes 25 and 45)		177,500		163,362
Total liabilities		275,143,026		257,687,590

(Continued)

WOORI BANK

SEPARATE STATEMENTS OF FINANCIAL POSITION

AS OF September 30, 2016 AND DECEMBER 31, 2015 (CONTINUED)

	September 30, 2016		December 31, 2015
	(Korean Won in millions)
EQUITY
Capital stock (Note 28)		3,381,392		3,381,392
Hybrid securities (Note 29)		3,883,907		3,334,002
Capital surplus (Note 28)		269,533		269,533
Other equity (Note 30)		54,772		106,016
Retained earnings (Notes 31 and 32)
(Regulatory reserve for credit loss as of September 30, 2016 and December 31, 2015 is 1,880,447 million Won and 1,382,443 million Won, respectively)
(Regulatory reserve for credit loss to be reserved(reversed) as of September 30, 2016 and December 31, 2015 is (45,194) million Won and 498,004 million Won, respectively)
(Planned provision(reversal) of regulatory reserve for credit loss as of September 30, 2016 and December 31, 2015 is (45,194) million Won and 498,004 million Won, respectively)		12,445,632		11,798,375
Total equity		20,035,236		18,889,318
Total liabilities and equity		295,178,262		276,576,908

See accompanying notes to separate financial statements.

WOORI BANK

SEPARATE STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND THE NINE MONTHS ENDED

SEPTEMBER 30, 2016 AND 2015

	Korean Won
	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
	(In millions, except for income per share data)
Interest income		1,831,108			5,566,767			1,893,140			5,762,040
Interest expense		773,201			2,392,721			871,964			2,759,016
Net interest income (Notes 34 and 45)		1,057,907			3,174,046			1,021,176			3,003,024
Fees and commissions income		251,970			749,481			252,031			739,280
Fees and commissions expense		34,378			109,567			32,240			91,038
Net fees and commissions income (Notes 35 and 45)		217,592			639,914			219,791			648,242
Dividend income (Note 36 and 45)		16,595			176,184			27,913			127,581
Net gain(loss) on financial instruments at fair value through profit or loss (Note 37)		(98,640	)		(54,867	)		102,949			132,945
Net gain(loss) on available-for-sale financial assets (Note 38)		25,905			57,061			(22,899	)		(45,555	)
Impairment losses due to credit loss (Notes 39 and 45)		(215,862	)		(540,504	)		(193,067	)		(792,515	)
General and administrative expenses (Notes 40 and 45)		(683,448	)		(2,159,408	)		(670,558	)		(2,065,927	)
Other net operating income(expenses) (Notes 40 and 45)		32,872			(144,052	)		(161,331	)		(263,625	)
Operating income		352,921			1,148,374			323,974			744,170
Share of loss of subsidiaries and associates (Note 13)		(3,690	)		(10,543	)		—			(21,402	)
Other net non-operating income		28,129			46,937			16,663			163,841
Non-operating income (Note 41)		24,439			36,394			16,663			142,439
Net income before income tax expense		377,360			1,184,768			340,637			886,609
Income tax expense (Note 42)		83,521			219,688			71,377			170,849
Net income
(Net income after the provision of regulatory reserve for credit loss for the nine months ended September 30, 2016 and 2015 is 1,010,274 million Won and 332,837 million Won, respectively, and net income after the provision of regulatory reserve for credit loss for the three months ended September 30, 2016 and 2015 is 321,164 million Won and 9,365 million Won, respectively) (Note 32)		293,839			965,080			269,260			715,760

(Continued)

WOORI BANK

SEPARATE STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND THE NINE MONTHS ENDED SEPTEMBER 30, 2016

AND 2015 (CONTINUED)

	Korean Won
	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
	(In millions, except for income per share data)
Remeasurement of the net defined benefit liability		(7,378	)		(52,105	)		(24,599	)		(50,681	)
Items that will not be reclassified to profit or loss		(7,378	)		(52,105	)		(24,599	)		(50,681	)
Gain (loss) on valuation of available-for-sale financial assets		(23,475	)		19,174			33,695			65,514
Gain (loss) on foreign currency translation of foreign operations		(18,121	)		(18,313	)		18,606			21,573
Items that may be reclassified to profit or loss		(41,596	)		861			52,301			87,087
Other comprehensive income (loss), net of tax		(48,974	)		(51,244	)		27,702			36,406
Total comprehensive income		244,865			913,836			296,962			752,166
Net income per share (In Korean Won) (Note 43)
Basic and diluted earnings per common share		363			1,212			322			864

See accompanying notes to separate financial statements.

WOORI BANK

SEPARATE STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

	Capital stock		Hybrid securities		Capital surplus		Other equity			Retained earnings			Total
	(Korean Won in millions)
January 1, 2015		3,381,392		2,538,823		269,533		(695,522	)		12,362,179			17,856,405
Net income		—		—		—		—			715,760			715,760
Dividends		—		—		—		—			(504,952	)		(504,952	)
Gain on valuation of available-for-sale financial assets		—		—		—		65,514			—			65,514
Gain on foreign currencies translation of foreign operations		—		—		—		21,573			—			21,573
Remeasurement of the net defined benefit liability		—		—		—		(50,681	)		—			(50,681	)
Dividends on hybrid securities		—		—		—		—			(134,517	)		(134,517	)
Issuance of hybrid securities		—		795,179		—		—			—			795,179
Appreciation of merger losses		—		—		—		806,640			(806,640	)		—
September 30, 2015		3,381,392		3,334,002		269,533		147,524			11,631,830			18,764,281
January 1, 2016		3,381,392		3,334,002		269,533		106,016			11,798,375			18,889,318
Net income		—		—		—		—			965,080			965,080
Dividends		—		—		—		—			(168,317	)		(168,317	)
Gain on valuation of available-for-sale financial assets		—		—		—		19,174			—			19,174
Loss on foreign currencies translation of foreign operations		—		—		—		(18,313	)		—			(18,313	)
Remeasurement of the net defined benefit liability		—		—		—		(52,105	)		—			(52,105	)
Dividends on hybrid securities		—		—		—		—			(149,506	)		(149,506	)
Issuance of hybrid securities		—		549,905		—		—			—			549,905
September 30, 2016		3,381,392		3,883,907		269,533		54,772			12,445,632			20,035,236

See accompanying notes to separate financial statements.

WOORI BANK

SEPARATE STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

	For the nine months ended September 30
	2016			2015
	(Korean Won in millions)
Cash flows from operating activities:
Net income		965,080			715,760
Adjustment to net income:
Income tax expense		219,688			170,849
Interest income		(5,566,767	)		(5,762,040	)
Interest expense		2,392,721			2,759,016
Dividend income		(206,892	)		(164,878	)
		(3,161,250	)		(2,997,053	)
Additions of expenses not involving cash outflows:
Loss on valuation of financial instruments at fair value through profit or loss		—			3,466
Impairment losses due to credit loss		540,504			792,515
Loss on available-for-sale financial assets		—			45,555
Impairment loss on investments in subsidiaries and associates		10,543			21,402
Loss on transaction of derivatives / valuation of derivative instruments (hedging)		31,778			16,004
Loss on hedged items (Fair value hedge)		82,263			99,862
Provisions		10,600			56,870
Retirement benefits		105,889			91,914
Depreciation and amortization		130,373			113,584
Loss on disposal of premises and equipment and other assets		6,548			1,742
Impairment loss on premises and equipment and other assets		211			490
		918,709			1,243,404
Deductions of revenues not involving cash inflows:
Gain on valuation of financial instruments at fair value through profit or loss		182,715			—
Gain on available-for-sale financial assets		57,061			—
Gain on transaction of derivatives / valuation of derivative instruments (hedging)		77,723			108,091
Gain on hedged items (Fair value hedge)		30,602			19,952
Reversal of provisions		864			356
Gain on disposal of investment in subsidiaries and associates		3,679			673
Gain on disposal of premises and equipment and other assets		1,227			6,708
Reversal of impairment loss on premises and equipment and other assets		480			372
		354,351			136,152

(Continued)

WOORI BANK

SEPARATE STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (CONTINUED)

	For the nine months ended September 30
	2016			2015
	(Korean Won in millions)
Changes in operating assets and liabilities:
Financial instruments at fair value through profit or loss		(73,091	)		587,920
Loans and receivables		(15,197,803	)		(23,249,860	)
Other assets		(67,423	)		(64,044	)
Deposits due to customers		10,724,475			15,476,646
Provision		(73,398	)		(89,308	)
Net defined benefit liability		(213,544	)		(166,560	)
Other financial liabilities		9,328,715			5,267,686
Other liabilities		16,104			(104,320	)
		4,444,035			(2,341,840	)
Cash received from (paid for) operating activities:
Interest income received		5,580,747			5,751,401
Interest expense paid		(2,319,850	)		(2,937,198	)
Dividend received		205,460			164,878
Income tax paid		(135,293	)		(336,582	)
Net cash provided by (used in) operating activities		6,143,287			(873,382	)
Cash flows from investing activities:
Cash in-flows from investing activities:
Disposal of available-for-sale financial assets		14,997,100			13,219,026
Redemption of held-to-maturity financial assets		5,958,431			4,736,741
Disposal of investments in subsidiaries and associates		52,891			37,773
Disposal of premises and equipment		237			17,635
Disposal of intangible assets		837			—
Disposal of assets held for sale		13,876			2,536
		21,023,372			18,013,711
Cash out-flows from investing activities:
Acquisition of available-for-sale financial assets		16,194,628			12,343,696
Acquisition of held-to-maturity financial assets		6,224,158			5,685,062
Acquisition of investments in subsidiaries and associates		46,940			45,200
Acquisition of premises and equipment		70,353			74,031
Acquisition of intangible assets		102,575			58,427
		22,638,654			18,206,416
Net cash used in investing activities		(1,615,282	)		(192,705	)

(Continued)

WOORI BANK

SEPARATE STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (CONTINUED)

	For the nine months ended September 30
	2016			2015
	(Korean Won in millions)
Cash flows from financing activities:
Cash in-flows from financing activities:
Increase in borrowings		4,636,750			11,133,710
Issuance of debentures		4,735,270			4,777,741
Issuance of hybrid securities		549,905			795,179
		9,921,925			16,706,630
Cash out-flows from financing activities:
Repayment of borrowings		8,342,021			7,423,761
Repayment of debentures		3,893,090			6,485,416
Dividends paid		168,317			504,952
Dividends paid on hybrid securities		125,947			104,326
		12,529,375			14,518,455
Net cash provided by (used in) financing activities		(2,607,450	)		2,188,175
Net increase in cash and cash equivalents		1,920,555			1,122,088
Cash and cash equivalents, beginning of the period		5,440,326			4,668,916
Effects of exchange rate changes on cash and cash equivalents		(39,684	)		256,110
Cash and cash equivalents, end of the period		7,321,197			6,047,114

See accompanying notes to separate financial statements

WOORI BANK

NOTES TO SEPARATE FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2016 AND FOR THE THREE MONTHS AND THE NINE MONTHS

ENDED SEPTEMBER 30, 2016 AND 2015

1. GENERAL

(1) Description of business

Woori Bank (hereinafter referred as the “Bank”) was established in 1899 and is engaged in the commercial banking business under the Banking Law, trust business under the Financial Investment Services and Capital Market Act, and foreign currencies exchange business with approval from the Bank of Korea (“BOK”) and the Ministry of Finance and Economy (“MOFE”).

Previously, Woori Finance Holdings Co., Ltd., the former holding company of Woori Financial Group, established on March 27, 2001 held a 100% ownership of the Bank. Effective November 1, 2014, Woori Finance Holdings Co., Ltd. completed its merger with and into Woori Bank, its wholly-owned subsidiary, as contemplated by the merger agreement dated July 28, 2014, by and between Woori Finance Holdings Co., Ltd. and Woori Bank. Accordingly, the shares of the Bank, 597 million shares, prior to the merger, were reduced to nil in accordance with capital reduction procedure, and then, in accordance with the merger ratio, the Bank newly issued 676 million shares. As a result, as of September 30, 2016, the common stock of the Bank amounts, expressed in Korean Won (the “KRW” or “Won”), to 3,381,392 million Won.

As of September 30, 2016, Korea Deposit Insurance Corporation (“KDIC”), as the largest shareholder, held 345 million shares (51.06% ownership) of the Bank’s shares issued.

On June 24, 2002, Woori Finance Holdings Co., Ltd. listed its common shares on the Korea Exchange through public offering. In addition, on September 29, 2003, the holding company registered with the Securities and Exchange Commission in the United States of America and, on the same day, listed its American Depositary Shares on the New York Stock Exchange.

As a result of such merger, the Bank incorporated Woori Card Co., Ltd., Woori Investment Bank Co., Ltd., Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd., and Woori Finance Research Institute Co., Ltd. as its subsidiaries.

The head office of the Bank is located in 51, Sogong-ro, Jung Gu, Seoul, Korea. The Bank has 905 branches and offices in Korea, and 22 branches and offices overseas as of September 30, 2016.

2. SIGNIFICANT BASIS OF PREPARATION AND ACCOUNTING POLICIES

The Bank’s separate financial statements are prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1034, Interim Financial Reporting and K-IFRS 1027, Separate Financial Statements. It is necessary to use the annual financial statements for the year ended December 31, 2015 for understanding of the accompanying separate financial statements.

Unless stated below, the accounting policies applied in preparing the accompanying interim separate financial statements have been applied consistently with the annual separate financial statements as of and for the year ended December 31, 2015.

1) The Bank has newly adopted the following amendment to K-IFRS that affected the Bank’s accounting policies.

Amendments to K-IFRS 1001 – Presentation of Financial Statements

The amendments to K-IFRS 1001 clarify the concept of applying materiality in practice and restrict an entity reducing the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. The adoption of the amendments has no significant impact on the separate financial statements.

Amendments to K-IFRS 1016 – Property, plant and Equipment

The amendments to K-IFRS 1016 prohibit the Bank from using a revenue-based depreciation method for items of property, plant and equipment. The adoption of the amendments has no significant impact on the separate financial statements.

Amendments to K-IFRS 1038 – Intangible Assets

The amendments to K-IFRS 1038 rebuts presumption that revenue is not an appropriate basis for the amortization of an intangible assets, which the presumption can only be rebutted when the intangible asset expressed as a measure of revenue or when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. The adoption of the amendments has no significant impact on the separate financial statements.

Amendments to K-IFRS 1111 – Accounting for Acquisitions of Interests in Joint Operations

The amendments to K-IFRS 1111 provides guidance on how to account for the acquisition of joint operation that constitutes a business as defined in K-IFRS 1103 Business Combinations. A joint operator is also required to disclose the relevant information required by K-IFRS 1103 and other standards for business combinations. The adoption of the amendments has no significant impact on the separate financial statements.

Amendments to K-IFRS 1027 – Separate Financial Statements

The amendments discuss accounting for investment in subsidiaries, related parties, and joint ventures at cost basis and allow the selection of the application of K-IFRS 1039 Financial Instruments: Recognition and Measurement or the application of equity method accounting under K-IFRS 1028 Investment in Associates and Joint Ventures. The adoption of the amendments has no significant impact on the separate financial statements.

Other than the amendment stated above, there are several annual improvements in the current period, but the application of the amendments has had no material effect on the Bank’s separate financial statements.

2) The Bank has not applied the following K-IFRSs that have been issued but are not yet effective:

Enactment of K-IFRS 1109 – Financial Instruments

The enactment of K-IFRS 1109 contain the requirements for the classification and measurement of financial assets and financial liabilities based on a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets and based on the contractual terms that give rise on specified dates to cash flows, impairment methodology based on the expected credit losses, and broadened types of instruments that qualify as hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting and the change of the hedge effectiveness test. This standard will supersede K-IFRS 1039 Recognition and Measurement of Financial Instruments. The enactments are effective for annual periods beginning on or after 1 January 2018.

- 2 -

Enactment of K-IFRS 1115 – Revenue from Contracts with Customers

The core principle under K-IFRS 1115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The enactment introduces a 5-step approach to revenue recognition and measurement: 1) Identify the contract with a customer, 2) Identify the performance obligations in the contract, 3) Determine the transaction price, 4) Allocate the transaction price to the performance obligations in the contract, 5) Recognize revenue when (or as) the entity satisfies a performance obligation. This standard will supersede K-IFRS 1011 - Construction Contracts, K-IFRS 1018- Revenue, K-IFRS 2113 - Customer Loyalty Programmes, K-IFRS 2115-Agreements for the Construction of Real Estate, K-IFRS 2118 - Transfers of Assets from Customers, and K-IFRS 2031-Revenue-Barter Transactions Involving Advertising Services. The enactment is effective for annual periods beginning on or after 1 January 2018.

The Bank is in the process of evaluating the impact on the separate financial statements upon the adoption of new and revised K-IFRSs that have been issued but are not yet effective.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

In the application of the Bank’s accounting policies to the interim financial statements, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results can differ from those estimates based on assumptions.

The significant judgments which management has made about the application of the Bank’s accounting policies and key sources of uncertainty in estimate do not differ from those used in preparing the separate financial statements for the year ended December 31, 2015.

4. RISK MANAGEMENT

The Bank’s operating activity is exposed to various financial risks. The Bank is required to analyze and assess the level of complex risks, and determine the permissible level of risks and manage such risks. The Bank’s risk management procedures have been established to improve the quality of assets for holding or investment purposes by making decisions as how to avoid or mitigate risks through the identification of the source of the potential risks and their impact.

The Bank has established an approach to manage the acceptable level of risks and reduce the excessive risks in financial instruments in order to maximize the profit given risks present, for which the Bank has implemented processes for risk identification, assessment, control, and monitoring and reporting.

The risk is managed by the risk management department in accordance with the Bank’s risk management policy. The Risk Management Committee makes decisions on the risk strategies such as the avoidance of concentration on capital at risk and the establishment of acceptable level of risk.

(1) Credit risk

Credit risk represents the possibility of financial losses incurred when the counterparty fails to fulfill its contractual obligations. The goal of credit risk management is to maintain the credit risk exposure to a permissible degree and to optimize the rate of return considering such credit risk.

1) Credit risk management

The Bank considers the probability of failure in performing the obligation of its counterparties, credit exposure to the counterparty, the related default risk and the rate of default loss. The Bank uses the credit rating model to assess the possibility of counterparty’s default risk; and when assessing the obligor’s credit grade, the Bank utilizes credit grades derived using statistical methods.

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In order to manage credit risk limit, the Bank establishes the appropriate credit line per obligor, company or industry. It monitors obligor’s credit line, total exposures and loan portfolios when approving the loan.

The Bank mitigates credit risk resulting from the obligor’s credit condition by using financial and physical collateral, guarantees, netting agreements and credit derivatives. The Bank has adopted the entrapment method to mitigate its credit risk. Credit risk mitigation is reflected in qualifying financial collateral, trade receivables, guarantees, residential and commercial real estate and other collaterals. The Bank regularly performs a revaluation of collateral reflecting such credit risk mitigation.

2) Maximum exposure to credit risk

The Bank’s maximum exposure to credit risk refers to net book value of financial assets net of allowances, which shows the uncertainties of maximum changes of net value of financial assets attributable to a particular risk without considering collateral and other credit enhancements obtained. However, the maximum exposure is the fair value amount (recorded on the books) for derivatives, maximum contractual obligation for payment guarantees and loan commitment for loan contracts.

The maximum exposure to credit risk is as follows (Unit: Korean Won in millions):

		September 30, 2016		December 31, 2015
Loans and receivables	Korean treasury and government agencies		15,462,336		11,985,469
	Banks		23,196,201		17,285,673
	Corporates		86,358,761		89,295,698
	Consumers		120,698,288		112,516,320
	Sub-total		245,715,586		231,083,160
Financial assets at FVTPL	Gold banking assets		21,423		24,884
	Debt securities held for trading		1,125,979		1,117,585
	Derivative assets		2,914,754		2,375,511
	Sub-total		4,062,156		3,517,980
AFS financial assets	AFS debt securities		11,436,503		11,124,906
HTM financial assets	HTM debt securities		13,735,813		13,527,452
Derivative assets	Derivative assets (hedging)		273,499		183,128
Off-balance accounts	Guarantees		14,234,957		17,507,149
	Loan commitments		53,077,532		63,361,727
	Sub-total		67,312,489		80,868,876
	Total		342,536,046		340,305,502

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a) Credit risk exposure by geographical areas

The following tables analyze credit risk exposure by geographical areas (Unit: Korean Won in millions):

	September 30, 2016
	Korea		USA		UK		Japan		Others (*1)		Total
Loans and receivables		238,284,370		1,154,485		768,237		321,365		5,187,129		245,715,586
Financial assets at FVTPL (*2)		1,125,979		—		21,423		—		—		1,147,402
AFS debt securities		11,380,957		—		—		—		55,546		11,436,503
HTM securities		13,703,778		—		—		—		32,035		13,735,813
Off-balance accounts		66,458,805		56,095		76,526		26,273		694,790		67,312,489
Total		330,953,889		1,210,580		866,186		347,638		5,969,500		339,347,793

	December 31, 2015
	Korea		USA		UK		Japan		Others (*1)		Total
Loans and receivables		223,646,082		1,210,766		644,387		192,599		5,389,326		231,083,160
Financial assets at FVTPL (*2)		1,117,585		—		24,884		—		—		1,142,469
AFS debt securities		11,074,231		—		—		—		50,675		11,124,906
HTM securities		13,525,799		—		—		—		1,653		13,527,452
Off-balance accounts		79,553,680		65,769		107,239		28,884		1,113,304		80,868,876
Total		328,917,377		1,276,535		776,510		221,483		6,554,958		337,746,863

(*1) Others consist of financial assets in Vietnam, Panama and European countries and etc.

(*2) Financial assets at FVTPL comprise gold banking assets and debt securities held for trading.

b) Credit risk exposure by industries

The following tables analyze credit risk exposure by industries, which are service, manufacturing, finance and insurance, construction, individuals, and others in accordance with the Korea Standard Industrial Classification Code (Unit: Korean Won in millions):

	September 30, 2016
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and receivables		45,629,530		35,579,479		39,520,204		3,971,448		114,742,149		6,272,776		245,715,586
Financial assets at FVTPL (*)		—		—		923,149		—		—		224,253		1,147,402
AFS debt securities		987,742		20,417		7,881,279		53,232		—		2,493,833		11,436,503
HTM securities		1,752,115		20,000		8,080,387		371,611		—		3,511,700		13,735,813
Off-balance accounts		14,884,124		25,798,681		9,181,335		3,835,173		9,457,849		4,155,327		67,312,489
Total		63,253,511		61,418,577		65,586,354		8,231,464		124,199,998		16,667,889		339,347,793

	December 31, 2015
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and receivables		47,361,981		36,456,505		30,823,625		4,610,677		106,355,248		5,475,124		231,083,160
Financial assets at FVTPL (*)		—		—		626,132		—		—		516,337		1,142,469
AFS debt securities		749,645		20,652		8,562,495		21,373		—		1,770,741		11,124,906
HTM securities		1,931,529		20,000		7,796,249		472,209		—		3,307,465		13,527,452
Off-balance accounts		16,357,655		32,420,468		13,499,646		5,023,364		8,928,661		4,639,082		80,868,876
Total		66,400,810		68,917,625		61,308,147		10,127,623		115,283,909		15,708,749		337,746,863

(*) Financial assets at FVTPL comprise gold banking assets and debt securities held for trading.

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3) Credit risk of loans and receivables

The credit exposure of loans and receivables by customer and loan condition are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing		Sub-total		Consumers		Total
Loans neither overdue nor impaired		15,466,086		23,211,026		48,576,610		30,521,846		6,474,122		85,572,578		119,861,813		244,111,503
Loans overdue but not impaired		—		—		10,639		118,335		—		128,974		721,802		850,776
Impaired loans		—		—		1,550,365		473,151		293,188		2,316,704		346,905		2,663,609
Total		15,466,086		23,211,026		50,137,614		31,113,332		6,767,310		88,018,256		120,930,520		247,625,888
Less: Allowance for credit losses		3,750		14,825		1,098,372		477,357		83,766		1,659,495		232,232		1,910,302
Total, net		15,462,336		23,196,201		49,039,242		30,635,975		6,683,544		86,358,761		120,698,288		245,715,586

	December 31, 2015
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing		Sub-total		Consumers		Total
Loans neither overdue nor impaired		11,988,506		17,296,466		50,392,830		30,901,813		6,887,579		88,182,222		111,587,607		229,054,801
Loans overdue but not impaired		—		—		6,049		90,726		—		96,775		767,687		864,462
Impaired loans		—		—		1,963,248		497,520		545,642		3,006,410		420,973		3,427,383
Total		11,988,506		17,296,466		52,362,127		31,490,059		7,433,221		91,285,407		112,776,267		233,346,646
Less: Allowance for credit losses		3,037		10,793		1,340,004		509,789		139,916		1,989,709		259,947		2,263,486
Total, net		11,985,469		17,285,673		51,022,123		30,980,270		7,293,305		89,295,698		112,516,320		231,083,160

a) Credit quality of loans and receivables

The Bank manages credit quality of its loans and receivables, (neither overdue nor impaired, net of allowance) through an internal rating system. Segregation of credit quality is as follows (Unit: Korean Won in millions):

	September 30, 2016
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing		Sub-total		Consumers		Total
Upper grade (*1)		15,462,336		23,196,201		40,283,085		17,096,492		4,741,399		62,120,976		116,688,205		217,467,718
Lower grade (*2)		—		—		7,903,088		13,185,918		1,713,691		22,802,697		3,080,748		25,883,445
Total		15,462,336		23,196,201		48,186,173		30,282,410		6,455,090		84,923,673		119,768,953		243,351,163
Value of collateral		—		382,341		17,612,043		24,742,407		3,986,527		46,340,977		101,856,269		148,579,587

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	December 31, 2015
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing		Sub-total		Consumers		Total
Upper grade (*1)		11,985,469		17,285,673		39,647,867		15,838,740		4,545,054		60,031,661		107,939,998		197,242,801
Lower grade (*2)		—		—		10,441,649		14,817,193		2,271,579		27,530,421		3,554,824		31,085,245
Total		11,985,469		17,285,673		50,089,516		30,655,933		6,816,633		87,562,082		111,494,822		228,328,046
Value of collateral		11,391		359,422		17,455,383		24,176,472		4,141,985		45,773,840		94,651,624		140,796,277

(*1) AAA ~ BBB for Corporates, and 1~6 level for Consumers

(*2) BBB- ~ C for Corporates, and 7~10 level for Consumers

Allowances for credit losses, for loans and receivables neither overdue nor impaired, amounting to 760,340 million Won and 726,755 million Won as of September 30, 2016 and as of December 31, 2015, respectively, are deducted from the loans and receivables above.

b) Aging analysis of loans and receivables

Aging analysis of loans and receivables (overdue but not impaired, net of allowance) is as follows (Unit: Korean Won in millions):

	September 30, 2016
Overdue	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small and medium sized enterprise		Project financing		Sub-total
Less than 30 days		—		—		9,049		85,515		—		94,564		566,307		660,871
30~60 days		—		—		1,064		12,942		—		14,006		85,810		99,816
60~90 days		—		—		278		7,712		—		7,990		41,740		49,730
Total		—		—		10,391		106,169		—		116,560		693,857		810,417
Value of collateral (*)		—		—		6,718		88,200		—		94,918		609,628		704,546

	December 31, 2015
Overdue	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small and medium sized enterprise		Project financing		Sub-total
Less than 30 days		—		—		3,517		58,325		—		61,842		629,269		691,111
30~60 days		—		—		2,040		16,584		—		18,624		83,833		102,457
60~90 days		—		—		—		4,969		—		4,969		29,439		34,408
Total		—		—		5,557		79,878		—		85,435		742,541		827,976
Value of collateral (*)		—		—		4,340		63,749		—		68,089		642,807		710,896

(*) The collateral value held is the recoverable amount used when calculating allowance for credit losses.

Allowances for credit losses, for loans and receivables that are overdue but not impaired, amounting to 40,359 million Won and 36,486 million Won as of September 30, 2016 and December 31, 2015, respectively, are deducted from the loans and receivables above.

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c) Impaired loans and receivables

Impaired loans and receivables, net of allowance are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small and medium sized enterprise		Project financing		Sub-total
Impaired loans		—		—		842,678		247,396		228,454		1,318,528		235,478		1,554,006
Value of collateral (*)		—		—		706,679		276,934		67,185		1,050,798		235,172		1,285,970

	December 31, 2015
	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small and medium sized enterprise		Project financing		Sub-total
Impaired loans		—		—		927,050		244,459		476,672		1,648,181		278,957		1,927,138
Value of collateral (*)		—		—		813,394		285,873		136,182		1,235,449		278,446		1,513,895

(*) The collateral value held is the recoverable amount used when calculating allowance for credit losses.

Allowances for credit losses, for impaired loans and receivables amounting to 1,109,603 million Won and 1,500,245 million Won as of September 30, 2016 and December 31, 2015, respectively, are deducted from the impaired loans and receivables above.

4) Credit quality of debt securities

The Bank manages debt securities based on the external credit rating. Credit soundness of debt securities on the basis of External Credit Assessment Institution (“ECAI”)’s rating is as follows (Unit: Korean Won in millions):

	September 30, 2016
	Held for trading		AFS securities		HTM securities		Total
AAA		1,120,482		9,983,829		13,335,747		24,440,058
AA- ~ AA+		—		1,284,999		400,066		1,685,065
BBB- ~ A+		5,497		167,675		—		173,172
Total		1,125,979		11,436,503		13,735,813		26,298,295

	December 31, 2015
	Held for trading		AFS securities		HTM securities		Total
AAA		1,117,585		9,925,295		13,157,340		24,200,220
AA- ~ AA+		—		1,030,176		370,112		1,400,288
BBB- ~ A+		—		157,691		—		157,691
Below BBB-		—		11,744		—		11,744
Total		1,117,585		11,124,906		13,527,452		25,769,943

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(2) Market risk

Market risk is the possible risk of loss arising from trading activities and non-trading activities in the volatility of market factors such as interest rates, stock prices, and foreign exchange rates. Market risk occurs as a result of changes in the interest rates and foreign exchange rates for financial instruments that are not yet settled, and all contracts are exposed to a certain level of volatility according to the interest rates, credit spreads, foreign exchange rates and the price of equity securities.

1) Market risk management

For trading activities and non-trading activities, the Bank avoids, bears or mitigates risks by identifying the underlying source of risks, measuring parameters and evaluating their appropriateness.

The Bank measures Value at Risk (“VaR”, maximum losses) with Historical Simulation Method based on 99% confidence level and 10-day of holding period of positions, and calculates the required market risk capital using the internal model, which has been approved by Financial Supervisory Service in Korea. For the internal management purpose, VaR is measured based on 99% confidence level and 1-day of holding period of positions and the limit management is performed on daily basis. The validation of the model is assessed through the performance of back testing which is to compare the actual gain or loss to the VaR measurements on daily basis.

In addition, for the purpose of crisis management, the Bank performs stress testing on monthly basis, which is to measure the expected loss amount in case of an extreme situation, such as IMF bailout in 1997 or global financial crisis in 2008.

On a yearly basis, the Risk Management Committee establishes the VaR limit, loss limit and risk capital limit for its management purposes. Limit by investment desk/dealer is independently managed to the extent of the limit given to each departments of the Bank and the limit by investment and loss cut is managed by risk management personnel with the department.

2) Sensitivity analysis of market risk

The Bank performs sensitivity analysis, both for trading and for non-trading activities.

For trading activities, the Bank uses a VaR model that uses certain assumptions of possible fluctuations in market condition and, by conducting simulations of gains and losses, under which the model estimates the maximum losses that may occur. A VaR model predicts based on statistics of possible losses on the portfolio at a certain period currently or in the future. It indicates the maximum expected loss with at least 99% credibility. In short, there exists a one percent possibility that the actual loss might exceed the predicted loss generated from the VaR’s calculation. The actual results are periodically monitored to examine the validity of the assumptions and variables and factors that are used in VaR’s calculations. However, this approach cannot prevent the loss when the market fluctuation exceeds expectation.

For non-trading activities, the Bank uses Net Interest Income (“NII”) and Net Present Value (“NPV”) calculated using the simulation method. NII is a profit based indicator for displaying the profit changes in short term due to the short term interest change. It will be estimated as subtracting the interest expenses of liabilities from the interest income of the assets. NPV is an indicator for displaying the risk in economical view according to the unfavorable changes related to the interest rate. It will be estimated as subtracting the present value of liabilities from the present value of the asset.

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a) Trading activities

The bank manage the VaR for the trading activities on the basis of Group’s financial statement.

The minimum, maximum and average VaR for the nine months ended September 30, 2016 and the year ended December 31, 2015, respectively, and the VaR as of September 30, 2016 and December 31, 2015, respectively, by the risk factors, are as follows (Unit: Korean Won in millions):

	As of September 30, 2016			For the Nine months ended September 30, 2016									As of December 31, 2015			For the year ended December 31, 2015
Risk factor				Average			Maximum			Minimum						Average			Maximum			Minimum
Interest rate		2,514			2,691			6,430			1,367			2,907			2,742			3,991			1,211
Stock price		3,611			3,361			5,028			2,304			3,186			2,411			4,377			531
Foreign currencies		5,159			5,097			7,686			3,967			3,997			3,415			4,847			2,329
Commodity price		52			118			258			21			117			102			218			5
Diversification		(4,456	)		(5,452	)		(10,283	)		(4,034	)		(5,017	)		(3,858	)		(6,910	)		(411	)
Total VaR		6,880			5,815			9,119			3,625			5,190			4,812			6,523			3,665

b) Non-trading activities

The NII and NPV are calculated for the assets and liabilities owned by the Bank, respectively, by using the simulation method. The scenario responding to interest rate (“IR”) changes are as follows (Unit: Korean Won in millions):

Name of scenario	September 30, 2016				December 31, 2015
	NII		NPV		NII		NPV
Base case		4,108,990		25,924,333		4,268,994		22,459,308
Base case (Prepay)		4,133,018		23,859,878		4,263,055		21,436,504
IR 100bp up		4,446,935		25,087,993		4,660,195		21,765,828
IR 100bp down		3,745,438		26,834,560		3,878,609		23,209,960
IR 200bp up		4,784,738		24,321,283		5,051,345		21,126,072
IR 200bp down		2,900,146		27,827,638		3,147,319		24,016,548
IR 300bp up		5,122,540		23,619,360		5,442,493		20,536,349
IR 300bp down		1,979,032		30,191,577		2,128,308		25,362,393

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The Bank estimates and manages risks related to changes in interest rate due to the difference in the maturities of interest-bearing assets and liabilities and discrepancies in the terms of interest rates. Cash flows of principal amounts and interests from interest bearing assets and liabilities by re-pricing date are as follows (Unit: Korean Won in millions):

		September 30, 2016
		Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset	Loans and receivables		135,070,774		38,671,193		8,762,176		7,454,131		51,924,674		33,498,049		275,380,997
	AFS financial assets		2,648,253		2,441,919		2,632,511		2,342,005		5,628,011		692,254		16,384,953
	HTM financial assets		2,711,193		1,869,113		1,168,272		1,169,145		6,474,019		887,964		14,279,706
	Total		140,430,220		42,982,225		12,562,959		10,965,281		64,026,704		35,078,267		306,045,656
Liability	Deposits due to customers		99,654,337		36,058,658		28,460,712		15,751,050		33,321,277		34,104		213,280,138
	Borrowings		9,408,600		1,586,278		530,009		460,273		2,833,457		405,246		15,223,863
	Debentures		1,672,599		1,581,118		1,772,708		599,269		10,022,770		4,068,164		19,716,628
	Total		110,735,536		39,226,054		30,763,429		16,810,592		46,177,504		4,507,514		248,220,629

		December 31, 2015
		Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset	Loans and receivables		130,296,312		40,146,654		7,616,158		7,299,313		47,979,536		29,697,401		263,035,374
	AFS financial assets		1,188,579		2,135,433		2,785,775		2,004,210		6,382,340		671,525		15,167,862
	HTM financial assets		1,901,817		1,652,225		1,191,175		1,611,999		6,952,975		911,563		14,221,754
	Total		133,386,708		43,934,312		11,593,108		10,915,522		61,314,851		31,280,489		292,424,990
Liability	Deposits due to customers		92,616,415		31,482,728		21,066,115		27,393,198		30,105,572		26,201		202,690,229
	Borrowings		12,703,849		1,371,272		847,540		498,146		3,053,197		497,944		18,971,948
	Debentures		2,685,033		853,725		410,453		1,649,464		8,685,923		4,562,271		18,846,869
	Total		108,005,297		33,707,725		22,324,108		29,540,808		41,844,692		5,086,416		240,509,046

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3) Currency risk

Currency risk arises from monetary financial instruments denominated in foreign currencies other than the functional currency. Therefore, no currency risk arises from non-monetary items or financial instruments denominated in the functional currency.

Financial instruments in foreign currencies exposed to currency risk are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions and Korean Won in millions):

		September 30, 2016
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Won equivalent		Foreign currency		Won Equivalent		Foreign currency		Won equivalent		Foreign currency		Won Equivalent		Won equivalent		Won equivalent
Asset	Loans and receivables		21,077		23,106,434		128,678		1,394,461		899		147,394		1,784		2,194,583		2,508,926		29,351,798
	Financial assets at FVTPL		114		125,203		78		850		—		—		16		19,533		46,716		192,302
	AFS financial assets		661		724,672		—		—		—		—		—		597		52,877		778,146
	HTM financial assets		—		—		—		—		—		—		—		—		32,036		32,036
	Total		21,852		23,956,309		128,756		1,395,311		899		147,394		1,800		2,214,713		2,640,555		30,354,282
Liability	Financial liabilities at FVTPL		134		146,906		328		3,556		—		—		75		92,481		89,524		332,467
	Deposits		10,568		11,585,503		136,449		1,478,673		1,304		213,771		599		736,840		802,275		14,817,062
	Borrowings		6,650		7,290,792		4,943		53,567		21		3,374		217		266,936		350,049		7,964,718
	Debentures		3,028		3,319,675		—		—		900		147,573		—		—		244,553		3,711,801
	Other financial liabilities		3,583		3,927,955		18,342		198,768		1,691		277,298		256		314,366		448,155		5,166,542
	Total		23,963		26,270,831		160,062		1,734,564		3,916		642,016		1,147		1,410,623		1,934,556		31,992,590
	Off-balance		8,052		8,827,238		28,803		312,133		729		119,458		418		514,490		429,479		10,202,798
		December 31, 2015
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Won equivalent		Foreign currency		Won equivalent		Foreign currency		Won equivalent		Foreign currency		Won equivalent		Won equivalent		Won equivalent
Asset	Loans and receivables		21,657		25,381,941		110,841		1,077,383		549		97,920		1,134		1,451,547		1,166,917		29,175,708
	Financial assets at FVTPL		133		156,048		113		1,096		—		—		1		987		428		158,559
	AFS financial assets		336		393,424		—		—		—		—		—		622		43,542		437,588
	HTM financial assets		—		—		—		—		—		—		—		—		1,653		1,653
	Total		22,126		25,931,413		110,954		1,078,479		549		97,920		1,135		1,453,156		1,212,540		29,773,508
Liability	Financial liabilities at FVTPL		149		174,554		499		4,853		—		—		33		42,299		98,312		320,018
	Deposits		9,385		10,999,477		114,383		1,111,813		1,375		245,396		295		378,111		720,591		13,455,388
	Borrowings		8,524		9,990,013		17,834		173,350		26		4,611		438		561,393		272,248		11,001,615
	Debentures		3,054		3,578,711		5,680		55,209		900		160,632		33		42,257		477,459		4,314,268
	Other financial liabilities		1,973		2,312,844		3,169		30,807		2,572		459,120		69		87,974		477,936		3,368,681
	Total		23,085		27,055,599		141,565		1,376,032		4,873		869,759		868		1,112,034		2,046,546		32,459,970
	Off-balance		9,294		10,892,782		26,444		257,043		247		44,028		528		676,588		721,749		12,592,190

- 12 -

(3) Liquidity risk

Liquidity risk refers to the risk that the Bank may encounter difficulties in meeting obligations due to its financial liabilities.

1) Liquidity risk management

Liquidity risk management is to prevent potential cash shortage as a result of mismatching the use of funds (assets) and sources of funds (liabilities) or unexpected cash outflows. The financial liabilities that are relevant to liquidity risk are incorporated within the scope of risk management. Derivatives instruments are excluded from those financial liabilities as they reflect expected cash flows for a pre-determined period.

Assets and liabilities are grouped by account under Asset Liability Management (“ALM”) in accordance with the characteristics of the account. The Bank manages liquidity risk by identifying maturity gap, and then gap ratio through performing various cash flows analysis (i.e. based on remaining maturity and contract period, etc.); while maintaining the gap ratio at or below the target limit.

2) Maturity analysis of non-derivative financial liabilities

a) Cash flows of principals and interests by remaining contractual maturities of non-derivative financial liabilities are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		650,188		—		—		—		167,391		—		817,579
Deposits due to customers		133,524,359		29,198,013		23,638,598		20,842,581		6,478,988		932,950		214,615,489
Borrowings		5,630,394		2,306,561		1,542,005		814,835		4,609,615		404,185		15,307,595
Debentures		1,672,453		1,580,807		1,772,949		599,955		10,022,554		4,068,171		19,716,889
Other financial liabilities		16,884,353		—		—		—		90,132		2,706,282		19,680,767
Total		158,361,747		33,085,381		26,953,552		22,257,371		21,368,680		8,111,588		270,138,319

	December 31, 2015
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		727,766		55		54		11,850		161,240		—		900,965
Deposits due to customers		119,332,770		25,160,775		17,004,097		34,731,078		7,066,516		896,648		204,191,884
Borrowings		7,870,794		2,247,565		2,039,814		1,149,706		5,240,221		496,550		19,044,650
Debentures		2,684,833		853,791		410,595		1,649,300		8,685,715		4,562,188		18,846,422
Other financial liabilities		8,313,014		—		—		—		—		2,587,534		10,900,548
Total		138,929,177		28,262,186		19,454,560		37,541,934		21,153,692		8,542,920		253,884,469

- 13 -

b) Cash flows of principals and interests by expected maturities of non-derivative financial liabilities are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		650,188		—		—		—		167,391		—		817,579
Deposits due to customers		143,978,749		30,621,179		20,382,289		13,434,680		5,382,756		433,550		214,233,203
Borrowings		5,630,422		2,306,549		1,541,992		814,832		4,609,615		404,185		15,307,595
Debentures		1,672,453		1,580,807		1,772,949		599,955		10,022,554		4,068,171		19,716,889
Other financial liabilities		16,884,353		—		—		—		90,132		2,706,282		19,680,767
Total		168,816,165		34,508,535		23,697,230		14,849,467		20,272,448		7,612,188		269,756,033

	December 31, 2015
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		727,766		55		54		11,850		161,240		—		900,965
Deposits due to customers		126,385,697		27,411,485		16,495,340		27,013,441		6,099,611		402,137		203,807,711
Borrowings		7,870,816		2,247,554		2,039,806		1,149,703		5,240,221		496,550		19,044,650
Debentures		2,684,833		853,791		410,595		1,649,300		8,685,715		4,562,188		18,846,422
Other financial liabilities		8,313,014		—		—		—		—		2,587,534		10,900,548
Total		145,982,126		30,512,885		18,945,795		29,824,294		20,186,787		8,048,409		253,500,296

3) Maturity analysis of derivative financial liabilities

Derivatives held for trading purposes are not managed in accordance with their contractual maturity, but the Bank holds such financial instruments with the purpose of disposing or redemption before their maturity. As such, those derivatives are incorporated as “within 3 months” in the table below. The cash flow from derivatives held for hedge purpose is estimated at the amount which is after offset of the cash inflow and outflow.

The cash flow by the maturity of derivative financial liabilities as of September 30, 2016 and December 31, 2015 are as follows (Unit: Korean Won in millions):

	Remaining maturity
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
September 30, 2016		2,971,565		—		—		—		—		—		2,971,565
December 31, 2015		2,568,446		—		—		—		—		—		2,568,446

4) Maturity analysis of off-balance accounts

The Bank provides guarantees on behalf of customers. A financial guarantee represents an irrevocable undertaking that the Bank should meet a customer’s obligations to third parties if the customer fails to do so. Under a loan commitment, the Bank agrees to make funds available to a customer in the future. Loan commitments which are usually for a specified term may be unconditionally cancellable or may persist, provided all conditions in the loan facility are satisfied or waived. Commitments to lend include commercial standby facilities and credit lines, liquidity facilities to commercial paper conduits and utilized overdraft facilities. The maximum limit to be paid by the Bank in accordance with guarantees and loan commitment only applies to principal amounts. There are contractual maturities for financial guarantees, such as guarantees for debentures issued or loans, loan commitments, and other guarantees, however, under the terms of the guarantees and loan commitments, funds should be paid upon demand from the counterparty. Details of off-balance accounts are as follows (Unit: Korea Won in millions):

- 14 -

	September 30, 2016		December 31, 2015
Guarantees		14,234,957		17,507,149
Loan commitments		53,077,532		63,361,727

(4) Operational risk

The Bank defines the operational risk that could cause a negative effect on capital resulting from inadequate internal process, labor work and systematic problem or external factors.

1) Operational risk management

The Bank maintains the operational risk management system under Basel II. The Bank developed advanced measurement approach to quantify required capital for operational risk. This system is used for reinforcement in market competitions, reducing the amount of risk capitals, managing the risk, and precaution for any unexpected occasions. This system was tested by the independent third party, and approved by the Financial Supervisory Service.

2) Operational risk measurement

To quantify the required capital for operational risk, the Bank applies advanced measurement approaches (AMA) using of internal loss data, business environment and internal control factors (BEICFs), and scenario analysis (SBA). For the operational risk management for its subsidiaries, the Bank adopted the basic indicator approach.

(5) Capital management

The Bank complies with the capital adequacy standard established by the Financial Services Commission. The capital adequacy standard is based on Basel III published by Basel Committee on Banking Supervision in Bank of International Settlements in 2010, and was implemented in Korea in December 2013. The capital adequacy ratio is calculated by dividing its own capital by asset (weighted with a risk premium – “risk weighted assets”) based on the separate financial statements of the Group.

The Bank is required to maintain a minimum common equity Tier 1 ratio of at least 5.375% and 4.5%, a minimum Tier 1 ratio of 6.875% and 6% and a minimum total regulatory capital of 8.875% and 8% as of September 30, 2016 and December 31, 2015, respectively.

Details of the Bank’s capital adequacy ratio as of September 30, 2016 and December 31, 2015 and are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Common Tier 1 capital		13,930,670			13,047,567
Other Tier 1 capital		3,265,798			3,016,309
Tier 2 capital		4,762,506			4,987,529
Total risk-adjusted capital		21,958,974			21,051,405
Risk-weighted assets for credit risk		142,093,959			142,127,112
Risk-weighted assets for market risk		2,039,296			2,595,566
Risk-weighted assets for operational risk		9,349,973			9,348,221
Total risk-weighted assets		153,483,228			154,070,899
Common equity Tier 1 ratio		9.08	%		8.47	%
Tier 1 capital ratio		11.20	%		10.43	%
Total capital ratio		14.31	%		13.66	%

- 15 -

5. OPERATING SEGMENTS

In evaluating the results of the Bank and allocating resources, the Bank’s Chief Operation Decision Maker (the “CODM”) utilizes the information per types of customers. This financial information of the segments is regularly reviewed by the CODM to make decisions about resources to be allocated to each segment and evaluate its performance.

(1) Segment by types of customers

The Bank’s reporting segments comprise the following customers: consumer banking, corporate banking, investment banking, capital market, and headquarters and others. The reportable segments are classified based on the target customers for whom the service is being provided:

	Details of products and services
Consumer banking	Loans/deposits and financial services for consumer, etc.
Corporate banking	Loans/deposits and export/import, financial services for corporations, etc.
Investment banking	Domestic/foreign investment, structured finance, M&A, equity and fund investment related business, venture advisory related tasks, real estate SOC development projects, etc.
Capital market	Fund management, investment securities and derivatives business, etc.
Headquarter and others	Segments that do not belong to above segments

1) The details of assets and liabilities by each segment are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Consumer banking		Corporate banking		Investment banking		Capital market		Headquarters and others		Sub-total		Adjustments		Total
Assets		103,032,126		105,139,039		6,159,000		11,852,713		66,804,299		292,987,177		2,191,085		295,178,262
Liabilities		52,146,293		174,615,508		54,821		11,088,236		35,402,837		273,307,695		1,835,331		275,143,026
	December 31, 2015
	Consumer banking		Corporate banking		Investment banking		Capital market		Headquarters and others		Sub-total		Adjustments		Total
Assets		95,612,963		107,313,193		6,646,754		7,903,460		58,248,294		275,724,664		852,244		276,576,908
Liabilities		46,049,310		170,127,944		41,772		6,410,552		31,478,927		254,108,505		3,579,085		257,687,590

- 16 -

2) The details of operating income by each segment are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2016
	Consumer banking			Corporate banking			Investment banking			Capital Market			Headquarters and others			Sub-total			Adjustments			Total
Net interest income
Interest income		2,228,511			2,293,660			114,282			14,666			694,792			5,345,911			220,856			5,566,767
Interest expense		(772,242	)		(1,349,208	)		(156	)		(227	)		(487,478	)		(2,609,311	)		216,590			(2,392,721	)
Inter-segment		(367,470	)		354,208			(104,388	)		24,648			93,002			—			—			—
		1,088,799			1,298,660			9,738			39,087			300,316			2,736,600			437,446			3,174,046
Net non-interest income
Non-interest income		682,013			399,706			421,359			6,935,357			2,458,504			10,896,939			82,607			10,979,546
Non-interest expense		(286,919	)		(20,284	)		(302,723	)		(6,923,656	)		(2,383,930	)		(9,917,512	)		(535,492	)		(10,453,004	)
Inter-segment		25,747			34,649			—			—			(60,396	)		—			—			—
		420,841			414,071			118,636			11,701			14,178			979,427			(452,885	)		526,542
Other expense
Administrative expense		(1,310,731	)		(700,794	)		(9,490	)		(12,104	)		(126,291	)		(2,159,410	)		—			(2,159,410	)
Impairment losses due to credit loss and others		(54,742	)		(456,407	)		(79,230	)		9,867			172,269			(408,243	)		15,439			(392,804	)
		(1,365,473	)		(1,157,201	)		(88,720	)		(2,237	)		45,978			(2,567,653	)		15,439			(2,552,214	)
Operating income		144,167			555,530			39,654			48,551			360,472			1,148,374			—			1,148,374
Non-operating income (expense)		(30,997	)		(2,754	)		32,618			—			37,527			36,394			—			36,394
Net income before income tax expense		113,170			552,776			72,272			48,551			397,999			1,184,768			—			1,184,768
Income tax expense		(27,387	)		(132,580	)		(17,490	)		(11,749	)		(30,482	)		(219,688	)		—			(219,688	)
Net income		85,783			420,196			54,782			36,802			367,517			965,080			—			965,080
	For the nine months ended September 30, 2015
	Consumer banking			Corporate banking			Investment banking			Capital Market			Headquarters and others			Sub-total			Adjustments			Total
Net interest income
Interest income		2,132,389			2,462,859			116,285			15,008			781,040			5,507,581			254,459			5,762,040
Interest expense		(953,431	)		(1,419,470	)		(14	)		(55	)		(581,040	)		(2,954,010	)		194,994			(2,759,016	)
Inter-segment		(242,395	)		205,503			(112,493	)		13,000			136,385			—			—			—
		936,563			1,248,892			3,778			27,953			336,385			2,553,571			449,453			3,003,024
Net non-interest income
Non-interest income		647,399			375,641			357,082			5,321,751			1,512,741			8,214,614			(28,462	)		8,186,152
Non-interest expense		(246,709	)		(13,804	)		(289,256	)		(5,303,088	)		(1,362,325	)		(7,215,182	)		(487,865	)		(7,703,047	)
Inter-segment		15,632			26,885			—			—			(42,517	)		—			—			—
		416,322			388,722			67,826			18,663			107,899			999,432			(516,327	)		483,105
Other expense
Administrative expense		(1,291,721	)		(661,634	)		(9,490	)		(11,572	)		(91,510	)		(2,065,927	)		—			(2,065,927	)
Impairment losses due to credit loss and others		(26,803	)		(686,434	)		21,926			(67,351	)		15,756			(742,906	)		66,874			(676,032	)
		(1,318,524	)		(1,348,068	)		12,436			(78,923	)		(75,754	)		(2,808,833	)		66,874			(2,741,959	)
Operating income		34,361			289,546			84,040			(32,307	)		368,530			744,170			—			744,170
Non-operating income (expense)		(13,398	)		(3,061	)		33,771			140			124,987			142,439			—			142,439
Net income before income tax expense		20,963			286,485			117,811			(32,167	)		493,517			886,609			—			886,609
Income tax expense		(5,073	)		(69,330	)		(28,510	)		7,784			(119,431	)		(214,560	)		43,711			(170,849	)
Net income		15,890			217,155			89,301			(24,383	)		374,086			672,049			43,711			715,760

- 17 -

(2) Information on financial products and services

The products of the Bank are classified as interest-bearing products such as loans, deposits and debt securities and non-interest bearing products such as loan commitment, credit commitment, equity securities, and credit card service. This classification of products has been reflected in the segment information presenting interest income and non-interest income.

(3) Information on geographical areas

Of the Bank’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the nine months ended September 30, 2016 and 2015 amounted to 16,338,395 million Won and 13,775,295 million Won, respectively, and revenue from the foreign customers amounted to 207,918 million Won and 172,897 million Won, respectively. Of the Bank’s non-current assets (investments in subsidiaries and associates, investment properties, premises and equipment and intangible assets), non-current assets located in Korea as of September 30, 2016 and December 31, 2015 are 6,449,712 million Won and 6,594,637 million Won, respectively, and in foreign countries are 8,674 million Won and 9,528 million Won, respectively.

6. CASH AND CASH EQUIVALENTS

(1) Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Cash and checks		4,320,220		2,089,943
Foreign currencies		715,765		618,368
Demand deposits		2,245,745		2,649,974
Fixed deposits		39,467		82,041
Total		7,321,197		5,440,326

(2) Material transactions not involving cash inflows and outflows are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Changes in other comprehensive income due to valuation of AFS financial assets		19,174			65,514
Changes in other comprehensive income (loss) of foreign currencies translation of foreign operations		(18,313	)		21,573
Changes in other comprehensive loss due to re-measurement of defined benefit liabilities		(52,105	)		(50,681	)
Changes in investments in subsidiaries and associates due to equity swap and others		—			100,662
Changes in investments in subsidiaries and associates due to accounts transfer		(137,849	)		—
Changes in accrued dividends on hybrid equity securities		23,559			30,191
Changes in payables due to intangible assets		—			125,496

- 18 -

7. FINANCIAL ASSETS AT FVTPL

As of September 30, 2016 and December 31, 2015, details of financial assets held for trading are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Deposits:
Gold banking assets		21,423		24,884
Securities:
Debt securities:
Korean treasury and government agencies		224,253		516,337
Financial institutions		901,726		601,248
Equity securities		21,366		41,332
Securities loaned		6,808		10,313
Sub-total		1,154,153		1,169,230
Derivative assets		2,914,754		2,375,511
Total		4,090,330		3,569,625

There are no financial assets designated at FVTPL as of September 30, 2016 and December 31, 2015.

8. AVAILABLE FOR SALE FINANCIAL ASSETS

Details of AFS financial assets are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Debt securities:
Korean treasury and government agencies		2,913,131		2,743,074
Financial institutions		4,290,857		4,561,334
Corporates		2,921,531		2,708,023
Bond denominated in foreign currencies		750,170		392,465
Sub-total		10,875,689		10,404,896
Equity securities		1,336,383		1,177,079
Beneficiary certificates		4,558,605		3,562,361
Securities loaned		560,814		720,010
Others		—		5,308
Total		17,331,491		15,869,654

- 19 -

9. HELD TO MATURITY FINANCIAL ASSETS

Details of HTM financial assets are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Korean treasury and government agencies		3,582,300		3,366,942
Financial institutions		4,909,447		4,138,250
Corporates		5,212,030		6,020,607
Bond denominated in foreign currencies		32,036		1,653
Total		13,735,813		13,527,452

10. LOANS AND RECEIVABLES

(1) Details of loans and receivables are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Due from banks		13,229,271		10,153,484
Loans		221,124,222		213,495,430
Other loan and receivables		11,362,093		7,434,246
Total		245,715,586		231,083,160

(2) Details of due from banks are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Due from banks in local currency:
Due from the Bank of Korea (“BOK”)		11,208,754			6,885,516
Due from the deposit banks		—			300,000
Due from non-monetary financial institutions		—			50,000
Others		30,337			24,525
Allowance for credit losses		(2,795	)		(2,063	)
Sub-total		11,236,296			7,257,978
Due from banks in foreign currencies:
Due from banks on demand		939,768			1,915,316
Time deposits		558,671			461,959
Others		495,674			519,542
Allowances for credit losses		(1,138	)		(1,311	)
Sub-total		1,992,975			2,895,506
Total		13,229,271			10,153,484

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(3) Details of restricted due from banks are as follows (Unit: Korean Won in millions):

	Counterparty	September 30, 2016		Reason of restriction
Due from banks in local currency:
Due from the Bank of Korea	The BOK		11,208,754	Reserve deposits under the BOK Act
Others	Samsung Securities and others		30,337	Deposits for futures and option trading and others
Sub-Total			11,239,091
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		939,768	Reserve deposits under the BOK Act and others
Others	Korea Investment & Securities and others		348,075	Deposits for foreign futures and option trading and others
Sub-Total			1,287,843
Total			12,526,934
	Counterparty	December 31, 2015		Reason of restriction
Due from banks in local currency:
Due from the Bank of Korea	The BOK		6,885,516	Reserve deposits under the BOK Act
Others	Samsung Securities and others		24,525	Deposits for futures and option trading and others
Sub-Total			6,910,041
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		1,915,316	Reserve deposits under the BOK Act and others
Others	Korea Investment & Securities and others		519,542	Deposits for foreign futures and option trading and others
Sub-Total			2,434,858
Total			9,344,899

(4) Details of loans are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Loans in local currency		189,772,182			184,220,598
Loans in foreign currencies		8,496,633			8,946,086
Domestic banker’s letter of credit		3,786,630			4,805,433
Bills bought in foreign currencies		6,764,581			6,605,617
Bills bought in local currency		101,287			71,701
Factoring receivables		139,949			149,515
Advances for customers on guarantees		47,576			42,049
Privately placed bonds		262,926			250,023
Call loans		2,356,037			2,383,536
Bonds purchased under resale agreements		10,720,477			7,395,100
Loan origination costs and fees		440,321			429,778
Others		21,958			41,967
Present value discount		(12,570	)		(89	)
Allowance for credit losses		(1,773,765	)		(1,845,884	)
Total		221,124,222			213,495,430

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(5) Details of other loans and receivables are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Receivables		8,951,516			5,299,202
Accrued income		951,648			877,436
Telex and telephone subscription rights and refundable deposits		1,004,326			1,028,250
Other receivables		587,207			643,586
Allowance for credit losses		(132,604	)		(414,228	)
Total		11,362,093			7,434,246

(6) Changes in the allowances for credit losses on loans and receivables are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2016
	Consumers			Corporates			Others			Total
Beginning balance		(196,056	)		(1,649,828	)		(417,602	)		(2,263,486	)
Net reversal of provision(net provision)		(65,185	)		(506,606	)		(26,039	)		(597,830	)
Recoveries of loans previously charged off		(41,778	)		(147,610	)		—			(189,388	)
Charge-offs		120,805			509,156			215,338			845,299
Sales of loans and receivables		2,017			104,844			91,767			198,628
Unwinding effect		7,818			54,690			—			62,508
Others		(16	)		33,984			(1	)		33,967
Ending balance		(172,395	)		(1,601,370	)		(136,537	)		(1,910,302	)

	For the nine months ended September 30, 2015
	Consumers			Corporates			Others			Total
Beginning balance		(319,739	)		(2,078,298	)		(332,880	)		(2,730,917	)
Net reversal of provision(net provision)		(104,415	)		(801,957	)		27,536			(878,836	)
Recoveries of loans previously charged off		(19,294	)		(73,027	)		—			(92,321	)
Charge-offs		195,933			739,268			334			935,535
Sales of loans and receivables		2,466			128,178			845			131,489
Unwinding effect		9,617			75,651			—			85,268
Others		(145	)		85,618			—			85,473
Ending balance		(235,577	)		(1,924,567	)		(304,165	)		(2,464,309	)

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11. THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1) The fair value hierarchy

The fair value hierarchy is determined by the levels of judgment involved in estimating fair values of financial assets and liabilities. The specific financial instruments characteristics and market condition such as volume of transactions and transparency are reflected to the market observable inputs. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities. The Bank maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value of its financial assets and financial liabilities. Fair value is measured based on the perspective of a market participant. As such, even when market assumptions are not readily available, the Bank’s own assumptions reflect those that market participants would use for measuring the assets or liabilities at the measurement date.

The fair value measurement is described in the one of the following three levels used to classify fair value measurements:

• Level 1 - fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The types of financial assets or liabilities generally included in Level 1 are publicly traded equity securities, derivatives, and debt securities issued by governmental bodies.

• Level 2 - fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices). The types of financial assets or liabilities generally included in Level 2 are debt securities not traded in active markets and derivatives traded in over-the-counter (“OTC”) but not required significant judgment.

• Level 3 - fair value measurements are those derived from valuation technique that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The types of financial assets or liabilities generally included in Level 3 are non-public securities and derivatives and debt securities of which valuation techniques require significant judgments and subjectivity.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Bank’s assessment of the significance of a particular input to a fair value measurement in its entirety requires judgment and consideration of inherent factors of the asset or liability.

(2) Fair value hierarchy of financial assets and liabilities measured at fair value is as follows (Unit: Korean Won in millions):

	September 30, 2016
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial assets:
Financial assets held for trading
Deposits		21,423		—		—		21,423
Debt securities		224,253		901,726		—		1,125,979
Equity securities		21,366		—		—		21,366
Securities loaned		6,808		—		—		6,808
Derivative assets		3,764		2,834,883		76,107		2,914,754
Sub-total		277,614		3,736,609		76,107		4,090,330
AFS financial assets
Debt securities		1,624,416		9,251,273		—		10,875,689
Equity securities		396,773		—		939,610		1,336,383
Beneficiary certificates		—		4,096,456		462,149		4,558,605
Securities loaned		427,515		133,299		—		560,814
Sub-total		2,448,704		13,481,028		1,401,759		17,331,491
Derivative assets		—		273,445		54		273,499
Total		2,726,318		17,491,082		1,477,920		21,695,320

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	September 30, 2016
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial liabilities:
Financial liabilities held for trading
Deposits		21,651		—		—		21,651
Derivative liabilities		2,558		2,880,981		62,851		2,946,390
Sub-total		24,209		2,880,981		62,851		2,968,041
Financial liabilities designated at FVTPL
Equity-linked securities		—		197		649,991		650,188
Debentures		—		94,850		—		94,850
Sub-total		—		95,047		649,991		745,038
Derivative liabilities		—		25,175		—		25,175
Total		24,209		3,001,203		712,842		3,738,254

	December 31, 2015
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial assets:
Financial assets held for trading
Deposits		24,884		—		—		24,884
Debt securities		516,337		601,248		—		1,117,585
Equity securities		41,332		—		—		41,332
Securities loaned		10,313		—		—		10,313
Derivative assets		419		2,296,416		78,676		2,375,511
Sub-total		593,285		2,897,664		78,676		3,569,625
AFS financial assets
Debt securities		1,512,104		8,892,792		—		10,404,896
Equity securities		343,335		—		833,744		1,177,079
Beneficiary certificates		—		3,196,465		365,896		3,562,361
Securities loaned		669,834		50,176		—		720,010
Others		—		—		5,308		5,308
Sub-total		2,525,273		12,139,433		1,204,948		15,869,654
Derivative assets		—		177,155		5,973		183,128
Total		3,118,558		15,214,252		1,289,597		19,622,407
Financial liabilities:
Financial liabilities held for trading
Deposits		24,872		—		—		24,872
Derivative liabilities		136,845		2,353,000		78,601		2,568,446
Sub-total		161,717		2,353,000		78,601		2,593,318
Financial liabilities designated at FVTPL
Equity-linked securities		—		10,660		747,351		758,011
Debentures		—		96,851		—		95,851
Sub-total		—		107,511		747,351		854,862
Total		161,717		2,460,511		825,952		3,448,180

(*1) There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value. The Bank recognizes transfers between the Levels at the end of reporting period within which events have occurred or conditions have changed.

(*2) Certain AFS unquoted equity securities were measured at cost as of September 30, 2016 and December 31, 2015, that are amounting to 18,955 million Won and 20,047 million Won, respectively. These unquoted equity instruments mostly represent minority investments in structured entity vehicles such as asset securitization structures. They are measured at cost because (a) observable inputs of financial information to measure fair value were not available to obtain, or (b) there is a significant variance in likely estimated cash flows or (c) the probabilities for the various estimated cash flows could not be measured reliably. In addition, there were no indicators of impairments in these investments and the Bank has no intention to dispose these investments in the foreseeable future.

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Certain financial assets are carried at cost, even though under K-IFRS it is required to be remeasured at their fair value, since they do not have quoted market prices in an active market and cannot be measured reliably at fair value. The carrying amount of the financial assets which have been disposed for the nine months ended September 30, 2016 is 161 million Won and related loss from the disposals is 41 million Won.

Financial assets and liabilities at FVTPL, AFS financial assets, financial assets and liabilities held for trading and derivative assets and liabilities are recognized at fair value. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Bank establishes the fair value using valuation techniques. Fair value measurement methods for each type of financial instruments are as follows:

	Fair value measurement technique	Input variables
Debt securities	The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the securities.	Risk free market rate of return and credit spread
Equity securities	Among Discounted Cash Flow (“DCF”) Model, Free Cash Flow to Equity (“FCFE”) Model, comparable company analysis, dividend discount model, risk-adjusted rate of return method, and net asset value method, one or more methods are used given the characteristic of the subject of fair value measurement.	Risk free market rate of return, market risk premium, corporate beta
Derivatives	The in-house developed model which is based on the models that are used by market participants in the valuation of general OTC derivative products, such as options, interest rate swaps, and currency swap that are based on inputs observable in the market. However, for some complicated financial instruments of which valuation should be based on some assumptions since some significant or all inputs to be used in the model are not observable in the market, the in-house derived model which is developed from the general valuation models, such as Finite Difference Method (“FDM”) or Monte Carlo Simulation.	Risk-free market rate, forward rate, volatility, foreign exchange rate, stock prices, etc.
Equity-linked securities	The fair value of security linked to stock prices or derivatives is measured by the models such as DCF model, FDM, or Monte Carlo Simulation given the natures of the securities or underlying assets.	Values of underlying assets, risk-free market rate, market rate, dividend and convenience yield, correlation, volatility, credit spread, and foreign exchange rate
Debentures	The fair value is measured by discounting the projected cash flows of a debenture by applying the market discount rate that is reflecting credit rating of the Bank.	Risk free market rate of return and forward rate

- 25 -

Measurement techniques of the financial assets and financial liabilities of level 3 that are recorded at fair value and significant, unobservable inputs are as follows:

	Fair value measurement technique	Input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Derivative assets	Option valuation model and others	Correlation	0.31~0.861	Volatility of fair value increases as correlation increases
		Historical variability	27.5%~40.9%	Volatility of fair value increases as historical variability increases
		Credit risk adjustment ratio	99.73%	Fair value decreases as credit risk adjustment ratio increases
Derivative liabilities	Option valuation model and others	Correlation	0.31~0.861	Volatility of fair value increases as correlation increases
		Historical variability	27.5%~40.9%	Volatility of fair value increases as historical variability increases
Equity-linked securities	Monte Carlo Simulation and others	Correlation	0.343~0.791	Compound financial instrument’s fair value increases as both of historical variability and correlation increase
		Historical variability	15.1%~46.3%	When correlation decreases, however, despite of increase of historical variability, the fair value of compound financial instrument may decrease
Equity securities	External appraisal value and others	Expected growth rate	0%~1%	Fair value increases as expected growth rate increases

Fair value of financial assets and liabilities classified into level 3 is measured by the Bank using its own valuation techniques or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Bank and the appropriateness of inputs is reviewed regularly.

(3) Changes in financial assets and liabilities classified into level 3 are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2016
	January 1, 2016		Net Income (loss) (*1)			Other comprehensive income (loss)			Purchases/ Issuances		Disposals/ Settlements			Transfer to or out of level 3 (*2)			September 30, 2016
Financial assets:
Financial assets held for trading
Derivative assets(*3)		78,676		(2,900	)		—			12,182		(11,311	)		(540	)		76,107
AFS financial assets
Equity securities (*4)		833,744		(4,698	)		55,527			193,535		(121,043	)		(17,455	)		939,610
Beneficiary certificates		365,896		14,283			673			114,800		(33,503	)		—			462,149
Others		5,308		595			(643	)		—		(5,260	)		—			—
Sub-total		1,204,948		10,180			55,557			308,335		(159,806	)		(17,455	)		1,401,759
Derivative assets		5,973		3,716			—			—		(9,635	)		—			54
Total		1,289,597		10,996			55,557			320,517		(180,752	)		(17,995	)		1,477,920
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities		78,601		785			—			—		(16,535	)		—			62,851
Financial liabilities designated at FVTPL
Equity-linked securities		747,351		44,006			—			983		(142,349	)		—			649,991
Total		825,952		44,791			—			983		(158,884	)		—			712,842

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(*1) The loss amounting to 31,437 million Won for the nine months ended September 30, 2016 which is from financial assets and liabilities that the Bank holds as at the end of the periods, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the separate statement of comprehensive income.

(*2) The Bank recognizes transfers among levels at the end of reporting period within which events have occurred or conditions have changed.

(*3) As the variables used for the valuation of currency related derivatives were observable in the market, such derivatives were transferred into level 2 from level 3.

(*4) AFS financial assets were transferred out of level 3 to level 1 upon the change of the fair value measurement method of the assets by using quoted prices in the active market from previously using the external valuation specialists. Also, AFS financial assets were transferred out of level 1 to level 3 upon the change of the fair value measurement method of the assets by using the external valuation specialists from previously using quoted prices in the active market.

	For the nine months ended September 30, 2015
	January 1, 2015		Net Income (loss) (*1)			Other comprehensive income (loss)			Purchases/ Issuances			Disposals/ Settlements			Transfer to or out of level 3 (*2)			September 30, 2015
Financial assets:
Financial assets held for trading
Derivative assets (*3)		48,691		56,040			—			(6,733	)		(17,538	)		(979	)		79,481
AFS financial assets
Equity securities (*4)		883,828		(31,970	)		21,851			86,811			(95,543	)		(13,123	)		851,854
Beneficiary certificates		352,118		5,857			(11,608	)		97,801			(60,003	)		—			384,165
Others		14,241		(7,062	)		1,697			—			(3,240	)		—			5,636
Sub-total		1,250,187		(33,175	)		11,940			184,612			(158,786	)		(13,123	)		1,241,655
Derivative assets		11,946		6,014			—			—			(11,680	)		—			6,280
Total		1,310,824		28,879			11,940			177,879			(188,004	)		(14,102	)		1,327,416
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities (*3)		41,711		56,433			—			2,610			(16,736	)		(1,202	)		82,816
Financial liabilities designated at FVTPL(*5)
Equity-linked securities		361,993		(100,825	)		—			798,142			(300,560	)		(197	)		758,553
Total		403,704		(44,392	)		—			800,752			(317,296	)		(1,399	)		841,369

(*1) The loss amounting to 59,015 million Won for the nine months ended September 30, 2015 which is from financial assets and liabilities that the Bank holds as at the end of the periods, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the separate statement of comprehensive income.

(*2) The Bank recognizes transfers among levels at the end of reporting period within which events have occurred or conditions have changed.

(*3) As the variables used for the valuation of equity and interest related derivatives were observable in the market, such derivatives were transferred into level 2 from level 3.

(*4) AFS financial assets were transferred out of level 3 to level 1 upon the change of the fair value measurement method of the assets by using quoted prices in the active market from previously using the external valuation specialists. Also, AFS financial assets were transferred out of level 1 to level 3 upon the change of the fair value measurement method of the assets by using the external valuation specialists from previously using quoted prices in the active market.

(*5) Since the observable market data for equity-linked securities became available, such assets and liabilities were transferred out of level 3 to level 2.

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(4) Sensitivity analysis on the unobservable inputs used for measuring level 3 financial instruments

The sensitivity analysis of the financial instruments is performed by classifying with favorable and unfavorable changes based on how changes in unobservable assumptions would have effects on the fluctuations of financial instruments’ value. When the fair value of a financial instrument is affected by more than one unobservable assumption, the below table reflects the most favorable or the most unfavorable changes which resulted from varying the assumptions individually. The sensitivity analysis was performed for two types of level 3 financial instruments: (1) interest rate related derivatives, currency related derivatives, equity related derivatives, and equity-linked securities of which fair value changes are recognized as net income; (2) equity securities and beneficiary certificates of which fair value changes are recognized as other comprehensive income. Equity securities classified as level 3 but measured at costs are excluded from sensitivity analysis.

The following table presents the sensitivity analysis which is based on reasonable estimates to explain the effect of reasonably possible alternative assumptions on the fair value of a level 3 financial instruments as of September 30, 2016 and December 31, 2015 (Unit: Korean Won in millions):

	As of September 30, 2016										As of December 31, 2015
	Net income (loss)					Other comprehensive income (loss)					Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable			Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets held for trading
Derivative assets (*1)(*2)		7,928		(6,533	)		—		—			10,674		(9,729	)		—		—
AFS financial Assets
Equity securities (*3)(*4)		—		—			24,824		(15,723	)		—		—			30,749		(18,528	)
Beneficiary certificates (*4)		—		—			2,555		(2,496	)		—		—			4,102		(3,875	)
Others (*5)		—		—			—		—			—		—			80		(80	)
Total		7,928		(6,533	)		27,379		(18,219	)		10,674		(9,729	)		34,931		(22,483	)
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities (*1)(*2)		8,261		(8,365	)		—		—			13,469		(12,281	)		—		—
Financial liabilities designated at FVTPL
Equity-linked securities (*1)		1,353		(1,345	)		—		—			2,289		(2,247	)		—		—
Total		9,614		(9,710	)		—		—			15,758		(14,528	)		—		—

(*1) Fair value changes of equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical fluctuation rate of stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate and currency related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing volatility of interest rate and credit risk adjustment ratio, which are major unobservable variables, by 10%, respectively.

(*2) Both derivative assets (and liabilities) held for trading and hedging are included.

(*3) Fair value changes of equity securities are calculated by increasing or decreasing growth rate (0~1%) and discount rate or liquidation value (-1~1%) and discount rate. The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4) Among the equity securities, even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in practice, fair value changes of beneficiary certificates and other securities whose major unobservable variables are composed of the real estate are calculated by increasing or decreasing price fluctuation of real estate which are underlying assets and discount rate by 1%.

(*5) Fair value changes of other securities are calculated by increasing or decreasing price fluctuation of trust property or real estate which are underlying assets and discount rate by 1%. The prices of trust property, real estates, and discount rate are major unobservable variables.

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(5) Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Fair value								Carrying
	Level 1		Level 2		Level 3		Total		Value
Financial assets:
HTM financial assets		704,169		13,183,433		—		13,887,602		13,735,813
Loans and receivables		—		—		249,475,300		249,475,300		245,715,586
Financial liabilities:
Deposits due to customers		—		212,353,505		—		212,353,505		212,077,602
Borrowings		—		15,122,925		—		15,122,925		15,056,318
Debentures		—		18,681,680		—		18,681,680		18,174,443
Other financial liabilities		—		25,511,903		—		25,511,903		25,512,321

	December 31, 2015
	Fair value								Carrying
	Level 1		Level 2		Level 3		Total		Value
Financial assets:
HTM financial assets		1,045,022		12,674,538		—		13,719,560		13,527,452
Loans and receivables		—		—		234,582,035		234,582,035		231,083,160
Financial liabilities:
Deposits due to customers		—		200,384,040		—		200,384,040		201,353,128
Borrowings		—		18,811,895		—		18,811,895		18,760,947
Debentures		—		17,594,292		—		17,594,292		17,259,749
Other financial liabilities		—		16,110,862		—		16,110,862		16,111,469

The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Bank determines the fair value using alternative assumptions through developing fair value measurement methods. Alternative assumptions and fair value measurement methods for financial assets and liabilities that are measured at amortized costs are given as follows:

	Fair value measurement technique	Input variables
Debt securities	The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the securities.	Risk free market rate of return and credit spread
Loans and receivables	The fair value is measured by discounting the projected cash flows of loan products by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor.	Risk free market rate of return, credit spread and prepayment ratio
Deposits due to customers, borrowings and debentures	The fair value is measured by discounting the projected cash flows of debt products by applying the market discount rate that is reflecting credit rating of the Bank.	Risk free market rate of return and forward rate

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12. DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS

(1) Derecognition of financial assets

1) Transferred financial assets that meet condition of derecognition

The book value, fair value of, and maximum exposure to loss from the financial assets that were derecognized from the separate financial statements of the Bank through disposals, but the Bank still have continuous involvements are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Type of continuous involvement	Book value of continuous participation		Fair value of continuous participation		Maximum exposure to loss
Conditional disposal of loans to KAMCO (*)	Post settlement		—		—		701

	December 31, 2015
	Type of continuous involvement	Book value of continuous participation		Fair value of continuous participation		Maximum exposure to loss
Conditional disposal of loans to KAMCO (*)	Post settlement		—		—		701

(*) For ex-post settling up amount of the collateral is not fixed yet, expected cash flow cannot be reliably measured as of September 30, 2016 and December 31, 2015, and the maximum exposure to loss is disclosed at the transfer price. Though the transfer does not qualify for derecognition in accordance with K-IFRS 1039 Financial Instrument: Recognition and Measurement, the Bank derecognized the financial asset from the separate financial statements applying exception for retrospective application of transactions before the date of transition to IFRSs in K-IFRS 1101 First-time Adoption of K-IFRS.

2) Transferred financial assets that do not meet condition of derecognition

a) Bonds sold under repurchase agreements

The financial instruments that were disposed but the Bank agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, are as follows (Unit: Korean Won in millions):

		September 30, 2016		December 31, 2015
Transfer assets	AFS financial assets		370,016		43,149
	HTM financial assets		7,129		139,340
	Total		377,145		182,489
Liabilities	Bonds sold under repurchase agreements		211,021		111,529

- 30 -

b) Securities loaned

When the Bank loans its securities to outside parties, the legal ownerships of the securities are transferred, however, they should be returned at the end of lending period and therefore the Bank does not derecognize them from the separate financial statements as it owns majority of risks and benefits from the securities continuously regardless of the transfer of legal ownership. The carrying amounts of securities loaned are as follows (Unit: Korean Won in millions):

		September 30, 2016		December 31, 2015		Loaned to
Financial assets at FVTPL	Equity securities- listed stock		6,809		10,313	Samsung Securities Co., Ltd. and others
AFS financial assets	Debt securities- Korean treasury and government agencies		560,814		720,010	Korea Securities Finance Corporation and others
			567,623		730,323

The details of the transferred financial assets that are not derecognized in their entirety, such as disposal of securities under repurchase agreement or securities loaned, are explained in Note 18.

(2) The offset between financial assets and liabilities

The Bank possesses both the uncollected domestic exchange receivables and unpaid domestic exchange payable, which satisfy offsetting criteria of K-IFRS 1032. Therefore, the total number of uncollected domestic exchange receivables or unpaid domestic exchange payable has been countervailed with part of unpaid domestic exchange payable or uncollected domestic exchange receivables, respectively, and has been disclosed in loans and receivables or other financial liabilities of the Bank’s separate statements of financial position respectively.

The Bank possesses the derivative assets, derivative liabilities, receivable spot exchange, and payable spot exchange which do not satisfy the offsetting criteria of K-IFRS 1032, but provide the Bank the right of, under the circumstances of the trading party’s defaults, insolvency, or bankruptcy, the offsetting. Item such as cash collateral cannot satisfy the offsetting criteria of K-IFRS 1032, but in accordance with the collateral arrangements and under the circumstances of the trading party’s default, insolvency, or bankruptcy, the derivative assets, derivative liabilities, receivable spot exchange, and the net amount of payable spot exchange can be offset.

The Bank has entered into a sale and repurchase agreements and accounted it as collateralized borrowing. Also, the Bank has entered into a purchase and resale agreement and accounted it as secured loans. The repurchase and resale agreement can have the offsetting right only under the trading party’s default, insolvency, or bankruptcy which do not satisfy the offsetting criteria of K-IFRS 1032, the Bank recorded the collateralized borrowings in borrowings and the secured loans in loans and receivables. The Bank under the repurchase agreements has offsetting right only upon the counter-party’s default, insolvency or bankruptcy, thus the repurchase agreements are applied by the TBMA/ISMA Global Master Repurchase Agreement of which do not satisfy the offsetting criteria of K-IFRS 1032. The Bank disclosed bonds sold (purchased) under repurchase agreements as borrowings (loans and receivables).

- 31 -

As of September 30, 2016 and December 31, 2015, the financial instruments to be set off and may be covered by master netting agreements and similar agreements are given as below (Unit: Korean Won in millions):

	September 30, 2016
	Gross amounts of		Gross amounts of recognized		Net amounts of		Related amounts not set off in the separate statement of financial position				Net amounts
	recognized financial assets		financial liabilities set off		financial assets presented		Master netting agreement		Cash collateral received
Financial assets:
Derivative assets and others (*1)		3,163,028		13,144		3,149,884		10,219,536		76,959		1,078,058
Receivable spot exchange (*2)		8,224,669		—		8,224,669
Bonds purchased under resale agreements (*2)		10,720,476		—		10,720,476		10,720,476		—		—
Domestic exchanges receivable (*2)(*5)		24,187,403		23,708,032		479,371		—		—		479,371
Total		46,295,576		23,721,176		22,574,400		20,940,012		76,959		1,557,429
	September 30, 2016
	Gross amounts of		Gross amounts of recognized financial assets set off		Net amounts of		Related amounts not set off in the separate statement of financial position				Net Amounts
	recognized financial liabilities				financial liabilities presented		Master netting agreement		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		3,406,263		13,144		3,393,119		10,587,588		9,930		1,019,097
Payable spot exchange (*3)		8,223,496		—		8,223,496
Bonds sold under repurchase agreements (*4)		211,021		—		211,021		211,021		—		—
Domestic exchanges payable (*3)(*5)		30,189,149		23,708,032		6,481,117		6,126,301		—		354,816
Total		42,029,929		23,721,176		18,308,753		16,924,910		9,930		1,373,913
	December 31, 2015
	Gross amounts of		Gross amounts of recognized		Net amounts of		Related amounts not set off in the separate statement of financial position				Net amounts
	recognized financial assets		financial liabilities set off		financial assets presented		Master netting agreement		Cash collateral received
Financial assets:
Derivative assets and others (*1)		2,560,610		8,857		2,551,753		5,566,120		53,162		1,234,707
Receivable spot exchange (*2)		4,302,236		—		4,302,236
Bonds purchased under resale agreements (*2)		7,395,100		—		7,395,100		7,395,100		—		—
Domestic exchanges receivable (*2)(*5)		29,975,508		29,467,000		508,508		—		—		508,508
Total		44,233,454		29,475,857		14,757,597		12,961,220		53,162		1,743,215
	December 31, 2015
	Gross amounts of		Gross amounts of recognized financial assets set off		Net amounts of		Related amounts not set off in the separate statement of financial position				Net amounts
	recognized financial liabilities				financial liabilities presented		Master netting agreement		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		3,132,885		8,857		3,124,028		6,156,089		173,268		1,095,727
Payable spot exchange (*3)		4,301,056		—		4,301,056
Bonds sold under repurchase agreements (*4)		111,529		—		111,529		111,529		—		—
Domestic exchanges payable (*3)(*5)		31,487,717		29,467,000		2,020,717		2,020,717		—		—
Total		39,033,187		29,475,857		9,557,330		8,288,335		173,268		1,095,727

- 32 -

(*1) The items include derivatives held for trading, held for hedging and equity-linked securities.

(*2) The items are included in loans and receivables.

(*3) The items are included in other financial liabilities.

(*4) The items are included in borrowings.

(*5) Certain financial assets and liabilities are presented as net amounts.

13. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES

(1) The Bank has the following subsidiaries (Unit: Korean Won in 100 millions, USD in 10 thousands, CNY and RUB in 100 millions, IDR in 100 millions, BRL in 10 thousands):

Subsidiaries	Location	Capital stock		Main business
Woori FIS Co., Ltd.	Korea	KRW	245	System software development & maintenance
Woori Private Equity Asset Management(*5)	Korea	KRW	300	Finance
Woori Finance Research Institute	Korea	KRW	30	Other service business
Woori Card	Korea	KRW	8,463	Finance
Woori Investment Bank	Korea	KRW	2,371	Other credit finance business
Woori Private Equity Fund (*1)(*2)	Korea	KRW	1,593	Other financial business
Woori Credit Information Co., Ltd.	Korea	KRW	50	Credit information
Woori America Bank	America	USD	12,250	Finance
PT Bank Woori Saudara Indonesia 1906 Tbk	Indonesia	IDR	5,211	”
Woori Global Markets Asia Ltd.	Hong Kong	USD	10,000	”
Woori Bank China Limited(*3)	China	CNY	21.6	”
Zao Woori Bank	Russia	RUB	14.5	”
Woori Brazil Bank	Brazil	BRL	7,709	”
Korea BTL Infrastructure Fund(*4)	Korea	KRW	7,734	”
Woori Fund Service Co., Ltd.	Korea	KRW	100	”
Woori Finance Cambodia	Cambodia	USD	300	”
Woori Finance Myanmar	Myanmar	USD	200	”

	September 30, 2016					December 31, 2015
Subsidiaries	Number of shares owned		Percentage of ownership (%)		Financial statements as of	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Woori FIS Co., Ltd.		4,900,000		100.0	Sep 30, 2016		4,900,000		100.0	Dec. 31, 2015
Woori Private Equity Asset Management(*5)		6,000,000		100.0	Sep 30, 2016		6,000,000		100.0	Dec. 31, 2015
Woori Finance Research Institute		600,000		100.0	Sep 30, 2016		600,000		100.0	Dec. 31, 2015
Woori Card		169,266,200		100.0	Sep 30, 2016		169,266,200		100.0	Dec. 31, 2015
Woori Investment Bank		275,761,491		58.2	Sep 30, 2016		275,761,491		58.2	Dec. 31, 2015
Woori Private Equity Fund (*1)(*2)		46,061		28.9	Sep 30, 2016		48,340		28.9	Dec. 31, 2015
Woori Credit Information Co., Ltd.		1,008,000		100.0	Sep 30, 2016		1,008,000		100.0	Dec. 31, 2015
Woori America Bank		24,500,000		100.0	Sep 30, 2016		24,500,000		100.0	Dec. 31, 2015
PT Bank Woori Saudara Indonesia 1906 Tbk		3,754,701,359		74.0	Sep 30, 2016		3,754,701,359		74.0	Dec. 31, 2015
Woori Global Markets Asia Ltd.		78,000,000		100.0	Sep 30, 2016		78,000,000		100.0	Dec. 31, 2015
Woori Bank China Limited (*3)		—		100.0	Sep 30, 2016		—		100.0	Dec. 31, 2015
Zao Woori Bank		57,999,999		100.0	Sep 30, 2016		57,999,999		100.0	Dec. 31, 2015
Woori Brazil Bank		77,093,999		100.0	Sep 30, 2016		77,093,999		100.0	Dec. 31, 2015
Korea BTL Infrastructure Fund (*4)		154,477,297		99.9	Sep 30, 2016		146,157,413		99.9	Dec. 31, 2015
Woori Fund Service Co., Ltd.		2,000,000		100.0	Sep 30, 2016		2,000,000		100.0	Dec. 31, 2015
Woori Finance Cambodia		3,000,000		100.0	Sep 30, 2016		3,000,000		100.0	Dec. 31, 2015
Woori Finance Myanmar		200,000		100.0	Sep 30, 2016		200,000		100.0	Dec. 31, 2015

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(*1) As Woori Private Equity Asset Management, which is a subsidiary of the Bank, has a control over Woori Private Equity Fund as its general partner, it is deemed that the Bank has a control over the entity.

(*2) Due to refund of capital invested occurred during the nine months ended September 30, 2016, both capital stock and the number of shares have decreased.

(*3) The functional currency of Woori Bank China Limited has changed from USD to CNY.

(*4) Due to paid-in capital increase occurred during the nine months ended September 30, 2016, both capital stock and the number of shares have increased.

(*5) The entity registered as the professional private equity fund investor during the nine months ended September 30, 2016, and it changed its name into Woori Private Equity Asset Management Co.,Ltd.

(2) As for the structured entities in accordance with K-IFRS 1110 and K-IFRS 1112, it is determined that the Bank controls the entity after considering facts and circumstances, such as the Bank’s power over the entity’s related business activities, the Bank’s exposure to variable returns from the its involvement with the entity, and the Bank’s ability to affect the returns through its power over the entity.

a) Details of structured entities which the Bank controls are as follows:

	As of September 30, 2016
SPEs	Location		Main business	Percentage of ownership (%)		Financial statements as of
Structured entities established for securitization of financial assets (*1)
Kumho Trust First Co., Ltd. and 14 structures entities		Korea	Asset securitization		—		Sep. 30, 2016
KAMCO Value Recreation First Securitization Specialty Co., Ltd.		Korea	”		15.0		Sep. 30, 2016
Money Trust by Trust Business Act (*2)
Principle Guaranteed Trust and Principle and Interest Guaranteed Trust		Korea	Trust		—		Sep. 30, 2016
Structured entities established for investment in securities and others
Haeoreum Short-term Bond 15th and 33 structures entities		Korea	Securities investments		100.0		Sep. 30, 2016
Consus Sakhalin Real Estate Investment Trust 1st		Korea	”		75.0		Sep. 30, 2016
	As of December 31, 2015
SPEs	Location		Main business	Percentage of ownership (%)		Financial statements as of
Structured entities established for securitization of financial assets (*1)
Kumho Trust First Co., Ltd. and 14 structures entities		Korea	Asset securitization		—		Dec. 31, 2015
KAMCO Value Recreation First Securitization Specialty Co., Ltd.		Korea	”		15.0		Dec. 31, 2015
Money Trust by Trust Business Act (*2)
Principle Guaranteed Trust and Principle and Interest Guaranteed Trust		Korea	Trust		—		Dec. 31, 2015
Structured entities established for investment in securities and others
Haeoreum Short-term Bond 15th and 33 structures entities		Korea	Securities investments		100.0		Dec. 31, 2015
Consus Sakhalin Real Estate Investment Trust 1st		Korea	”		75.0		Dec. 31, 2015

(*1) It is determined that the Bank controls the entity after considering all the facts and circumstances, such as the Bank’s power over the entity’s related business activities, the Bank’s exposure to variable returns from its involvement with the entity, and the Bank’s ability to affect the returns through its power over the entity, even though the Bank holds less than 50% ownership interest of the entity.

(*2) The Bank controls the trust because it has power that determines the operational performance over the trust and is exposed to variable returns to absorb losses through the guarantees of payment of principal and fixed rate of return.

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b) The following companies have been excluded from the consolidation scope despite of the Bank’s holding of majority ownership interest over the companies as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities investments		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities investments		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities investments		88.9

	As of December 31, 2015
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities investments		60.0
Heungkuk High Class Private Equity Securities Investment Trust 377th (*)	Korea	Securities investments		51.3
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities investments		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities investments		88.9

(*) The Bank owns the majority ownership interest in these structured entities, but has no power on the investees’ relevant activities. As such, it is deemed that the Bank has no power or control over the structured entities.

(3) Investments in associates are as follows (Unit: Korean Won in 100 millions):

					September 30, 2016
Investee	Location	Capital		Main business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Kumho Tires Co., Inc. (*1)(*5)(*17)	Korea		7,900	Manufacturing		22,357,561		14.2	Jun. 30, 2016
Woori Blackstone Korea Opportunity No.1 Private Equity Fund (*8)	Korea		1,198	Finance		25,699,287,222		21.4	Sep. 30, 2016
Woori Service Networks Co., Ltd. (*3)	Korea		5	Freight & staffing		4,704		4.9	Aug. 31, 2016
Korea Credit Bureau Co., Ltd. (*2)	Korea		100	Credit information		180,000		9.9	Sep. 30, 2016
Korea Finance Security Co., Ltd. (*3)	Korea		60	Security service		180,000		15.0	Aug. 31, 2016
Chin Hung International Inc. (*3)(*5)	Korea		769	Construction		43,709,400		28.4	Aug. 31, 2016
Poonglim Industrial Co., Ltd. (*6) (*7)(*16)	Korea		736	Construction		4,146,811		29.7	Jun. 30, 2016
STX Engine Co., Ltd. (*1)(*5)(*6)	Korea		691	Manufacturing		8,082,650		29.2	Jun. 30, 2016
Samho International Co., Ltd. (*1)(*5)	Korea		759	Construction		1,190,000		7.8	Sep. 30, 2016
Force TEC Co., Ltd. (*4)	Korea		118	Freight & staffing		8,087,128		34.4	—
STX Corporation (*1)(*5)(*6)(*16)	Korea		748	Wholesale		4,472,248		15.0	Jun. 30, 2016
Osung LST Co., Ltd. (*1)(*5)(*6)(*15)	Korea		620	Manufacturing		13,817,333		11.1	Jun. 30, 2016
Saman Corporation (*2)(*12)(*17)	Korea		7	Construction & Technology Service		12,542		9.2	Jun. 30, 2016
Dongwoo C & C Co., Ltd.(*4)	Korea		7	Construction		13,317		23.2	—
SJCO Co., Ltd. (*4)	Korea		26	Aggregate transportation and Wholesale		70,529		26.5	—
G2 collection Co., Ltd. (*4)	Korea		2	Wholesale and retail sales		12,574		28.9	—
The Base Enterprise Co., Ltd. (*4)(*10)	Korea		7	Manufacturing		68,470		48.4	—
Heungjiwon Co., Ltd. (*4)(*10)	Korea		6	Other printing		32,849		27.8	—
Kyesan Engineering Co., Ltd. (*4)(*10)	Korea		13	Construction		60,581		23.2	—
Good Software Lab Co., Ltd. (*4)(*10)	Korea		3	Service		17,121		28.9	—
Wongwang Co., Ltd. (*4)(*10)	Korea		1	Wholesale and real estate		2,590		29.0	—

- 35 -

					September 30, 2016
Investee	Location	Capital		Main business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Sejin Construction Co., Ltd. (*4)(*9)	Korea		4	Construction		12,123		29.6	—
Gachi Staff Co., Ltd. (*4)(*10)	Korea		2	Wholesale		10,803		27.1	—
Deokwon Food Co., Ltd. (*4)(*10)	Korea		3	Poultry processing and storage		14,300		27.3	—
QTS Shipping Co., Ltd. (*4)(*9)	Korea		3	Complex transportation brokerage		17,460		49.4	—
Woori Growth Partnerships New Technology Private Equity Fund (*11)	Korea		235	Other finance		9,561		23.1	Sep. 30, 2016
					December 31, 2015
Investee	Location	Capital		Main Business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Kumho Tires Co., Inc. (*1)(*5)(*17)	Korea		7,900	Manufacturing		22,357,561		14.2	Dec. 31, 2015
Woori Blackstone Korea Opportunity No.1 Private Equity Fund (*8)	Korea		1,664	Finance		35,682,969,783		21.4	Dec. 31, 2015
Woori Service Networks Co., Ltd. (*3)	Korea		5	Freight & staffing		4,704		4.9	Nov. 30, 2015
Korea Credit Bureau Co., Ltd. (*2)	Korea		100	Credit information		180,000		9.9	Dec. 31, 2015
Korea Finance Security Co., Ltd. (*3)	Korea		60	Security service		180,000		15.0	Nov. 30, 2015
United PF 1st Corporate Financial Stability (*13)	Korea		9,732	Finance		171,585		17.7	Dec. 31, 2015
Chin Hung International Inc. (*3)(*5)	Korea		769	Construction		43,709,400		28.4	Nov. 30, 2015
Poonglim Industrial Co., Ltd. (*6) (*7)(*16)	Korea		736	Construction		4,146,811		28.9	Sep. 30, 2015
STX Engine Co., Ltd. (*1)(*5)(*6)	Korea		691	Manufacturing		8,082,650		29.2	Sep. 30, 2015
Samho International Co., Ltd. (*1)(*5)	Korea		759	Construction		1,190,000		7.8	Dec. 31, 2015
Force TEC Co., Ltd. (*4)	Korea		118	Freight & staffing		8,087,128		34.4	—
Hana Engineering & Construction Co., Ltd. (*14)	Korea		39	Construction		177,874		22.4	—
STX Corporation (*1)(*5)(*6)	Korea		748	Wholesale		4,472,248		15.0	Sep. 30, 2015
Osung LST Co., Ltd. (*1)(*5)(*6)(*15)	Korea		620	Manufacturing		13,817,333		11.1	Sep. 30, 2015
Saman Corporation (*2)(*12)(*17)	Korea		341	Construction Technology Service		627,124		9.2	Dec. 31, 2015
Dongwoo C & C Co.,Ltd.(*4)	Korea		7	Construction		13,317		23.2	—
SJCO Co.,Ltd. (*4)	Korea		26	Aggregate transportation and Wholesale		70,529		26.5	—
Ilyang construction Co., Ltd. (*14)	Korea		13	Construction		105,936		40.0	—
G2 collection Co.,Ltd. (*4)	Korea		2	Wholesale and retail sales		12,574		28.9	—

(*1) The Bank has significant influence in the creditors’ council which is the decision making body regarding to financial and operational policies of the entities.

(*2) The Bank can participate in the decision making body and exercise significant influence over Korea Credit Bureau Co., Ltd. and Saman Corporation through business partnerships.

(*3) As the financial statements as of September 30, 2016 and December 31, 2015 are not available, the Bank applied the equity method by using the financial statements as of August 31, 2016 and November 30, 2015 and adjusted the effects of significant transactions or events that occurred between the dates of those financial statements. Meanwhile, significant portion of business for Woori Service Networks Co., Ltd. and Korea Finance Security Co., Ltd. is transacted with the Bank.

(*4) The carrying value of investments in Force TEC Co., Ltd. and Dongwoo C & C Co., Ltd., SJCO Co.,Ltd., and G2 collection Co., Ltd., The Base Enterprise Co., Ltd., Heungjiwon Co., Ltd., Kyesan Engineering Co., Ltd., Good Software Lab Co., Ltd., Wongwang Co., Ltd., Sejin Construction Co., Ltd., Gachi Staff Co., Ltd., Deokwon Food Co., Ltd. and QTS Shipping Co.,Ltd. is nil as of September 30, 2016 and December 31, 2015, respectively.

(*5) The investment in associates that have quoted market prices are Kumho Tire Co., Inc. (Current period: KRW 11,300, Previous year: KRW 6,730), Chin Hung International Inc. (Current period: KRW 1,905, Previous year: KRW 2,300), STX Engine Co., Ltd. (Current period: KRW 6,730, Previous year: KRW 6,800), Samho International Co., Ltd. (Current period: KRW 17,100, Previous year: KRW 15,550), STX Corporation. (Current period: KRW 2,450, Previous year: KRW 3,435), and Osung LST Co., Ltd. (Previous year: KRW 795).

- 36 -

(*6) As the financial statements as of September 30, 2016 and December 31, 2015 are not available, the Bank applied the equity method by using the financial statements as of June 30, 2016 and September 30, 2015 and adjusted the effects of significant transactions or events that occurred between the dates of those financial statements.

(*7) Due to treasury stock acquisition of Poonglim Industrial Co., Ltd. occurred during the nine months ended September 30, 2016 the ownership of the Bank has increased.

(*8) Due to the redemption of the capital of Woori Blackstone Korea Opportunity No.1 Private Equity Fund, these investees’ capital stocks and the Bank’s number of holding shares in these entities decreased.

(*9) Due to debt-equity swap occurred during the nine months ended September 30, 2016, it became an associate.

(*10) Even though the Bank’s ownership ratio of the entity is more than 20%, the Bank did not have significant influence over the entity due to the fact that the entity was going through workout process under receivership, thus it was excluded from the investment in associates. However, as the workout was over during the nine months ended September 30, 2016, it was included in the investment in associates.

(*11) As the Bank invested K-Growth crowd 2step Fund during the nine months ended September 30, 2016, it was included in the investment in associates.

(*12) Due to the capital reduction of Saman Corporation, the capital stocks and the Bank’s ownership interest in this entity decreased.

(*13) As the Bank lost significant influence over United PF 1st Corporate Financial Stability during the nine months ended September 30, 2016, it was excluded from the investment in associates.

(*14) As the Bank sold its ownership interests in the entities during the nine months ended September 30, 2016, they were excluded from the investment in associates.

(*15) This entity was reclassified into assets held for sale for the nine months ended September 30, 2016

(*16) Equity method was suspended on the investee due to accumulated loss on equity method exceeded the value of Investments in subsidiaries and associates for the nine months ended September 30, 2016

(*17) As the financial statements as of September 30, 2016 are not available, the Bank applied the equity method by using the financial statements as of June 30, 2016 and adjusted the effects from significant transactions or events that occurred between the dates of those financial statements.

(4) The entities excluded from associates, although the Bank’s ownership interest in them is higher than 20% as of September 30, 2016 and December 31, 2015 are as follows:

	As of September 30, 2016
Associate	Number of shares owned		Percentage of ownership
Orient Shipyard Co., Ltd. (*)		465,050		23.0	%
Saenuel Co., Ltd. (*)		3,531		37.4	%
E Mirae Tech Co., Ltd. (*)		7,696		41.0	%
Jehin Trading Co., Ltd. (*)		81,610		27.3	%
NK Eng Co., Ltd. (*)		697,033		23.1	%
The Season Company Co., Ltd. (*)		18,187		30.1	%
Yuil PESC Co., Ltd. (*)		8,642		24.0	%
DOWOO (*)		13,477		41.9	%
Reading Doctors Co.,Ltd. (*)		7,398		35.4	%
DAEA SNC Co.,Ltd. (*)		1,253		24.0	%
	As of December 31, 2015
Associate	Number of shares owned		Percentage of ownership
Orient Shipyard Co., Ltd. (*)		465,050		23.0	%
The Base Enterprise Co., Ltd. (*)		68,470		48.4	%
Saenuel Co., Ltd. (*)		3,531		37.4	%
Heungjiwon Co., Ltd. (*)		32,849		27.8	%
E Mirae Tech Co., Ltd. (*)		7,696		41.0	%
Jehin Trading Co., Ltd. (*)		81,610		27.3	%
NK Eng Co., Ltd. (*)		697,033		23.1	%
The Season Company Co., Ltd. (*)		18,187		30.1	%
Deokwon Food Co., Ltd. (*)		14,300		27.3	%
Yuil PESC Co., Ltd. (*)		8,642		24.0	%
Kyesan Engineering Co.,Ltd. (*)		60,581		23.2	%
Good Software Lab Co.,Ltd. (*)		17,121		28.9	%
DOWOO (*)		13,477		41.9	%
Reading Doctors Co.,Ltd. (*)		7,398		35.4	%
Orient Star Logistics Co.,Ltd. (*)		17,293		22.3	%
Wongwang Co.,Ltd. (*)		2,590		29.0	%

(*) Even though the Bank’s ownership interest in the entity is more than 20%, it does not have significant influence over the entity due to the fact that the entity is going through workout process under receivership, thus it is excluded from the investment in associates.

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(5) Changes in carrying value of investments in subsidiaries and associates accounted for using the equity method are as follows (Korean Won in millions). Because the investments associated with structured entities were classified as financial assets at FVTPL or AFS financial assets, they were excluded from the carrying value of investments in subsidiaries and associates.

	For the nine months ended September 30, 2016
Investee	January 1, 2016		Acquisitions (*1)		Disposals and others (*2)(*3)			Impairment			September 30, 2016
Woori FIS		35,362		—		—			—			35,362
Woori Private Equity Asset Management		43,227		—		—			—			43,227
Woori Finance Research Institute		3,364		—		—			—			3,364
Woori Card		1,174,260		—		—			—			1,174,260
Woori Investment Bank		79,992		—		—			—			79,992
Woori Private Equity Fund		11,297		—		(2,279	)		—			9,018
Woori Credit Information Co., Ltd.		24,666		—		—			—			24,666
Woori America Bank		202,371		—		—			—			202,371
PT Bank Woori Saudara Indonesia 1906 Tbk		215,400		—		—			—			215,400
Woori Global Markets Asia Ltd.		113,858		—		—			—			113,858
Woori Bank China Limited		427,802		—		—			—			427,802
Zao Woori Bank		51,780		—		—			—			51,780
Woori Brazil Bank		44,045		—		—			—			44,045
Korea BTL Infrastructure Fund		735,173		42,000		(526	)		—			776,647
Woori Fund Service Co., Ltd.		10,000		—		—			—			10,000
Woori Finance Cambodia		4,600		—		—			—			4,600
Woori Finance Myanmar		2,389		—		—			—			2,389
Kumho Tire Co., Inc.		175,652		—		—			—			175,652
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		35,682		—		(9,984	)		—			25,698
Woori Service Networks Co., Ltd.		108		—		—			—			108
Korea Credit Bureau Co., Ltd.		3,313		—		—			—			3,313
Korea Finance Security Co., Ltd.		3,267		—		—			—			3,267
United PF 1st Corporate Financial Stability		172,441		—		(172,441	)		—			—
Chin Hung International Inc.		67,467		—		—			—			67,467
Poonglim Industrial Co., Ltd.		5,123		—		—			(302	)		4,821
STX Engine Co., Ltd.		50,831		—		—			(6,216	)		44,615
SamHo Co., Ltd.		7,492		—		—			—			7,492
STX Corporation		14,311		—		—			(4,025	)		10,286
Osung LST Co., Ltd.		6,453		—		(6,453	)		—			—
Saman Corporation		8,521		—		—			—			8,521
K-Growth crowd 2step Fund		—		800		(800	)		—			—
Woori Growth Partnerships New Technology Private Equity Fund		—		9,561		—			—			9,561
		3,730,247		52,361		(192,483	)		(10,543	)		3,579,582

(*1) AFS financial assets decreased by 5,421 million Won through transfers to investments in associates occurred during the nine months ended September 30, 2016

(*2) Investments in associates decreased by 136,817 million Won through transfers to AFS financial assets occurred during the nine months ended September 30, 2016.

(*3) Investments in associates decreased by 6,453 million Won through transfers to assets held for sale occurred during the nine months ended September 30, 2016.

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	For the nine months ended September 30, 2015
Investee	January 1, 2015		Acquisitions(*)		Disposals and others			Impairment			September 30, 2015
Woori FIS		35,362		—		—			—			35,362
Woori Private Equity Asset Management		43,227		—		—			—			43,227
Woori Finance Research Institute		3,364		—		—			—			3,364
Woori Card		1,174,260		—		—			—			1,174,260
Woori Investment Bank		79,992		—		—			—			79,992
Woori Private Equity Fund		11,297		—		—			—			11,297
Woori Credit Information Co., Ltd.		24,666		—		—			—			24,666
Woori America Bank		202,371		—		—			—			202,371
PT Bank Woori Saudara Indonesia 1906 Tbk		215,400		—		—			—			215,400
Woori Global Markets Asia Ltd.		113,858		—		—			—			113,858
Woori Bank China Limited		401,621		26,181		—			—			427,802
Zao Woori Bank		51,780		—		—			—			51,780
Woori Brazil Bank		44,045		—		—			—			44,045
Korea BTL Infrastructure Fund		665,441		45,200		(365	)		—			710,276
Woori Fund Service Co., Ltd.		10,000		—		—			—			10,000
Woori Finance Cambodia		4,600		—		—			—			4,600
Woori Finance Myanmar		—		2,389		—			—			2,389
Kumho Tire Co., Inc.		175,652		—		—			—			175,652
Woori Blackstone Korea Opportunity Private Equity Fund 1st		66,043		—		(17,489	)		—			48,554
Woori Service Networks Co., Ltd.		108		—		—			—			108
Korea Credit Bureau Co., Ltd.		2,215		—		—			—			2,215
Korea Finance Security Co., Ltd.		3,337		—		(70	)		—			3,267
United PF 1st Corporate Financial Stability		191,617		—		(19,176	)		—			172,441
Chin Hung International Inc.		38,016		29,451		—			—			67,467
Poonglim Industrial Co., Ltd.		7,594		—		—			(2,289	)		5,305
STX Engine Co., Ltd.		15,962		45,030		—			(10,161	)		50,831
SamHo Co., Ltd.		7,492		—		—			—			7,492
STX Corporation		14,311		—		—			—			14,311
Osung LST Co., Ltd.		15,405		—		—			(8,952	)		6,453
		3,619,036		148,251		(37,100	)		(21,402	)		3,708,785

(*) Investments in associates increased by 103,051 million Won through transfers between accounts, such as loan-equity swap occurred during the nine months ended September 30, 2015.

14. INVESTMENT PROPERTIES

(1) Investment properties are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Acquisition cost		381,684			364,482
Accumulated depreciation		(23,178	)		(19,590	)
Net carrying value		358,506			344,892

(2) Changes in investment properties are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Beginning balance		344,892			350,785
Depreciation		(2,659	)		(2,778	)
Transfers		16,319			1,794
Foreign currencies translation adjustments		(46	)		63
Ending balance		358,506			349,864

(3) Fair value of investment properties is amounting to 373,913 million Won and 365,205 million Won as of September 30, 2016 and December 31, 2015, respectively. The fair value of investment property, based on the assessment that was independently performed by external appraisal agencies is classified as level 3 on the fair value hierarchy as of September 30, 2016 and December 31, 2015.

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(4) Rental fee earned from investment properties is amounting to 10,286 million Won and 10,440 million Won for the nine months ended September 30, 2016 and 2015, respectively.

15. PREMISES AND EQUIPMENT

(1) Details of premises and equipment are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Land		Building			Properties for business use			Structures in leased office			Construction in progress		Total
Acquisition cost		1,462,723		826,056			463,254			386,337			2,967		3,141,337
Accumulated depreciation		—		(149,433	)		(346,125	)		(326,810	)		—		(822,368	)
Net carrying value		1,462,723		676,623			117,129			59,527			2,967		2,318,969

	December 31, 2015
	Land		Building			Properties for business use			Structures in leased office			Construction in progress		Total
Acquisition cost		1,478,209		824,812			427,065			367,368			522		3,097,976
Accumulated depreciation		—		(132,982	)		(320,910	)		(302,578	)		—		(756,470	)
Net carrying value		1,478,209		691,830			106,155			64,790			522		2,341,506

(2) Details of changes in premises and equipment are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2016
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Total
Beginning balance		1,478,209			691,830			106,155			64,790			522			2,341,506
Acquisitions		—			11,384			42,714			13,730			2,525			70,353
Disposals		(30	)		—			(174	)		(1,583	)		(67	)		(1,854	)
Depreciation		—			(18,436	)		(31,518	)		(36,437	)		—			(86,391	)
Classified to assets held for sale		(4,368	)		(2,941	)		—			—			—			(7,309	)
Foreign currencies translation adjustments		(35	)		(84	)		(73	)		(58	)		(13	)		(263	)
Transfers		(11,198	)		(5,121	)		—			—			—			(16,319	)
Others		145			(9	)		25			19,085			—			19,246
Ending balance		1,462,723			676,623			117,129			59,527			2,967			2,318,969

	For the nine months ended September 30, 2015
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Total
Beginning balance		1,498,917			693,873			92,615			62,949			96			2,348,450
Acquisitions		2,628			16,643			33,762			20,544			454			74,031
Disposals		(10,648	)		(115	)		(298	)		(1,542	)		(79	)		(12,682	)
Depreciation		—			(17,843	)		(27,972	)		(26,304	)		—			(72,119	)
Classified to assets held for sale		(4,045	)		(3,224	)		—			—			—			(7,269	)
Foreign currencies translation adjustments		45			57			182			250			(1	)		533
Transfers		(10,272	)		8,478			—			—			—			(1,794	)
Others		—			(450	)		9			9,274			—			8,833
Ending balance		1,476,625			697,419			98,298			65,171			470			2,337,983

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16. INTANGIBLE ASSETS

(1) Details of intangible assets are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Industrial property rights			Development cost			Others			Membership deposits			Total
Acquisition cost		571			44,295			583,305			12,058			640,229
Accumulated amortization		(347	)		(15,496	)		(420,671	)		—			(436,514	)
Accumulated impairment losses		—			—			—			(2,386	)		(2,386	)
Net carrying value		224			28,799			162,634			9,672			201,329

	December 31, 2015
	Industrial property rights			Development cost			Others			Membership deposits			Total
Acquisition cost		571			27,980			545,470			11,535			585,556
Accumulated amortization		(288	)		(13,732	)		(381,191	)		—			(395,211	)
Accumulated impairment losses		—			—			—			(2,825	)		(2,825	)
Net carrying value		283			14,248			164,279			8,710			187,520

(2) Details of changes in intangible assets are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2016
	Industrial property rights			Development cost			Others			Membership deposit			Total
Beginning balance		283			14,248			164,279			8,710			187,520
Acquisition		—			16,296			36,370			1,384			54,050
Disposals		—			—			—			(739	)		(739	)
Amortization		(59	)		(1,744	)		(39,520	)		—			(41,323	)
Reversal of impairment loss		—			—			—			269			269
Foreign currencies translation adjustments		—			(1	)		(17	)		48			30
Others		—			—			1,522			—			1,522
Ending balance		224			28,799			162,634			9,672			201,329

	For the nine months ended September 30, 2015
	Industrial property rights			Development cost			Others			Membership deposit			Total
Beginning balance		306			2,242			31,409			9,229			43,186
Acquisition		20			5,646			178,257			—			183,923
Amortization		(55	)		(441	)		(38,191	)		—			(38,687	)
Impairment loss		—			—			—			(119	)		(119	)
Foreign currencies translation adjustments		1			2			27			18			48
Ending balance		272			7,449			171,502			9,128			188,351

17. ASSETS HELD FOR SALE

Assets held for sale is as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Premises and equipment		7,536		17,904
Investments in subsidiaries and associates		6,453		—
Total		13,989		17,904

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18. ASSETS SUBJECT TO LIEN AND ASSETS ACQUIRED THROUGH FORECLOSURES

(1) Assets subjected to lien are as follows (Unit: Korean Won in millions):

		September 30, 2016
		Collateral given to	Amount		Reason for collateral
Loan and receivables	Due from banks in local currency	Samsung Securities and others		15,028	Margin deposit for future or option
	Due from banks in foreign currencies	Korea Investment & Securities and others		270,231	Foreign margin deposit for future or option and others
Financial assets at FVTPL	Financial institutions debt securities and others	Yuanta Securities and others		439,057	Collaterals for customer RP and others
AFS financial assets	Korean treasury and government agencies bonds	Korea Securities Depository and others		370,016	Related to bonds sold under repurchase agreements (*)
	Financial institutions debt securities and others	The BOK and others		3,369,037	Settlement risk and others
HTM financial assets	Korean treasury and government agencies bonds	Korea Securities Depository and others		7,129	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government agencies bonds and others	The BOK and others		5,918,574	Settlement risk and others
		Total		10,389,072

		December 31, 2015
		Collateral given to	Amount		Reason for collateral
Loan and receivables	Due from banks in local currency	Samsung Securities and others		18,718	Margin deposit for future or option and others
	Due from banks in foreign currencies	Korea Investment & Securities and others		452,860	Foreign margin deposit for future or option and others
Financial assets at FVTPL	Financial institutions debt securities and others	Yuanta Securities and others		220,897	Collaterals for customer RP and others
AFS financial assets	Korean treasury and government agencies bonds	Banco Bilbao Vizcaya Argentaria		43,149	Related to bonds sold under repurchase agreements (*)
	Financial institutions debt securities and others	The BOK and others		3,554,963	Settlement risk and others
HTM financial assets	Korean treasury and government agencies bonds	Nomura Securities and others		139,340	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government agencies bonds and others	The BOK and others		4,651,914	Total limit borrowing and others
		Total		9,081,841

(*) The assets are not derecognized as there are the repurchase agreements at predetermined price or original sale price added with certain rate of return. Collaterals are provided, and the purchasers are eligible to dispose or provide them as collateral. The Bank recognizes the relevant amount as liability (bond sold under repurchase agreements) due to derecognition.

- 42 -

(2) There is no asset which the Bank has acquired through foreclosure as of September 30, 2016 and December 31, 2015.

(3) Securities loaned are as follows (Unit: Korean Won in millions):

		September 30, 2016		December 31, 2015		Loaned to
Financial assets at FVTPL	Equity securities- listed stock		6,809		10,313	Samsung Securities Co., Ltd. and others
AFS financial assets	Korean treasury and government agencies bonds and others		560,814		720,010	Korea Securities Depository and others
Total			567,623		730,323

Securities loaned are lending of specific securities to borrowers who agree to return the same quantity of the same security at the end of lending period. As the Bank does not derecognize these securities, there are no liabilities relates to Securities loaned.

(4) Collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties

Fair values of collaterals held can be disposed and re-subjected to lien regardless of defaults of counterparties as of September 30, 2016 and December 31, 2015 are as follows (Unit: Korean Won in millions):

	September 30, 2016
Type	Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		11,127,871		—

	December 31, 2015
Type	Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		7,661,656		—

19. OTHER ASSETS

Details of other assets are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Prepaid expenses		173,785		104,636
Advance payments		179		424
Others		3,019		4,066
Total		176,983		109,126

20. FINANCIAL LIABILITY AT FVTPL

(1) Financial liabilities at FVTPL consist of as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Financial liabilities held for trading		2,968,041		2,593,318
Financial liabilities designated at FVTPL		745,038		854,862
Total		3,713,079		3,448,180

(2) Financial liabilities held for trading are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Deposits:
Gold banking liabilities		21,651		24,872
Derivative liabilities:		2,946,390		2,568,446
Total		2,968,041		2,593,318

- 43 -

(3) Financial liabilities designated at FVTPL are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Compound financial instruments:
Equity		650,188		758,011
Debentures:
Debentures in local currency		94,850		96,851
Total		745,038		854,862

(4) Credit risk adjustments to financial liabilities designated at FVTPL are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Financial liabilities designated at FVTPL subject to credit risk adjustments		745,038			866,669
Changes in fair value for credit risk adjustments		(841	)		(324	)
Accumulated changes in fair value of credit risk adjustments		(15,814	)		(14,775	)

In measuring derivatives liabilities at fair value, credit risk adjustments reflect the Bank’s own credit risk. The methodology to determine the adjustments incorporates the Bank’s credit spread as observed through credit ratings.

(5) The difference between financial liabilities at FVTPL’s carrying amount and nominal amount at maturity are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Carrying amount		745,038			854,862
Face amount at maturity		905,212			1,086,365
		(160,174	)		(231,503	)

21. DEPOSITS DUE TO CUSTOMERS

Details of deposits due to customers by the type of interest are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Deposits in local currency:
Deposits on demand:		9,214,565			9,733,863
Time deposits		184,231,102			175,705,642
Mutual installment		38,107			40,887
Certificate of deposits		3,802,876			2,435,087
Sub-total		197,286,650			187,915,479
Deposits in foreign currencies:		14,817,062			13,455,388
Present value discount		(26,110	)		(17,739	)
Total		212,077,602			201,353,128

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22. BORROWINGS AND DEBENTURES

(1) Details of borrowings as are as follows (Unit: Korean Won in millions):

	September 30, 2016
	Lender	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.5 ~ 0.8		1,438,803
Borrowing from government funds	Small & medium Business Corporation and others		0.0 ~ 3.5		1,518,763
Others	The Korea Development Bank and others		0.0 ~ 3.8		3,587,983
Sub-total					6,545,549
Borrowings in foreign currencies
Borrowings in foreign currencies	The Korea Development Bank and others		0.0 ~ 3.2		7,306,836
Offshore borrowings in foreign currencies	Wells Fargo and others		0.2 ~ 1.3		31,208
Sub-total					7,338,044
Bills sold	Others		0.0 ~ 1.6		24,200
Call-money	Banks and others		0.1 ~ 3.5		938,373
Bonds sold under repurchase agreements	Other financial institutions		0.6 ~ 4.5		211,021
Present value discount					(869	)
Total					15,056,318

	December 31, 2015
	Lender	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.5 ~ 0.8		1,475,991
Borrowing from government funds	Small & medium Business Corporation and others		0.0 ~ 3.5		1,535,953
Others	The Korea Development Bank and others		0.0 ~ 3.8		3,956,191
Sub-total					6,968,135
Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 4.6		9,624,510
Offshore borrowings in foreign currencies	Zuercher Kantonal Bank and others		0.3 ~ 0.9		32,946
Sub-total					9,657,456
Bills sold	Others		0.0 ~ 2.6		37,501
Call-money	Banks and others		0.0 ~ 5.2		1,987,837
Bonds sold under repurchase agreements	Other financial institutions		0.8 ~ 4.5		111,529
Present value discount					(1,511	)
Total					18,760,947

- 45 -

(2) Details of debentures are as follows (Unit: Korean Won in millions):

	September 30, 2016					December 31, 2015
	Interest rate (%)		Amount			Interest rate (%)		Amount
Carrying value of bond(*):
Ordinary bonds		1.1 ~ 5.2		12,979,458			0.2 ~ 5.2		12,249,070
Subordinated bonds		3.0 ~ 5.9		5,228,312			3.4 ~ 5.9		5,038,688
Sub-total				18,207,770					17,287,758
Discount on bonds				(33,327	)				(28,009	)
Total				18,174,443					17,259,749

(*) The debentures of 3,413,409 million Won and 3,148,703 million Won as of September 30, 2016 and December 31, 2015, respectively, which are being hedged against risks of changes in fair value.

23. PROVISIONS

(1) Details of provisions are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Asset retirement obligation		53,683		35,933
Provisions for guarantees (*1)		233,882		366,873
Provisions for unused commitments		53,999		45,773
Provisions for credit card points		11,076		—
Other provisions (*2)		13,345		19,308
Total		365,985		467,887

(*1) Provisions for guarantee include provision for financial guarantee of 68,726 million Won and 80,913 million Won as of September 30, 2016 and December 31, 2015, respectively.

(*2) Other provisions consist of provision for litigation, provision for loss recovery and others.

(2) Changes in provision except asset retirement obligation are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2016
	Provision for guarantees			Provision for unused commitments			Provision for credit card point			Other Provisions			Total
Beginning balance		366,873			45,773			—			19,308			431,954
Provisions provided		—			8,245			5,709			2,965			16,919
Provisions used		(81,286	)		(19	)		(11,732	)		(8,928	)		(101,965	)
Reversal of unused amount		(65,571	)		—			—			—			(65,571	)
Transfer		—			—			17,099			—			17,099
Others		13,866			—			—			—			13,866
Ending balance		233,882			53,999			11,076			13,345			312,302

	For the nine months ended September 30, 2015
	Provision for guarantees			Provision for unused commitments			Other Provisions			Total
Beginning balance		527,659			57,422			54,631			639,712
Provisions provided		—			—			54,327			54,327
Provisions used		(22,290	)		69			(84,389	)		(106,610	)
Reversal of unused amount		(83,599	)		(2,722	)		—			(86,321	)
Others		20,225			—			—			20,225
Ending balance		441,995			54,769			24,569			521,333

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(3) Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Beginning balance		35,933			27,574
Provisions provided		1,437			923
Provision used		(706	)		(608	)
Amortization of present value discount		331			287
Reversal of provisions unused		—			(74	)
Increase in asset retirement expense and others		16,688			8,010
Ending balance		53,683			36,112

24. NET DEFINED BENEFIT LIABILITY

The characteristics of Bank’s defined benefit plans characteristics are as follows:

Employees and directors with one or more years of service are entitled to receive a payment upon termination of their employment, based on their length of service and rate of pay at the time of termination. The assets of the plans are measured at their fair value at the end of reporting date. The plan liabilities are measured using the projected unit method, which takes account of projected earnings increases, using actuarial assumptions that give the best estimate of the future cash flows that will arise under the plan liabilities.

The Bank exposed to various risks through defined benefit retirement pension plan, and the most significant risks are as follows:

Volatility of asset	The defined benefit obligation was estimated with an interest rate calculated based on the yield of high quality corporate bonds earnings. A deficit may occur if the rate of return of plan assets falls short of the interest rate.
Decrease in profitability of high quality corporate bonds	A decrease in profitability of high quality corporate bonds will be offset by some increase in the value of debt securities that the employee benefit plan owns but will bring an increase in the defined benefit liabilities.
Risk of inflation	Defined benefit obligations are related to inflation rate; the higher the inflation rate is, the higher the level of liabilities. Therefore, deficit occurs in the system if an inflation rate increases.

(1) The net defined benefit liability is as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Defined benefit obligation		994,778			846,368
Fair value of plan assets		(988,019	)		(800,690	)
Net defined benefit liabilities		6,759			45,678

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(2) Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Beginning balance		846,368			642,034
Current service cost		106,745			92,325
Interest cost		17,510			15,449
Remeasurements		62,951			62,536
Foreign currencies translation adjustments		(4	)		68
Retirement benefit paid		(29,550	)		(18,255	)
Curtailment or settlement		(9,242	)		(8,231	)
Ending Balance		994,778			785,926

(3) Changes in the plan assets are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Beginning balance		800,690			598,653
Interest income		18,028			15,869
Remeasurements		(5,789	)		(4,325	)
Employer’s contributions		213,000			165,600
Retirement benefit paid		(29,006	)		(17,296	)
Curtailment or settlement		(8,904	)		(8,240	)
Ending balance		988,019			750,261

(4) Plan assets mainly consist of time deposits as of September 30, 2016 and December 31, 2015. Among plan assets, realized returns on plan assets amount to 12,239 million Won and 11,544 million Won for the nine months ended September 30, 2016 and 2015, respectively.

It is expected that the Bank shall contribute 138,662 million Won for the plan for the year ended December 31, 2016.

(5) Current service cost, net interest expense, gain and loss on the curtailment or settlement and remeasurements recognized in the consolidated statements of net income and total comprehensive income are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Current service cost		106,745			92,325
Net interest income		(518	)		(420	)
Loss(gain) on the curtailment or settlement		(338	)		9
Cost recognized in net income		105,889			91,914
Remeasurements		68,740			66,861
Cost recognized in total comprehensive income		174,629			158,775

Cost recognized in net income related to defined contribution plans are recognized 2,683 million Won and 2,122 million Won for the nine months ended September 30, 2016 and 2015, respectively.

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(6) Key actuarial assumptions used in defined benefit liability assessment are as follows:

	September 30, 2016	December 31, 2015
Discount rate	2.14%	2.83%
Future wage growth rate	6.31%	6.35%
Mortality rate	Issued by Korea Insurance Development Institute	Issued by Korea Insurance Development Institute
Retirement rate	Experience rate for each employment classification	Experience rate for each employment classification

(7) The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation is as follows (Unit: Korean Won in millions):

		September 30, 2016			December 31, 2015
Discount rate	Increase by 1% point		(101,231	)		(83,574	)
	Decrease by 1% point		118,025			96,967
Future wage growth rate	Increase by 1% point		116,090			96,078
	Decrease by 1% point		(101,634	)		(84,418	)

25. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Other financial liabilities:
Accounts payable		8,785,457			5,004,048
Accrued expenses		1,822,635			1,750,524
Borrowing from trust accounts		4,742,542			4,511,333
Agency business revenue		867,793			415,776
Foreign exchanges remittances		699,763			701,492
Domestic exchanges payable		6,633,145			2,076,984
Other miscellaneous financial liabilities		1,961,508			1,651,984
Present value discount		(522	)		(672	)
Sub-total		25,512,321			16,111,469
Other liabilities:
Unearned income		45,697			50,284
Other miscellaneous liabilities		131,803			113,078
Sub-total		177,500			163,362
Total		25,689,821			16,274,831

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26. DERIVATIVES

(1) Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):

	September 30, 2016
			Assets				Liabilities
	Notional amount		For fair value hedge		For trading		For fair value Hedge		For trading
Interest rate:
Interest rate futures		1,332		—		—		—		—
Interest rate swaps		115,818,047		273,499		751,997		—		765,197
Long interest rate options		1,100,000		—		31,941		—		—
Short interest rate options		1,025,000		—		—		—		30,991
Currency:
Currency futures		520,392		—		—		—		—
Currency forwards		57,838,965		—		1,113,725		—		1,060,526
Currency swaps		32,911,169		—		888,867		—		884,474
Long currency options		1,309,863		—		46,522		—		—
Short currency options		1,045,256		—		—		—		20,414
Equity:
Stock futures		277,355		—		—		—		—
Long stock options		1,880,755		—		77,159		—		—
Short stock options		3,360,618		—		—		25,175		180,134
Others:
Other futures		566		—		—		—		—
Other swaps		21,593		—		4,446		—		3,709
Long other options		6,941		—		97		—		—
Short other options		91,999		—		—		—		945
		217,209,851		273,499		2,914,754		25,175		2,946,390

	December 31, 2015
			Assets				Liabilities
	Notional amount		For fair value hedge		For trading		For trading
Interest rate:
Interest rate swaps		111,792,748		180,378		926,781		959,347
Long interest rate options		881,679		—		13,961		—
Short interest rate options		1,086,679		—		—		15,164
Currency:
Currency futures		386,924		—		—		—
Currency forwards		52,910,908		—		745,908		463,271
Currency swaps		27,035,675		—		613,652		949,921
Long currency options		1,657,911		—		63,498		—
Short currency options		1,366,459		—		—		13,530
Equity:
Stock futures		169,785		—		—		—
Long stock options		682,358		2,750		444		—
Short stock options		2,410,815		—		—		155,386
Others:
Other futures		1,100		—		—		—
Other forwards		125		—		—		39
Other swaps		78,882		—		5,363		4,781
Long other options		41,097		—		5,904		—
Short other options		142,259		—		—		7,007
		200,645,404		183,128		2,375,511		2,568,446

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Derivatives held for trading purpose classified into financial assets or liabilities at FVTPL (Notes 7 and 20) and derivatives for hedging are stated in a separate line item of the separate statements of financial position.

(2) Gains or losses from valuation of financial instruments under hedge accounting are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Losses from hedged items		(51,661	)		(79,910	)
Gains from hedging instruments		45,945			92,087

27. DEFERRED DAY 1 PROFITS AND LOSSES

Changes in deferred day 1 profits and losses are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Beginning balance		28,008			13,499
New transactions		1,337			24,055
Amounts recognized in profits and losses		(13,498	)		(9,932	)
Ending balance		15,847			27,622

In case some variables to measure fair values of financial instruments were not observable or available in the market, valuation techniques were utilized to evaluate such financial instruments. Those financial instruments were recorded at the fair value produced by the valuation techniques as at the time of acquisition, even though there were differences noted between the transaction price and the fair value. The table above presents the difference yet to be realized as profit or losses.

28. CAPITAL STOCK AND CAPITAL SURPLUS

(1) The number of authorized shares and others are as follows:

	September 30, 2016		December 31, 2015
Authorized shares of common stock		5,000,000,000 Shares		5,000,000,000 Shares
Par value		5,000 Won		5,000 Won
Issued shares of common stock		676,000,000 Shares		676,000,000 Shares
Capital stock		3,381,392 million Won		3,381,392 million Won

Due to the retirement of repurchased stocks of 278,371 shares occurred during the year ended December 31, 2015, the amount of capital stock differs from the nominal amount of issued stocks.

(2) There is no change in numbers of issued shares of common stock for nine months ended September 30, 2016 and 2015.

(3) Details of capital surplus are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Capital in excess of par value		269,533		269,533

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29. HYBRID SECURITIES

The bond-type hybrid securities classified as owners’ equity are as follows (Unit: Korean Won in millions):

	Issue date		Maturity		Interest rates (%)		September 30, 2016			December 31, 2015
Securities in local currency		2008.06.20		2038.06.20		7.7		255,000			255,000
		2011.11.22		2041.11.22		5.9		310,000			310,000
		2012.03.08		2042.03.08		5.8		190,000			190,000
		2013.04.25		2043.04.25		4.4		500,000			500,000
		2013.11.13		2043.11.13		5.7		200,000			200,000
		2014.12.12		2044.12.12		5.2		160,000			160,000
		2015.06.03		2045.06.03		4.4		240,000			240,000
Sub-total								1,855,000			1,855,000
Securities in foreign currencies		2007.05.02		2037.05.02		6.2		930,900			930,900
		2015.06.10		2045.06.10		5.0		559,650			559,650
		2016.09.27		2046.09.27		4.5		553,450			—
Sub-total								2,044,000			1,490,550
Issuance cost								(15,093	)		(11,548	)
Total								3,883,907			3,334,002

With respect to the hybrid securities issued, the contractual agreements allow the Bank to indefinitely extend the maturity date and defer the payment of interest. If the Bank makes a resolution not to pay dividends on common stock, and then, the Bank is exonerated from interest payment on the hybrid securities.

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30. OTHER EQUITY

(1) Details of other equity are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Accumulated other comprehensive income:
Gain on valuation of AFS financial assets		348,898			329,724
Loss on foreign currencies translation of foreign operations		(20,274	)		(1,961	)
Remeasurement of the net defined benefit liability		(239,739	)		(187,634	)
Sub-total		88,885			140,129
Treasury shares		(34,113	)		(34,113	)
Total		54,772			106,016

(2) Changes in the accumulated other comprehensive income are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2016
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments (*)			Income tax effect			Ending balance
Gain (loss) on valuation of AFS financial assets		329,724			70,248			(44,953	)		(6,121	)		348,898
Gain (loss) on foreign currencies translation of foreign operations		(1,961	)		(24,160	)		—			5,847			(20,274	)
Remeasurement of the net defined benefit liability		(187,634	)		(68,739	)		—			16,634			(239,739	)
Total		140,129			(22,651	)		(44,953	)		16,360			88,885

	For the nine months ended September 30, 2015
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments (*)			Income tax effect			Ending balance
Gain (loss) on valuation of AFS financial assets		282,864			102,849			(16,419	)		(20,916	)		348,378
Gain (loss) on foreign currencies translation of foreign operations		(20,109	)		28,460			—			(6,887	)		1,464
Remeasurement of the net defined benefit liability		(114,043	)		(66,862	)		—			16,181			(164,724	)
Total		148,712			64,447			(16,419	)		(11,622	)		185,118

(*) For the change in gain (loss) on valuation of AFS financial assets, increase or decrease represents change due to the valuation during the period, and reclassification adjustments explains disposal or recognition of impairment losses on AFS financial assets.

- 53 -

31. RETAINED EARNINGS

(1) Details of retained earnings are as follows (Unit: Korean Won in millions):

		September 30, 2016		December 31, 2015
Legal reserves	Earned surplus reserve		1,622,754		1,528,754
	Other legal reserve		44,634		43,132
	Sub-total		1,667,388		1,571,886
Voluntary reserves	Business rationalization reserve		8,000		8,000
	Reserve for financial structure improvement		235,400		235,400
	Additional reserve		7,073,104		7,249,104
	Regulatory reserve for credit loss		1,880,447		1,382,443
	Revaluation reserve		753,908		760,365
	Other voluntary reserve		11,700		11,700
	Sub-total		9,962,559		9,647,012
Retained earnings before appropriation			815,685		579,477
	Total		12,445,632		11,798,375

i. Earned surplus reserve

In accordance with the Banking Act, legal reserve are appropriated at least one tenth of the earnings after tax on every dividend declaration, not exceeding the paid in capital. This reserve may not be used other than for offsetting a deficit or transferring to capital.

ii. Other legal reserve

Other legal reserves were appropriated in the branches located in Japan, Vietnam and Bangladesh according to the banking laws of Japan, Vietnam and Bangladesh, and may be used to offset any deficit incurred in those branches.

iii. Business rationalization reserve

Pursuant to the Restriction of Special Taxation Act, the Bank was previously required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits up to December 31, 2001. The requirement was no longer effective from January 1, 2002.

iv. Reserve for financial structure improvement

From 2002 to 2014, the Finance Supervisory Services recommended banks in Korea to appropriate at least 10 percent of net income after accumulated deficit for financial structure improvement, until tangible common equity ratio equals 5.5 percent. But this reserve is not available for payment of cash dividends; however, it can be used to reduce a deficit or be transferred to capital. The reserve and appropriation is an Autonomous judgment matter of the Bank since 2015.

v. Additional reserve and other voluntary reserve

Additional reserve and other voluntary reserve were appropriated for capital adequacy and other management purpose.

vi. Regulatory reserve for credit loss

In accordance with Article 29 of the Regulation on Supervision of Banking Business (“RSBB”), if provisions for credit loss under K-IFRS for the accounting purpose are lower than provisions under RSBB, the Bank discloses such shortfall amount as regulatory reserve for credit loss.

- 54 -

vii. Revaluation reserve

Revaluation reserve is the amount of limited dividends set by the board of directors to be recognized as complementary capital when the gain or loss occurred in the property revaluation by adopting K-IFRS.

(2) The changes in retained earnings are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Beginning balance		11,798,375			12,362,179
Net income		965,080			715,760
Dividends on common stock		(168,317	)		(504,952	)
Dividends on hybrid securities		(149,506	)		(134,517	)
Appreciation of merger losses		—			(806,640	)
Ending balance		12,445,632			11,631,830

32. REGULATORY RESERVE FOR CREDIT LOSS

In accordance with Paragraph 1 and 2 of Article 29 of the Regulation on Supervision Banking Business (“RSBB”), if the estimated provisions for credit loss under K-IFRS for the accounting purpose are lower than those in accordance with the provisions under the RSBB, the Bank shall disclose the difference as the planned regulatory reserve for credit loss.

(1) Balance of the planned regulatory reserve for credit loss is as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Beginning balance		1,880,447			1,382,443
Planned provision (reversal) of regulatory reserve for credit loss		(45,194	)		498,004
Ending balance		1,835,253			1,880,447

(2) Planned reserves provided(reversal of regulatory reserve) for credit loss, adjusted net income after the planned reserves provided and adjusted earnings per share after the planned reserves provided are as follows (Unit: Korean Won in millions, except for earnings per share amount):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Net income		293,839			965,080			269,260			715,760
Provision (reversal) of regulatory reserve for credit loss		(27,325	)		(45,194	)		259,895			382,923
Adjusted net income after the provision (reversal) of regulatory reserve		321,164			1,010,274			9,365			332,837
Adjusted EPS after the provision (reversal) of regulatory reserve (Unit: Korean Won)		404			1,279			(65	)		295

- 55 -

33. DIVIDENDS

At the shareholders’ meeting on March 25, 2016, dividend payment for the year ended December 31, 2015 amounting to 168,317 million Won (250 Won per share) was approved, and such dividend was paid during the nine months ended September 30, 2016.

34. NET INTEREST INCOME

(1) Interest income recognized is as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Financial assets at FVTPL		4,626		14,142		4,298		14,841
AFS financial assets		58,453		183,524		71,099		211,418
HTM financial assets		86,775		272,700		106,181		313,795
Loans and receivables
Interest of due from banks		13,713		38,254		12,700		44,475
Interest of loans		1,661,207		5,036,874		1,689,299		5,149,643
Interest of other assets		6,334		21,273		9,563		27,868
Sub-total		1,681,254		5,096,401		1,711,562		5,221,986
Total		1,831,108		5,566,767		1,893,140		5,762,040

(2) Interest expenses recognized are as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Interest on deposits due to customers		579,856		1,799,663		655,164		2,073,570
Interest on borrowings		48,352		151,043		50,456		148,889
Interest on debentures		122,544		368,334		140,579		452,292
Other interest expense		22,449		73,681		25,765		84,265
Total		773,201		2,392,721		871,964		2,759,016

- 56 -

35. NET FEES AND COMMISSIONS INCOME

(1) Details of fees and commissions income occurred are as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Fees and commissions received (*)		183,634		558,915		189,707		570,538
Fees and commissions received for provision of guarantee		17,436		54,299		21,282		62,996
Fees and commissions received on project financing		4,434		17,923		7,479		12,137
Fees and commissions received on securities		19,919		52,844		17,992		50,360
Other Fees and commissions received		26,547		65,500		15,571		43,249
Total		251,970		749,481		252,031		739,280

(*) Fees and commissions received include agency commission, fee income from electronic finance, fee income related to loan, fees for import letter of credit dealing, commission received on foreign exchange and others.

(2) Details of fees and commissions expenses occurred are as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Fees and commissions paid		34,341		109,438		32,215		90,952
Other fees and commissions paid		37		129		25		86
Total		34,378		109,567		32,240		91,038

36. DIVIDEND INCOME

Details of dividend income recognized are as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Financial assets at FVTPL		85		743		67		736
AFS financial assets		16,510		175,441		27,846		126,845
		16,595		176,184		27,913		127,581

- 57 -

37. GAINS (LOSSES) ON FINANCIAL ASSETS AT FVTPL

(1) Details of gains or losses related to financial assets at FVTPL are as follows (Unit: Korean Won in millions):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Gains (losses) on financial assets held for trading		(7,042	)		(10,376	)		(3,195	)		36,080
Gains (losses) on financial liabilities designated at FVTPL		(91,598	)		(44,491	)		106,144			96,865
Total		(98,640	)		(54,867	)		102,949			132,945

(2) Details of gains or losses on financial assets held for trading are as follows (Unit: Korean Won in millions):

			2016						2015
			Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Financial Assets at FVTPL	Securities	Gain on valuation		572			5,412			2,366			4,790
		Gain on disposals		2,366			6,755			2,626			17,410
		Loss on valuation		(77	)		(1,575	)		1,930			(4,663	)
		Loss on disposals		(1,175	)		(3,165	)		(8,151	)		(11,224	)
		Sub-total		1,686			7,427			(1,229	)		6,313
	Other financial assets	Gain on valuation		1,717			12,085			2,894			7,280
		Gain on disposals		707			2,248			126			326
		Loss on valuation		(2,102	)		(12,487	)		(2,776	)		(7,220	)
		Loss on disposals		(275	)		(1,590	)		(151	)		(205	)
		Sub-total		47			256			93			181
		Total		1,733			7,683			(1,136	)		6,494
Derivatives (for trading)	Interest rates derivatives	Gain on transactions and valuation		219,863			1,065,271			378,103			952,536
		Loss on transactions and valuation		(187,128	)		(1,083,824	)		(403,747	)		(995,774	)
		Sub-total		32,735			(18,553	)		(25,644	)		(43,238	)
	Currencies derivatives	Gain on transactions and valuation		2,534,958			5,238,013			2,411,483			3,878,641
		Loss on transactions and valuation		(2,666,654	)		(5,261,830	)		(2,273,934	)		(3,695,967	)
		Sub-total		(131,696	)		(23,817	)		137,549			182,674
	Equity derivatives	Gain on transactions and valuation		109,687			179,260			38,196			60,202
		Loss on transactions and valuation		(19,267	)		(155,284	)		(152,408	)		(170,776	)
		Sub-total		90,420			23,976			(114,212	)		(110,574	)
	Other derivatives	Gain on transactions and valuation		4,972			13,889			11,672			23,334
		Loss on transactions and valuation		(5,206	)		(13,554	)		(11,424	)		(22,610	)
		Sub-total		(234	)		335			248			724
		Total		(8,775	)		(18,059	)		(2,059	)		29,586
Total				(7,042	)		(10,376	)		(3,195	)		36,080

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(3) Details of gains or losses on financial instruments designated at FVTPL are as follows (Unit: Korean Won in millions):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Gain (loss) on equity-linked securities:
Loss on disposal of equity-linked securities		(12,698	)		(19,851	)		(8,485	)		(18,814	)
Gain (loss) on valuation of equity-linked securities		(79,634	)		(26,641	)		114,739			115,848
Sub-total		(92,332	)		(46,492	)		106,254			97,034
Gain (loss) on other financial instruments:
Gain (loss) on valuation of other financial instruments		734			2,001			(110	)		(169	)
Total		(91,598	)		(44,491	)		106,144			96,865

38. GAINS(LOSSES) ON AFS FINANCIAL ASSETS

Details of gains or losses on AFS financial assets recognized are as follows (Unit: Korean Won in millions):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Gain on redemptions of securities		—			594			—			—
Gain on transactions of securities		32,236			71,455			14,532			60,610
Impairment loss		(6,331	)		(14,988	)		(37,431	)		(106,165	)
Total		25,905			57,061			(22,899	)		(45,555	)

39. IMPAIRMENT LOSSES DUE TO CREDIT LOSS

Impairment losses on loans and receivables, guarantees and loan commitments recognized due to credit loss are as follows (Unit: Korean Won in millions):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Impairment losses due to credit loss		(195,191	)		(597,830	)		(179,886	)		(878,836	)
Reversal of provision on (provision provided for)guarantee		(11,239	)		65,571			(15,937	)		83,599
Reversal of provision on (provision provided for) loan commitment		(9,432	)		(8,245	)		2,756			2,722
Total		(215,862	)		(540,504	)		(193,067	)		(792,515	)

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40. OTHER NET OPERATING INCOMES (EXPENSES)

(1) Details of general and administrative expenses are as follows (Unit: Korean Won in millions):

			2016				2015
			Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Salaries	Short-term employee benefits	Salaries		275,730		823,946		272,019		804,823
		Employee benefits		86,919		252,027		82,882		248,530
	Retirement benefit service costs			36,702		108,572		31,460		94,036
	Termination			—		92,039		—		63,116
	Sub-total			399,351		1,276,584		386,361		1,210,505
Depreciation and amortization				39,398		127,714		35,455		110,806
Other general and administrative expenses	Rent			63,688		190,800		65,648		181,802
	Taxes and public dues			19,111		71,579		17,389		70,325
	Service charges			54,009		156,791		52,603		152,292
	Computer and IT related			56,473		176,269		63,616		190,787
	Telephone and communication			8,014		23,392		7,837		23,212
	Operating promotion			10,570		30,192		9,889		29,083
	Advertising			11,286		43,177		8,451		28,646
	Printings			1,732		6,136		1,957		6,570
	Traveling			2,126		6,218		1,757		5,566
	Supplies			1,200		3,707		1,300		3,973
	Insurance premium			1,003		2,909		1,098		3,249
	Reimbursement			5,031		13,131		6,329		13,260
	Maintenance			3,396		9,997		3,443		9,837
	Water, light and heating			3,670		10,248		3,675		10,720
	Vehicle maintenance			2,024		5,767		2,228		6,294
	Others			1,366		4,797		1,522		9,000
	Sub-total			244,699		755,110		248,742		744,616
	Total			683,448		2,159,408		670,558		2,065,927

(2) Details of other operating income recognized are as follows (Unit: Korean Won in millions):

	2016					2015
	Three months ended September 30			Nine months ended September 30		Three months ended September 30			Nine months ended September 30
Gain on transactions of foreign exchange		858,657			3,256,369		673,957			1,934,558
Gain on disposals of loans and receivables		25,103			158,858		31,235			174,549
Gain on fair value hedging derivatives		(33,782	)		77,723		82,132			108,091
Gain on fair value hedged items		12,489			30,602		(5,123	)		19,952
Others (*)		32,809			80,172		81,908			132,418
		895,276			3,603,724		864,109			2,369,568

(*) Other income includes such incomes amounting to 69,920 million Won and 125,775 million Won for the nine months ended September 30, 2016 and 2015, respectively, that the Bank recognized for it is to receive from other creditor financial institutions in accordance with the creditor financial institutions committee agreement.

- 60 -

(3) Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):

	2016					2015
	Three months ended September 30			Nine months ended September 30		Three months ended September 30			Nine months ended September 30
Loss on transactions of foreign exchange		724,382			3,083,870		762,558			1,968,071
KDIC Deposit insurance premium		74,381			216,590		65,800			194,994
Contribution to miscellaneous funds		71,063			220,844		87,066			254,437
Loss on disposals of loans and receivables		2,481			2,486		3,801			3,814
Loss on fair value hedging derivatives		12,766			31,778		(5,733	)		16,004
Loss on fair value hedged items		(36,437	)		82,263		73,637			99,862
Others (*)		13,768			109,945		38,311			96,011
Total		862,404			3,747,776		1,025,440			2,633,193

(*) Other expense includes such expenses amounting to 98,023 million Won and 38,394 million Won for the nine months ended September 30, 2016 and 2015, respectively, that the Bank recognized for it is to carry out a payment to other creditor financial institutions in accordance with the creditor financial institutions committee agreement.

41. OTHER NON-OPERATING INCOMES (EXPENSES)

(1) Details of gain or loss on valuation of investments in subsidiaries and associates are as follows (Unit: Korean Won in millions):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30		Nine months ended September 30
Impairment loss		(3,690	)		(10,543	)		—		(21,402	)

(2) Details of other non-operating income (expenses) recognized are as follows (Unit: Korean Won in millions):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Other non-operating income		37,815			123,823			26,500			229,310
Other non-operating expenses		(9,686	)		(76,886	)		(9,837	)		(65,469	)
Net other non-operating income		28,129			46,937			16,663			163,841

(3) Details of other non-operating income recognized are as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Rental fee income		3,582		10,652		3,471		10,985
Dividends from investments in subsidiaries and associates		9,641		30,708		9,901		37,297
Gain on disposal of investments in subsidiaries and associates		—		3,679		673		673
Gain on disposal of premises and equipment intangible assets and investment properties		1,160		1,227		17		6,708
Reversal of impairment of premises and equipment intangible assets and investment properties		37		480		10		372
Others(*)		23,395		77,077		12,428		173,275
Total		37,815		123,823		26,500		229,310

(*) Other income includes such incomes amounting to 132,784 million Won for the nine months ended September 30, 2015 that the Bank received in accordance with the final irrevocable judgment for the payment of commitment (Note 44).

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(4) Details of other non-operating expenses recognized are as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Depreciation of investment properties		900		2,659		911		2,778
Interest expenses of rent leasehold deposits		120		367		152		545
Loss on disposals of premises and equipment, intangible assets and investment properties		705		6,548		411		1,742
Impairment loss on premises and equipment, intangible assets and investment properties		72		211		175		490
Donation		2,362		35,783		2,847		31,458
Others		5,527		31,318		5,341		28,456
Total		9,686		76,886		9,837		65,469

42. INCOME TAX EXPENSE

(1) Details of income tax expense are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Current tax expense
Current tax expense in respect of the current period		112,623			72,764
Adjustments recognized in the current period in relation to the current tax of prior periods		(20,676	)		(21,448	)
Sub-total		91,947			51,316
Deferred tax expense
Deferred tax expense relating to the origination and reversal of temporary differences		111,381			131,155
Deferred tax charged directly to equity		16,360			(11,622	)
Sub-total		127,741			119,533
Income tax expense		219,688			170,849

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(2) Income tax expense can be reconciled to net income before income tax expense is as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016			2015
Net income before income tax expense		1,184,768			886,609
Tax calculated at statutory tax rate (*)		286,252			214,098
Adjustments
Effect of income that is exempt from taxation		(39,474	)		(34,186	)
Effect of expenses that are not deductible in determining taxable profit		7,011			6,910
Adjustments recognized in the current period in relation to the current tax of prior periods		(20,676	)		(21,448	)
Others		(13,425	)		5,475
Sub-total		(66,564	)		(43,249	)
Income tax expense		219,688			170,849
Effective tax rate		18.5	%		19.3	%

(*) The applicable income tax rate is 11 % up to 200 million Won, 22 % over 200 million Won to 20 billion Won, and 24.2 % over 20 billion Won.

(3) Details of deferred tax relating to items that are charged directly in equity are as follows (Unit: Korean Won in millions):

	September 30, 2016			December 31, 2015
Loss on valuation of AFS securities		(111,389	)		(105,268	)
Foreign currencies translation of foreign operations		6,473			626
Remeasurement of the net defined benefit liability		76,538			59,904
Total		(28,378	)		(44,738	)

43. EARNINGS PER SHARE (“EPS”)

(1) Basic EPS is calculated by dividing net income by weighted average number of common shares outstanding (Unit: Korean Won in millions except for EPS, and number of shares):

	2016						2015
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Net income attributable to common shareholders		293,839			965,080			269,260			715,760
Dividends to hybrid securities		(49,269	)		(149,506	)		(52,820	)		(134,517	)
Net income attributable to common shareholders		244,570			815,574			216,440			581,243
Weighted average number of common shares outstanding		673 shares in million			673 shares in million			673 shares in million			673 shares in million
Basic Earnings Per Share (Unit: Korean Won)		363			1,212			322			864

(2) Diluted EPS equals to basic EPS for there is no dilution effect for the nine months ended September 30, 2016 and 2015, respectively.

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44. CONTINGENT LIABILITIES AND COMMITMENTS

(1) Details of guarantees which the Bank has provided to others are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Confirmed guarantees:
Guarantees for loans		84,931		108,176
Acceptances		412,541		466,909
Guarantees in acceptances of imported goods		99,476		100,084
Other confirmed guarantees		7,172,514		8,115,835
Total		7,769,462		8,791,004
Unconfirmed guarantees:
Local letters of credit		355,535		422,812
Letters of credit		3,344,263		4,241,583
Other unconfirmed guarantees		851,666		1,916,209
Total		4,551,464		6,580,604
Commercial paper purchase commitments and others		1,914,031		2,135,541

(2) Details of loan commitments and others are as follow (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Loan commitments		53,077,532		63,361,727
Other commitments		1,969,110		2,101,669

(3) Litigation case

a) The Bank has filed and faced lawsuits as follows (Unit: Korean Won in millions except for number of cases):

	September 30, 2016
	As plaintiff		As defendant
Number of cases		53		184
Amount of litigation		307,498		215,621
Provisions for litigations				3,718

	December 31, 2015
	As plaintiff		As defendant
Number of cases		86		222
Amount of litigation		337,047		169,294
Provisions for litigations				2,605

b) The Bank, along with other 13 financial institutions including Seoul Guarantee Insurance, has filed a lawsuit against Samsung Group and its associates as defendant in respect of the claim of return of guaranteed fund which was related to the filing of court administration of Renault Samsung Motors. In regard to the lawsuit, on January 29, 2015, the supreme court of Korea made final judgment that the plaintiff should pay the guaranteed fund to the Bank and other financial institutions. The Bank recognized 132,784 million Won as gain for the year ended December 31, 2015, in accordance with K-IFRS 1037 Provisions, Contingent liabilities and Contingent assets.

(4) Other

The Bank operates Korean Won currency settlement service as for commercial trade settlements between Korea and Iran. In accordance with the submission request of information from U.S. prosecutors (U.S. Federal Prosecutors and Prosecutors of the New York State), the Bank is currently performing its own internal investigation to confirm if the Bank is meeting the requirements on sanction of U.S. Government in respect of its service operation. As at the end of September 30, 2016, the Bank believes that it cannot make reasonable estimation due to possible results from such investigation.

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45. RELATED PARTY TRANSACTIONS

Related parties of the Bank, assets and liabilities recognized, guarantees provided and major transactions with related parties during the current and prior period are as follows:

(1) The related parties of the Bank as of September 30, 2016 are as follows:

	Related parties
Controlling party (Government related entity)	KDIC
Joint ventures	Woori Renaissance Holdings
Subsidiaries	Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Card Co., Ltd., Woori Investment Bank Co., Ltd., Woori Private Equity Fund, Woori Credit Information Co., Ltd., Woori America Bank, PT Bank Woori Saudara Indonesia 1906 Tbk, Woori Global Market Asia Ltd., Woori Bank China Limited, Zao Woori Bank, Woori Brazil Bank, Korea BTL Infrastructure Fund, Woori Fund Service Co., Ltd., Woori Finance Cambodia, Woori Finance Myanmar, Woori EL Co., Ltd., Woori Bank Principal and Interest Guaranteed Trust, Woori Bank Principal Guaranteed Trust, Kumho Trust 1st Co., Ltd. and 16 SPCs, Kiwoom Partner Plus PF Bond 4 and 34 Beneficiary Certificates
Associates	Kumho Tires Co., Ltd., Woori Blackstone Korea Opportunity No.1 Private Equity Fund, Woori Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Chin Hung International Inc., Poonglim Industrial Co., Ltd., STX Engine Co., Ltd., Samho International Co., Ltd., Force TEC Co., Ltd., STX Corporation, Osung LST Co., Ltd., Woori Columbus 1st Private Equity Fund and others (Dongwoo C & C Co., Ltd. and 13 associates)

(2) Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):

Related party		A title of account	September 30, 2016		December 31, 2015
Ultimate controlling party (Government related entity)	KDIC	Other assets		270,055		510,193
		Deposits		1,448,649		930,231
		Other liabilities		11,323		9,812
Subsidiaries	Woori FIS Co., Ltd.	Other assets		161		102
		Deposits		29,543		15,462
		Other liabilities		15,629		16,536
	Woori Private Equity Asset Management Co., Ltd.	Deposits Other liabilities		2,029 —		24,547 143
	Woori Finance Research Institute Co., Ltd.	Deposits		3,720		2,113
		Other liabilities		569		1,534
	Woori Card Co., Ltd.	Other assets		10,633		9,306
		Deposits		100,898		30,606
		Other liabilities		12,648		13,414
	Woori Investment Bank Co., Ltd.	Due from banks		70,000		50,000
		Other assets		8,273		6,109
		Deposits		10,377		6,551
		Other liabilities		10,851		8,321
	Woori Private Equity Fund	Other assets		2		4
		Deposits		125		9,127
		Other liabilities		—		2
	Woori Credit Information Co., Ltd.	Deposits		16,608		18,699
		Other liabilities		10,217		10,897

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Related party		A title of account	September 30, 2016			December 31, 2015
Subsidiaries	Woori America Bank	Due from banks		4,289			2,850
	PT Bank Woori Saudara Indonesia 1906 Tbk	Due from banks		4,783			2,520
		Loans		54,819			58,600
		Allowance for credit loss		(61	)		(65	)
		Deposits		5			68
	Woori Global Market Asia Ltd.	Loans		124,696			125,463
		Allowance for credit loss		(115	)		(139	)
		Deposits		2,941			1,498
		Borrowings		—			5,860
	Woori Bank China Limited	Due from banks		16,688			9,015
		Loans		22,703			485,380
		Allowance for credit loss		(24	)		(541	)
		Other assets		141			971
		Deposits		29,980			215
		Other liabilities		140			573
	Zao Woori Bank	Due from banks		65,892			72,095
		Loans		39,175			54,238
		Allowance for credit loss		(44	)		(61	)
		Other assets		47			132
	Woori Brazil Bank	Loans		1,644			1,992
		Allowance for credit loss		—			(2	)
	Korea BTL Infrastructure Fund	Other assets		9			8
	Woori Fund Service Co., Ltd.	Deposits		4,184			3,236
		Other liabilities		841			812
	Woori Finance Cambodia	Loans		21,378			16,408
		Allowance for credit loss		(13	)		(10	)
		Other liabilities		—			1
	Woori Finance Myanmar	Loans		1,096			—
		Allowance for credit loss		(1	)		—
	Woori EL Co., Ltd.	Deposits		22			23
	Woori Bank Principal and Interest Guaranteed Trust and Principal Guaranteed Trust	Other assets Other liabilities		9,365 43,848			3,162 34,937
	Structured entities and others	Loans		25,760			26,765
		Allowance for credit loss		(4,880	)		(17,443	)
		Other assets		162			13
		Deposits		7,656			1,781
		Other liabilities		565			908
	Beneficiary Certificates	Other assets		23			20
Associates	Kumho Tires Co., Ltd.	Loans		354,915			279,895
		Allowance for credit loss		(698	)		(551	)
		Deposits		30,150			67,815
		Other liabilities		63			115

- 66 -

Related party		A title of account	September 30, 2016			December 31, 2015
Associates	Woori Service Networks Co., Ltd.	Deposits		2,148			3,821
		Other liabilities		348			377
	Korea Credit Bureau Co., Ltd.	Deposits		8,016			9,038
		Other liabilities		89			54
	Korea Finance Security Co., Ltd.	Deposits		1,386			1,468
		Other liabilities		4			7
	United PF 1st Corporate financial stability (*1)	Deposits		—			20
	Chin Hung International Inc.	Loans		4,044			5,366
		Allowance for credit loss		(3,620	)		(4,636	)
		Deposits		9,588			1,378
		Other liabilities		3			6
	Poonglim Industrial Co., Ltd.	Loans		—			1,557
		Allowance for credit loss		—			(1,557	)
		Deposits		1,940			7,906
		Other liabilities		—			5
	STX Engine Co., Ltd.	Loans		108,636			120,599
		Allowance for credit loss		(62,141	)		(25,639	)
		Deposits		16,679			5,167
		Other liabilities		6,263			600
	Samho International Co., Ltd.	Loans		37,574			42,739
		Allowance for credit loss		(5,269	)		(5,802	)
		Deposits		78,690			96,281
		Other liabilities		920			950
	Force TEC Co., Ltd.	Loans		—			28,504
		Allowance for credit loss		—			(6,246	)
		Deposits		—			355
		Other liabilities		—			1,201
	Hana Engineering & Construction Co., Ltd. (*2)	Loans		—			71
		Allowance for credit loss		—			(71	)
		Deposits		—			38
	STX Corporation	Loans		126,604			151,791
		Allowance for credit loss		(80,778	)		(19,182	)
		Deposits		10,265			13,643
		Other liabilities		2,009			219
	Osung LST Co., Ltd.(*3)	Loans		—			5,639
		Allowance for credit loss		—			(338	)
		Deposits		—			983
		Other liabilities		—			2
	Ilyang construction Co., Ltd. (*2)	Loans		—			838
		Allowance for credit loss		—			(215	)
	Others (*4)	Loans		1,089			—
		Allowance for credit loss		(483	)		—
		Other assets		15			—
		Deposits		3,645			—
		Other liabilities		59			—

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(*1) As the Bank lost significant influence over United PF 1st Corporate Financial Stability during nine months ended September 30, 2016, it was excluded from the related parties.

(*2) As the Bank sold shares of Hana Engineering & Construction and Ilyang construction Co., Ltd. during nine months ended September 30, 2016, they were excluded from the associates.

(*3) This entity was reclassified into assets held for sale for the nine months ended September 30, 2016.

(*4) There are Kyesan Engineering Co., Ltd., Good Software Lab Co., Ltd., Dongwoo C & C Co., Ltd., Heungjiwon Co., Ltd., Saman Corporation, Gachi Staff Co., Ltd., Deokwon Food Co., Ltd. and QTS Shipping Co., Ltd, SJCO Co.,Ltd, Woori Growth Partnerships New Technology Private Equity Fund.

(3) Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):

			For the nine months ended September 30
Related party		A title of account	2016			2015
Controlling party (Government related entity)	KDIC	Interest income		9,450			17,671
		Interest expenses		14,123			18,383
Subsidiaries	Woori FIS Co., Ltd.	Fees income		364			—
		Other income		5,083			5,194
		Other expenses		160,994			174,229
	Woori Private Equity Asset Management Co., Ltd.	Fees income		7			—
		Interest expenses		214			221
	Woori Finance Research Institute Co.,Ltd.	Fees income		6			—
		Other income		224			216
		Interest expenses		26			26
		Fees expenses		3,525			3,225
	Woori Card Co., Ltd.	Fees income		98,196			94,476
		Other income		516			337
		Interest expenses		13			56
		Reversal of impairment losses due to credit loss		—			14
	Woori Investment Bank Co.,Ltd.	Fees income		343			163
		Other income		2,961			1,848
		Interest expenses		31			34
		Other expenses		2,689			1,097
		Reversal of impairment losses due to credit loss		—			58
	Woori Private Equity Fund	Fees income		5			5
		Interest expenses		3			13
	Woori Credit Information Co., Ltd.	Fees income		43			—
		Dividend income		1,008			2,016
		Other income		297			300
		Interest expenses		156			233
		Fees expenses		7,079			8,826
	PT Bank Woori Saudara Indonesia 1906 Tbk	Interest income		381			268
		Dividend income		2,643			1,556
		Fees expenses		54			43
		Impairment losses due to credit loss (reversal)		(4	)		60

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			For the nine months ended September 30
Related party		A title of account	2016			2015
Subsidiaries	Woori Global Markets Asia Ltd.	Interest income		1,299			1,277
		Interest expenses		32			2
		Impairment losses due to credit loss (reversal)		(24	)		14
	Woori Bank China Limited	Interest income		2,496			2,577
		Fees income		—			144
		Other income		56			63
		Interest expenses		16			—
		Other expenses		141			59
		Impairment losses due to credit loss(reversal)		(517	)		127
	Zao Woori Bank	Interest income		361			447
		Reversal of impairment losses due to credit loss		17			24
	Woori Brazil Bank	Interest income		15			—
		Reversal of impairment losses due to credit loss		2			—
	Korea BTL Infrastructure Fund	Dividend income		22,288			22,951
		Fees income		56			50
	Woori Fund Service Co., Ltd.	Fees income Other income Interest expenses		12 116 43			2 85 29
	Woori Finance Cambodia	Interest income		356			182
		Impairment losses due to credit loss (reversal)		3			(31	)
	Woori Finance Myanmar	Interest income		5			—
		Impairment losses due to credit loss		1			—
	Woori Bank Principal and Interest Guaranteed Trust and Principal Guaranteed Trust	Other income		6,204			6,524
		Interest expenses		492			579
		Other expenses		21			20
	Structured entities	Interest income		295			2,470
		Fees income		6,046			3,616
		Interest expenses		5			4
		Reversal of impairment losses due to credit loss		12,563			24,306
Associates	Kumho Tires Co., Ltd.	Interest income		1,941			2,004
		Fees income		6			5
		Interest expenses		53			171
		Impairment losses due to credit loss (reversal)		147			(1,974	)
	Woori Blackstone Korea Opportunity No.1 Private Equity Fund	Dividend income		4,568			10,707
	Woori Service Networks Co., Ltd.	Dividend income		12			12
		Other income		22			21
		Interest expenses		38			63

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			For the nine months ended September 30
Related party		A title of account	2016			2015
Associates	Korea Credit Bureau Co., Ltd.	Dividend income		136			—
		Interest expenses		108			54
	Korea Finance Security Co., Ltd.	Dividend income		54			55
		Interest expenses		7			30
	Chin Hung International Inc.	Interest income		190			734
		Fees income		1			1
		Interest expenses		20			29
		Reversal of impairment losses due to credit loss		1,016			781
	Poonglim Industrial Co., Ltd.	Interest expenses		2			9
		Reversal of impairment losses due to credit loss		1,557			284
	STX Engine Co., Ltd.	Interest income		1,013			1,022
		Fees income		20			27
		Interest expenses		65			35
		Impairment losses due to credit loss		36,502			37,201
	Samho International Co., Ltd	Interest income		687			755
		Fees income		5			4
		Interest expenses		370			769
		Impairment losses due to credit loss (reversal)		(533	)		340
	Force TEC Co., Ltd.	Interest income		153			187
		Reversal of impairment losses due to credit loss		—			244
	STX Corporation	Interest income		803			1,364
		Fees income		52			89
		Interest expenses		5			5
		Impairment losses due to credit loss		61,596			2,066
	Osung LST Co., Ltd.	Interest income		170			169
		Interest expenses		1			15
		Reversal of impairment losses due to credit loss		338			99
	Others (*)	Interest expenses		12			—
		Reversal of impairment losses due to credit loss		277			—

(*) There are Kyesan Engineering Co., Ltd., Good Software Lab Co., Ltd., Dongwoo C & C Co., Ltd., The Base Enterprise Co., Ltd., Saman Corporation, Gachi Staff Co., Ltd., Deokwon Food Co., Ltd. and QTS Shipping Co., Ltd., Woori Growth Partnerships New Technology Private Equity Fund.

(4) Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):

	Warranty	September 30, 2016		December 31, 2015
KDIC	Loan commitment		1,500,000		1,500,000
Woori Card Co., Ltd.	Loan commitment		500,000		500,000
Woori Investment Bank	Loan commitment		50,000		50,000
Woori America Bank	Confirmed guarantees in foreign currencies		21,826		2,640
P.T. Bank Woori Saudara Indonesia 1906 Tbk	Confirmed guarantees in foreign currencies and others		155,335		124,177

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	Warranty	September 30, 2016		December 31, 2015
Woori Global Market Asia Ltd.	Confirmed guarantees in foreign currencies		17,541		18,752
Woori Bank China Limited	Confirmed guarantees in foreign currencies and others		93,155		73,802
Zao Woori Bank	Confirmed guarantees in foreign currencies		40,097		56,450
Woori Brazil Bank	Confirmed guarantees in foreign currencies		4,146		1,690
Korea BTL Infrastructure Fund	Securities purchase contract		317,778		468,786
Woori Finance Cambodia	Loan commitment		548		7,032
Structured entities and others	Loan commitment in local currency		493,300		520,400
	Loan commitment		545		723
Kumho Tires Co., Inc.	Import credit in foreign currencies and others		8,764		11,623
	Loan commitment		46,757		142,694
ChinHung International Inc.	Loan commitment		40,630		40,630
STX Engine Co., Ltd.	Import credit in foreign currencies and others		43,129		74,135
	Loan commitment		48,624		12,912
Samho International Co., Ltd.	Loan commitment		32,886		27,721
Force TEC Co., Ltd.	Loan commitment		—		5,762
STX Corporation	Import credit in foreign currencies and others		28,411		23,235
	Loan commitment		—		9,069

For the guarantee provided to the related parties, the Bank recognized provisions for guarantees amounting to 35,636 million Won and 14,028 million Won, respectively, as of September 30, 2016 and December 31, 2015.

(5) Details of compensation to key management are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2016		2015
Shot-term employee benefits		6,878		4,374
Retirement benefit service costs		423		176
Total		7,301		4,550

Key management includes registered executives and non-registered executives. Outstanding assets and liabilities from transactions with key management amount to 779 million Won and 4,293 million Won, respectively, as of September 30, 2016. And with respect to the assets, the Bank has not recognized any allowance, nor provision.

46. TRUST ACCOUNTS

(1) Trust accounts of the Bank are as follows (Unit: Korean Won in millions):

	Total assets				Operating income
	September 30, 2016		December 31, 2015		2016				2015
					Three months ended September 30		For the nine months ended September 30		Three months ended September 30		For the nine months ended September 30
Trust accounts		38,766,493		34,135,580		166,663		592,852		166,121		626,049

(2) Significant receivables and payables between the Bank and trust accounts are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Receivables
Trust fees receivables		31,586		18,704
Payables
Borrowings from trust accounts		3,850,574		3,794,847

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(3) Significant transactions between the Bank and trust accounts are as follows (Unit: Korean Won in millions):

	2016				2015
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Revenue
Trust fees		23,558		56,835		13,513		37,073
Expense
Interest expenses on borrowings from trust accounts		9,553		34,873		14,090		46,529

(4) Principal guaranteed trusts and principal and fixed rate of return guaranteed trusts.

1) The carrying value of principal guaranteed trusts and principal and fixed rate of return guaranteed trusts are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Principal guaranteed trusts
Old-age pension trusts		4,940		5,235
Personal pension trusts		518,956		523,544
Pension trusts		718,924		681,868
Retirement trusts		54,853		64,921
New personal pension trusts		8,552		8,540
New old-age pension trusts		3,101		3,376
Sub-total		1,309,326		1,287,484
Principal and fixed rate of return guaranteed trusts
Development trusts		20		19
Unspecified money trusts		771		782
Sub-total		791		801
Total		1,310,117		1,288,285

2) The amounts that the Bank has to pay by the capital guaranteed contract or the operating results of the principal and return guaranteed trusts are as follows (Unit: Korean Won in millions):

	September 30, 2016		December 31, 2015
Liabilities for the account (subsidy for trust account adjustment)		22		26

47. PROMOTING PRIVATIZATION PLAN

Pursuant to the privatization plan of Woori Finance Holdings Co., Ltd., which was decided at the Public Fund Oversight Committee (the “PFOC”) on June 26, 2013, the Bank has disposed its subsidiaries. Kwangju Bank and Kyongnam Bank were demerged as of May 1, 2014, and from March 2014 to June 2014, Woori Investment & Securities, Woori Aviva Life Insurance, Woori Savings Bank, Woori Asset Management, Woori Financial and Woori F&I were disposed in due order.

With respect to the privatization of Woori Bank, the Public Fund Oversight Committee (“PFOC”) announced the plan that comprised the merger between Woori Finance Holdings Co., Ltd (“Holding Company”) and Woori Bank and the disposal of controlling interests (30% of ownership) and non-controlling interests (26.97% of ownership), respectively, of Woori Bank after newly listing its shares on the stock exchange newly. Pursuant to the plan, the Bank merged with the Holding Company as of November 1, 2014, and completed its listing on Korea Stock Exchange on November 19, 2014.

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On November 28, 2014, KDIC commenced the bidding procedure for the disposal of controlling interests and non-controlling interests of the Bank. Since only the bidding for the non-controlling interests was successful, KDIC’s ownership of the Bank decreased from 56.97% to 51.04%. By the way, as the retirement of treasury stocks on October 2015, KDIC’s ownership of the Bank changed to 51.06% as of September 30, 2016

On July 21, 2015, the PFOC, a deliberative body in charge of privatizing Woori Bank, held a meeting to discuss means to promote the privatization plan, and announced a plan to take a two-track approach to sell the stake. To maximize the retrieval of public fund initially invested, promotion of privatization schedule and development of financial industry, the PFOC is considering a new approach of selling parts out of the government’s stake to multiple buyers in smaller portions, as well as its previous plan of selling the controlling stake to a single buyer.

In addition, Financial Services Commission (“FSC”) announced the amendment on normalization of business MOU, which aimed to promote improvement of corporate value through enhancing managerial autonomy of the Bank on October 2, 2015, and subsequent to the announcement, revised the Enforcement Decree of the Special Act on the Management of Public Funds on March 29, 2016.

Also, the Public Fund Management Committee (“PFMC”) announced the latest sale-plan that aims to sell off about 30 percent out of a 51.06 percent stake in the bank held by KDIC to multiple investors splitting the shares into 4 to 8 percent chunks on August 22, 2016. Pursuant to the plan, the KDIC commenced the bidding procedure for the disposal on August 24, 2016 by putting up a public notice of sale, and received letters of intent from 18 potential bidders by September 23, 2016. The PFMC has closed the bidding on November 11, 2016, subsequently announced seven chosen buyers to acquire a total of 29.7 percent stake in Woori Bank on November 13 and plans to wrap up the sale process by the end of this year.

48. AGREEMENT ON THE IMPLEMENTATION OF A MANAGEMENT PLAN 

(1) Since December 30, 2000, the Bank and the KDIC have entered into an agreement to implement management plans. Under the agreements, the Bank is obligated to improve its respective financial ratios, such as Bank of International Settlements (“BIS”) capital ratio, general and administrative ratio, non-performing loan rate. If the Bank fails to make improvements, the KDIC can enforce the Bank to increase or decrease its capital, pursue mergers, transfer of loans and deposits, or close or sell parts of its business operations.

(2) In addition, on July 2, 2001, in order to establish efficient integrated structure of the Bank, the Bank and the KDIC have entered into an agreement to implement management plans, which incorporate establishment of corporate governance and business management system, improvement of short-term operational performance, strengthening the Bank’s competitiveness and pursuance of privatization plan, meeting the financial ratio objectives, and penalties in case the Bank not meeting such management plans.

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