Exhibit 99.1

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

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 on November 13, 2017

To the Shareholders and the Board of Directors of

Woori Bank

Report on the Consolidated Financial Statements

We have reviewed the accompanying consolidated interim financial statements of Woori Bank and subsidiaries (the “Group”). The financial statements consist of the consolidated interim statements of financial position as of September 30, 2017 and the consolidated interim statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016, consolidated interim statements of changes in shareholders’ equity and consolidated interim statements of cash flows, all expressed in Korean Won, for the nine months ended September 30, 2017 and 2016, respectively, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Interim Financial Statements

The Group’s management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with standards for review of consolidated 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 consolidated interim financial statements of the Group 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 to learn more about our global network of member firms.

^© 2017. For information, contact Deloitte Anjin LLC

Others

We audited the consolidated interim statement of financial position as of December 31, 2016, and the related consolidated interim statements of comprehensive income, changes in shareholders’ equity and cash flows for the year ended December 31, 2016 (not presented in the accompanying consolidated 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 3, 2017. The consolidated statement of financial position as of December 31, 2016 presented as a comparative purpose in the accompanying financial statements does not differ, in all material respects, from the audited consolidated statement of financial position as of December 31, 2016.

Accounting principles and review standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and review standards and their application in practice.

November 13, 2017

Notice to Readers

This report is effective as of November 13, 2017, 2017, the accountants’ review report date. Certain subsequent events or circumstances may have occurred between the accountants’ review report date and the time the accountants’ review report is read. Such events or circumstances could significantly affect the consolidated financial statements and may result in modifications to the accountants’ review report.

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

The accompanying consolidated interim financial statements including all footnote disclosures were prepared by and are the responsibility of the Group.

Kwang Goo Lee

President and Chief Executive Officer

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

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016

	September 30, 2017		December 31, 2016
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Note 6)		6,812,489		7,591,324
Financial assets at fair value through profit or loss (Notes 4,7,11,12,18 and 26)		4,609,487		5,650,724
Available-for-sale financial assets (Notes 4,8,11,12 and 18)		18,624,588		20,817,583
Held-to-maturity financial assets (Notes 4,9,11,12 and 18)		16,325,482		13,910,251
Loans and receivables (Notes 4,10,11,12,18 and 45)		266,972,072		258,392,633
Investments in joint ventures and associates (Note 13)		557,860		439,012
Investment properties (Note 14)		361,355		358,497
Premises and equipment (Notes 15 and 18)		2,490,725		2,458,025
Intangible assets and goodwill (Note 16)		524,914		483,739
Assets held for sale (Note 17)		2,909		2,342
Current tax assets		4,105		6,229
Deferred tax assets		258,031		232,007
Derivative assets (Notes 4,11,12 and 26)		109,828		140,577
Net defined benefit assets (Note 24)		5,934		70,938
Other assets (Notes 19 and 45)		215,383		128,846
Total assets		317,875,162		310,682,727
LIABILITIES
Financial liabilities at fair value through profit or loss (Notes 4,11,12,20 and 26)		2,468,106		3,803,358
Deposits due to customers (Notes 4,11,21 and 45)		226,344,233		221,020,411
Borrowings (Notes 4,11,12 and 22)		16,314,499		18,769,515
Debentures (Notes 4,11 and 22)		27,537,013		23,565,449
Provisions (Notes 23 and 44)		401,185		428,477
Net defined benefit liability (Note 24)		26,433		64,666
Current tax liabilities		249,960		171,192
Deferred tax liabilities		22,303		22,023
Derivative liabilities (Notes 4,11,12 and 26)		41,619		7,221
Other financial liabilities (Notes 4,11,12, 25 and 45)		23,529,630		21,985,086
Other liabilities (Notes 25 and 45)		323,213		299,376
Total liabilities		297,258,194		290,136,774

(Continued)

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016 (CONTINUED)

	September 30, 2017			December 31, 2016
	(Korean Won in millions)
EQUITY
Owners’ equity:		20,450,563			20,386,160
Capital stock (Note 28)		3,381,392			3,381,392
Hybrid securities (Note 29)		3,017,888			3,574,896
Capital surplus (Note 28)		287,066			286,331
Other equity (Note 30)		(1,759,299	)		(1,468,025	)
Retained earnings (Notes 31 and 32)
(Regulatory reserve for credit loss as of September 30, 2017 and December 31, 2016 is 2,438,191 million Won and 2,255,252 million Won, respectively
Regulatory reserve for credit loss to be reserved as of September 30, 2017 and December 31, 2016 is 102,705 million Won and 182,939 million Won, respectively
Planned provision of regulatory reserve for credit loss as of September 30, 2017 and December 31, 2016 is 102,705 million Won and 182,939 million Won, respectively)		15,523,516			14,611,566
Non-controlling interests (Note 1)		166,405			159,793
Total equity		20,616,968			20,545,953
Total liabilities and equity		317,875,162			310,682,727

See accompanying notes

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND NINE MONTHS

ENDED SEPTEMBER 30, 2017 AND 2016

	2017						2016
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
	(Korean Won in millions, except per share data)
Interest income		2,187,829			6,377,413			2,108,925			6,402,487
Interest expense		836,273			2,475,537			852,483			2,657,287
Net interest income (Notes 34 and 45)		1,351,556			3,901,876			1,256,442			3,745,200
Fees and commissions income		534,597			1,548,490			482,002			1,388,832
Fees and commissions expense		257,728			733,921			240,495			679,319
Net fees and commissions income (Notes 35 and 45)		276,869			814,569			241,507			709,513
Dividend Income (Note 36)		48,842			108,287			16,881			137,280
Net gain (loss) on financial instruments at fair value through profit or loss (Note 37)		48,773			(97,636	)		(102,362	)		(43,766	)
Net gain on available-for-sale financial assets (Note 38)		44,273			148,445			3,889			32,772
Impairment losses on credit loss (Notes 39 and 45)		(217,259	)		(501,022	)		(240,099	)		(670,843	)
General and administrative expenses (Note 40 and 45)		(1,108,625	)		(2,647,052	)		(767,230	)		(2,411,782	)
Other net operating income (expenses) (Notes 40 and 45)		(126,741	)		74,449			31,090			(109,153	)
Operating income		317,688			1,801,916			440,118			1,389,221
Share of gains (losses) of joint ventures and associates (Note 13)		69,670			5,392			(6,375	)		(18,019	)
Other net non-operating income (loss)		(15,720	)		(5,722	)		14,532			(11,806	)
Non-operating income (loss) (Note 41)		53,950			(330	)		8,157			(29,825	)
Net income before income tax expense		371,638			1,801,586			448,275			1,359,396
Income tax expense (Note 42)		88,212			409,145			88,883			242,217
Net income
(Net income after the provision of regulatory reserve for credit loss for the three months ended September 30, 2017 and 2016 are 230,682 million Won and 372,698 million Won, respectively, and net income after the provision of regulatory reserve for credit loss for the nine months ended September 30, 2017 and 2016 are 1,289,736 million Won and 1,117,659 million Won, respectively) (Note 32)		283,426			1,392,441			359,392			1,117,179
Remeasurement of the net defined benefit liability		22,820			13,143			(8,121	)		(52,788	)
Items that will not be reclassified to profit or loss		22,820			13,143			(8,121	)		(52,788	)
Gain (loss) on available-for-sale financial assets		(22,335	)		(51,041	)		(27,945	)		52,278
Share of other comprehensive gain (loss) of joint ventures and associates		3,410			4,917			(2,732	)		(2,965	)
Gain (loss) on foreign currency translation for foreign operations		14,488			(54,522	)		(72,392	)		(75,041	)
Gain (loss) on valuation of cashflow hedge		279			(1,247	)		—			10,371
Items that may be reclassified to net income		(4,158	)		(101,893	)		(103,069	)		(15,357	)
Other comprehensive income (loss), net of tax		18,662			(88,750	)		(111,190	)		(68,145	)
Total comprehensive income		302,088			1,303,691			248,202			1,049,034
Net income attributable to:
Net income attributable to owners		280,146			1,378,507			355,649			1,105,915
Net income attributable to non-controlling interests		3,280			13,934			3,743			11,264
Total comprehensive income attributable to:
Comprehensive income attributable to owners		299,649			1,295,391			248,848			1,037,516
Comprehensive income (loss) attributable to non-controlling interests		2,439			8,300			(646	)		11,518
Basic and diluted earnings per share (In Korean Won) (Note 43)		358			1,855			455			1,421

See accompanying notes

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

	Capital stock		Hybrid securities			Capital surplus		Other Equity and others			Retained earnings			Controlling interests			Non- controlling interests			Total equity
	(Korean Won in millions)
January 1, 2016		3,381,392		3,334,002			294,259		(1,547,303	)		13,726,122			19,188,472			121,443			19,309,915
Net income		—		—			—		—			1,105,915			1,105,915			11,264			1,117,179
Dividends		—		—			—		—			(168,317	)		(168,317	)		(1,275	)		(169,592	)
Disposal of investments in consolidated subsidiaries		—		—			1		—			—			1			—			1
Gain on valuation of available-for-sale financial assets		—		—			—		51,654			—			51,654			624			52,278
Changes in equity of joint ventures and associates		—		—			—		(2,965	)		—			(2,965	)		—			(2,965	)
Loss on foreign currencies translation of foreign operations		—		—			—		(74,675	)		—			(74,675	)		(366	)		(75,041	)
Gain on valuation of cash flow hedge		—		—			—		10,371			—			10,371			—			10,371
Remeasurement of the net defined benefit liability		—		—			—		(52,783	)		—			(52,783	)		(5	)		(52,788	)
Dividends on hybrid securities		—		—			—		—			(149,506	)		(149,506	)		—			(149,506	)
Issuance of hybrid securities		—		549,905			—		—			—			549,905			—			549,905
September 30, 2016		3,381,392		3,883,907			294,260		(1,615,701	)		14,514,214			20,458,072			131,685			20,589,757
January 1, 2017		3,381,392		3,574,896			286,331		(1,468,025	)		14,611,566			20,386,160			159,793			20,545,953
Net income		—		—			—		—			1,378,507			1,378,507			13,934			1,392,441
Dividends		—		—			—		—			(336,636	)		(336,636	)		(1,544	)		(338,180	)
Subsidiary capital increase		—		—			735		—			—			735			(144	)		591
Gain(loss) on valuation of available-for-sale financial assets		—		—			—		(51,480	)		—			(51,480	)		439			(51,041	)
Changes in equity of joint ventures and associates		—		—			—		4,917			—			4,917			—			4,917
Loss on foreign currencies translation of foreign operations		—		—			—		(48,506	)		—			(48,506	)		(6,016	)		(54,522	)
Loss on valuation of cash flow hedge		—		—			—		(1,247	)		—			(1,247	)		—			(1,247	)
Remeasurement of the net defined benefit liability		—		—			—		13,200			—			13,200			(57	)		13,143
Dividends on hybrid securities		—		—			—		—			(129,921	)		(129,921	)		—			(129,921	)
Issuance of hybrid securities		—		559,565			—		—			—			559,565			—			559,565
Redemption of hybrid securities		—		(1,116,573	)		—		(208,158	)		—			(1,324,731	)		—			(1,324,731	)
September 30, 2017		3,381,392		3,017,888			287,066		(1,759,299	)		15,523,516			20,450,563			166,405			20,616,968

See accompanying notes

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

	For the nine months ended September 30
	2017			2016
	(Korean Won in millions)
Cash flows from operating activities:
Net income		1,392,441			1,117,179
Adjustments:
Income tax expense		409,145			242,217
Interest income		(6,377,413	)		(6,402,487	)
Interest expense		2,475,537			2,657,287
Dividend income		(108,287	)		(137,280	)
		(3,601,018	)		(3,640,263	)
Additions of expenses not involving cash outflows:
Impairment losses on credit loss		501,022			670,843
Impairment loss on investments in joint ventures and associates		74,171			29,280
Loss on transaction and valuation of derivatives instruments (hedging)		39,768			31,778
Loss on hedged items (fair value hedge)		6,856			82,263
Provisions		52,391			22,695
Retirement benefits		107,430			114,277
Depreciation and amortization		179,085			191,127
Loss on disposal of investments in joint ventures and associates		38,701			15,060
Loss on disposal of premises and equipment and other assets		8,574			6,611
Impairment loss on premises and equipment and other assets		269			1,403
		1,008,267			1,165,337
Deduction of revenues not involving cash inflows:
Gain on valuation of financial instruments at fair value through profit or loss		65,764			182,767
Gain on available-for-sale financial assets		148,445			32,772
Gain on valuation of investments in joint ventures and associates		79,563			11,261
Gain on transaction and valuation of derivatives instruments (hedging)		7,695			77,723
Gain on hedged items (fair value hedge)		25,055			30,602
Reversal of provisions		2,000			864
Gain on disposal of investments in joint ventures and associates		33,194			1,250
Gain on disposal of premises and equipment and other assets		4,895			1,525
Reversal of impairment loss on premises and equipment and other assets		604			3,711
		367,215			342,475
Changes in operating assets and liabilities:
Financial instruments at fair value through profit or loss		(232,152	)		(137,199	)
Loans and receivables		(10,076,492	)		(17,776,026	)
Other assets		(86,535	)		(94,998	)
Deposits due to customers		5,326,478			11,323,759
Provision		(98,616	)		(58,034	)
Net defined benefit liability		(19,952	)		(249,297	)
Other financial liabilities		1,644,842			9,621,522
Other liabilities		14,749			18,750
		(3,527,678	)		2,648,477

(Continued)

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (CONTINUED)

	For the nine months ended September 30
	2017			2016
	(Korean Won in millions)
Cash received from (paid for) operating activities:
Interest income received		6,445,201			6,409,990
Interest expense paid		(2,535,668	)		(2,498,628	)
Dividends received		110,855			136,163
Income tax paid		(328,793	)		(211,346	)
Net cash provided by (used in) operating activities		(1,403,608	)		4,784,434
Cash flows from investing activities:
Cash in-flows from investing activities:
Disposal of available-for-sale financial assets		18,991,381			14,997,100
Redemption of held-to-maturity financial assets		6,851,014			5,958,431
Disposal of investments in joint ventures and associates		78,204			57,035
Disposal of investment properties		356			—
Disposal of premises and equipment		6,425			250
Disposal of intangible assets		998			3,784
Disposal of assets held for sale		6,832			13,876
		25,935,210			21,030,476
Cash out-flows from investing activities:
Acquisition of available-for-sale financial assets		15,777,632			16,194,628
Acquisition of held-to-maturity financial assets		9,280,802			6,224,158
Acquisition of investments in joint ventures and associates		137,411			800
Acquisition of investment properties		5,080			3,133
Acquisition of premises and equipment		133,728			82,727
Acquisition of intangible assets		168,676			115,445
		25,503,329			22,620,891
Net cash provided by (used in) investing activities		431,881			(1,590,415	)
Cash flows from financing activities:
Cash inflows from financing activities:
Increase in borrowings		9,856,662			5,698,152
Issuance of debentures		14,556,550			11,913,773
Issuance of hybrid securities		559,565			549,905
Capital increase of subsidiaries		635			—
		24,973,412			18,161,830
Cash outflows from financing activities:
Decrease in borrowings		12,308,155			8,512,585
Repayment of debentures		10,581,681			10,691,486
Redemption of hybrid securities		1,323,400			—
Payment of dividends		336,636			168,317
Dividends paid on hybrid securities		131,423			125,946
Dividends paid on non-controlling interests		1,544			1,275
		24,682,839			19,499,609
Net cash provided by (used in) financing activities		290,573			(1,337,779	)
Net increase (decrease) in cash and cash equivalents		(681,154	)		1,856,240
Cash and cash equivalents, beginning of the period		7,591,324			6,644,055
Effects of exchange rate changes on cash and cash equivalents		(97,681	)		(218,785	)
Cash and cash equivalents, end of the period		6,812,489			8,281,510

See accompanying notes

WOORI BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017 AND FOR THE THREE MONTHS AND THE NINE MONTHS

ENDED SEPTEMBER 30, 2017 AND 2016

1. GENERAL

(1) Summary of the parent company

Woori Bank (hereinafter referred to the “Bank”), which is a controlling entity in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1110 – Consolidated Financial Statements, 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 November 1, 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, 2017, the common stock of the Bank amounts, expressed in Korean Won (the “KRW” or “Won”), to 3,381,392 million Won.

During the year ended December 31, 2016, the Korea Deposit Insurance Corporation (“KDIC”), the majority shareholder of the Bank, sold its 187 million shares in the Bank in accordance with the contract of “Disposal of Woori Bank’s shares to Oligopolistic Shareholders”. In addition to the sale, during the nine months ended September 30, 2017, KDIC sold additional 33 million shares. As of September 30, 2017 and December 31, 2016, KDIC held 125 million shares and 158 million shares (18.52% and 23.37% ownership interest) respectively, 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 875 branches and offices in Korea, and 23 branches and offices overseas as of September 30, 2017.

(2) The consolidated financial statements for Woori Bank and its subsidiaries (the “Group”) include the following subsidiaries:

			Percentage of ownership (%)				Location		Financial statements as of (2017)
Subsidiaries	Main business		September 30, 2017		December 31, 2016
Woori Bank:
Woori FIS Co., Ltd.		System software development & maintenance		100.0		100.0		Korea		September 30
Woori Private Equity Asset Management Co., Ltd.		Finance		100.0		100.0		Korea		September 30
Woori Finance Research Institute Co., Ltd.		Other service business		100.0		100.0		Korea		September 30
Woori Card Co., Ltd.		Finance		100.0		100.0		Korea		September 30
Woori Investment Bank Co., Ltd.		Other credit finance business		58.2		58.2		Korea		September 30
Woori Credit Information Co., Ltd.		Credit information		100.0		100.0		Korea		September 30
Woori America Bank		Finance		100.0		100.0		U.S.A.		September 30
Woori Global Markets Asia Limited		”		100.0		100.0		Hong Kong		September 30

		Percentage of ownership (%)				Location	Financial statements as of (2017)
Subsidiaries	Main business	September 30, 2017		December 31, 2016
Woori Bank (China) Limited	Finance		100.0		100.0	China	September 30
AO Woori Bank	”		100.0		100.0	Russia	September 30
PT Bank Woori Saudara Indonesia 1906 Tbk(*1)	”		79.9		74.0	Indonesia	September 30
Banco Woori Bank do Brasil S.A.	”		100.0		100.0	Brazil	September 30
Korea BTL Infrastructure Fund	”		99.9		99.9	Korea	September 30
Woori Fund Service Co., Ltd.	”		100.0		100.0	Korea	September 30
Woori Finance Cambodia PLC.	”		100.0		100.0	Cambodia	September 30
Woori Finance Myanmar Co., Ltd.	”		100.0		100.0	Myanmar	September 30
Wealth Development Bank	”		51.0		51.0	Philippines	September 30
Woori Bank Vietnam Limited	”		100.0		100.0	Vietnam	September 30
Kumho Trust First Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	September 30
Asiana Saigon Inc. (*2)	”		0.0		0.0	Korea	September 30
An-Dong Raja First Co., Ltd. (*6)	”		—		0.0	Korea	September 30
Consus Eighth Co., LLC (*2)	”		0.0		0.0	Korea	September 30
KAMCO Value Recreation First Securitization Specialty Co., Ltd. (*2)	”		15.0		15.0	Korea	September 30
Hermes STX Co., Ltd. (*2)	”		0.0		0.0	Korea	September 30
BWL First Co., LLC (*2)	”		0.0		0.0	Korea	September 30
Woori Poongsan Co., Ltd. (*2)	”		0.0		0.0	Korea	September 30
Deogi Dream Fourth Co., Ltd. (*2)	”		0.0		0.0	Korea	September 30
Jeonju Iwon Ltd. (*2)	”		0.0		0.0	Korea	September 30
Wonju I one Inc. (*2)	”		0.0		0.0	Korea	September 30
Heitz Third Co., Ltd. (*2)	”		0.0		0.0	Korea	September 30
Woorihansoop 1st Co., Ltd. (*2)	”		0.0		0.0	Korea	September 30
Electric Cable First Co., Ltd (*2)	”		0.0		0.0	Korea	September 30
Woori International First Co., Ltd. (*2)	”		0.0		0.0	Korea	September 30
Woori HJ First Co., Ltd. (*2)	”		0.0		0.0	Korea	September 30
Woori WEBST 1st Co., Ltd. (*2)	”		0.0		—	Korea	September 30
HNLD 1st Inc.(*2)	”		0.0		—	Korea	September 30
Wibihansoop 1st Co., Ltd. (*2)	”		0.0		—	Korea	September 30
Uri QS 1st Co., Ltd (*2)	”		0.0		—	Korea	September 30
Uri Display 1st Co., Ltd.(*2)	”		0.0		—	Korea	September 30
Tiger Eyes 2nd Co., Ltd.(*2)	”		0.0		—	Korea	September 30
Samsung Plus Private Equity Investment Trust 36th and 22 beneficiary certificates for the rest (*3)	Securities investment and others		—		—	Korea	September 30
Principle Guaranteed Trust (*4)	Trust		0.0		0.0	Korea	September 30
Principle and Interest Guaranteed Trust (*4)	”		0.0		0.0	Korea	September 30
Woori Bank and Woori Private Equity Asset Management Co., Ltd.:
Woori Private Equity Fund (*5)	Other financial business		—		31.9	Korea	September 30
Woori Private Equity Fund:
Woori EL Co., Ltd. (*5)	Other financial business		—		100.0	Korea	September 30
Woori Investment Bank:
Dongwoo First Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		5.0	Korea	September 30
Seari First Securitization Specialty Co., Ltd. (*2)	”		5.0		—	Korea	September 30
Namjong 1st Securitization Specialty Co., Ltd. (*2)	”		5.0		—	Korea	September 30
Woori Card Co., Ltd.:
TUTU Finance-WCI Myanmar Co., Ltd	Finance		100.0		100.0	Myanmar	September 30
Woori Card one of 2017-1 Securitization Specialty Co., Ltd. (*2)	Asset securitization		0.5		—	Korea	September 30

(*1) The ownership ratio has been increased, attributed to unequal capital increase of the subsidiary.

(*2) The entity was a structured entity for the purpose of asset securitization and was in scope for consolidation. Although the Group is not a majority shareholder, the Group 1) had the power over the investee, 2) was exposed, or had rights, to variable returns from its involvement with the investee, and 3) had the ability to use its power to affect its returns.

- 2 -

(*3) The entity was a structured entity for the purpose of investment in securities and was in scope for consolidation, considering that the Group 1) had the power over the investee, 2) was exposed, or has rights, to variable returns from its involvement with the investee, and 3) had the ability to use its power to affect its returns.

(*4) The entity was a money trust under the Financial Investment Services and Capital Markets Act and was in scope for consolidation. Although the Group was not a majority shareholder, the Group 1) had the power over the investee, 2) was exposed, or had rights, to variable returns from its involvement with the investee, and 3) had the ability to use its power to affect its returns.

(*5) Due to return of capital invested occurred during the nine months ended September 30, 2017, both capital stock and the number of shares became nil. Residual net assets will be distributed in proportion to ownership interests.

(*6) Due to liquidation for the nine months ended as of September 30, 2017, the entity was excluded from the scope for consolidation.

(3) As of September 30, 2017, and December 31, 2016, despite having more than a 50% ownership interest, the Group has not consolidated the following companies as the Group does not have the ability to control following subsidiaries:

	As of September 30, 2017
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities Investment		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities Investment		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities Investment		88.9
Hana Walmart Real Estate Investment Trust 41-1(*)	Korea	Securities Investment		77.0

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

	As of December 31, 2016
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities Investment		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities Investment		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities Investment		88.9
Kiwoom Frontier Professional Investment Private Fund 6(Bond) (*)	Korea	Securities Investment		50.0

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

(4) The summarized financial information before the elimination of intercompany transactions of the subsidiaries whose financial information was prepared under K-IFRS for the Group’s consolidated financial statements is as follows (Unit: Korean Won in millions):

	As of and for the nine months ended September 30, 2017
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori FIS Co., Ltd.		95,497		59,583		185,862		406			406
Woori Private Equity Asset Management Co., Ltd.		43,113		2,249		6,996		(3,403	)		(3,434	)
Woori Finance Research Institute Co., Ltd.		4,616		736		4,258		512			504
Woori Card Co., Ltd.		8,671,596		7,064,054		1,285,385		81,333			82,576
Woori Investment Bank Co., Ltd.		2,016,621		1,828,201		142,970		15,579			16,358
Woori Credit Information Co., Ltd.		32,270		5,028		22,802		953			870
Woori America Bank		2,056,706		1,762,696		61,031		11,293			2,124
Woori Global Markets Asia Limited		290,025		170,884		7,370		1,159			(5,286	)
Woori Bank (China) Limited		5,002,274		4,478,421		295,639		9,084			6,647
AO Woori Bank		214,735		160,288		11,886		3,488			3,062
PT Bank Woori Saudara Indonesia 1906 Tbk		2,363,036		1,854,080		145,535		27,799			4,820
Banco Woori Bank do Brasil S.A.		199,452		163,714		16,029		1,571			552
Korea BTL Infrastructure Fund		786,511		301		22,656		19,919			19,919
Woori Fund Service Co., Ltd.		12,219		1,031		6,712		1,175			1,175
Woori Finance Cambodia PLC.		43,196		23,407		4,097		1,052			885

- 3 -

	As of and for the nine months ended September 30, 2017
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners		Comprehensive income (loss) attributable to owners
Woori Finance Myanmar Co., Ltd.		18,927		5,387		1,658		501		627
Wealth Development Bank		192,043		155,878		10,260		1,333		833
Woori Bank Vietnam Limited		695,263		539,606		22,410		4,458		(3,289	)
Money trust under the FISCM Act (*)		1,559,927		1,530,440		34,718		157		157
Structured entity for the securitization of financial assets		830,013		1,241,198		17,545		1,491		(2,434	)
Structured entity for the investments in securities		1,701,265		125,483		48,176		20,066		4,328

(*) FISCM Act: Financial Investment Services and Capital Markets Act

	As of and for the year ended December 31, 2016
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori FIS Co., Ltd.		141,329		105,821		244,783		1,048			1,432
Woori Private Equity Asset Management Co., Ltd.		97,338		53,244		2,154		312			219
Woori Finance Research Institute Co., Ltd.		3,710		334		4,445		108			100
Woori Card Co., Ltd.		7,606,108		6,180,893		1,555,373		109,393			116,381
Woori Investment Bank Co., Ltd.		1,576,627		1,404,566		178,572		23,872			23,897
Woori Credit Information		31,292		4,416		27,884		543			618
Woori America Bank		2,186,049		1,973,263		73,909		15,266			20,899
Woori Global Markets Asia Limited		272,008		147,581		7,255		1,863			5,582
Woori Bank (China) Limited		4,984,017		4,466,812		475,174		32,025			11,505
AO Woori Bank		239,860		188,474		16,221		5,650			15,553
PT Bank Woori Saudara Indonesia 1906 Tbk		2,089,822		1,693,111		179,014		24,573			48,542
Banco Woori Bank do Brasil S.A.		241,229		206,043		17,059		2,786			9,600
Korea BTL Infrastructure Fund		784,770		299		33,476		29,617			29,617
Woori Fund Service Co., Ltd.		11,386		1,372		7,787		1,011			1,011
Woori Finance Cambodia PLC.		32,405		24,751		4,545		1,250			1,494
Woori Finance Myanmar Co., Ltd.		4,305		2,651		380		(613	)		(569	)
Wealth Development Bank		209,779		174,446		12,519		1,248			1,876
Woori Bank Vietnam Limited		159,223		278		—		(346	)		3,545
Money trust under the FISCM Act (*)		1,525,145		1,495,815		55,540		697			697
Structured entity for the securitization of financial assets		487,431		895,824		29,480		6,912			7,138
Structured entity for the investments in securities		4,397,163		1,898,977		137,896		56,605			61,535

(*) FISCM Act: Financial Investment Services and Capital Markets Act

(5) The financial support that the Group provides to consolidated structured entities is as follows:

- Structured entity for the securitization of financial assets

The structured entity is established for the purpose of securitization of project financing loans, corporate bonds, and other financial assets. The Group is involved with the structured entity through providing with credit facility over asset-backed commercial papers issued by the entity, originating loans directly to the structured entity, or purchasing 100% of the subordinated debts issued by the structured entity.

- Structured entity for the investments in securities

The structured entity is established for the purpose of investments in securities. The Group acquires beneficiary certificates through its contribution of fund to the structured entity, and it is exposed to the risk that it may not be able to recover its fund depending on the result of investment performance of asset managers of the structured entity.

- 4 -

- Money trust under the Financial Investment Services and Capital Markets Act

The Group provides with financial guarantee of principal and interest or principal only to some of its trust products. Due to the financial guarantees, the Group may be obliged to supplement when the principal and interest or principal of the trust product sold is short of the guaranteed amount depending on the result of investment performance of the trust product.

(6) The details of the limitations with regard to the transfer of assets or the redemption of liabilities within the Group are provided below.

Some subsidiaries are regulated by the rules of the jurisdictions, in which they were incorporated, with regard to funding or management of deposits. Also, there is the limitation that they must have pre-approval from their regulators in case of remittance of earnings to the Bank.

(7) The Group has entered into various agreements with structured entities such as asset securitization vehicles, structured finance and investment funds, and monetary funds. Where it is determined in accordance with K-IFRS 1110 that the Group has no controlling power over such structured entities, the entities are not consolidated. The nature of interests, which the Group retains, and the risks, to which the Group is exposed, of the unconsolidated structured entities are as follows:

The interests to unconsolidated structured entities, which the Group retains, are classified to asset securitization vehicles, structured finance and investment fund, based on the nature and the purpose of the structured entities.

Asset securitization vehicle issues asset-backed securities and redeems the principal and interest or distributes dividends on asset-backed securities with profits from collecting cash flows or sale of securitized assets. The Group, as a secondary guarantor, provides purchase commitments for its asset-backed securities or guarantees to such asset securitization vehicle and recognizes commission income or interest income related to the commitment or guarantees. Therefore, the Group would be exposed to risks to purchases or pays back asset-backed securities issued by the vehicles when a primary guarantor fails to provide the financing asset securitization vehicles.

Structured finance includes investments in project financing on real estates, social overhead capital (“SOC”), infrastructure and shipping finance. They are formed as special purpose entity by funding through equity investments and loans from various investors. Investment decisions are made by the Group based on business outlook of such projects. In relation to such investments, the Group recognizes interest income on loans, gains or losses on valuation of equity investments or dividend income. The structured finance is secured by additional funding agreement, guarantee or credit facilities. However, the structured financing project would fail to return the capital of equity investments or principal of loans to the Group if it is discontinued or did not achieve business outcome.

Investment funds include trusts and private equity funds. A trust is formed by contributions from various investors, operated by a manager engaged to the trust and distributed proceeds from sales of investments to the investors. A private equity fund is established in order to acquire ownership interests in a portfolio company with exit strategy after implementing financial and operational restructuring of the company. The Group recognizes unrealized gains or losses on change in value of investments in proposition of ownership interests in investments. The Group would be exposed to risks of loss when the value of portfolio investment is decreased.

- 5 -

Total assets of the unconsolidated structured entities, the carrying value of the related items recorded, the maximum exposure to risks, and the loss recognized in conjunction with the unconsolidated structured entities as of September 30, 2017 and December 31, 2016 are as follows (Unit: Korean Won in millions):

	September 30, 2017
	Asset securitization vehicle		Structured finance		Investment Funds
Total asset of the unconsolidated structured entities		6,749,481		48,581,405		15,685,071
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		3,265,065		2,245,524		1,422,240
Loans and receivables		43,005		1,936,632		—
Financial assets at fair value through profit or loss		—		194,828		13,040
Available-for-sale financial assets		926,261		109,070		1,192,410
Held-to-maturity financial assets		2,295,236		—		—
Investments in joint ventures and associates		—		—		216,790
Derivative assets		563		4,994		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		1,825		1,417		—
Derivative liabilities		340		565		—
Other liabilities (including provisions)		1,485		852		—
The maximum exposure to risks		4,032,834		3,097,300		1,422,240
Investments		3,265,065		2,245,524		1,422,240
Credit facilities		767,769		851,776		—
Loss recognized on unconsolidated structured entities		512		5,919		5,083
	December 31, 2016
	Asset securitization vehicle		Structured finance		Investment Funds
Total asset of the unconsolidated structured entities		8,426,713		61,324,862		9,131,362
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		3,361,910		2,790,215		1,749,494
Loans and receivables		65,470		2,414,044		—
Financial assets at fair value through profit or loss		—		254,150		—
Available-for-sale financial assets		1,216,446		115,843		1,664,865
Held-to-maturity financial assets		2,079,648		—		—
Investments in joint ventures and associates		—		—		84,629
Derivative assets		346		6,178		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		1,363		1,224		—
Derivative liabilities		201		362		—
Other liabilities (including provisions)		1,162		862		—
The maximum exposure to risks		4,263,993		3,802,210		1,749,494
Investments		3,361,910		2,790,215		1,749,494
Purchase agreements		28,000		—		—
Credit facilities		834,083		970,195		—
Other commitments		40,000		41,800		—
Loss recognized on unconsolidated structured entities		6,353		71,185		683

(8) Subsidiaries of which non-controlling interests are significant to the Group’s consolidated financial statements are as follows (Unit: Korean Won in millions):

1) Accumulated non-controlling interests at the end of the reporting period

	September 30, 2017		December 31, 2016
Woori Investment Bank		80,833		73,986
PT Bank Woori Saudara Indonesia 1906 Tbk		69,608		70,249
Wealth Development Bank		17,721		16,983

2) Net income attributable to non-controlling interests

	For the nine months ended September 30, 2017		For the nine months ended September 30, 2016
Woori Investment Bank		6,520		6,680
PT Bank Woori Saudara Indonesia 1906 Tbk		6,731		4,551
Wealth Development Bank		653		—

- 6 -

3) Dividends to non-controlling interests

	For the nine months ended September 30, 2017		For the nine months ended September 30, 2016
PT Bank Woori Saudara Indonesia 1906 Tbk		1,513		1,242

2. SIGNIFICANT BASIS OF PREPARATION AND ACCOUNTING POLICIES

The Group’s consolidated financial statements are prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1034, Interim Financial Reporting. It is necessary to use the annual financial statements for the year ended December 31, 2016 for understanding of the accompanying interim financial statements.

The significant accounting policies that have been applied for the preparation of the consolidated financial statements as of and for the nine months ended September 30, 2017 are described below, and the significant accounting policies are the same as the accounting policies applied for the preparation of the previous year’s consolidated financial statements, except the impacts from the adoptions of accounting standards or interpretations which are explained below.

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

Amendments to K-IFRS 1007 – Statement of Cash Flows

The amendments require that changes in liabilities arising from financial activities are disclosed. The adoption of the amendments has no material impact on the Group’s consolidated financial statements.

Amendments to K-IFRS 1012 – Income Taxes

The amendments clarify that unrealized losses on fixed-rate debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the holder expects to recover the carrying amount of the debt instrument by sale or by use and that the estimate of probable future taxable profit may include the recovery of some of assets for more than their carrying amount. When the Group assesses whether there will be sufficient taxable profit, the Group should compare the deductible temporary differences with future taxable profit that excludes tax deductions resulting from the reversal of those deductible temporary differences. The adoption of the amendments has no material impact on the Group’s consolidated financial statements.

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

Enactments to K-IFRS 1109 – Financial Instruments

The enactments to 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. K-IFRS 1109 – Financial Instruments which was enacted on September 25, 2015 will be applied for annual periods beginning on or after 1 January 2018 or may be applied earlier. This standard will supersede K-IFRS 1039- Recognition and Measurement of Financial Instruments. By the way, the Group will apply K-IFRS 1109 for annual periods beginning on or after 1 January 2018.

In addition, K-IFRS 1109 includes certain exceptions to the classification and measurement of financial assets and the retroactive restatement for classification and measurement of financial assets, impairment of financial assets; and hedge accounting.

- 7 -

The Group evaluated the potential effect to the financial statement as of June 30, 2017 based on the present situation as of September 30, 2017 and the available information for evaluating the financial effect by initial adoption of K-IFRS 1109 preliminarily. The effect to the financial statement for the initial adopted fiscal year depends on not only the selection and decision of the accounting policies by this standard but also the financial instrument which the Group holds for the period and economic situation and so on.

Meanwhile, the typical financial impacts per each major requirements under the Standard that are expected to be applicable are as follows:

Phase 1: Classification and measurement of financial assets and financial liabilities

All recognized financial assets that are currently within the scope of K-IFRS 1109 will be subsequently measured either at amortized cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL) under K-IFRS 1109 based on the business model and the nature of the contractual cash flows. And if the hybrid contracts contains the financial assets as the host contract, embedded derivative will not be separated, they will be classified as a whole specifically:

	The business model
The nature of contractual cash flows	Objective is to collect the contractual cash flows	Objective is achieved both by collecting the contractual cash flows and selling financial assets	Objective is to sell financial assets and so on
Contractual cash flows that are solely payment of principal and interest	Measured at amortized cost(*1)	Measure at FVOCI(*1)	Measure at FVTPL
Other than the above	Measure at FVTPL(*2)	Measure at FVTPL(*2)	Measure at FVTPL(*2)

(*1) For eliminating or reducing accounting discrepancies, an irrevocable election can be made at initial recognition to measure the investment at FVTPL.

(*2) For the equity securities which are traded for the purpose other than short-term trading, an irrevocable election can be made at initial recognition to measure the investment at FVOCI.

Under K-IFRS 1109, as it is more strictly required to classify to the financial assets measured at amortized cost or fair value through OCI compared to under current K-IFRS 1039, when adopting the K-IFRS 1109, the volatility of net income can be expanded by the increasing portion of the financial asset measured at FVTPL. In accordance with K-IFRS 1109, the debt instruments only which occur the cash flow that is compose of solely the principal and the interest on the remaining principal at specified dates by the contract, whose purpose is to receive the cash flow under the contract can be measured at amortized cost. In accordance with K-IFRS 1039, the Group shall measure loans and receivables amounting to 265,148,624 million Won and held-to-maturity financial assets amounting to 15,144,766 million Won as of June 30, 2017 as amortized cost, and among theses, 24,585 million Won of debt instruments, whose host contracts are debt securities and which separated the embedded derivatives from the hybrid contracts is included.

Based on the result of the preliminary effect evaluation, if K-IFRS 1109 adopt to the above financial assets as of June 30, 2017, as they almost occur the cash flow that is compose of solely the principal and the interest on the remaining principal at specified dates by the contract, whose purpose is to receive the cash flow under the contract, so they can be measure at amortized cost and there is no material effect to the financial statement. However, for debt securities as the host contract of hybrid contract amounting to 24,585 million Won, as the cash flow under the contract is not composed of solely the principal and the interest on the remaining principal, it will be classified to the financial asset measured at FVTPL.

In accordance with K-IFRS 1109, the debt instruments only which occur the cash flow that is composed of solely the principal and the interest on the remaining principal at specified dates by the contract, whose purpose is to receive the cash flow under the contract and sell itself can be measure at FVOCI. In accordance with K-IFRS 1039, the Group hold debt instruments as available-for-sale assets amounting to 15,123,734 million Won as of June 30, 2017.

- 8 -

Based on the result of the preliminary effect evaluation, if K-IFRS 1109 adopt to the above AFS financial assets as of June 30, 2017, they almost can be classified to financial asset measured at FVOCI. However, for beneficiary certificates amounting to 3,045,406 million Won, other equity investment amounting to 297,115 million Won and debt securities amounting to 109,873 million Won, as the cash flows of those are not composed of solely the principal and the interest on the remaining principal, they may be classified to financial assets measured at FVTPL. As a result, the volatility of net income can be expanded.

In accordance with K-IFRS 1109, an entity may make an irrevocable election at initial recognition for particular investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income, and the amounts should not be recycled to profit or loss. In accordance with K-IFRS 1039, the Group holds equity investments that are classified as available-for-sale financial assets amounting to 1,156,914 million Won as of June 30, 2017.

The Group is reviewing the designation of the financial asset measured at FVOCI among the available for sale equity securities.

One major change from K-IFRS 1039 relates to the presentation of changes in the fair value of a financial liability designated as at FVTPL attributable to changes in the credit risk of that liability. Under K-IFRS 1109, such changes are presented in other comprehensive income, unless the presentation of the effect of the change in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. In accordance with K-IFRS 1039, the Group holds financial liabilities designated as at FVTPL 616,177 million Won as of June 30, 2017.

Based on the result of the preliminary effect evaluation, the variance amount due to the effect of accumulated credit risk variance among the total variance of financial liabilities designated as at FVPTL is 15,893 million Won.

Phase 2: Impairment methodology

The impairment model under K-IFRS 1109 reflects expected credit losses. Under the impairment approach in K-IFRS 1109, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses should be updated at each reporting date to reflect changes in credit risk since initial recognition.

In accordance with K-IFRS 1109, the allowance for doubtful receivables is measured at the amount equivalent to the expected 12-month credit loss or the lifetime expected credit loss, depending on the degree of deterioration of the credit risk after the initial recognition of the financial asset. As a result, the credit loss can be earlier than under occurred loss model of current K-IFRS 1039.

	Stage 1	Stage 2	Stage 3
Stage	In case the exposure’s credit risk has not increased significantly since initial recognition(*)	In case the exposure has suffered a significant increase in credit risk	In case the exposure meets the accounting definition of credit impaired
Allowance recognition	The Group recognizes only 12-month expected credit losses as a loss allowance	The Group recognizes a loss allowance equal to lifetime expected credit losses

(*) It can be considered that the credit risk dose not increase significantly when the credit risk is low at the year-end.

- 9 -

Meanwhile, K-IFRS 1109 requires that, an entity shall only recognize the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financial assets.

Based on the result of the preliminary effect evaluation, the allowance for credit losses will increase by 265,178 million Won and the total amount of the allowance for credit losses is expected to be 2,263,725 million Won as of June 30, 2017. The details of credit losses are as follows (Unit: Korean Won in millions):

		June 30, 2017		Allowance for credit losses (K-IFRS 1109)
Loans and receivables	Stage 1		272,557,218		629,798
	Stage 2		11,600,372		471,929
	Stage 3		1,992,502		856,697
Provisions	Stage 1		92,292,965		116,161
	Stage 2		1,252,584		45,478
	Stage 3		292,308		143,662

The BIS is expected to be 15.33% which increased by 0.04% as of June 30, 2017. The result of preliminary effect evaluation can be changed according to the additional available information for the future and the relevant decision making.

Phase 3: Hedge accounting

The general hedge accounting requirements of K-IFRS 1109 is relaxed compared to under hedge accounting mechanisms in K-IFRS 1039. Greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify as hedging instruments and hedged items that are eligible for hedge accounting. In addition, the quantitative criteria (80~125%) for the highly hedge effectiveness is abolished and retrospective assessment of hedge effectiveness is no longer required. So it enable the company to focus on the risk management activities.

Enactments to 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 amendments 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 amendments are effective for annual periods beginning on or after 1 January 2018.

Enactments to K-IFRS 2122 – Foreign Currency Transactions and Advance Consideration

The amendments clarify that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. The amendments are effective for annual periods beginning on or after 1 January 2018.

Annual Improvements to K-IFRS 2014-2016 Cycle

The amendments clarify that in applying the equity method of accounting to an associate or a joint venture in accordance with K-IFRS 1028, an investor, such as venture capital investment vehicle, may apply fair value measurement selectively to each of its associate or joint venture, as well as certain amendments for K-IFRS 1101. The amendments are effective for annual periods beginning on or after 1 January 2018.

- 10 -

The Group is in the process of evaluating the impact on the consolidated financial statements upon the adoption of amendments of K-IFRSs that have been issued but are not yet effective.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

In the application of the Group’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 such definitions.

The significant judgments which management has made about the application of the Group’s accounting policies and key sources of uncertainty in estimate do not differ from those used in preparing the consolidated financial statements for the year ended December 31, 2016.

4. RISK MANAGEMENT

The Group’s operating activity is exposed to various financial risks. The Group is required to analyze and assess the level of complex risks, and determine the permissible level of risks and manage such risks. The Group’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 Group 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 Group 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 Group’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 goals of credit risk management are to maintain the Group’s credit risk exposure to a permissible degree and to optimize its rate of return considering such credit risk.

1) Credit risk management

The Group 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 Group uses the credit rating model to assess the possibility of counterparty’s default risk; and when assessing the obligor’s credit grade, the Group utilizes credit grades derived using statistical methods.

In order to manage credit risk limit, the Group 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 Group mitigates credit risk resulting from the obligor’s credit condition by using financial and physical collateral, guarantees, netting agreements and credit derivatives. The Group 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 Group regularly performs a revaluation of collateral reflecting such credit risk mitigation.

- 11 -

2) Maximum exposure to credit risk

The Group’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, 2017		December 31, 2016
Loans and receivables:
Korean treasury and government agencies		12,916,316		16,058,305
Banks		24,462,247		20,242,260
Corporates		91,776,567		88,985,566
Consumers		137,816,942		133,106,502
Sub-total		266,972,072		258,392,633
Financial assets at fair value through profit or loss (“FVTPL”):
Gold banking assets		26,305		26,180
Debt securities held for trading		2,671,171		2,644,916
Financial assets designated at FVTPL		6,475		4,348
Derivative assets for trading		1,849,389		2,898,295
Sub-total		4,553,340		5,573,739
Available-for-sale (“AFS”) debt securities		14,565,512		16,541,888
Held-to-maturity (“HTM”) securities		16,325,482		13,910,251
Derivative assets for hedging		109,828		140,577
Off-balance accounts :
Guarantees		13,290,358		14,761,784
Loan commitments		82,058,484		83,795,496
Sub-total		95,348,842		98,557,280
Total		397,875,076		393,116,368

- 12 -

a) Credit risk exposure by geographical areas

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

	September 30, 2017
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and receivables		250,347,708		4,132,193		2,834,235		1,101,804		451,636		8,104,496		266,972,072
Financial assets at FVTPL		4,385,884		3,512		—		121,675		94		42,175		4,553,340
AFS debt securities		13,905,961		34,434		138,372		—		—		486,745		14,565,512
HTM securities		16,182,448		—		58,969		—		—		84,065		16,325,482
Derivative assets		29,579		—		—		80,249		—		—		109,828
Off-balance accounts		93,284,545		721,869		167,844		72,917		37,412		1,064,255		95,348,842
Total		378,136,125		4,892,008		3,199,420		1,376,645		489,142		9,781,736		397,875,076
	December 31, 2016
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and receivables		241,380,250		4,286,018		2,792,088		895,874		323,470		8,714,933		258,392,633
Financial assets at FVTPL		5,205,849		6,525		—		261,547		81		99,737		5,573,739
AFS debt securities		16,155,290		13,845		137,861		—		—		234,892		16,541,888
HTM securities		13,758,863		—		20,336		—		—		131,052		13,910,251
Derivative assets		74,166		—		—		66,342		—		69		140,577
Off-balance accounts		96,245,092		737,513		103,130		80,831		23,250		1,367,464		98,557,280
Total		372,819,510		5,043,901		3,053,415		1,304,594		346,801		10,548,147		393,116,368

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

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, 2017
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and receivables		47,622,232		35,089,822		39,492,241		3,839,561		129,932,760		10,995,456		266,972,072
Financial assets at FVTPL		71,716		117,678		3,449,013		6,190		2,939		905,804		4,553,340
AFS debt securities		764,326		30,160		7,513,948		133,875		—		6,123,203		14,565,512
HTM securities		1,358,687		—		10,302,610		285,628		—		4,378,557		16,325,482
Derivative assets		—		—		109,828		—		—		—		109,828
Off-balance accounts		16,648,268		23,389,789		9,633,042		3,844,872		36,625,544		5,207,327		95,348,842
Total		66,465,229		58,627,449		70,500,682		8,110,126		166,561,243		27,610,347		397,875,076
	December 31, 2016
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and receivables		46,040,278		35,652,974		37,711,983		3,789,670		125,558,637		9,639,091		258,392,633
Financial assets at FVTPL		77,198		360,881		4,093,567		24,140		993		1,016,960		5,573,739
AFS debt securities		1,092,279		57,781		9,568,151		63,166		—		5,760,511		16,541,888
HTM securities		1,673,971		—		8,290,451		251,599		—		3,694,230		13,910,251
Derivative assets		—		—		140,577		—		—		—		140,577
Off-balance accounts		18,423,611		26,878,320		9,927,574		4,621,971		33,603,651		5,102,153		98,557,280
Total		67,307,337		62,949,956		69,732,303		8,750,546		159,163,281		25,212,945		393,116,368

- 13 -

3) Credit risk of loans and receivables

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

	September 30, 2017
					Corporates
	Korean treasury and government agencies		Banks		General business		Small & medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Loans and receivables neither overdue nor impaired		12,918,080		24,478,009		52,053,577		33,452,677		5,927,618		91,433,872		136,886,881		265,716,842
Loans and receivables overdue but not impaired		1,527		—		54,041		82,420		1,060		137,521		812,036		951,084
Impaired loans and receivables		—		—		1,179,710		301,753		69,234		1,550,697		551,665		2,102,362
Total		12,919,607		24,478,009		53,287,328		33,836,850		5,997,912		93,122,090		138,250,582		268,770,288
Allowance for credit losses		3,291		15,762		968,209		339,559		37,755		1,345,523		433,640		1,798,216
Total, net		12,916,316		24,462,247		52,319,119		33,497,291		5,960,157		91,776,567		137,816,942		266,972,072
	December 31, 2016
					Corporates
	Korean treasury and government agencies		Banks		General business		Small & medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Loans and receivables neither overdue nor impaired		16,062,399		20,258,860		49,815,352		31,520,617		7,142,440		88,478,409		132,195,005		256,994,673
Loans and receivables overdue but not impaired		—		—		48,294		57,245		—		105,539		765,829		871,368
Impaired loans and receivables		—		—		1,404,568		429,955		208,372		2,042,895		510,793		2,553,688
Total		16,062,399		20,258,860		51,268,214		32,007,817		7,350,812		90,626,843		133,471,627		260,419,729
Allowance for credit losses		4,094		16,600		1,156,000		424,142		61,135		1,641,277		365,125		2,027,096
Total, net		16,058,305		20,242,260		50,112,214		31,583,675		7,289,677		88,985,566		133,106,502		258,392,633

- 14 -

a) Credit quality of loans and receivables

The Group 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, 2017
	Korean treasury and government agencies				Corporates
			Banks		General business		Small & medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Upper grade (*1)		12,914,611		24,462,247		44,231,984		22,006,654		4,941,394		71,180,032		133,294,693		241,851,583
Lower grade (*2)		178		—		7,410,746		11,260,517		957,541		19,628,804		3,437,984		23,066,966
Total		12,914,789		24,462,247		51,642,730		33,267,171		5,898,935		90,808,836		136,732,677		264,918,549
Value of collateral(*3)		—		477,517		19,719,917		26,898,239		3,011,270		49,629,426		113,930,125		164,037,068

	December 31, 2016
	Korean treasury and government agencies				Corporates
			Banks		General business		Small & medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Upper grade (*1)		16,058,288		20,242,260		41,461,420		18,755,963		5,337,033		65,554,416		128,374,017		230,228,981
Lower grade (*2)		17		—		7,941,871		12,550,282		1,763,658		22,255,811		3,680,920		25,936,748
Total		16,058,305		20,242,260		49,403,291		31,306,245		7,100,691		87,810,227		132,054,937		256,165,729
Value of collateral(*3)		—		358,456		18,003,674		25,493,006		3,996,162		47,492,842		111,054,910		158,906,208

(*1) AAA~BBB for corporates, and 1~6 level for consumers

(*2) BBB- ~C for corporates, and 7~10 level for consumers

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

Allowances for credit losses, for loans and receivables neither overdue nor impaired, amounting to 798,293 million Won and 828,944 million Won as of September 30, 2017 and as of December 31, 2016, respectively, which 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, 2017
Past due	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small & medium sized enterprise		Project financing and others		Sub-total
Less than 30 days		1,527		—		45,958		46,545		—		92,503		619,857		713,887
30~59 days		—		—		4,070		15,145		—		19,215		91,944		111,159
60~89 days		—		—		1,569		11,879		1,049		14,497		55,699		70,196
Total		1,527		—		51,597		73,569		1,049		126,215		767,500		895,242
Value of collateral (*)		—		—		12,006		59,447		1,060		72,513		585,907		658,420

	December 31, 2016
Past due	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small & medium sized enterprise		Project financing and others		Sub-total
Less than 30 days		—		—		45,255		41,329		—		86,584		584,995		671,579
30~59 days		—		—		1,553		8,933		—		10,486		90,296		100,782
60~89 days		—		—		337		2,123		—		2,460		49,151		51,611
Total		—		—		47,145		52,385		—		99,530		724,442		823,972
Value of collateral (*)		—		—		7,021		45,304		—		52,325		546,164		598,489

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

- 15 -

Allowances for credit losses, for loans and receivables that are overdue but not impaired, amounting to 55,842 million Won and 47,396 million Won as of September 30, 2017 and December 31, 2016, respectively, which are deducted from the loans and receivables above.

c) Impaired loans and receivables

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

	September 30, 2017
	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small & medium sized enterprise		Project financing and others		Sub-total
Impaired loans		—		—		624,792		156,551		60,173		841,516		316,765		1,158,281
Value of collateral (*)		—		—		513,049		164,011		38,686		715,746		228,648		944,394

	December 31, 2016
	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small & medium sized enterprise		Project financing and others		Sub-total
Impaired loans		—		—		661,778		225,045		188,986		1,075,809		327,123		1,402,932
Value of collateral (*)		—		—		482,680		236,954		42,166		761,800		250,583		1,012,383

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

Allowances for credit losses, for impaired loans and receivables amounting to 944,081 million Won and 1,150,756 million Won as of September 30, 2017 and December 31, 2016, respectively, are deducted from the impaired loans and receivables above.

4) Credit quality of debt securities

The Group 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, 2017
	Financial assets at FVTPL (*)		AFS debt securities		HTM securities		Total
AAA		1,652,163		10,911,826		15,539,139		28,103,128
AA- ~ AA+		796,765		2,742,965		727,801		4,267,531
BBB- ~ A+		222,243		854,669		58,542		1,135,454
Below BBB-		6,475		56,052		—		62,527
Total		2,677,646		14,565,512		16,325,482		33,568,640

	December 31, 2016
	Financial assets at FVTPL (*)		AFS debt securities		HTM securities		Total
AAA		1,658,332		12,490,934		13,342,384		27,491,650
AA- ~ AA+		720,535		3,372,310		466,401		4,559,246
BBB- ~ A+		266,049		618,736		101,466		986,251
Below BBB-		4,348		59,908		—		64,256
Total		2,649,264		16,541,888		13,910,251		33,101,403

(*) Financial assets at FVTPL comprise debt securities held for trading and financial assets designated at FVTPL.

- 16 -

(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 changes in 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 Group avoids, bears, or mitigates risks by identifying the underlying source of the risks, measuring parameters and evaluating their appropriateness.

On a yearly basis, the Risk Management Committee establishes a Value at Risk (“VaR”, maximum losses) limit, loss limit and risk capital limit by subsidiaries for its management purposes. The limit by investment desk/dealer is independently managed to the extent of the limit given to subsidiaries and the limit by investment and loss cut is managed by the risk management personnel within the department.

The Group uses both a standard-based and an internal model-based approach to measure market risk. The standard-based approach is used to calculate individual market risk of owned capital while the internal model-based approach is used to calculate general capital market risk and it is used to measure internal risk management measure. For the trading activities, the Risk Management department measures the VaR limit by department, risk factor and loss limit on a daily basis and reports regularly to the Risk Management Committee.

2) Sensitivity analysis of market risk

The Group performs the sensitivity analyses both for trading and for non-trading activities.

For trading activities, the Group 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 calculation. The actual results are periodically monitored to examine the validity of the assumptions, variables, and factors that are used in VaR calculations. However, this approach cannot prevent the loss when the market fluctuation exceeds expectation.

For the non-trading activities, interest rate Earning at Risk (“EaR”) and interest rate VaR, which is based on the simulations of the Net Interest Income (“NII”) and Net Present Value (“NPV”), are calculated for the Bank and the consolidated trusts, and the risks for all other subsidiaries are measured and managed by the interest rate EaR and the interest rate VaR calculations based on the Bank for International Settlements (“BIS”) Framework.

NII is a profit-based indicator for displaying the profit changes in short term due to the short-term interest changes. It will be estimated as subtracting interest expenses of liabilities from the interest income of assets. NPV is an indicator for displaying risks in economic view according to unfavorable changes related to interest rate. It will be estimated as subtracting the present value of liabilities from the present value of assets.

EaR shows the maximum profit-loss amount, which indicates the maximum deduction amount caused by the unfavorable changes related to the interest rate of a certain period (i.e. 1 year). Interest rate VaR shows the potential maximum loss generated by the unfavorable changes during a certain period of time in the present or future.

- 17 -

a) Trading activities

The minimum, maximum and average VaR for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, and the VaR as of September 30, 2017 and December 31, 2016, respectively, are as follows (Unit: Korean Won in millions):

	As of September 30, 2017			For the nine months ended September 30, 2017									As of December 31, 2016			For the year ended December 31, 2016
Risk factor				Average			Maximum			Minimum						Average			Maximum			Minimum
Interest rate		3,647			3,806			4,918			2,467			3,250			2,844			6,430			1,367
Stock price		2,656			2,756			4,419			1,192			4,191			3,456			5,063			2,304
Foreign currencies		6,636			4,927			6,636			4,061			4,396			4,914			7,686			3,967
Commodity price		8			39			188			4			152			113			325			21
Diversification		(5,135	)		(4,370	)		(6,798	)		(2,097	)		(5,630	)		(5,355	)		(10,385	)		(4,034	)
Total VaR		7,812			7,158			9,363			5,627			6,359			5,972			9,119			3,625

b) Non-trading activities

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

	September 30, 2017				December 31, 2016
	NII		NPV		NII		NPV
Base case		4,540,073		21,619,693		4,367,411		21,556,632
Base case (Prepay)		4,543,372		21,268,573		4,384,783		20,666,425
IR 100bp up		4,952,710		20,973,125		4,802,118		20,893,490
IR 100bp down		4,065,923		22,328,393		3,903,129		22,279,204
IR 200bp up		5,365,426		20,395,129		5,236,879		20,289,742
IR 200bp down		3,150,905		23,075,223		2,975,351		23,052,848
IR 300bp up		5,778,141		19,885,134		5,671,639		19,742,627
IR 300bp down		2,066,550		25,193,281		1,968,273		25,096,193

The interest EaR and VaR calculated based on the BIS Framework of subsidiaries other than the Bank and consolidated trusts are as follows (Unit: Korean Won in millions):

September 30, 2017			December 31, 2016
EaR	VaR		EaR		VaR
226,693		114,435		188,381		110,335

- 18 -

The Group 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, 2017
	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		151,455,145		40,177,541		9,828,204		7,848,737		58,688,683		39,622,693		307,621,003
AFS financial assets		3,818,471		1,908,621		3,012,472		2,726,214		4,917,436		681,275		17,064,489
HTM financial assets		1,989,977		1,563,189		1,856,937		1,428,804		9,703,133		351,506		16,893,546
Total		157,263,593		43,649,351		14,697,613		12,003,755		73,309,252		40,655,474		341,579,038
Liability:
Deposits due to customers		103,884,829		36,800,844		30,958,253		16,558,616		37,590,999		763,536		226,557,077
Borrowings		11,353,673		1,092,260		384,534		511,073		2,686,563		459,135		16,487,238
Debentures		1,968,756		1,902,867		2,439,281		1,007,136		18,969,347		3,126,977		29,414,364
Total		117,207,258		39,795,971		33,782,068		18,076,825		59,246,909		4,349,648		272,458,679

	December 31, 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		148,237,350		42,032,667		8,064,502		7,757,087		55,838,192		35,245,734		297,175,532
AFS financial assets		3,165,094		2,946,992		2,854,514		2,915,226		5,029,918		713,596		17,625,340
HTM financial assets		2,770,079		1,515,213		1,246,503		1,143,170		6,853,951		892,030		14,420,946
Total		154,172,523		46,494,872		12,165,519		11,815,483		67,722,061		36,851,360		329,221,818
Liability:
Deposits due to customers		100,051,821		36,614,529		25,028,378		25,017,836		34,513,004		40,737		221,266,305
Borrowings		13,772,710		1,044,748		491,330		368,431		2,816,565		421,677		18,915,461
Debentures		2,109,235		2,077,681		860,455		1,545,943		14,613,799		4,143,773		25,350,886
Total		115,933,766		39,736,958		26,380,163		26,932,210		51,943,368		4,606,187		265,532,652

- 19 -

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, 2017
	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		23,358		26,781,114		117,702		1,201,047		25,478		4,391,083		1,397		1,887,641		4,253,671		38,514,556
Financial assets at FVTPL		41		46,622		31		316		—		—		40		53,467		100,593		200,998
AFS financial assets		1,583		1,815,207		—		—		200		34,434		—		623		242,146		2,092,410
HTM financial assets		103		118,255		—		—		—		—		—		—		83,320		201,575
Total		25,085		28,761,198		117,733		1,201,363		25,678		4,425,517		1,437		1,941,731		4,679,730		41,009,539
	September 30, 2017
	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
Liability:
Financial liabilities at FVTPL		53		60,773		89		907		—		—		103		138,974		166,648		367,302
Deposits due to customers		11,213		12,856,184		145,180		1,481,447		22,067		3,803,237		492		665,256		2,025,110		20,831,234
Borrowings		7,069		8,109,736		2,485		25,359		—		—		376		507,789		277,349		8,920,233
Debentures		3,329		3,816,883		—		—		700		120,645		—		—		231,480		4,169,008
Other financial liabilities		4,258		4,882,050		26,481		270,220		3,103		534,804		215		290,838		599,069		6,576,981
Total		25,922		29,725,626		174,235		1,777,933		25,870		4,458,686		1,186		1,602,857		3,299,656		40,864,758
Off-balance accounts		7,482		8,578,993		34,046		347,405		1,163		200,379		359		484,746		896,220		10,507,743
	December 31, 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		22,868		27,635,970		108,944		1,129,539		23,194		4,018,678		1,548		1,962,856		4,382,990		39,130,033
Financial assets at FVTPL		66		79,386		57		589		—		—		30		37,562		34,124		151,661
AFS financial assets		898		1,085,108		—		—		80		13,844		—		570		144,799		1,244,321
HTM financial assets		17		20,517		—		—		—		—		—		—		143,535		164,052
Total		23,849		28,820,981		109,001		1,130,128		23,274		4,032,522		1,578		2,000,988		4,705,448		40,690,067

	December 31, 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
Liability:
Financial liabilities at FVTPL		75		90,908		253		2,621		—		—		88		111,098		115,980		320,607
Deposits due to customers		11,294		13,648,729		124,790		1,293,835		18,950		3,283,291		651		825,165		2,402,076		21,453,096
Borrowings		7,193		8,692,792		3,243		33,625		—		—		222		280,894		115,332		9,122,643
Debentures		2,931		3,541,769		—		—		700		121,282		—		—		228,720		3,891,771
Other financial liabilities		2,235		2,700,703		12,390		128,464		1,508		261,278		245		310,396		846,990		4,247,831
Total		23,728		28,674,901		140,676		1,458,545		21,158		3,665,851		1,206		1,527,553		3,709,098		39,035,948
Off-balance accounts		8,593		10,384,163		28,675		297,304		1,061		183,883		374		473,845		312,187		11,651,382

- 20 -

(3) Liquidity risk

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

1) Liquidity risk management

Liquidity risk management is to prevent potential cash shortages 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 Group manages liquidity risk by identifying the maturity gap and such gap ratio through 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, 2017
	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		359,136		1,136		164,838		154		—		—		525,264
Deposits due to customers		143,496,208		30,459,337		24,686,041		20,212,631		7,580,824		3,391,357		229,826,398
Borrowings		7,032,096		2,551,909		1,143,290		1,546,901		3,866,643		459,109		16,599,948
Debentures		1,968,651		1,902,178		2,439,799		988,275		18,969,720		3,126,985		29,395,608
Other financial liabilities		16,221,274		162,980		1,809		750		153,855		2,818,101		19,358,769
Total		169,077,365		35,077,540		28,435,777		22,748,711		30,571,042		9,795,552		295,705,987

	December 31, 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		678,813		1,529		94		47		154,325		—		834,808
Deposits due to customers		136,835,315		28,685,473		19,254,108		30,875,962		6,284,092		2,732,019		224,666,969
Borrowings		9,146,895		2,355,336		876,836		1,486,710		4,711,273		420,720		18,997,770
Debentures		2,108,780		2,077,387		860,596		1,518,524		14,641,016		4,116,768		25,323,071
Other financial liabilities		14,813,948		27,544		5,480		1,433		84,792		2,751,825		17,685,022
Total		163,583,751		33,147,269		20,997,114		33,882,676		25,875,498		10,021,332		287,507,640

- 21 -

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, 2017
	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		359,136		1,136		164,838		154		—		—		525,264
Deposits due to customers		155,450,482		31,646,245		20,092,451		12,807,269		6,460,318		2,985,526		229,442,291
Borrowings		7,032,096		2,551,909		1,143,290		1,546,901		3,866,643		459,109		16,599,948
Debentures		1,968,651		1,902,178		2,439,799		988,275		18,969,720		3,126,985		29,395,608
Other financial liabilities		16,221,274		162,980		1,809		750		153,855		2,818,101		19,358,769
Total		181,031,639		36,264,448		23,842,187		15,343,349		29,450,536		9,389,721		295,321,880

	December 31, 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		678,813		1,529		94		47		154,325		—		834,808
Deposits due to customers		148,089,355		30,163,971		17,600,803		20,947,335		5,128,387		2,331,993		224,261,844
Borrowings		9,146,901		2,355,332		876,835		1,486,710		4,711,273		420,719		18,997,770
Debentures		2,108,780		2,077,387		860,596		1,518,524		14,641,016		4,116,768		25,323,071
Other financial liabilities		14,813,948		27,544		5,480		1,433		84,792		2,751,825		17,685,022
Total		174,837,797		34,625,763		19,343,808		23,954,049		24,719,793		9,621,305		287,102,515

3) Maturity analysis of derivative financial liabilities is as follows (Unit: Korean Won in millions):

Derivatives held for trading purpose are not managed in accordance with their contractual maturity, as the Group 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 after the offset of the cash inflow and outflow.

The cash flow by the maturity of derivative financial liabilities as of September 30, 2017 and December 31, 2016 as follows:

	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, 2017		2,008,539		—		—		—		28,608		—		2,037,147
December 31, 2016		3,009,977		—		—		208		7,013		—		3,017,198

4) Maturity analysis of off-balance accounts

The Group provides guarantees on behalf of customers. A financial guarantee represents an irrevocable undertaking that the Group should meet a customer’s obligations to third parties if the customer fails to do so. Under a loan commitment, the Group agrees to make funds available to a customer in the future. Loan commitments that 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 Group 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: Korean Won in millions):

	September 30, 2017		December 31, 2016
Guarantees		13,290,358		14,761,784
Loan commitments		82,058,484		83,795,496

- 22 -

(4) Operational risk

The Group 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 Group has been running the operational risk management system under Basel II. The Group developed advanced measurement approaches to quantify required capital for operational risk. This system is used for reinforcement in foreign competitions, reducing the amount of risk capitals, managing the risk, and precaution for any unexpected occasions. This system has been tested by an independent third party, and this system approved by the Financial Supervisory Service.

2) Operational risk measurement

To quantify required capital for operational risk, the Group applies Advanced Measurement Approaches (AMA) using of internal and external loss data, business environment and internal control factors (BEICFs), and scenario analysis (SBA). For the operational risk management for its subsidiaries, the Group adopted the Basic Indicator Approach.

(5) Capital management

The Group complies with the standard of capital adequacy provided by financial regulatory authorities. The capital adequacy ratio is based on Basel III of Basel Committee on Banking Supervision and Basel III was applied from the end of December, 2013. The capital adequacy ratio is calculated by dividing own capital by asset (weighted with a risk premium – risk weighted assets) based on the consolidated financial statements of the Group.

According to the above regulations, the Group is required to meet the following new minimum requirements: 6.25% and 5.38%, a minimum Tier 1 ratio of 7.75% and 6.88% and a minimum total regulatory capital of 9.75% and 8.88% as of September 30, 2017 and December 31, 2016.

The details are as follows (Unit: Korean won in millions):

	September 30, 2017			December 31, 2016
Tier 1 capital		16,447,709			15,714,480
Other Tier 1 capital		3,034,556			3,275,496
Tier 2 capital		3,458,324			3,910,513
Total risk-adjusted capital		22,940,589			22,900,489
Risk-weighted assets for credit risk		138,781,075			138,018,500
Risk-weighted assets for market risk		2,497,170			2,277,809
Risk-weighted assets for operational risk		9,676,775			9,431,814
Total risk-weighted assets		150,955,020			149,728,123
Common Equity Tier 1 ratio		10.90	%		10.50	%
Tier 1 capital ratio		12.91	%		12.68	%
Total capital ratio		15.20	%		15.29	%

- 23 -

5. OPERATING SEGMENTS

In evaluating the results of the Group and allocating resources, the Group’s Chief Operation Decision Maker (the “CODM”) utilizes the information per type 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 type of customers

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

• 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 & fund investment related business, venture advisory related tasks, real estate SOC development practices, etc.

• Capital market: Fund management, investment in securities and derivatives, etc.

• Credit card: Credit card, cash service and card loan, etc.

• Headquarter and others: Segments that do not belong to above operating segments

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

	September 30, 2017
	Consumer banking		Corporate banking		Investment banking		Capital market		Credit card		Headquarters and others		Sub-total		Adjustment			Total
Assets		107,890,261		105,315,489		6,194,121		11,341,530		8,671,596		84,505,699		323,918,696		(6,043,534	)		317,875,162
Liabilities		74,336,238		154,285,396		55,651		10,186,345		7,064,054		51,144,639		297,072,323		185,871			297,258,194

	December 31, 2016
	Consumer banking		Corporate banking		Investment banking		Capital market		Credit card		Headquarters and others		Sub-total		Adjustment			Total
Assets		105,931,025		104,937,198		6,337,634		8,111,230		7,606,108		82,840,235		315,763,430		(5,080,703	)		310,682,727
Liabilities		62,294,922		162,937,921		55,785		7,287,850		6,180,893		51,137,220		289,894,591		242,183			290,136,774

- 24 -

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

	For the nine months ended September 30, 2017
	Consumer banking			Corporate banking			Investment banking			Capital market			Credit Cards			Headquarters and others			Sub-total			Adjustments			Total
Net Interest income		1,235,409			1,316,262			7,687			25,730			342,750			534,862			3,462,700			439,176			3,901,876
Interest income		2,332,134			2,196,051			108,570			14,328			442,903			1,053,361			6,147,347			230,066			6,377,413
Interest expense		(717,708	)		(1,238,742	)		(186	)		—			(100,153	)		(627,858	)		(2,684,647	)		209,110			(2,475,537	)
Inter-segment		(379,017	)		358,953			(100,697	)		11,402			—			109,359			—			—			—
Net non-interest income		489,100			444,412			119,512			29,638			54,673			335,607			1,472,942			(568,216	)		904,726
Non-interest income		598,446			503,820			272,024			6,155,339			836,721			1,801,968			10,168,318			(195,768	)		9,972,550
Non-interest expense		(182,815	)		(104,265	)		(152,512	)		(6,125,701	)		(782,048	)		(1,348,035	)		(8,695,376	)		(372,448	)		(9,067,824	)
Inter-segment		73,469			44,857			—			—			—			(118,326	)		—			—			—
Other income(expense)		(1,407,860	)		(859,872	)		6,571			9,047			(286,093	)		(606,366	)		(3,144,573	)		139,887			(3,004,686	)
Administrative expense		(1,337,680	)		(618,969	)		(8,434	)		(11,309	)		(118,846	)		(741,176	)		(2,836,414	)		189,362			(2,647,052	)
Impairment losses due to credit loss and others		(70,180	)		(240,903	)		15,005			20,356			(162,247	)		134,810			(308,159	)		(49,475	)		(357,634	)
Operating income		316,649			900,802			133,770			64,415			111,330			264,103			1,791,069			10,847			1,801,916
Non-operating income(loss)		3,304			(3,097	)		32,832			—			(4,097	)		(25,334	)		3,608			(3,938	)		(330	)
Net income before income tax expense		319,953			897,705			166,602			64,415			107,233			238,769			1,794,677			6,909			1,801,586
Income tax expense		(77,429	)		(204,541	)		(40,318	)		(15,588	)		(25,900	)		(8,148	)		(371,924	)		(37,221	)		(409,145	)
Net income		242,524			693,164			126,284			48,827			81,333			230,621			1,422,753			(30,312	)		1,392,441
	For the nine months ended September 30, 2016
	Consumer banking			Corporate banking			Investment banking			Capital market			Credit Cards			Headquarters and others			Sub-total			Adjustments			Total
Net Interest income		1,088,799			1,298,660			9,738			39,087			315,967			553,785			3,306,036			439,164			3,745,200
Interest income		2,228,511			2,293,660			114,282			14,666			411,611			1,125,147			6,187,877			214,610			6,402,487
Interest expense		(772,242	)		(1,349,208	)		(156	)		(227	)		(95,644	)		(664,364	)		(2,881,841	)		224,554			(2,657,287	)
Inter-segment		(367,470	)		354,208			(104,388	)		24,648			—			93,002			—			—			—
Net non-interest income		420,841			414,071			118,636			11,701			62,198			232,636			1,260,083			(711,736	)		548,347
Non-interest income		682,013			399,706			421,359			6,935,357			723,278			3,150,096			12,311,809			(298,094	)		12,013,715
Non-interest expense		(286,919	)		(20,284	)		(302,723	)		(6,923,656	)		(661,080	)		(2,857,064	)		(11,051,726	)		(413,642	)		(11,465,368	)
Inter-segment		25,747			34,649			—			—			—			(60,396	)		—			—			—
Other income(expense)		(1,365,472	)		(1,157,200	)		(88,720	)		(2,237	)		(254,812	)		(237,252	)		(3,105,693	)		201,367			(2,904,326	)
Administrative expense		(1,310,730	)		(700,793	)		(9,490	)		(12,104	)		(104,516	)		(463,717	)		(2,601,350	)		189,568			(2,411,782	)
Impairment losses due to credit loss and others		(54,742	)		(456,407	)		(79,230	)		9,867			(150,296	)		226,465			(504,343	)		11,799			(492,544	)
Operating income		144,168			555,531			39,654			48,551			123,353			549,169			1,460,426			(71,205	)		1,389,221
Non-operating income(loss)		(30,998	)		(2,754	)		32,618			—			(2,794	)		41,228			37,300			(67,125	)		(29,825	)
Net income before income tax expense		113,170			552,777			72,272			48,551			120,559			590,397			1,497,726			(138,330	)		1,359,396
Income tax expense		(27,387	)		(132,580	)		(17,490	)		(11,749	)		(28,168	)		(30,482	)		(247,856	)		5,639			(242,217	)
Net income		85,783			420,197			54,782			36,802			92,391			559,915			1,249,870			(132,691	)		1,117,179

(2) Information on products and services

The products of the Group 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.

- 25 -

(3) Information on geographical areas

Among the Group’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the nine months ended September 30, 2017 and 2016 amounted to 15,525,861 million Won and 17,600,787 million Won, respectively, and revenue from the foreign customers amounted to 824,102 million Won and 815,415 million Won, respectively. Among the Group’s non-current assets (investments in joint ventures and associates, investment properties, premises and equipment and intangible assets), non-current assets attributed to domestic subsidiaries as of September 30, 2017 and December 31, 2016 are 3,688,314 million Won and 3,498,327 million Won, respectively, and foreign subsidiaries are 246,540 million Won and 240,946 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, 2017		December 31, 2016
Cash		2,245,815		2,113,739
Foreign currencies		716,944		742,340
Demand deposits		3,102,713		4,238,956
Fixed deposits		747,017		496,289
Total		6,812,489		7,591,324

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

	For the nine months ended September 30, 2017			For the nine months ended September 30, 2016
Changes in other comprehensive income (loss) due to valuation of AFS financial assets		(51,041	)		52,278
Changes in other comprehensive income (loss) of investment in associates		4,917			(2,965	)
Changes in other comprehensive income (loss) of foreign currencies translation of foreign operations		(54,522	)		(75,041	)
Changes in other comprehensive income (loss) related to valuation of cash flow hedging		(1,247	)		10,371
Changes in other comprehensive loss due to remeasurement of the net defined benefit liability		13,143			(52,788	)
Changes in investments in associates due to equity swap and others		51,227			—
Changes in investments in associates due to accounts transfer		—			(156,727	)
Changes in unpaid dividends on hybrid equity securities		(1,502	)		23,560

- 26 -

7. FINANCIAL ASSETS AT FVTPL

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

	September 30, 2017		December 31, 2016
Financial assets held for trading		4,590,507		5,633,724
Financial assets designated at FVTPL		18,980		17,000
Total		4,609,487		5,650,724

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

	September 30, 2017		December 31, 2016
Deposits:
Gold banking asset		26,305		26,180
Securities:
Debt securities
Korean treasury and government agencies		533,202		519,337
Financial institutions		1,569,337		1,444,459
Corporates		568,632		681,120
Equity securities		27,395		35,983
Beneficiary certificates		16,247		23,891
Securities loaned		—		4,459
Sub-total		2,714,813		2,709,249
Derivatives assets		1,849,389		2,898,295
Total		4,590,507		5,633,724

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

	September 30, 2017		December 31, 2016
Debt securities		6,475		4,348
Equity securities		12,505		12,652
Total		18,980		17,000

- 27 -

8. AVAILABLE FOR SALE FINANCIAL ASSETS

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

	September 30, 2017		December 31, 2016
Debt securities:
Korean treasury and government agencies		3,076,447		3,788,630
Financial institutions		5,632,300		6,314,198
Corporates		3,270,981		4,409,186
Asset-backed securities		310,739		249,203
Bonds in foreign currencies		2,068,932		1,211,864
Others		35,214		75,228
Sub-total		14,394,613		16,048,309
Equity securities		1,455,535		1,453,613
Beneficiary certificates		2,603,541		2,822,082
Securities loaned		170,899		493,579
Total		18,624,588		20,817,583

9. HELD TO MATURITY FINANCIAL ASSETS

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

	September 30, 2017		December 31, 2016
Korean treasury and government agencies		4,224,173		3,754,356
Financial institutions		6,658,634		5,168,487
Corporates		5,241,100		4,823,356
Bonds in foreign currencies		201,575		164,052
Total		16,325,482		13,910,251

10. LOANS AND RECEIVABLES

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

	September 30, 2017		December 31, 2016
Due from banks		14,697,586		14,815,476
Loans		239,671,726		235,400,585
Other loans and receivables		12,602,760		8,176,572
Total		266,972,072		258,392,633

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

	September 30, 2017			December 31, 2016
Due from banks in local currency:
Due from The Bank of Korea (“BOK”)		11,212,033			11,395,162
Due from depository banks		20,003			3
Due from non-depository institutions		14,969			9,811
Due from the Korea Exchange		2,089			1,625
Others		77,044			73,283
Allowance for credit losses		(2,755	)		(2,798	)
Sub-total		11,323,383			11,477,086
Due from banks in foreign currencies:
Due from banks on demand		856,912			877,636
Due from banks on time		1,601,379			1,684,631
Others		918,208			778,418
Allowance for credit losses		(2,296	)		(2,295	)
Sub-total		3,374,203			3,338,390
Total		14,697,586			14,815,476

- 28 -

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

Financial institution	Counterparty	September 30, 2017		Reason of restriction
Due from banks in local currency:
Due from The BOK	The BOK		11,212,033	Reserve deposits under The BOK Act
Others	The Korea Exchange and others		74,089	Central counter party KRW margin and others
	Sub-total		11,286,122
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		842,415	Reserve deposits under The BOK Act and others
Others	The People’s Bank of China and others		884,954	Reserve deposits and others
	Sub-total		1,727,369
			13,013,491
Financial institution	Counterparty	December 31, 2016		Reason of restriction
Due from banks in local currency:
Due from The BOK	The BOK		11,395,162	Reserve deposits under The BOK Act
Others	The Korea Exchange and others		70,304	Central counter party KRW margin and others
	Sub-total		11,465,466
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		854,612	Reserve deposits under The BOK Act and others
Others	The People’s Bank of China and others		778,418	Reserve deposits and others
	Sub-total		1,633,030
			13,098,496

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

	September 30, 2017			December 31, 2016
Loans in local currency		196,803,960			191,309,481
Loans in foreign currencies		13,698,849			14,101,839
Domestic banker’s letter of credit		2,750,451			3,754,030
Credit card accounts		6,980,965			6,673,765
Bills bought in foreign currencies		8,449,003			7,758,575
Bills bought in local currency		178,175			414,451
Factoring receivables		49,459			96,763
Advances for customers on guarantees		24,947			25,197
Privately placed bonds		330,113			328,405
Securitized loans		528,830			252,690
Call loans		2,282,109			2,985,077
Bonds purchased under resale agreements		8,363,588			8,854,753
Loan origination costs and fees		487,982			458,639
Others		481,753			251,635
Present value discount		(12,285	)		(13,827	)
Allowance for credit losses		(1,726,173	)		(1,850,888	)
Total		239,671,726			235,400,585

- 29 -

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

	September 30, 2017			December 31, 2016
CMA accounts		180,000			190,000
Receivables		10,133,617			5,417,676
Accrued income		1,002,844			1,080,489
Telex and telephone subscription rights and refundable deposits		991,665			1,019,577
Other debtors		361,626			639,945
Allowance for credit losses		(66,992	)		(171,115	)
Total		12,602,760			8,176,572

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

	For the nine months ended September 30, 2017
	Consumers			Corporates			Credit card			Others			Total
Beginning balance		(163,858	)		(1,498,842	)		(155,372	)		(209,024	)		(2,027,096	)
Net reversal of provision (net provision)		(96,177	)		(318,660	)		(140,061	)		4,057			(550,841	)
Recoveries of loans previously charged off		(32,485	)		(66,665	)		(37,987	)		(5	)		(137,142	)
Charge-offs		95,191			307,347			154,891			52,029			609,458
Sales of loans and receivables		868			61,432			—			29,264			91,564
Unwinding effect		6,704			29,062			—			—			35,766
Others(*)		471			179,970			—			(366	)		180,075
Ending balance		(189,286	)		(1,306,356	)		(178,529	)		(124,045	)		(1,798,216	)
(*)    Others are due to debt-equity swap, fluctuation of foreign currencies exchange rates, etc.
	For the nine months ended September 30, 2016
	Consumers			Corporates			Credit card			Others			Total
Beginning balance		(203,433	)		(1,686,194	)		(145,810	)		(442,620	)		(2,478,057	)
Net reversal of provision		(65,153	)		(506,360	)		(139,591	)		(11,664	)		(722,768	)
Recoveries of loans previously charged off		(41,780	)		(147,918	)		(32,248	)		(19,233	)		(241,179	)
Charge-offs		120,805			508,131			169,135			215,338			1,013,409
Sales of loans and receivables		2,017			104,844			—			91,767			198,628
Unwinding effect		7,818			54,885			—			—			62,703
Others(*)		50			36,263			1			(8,257	)		28,057
Ending balance		(179,676	)		(1,636,349	)		(148,513	)		(174,669	)		(2,139,207	)

(*) Others are due to debt-equity swap, fluctuation of foreign currencies exchange rates, etc.

- 30 -

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 Group 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 Group’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 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 Group’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.

- 31 -

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

	September 30, 2017
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial assets:
Financial assets held for trading
Deposits		26,305		—		—		26,305
Debt securities		407,052		2,264,119		—		2,671,171
Equity securities		27,395		—		—		27,395
Beneficiary certificates		—		16,247		—		16,247
Derivative assets		4,814		1,813,963		30,612		1,849,389
Sub-total		465,566		4,094,329		30,612		4,590,507
Financial assets designated at FVTPL
Debt securities		—		—		6,475		6,475
Equity securities		—		—		12,505		12,505
Sub-total		—		—		18,980		18,980
AFS financial assets
Debt securities		3,072,056		11,322,557		—		14,394,613
Equity securities		382,647		—		1,072,888		1,455,535
Beneficiary certificates		—		1,959,569		643,972		2,603,541
Securities loaned		79,955		90,944		—		170,899
Sub-total		3,534,658		13,373,070		1,716,860		18,624,588
Derivative assets		—		109,828		—		109,828
Total		4,000,224		17,577,227		1,766,452		23,343,903
Financial liabilities:
Financial liabilities held for trading
Deposits		26,327		—		—		26,327
Derivative liabilities		3,545		1,954,159		37,824		1,995,528
Securities sold		3,901		—		—		3,901
Sub-total		33,773		1,954,159		37,824		2,025,756
Financial liabilities designated at FVTPL
Equity-linked securities		—		—		349,409		349,409
Debentures		—		92,941		—		92,941
Sub-total		—		92,941		349,409		442,350
Derivative liabilities		—		41,619		—		41,619
Total		33,773		2,088,719		387,233		2,509,725

- 32 -

	December 31, 2016
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial assets:
Financial assets held for trading
Deposits		26,180		—		—		26,180
Debt securities		370,636		2,274,280		—		2,644,916
Equity securities		35,983		—		—		35,983
Beneficiary certificates		—		23,891		—		23,891
Securities loaned		4,459		—		—		4,459
Derivative assets		3,233		2,871,909		23,153		2,898,295
Sub-total		440,491		5,170,080		23,153		5,633,724
Financial assets designated at FVTPL
Debt securities		—		—		4,348		4,348
Equity securities		—		—		12,652		12,652
Sub-total		—		—		17,000		17,000
AFS financial assets
Debt securities		2,288,917		13,759,392		—		16,048,309
Equity securities		428,678		—		1,024,935		1,453,613
Beneficiary certificates		—		2,291,571		530,511		2,822,082
Securities loaned		391,279		102,300		—		493,579
Sub-total		3,108,874		16,153,263		1,555,446		20,817,583
Derivative assets		—		140,478		99		140,577
Total		3,549,365		21,463,821		1,595,698		26,608,884
Financial liabilities:
Financial liabilities held for trading
Deposits		26,501		—		—		26,501
Derivative liabilities		1,750		2,974,703		33,524		3,009,977
Sub-total		28,251		2,974,703		33,524		3,036,478
Financial liabilities designated at FVTPL
Equity-linked securities		—		197		673,709		673,906
Debentures		—		92,974		—		92,974
Sub-total		—		93,171		673,709		766,880
Derivative liabilities		—		7,221		—		7,221
Total		28,251		3,075,095		707,233		3,810,579

(*1) There is no transfer between level 1 and level 2 of financial assets and liabilities measured at fair value. The Group recognizes transfers between the levels at the end of reporting period within which events or conditions change.

(*2) Certain AFS unquoted equity securities were measured at cost as of September 30, 2017 and December 31, 2016, that are amounting to 64,307 million Won and 43,202 million Won, respectively. These unquoted equity instruments mostly represent minority investments in special purposed entity vehicles such as asset securitization structures. They are measured at cost because (a) observable inputs of financial information to measure fair value was 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, the Group has no intention to dispose these investments in the foreseeable future.

Certain financial assets are carried at cost, even though under K-IFRS it is required to be subsequently measured at their fair value, since they do not have quoted market prices in an active market and cannot be measured at fair value reliably. The carrying amount of the financial assets which have been disposed for the nine months ended September 30, 2017 is 910 million Won and the related gain from the disposals is 647 million Won.

Financial assets and liabilities designated at FVTPL, held-for-trading financial assets and liabilities, AFS financial assets, 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.

- 33 -

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 Group determines the fair value using alternative assumptions and developing fair value measurement methods. Input variables and fair value measurement methods for each type of financial instruments are as follows:

	Fair value measurement methods	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, credit spread
Equity securities	Among DCF (Discounted Cash Flow) Model, FCFE (Free Cash Flow to Equity) Model, Comparable Company Analysis, Dividend Discount Model, Risk-adjusted Rate of Return Method, and Net Asset Value Method, more than one method is used given the characteristic of the subject of fair value measurement.	Risk-free market rate, market risk premium, 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, currency swap and currency forward 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, volatility, correlation coefficient, 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 Group.	Risk-free market rate, forward rate

- 34 -

Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but 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 coefficient	0.700~0.980	Variation of fair value increases as correlation coefficient increases.
		Volatility of underlying asset	16.8%~33.8%	Variation of fair value increases as volatility increases.
Derivative liabilities	Option valuation model and others	Correlation coefficient	0.700~0.980	Variation of fair value increases as correlation coefficient increases.
		Volatility of underlying asset	16.8%~33.8%	Variation of fair value increases as volatility increases.
Equity linked securities	Monte Carlo Simulation and others	Correlation coefficient	0.159~0.701	Equity linked securities’ fair value increases if both volatility and correlation coefficient increase. However when correlation coefficient decreases, despite the increase in volatility, the fair value of equity linked securities may decrease.
		Volatility of underlying asset	9.1%~40.6%
Equity securities	External appraisal value and others	Expected growth rate	0.0%~1.0%	Fair value increases as expected growth rate increases.

Fair value of financial assets and liabilities classified into level 3 is measured by the Group 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 Group and the appropriateness of inputs is reviewed regularly.

- 35 -

(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, 2017
	January 1, 2017		Net Income (loss) (*1)			Other comprehensive income		Purchases/ Issuances		Disposals/ Settlements			Transfer to or out of level 3 (*2)		September 30, 2017
Financial assets:
Financial assets held for trading
Derivative assets		23,153		24,713			—		583		(17,837	)		—		30,612
Financial assets designated at FVTPL
Debt securities		4,348		127			—		2,000		—			—		6,475
Equity securities		12,652		(147	)		—		—		—			—		12,505
Sub-total		17,000		(20	)		—		2,000		—			—		18,980
AFS financial assets
Equity securities		1,024,935		22,182			17,595		47,700		(39,524	)		—		1,072,888
Beneficiary certificates		530,511		1,982			1,087		200,722		(90,330	)		—		643,972
Sub-total		1,555,446		24,164			18,682		248,422		(129,854	)		—		1,716,860
Derivative assets		99		185			—		—		(284	)		—		—
Total		1,595,698		49,042			18,682		251,005		(147,975	)		—		1,766,452
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities		33,524		22,094			—		500		(18,294	)		—		37,824
Financial liabilities designated at FVTPL
Equity-linked securities		673,709		104,217			—		—		(428,517	)		—		349,409
Total		707,233		126,311			—		500		(446,811	)		—		387,233

(*1) The losses which increase the financial liabilities are presented as positive amounts and the gains which decrease the financial liabilities are presented as negative amounts. The loss amounting to 62,894 million Won for the nine months ended September 30, 2017, which is from financial assets and liabilities that the Group holds, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the statement of comprehensive income.

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

- 36 -

	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		(2,881	)		—			12,182		(11,311	)		(540	)		76,126
Financial assets designated at FVTPL
Debt securities		986		(181	)		—			2,509		—			—			3,314
Equity securities		11,609		536			—			—		—			—			12,145
Sub-total		12,595		355			—			2,509		—			—			15,459
AFS financial assets
Equity securities (*4)		993,368		(4,944	)		62,539			195,035		(120,925	)		(17,455	)		1,107,618
Beneficiary certificates		377,070		1,012			(1,510	)		120,178		(19,401	)		—			477,349
Others		5,308		594			(642	)		—		(5,260	)		—			—
Sub-total		1,375,746		(3,338	)		60,387			315,213		(145,586	)		(17,455	)		1,584,967
Derivative assets		5,973		3,716			—			—		(9,635	)		—			54
Total		1,472,990		(2,148	)		60,387			329,904		(166,532	)		(17,995	)		1,676,606
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities		78,607		886			—			—		(16,534	)		—			62,959
Financial liabilities designated at FVTPL
Equity-linked securities		747,351		44,006			—			983		(142,349	)		—			649,991
Total		825,958		44,892			—			983		(158,883	)		—			712,950

(*1) The loss amounting to 31,766 million Won for the nine months ended September 30, 2016, which is from financial assets and liabilities that the Group holds , has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the consolidated statement of comprehensive income.

(*2) The Group recognizes transfers between 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 1 to level 3 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.

- 37 -

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

The sensitivity analysis of the financial instruments has been 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 to disclose the effect of reasonably possible volatility on the fair value of a level 3 financial instruments as of September 30, 2017 and December 31, 2016. (Unit: Korean Won in millions):

	As of September 30, 2017										As of December 31, 2016
	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
Derivatives instruments assets (*1)(*2)		3,516		(4,690	)		—		—			861		(2,248	)		—		—
Financial assets designed at FVTPL
Equity securities (*5)		703		656			—		—			707		(657	)		—		—
AFS Financial assets
Equity securities (*3)(*4)		—		—			35,705		(18,814	)		—		—			31,412		(18,551	)
Beneficiary certificates (*4)		—		—			2,378		(2,038	)		—		—			2,903		(2,571	)
Total		4,219		(4,034	)		38,083		(20,852	)		1,568		(2,905	)		34,315		(21,122	)
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities (*1)(*2)		7,080		(5,726	)		—		—			4,892		(3,568	)		—		—
Financial liabilities designated at FVTPL
Equity-linked securities (*1)		144		(125	)		—		—			905		(857	)		—		—
Total		7,224		(5,851	)		—		—			5,797		(4,425	)		—		—

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

(*2) Both derivative assets and liabilities for 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 is underlying assets and discount rate by 1%.

(*5) Changes of fair value are measured by increasing or decreasing the discount rate by 10%, which is major unobservable variable, respectively.

- 38 -

(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):

	As of September 30, 2017
	Fair value								Book value
	Level 1		Level 2		Level 3		Total
Financial assets:
HTM financial assets		1,605,876		14,738,040		—		16,343,916		16,325,482
Loans and receivables		—		—		267,026,970		267,026,970		266,972,072
Financial liabilities:
Deposits due to customers		—		226,245,800		—		226,245,800		226,344,233
Borrowings		—		16,296,085		—		16,296,085		16,314,499
Debentures		—		27,588,702		—		27,588,702		27,537,013
Other financial liabilities		—		23,528,442		—		23,528,442		23,529,630

	As of December 31, 2016
	Fair value								Book Value
	Level 1		Level 2		Level 3		Total
Financial assets:
HTM financial assets		741,880		13,243,297		—		13,985,177		13,910,251
Loans and receivables		—		—		259,565,952		259,565,952		258,392,633
Financial liabilities:
Deposits due to customers		—		221,001,466		—		221,001,466		221,020,411
Borrowings		—		18,785,325		—		18,785,325		18,769,515
Debentures		—		24,004,668		—		24,004,668		23,565,449
Other financial liabilities		—		21,984,171		—		21,984,171		21,985,086

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 Group determines the fair value using alternative assumptions through developing fair value measurement methods. Input variables 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 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, credit spread and prepayment-rate
Deposit due to customers, borrowings, debentures, and other financial liabilities	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 Group.	Risk-free market rate and forward rate

- 39 -

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 consolidated financial statements of the Group through disposals, but the Group still have continuous involvements are given as follows (Unit: Korean Won in millions):

	September 30, 2017
	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		—		—		—

(*) The post settlement had been settled up as of September 30, 2017, and there are no financial instruments which meet the derecognition conditions but the group has continuous involvements.

	December 31, 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

(*) For ex-post settling up amount of the collateral is not fixed yet, expected cash flow cannot be reliably measured as of December 31, 2016, 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 Group derecognized the financial asset from the consolidated 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) Disposal of securities under repurchase agreements

The financial instruments that were disposed but the Group 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, 2017		December 31, 2016
Assets transferred AFS financial assets		121,227		2,546,683
HTM financial assets		5,432		7,133
Total		126,659		2,553,816
Related liabilities Bonds sold under repurchase agreements		114,586		2,004,905

- 40 -

b) Securities loaned

When the Group 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 therefore the Group does not derecognize them from the consolidated 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, 2017		December 31, 2016		Loaned to
Financial assets at FVTPL	Korean equity securities		—		4,459	Samsung Securities Co., Ltd. and others
AFS financial assets	Korean treasury and government agencies and others		170,899		493,579	Korea Securities Finance Corporation and others
	Total		170,899		498,038

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 of financial assets and liabilities

The Group 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 Group’s statements of financial position and loans and receivables, respectively.

The Group 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 Group 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 Group has entered into a sale and repurchase agreements and accounted it as collateralized borrowing. Also, the Group 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 Group recorded the collateralized borrowings in borrowings and the secured loans in loans and receivables. The Group 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 Group disclosed bonds sold (purchased) under repurchase agreements as borrowings (loans and receivables).

- 41 -

As of September 30, 2017 and December 31, 2016, 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, 2017
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets set off		Net amounts of financial assets presented		Related amounts not set off in the statement of financial position				Net amounts
							Financial instruments		Cash collateral received
Financial assets:
Derivative assets and others (*1)		1,766,757		2,162		1,764,595		10,082,645		1,164		567,947
Receivable spot exchange (*2)		8,887,161		—		8,887,161
Bonds purchased under resale agreements (*2)		8,363,588		—		8,363,588		8,363,588		—		—
Domestic exchanges receivable (*2)(*5)		27,653,928		27,389,521		264,407		—		—		264,407
Total		46,671,434		27,391,683		19,279,751		18,446,233		1,164		832,354

	September 30, 2017
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities set off		Net amounts of financial liabilities presented		Related amounts not set off in the statement of financial position				Net amounts
							Financial instruments		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		2,045,134		2,162		2,042,972		10,238,686		185,152		505,504
Payable spot exchange (*3)		8,886,370		—		8,886,370
Bonds sold under repurchase agreements (*4)		114,586		—		114,586		114,586		—		—
Domestic exchanges payable (*3)(*5)		32,057,321		27,389,521		4,667,800		4,663,185		—		4,615
Total		43,103,411		27,391,683		15,711,728		15,016,457		185,152		510,119

	December 31, 2016
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets set off		Net amounts of financial assets presented		Related amounts not set off in the statement of financial position				Net amounts
							Financial instruments		Cash collateral received
Financial assets:
Derivative assets and others (*1)		2,962,969		8,442		2,954,527		6,546,232		69,834		1,016,550
Receivable spot exchange (*2)		4,678,089		—		4,678,089
Bonds purchased under resale agreements (*2)		8,854,753		—		8,854,753		8,854,753		—		—
Domestic exchanges receivable (*2)(*5)		31,456,123		30,883,281		572,842		—		—		572,842
Total		47,951,934		30,891,723		17,060,211		15,400,985		69,834		1,589,392

	December 31, 2016
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities set off		Net amounts of financial liabilities presented		Related amounts not set off in the statement of financial position				Net amounts
							Financial instruments		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		3,467,374		8,442		3,458,932		6,695,062		105,270		1,341,375
Payable spot exchange (*3)		4,682,775		—		4,682,775
Bonds sold under repurchase agreements (*4)		2,004,905		—		2,004,905		2,004,905		—		—
Domestic exchanges payable (*3)(*5)		39,345,524		30,883,281		8,462,243		6,161,151		—		2,301,092
Total		49,500,578		30,891,723		18,608,855		14,861,118		105,270		3,642,467

- 42 -

(*1) The items include derivatives held for trading, derivatives 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 at as net amounts.

13. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

(1) Investments in joint ventures and associates accounted for using the equity method of accounting are as follows (Unit: Korean Won in millions):

			Percentage of ownership (%)				Financial
Subsidiaries	Main business		September 30, 2017		December 31, 2016		statements as of September 30,2017
Woori Bank and Woori Private Equity Asset Management Co., Ltd.:
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		Other finance business		26.4		26.4		September 30
Woori Bank:
Kumho Tire Co., Inc. (*1)(*2)		Manufacturing		14.2		14.2		June 30(*3)
Woori Service Networks Co., Ltd. (*4)		Freight & staffing services		4.9		4.9		August 31(*3)
Korea Credit Bureau Co., Ltd. (*5)		Credit information		9.9		9.9		September 30
Korea Finance Security Co., Ltd. (*4)		Security service		15.0		15.0		August 31(*3)
Chin Hung International Inc. (*2)(*9)		Construction		25.3		28.4		August 31(*3)
Poonglim Industrial Co., Ltd. (*6)(*12)(*14)		Construction		30.2		31.0		June 30(*3)
STX Engine Co., Ltd. (*1)(*2)		Manufacturing		29.2		29.2		June 30(*3)
Samho International Co., Ltd. (*2)(*18)		Construction		—		7.8		—
Force TEC Co., Ltd. (*6)(*15)		Freight & staffing services		—		34.4		—
STX Corporation (*1)(*2)(*6)(*13)		Wholesale of non-specialized goods		19.7		9.5		June 30(*3)
Saman Corporation (*5)		General construction Technology service		9.2		9.2		June 30(*3)
Dongwoo C & C Co., Ltd. (*6)		Construction		23.2		23.2		—
SJCO Co., Ltd. (*6)		Aggregate transportation and wholesale		26.5		26.5		—
G2 Collection Co., Ltd. (*6)		Wholesale and retail sales		28.9		28.9		—
The Base Enterprise Co., Ltd. (*6)		Manufacturing		48.4		48.4		—
Heungjiwon Co., Ltd. (*6)		Other printing		27.8		27.8		—
Kyesan Engineering Co., Ltd. (*6)		Construction		23.2		23.2		—
Good Software Lap Co., Ltd. (*6)		Service		28.9		28.9		—
Wongwang Co., Ltd. (*6)		Wholesale and real estate		29.0		29.0		—
Sejin Construction Co., Ltd. (*6)		Construction		29.6		29.6		—
Deokwon Food Co., Ltd. (*6)(*17)		Poultry processing and storage		—		27.3		—
QTS Shipping Co., Ltd. (*6)		Complex transportation brokerage		49.4		49.4		—
DAEA SNC Co. Ltd. (*6)		Wholesale and retail sales		24.0		24.0		—
ARES-TECH Co.,Ltd. (*6)		Electronic component manufacturing		23.4		23.4		—
Reading Doctors Co., Ltd. (*6)(*10)		Other service business		35.4		—		—
PREXCO Co., Ltd. (*6)(*10)		Manufacturing		28.1		—		—
Hyunwoo International Co., Ltd. (*6)(*10)		Manufacturing		25.9		—		—
Jiwon Plating Co., Ltd. (*6)(*16)		Plating		20.5		—		—
Cultizm Korea LTD Co., Ltd. (*6)(*16)		Wholesale and retail sales		31.3		—		—
Woori Growth Partnerships New Technology Private Equity Fund		Other financial business		23.1		23.1		September 30
2016KIF-IMM Woori Bank Technology Venture Fund		Other financial business		20.0		20.0		September 30
K BANK Co., Ltd. (*5)		Finance		13.0		13.0		August 31(*3)
Smart Private Equity Fund No.2 (*11)		Other financial business		20.0		—		September 30
Woori Bank-Company K Korea Movie Asset Fund (*11)		Other financial business		25.0		—		September 30
Well to Sea No. 3 Private Equity Fund (*11)		Finance		50.0		—		June 30(*3)
Woori Private Equity Fund:
Woori Renaissance Holdings (*7)		Other financial business		—		51.6		—
Woori Private Equity Asset Management Co., Ltd.,:
Woori Columbus 1st Private Equity Fund (*8)		Other financial business		2.0		2.0		September 30

- 43 -

(*1) The Group has significant influence on these entities through its position in the creditors’ council which is the decision making body regarding to financial and operational policies of associates.

(*2) The investments in associates that have quoted market prices are Kumho Tire Co., Ltd. (current period: KRW 5,980, previous year: KRW 8,480), Chin Hung International Inc. (current period: KRW 1,990, previous year: KRW 2,090), STX Engine Co., Ltd. (current period: KRW 12,150, previous year: KRW 6,630), Samho International Co., Ltd. (previous year: KRW 16,900), STX Corporation. (previous year: KRW 1,660).

(*3) The significant transactions and events between the end of reporting period of the associates and the Group have been properly incorporated.

(*4) Most of the significant business transactions of associates are with the Group as of September 30, 2017 and December 31, 2016.

(*5) The Group can participate in decision-making body and exercise significant influence over associates through business partnerships.

(*6) The carrying values of investments in Reading Doctors Co., Ltd., PREXCO Co., Ltd and Hyunwoo International Co., Ltd., Jiwon Plating Co., Ltd. and Cultizm Korea LTD Co., Ltd. are nil as of September 30, 2017 and those of investments in Force TEC Co., Ltd., STX Corporation and Deokwon Food Co., Ltd. are nil as of December 31, 2016. Furthermore, those of investments in Poonglim Industrial Co., Ltd., Dongwoo C&C Co., Ltd., SJCO Co., Ltd., 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., QTS Shipping Co., Ltd., DAEA SNC Co., Ltd. and ARES-TECH Co., Ltd. are nil as of both December 31, 2016 and September 30, 2017.

(*7) The Group owns over 50% ownership as of December 31, 2016. However, the investment in this entity was accounted for using equity method as the ownership and related contracts meet the definition of joint arrangement under K-IFRS 1111 Joint Arrangements. As of September 30, 2017 the entity has been excluded from the range of associates as liquidated.

(*8) As a general partner of Woori Columbus 1st Private Equity Fund, the Group has significant influence over the entity’s operational and financial policy making process, including participating in making decision of dividend or other distribution. As such, the investment in this entity was accounted for using equity method as of September 30, 2017 and December 31, 2016. Meanwhile, as of September 30, 2017, the principal investments in the associates were returned, and is to maintain a 2.0% stake until its liquidation based on the resolution of special meeting of investors.

(*9) Due to consolidation of stocks and debt-equity swap, the Group’s number of holding shares and ownership ratio have decreased.

(*10) Even though the Group’s ownership ratio of the entity was more than 20% as of December 31, 2016, the Group did not have significant influence over the entity due to the fact that the entity was going through workout process under receivership, and thus the entity was excluded from the investment in associates. However, as the workout process was completed during the nine months ended September 30, 2017, it has been included in the investment in associates.

(*11) Due to capital contribution by the Group during the nine months ended September 30, 2017, the entities were included in the investment in associates

(*12) The Group has sold a part of shares of the associates so the number of shares holding has decreased during the nine months ended September 30, 2017.

(*13) Due to debt-equity swap capital stock, the Group ownership ratio have increased during the nine months ended September 30, 2017.

(*14) As the carrying amounts of certain investments in associates had been reduced to zero, the Group discontinued the use of the equity method in accounting for those investments, and unrecognized losses due to the restricted application of equity method amount to 14,627 million Won and 612 million Won as of September 30, 2017 and December 31, 2016, respectively.

(*15) Not in scope for the associates, because the Group does not have significant influence over the entity due to the fact that it is going through workout process under receivership as of September 30, 2017.

- 44 -

(*16) Due to debt-equity swap, the entity was included in the investment in associates during the nine months ended September 30, 2017.

(*17) As the Group sold its entire ownership interest of the entities, it was exclude from the investment in associates during the nine months ended September 30, 2017.

(*18) The entity was sold after it was transferred to assets held for sale and was excluded from the investment in associates.

(2) Changes in the carrying value of investments in joint ventures and associates accounted for using the equity method of accounting are as follows (Unit: Korean Won in millions):

	For the nine months ended September 30, 2017
	Acquisition cost		January 1, 2017		Share of profits (losses)			Acquisi- tion (*)		Disposal and others			Dividends			Change in Capital			Others (*)			September 30, 2017
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		—		15,289		(4,621	)		—		(7,333	)		(3,298	)		—			—			37
Kumho Tire Co., Inc.		175,652		200,332		(6,845	)		—		—			—			397			—			193,884
Woori Service Networks Co., Ltd.		108		145		10			—		—			(8	)		—			—			147
Korea Credit Bureau Co., Ltd.		3,313		5,592		457			—		—			(149	)		—			—			5,900
Korea Finance Security Co., Ltd.		3,266		3,376		106			—		—			(54	)		—			—			3,428
Chin Hung International Inc.		89,725		43,032		(18,098	)		41,053		—			—			1,562			(26,144	)		41,405
Poonglim Industrial Co., Ltd.		13,916		—		—			—		—			—			—			—			—
STX Engine Co., Ltd.		92,038		43,036		(300	)		—		—			—			4,230			—			46,966
Samho Co., Ltd.		7,492		19,729		2,021			—		(16,354	)		—			(73	)		(5,323	)		—
STX Corporation		42,215		—		(28,520	)		8,546		—			—			690			27,772			8,488
Saman Corporation		8,521		8,699		(872	)		—		—			—			26			—			7,853
Woori Growth Partnerships New Technology Private Equity Fund		13,602		13,118		(376	)		15,099		(498	)		—			(156	)		—			27,187
2016KIF-IMM Woori Bank Technology Venture Fund		1,800		1,800		—			4,140		—			—			—			—			5,940
K BANK Co., Ltd.		32,500		30,442		(8,501	)		11,172		—			—			(139	)		25			32,999
Smart Private Equity Fund No.2		3,000		—		(58	)		3,000		—			—			—			—			2,942
Woori Bank-Company K Korea Movie Asset Fund		1,500		—		(28	)		1,500		—			—			—			—			1,472
Well to Sea No.3 Private Equity Fund		102,500		—		76,962			102,500		(250	)		—			—			—			179,212
Woori Renaissance Holdings		—		54,422		(622	)		—		—			(57,109	)		—			3,309			—
		591,148		439,012		10,715			187,010		(24,435	)		(60,618	)		6,537			(361	)		557,860

(*) Changes in investments in joint ventures and associates due to debt-equity swap is 51,227 million Won.

	For the nine months ended September 30, 2016
	Acquisition cost		January 1, 2016		Share of profits (losses)			Acquisi- tion (*1)		Disposal and others (*2)(*3)			Dividends			Change in Capital			Impairment			September 30, 2016
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		43,917		56,044		1,929			—		(12,286	)		(5,607	)		—			—			40,080
Kumho Tire Co., Inc.		175,652		214,050		(9,770	)		—		—			—			1,828			—			206,108
Woori Service Networks Co., Ltd.		108		139		9			—		—			(12	)		—			—			136
Korea Credit Bureau Co., Ltd.		3,313		5,291		147			—		—			(135	)		—			—			5,303
Korea Finance Security Co., Ltd.		3,266		3,711		(278	)		—		—			(54	)		—			—			3,379
United PF 1st Corporate financial stability		172,441		187,592		3,265			—		(190,857	)		—			—			—			—
Chin Hung International Inc.		89,725		43,936		(637	)		—		—			—			89			—			43,388
Poonglim Industrial Co., Ltd.		13,916		5,313		(2,346	)		—		—			—			(2,967	)		—			—
STX Engine Co., Ltd.		92,038		51,276		(3,444	)		—		—			—			(1,563	)		—			46,269
Samho Co., Ltd.		7,492		14,325		3,470			—		—			—			—			—			17,795
STX Corporation		42,215		4,251		(8,179	)		—		—			—			3,928			—			—
Osung LST Co., Ltd.		15,405		10,985		(2,903	)		—		(6,928	)		—			19			(1,173	)		—
Saman Corporation		8,521		8,521		418			—		—			—			(74	)		—			8,865
K-Growth crowd 2step Fund		800		—		(13	)		800		(787	)		—			—			—			—
Woori Growth Partnerships New Technology Private Equity Fund		9,561		—		(491	)		9,561		—			—			—			—			9,070
Woori Renaissance Holdings		63,000		37,121		2,020			—		—			(2	)		—			—			39,139
Woori Columbus 1st Private Equity Fund		1,200		1,306		(43	)		—		(1,065	)		(198	)		—			—			—
		738,430		643,861		(16,846	)		10,361		(211,923	)		(6,008	)		1,260			(1,173	)		419,532

- 45 -

(*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 155,220 million Won through transfers to AFS financial assets occurred during the nine months ended September 30, 2016.

(*3) Investments in associates decreased by 6,928 million Won through transfers to assets held for sale occurred during the nine months ended September 30, 2016.

(3) Summary financial information relating to investments in joint ventures and associates accounted for using the equity method of accounting is as follows (Unit: Korean Won in millions):

	September 30, 2017
	Assets		Liabilities		Operating revenue		Net income (loss)
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		200		31		49,986		(11,992	)
Kumho Tire Co., Inc.		5,013,220		3,893,664		1,381,478		(108,119	)
Woori Service Networks Co., Ltd.		4,748		1,770		10,869		778
Korea Credit Bureau Co., Ltd.		76,109		19,077		49,223		4,432
Korea Finance Security Co., Ltd.		32,515		9,667		40,135		465
Chin Hung International Inc.		333,173		265,968		349,796		13,950
Poonglim Industrial Co., Ltd.		245,125		305,736		75,085		(1,077	)
STX Engine Co., Ltd.		862,594		753,364		188,103		2,851
STX Corporation		584,298		521,144		848,336		349,318
Saman Corporation		97,963		70,965		48,842		(7,604	)
Woori Growth Partnerships New Technology Private Equity Fund		118,293		483		291		(2,307	)
2016KIF-IMM Woori Bank Technology Venture Fund		28,692		376		4		(1,135	)
K BANK Co., Ltd.		961,997		794,293		9,868		(52,161	)
Smart Private Equity Fund No.2		14,764		52		1		(288	)
Woori Bank-Company K Korea Movie Asset Fund		5,886		—		12		(114	)
Well to Sea No.3 Private Equity Fund		5,464,758		4,870,573		153,999		153,999
Woori Columbus 1st Private Equity Fund		21		8		—		(291	)

	December 31, 2016
	Assets		Liabilities		Operating revenue		Net income (loss)
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		57,971		427		75,084		38,226
Kumho Tire Co., Inc.		5,079,740		3,914,306		2,156,667		(53,328	)
Woori Service Networks Co., Ltd.		4,722		1,782		14,875		801
Korea Credit Bureau Co., Ltd.		71,245		17,322		59,868		3,517
Korea Finance Security Co., Ltd.		32,262		9,759		52,657		700
Chin Hung International Inc.		421,710		354,995		578,640		794
Poonglim Industrial Co., Ltd.		304,718		323,765		156,770		(15,135	)
STX Engine Co., Ltd.		865,265		769,481		372,295		(22,978	)
Samho Co., Ltd.		740,786		489,130		909,927		68,077
STX Corporation		781,622		1,087,469		1,252,968		(378,782	)
Saman Corporation		83,380		47,175		72,850		2,746
Woori Growth Partnerships New Technology Private Equity Fund		57,339		493		37		(2,177	)
2016KIF-IMM Woori Bank Technology Venture Fund		9,005		254		5		(250	)
K BANK Co., Ltd.		239,806		5,633		2,927		(12,222	)
Woori Renaissance Holdings Inc.		127,411		26,703		37,206		33,508
Woori Columbus 1st Private Equity Fund		811		506		3,764		(450	)

- 46 -

(4) The entities that the Group has not applied equity method of accounting although the Group’s ownership interest is more than 20% as of September 30, 2017 and December 31, 2016, are as follows:

	As of September 30, 2017
	Number of shares owned		Ownership (%)
Orient Shipyard Co., Ltd. (*)		465,050 shares		21.4
Saenuel Co., Ltd. (*)		3,531 shares		37.4
E Mirae Tech Co., Ltd. (*)		7,696 shares		41.0
Jehin Trading Co., Ltd. (*)		81,610 shares		27.3
NK Eng Co., Ltd. (*)		697,033 shares		23.1
The season Co., Ltd. (*)		18,187 shares		30.1
Yuil PESC Co., Ltd. (*)		8,642 shares		24.0
Youngdong Sea Food Co., Ltd. (*)		12,106 shares		24.0
Sinseong Trading Co., Ltd. (*)		2,584 shares		27.2
CL Tech Co., Ltd. (*)		13,759 shares		38.6
Force TEC Co., Ltd. (*)		4,780,907 shares		25.8
Protronics Co., Ltd. (*)		95,921 shares		48.1
Gil Co., Ltd. (*)		44,662 shares		26.1
Instern Co., Ltd. (*)		14,296 shares		20.1

(*) Even though the Group’s ownership interest of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, thus it is excluded from the investment in associates.

	As of December 31, 2016
	Number of shares owned		Ownership (%)
Orient Shipyard Co., Ltd. (*)		465,050 shares		23.0
Saenuel Co., Ltd. (*)		3,531 shares		37.4
E Mirae Tech Co., Ltd. (*)		7,696 shares		41.0
Jehin Trading Co., Ltd. (*)		81,610 shares		27.3
NK Eng Co., Ltd. (*)		697,033 shares		23.1
The season Co., Ltd. (*)		18,187 shares		30.1
Yuil PESC Co., Ltd. (*)		8,642 shares		24.0
Youngdong Sea Food Co., Ltd. (*)		12,106 shares		24.0
Sinseong Trading Co., Ltd. (*)		2,584 shares		27.2
Reading Doctors Co., Ltd. (*)		7,398 shares		35.4
PREXCO Co., Ltd. (*)		919,972 shares		28.1
Hyunwoo International Co., Ltd. (*)		59,873 shares		25.9

(*) Even though the Group’s ownership interest of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, thus it is excluded from the investment in associates.

- 47 -

(5) As of September 30, 2017 and December 31, 2016, the reconciliations from the net assets of associates based on the ownership ratio of the Group to its corresponding book value of investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):

	As of September 30, 2017
	Total net asset			Ownership (%)		Net assets of associates (or joint ventures)			Cost-book value differential and others		Impairment			Intercompany transaction and others			Book value
Woori Blackstone Korea Opportunity Private Equity Fund No.1		169			26.4		45			—		—			(8	)		37
Kumho Tire Co., Inc. (*)		1,009,658			14.2		142,876			48,459		—			2,549			193,884
Woori Service Networks Co., Ltd.		2,978			4.9		147			—		—			—			147
Korea Credit Bureau Co., Ltd.		57,032			9.9		5,652			248		—			—			5,900
Korea Finance Security Co., Ltd.		22,848			15.0		3,428			—		—			—			3,428
Chin Hung International Inc. (*)		67,061			25.3		16,970			24,565		—			(130	)		41,405
Poonglim Industrial Co., Ltd. (*)		(158,028	)		30.2		(47,729	)		54,542		(20,504	)		13,691			—
STX Engine Co., Ltd.		109,230			29.2		31,933			14,954		—			79			46,966
STX Corporation		63,154			19.7		12,453			24,614		(28,579	)		—			8,488
Saman Corporation		26,998			9.2		2,480			5,373		—			—			7,853
Woori Growth Partnerships New Technology Private Equity Fund		117,810			23.1		27,187			—		—			—			27,187
2016KIF-IMM Woori Bank Technology Venture Fund		28,316			20.0		5,663			—		—			277			5,940
K BANK Co., Ltd. (*)		254,467			13.0		32,999			—		—			—			32,999
Smart Private Equity Fund No.2		14,712			20.0		2,942			—		—			—			2,942
Woori Bank-Company K Korea Movie Asset Fund		5,886			25.0		1,472			—		—			—			1,472
Well to Sea No.3 Private Equity Fund (*)		358,224			50.0		179,025			—		—			187			179,212
Woori Columbus 1st Private Equity Fund		13			2.0		—			—		—			—			—

(*) The net asset amount is after reflecting debt-equity swap and others.

	As of December 31, 2016
	Total net asset			Ownership (%)		Net assets of associates (or joint ventures)			Cost-book value differential		Impairment			Intercompany transaction and others			Book value
Woori Blackstone Korea Opportunity Private Equity Fund No.1		57,544			26.4		15,191			—		—			98			15,289
Kumho Tire Co., Inc. (*)		1,055,219			14.2		149,324			48,459		—			2,549			200,332
Woori Service Networks Co., Ltd.		2,940			4.9		145			—		—			—			145
Korea Credit Bureau Co., Ltd.		53,923			9.9		5,344			248		—			—			5,592
Korea Finance Security Co., Ltd.		22,503			15.0		3,376			—		—			—			3,376
Chin Hung International Inc. (*)		65,387			28.4		18,593			24,565		—			(126	)		43,032
Poonglim Industrial Co., Ltd. (*)		(111,156	)		31.0		(34,463	)		54,149		(21,062	)		1,376			—
STX Engine Co., Ltd.		95,784			29.2		28,002			14,954		—			80			43,036
Samho Co., Ltd.		251,656			7.8		19,729			—		—			—			19,729
STX Corporation (*)		(250,018	)		9.5		(23,633	)		24,614		(27,904	)		26,923			—
Saman Corporation		36,205			9.2		3,326			5,373		—			—			8,699
Woori Growth Partnerships New Technology Private Equity Fund		56,846			23.1		13,118			—		—			—			13,118
2016KIF-IMM Woori Bank Technology Venture Fund		8,751			20.0		1,750			—		—			50			1,800
K BANK Co., Ltd.		234,173			13.0		30,442			—		—			—			30,442
Woori Renaissance Holdings		100,708			51.6		51,965			—		(6,441	)		8,898			54,422
Woori Columbus 1st Private Equity Fund		305			2.0		6			—		—			(6	)		—

(*) The net asset amount is after reflecting preferred stocks and others.

- 48 -

14. INVESTMENT PROPERTIES

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

	September 30, 2017			December 31, 2016
Acquisition cost		393,701			387,675
Accumulated depreciation		(32,346	)		(29,178	)
Net carrying value		361,355			358,497

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

	For the nine months ended September 30, 2017			For the nine months ended September 30, 2016
Beginning balance		358,497			351,496
Acquisition		5,080			3,133
Disposal		(397	)		—
Depreciation		(2,986	)		(2,839	)
Reversal of impairment losses		112			—
Transfer		1,580			16,319
Classified to assets held for sale		(464	)		—
Foreign currencies translation adjustments		(67	)		(46	)
Ending balance		361,355			368,063

(3) Fair value of investment properties is amounting to 379,686 million Won and 382,370 million Won as of September 30, 2017 and December 31, 2016, 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, 2017 and December 31, 2016.

(4) Rental fee earned from investment properties is amounting to 3,789 million Won and 3,658 million Won for the nine months ended September 30, 2017 and 2016, respectively.

- 49 -

15. PREMISES AND EQUIPMENT

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

	September 30, 2017
	Land		Building			Properties for business use			Structures in leased office			Construction in progress		Structures			Total
Acquisition cost		1,491,982		866,832			1,022,955			431,683			60,555		20			3,874,027
Accumulated depreciation		—		(181,146	)		(836,270	)		(365,869	)		—		(17	)		(1,383,302	)
Net carrying value		1,491,982		685,686			186,685			65,814			60,555		3			2,490,725

	December 31, 2016
	Land		Building			Properties for business use			Structures in leased office			Construction in progress		Structures			Total
Acquisition cost		1,488,745		855,332			1,010,141			424,562			18,717		20			3,797,517
Accumulated depreciation		—		(163,633	)		(820,239	)		(355,604	)		—		(16	)		(1,339,492	)
Net carrying value		1,488,745		691,699			189,902			68,958			18,717		4			2,458,025

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

	For the nine months ended September 30, 2017
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Structures			Total
Beginning balance		1,488,745			691,699			189,902			68,958			18,717			4			2,458,025
Acquisition		4,244			17,932			46,917			16,851			47,736			—			133,680
Disposal		(891	)		(2,593	)		(319	)		(606	)		—			—			(4,409	)
Depreciation		—			(19,602	)		(56,447	)		(24,887	)		—			(1	)		(100,937	)
Classified to assets held for sale		(3,642	)		(1,059	)		614			—			—			—			(4,087	)
Transfer		4,200			(58	)		5,471			—			(5,624	)		—			3,989
Foreign currencies translation adjustment		(674	)		(624	)		(665	)		(545	)		(274	)		—			(2,782	)
Others		—			(9	)		1,212			6,043			—			—			7,246
Ending balance		1,491,982			685,686			186,685			65,814			60,555			3			2,490,725

	For the nine months ended September 30, 2016
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Structures			Total
Beginning balance		1,493,628			704,017			193,291			79,744			522			4			2,471,206
Acquisition		—			11,386			52,390			16,307			2,575			—			82,658
Disposal		(30	)		—			(206	)		(1,583	)		(67	)		—			(1,886	)
Depreciation		—			(19,017	)		(61,353	)		(40,082	)		—			(1	)		(120,453	)
Reversal of impairment loss		—			—			7			—			—			—			7
Classified to assets held for sale		(4,368	)		(2,941	)		—			—			—			—			(7,309	)
Transfer		(11,198	)		(5,121	)		—			—			—			—			(16,319	)
Foreign currencies translation adjustments		(139	)		(163	)		(815	)		(965	)		(15	)		—			(2,097	)
Others		145			119			1,327			30,528			—			—			32,119
Ending balance		1,478,038			688,280			184,641			83,949			3,015			3			2,437,926

- 50 -

16. INTANGIBLE ASSETS AND GOODWILL

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

	September 30, 2017
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership deposit			Total
Acquisition cost		116,544		203,001			884			392,511			631,686			26,540			1,371,166
Accumulated amortization		—		(158,891	)		(488	)		(177,655	)		(502,180	)		—			(839,214	)
Accumulated impairment losses		—		—			—			—			(59	)		(6,979	)		(7,038	)
Net carrying value		116,544		44,110			396			214,856			129,447			19,561			524,914

	December 31, 2016
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership deposit			Total
Acquisition cost		124,803		185,202			714			299,031			622,540			26,884			1,259,174
Accumulated amortization		—		(149,725	)		(401	)		(160,335	)		(458,088	)		—			(768,549	)
Accumulated impairment losses		—		—			—			—			(88	)		(6,798	)		(6,886	)
Net carrying value		124,803		35,477			313			138,696			164,364			20,086			483,739

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

	For the nine months ended September 30, 2017
	Goodwill			Software			Industrial property rights			Development cost			Others			Membership deposit			Total
Beginning balance		124,803			35,477			313			138,696			164,364			20,086			483,739
Acquisition		105			9,351			170			102,051			17,824			560			130,061
Disposal		—			—			—			—			(38	)		(866	)		(904	)
Amortization (*)		—			(12,212	)		(87	)		(17,326	)		(45,539	)		—			(75,164	)
Impairment loss		—			—			—			—			—			(181	)		(181	)
Transfer		—			8,072			—			(8,108	)		36			—			—
Foreign currencies translation adjustment		(8,364	)		(99	)		—			(402	)		(968	)		(33	)		(9,866	)
Others		—			3,521			—			(55	)		(6,232	)		(5	)		(2,771	)
Ending balance		116,544			44,110			396			214,856			129,447			19,561			524,914

(*) Amortization of other intangible assets amounting to 36,419 million Won is included in other operating expenses.

	For the nine months ended September 30, 2016
	Goodwill			Software			Industrial property rights			Development cost			Others			Membership deposit			Total
Beginning balance		103,525			38,171			344			51,357			201,769			24,640			419,806
Acquisition		—			2,029			4			23,104			41,244			1,902			68,283
Disposal		—			—			—			—			(23	)		(3,408	)		(3,431	)
Amortization		—			(11,328	)		(71	)		(13,373	)		(43,063	)		—			(67,835	)
Impairment loss(Reversal of)		—			—			—			—			3,231			(923	)		2,308
Foreign currencies translation adjustments		(839	)		—			—			(1	)		(898	)		(115	)		(1,853	)
Others		137			—			—			—			1,151			(23	)		1,265
Ending balance		102,823			28,872			277			61,087			203,411			22,073			418,543

- 51 -

17. ASSETS HELD FOR SALE

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

	September 30, 2017		December 31, 2016
Premises and equipment and others		2,909		2,342

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, 2017
		Collateral given to	Amount		Reason for collateral
Loan and receivables	Due from banks on time in foreign currencies	The Bank of China and others		6,890	Collaterals for issuing letter of guarantee and others
	Due from banks in local currency	Samsung Securities Co., Ltd. and others		9,298	Margin deposit for futures or option
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		228,393	Foreign margin deposit for future or option and others
Financial assets at FVTPL	Financial institutions debt securities and others	Yuanta Securities Co., Ltd. and others		269,686	Substitute securities and others
AFS financial assets	Korean treasury and government agencies bonds and others	Korea Securities Depository and others		121,227	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government agencies bonds and others	The BOK and others		1,602,529	Settlement risk and others
HTM financial assets	Korean treasury and government agencies bonds	Korea Securities Depository		5,432	Related to bonds sold under repurchase agreements (*)
	Financial institutions debt securities and others	The BOK and others		8,088,568	Settlement risk and others
Premises and equipment	Land and building	Credit Counselling & Recovery Service and others		6,186	Leasehold rights and others
		Total		10,338,209

(*) The Group enters into the repurchase agreements at predetermined price or original sale price added with certain rate of return after the disposal of securities. In this regards, the securities are provided as collaterals, and the purchasers are eligible to dispose or provide them as collateral. Therefore, as such securities have been transferred but have not been derecognized, the Group recognizes the relevant amount as liability (bond sold under repurchase agreements).

		December 31, 2016
		Collateral given to	Amount		Reason for collateral
Loan and receivables	Due from banks in local currency	Samsung Securities Co., Ltd. and others		24,589	Margin deposit for futures and options and others
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		227,249	Foreign margin deposit for future or option and others
Financial assets at FVTPL	Financial institutions debt securities and others	Yuanta Securities Co., Ltd. and others		473,476	Substitute securities and others
AFS financial assets	Korean treasury and government agencies bonds	Korea Securities Depository and others		2,546,683	Related to bonds sold under repurchase agreements (*)
	Financial institutions debt securities and others	The BOK and others		836,522	Settlement risk and others
HTM financial assets	Korean treasury and government agencies bonds	Korea Securities Depository and others		7,133	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government agencies bonds and others	The BOK and others		6,185,295	Settlement risk and others
Premises and equipment	Land and Building	Credit Counselling & Recovery Service and others		6,310	Leasehold rights and others
		Total		10,307,257

(*) The Group enters into the repurchase agreements at predetermined price or original sale price added with certain rate of return after the disposal of securities. In this regards, the securities are provided as collaterals, and the purchasers are eligible to dispose or provide them as collateral. Therefore, as such securities have been transferred but have not been derecognized, the Group recognizes the relevant amount as liability (bond sold under repurchase agreements).

- 52 -

(2) The carrying amounts of buildings acquired through foreclosure are as follows (Unit: Korean Won in millions):

	September 30, 2017		December 31, 2016
Land		—		4,138
Buildings		—		1,852
Properties for business use		—		202
Total		—		6,192

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

		September 30, 2017		December 31, 2016		Loaned to
Financial assets at FVTPL	Korean Equity securities		—		4,459	Samsung Securities Co., Ltd. and others
AFS financial assets	Korean treasury and government agencies bonds and others		170,899		493,579	Korea Securities Finance Corporation and others
	Total		170,899		498,038

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 Group does not derecognize these securities, there are no liabilities recognized through such transactions 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, 2017 and December 31, 2016 are as follows (Unit: Korean Won in millions):

	September 30, 2017
	Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		8,771,756		—

	December 31, 2016
	Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		8,746,101		—

- 53 -

19. OTHER ASSETS

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

	September 30, 2017		December 31, 2016
Prepaid expenses		197,201		111,445
Advance payments		9,418		1,944
Non-operative assets		—		6,192
Others		8,764		9,265
Total		215,383		128,846

20. FINANCIAL LIABILITIES AT FVTPL

Financial liabilities at FVTPL are composed of financial liabilities held for trading and financial liabilities designated at FVTPL.

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

	September 30, 2017		December 31, 2016
Financial liabilities held for trading		2,025,756		3,036,478
Financial liabilities designated at FVTPL		442,350		766,880
Total		2,468,106		3,803,358

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

	September 30, 2017		December 31, 2016
Deposits due to Customers:
Gold banking liabilities		26,327		26,501
Derivative liabilities		1,995,528		3,009,977
Securities sold		3,901		—
Total		2,025,756		3,036,478

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

	September 30, 2017		December 31, 2016
Equity linked securities index:
Equity linked securities index in short position		349,409		673,906
Debentures:
Debentures in local currency		92,941		92,974
Total		442,350		766,880

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

	For the nine months ended September 30
	2017			2016
Financial liabilities designated at FVTPL subject to credit risk adjustments		442,350			745,038
Changes in fair value for credit risk adjustments		(117	)		(841	)
Accumulated changes in fair value for credit risk adjustments		(15,878	)		(15,814	)

Credit risk adjustments are applied to reflect the Group’s own credit risk when measuring derivative liabilities at fair value. The methodology to determine the adjustment incorporates the Group’s credit spread as observed through credit ratings.

- 54 -

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

	September 30, 2017			December 31, 2016
Carrying amount		442,350			766,880
Nominal amount at maturity		456,732			902,375
Difference		(14,382	)		(135,495	)

21. DEPOSITS DUE TO CUSTOMERS

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

	September 30, 2017			December 31, 2016
Deposits in local currency:
Deposits on demand		8,760,841			9,491,680
Deposits at termination		188,294,638			183,723,369
Mutual installment		34,821			37,128
Deposits on notes payables		1,133,005			943,446
Deposits on CMA		172,862			203,013
Certificate of deposits		5,788,205			3,836,430
Other deposits		1,381,311			1,360,176
Sub-total		205,565,683			199,595,242
Deposits in foreign currencies		20,831,234			21,453,096
Present value discount		(52,684	)		(27,927	)
Total		226,344,233			221,020,411

22. BORROWINGS AND DEBENTURES

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

	September 30, 2017
	Lenders		Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from The BOK		The BOK		0.5 ~ 0.8		1,457,178
Borrowings from government funds		Small Enterprise And Market Service and others		0.0 ~ 3.5		1,634,535
Others		The Korea Development Bank and others		0.0 ~ 3.8		3,907,323
Sub-total						6,999,036
Borrowings in foreign currencies:
Borrowings in foreign currencies		The Export-Import BOK and others		0.0 ~ 7.3		7,944,067
Offshore borrowings in foreign currencies		Commonwealth Bank		1.8		30,273
Sub-total						7,974,340
Bills sold		Others		0.0 ~ 1.2		30,643
Call money		Bank and others		0.0 ~ 4.4		1,196,183
Bonds sold under repurchase agreements		Other financial institutions		0.6 ~ 8.6		114,586
Present value discount						(289	)
Total						16,314,499

- 55 -

	December 31, 2016
	Lenders		Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK		The BOK		0.5 ~ 0.8		1,598,553
Borrowings from government funds		Small and Medium Business Corporation and others		0.0 ~ 3.5		1,534,807
Others		Seoul Metropolitan Government and others		0.0 ~ 3.8		3,922,878
Sub-total						7,056,238
Borrowings in foreign currencies:
Borrowings in foreign currencies		The Export-Import BOK and others		0.0 ~ 5.2		7,737,237
Offshore borrowings in foreign currencies		Wells Fargo		1.4		18,128
Sub-total						7,755,365
Bills sold		Others		0.0 ~ 1.6		26,895
Call money		Bank and others		0.0 ~ 5.1		1,926,779
Bonds sold under repurchase agreements		Other financial institutions		0.0 ~ 4.5		2,004,905
Present value discount						(667	)
Total						18,769,515

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

	September 30, 2017					December 31, 2016
	Interest rate (%)		Amount			Interest rate (%)		Amount
Face value of bond(*):
Ordinary bonds		1.5 ~ 11.8		22,495,833			1.5 ~ 11.8		18,268,403
Subordinated bonds		3.4 ~ 12.6		4,725,384			3.0 ~ 12.6		5,327,335
Other bonds		1.6 ~ 17.0		348,166			17.0		4,006
Sub-total				27,569,383					23,599,744
Discounts on bond				(32,370	)				(34,295	)
Total				27,537,013					23,565,449

(*) Included debentures under fair value hedge relationships are 3,355,581 million Won and 3,610,193 million Won as of September 30, 2017 and December 31, 2016, respectively. Also, debentures under cash flow hedge amounting to 401,744 million Won are included.

23. PROVISIONS

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

	September 30, 2017		December 31, 2016
Asset retirement obligation		61,759		58,076
Provision for guarantee (*1)		193,290		238,117
Provisions for unused commitments		85,260		87,909
Provisions for customer reward credits		39,786		22,093
Other provisions (*2)		21,090		22,282
Total		401,185		428,477

(*1) Provision for guarantee includes provision for financial guarantee of 63,307 million Won and 67,557 million Won as of September 30, 2017 and December 31, 2016, respectively.

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

- 56 -

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

	For the nine months ended September 30, 2017
	Provision for guarantees			Provision for unused commitments			Provisions for customer reward credits			Other provisions			Total
Beginning balance		238,117			87,909			22,093			22,282			370,401
Provisions provided		1,773			2,043			46,713			3,970			54,499
Provisions used		(17,260	)		(35	)		(65,228	)		(7,136	)		(89,659	)
Reversal of unused amount		(48,964	)		(4,671	)		—			(57	)		(53,692	)
Differences due to foreign currencies translation		53			14			—			(153	)		(86	)
Transfer(*)		—			—			17,507			—			17,507
Others		19,571			—			18,701			2,184			40,456
Ending balance		193,290			85,260			39,786			21,090			339,426

(*) According to contracts with the third parties, the Group ultimately will be reimbursed for which it has paid out on behalf of customers, which has incurred through their customer loyalty programs. Therefore, when such obligation incurs, the Group recognizes it as “transfer”, but there is no impact on the Group’s expense.

	For the nine months ended September 30, 2016
	Provision for guarantees			Provision for unused commitments			Provisions for customer reward credits			Other provisions			Total
Beginning balance		364,141			85,313			5,445			22,581			477,480
Provisions provided		4,513			13,247			16,882			3,871			38,513
Provisions used		(81,410	)		(20	)		(7,808	)		(9,508	)		(98,746	)
Reversal of unused amount		(68,532	)		(1,153	)		—			—			(69,685	)
Transfer		—			—			40			—			40
Others		13,725			(43	)		858			(6	)		14,534
Ending balance		232,437			97,344			15,417			16,938			362,136

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

	For the nine months ended September 30, 2017			For the nine months ended September 30, 2016
Beginning balance		58,076			39,121
Provisions provided		1,479			1,437
Provisions used		(987	)		(706	)
Reversal of unused amount		(732	)		—
Amortization		313			347
Increase in asset retirement expense and others		3,610			18,509
Ending balance		61,759			58,708

- 57 -

24. NET DEFINED BENEFIT LIABILITY(ASSET)

The characteristics of the Group’s defined benefit retirement pension 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 Group is 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 blue chip 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 blue chip bonds	A decrease in profitability of blue chip 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 obligation.
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) Details of net defined benefit liability (asset) are as follows (Unit: Korean Won in millions):

	September 30, 2017			December 31, 2016
Defined benefit obligation		1,040,983			984,381
Fair value of plan assets		(1,020,484	)		(990,653	)
Net defined benefit liability (asset)		20,499			(6,272	)

(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, 2017			For the nine months ended September 30, 2016
Beginning balance		984,381			901,219
Current service cost		110,279			115,148
Interest expense		19,709			18,038
Remeasurements		(29,030	)		63,649
Foreign currencies translation adjustments		(124	)		(10	)
Retirement benefit paid		(33,563	)		(31,047	)
Curtailment or liquidation		(10,928	)		(9,243	)
Others		259			370
Ending balance		1,040,983			1,058,124

- 58 -

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

	For the nine months ended September 30, 2017			For the nine months ended September 30, 2016
Beginning balance		990,653			801,528
Interest income		22,682			18,571
Remeasurements		(11,301	)		(5,945	)
Employer’s contributions		18,000			218,250
Retirement benefit paid		(31,611	)		(30,208	)
Curtailment or liquidation		(11,052	)		(8,905	)
Others		43,113			(5,259	)
Ending balance		1,020,484			988,032

(4) Plan assets wholly consist of time deposits as of September 30, 2017 and December 31, 2016, respectively. Among plan assets, realized returns on plan assets amount to 11,381 million Won and 12,626 million Won for the nine months ended September 30, 2017 and 2016, respectively.

It is expected that the Group shall contribute 131,248 million Won for the plan for the year ended December 31, 2017.

(5) Current service cost, net interest expense, loss on the curtailment or liquidation 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, 2017			For the nine months ended September 30, 2016
Current service cost		110,279			115,148
Net interest income		(2,973	)		(533	)
Loss(gain) on the curtailment or liquidation		124			(338	)
Cost recognized in net income		107,430			114,277
Remeasurements		(17,729	)		69,594
Cost recognized in total comprehensive income		89,701			183,871

Retirement benefit service costs related to defined contribution plans are recognized 3,317 million Won and 3,095 million Won for the nine months ended September 30, 2017 and 2016, respectively.

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

	September 30, 2017	December 31, 2016
Discount rate	3.08%	2.85%
Future wage growth rate	6.07%	6.05%
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, 2017			December 31, 2016
Discount rate	Increase by 1% point		(109,427	)		(107,203	)
	Decrease by 1% point		126,324			125,395
Future wage growth rate	Increase by 1% point		125,974			124,766
	Decrease by 1% point		(110,722	)		(108,344	)

- 59 -

25. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

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

	September 30, 2017			December 31, 2016
Other financial liabilities:
Accounts payable		10,402,098			5,626,661
Accrued expenses		2,088,022			2,055,936
Borrowings from trust accounts		3,334,570			3,329,683
Agency business revenue		687,719			331,159
Foreign exchange payables		618,663			702,968
Domestic exchange payables		4,677,410			8,480,765
Other miscellaneous financial liabilities		1,722,289			1,458,747
Present value discount		(1,141	)		(833	)
Sub-total		23,529,630			21,985,086
Other liabilities:
Unearned income		179,517			171,050
Other miscellaneous liabilities		143,696			128,326
Sub-total		323,213			299,376
Total		23,852,843			22,284,462

26. DERIVATIVES

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

	September 30, 2017
			Assets						Liabilities
	Nominal amount		For cash flow hedge		For fair value Hedge		For trading		For cash flow hedge		For fair value hedge		For trading
Interest rate:
Futures		76,034		—		—		—		—		—		—
Swaps		131,017,740		—		109,385		289,979		—		10,333		310,652
Purchase options		690,000		—		—		14,065		—		—		—
Written options		945,000		—		—		—		—		—		14,793
Currency:
Futures		634,228		—		—		—		—		—		—
Forwards		73,885,352		—		—		615,117		—		—		549,603
Swaps		51,241,604		443		—		735,760		18,274		—		766,045
Purchase options		2,853,953		—		—		30,079		—		—		—
Written options		4,674,360		—		—		—		—		—		38,148
Equity:
Futures		354,803		—		—		—		—		—		—
Swaps		15,000		—		—		134		—		—		20
Purchase options		6,369,003		—		—		164,066		—		—		—
Written options		7,376,209		—		—		—		—		13,012		315,854
Others:
Futures		3,582		—		—		—		—		—		—
Swaps		1,987		—		—		65		—		—		55
Purchase options		6,970		—		—		124		—		—		—
Written options		24,523		—		—		—		—		—		358
Total		280,170,348		443		109,385		1,849,389		18,274		23,345		1,995,528

- 60 -

	December 31, 2016
			Assets				Liabilities
	Notional amount		For fair value Hedge		For trading		For fair value hedge		For trading
Interest rate:
Futures		54,785		—		—		—		—
Swaps		118,582,511		139,832		470,057		7,013		509,686
Purchase options		860,000		—		21,172		—		—
Written options		1,035,000		—		—		—		21,863
Currency:
Futures		493,733		—		—		—		—
Forwards		62,539,094		—		1,265,852		—		1,015,380
Swaps		39,782,049		—		1,022,969		—		1,221,959
Purchase options		1,120,949		—		42,126		—		—
Written options		907,211		—		—		—		8,589
Equity:
Futures		926,392		—		—		—		—
Swaps		15,000		—		92		—		88
Purchase options		3,007,969		745		73,261		—		—
Written options		4,460,233		—		—		208		228,900
Others:
Futures		5,105		—		—		—		—
Swaps		7,918		—		2,645		—		2,331
Purchase options		8,307		—		121		—		—
Written options		64,352		—		—		—		1,181
Total		233,870,608		140,577		2,898,295		7,221		3,009,977

Derivatives held for trading purpose are classified into financial assets or liabilities at FVTPL (see Notes 7 and 20) and derivatives for hedging are stated as a separate line item in the consolidated 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
	2017			2016
Losses from hedged items		18,199			(51,661	)
Gains from hedging instruments		(32,073	)		45,945

Meanwhile, the maximum period that the Group is exposed to cash flow risk arising from the hedging transaction discussed above will be terminated by January 2020.

Among gain (loss) on valuation of derivatives that was included in the accumulated other comprehensive income, the amount has been reclassified to loss is 16,899 million Won, before reduction of income tax effect during the nine months ended September 30, 2017.

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27. DEFERRED DAY 1 PROFITS OR LOSSES

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

	For the nine months ended September 30
	2017			2016
Beginning balance		13,422			28,008
New transactions		500			1,337
Amounts recognized in profits or losses		(5,271	)		(13,498	)
Ending balance		8,651			15,847

In case some variables to measure fair values of financial instruments are not observable or available in the market, valuation techniques are utilized to evaluate such financial instruments. Those financial instruments are recorded at the fair value produced by the valuation techniques as at the time of acquisition, even though there are difference noted between the transaction price and the fair value. The table above presents the difference yet to be realized as profit or losses as of September 30, 2017 and December 31, 2016.

28. CAPITAL STOCK AND CAPITAL SURPLUS

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

	September 30, 2017		December 31, 2016
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

(2) There is no change to be disclosed in numbers of issued and outstanding shares of common stock for the nine months ended September 30, 2017 and 2016.

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

	September 30, 2017		December 31, 2016
Capital in excess of par value		269,533		269,533
Other capital surplus		17,533		16,798
Total		287,066		286,331

- 62 -

29. HYBRID SECURITIES

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

	Issue date	Maturity	Interest rate (%)		September 30, 2017			December 31, 2016
Securities in local currency	June 20, 2008	June 20, 2038		7.7		255,000			255,000
	March 8, 2012	March 8, 2042		5.8		—			190,000
	April 25, 2013	April 25, 2043		4.4		500,000			500,000
	November 13, 2013	November 13, 2043		5.7		200,000			200,000
	December 12, 2014	December 12, 2044		5.2		160,000			160,000
	June 3, 2015	June 3, 2045		4.4		240,000			240,000
Securities in foreign currencies	May 2, 2007	May 2, 2037		6.2		—			930,900
	June 10, 2015	June 10, 2045		5.0		559,650			559,650
	September 27, 2016	—		4.5		553,450			553,450
	May 16, 2017	—		5.3		562,700			—
Issuance cost						(12,912	)		(14,104	)
Total						3,017,888			3,574,896

With respect to the hybrid securities issued, there’s no maturity or the contractual agreements allow the Group to indefinitely extend the maturity date and defer the payment of interest. If the Group makes a resolution not to pay dividends on common stock, and then, the Group 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, 2017			December 31, 2016
Accumulated other comprehensive income:
Gain on valuation of available-for-sale financial assets		335,501			386,981
Share of other comprehensive loss of joint ventures and associates		3,054			(1,863	)
Loss on foreign currency translation of foreign operations		(96,859	)		(48,353	)
Remeasurement loss related to defined benefit plan		(150,197	)		(163,397	)
Loss on valuation of cash flow hedges		(1,247	)		—
Sub-total		90,252			173,368
Treasury shares		(34,113	)		(34,113	)
Other capital adjustments		(1,815,438	)		(1,607,280	)
Total		(1,759,299	)		(1,468,025	)

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

	For the nine months ended September 30, 2017
	Beginning balance			Increase (decrease)(*)			Reclassification adjustments(*)			Income tax effect			Ending balance
Gain (loss) on valuation of available-for-sale financial assets		386,981			60,151			(122,975	)		11,344			335,501
Share of other comprehensive income (loss) of joint ventures and associates		(1,863	)		6,537			—			(1,620	)		3,054
Gain (loss) on foreign currency translation of foreign operations		(48,353	)		(61,194	)		—			12,688			(96,859	)
Remeasurement gain (loss) related to defined benefit plan		(163,397	)		17,504			—			(4,304	)		(150,197	)
Gain (loss) on valuation of cash flow hedges		—			(18,544	)		16,899			398			(1,247	)
Total		173,368			4,454			(106,076	)		18,506			90,252

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

	For the nine months ended September 30, 2016
	Beginning balance			Increase (decrease)(*)			Reclassification adjustments(*)			Income tax effect			Ending balance
Gain (loss) on valuation of available-for-sale financial assets		374,685			101,744			(43,234	)		(6,856	)		426,339
Share of other comprehensive income (loss) of joint ventures and associates		6,074			1,242			(3,906	)		(301	)		3,109
Gain (loss) on foreign currency translation of foreign operations		(70,789	)		(98,679	)		—			24,004			(145,464	)
Remeasurement of the net defined benefit liability		(197,579	)		(69,593	)		—			16,810			(250,362	)
Cash flow hedges		(10,371	)		10,371			—			—			—
Total		102,020			(54,915	)		(47,140	)		33,657			33,622

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

- 64 -

31. RETAINED EARNINGS

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

		September 30, 2017		December 31, 2016
Legal reserve	Legal reserve		1,729,754		1,622,754
	Other legal reserve		45,669		44,634
	Sub-total		1,775,423		1,667,388
Voluntary reserve	Business rationalization reserve		8,000		8,000
	Reserve for financial structure improvement		235,400		235,400
	Additional reserve		7,418,806		7,073,104
	Regulatory reserve for credit loss		2,438,191		2,255,252
	Revaluation reserve		751,964		753,908
	Other voluntary reserve		11,700		11,700
	Sub-total		10,864,061		10,337,364
Retained earnings before appropriation			2,884,032		2,606,814
	Total		15,523,516		14,611,566

i. Legal 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 Group 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 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 Group 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 Group discloses such short fall amount as regulatory reserve for credit loss.

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vii. Revaluation reserve

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

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

	For the nine months ended September 30
	2017			2016
Beginning balance		14,611,566			13,726,122
Net attributable to owners		1,378,507			1,105,915
Dividends on common stock		(336,636	)		(168,317	)
Dividends on hybrid securities		(129,921	)		(149,506	)
Ending balance		15,523,516			14,514,214

32. REGULATORY RESERVE FOR CREDIT LOSS

In accordance with Paragraph 1 and 2 of Article 29 of the Regulation on the Supervision of 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 Group 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, 2017		December 31, 2016
Beginning balance		2,438,191		2,255,252
Planned provision of regulatory reserve for credit loss		102,705		182,939
Ending balance		2,540,896		2,438,191

(2) Planned reserves provided, 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):

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30			Nine months ended September 30
Net income		283,426		1,392,441		359,392			1,117,179
Provision (reversal) of regulatory reserve for credit loss		52,744		102,705		(13,306	)		(480	)
Adjusted net income after the provision(reversal) of regulatory reserve		230,682		1,289,736		372,698			1,117,659
Adjusted EPS after the provision (reversal) of regulatory reserve(Unit: Korean Won)		285		1,723		481			1,439

33. DIVIDENDS

At the shareholders’ meeting on March 24, 2017, dividend payment for the year ended December 31, 2016 amounting to 269,308 million Won (400 Won per share) was approved.

In addition, on July 28, 2017, the board of directors approved interim dividend payment of 100 Won per share, which amounts to 67,328 million Won in total and such dividend was paid during the nine months ended September 30, 2017.

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34. NET INTEREST INCOME

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

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Financial assets at FVTPL		14,680		41,486		14,168		43,852
AFS financial assets		67,021		211,088		84,641		261,181
HTM financial assets		77,349		227,022		88,245		277,737
Loans and receivables:
Interest on due from banks		21,869		63,272		16,955		50,832
Interest on loans		1,999,561		5,809,569		1,895,734		5,739,685
Interest of other receivables		7,349		24,976		9,182		29,200
Sub-total		2,028,779		5,897,817		1,921,871		5,819,717
Total		2,187,829		6,377,413		2,108,925		6,402,487

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

	2017				2016
	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		596,923		1,771,307		618,854		1,945,407
Interest on borrowings		59,575		175,123		51,616		161,748
Interest on debentures		162,556		468,360		154,735		464,792
Other interest expense		17,219		60,747		27,278		85,340
Total		836,273		2,475,537		852,483		2,657,287

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35. NET FEES AND COMMISSIONS INCOME

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

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Fees and commissions received (*)		172,487		508,809		163,273		496,737
Fees and commissions received for provision of guarantee		16,538		48,238		15,982		50,145
Fees and commissions received on project financing		5,466		11,800		4,434		17,923
Fees and commissions received on credit card		270,229		797,795		246,363		699,283
Fees and commissions received on securities		19,984		60,251		20,515		53,998
Other fees and commissions received		49,893		121,597		31,435		70,746
Total		534,597		1,548,490		482,002		1,388,832

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

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

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Fees and commissions paid		44,128		117,295		38,632		119,046
Credit card commission		212,123		612,472		201,206		557,657
Brokerage commission		214		562		97		531
Others		1,263		3,592		560		2,085
Total		257,728		733,921		240,495		679,319

36. DIVIDEND INCOME

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

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Dividend from financial assets at FVTPL		23		213		90		841
Dividend from AFS financial assets		48,819		108,074		16,791		136,439
Total		48,842		108,287		16,881		137,280

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37. GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FVTPL

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

	2017						2016
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Gains (losses) on financial instruments held for trading		67,214			7,028			(10,729	)		370
Losses on financial instruments designated at FVTPL		(18,441	)		(104,664	)		(91,633	)		(44,136	)
Total		48,773			(97,636	)		(102,362	)		(43,766	)

(2) Gains (losses) on financial instruments held for trading are as follows (Unit: Korean Won in millions):

			2017						2016
			Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Financial Instruments held for trading	Securities	Gain on valuation		(2,220	)		3,675			166			17,180
		Gain on disposals		6,954			16,814			3,786			21,772
		Loss on valuation		(1,498	)		(8,009	)		(1,813	)		(5,164	)
		Loss on disposals		(1,543	)		(3,600	)		(2,527	)		(7,507	)
		Sub-total		1,693			8,880			(388	)		26,281
	Other financial instruments	Gain on valuation		1,742			4,813			1,717			12,085
		Gain on disposals		954			1,887			707			2,248
		Loss on valuation		(2,243	)		(5,833	)		(2,102	)		(12,487	)
		Loss on disposals		(317	)		(551	)		(275	)		(1,590	)
		Sub-total		136			316			47			256
		Total		1,829			9,196			(341	)		26,537
Derivatives (for trading)	Interest rates derivatives	Gain on transactions and valuation		242,785			676,134			220,952			1,059,261
		Loss on transactions and valuation		(236,425	)		(658,159	)		(187,315	)		(1,084,307	)
		Sub-total		6,360			17,975			33,637			(25,046	)
	Currencies derivatives	Gain on transactions and valuation		821,443			4,595,008			2,554,939			5,300,990
		Loss on transactions and valuation		(774,537	)		(4,718,146	)		(2,688,639	)		(5,320,934	)
		Sub-total		46,906			(123,138	)		(133,700	)		(19,944	)
	Equity derivatives	Gain on transactions and valuation		95,483			398,410			109,869			180,014
		Loss on transactions and valuation		(83,339	)		(294,890	)		(19,766	)		(156,588	)
		Sub-total		12,144			103,520			90,103			23,426
	Other derivatives	Gain on transactions and valuation		2,084			14,396			11,522			30,166
		Loss on transactions and valuation		(2,109	)		(14,921	)		(11,950	)		(34,769	)
		Sub-total		(25	)		(525	)		(428	)		(4,603	)
		Total		65,385			(2,168	)		(10,388	)		(26,167	)
	Total			67,214			7,028			(10,729	)		370

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(3) Gains (losses) on financial instruments designated at FVTPL are as follows (Unit: Korean Won in millions):

	2017						2016
	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 disposals of equity-linked securities		(27,988	)		(43,865	)		(12,698	)		(19,851	)
Gain (loss) on valuation of equity-linked securities		8,901			(60,813	)		(79,634	)		(26,641	)
Sub-total		(19,087	)		(104,678	)		(92,332	)		(46,492	)
Gain (loss) on other securities:
Gain (loss) on valuation of other securities		(4	)		(20	)		(35	)		355
Gain on other financial instruments:
Gain on valuation of other financial instruments		650			34			734			2,001
Total		(18,441	)		(104,664	)		(91,633	)		(44,136	)

38. GAINS (LOSSES) ON AFS FINANCIAL ASSETS

Gains (losses) on AFS financial assets are as follows (Unit: Korean Won in millions):

	2017						2016
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Gains on redemption of securities		150			697			—			611
Gains on transaction of securities		48,753			165,015			12,204			49,105
Impairment losses on securities		(4,630	)		(17,267	)		(8,315	)		(16,944	)
Total		44,273			148,445			3,889			32,772

39. IMPAIRMENT LOSSES DUE TO CREDIT LOSS

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

	2017						2016
	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		(216,865	)		(550,841	)		(218,210	)		(722,768	)
Reversal of provision on (provision provided for) guarantee		2,223			47,191			(11,635	)		64,019
Reversal of provision on (provision provided for) loan commitment		(2,617	)		2,628			(10,254	)		(12,094	)
Total		(217,259	)		(501,022	)		(240,099	)		(670,843	)

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40. GENERAL ADMINISTRATIVE EXPENSES AND OTHER NET OPERATING INCOME (EXPENSES)

(1) General and administrative expenses recognized are as follows (Unit: Korean Won in millions):

			2017				2016
			Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Employee benefits	Short term employee benefits	Salaries Employee benefits		334,986		989,177		319,946		954,288
				144,596		358,196		97,737		281,718
	Retirement benefit service costs			36,690		110,747		39,538		117,372
	Termination			298,780		304,257		359		93,150
	Sub-total			815,052		1,762,377		457,580		1,446,528
Depreciation and amortization				44,753		139,680		58,697		188,288
Other administrative expenses	Rent			77,971		234,679		77,103		233,016
	Taxes and dues		23,637		86,815		23,612		86,297
	Service charges		50,240		146,658		59,196		174,809
	Computer and IT related		18,998		49,475		17,695		59,511
	Telephone and communication		16,501		48,091		15,708		45,697
	Operating promotion		9,981		31,034		11,755		33,752
	Advertising		12,426		42,306		12,680		46,959
	Printing		1,877		6,114		2,041		7,054
	Traveling		3,688		9,712		2,690		7,723
	Supplies		1,624		4,741		1,507		4,649
	Insurance premium		2,193		6,362		2,001		5,600
	Reimbursement		5,657		14,834		5,528		14,564
	Maintenance		5,860		12,742		3,928		11,397
	Water, light, and heating		3,835		10,981		4,123		11,563
	Vehicle maintenance		2,519		7,483		2,526		7,219
	Others		11,813		32,968		8,860		27,156
	Sub-total			248,820		744,995		250,953		776,966
	Total			1,108,625		2,647,052		767,230		2,411,782

(2) Other operating income recognized is as follows (Unit: Korean Won in millions):

	2017					2016
	Three months ended September 30			Nine months ended September 30		Three months ended September 30			Nine months ended September 30
Gains on transaction of foreign exchange		623,165			2,322,152		942,888			3,578,188
Gains on disposal of loans and receivables		(907	)		200,953		28,073			201,538
Gains on transactions of derivatives		(3,961	)		7,695		(33,782	)		77,723
Gains on fair value hedged items		13,195			25,055		12,489			30,602
Others (*)		4,294			72,962		35,001			94,926
Total		635,786			2,628,817		984,669			3,982,977

(*) Other income includes such income amounting to 28,800 million Won and 69,920 million Won for the nine months ended September 30, 2017 and 2016, respectively, that the Group recognized for it is to receive from other creditor financial institutions in accordance with the creditor financial institutions committee agreement.

- 71 -

(3) Other operating expenses recognized are as follows (Unit: Korean Won in millions):

	2017					2016
	Three months ended September 30			Nine months ended September 30		Three months ended September 30			Nine months ended September 30
Losses on transaction of foreign exchange		579,896			1,954,660		803,365			3,395,558
KDIC deposit insurance fees		77,125			227,381		75,451			219,952
Contribution to miscellaneous funds		70,741			215,003		71,656			222,599
Losses on disposal of loans and receivables		7,574			7,602		2,481			2,486
Losses related to derivatives		8,637			39,768		12,764			31,778
Losses on fair value hedged items		(8,990	)		6,856		(36,437	)		82,263
Others (*)		27,544			103,098		24,299			137,494
Total		762,527			2,554,368		953,579			4,092,130

(*) Other expense includes such expenses amounting to 5,237 million Won and 98,023 million Won for the nine months ended September 30, 2017 and 2016, respectively, that the Group 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 INCOME (EXPENSES)

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

	2017						2016
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Gain on valuation		76,247			79,563			2,989			11,261
Loss on valuation		(6,577	)		(68,848	)		(12,836	)		(28,107	)
Impairment loss		—			(5,323	)		3,472			(1,173	)
Total		69,670			5,392			(6,375	)		(18,019	)

(2) Other non-operating income and expenses recognized are as follows (Unit: Korean Won in millions):

	2017						2016
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Other non-operating incomes		19,894			97,079			26,915			88,884
Other non-operating expenses		(35,614	)		(102,801	)		(12,383	)		(100,690	)
Total		(15,720	)		(5,722	)		14,532			(11,806	)

- 72 -

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

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Rental fee income		2,025		5,725		1,460		5,193
Gains on disposal of investments in joint ventures and associates		308		33,194		51		1,250
Gains on disposal of premises and equipment, intangible assets and other assets		3,220		4,895		1,178		1,525
Reversal of impairment loss of premises and equipment, intangible assets and other assets		572		604		1,126		3,711
Others		13,769		52,661		23,100		77,205
Total		19,894		97,079		26,915		88,884

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

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Depreciation on investment properties		995		2,986		979		2,839
Interest expense of rent leasehold deposits		111		334		121		375
Losses on disposal of investment in joint ventures and associates		10,971		38,701		—		15,060
Losses on disposal of premises and equipment, intangible assets and other assets		7,966		8,574		724		6,611
Impairment losses of premises and equipment, intangible assets and other assets		109		269		1,060		1,403
Donation		9,356		24,336		2,405		36,322
Others		6,106		27,601		7,094		38,080
Total		35,614		102,801		12,383		100,690

- 73 -

42. INCOME TAX EXPENSE

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

	For the nine months ended September 30
	2017			2016
Current tax expense
Current tax expense in respect of the current period		419,793			164,644
Adjustments recognized in the current period in relation to the current tax of prior periods		(5,122	)		(22,132	)
Sub-total		414,671			142,512
Deferred tax expense
Deferred tax expense relating to the origination and reversal of temporary differences		(25,745	)		65,965
Deferred tax charged directly to equity		20,219			33,740
Sub-total		(5,526	)		99,705
Income tax expense		409,145			242,217

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

	For the nine months ended September 30
	2017			2016
Net income before income tax expense		1,801,586			1,359,396
Tax calculated at statutory tax rate (*)		435,522			328,512
Adjustments
Effect of income that is exempt from taxation		(45,268	)		(59,093	)
Effect of expense not deductible in determining taxable profit		20,409			10,761
Adjustments recognized in the current period in relation to the current tax of prior periods		(5,122	)		(22,132	)
Others		3,604			(15,831	)
Sub-total		(26,377	)		(86,295	)
Income tax expense		409,145			242,217
Effective tax rate		22.7	%		17.8	%

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

(3) Details of accumulated deferred tax charged direct to equity are as follows (Unit: Korean Won in millions):

	September 30, 2017			December 31, 2016
Loss on valuation of AFS securities		(101,677	)		(113,161	)
Share of other comprehensive income of joint ventures and associates		(670	)		950
Foreign currency translation of foreign operations		31,156			16,930
Remeasurements gain related to defined benefit plan		47,393			51,661
Gain on valuation of cash flow hedge		398			—
Total		(23,400	)		(43,620	)

- 74 -

43. EARNINGS PER SHARE (“EPS”)

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):

	2017						2016
	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		280,146			1,378,507			355,649			1,105,915
Dividends on hybrid securities		(39,098	)		(129,921	)		(49,270	)		(149,506	)
Net income attributable to common shareholders		241,048			1,248,586			306,379			956,409
Weighted average number of common shares outstanding		673			673			673			673
Basic earnings per share (Unit: Korean Won)		358			1,855			455			1,421

Diluted EPS is equal to basic EPS because there is no dilution effect for the nine months ended September 30, 2017 and 2016.

44. CONTINGENT LIABILITIES AND COMMITMENTS

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

	September 30, 2017		December 31, 2016
Confirmed guarantees
Guarantee for loans		89,711		79,566
Acceptances		361,426		504,354
Guarantees in acceptances of imported goods		115,576		97,606
Other confirmed guarantees		6,543,730		7,588,661
Total		7,110,443		8,270,187
Unconfirmed guarantees
Local letter of credit		433,114		397,588
Letter of credit		3,743,451		3,844,345
Other unconfirmed guarantees		622,053		859,768
Total		4,798,618		5,101,701
Commercial paper purchase commitments and others		1,381,297		1,389,896

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

	September 30, 2017		December 31, 2016
Loan commitments		82,058,484		83,795,496
Other commitments		5,250,291		4,840,593

(3) Litigation case

The Group had filed lawsuits as follows (Unit: Korean Won in millions except for number of cases):

	September 30, 2017				December 31, 2016
	As plaintiff		As defendant		As plaintiff		As defendant
Number of cases		70 cases		169 cases		88 cases		175 cases
Amount of litigation		425,211		322,496		308,848		246,465
Provisions for litigations				8,483				5,946

- 75 -

(4) Other

The Group 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 Group is currently performing its own internal investigation to confirm if the Group has met the requirements on sanction of U.S. Government in respect of its service operation. As of September 30, 2017, the Group believes that it cannot make reasonable estimation due to possible results from such investigation.

45. RELATED PARTY TRANSACTIONS

Related parties of the Group as of September 30, 2017 and its assets and liabilities recognized as of September 30, 2017 and December 31, 2016 and major transactions with related parties for the nine months ended September 30, 2017 and 2016 are as follows:

(1) Related parties

Related parties

Associates

Kumho Tires Co., Inc., Woori Blackstone Korea Opportunity Private Equity Fund No.1, 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, STX Corporation, Woori Columbus 1st Private Equity Fund, 2016KIF-IMM Woori Bank Technology Venture Fund, K BANK Co.,Ltd., Well to Sea No. 3 Private Equity Fund, and Others (Dongwoo C & C Co., Ltd. and other 20 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, 2017			December 31, 2016
Corporation that have significant influence over the Group	KDIC (*1)	Loans		—			9
		Other assets		—			270,041
		Deposits due to customers		—			1,894,631
		Other liabilities		—			15,568
Associates	Kumho Tires Co., Inc.	Loans		219,217			299,523
		Allowance for credit loss		(42,843	)		(715	)
		Deposits due to customers		8,162			45,957
		Other liabilities		4,641			50
	Woori Blackstone Korea Opportunity Private Equity Fund No.1	Other assets		8			34
		Other liabilities		306			306
	Woori Service Networks Co., Ltd.	Loans		27			29
		Deposits due to customers		2,481			2,572
		Other liabilities		364			393
	Korea Credit Bureau Co., Ltd.	Loans		7			2
		Deposits due to customers		5,025			5,069
		Other liabilities		50			40
	Korea Finance Security Co., Ltd.	Loans		69			55
		Deposits due to customers		3,239			2,801
		Other liabilities		5			6
	Chin Hung International Inc.	Loans		105			4,320
		Allowance for credit loss		(12	)		(4,287	)
		Deposits due to customers		75,529			14,047
		Other liabilities		1,695			279

- 76 -

Related party		A title of account	September 30, 2017			December 31, 2016
Associates	Poonglim Industrial Co., Ltd.	Deposits due to customers		4			283
	STX Engine Co., Ltd.	Loans		115,376			107,974
		Allowance for credit loss		(97,182	)		(89,531	)
		Deposits due to customers		13,948			13,260
		Other liabilities		27			588
	Samho International Co., Ltd.(*2)	Loans		—			37,327
		Allowance for credit loss		—			(717	)
		Deposits due to customers		—			82,917
		Other liabilities		—			216
	STX Corporation	Loans		58,211			144,035
		Allowance for credit loss		(31,537	)		(92,643	)
		Deposits due to customers		13,754			14,412
		Other liabilities		62			90
	K BANK Co.,Ltd.	Loans		265			—
		Other assets		—			325
	Well to Sea No.3 Private Equity Fund (*3)	Loans		83,040			—
		Allowance for credit loss		(85	)		—
		Other liabilities		56			—
	Others (*4)	Loans		321			619
		Allowance for credit loss		(320	)		(253	)
		Other assets		2			8
		Deposits due to customers		3,695			4,460
		Other liabilities		73			60

(*1) As its ownership interest in the Group is lower than 20% as of September 30, 2017, it has been excluded from the corporation that have significant influence over the Group.

(*2) As the Group sold its entire ownership interest of the entity, it is excluded from the investment in associates during the nine months ended September 30, 2017.

(*3) Due to capital contribution by the Group during the nine months ended September 30, 2017, the entity was included in the investment in associates.

(*4) Others include Saman Corporation, Kyesan Engineering Co., Ltd., Hyunwoo International Co., Ltd.,DAEA SNC Co., Ltd. and others as of September 30, 2017 and December 31, 2016.

(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	2017		2016
Corporation that has significant influence over the group	KDIC(*1)	Interest income		—		9,450
		Interest expenses		15,331		14,123
Associates	Kumho Tires Co., Inc.	Interest income		2,155		1,941
		Fees income		6		6
		Interest expenses		1		53
		Impairment losses due to credit loss		42,128		147
	Woori Blackstone Korea Opportunity Private Equity Fund No.1	Fees income		36		155
	Woori Service Networks Co., Ltd.	Other income		22		22
		Interest expenses		19		38
		Fees expenses		335		747
		Other expenses		307		165

- 77 -

			For the nine months ended September 30
Related party		A title of account	2017			2016
	Korea Credit Bureau Co., Ltd.	Interest expenses		60			108
		Fees expenses		1,023			1,313
Associates	Korea Finance Security Co., Ltd.	Interest expenses		8			7
		Fees expenses		—			82
	Chin Hung International Inc.	Interest income		364			190
		Fees income		1			1
		Interest expenses		18			20
		Reversal of impairment losses due to credit loss		(4,275	)		(964	)
	Poonglim Industrial Co., Ltd.	Interest expenses		—			2
		Reversal of impairment losses due to credit loss		—			(1,557	)
	STX Engine Co., Ltd.	Interest income		1,011			1,013
		Fees income		28			20
		Interest expenses		109			65
		Impairment losses due to credit loss		7,651			36,505
	Samho International Co., Ltd. (*2)	Interest income		486			687
		Fees income		5			5
		Interest expenses		334			370
		Reversal of impairment losses due to credit loss		(717	)		(545	)
	Force TEC Co., Ltd. (*3)	Interest income		—			153
	STX Corporation	Interest income		219			803
		Fees income		60			52
		Interest expenses		2			5
		Impairment losses due to credit loss (reversal)		(61,106	)		61,609
	Osung LST Co., Ltd. (*4)	Interest income		—			170
		Interest expenses		—			1
		Reversal of allowance for credit loss		—			(338	)
	Woori Columbus 1st Private Equity Fund	Fees income		—			308
	K BANK Co., Ltd. (*5)	Fees income		594			—
		Other income		1,051			—
	Well to Sea No.3 Private Equity Fund (*6)	Impairment losses due to credit loss		85			—
	Others (*7)	Interest expenses		10			12
		Impairment losses due to credit loss		67			277

- 78 -

(*1) As its ownership interest in the Group is lower than 20% as of September 30, 2017, it has been exclude from the corporation that have significant influence over the Group.

(*2) As the Group sold its entire ownership interest of the entity, it is excluded from the investment in associates during the nine months ended September 30, 2017.

(*3) The entity is not in scope for the associates, because the Group does not have significant influence over the entity due to the fact that it is going through workout process under receivership as of September 30, 2017.

(*4) As the Group sold its ownership interests in the entities during the year ended December 31, 2016, these entities were excluded from the investment in associates.

(*5) Due to capital contribution during the year ended December 31, 2016, the entity has been included in the investment in associates.

(*6) Due to capital contribution by the Group during the nine months ended September 30, 2017, the entity was included in the investment in associates.

(*7) Others include Saman Corporation, Kyesan Engineering Co., Ltd., Hyunwoo International Co., Ltd., DAEA SNC Co., Ltd. and others as of September 30, 2017, and Saman Corporation, Kyesan Engineering Co., Ltd., Gachi Staff Co., Ltd., QTS Shipping Co., Ltd., and others were included as of December 31, 2016, respectively.

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

	September 30, 2017		December 31, 2016
KDIC(*1)		—		1,500,000	Loan commitment
Kumho Tires Co., Inc.		19,778		24,187	Letter of credit and others
		191,163		126,435	Loan commitment
Korea Finance Security Co., Ltd.		191		205	Loan commitment
Korea Credit Bureau Co., Ltd.		28		33	Loan commitment
Woori Service Networks Co., Ltd.		173		171	Loan commitment
Chin Hung International Inc.		32,194		40,904	Loan commitment
STX Engine Co., Ltd.		65,082		63,103	Letter of credit and others
		413		685	Loan commitment
SamHo Co., Ltd.(*2)		—		30,083	Loan commitment
STX corporation		19,323		24,316	Letter of credit and others
		—		71	Loan commitment
K BANK Co., Ltd.(*3)		72		—	Loan commitment
Well to Sea No.3 Private Equity Fund (*4)		226,960		—	Loan commitment

(*1) As its ownership interest in the Group is lower than 20% as of September 30, 2017, it has been exclude from the corporation that have significant influence over the Group.

(*2) As the Group sold its entire ownership interest of the entities during the nine months ended September 30, 2017, they are excluded from the investment in associates.

(*3) Due to capital contribution by the Group during the nine months ended September 30, 2017, the entity was included in the investment in associates.

(*4) Due to capital contribution during the year ended December 31, 2016, the entity has been included in the investment in associates.

For the guarantee provided to the related parties, the Group recognized provisions for guarantees amounting to 69,862 million Won and 70,587 million Won, as of September 30, 2017 and December 31, 2016, respectively.

(5) Compensation for key management is as follows (Unit: Korean Won in millions):

	For the nine months ended September 30
	2017		2016
Short term benefits		9,340		6,878
Severance payments		372		423
Total		9,712		7,301

- 79 -

Key management includes registered executives and non-registered executives. Outstanding assets and liabilities from transactions with key management amount to 1,200 million Won and 5,756 million Won, respectively, as of September 30, 2017. With respect to the assets, the Group has not recognized any allowance, nor provision.

46. TRUST ACCOUNTS

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

	Total assets				Operating income
	September 30, 2017		December 31, 2016		2017				2016
					Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Trust accounts		44,093,154		38,807,666		268,593		684,909		166,663		592,852

(2) Receivables and payables from the transactions between the Group and trust accounts are as follows (Unit: Korean Won in millions):

	September 30, 2017		December 31, 2016
Receivables
Trust fees receivables		32,005		23,667
Payables
Deposits due to customers		633,642		1,919,324
Borrowings from trust accounts		2,593,050		2,687,776
Sub-total		3,226,692		4,607,100

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

	2017				2016
	Three months ended September 30		Nine months ended September 30		Three months ended September 30		Nine months ended September 30
Revenue
Trust fees		40,130		105,337		23,558		56,835
Expense
Interest expenses on deposits due to customers		3,103		15,503		11,869		36,408
Interest expenses on borrowings from trust accounts		7,652		23,338		9,553		34,873
Sub-total		10,755		38,841		21,422		71,281

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

1) As of September 30, 2017 and December 31, 2016, the carrying of principal guaranteed trusts and principal and fixed rate of return guaranteed trusts are as follows (Unit: Korean Won in millions):

	September 30, 2017		December 31, 2016
Principal guaranteed trusts
Old-age pension trusts		4,221		4,513
Personal pension trusts		524,080		532,959
Pension trusts		775,390		741,759
Retirement trusts		50,690		53,773
New personal pension trusts		8,509		8,536
New old-age pension trusts		2,562		2,919
Sub-total		1,365,452		1,344,459
Principal and fixed rate of return guaranteed trusts
Development trusts		19		19
Unspecified money trusts		791		787
Sub-total		810		806
Total		1,366,262		1,345,265

2) As of September 30, 2017 and December 31, 2016, the amounts that the Group 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, 2017		December 31, 2016
Liabilities for the account (subsidy for trust account adjustment)		24		30

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 Group has disposed of its subsidiaries. Kwangju Bank and Kyongnam Bank were demerged as of May 1, 2014, and Woori Investment & Securities, Woori Aviva Life Insurance, Woori Savings Bank, Woori Asset Management, Woori Financial and Woori F&I were disposed of in due order during the period from March 2014 to June 2014.

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

On November 28, 2014, Korea Deposit Insurance Corporation (“KDIC”) commenced the bidding to dispose of controlling and non-controlling interests of the Group. With the successful bidding for non-controlling interests only, KDIC’s ownership of the Group decreased from 56.97% to 51.04%. Further, KDIC’s ownership of the Group was changed to 51.06% due to retirement of treasury stocks on October 2015.

On July 21, 2015, the PFOC, a deliberative body in charge of privatizing Woori Bank, held a meeting to discuss the means to promote the privatization plan. PFOC thereby announced a plan to maximize the retrieval of public fund that was initially invested and to sell the controlling shares to the investors (“oligopolistic shareholders”), in an effort to promote the early privatization and development of financial industry.

On October 2, 2015, Financial Services Commission (“FSC”) announced the amendment on normalization of business memorandum of understanding (“MOU”) in an effort to promote corporate value through enhanced managerial autonomy of the Group. FSC subsequently made amendments to the Enforcement Decree of the Special Act on the Management of Public Funds on March 29, 2016.

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In addition, on August 22, 2016, PFOC announced a plan to sell about 30% shares out of 51.06% shares held by KDIC to multiple investors, ranging from 4 to 8% ownership each. Pursuant to the plan, the KDIC commenced the bidding to dispose of its shares by putting up a public notice of sale on August 24, 2016. As of September 23, 2016, KDIC received letters of intent from eighteen potential investors, with an intent to hold shares ranging from 82% to 119%. As a result of the bid, eight potential investors submitted bid letters for total of 33.7% shares. On November 13, PFOC announced that seven selected buyers acquired total of 29.7% shares of the Group. Upon successful privatization of the Bank, PFOC, in an effort to ensure autonomous management of the private sector (i.e., oligopolistic shareholders), released the Bank from the MOU on December 16, 2016.

By the way, for the nine months ended September 30, 2017, as 2.85% of call options was exercised out of total 2.97% call options granted to the selected buyers when selling the non-controlling interest, KDIC’s remaining ownership interest became 18.52%. In consideration with the benefits from privatization and the retrieval of public fund, the government will hold a discussion with PFOC on its plan to sell the remaining shares of the Bank held by KDIC in the near future.

48. TERMINATION OF CONTRACT AND FOLLOW-UP AGREEMENT ON THE IMPLEMENTATION OF A MANAGEMENT PLAN

Upon successful privatization, the MOU on management normalization between the Group and KDIC on December 16, 2016 was terminated. The same parties instead signed a written agreement on disposal of shares of the Group for the purpose of the appropriate public fund management. According to the agreement, KDIC has the right to appoint one personnel from KDIC as a non-executive member of the board of directors of the Group, as long as KDIC holds over 10% voting shares, or is the largest shareholder (disregarding National Pension Service) holding more than 4% but less than 10% shares. Also, KDIC may claim inspection of the information related to the minutes of the board of directors and agenda that may have significant impact on the residual shares, as long as KDIC holds over 4% shares of the Group.

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