Exhibit 99.2

WOORI BANK

SEPARATE 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 Separate Interim Financial Statements

We have reviewed the accompanying separate interim financial statements of Woori Bank (the “Bank”). The financial statements consist of the separate statements of financial position as of September 30, 2017, the related separate interim statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016, respectively, the related separate statements of changes in shareholders’ equity and 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 Separate Interim Financial Statements

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

Independent Accountants’ Responsibility

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

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

Review conclusion

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

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/kr/about to learn more about our global network of member firms.

^© 2017. For information, contact Deloitte Anjin LLC

Others

We audited the separate statement of financial position as of December 31, 2016, and the related separate statements of comprehensive income, changes in shareholders’ equity and cash flows for the year ended December 31, 2016 (not presented in the accompanying separate interim financial statements), all expressed in Korean Won, in accordance with auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion in our independent auditors’ report dated on March 3, 2017. The separate statement of financial position as of December 31, 2016 presented as a comparative purpose in the accompanying interim financial statements does not differ, in all material respects, from the audited separate statement of financial position as of December 31, 2016.

Accounting principles and review standards and their application in practice vary among countries. The accompanying separate interim 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 separate interim 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, the independent accountants’ review report date. Certain subsequent events or circumstances may have occurred between the review report date and the time the report is read. Such events or circumstances could significantly affect the separate interim financial statements and may result in modifications to the independent accountants’ review report.

WOORI BANK

SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017

AND FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2017 AND 2016

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

Kwang Goo Lee

President and Chief Executive Officer

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

WOORI BANK

SEPARATE 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 (Notes 6 and 45)		5,050,978		6,104,029
Financial assets at fair value through profit or loss (Notes 4, 7, 11, 12, 18 and 26)		3,014,346		4,076,872
Available-for-sale financial assets (Notes 4, 8, 11, 12 and 18)		17,482,663		18,105,862
Held-to-maturity financial assets (Notes 4, 9, 11, 12 and 18)		16,216,094		13,792,266
Loans and receivables (Notes 4, 10, 11, 12, 18 and 45)		248,183,210		241,508,048
Investments in subsidiaries and associates (Note 13)		4,211,863		3,779,169
Investment properties (Note 14)		344,335		348,393
Premises and equipment (Note 15)		2,380,564		2,342,280
Intangible assets (Note 16)		296,891		242,230
Assets held for sale (Note 17)		1,979		2,342
Deferred tax assets		195,913		162,211
Derivative assets (Notes 4,11, 12 and 26)		109,385		140,577
Net defined benefit assets (Note 24)		5,934		70,938
Other assets (Notes 19 and 45)		183,469		96,926
Total assets		297,677,624		290,772,143
LIABILITIES
Financial liabilities at fair value through profit or loss (Notes 4, 11, 12, 20 and 26)		2,456,670		3,793,479
Deposits due to customers (Notes 4, 11, 21 and 45)		215,888,152		211,382,380
Borrowings (Notes 4, 11, 12 and 22)		15,204,833		16,060,821
Debentures (Notes 4, 11 and 22)		21,255,612		18,166,057
Provisions (Notes 23 and 44)		357,000		380,473
Current tax liabilities		238,134		148,672
Derivative liabilities (Notes 4, 11,12 and 26)		23,345		7,221
Other financial liabilities (Notes 4, 11, 12, 25 and 45)		22,298,777		20,827,284
Other liabilities (Notes 25 and 45)		170,049		153,238
Total liabilities		277,892,572		270,919,625

(Continued)

WOORI BANK

SEPARATE 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
Capital stock (Note 28)		3,381,392			3,381,392
Hybrid securities (Note 29)		3,017,888			3,574,896
Capital surplus (Note 28)		269,533			269,533
Other equity (Note 30)		(102,193	)		138,542
Retained earnings (Notes 31 and 32)
(Regulatory reserve for credit loss as of September 30, 2017 and December 31, 2016 is 2,017,342 million Won and 1,880,447 million Won, respectively)
Regulatory reserve for credit loss to be reserved as of September 30, 2017 and December 31, 2016 is 25,104 million Won and 136,895 million Won, respectively
Planned provision of regulatory reserve for credit loss as of September 30, 2017 and December 31, 2016 is 25,104 million Won and 136,895 million Won, respectively)		13,218,432			12,488,155
Total equity		19,785,052			19,852,518
Total liabilities and equity		297,677,624			290,772,143

See accompanying notes

WOORI BANK

SEPARATE INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND THE NINE MONTHS ENDED

SEPTEMBER 30, 2017 AND 2016

	Korean Won
	2017						2016
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
	(In millions, except for income per share data)
Interest income		1,881,273			5,482,056			1,831,108			5,566,767
Interest expense		747,565			2,216,690			773,201			2,392,721
Net interest income (Notes 34 and 45)		1,133,708			3,265,366			1,057,907			3,174,046
Fees and commissions income		279,128			808,305			251,970			749,481
Fees and commissions expense		38,302			101,629			34,378			109,567
Net fees and commissions income (Notes 35 and 45)		240,826			706,676			217,592			639,914
Dividend income (Note 36)		48,444			110,180			16,595			176,184
Net gain(loss) on financial instruments at fair value through profit or loss (Note 37)		42,805			(94,788	)		(98,640	)		(54,867	)
Net gain on available-for-sale financial assets (Note 38)		47,211			137,449			25,905			57,061
Impairment losses due to credit loss (Notes 39 and 45)		(156,786	)		(336,690	)		(215,862	)		(540,504	)
General and administrative expenses (Notes 40 and 45)		(1,001,984	)		(2,352,496	)		(683,448	)		(2,159,408	)
Other net operating income (expenses) (Notes 40 and 45)		(121,657	)		95,210			32,872			(144,052	)
Operating income		232,567			1,530,907			352,921			1,148,374
Share of losses of subsidiaries and associates (Note 13)		(9,635	)		(47,182	)		(3,690	)		(10,543	)
Other net non-operating income		22,462			59,133			28,129			46,937
Non-operating income (Note 41)		12,827			11,951			24,439			36,394
Net income before income tax expense		245,394			1,542,858			377,360			1,184,768
Income tax expense (Note 42)		52,986			346,024			83,521			219,688
Net income
(Net income after the provision of regulatory reserve for credit loss for the three months ended September 30, 2017 and 2016 is 156,498 million Won and 321,164 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 is 1,171,730 million Won and 1,010,274 million Won, respectively,) (Note 32)		192,408			1,196,834			293,839			965,080

(Continued)

WOORI BANK

SEPARATE INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND THE NINE MONTHS ENDED

SEPTEMBER 30, 2017 AND 2016 (CONTINUED)

	Korean Won
	2017						2016
	Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
	(In millions, except for income per share data)
Remeasurement gain (loss) related to defined benefit plan		21,817			12,868			(7,378	)		(52,105	)
Items that will not be reclassified to profit or loss		21,817			12,868			(7,378	)		(52,105	)
Gain (loss) on valuation of available-for-sale financial assets		(16,426	)		(32,644	)		(23,475	)		19,174
Gain (loss) on foreign currency translation of foreign operations		1,712			(12,801	)		(18,121	)		(18,313	)
Items that may be reclassified to profit or loss		(14,714	)		(45,445	)		(41,596	)		861
Other comprehensive loss, net of tax		7,103			(32,577	)		(48,974	)		(51,244	)
Total comprehensive income		199,511			1,164,257			244,865			913,836
Net income per share (Note 43)
Basic and diluted earnings per common share		228			1,585			363			1,212

See accompanying notes

WOORI BANK

SEPARATE INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

	Capital stock		Hybrid securities			Capital surplus		Other equity			Retained earnings			Total
	(Korean Won in millions)
January 1, 2016		3,381,392		3,334,002			269,533		106,016			11,798,375			18,889,318
Net income		—		—			—		—			965,080			965,080
Dividends on common stock		—		—			—		—			(168,317	)		(168,317	)
Gain on valuation of available-for-sale financial assets		—		—			—		19,174			—			19,174
Loss on foreign currency translation of foreign operations		—		—			—		(18,313	)		—			(18,313	)
Remeasurement loss related to defined benefit plan		—		—			—		(52,105	)		—			(52,105	)
Dividends to hybrid securities		—		—			—		—			(149,506	)		(149,506	)
Issuance of hybrid securities		—		549,905			—		—			—			549,905
September 30, 2016		3,381,392		3,883,907			269,533		54,772			12,445,632			20,035,236
January 1, 2017		3,381,392		3,574,896			269,533		138,542			12,488,155			19,852,518
Net income		—		—			—		—			1,196,834			1,196,834
Dividends on common stock		—		—			—		—			(336,636	)		(336,636	)
Loss on valuation of available-for-sale financial assets		—		—			—		(32,644	)		—			(32,644	)
Loss on foreign currency translation of foreign operations		—		—			—		(12,801	)		—			(12,801	)
Remeasurement gain related to defined benefit plan		—		—			—		12,868			—			12,868
Dividends to hybrid securities		—		—			—		—			(129,921	)		(129,921	)
Issuance of hybrid securities		—		559,565			—		—			—			559,565
Redemption of hybrid securities		—		(1,116,573	)		—		(208,158	)		—			(1,324,731	)
September 30, 2017		3,381,392		3,017,888			269,533		(102,193	)		13,218,432			19,785,052

See accompanying notes

WOORI BANK

SEPARATE 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		1,196,834			965,080
Adjustment to net income:
Income tax expense		346,024			219,688
Interest income		(5,482,056	)		(5,566,767	)
Interest expense		2,216,690			2,392,721
Dividend income		(137,690	)		(206,892	)
		(3,057,032	)		(3,161,250	)
Additions of expenses not involving cash outflows:
Impairment losses due to credit loss		336,690			540,504
Impairment loss on investments in subsidiaries and associates		47,182			10,543
Loss on transaction and valuation of derivatives instruments (hedging)		22,539			31,778
Loss on hedged items (fair value hedge)		6,856			82,263
Provisions		10,889			10,600
Retirement benefits		98,527			105,889
Depreciation and amortization		124,707			130,373
Loss on disposal of premises and equipment and other assets		1,156			6,548
Impairment loss on premises and equipment and other assets		153			211
		648,699			918,709
Deductions of revenues not involving cash inflows:
Gain on valuation of financial instruments at fair value through profit or loss		70,265			182,715
Gain on available-for-sale financial assets		137,449			57,061
Gain on transaction and valuation of derivatives instruments (hedging)		7,038			77,723
Gain on hedged items (fair value hedge)		25,055			30,602
Reversal of provisions		1,779			864
Gain on disposal of investment in subsidiaries and associates		9,232			3,679
Gain on disposal of premises and equipment and other assets		12,713			1,227
Reversal of impairment loss on premises and equipment and other assets		88			480
		263,619			354,351

(Continued)

WOORI BANK

SEPARATE 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)
Changes in operating assets and liabilities:
Financial instruments at fair value through profit or loss		(204,017	)		(73,091	)
Loans and receivables		(6,929,960	)		(15,197,803	)
Other assets		(86,912	)		(67,423	)
Deposits due to customers		4,508,409			10,724,475
Provision		10,144			(73,398	)
Net defined benefit liability		(16,510	)		(213,544	)
Other financial liabilities		1,562,611			9,328,715
Other liabilities		8,940			16,104
		(1,147,295	)		4,444,035
Cash received from (paid for) operating activities:
Interest income received		5,531,811			5,580,747
Interest expense paid		(2,232,723	)		(2,319,850	)
Dividend received		134,045			205,460
Income tax paid		(281,194	)		(135,293	)
Net cash provided by operating activities		529,526			6,143,287
Cash flows from investing activities:
Cash inflows from investing activities:
Disposal of available-for-sale financial assets		16,206,321			14,997,100
Redemption of held-to-maturity financial assets		6,772,192			5,958,431
Disposal of investments in subsidiaries and associates		32,876			52,891
Disposal of premises and equipment		6,194			237
Disposal of intangible assets		383			837
Disposal of assets held for sale		14,914			13,876
		23,032,880			21,023,372
Cash outflows from investing activities:
Acquisition of available-for-sale financial assets		15,519,965			16,194,628
Acquisition of held-to-maturity financial assets		9,242,169			6,224,158
Acquisition of investments in subsidiaries and associates		454,332			46,940
Acquisition of investment properties		2,647			—
Acquisition of premises and equipment		110,916			70,353
Acquisition of intangible assets		148,862			102,575
		25,478,891			22,638,654
Net cash used in investing activities		(2,446,011	)		(1,615,282	)

(Continued)

WOORI BANK

SEPARATE 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 flows from financing activities:
Cash inflows from financing activities:
Increase in borrowings		9,229,323			4,636,750
Issuance of debentures		6,936,910			4,735,270
Issuance of hybrid securities		559,565			549,905
		16,725,798			9,921,925
Cash outflows from financing activities:
Repayment of borrowings		10,085,689			8,342,021
Repayment of debentures		3,847,036			3,893,090
Dividends paid		336,636			168,317
Redemption of hybrid securities		1,323,400			—
Dividends paid on hybrid securities		131,423			125,947
		15,724,184			12,529,375
Net cash provided by (used in) financing activities		1,001,614			(2,607,450	)
Net increase (decrease) in cash and cash equivalents		(914,871	)		1,920,555
Cash and cash equivalents, beginning of the period		6,104,029			5,440,326
Effects of exchange rate changes on cash and cash equivalents		(138,180	)		(39,684	)
Cash and cash equivalents, end of the period		5,050,978			7,321,197

See accompanying notes

WOORI BANK

NOTES TO SEPARATE 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) Woori Bank

Woori Bank (hereinafter referred to the “Bank”) was established in 1899 and is engaged in the commercial banking business under the Banking Act, trust business and foreign exchange business under the Financial Investment Services and Capital Market Act.

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 (the “Merger”) with and into Woori Bank. Accordingly, the shares of the Bank, 597 million shares, prior to the merger, was 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 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 Woori Finance Holdings Co., Ltd. was merged into the Bank, the Bank, which is the existing company, succeeded such rights and obligations as a listed company on the Korea Exchange and 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. SIGNIFICANT BASIS OF PREPARATION AND ACCOUNTING POLICIES

The Bank’s separate interim financial statements are prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1034, Interim Financial Reporting and K-IFRS 1027, Separate Financial Statements. It is necessary to use the annual separate financial statements for the year ended December 31, 2016 for understanding of the accompanying interim financial statements.

Unless stated below, the accounting policies applied in preparing the accompanying separate interim financial statements have been applied consistently with the annual separate financial statements as of and for the year ended December 31, 2016.

(1) The Bank has newly adopted the following amendment to K-IFRS that affected the Bank’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 significant impact on the separate 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 Bank assesses whether there will be sufficient taxable profit, the Bank 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 significant impact on the separate financial statements.

(2) The Bank 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 Bank 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.

The Bank 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 Bank holds for the period and economic situation and so on.

- 2 -

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 is traded for the purpose other than short-term trading, an irrevocable election ca 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 fair value through profit or loss. 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 Bank shall measure loans and receivables amounting to 247,306,721 million Won and held-to-maturity financial assets amounting to 15,059,372 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. But, in the case of 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 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 and sell itself can be measure at FVOCI. In accordance with K-IFRS 1039, the Bank hold debt instruments as available-for-sale assets amounting to 12,191,265 million Won as of June 30, 2017.

Based on the result of the preliminary effect evaluation, if K-IFRS 1109 adopts to the above AFS financial assets as of June 30, 2017, they almost can be classified to financial assets measured at FVOCI. However, for beneficiary certificates amounting to 4,685,463 million Won, other equity investment amounting to 287,454 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 Bank holds equity investments that are classified as available-for-sale financial assets amounting to 985,737 million Won as of June 30, 2017.

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

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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 Bank 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 FVTPL is 15,893 million Won as of June, 2017.

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. So 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 Bank recognizes only 12-month expected credit losses as a loss allowance	The Bank 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.

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 192, 517 million Won and the total amount of the allowance for credit losses is expected to be 1,893,070 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		252,179,900		487,314
	Stage 2		10,352,672		390,126
	Stage 3		1,741,979		758,426
Provisions	Stage 1		63,874,377		85,504
	Stage 2		736,434		30,238
	Stage 3		289,873		141,462

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.

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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.

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

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

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

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

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4. RISK MANAGEMENT

The Bank’s operating activity is exposed to various financial risks; hence, the Bank is required to analyze and assess the level of complex risks, determine the level of risks to be accepted, or to manage the risks.

The Bank’s risk management procedure is set for improvement in the quality of assets held and investments by making a decision about how to avoid or mitigate risks through the identification of the cause of the potential risks and their impacts.

The Bank takes approaches to minimize risks and maximize profits by managing risks acceptable to the Bank and eliminating excessive risks of financial instruments. For these approaches, the following procedures are performed: risk recognition, measurement and assessment, control, and monitoring and reporting.

The risk is managed by the risk management department based on the Bank’s risk management policy. The Risk Management Committee of the Bank makes the decision on the risk management strategy such as the avoidance of concentration of risk and establishment of acceptable level of risks.

(1) Credit risk

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

1) Credit risk management

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

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

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

2) Maximum exposure to credit risk

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

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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		12,841,334		15,815,135
	Banks		22,147,278		17,826,219
	Corporates		85,043,686		83,529,250
	Consumers		128,150,912		124,337,444
	Sub-total		248,183,210		241,508,048
Financial assets at FVTPL	Gold banking assets		26,305		26,180
	Debt securities held for trading		1,150,515		1,140,928
	Derivative assets		1,835,347		2,880,543
	Sub-total		3,012,167		4,047,651
AFS financial assets	AFS debt securities		12,111,572		11,572,916
HTM financial assets	HTM debt securities		16,216,094		13,792,266
Derivative assets	Derivative assets (hedging)		109,385		140,577
Off-balance accounts	Guarantees		13,909,308		14,953,197
	Loan commitments		51,610,323		56,313,804
	Sub-total		65,519,631		71,267,001
	Total		345,152,059		342,328,459

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		USA		UK		Japan		Others (*)		Total
Loans and receivables		240,171,275		1,099,878		1,101,804		451,636		5,358,617		248,183,210
Financial assets at FVTPL		2,848,223		—		121,675		94		42,175		3,012,167
AFS debt securities		11,919,142		—		—		—		192,430		12,111,572
HTM securities		16,182,448		—		—		—		33,646		16,216,094
Derivative assets		29,136		—		80,249		—		—		109,385
Off-balance accounts		64,658,082		122,803		72,917		37,412		628,417		65,519,631
Total		335,808,306		1,222,681		1,376,645		489,142		6,255,285		345,152,059
	December 31, 2016
	Korea		USA		UK		Japan		Others (*)		Total
Loans and receivables		232,571,489		1,131,617		895,874		323,470		6,585,598		241,508,048
Financial assets at FVTPL		3,686,286		—		261,547		81		99,737		4,047,651
AFS debt securities		11,506,682		—		—		—		66,234		11,572,916
HTM securities		13,758,863		—		—		—		33,403		13,792,266
Derivative assets		74,166		—		66,342		—		69		140,577
Off-balance accounts		70,079,004		76,694		80,831		23,250		1,007,222		71,267,001
Total		331,676,490		1,208,311		1,304,594		346,801		7,792,263		342,328,459

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

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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		46,258,171		33,682,423		36,997,958		3,127,512		121,916,668		6,200,478		248,183,210
Financial assets at FVTPL		57,709		112,460		2,608,941		5,377		2,939		224,741		3,012,167
AFS debt securities		742,815		—		6,907,192		113,864		—		4,347,701		12,111,572
HTM securities		1,358,687		—		10,283,784		285,628		—		4,287,995		16,216,094
Derivative assets		—		—		109,385		—		—		—		109,385
Off-balance accounts		13,875,535		24,264,979		8,733,145		3,601,831		10,298,133		4,746,008		65,519,631
Total		62,292,917		58,059,862		65,640,405		7,134,212		132,217,740		19,806,923		345,152,059
	December 31, 2016
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and receivables		44,851,563		34,465,760		34,641,443		3,177,968		118,412,745		5,958,569		241,508,048
Financial assets at FVTPL		59,472		356,305		3,331,108		23,812		993		275,961		4,047,651
AFS debt securities		1,069,084		—		8,128,709		53,232		—		2,321,891		11,572,916
HTM securities		1,673,971		—		8,192,802		251,599		—		3,673,894		13,792,266
Derivative assets		—		—		140,577		—		—		—		140,577
Off-balance accounts		15,949,042		27,446,354		9,065,002		4,358,268		9,759,416		4,688,919		71,267,001
Total		63,603,132		62,268,419		63,499,641		7,864,879		128,173,154		16,919,234		342,328,459

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3) Credit risk of loans and receivables

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

	September 30, 2017
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Loans neither overdue nor impaired		12,844,581		22,161,636		47,060,126		32,610,537		5,091,248		84,761,911		127,367,072		247,135,200
Loans overdue but not impaired		—		—		15,348		82,420		1,060		98,828		676,825		775,653
Impaired loans		—		—		1,107,078		291,168		38,948		1,437,194		342,658		1,779,852
Total		12,844,581		22,161,636		48,182,552		32,984,125		5,131,256		86,297,933		128,386,555		249,690,705
Allowance for loan losses		3,247		14,358		887,832		334,972		31,443		1,254,247		235,643		1,507,495
Total, net		12,841,334		22,147,278		47,294,720		32,649,153		5,099,813		85,043,686		128,150,912		248,183,210

	December 31, 2016
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Loans neither overdue nor impaired		15,819,124		17,841,428		45,975,557		30,744,224		6,349,788		83,069,569		123,558,440		240,288,561
Loans overdue but not impaired		—		—		7,550		55,993		—		63,543		641,829		705,372
Impaired loans		—		—		1,362,414		425,354		176,715		1,964,483		343,593		2,308,076
Total		15,819,124		17,841,428		47,345,521		31,225,571		6,526,503		85,097,595		124,543,862		243,302,009
Allowance for loan losses		3,989		15,209		1,095,969		417,333		55,043		1,568,345		206,418		1,793,961
Total, net		15,815,135		17,826,219		46,249,552		30,808,238		6,471,460		83,529,250		124,337,444		241,508,048

a) Credit quality of loans and receivables

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

	September 30, 2017
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Upper grade (*1)		12,841,334		22,147,278		40,227,995		21,173,427		4,106,686		65,508,108		124,384,688		224,881,408
Lower grade (*2)		—		—		6,480,613		11,257,485		957,541		18,695,639		2,903,673		21,599,312
Total		12,841,334		22,147,278		46,708,608		32,430,912		5,064,227		84,203,747		127,288,361		246,480,720
Value of collateral(*3)		—		477,517		18,718,567		26,294,266		2,808,414		47,821,247		105,818,495		154,117,259

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	December 31, 2016
	Korean treasury and government agencies		Banks		Corporates
					General business		Small and medium sized enterprise		Project financing and others		Sub-total		Consumers		Total
Upper grade (*1)		15,815,135		17,826,219		38,405,298		17,985,120		4,546,178		60,936,596		120,252,187		214,830,137
Lower grade (*2)		—		—		7,203,345		12,550,168		1,763,658		21,517,171		3,232,521		24,749,692
Total		15,815,135		17,826,219		45,608,643		30,535,288		6,309,836		82,453,767		123,484,708		239,579,829
Value of collateral(*3)		—		358,456		17,182,861		24,978,778		3,838,833		46,000,472		104,257,623		150,616,551

(*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 is the allocated collateral amount when estimating the allowance for credit losses.

Allowances for credit losses, for loans and receivables neither overdue nor impaired, amounting to 654,480 million Won and 708,732 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
Overdue	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small and medium sized enterprise		Project financing and others		Sub-total
Less than 30 days		—		—		12,295		46,545		—		58,840		535,347		594,187
30~59 days		—		—		751		15,145		—		15,896		74,128		90,024
60~89 days		—		—		929		11,356		1,049		13,334		43,017		56,351
Total		—		—		13,975		73,046		1,049		88,070		652,492		740,562
Value of collateral (*)		—		—		11,232		59,447		1,060		71,739		581,887		653,626

	December 31, 2016
Overdue	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small and medium sized enterprise		Project financing and others		Sub-total
Less than 30 days		—		—		6,583		41,329		—		47,912		511,722		559,634
30~59 days		—		—		263		8,064		—		8,327		72,583		80,910
60~89 days		—		—		130		1,906		—		2,036		33,996		36,032
Total		—		—		6,976		51,299		—		58,275		618,301		676,576
Value of collateral (*)		—		—		5,161		39,488		—		44,649		542,109		586,758

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

Allowances for credit losses, for loans and receivables that are overdue but not impaired, amounting to 35,091 million Won and 28,796 million Won as of September 30, 2017 and December 31, 2016, respectively, which are deducted from the loans and receivables above.

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c) Individually 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 and medium sized enterprise		Project financing and others		Sub-total
Impaired loans		—		—		572,137		145,195		34,537		751,869		210,059		961,928
Value of collateral (*)		—		—		481,236		158,686		11,268		651,190		206,177		857,367

	December 31, 2016
	Korean treasury and government agencies		Banks		Corporates								Consumers		Total
					General business		Small and medium sized enterprise		Project financing and others		Sub-total
Impaired loans		—		—		633,933		221,651		161,624		1,017,208		234,435		1,251,643
Value of collateral (*)		—		—		461,795		236,633		11,268		709,696		233,500		943,196

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

Allowances for credit losses, for impaired loans and receivables amounting to 817,924 million Won and 1,056,433 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 Bank manages debt securities based on the external credit rating. Credit soundness of debt securities on the basis of External Credit Assessment Institution (“ECAI”)’s rating is as follows (Unit: Korean Won in millions):

	September 30, 2017
	Held for trading		AFS securities		HTM securities		Total
AAA		1,150,515		9,771,020		15,539,139		26,460,674
AA- ~ AA+		—		2,145,724		676,955		2,822,679
BBB- ~ A+		—		194,828		—		194,828
Total		1,150,515		12,111,572		16,216,094		29,478,181

	December 31, 2016
	Held for trading		AFS securities		HTM securities		Total
AAA		1,140,928		9,908,516		13,342,384		24,391,828
AA- ~ AA+		—		1,477,709		449,882		1,927,591
BBB- ~ A+		—		186,691		—		186,691
Total		1,140,928		11,572,916		13,792,266		26,506,110

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(2) Market risk

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

1) Market risk management

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

The Bank 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.

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

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

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

2) Sensitivity analysis of market risk

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

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

For the non-trading activities, the interest rate risk is managed and measured based on the analysis of the Net Interest Income (“NII”) and Net Portfolio Value (“NPV”) by the scenarios. 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.

- 12 -

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

Name of scenario	September 30, 2017				December 31, 2016
	NII		NPV		NII		NPV
Base case		4,559,653		21,621,542		4,388,019		21,582,242
Base case (Prepay)		4,562,952		21,270,422		4,405,391		20,692,036
IR 100bp up		4,985,019		20,975,173		4,835,013		20,919,129
IR 100bp down		4,080,515		22,330,017		3,918,645		22,304,777
IR 200bp up		5,410,464		20,397,354		5,282,061		20,315,402
IR 200bp down		3,160,510		23,076,597		2,985,778		23,078,379
IR 300bp up		5,835,907		19,887,514		5,729,108		19,768,300
IR 300bp down		2,071,169		25,194,379		1,973,612		25,121,678

- 13 -

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

		September 30, 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		138,339,996		38,153,150		8,986,185		7,038,065		55,528,473		39,073,722		287,119,591
	AFS financial assets		3,523,590		1,867,114		2,981,294		2,603,187		4,835,254		664,583		16,475,022
	HTM financial assets		1,971,150		1,563,189		1,856,937		1,428,804		9,640,458		322,859		16,783,397
	Total		143,834,736		41,583,453		13,824,416		11,070,056		70,004,185		40,061,164		320,378,010
Liability	Deposits due to customers		98,637,858		35,895,411		30,610,579		14,977,529		36,931,267		20,080		217,072,724
	Borrowings		10,514,862		1,034,958		384,534		340,858		2,631,945		458,725		15,365,882
	Debentures		1,135,328		1,572,155		2,060,287		666,354		14,370,517		3,040,856		22,845,497
	Total		110,288,048		38,502,524		33,055,400		15,984,741		53,933,729		3,519,661		255,284,103

		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		135,557,398		40,538,479		7,495,772		7,170,044		53,206,944		34,687,775		278,656,412
	AFS financial assets		2,896,225		2,908,851		2,837,545		2,902,392		4,958,226		675,113		17,178,352
	HTM financial assets		2,672,430		1,515,213		1,246,503		1,143,170		6,851,166		874,298		14,302,780
	Total		141,126,053		44,962,543		11,579,820		11,215,606		65,016,336		36,237,186		310,137,544
Liability	Deposits due to customers		95,261,776		36,070,813		24,657,781		22,748,665		33,819,842		40,032		212,598,909
	Borrowings		11,303,870		852,447		491,330		368,431		2,781,917		421,272		16,219,267
	Debentures		1,591,345		1,781,725		606,539		1,089,673		10,549,803		4,106,259		19,725,344
	Total		108,156,991		38,704,985		25,755,650		24,206,769		47,151,562		4,567,563		248,543,520

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3) Currency risk

Currency risk occurs from the financial instrument 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, and 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		19,964		22,893,027		117,615		1,200,172		1,401		241,459		1,381		1,866,061		2,255,712		28,456,431
	Financial assets at FVTPL		38		43,101		31		316		—		—		40		53,467		100,593		197,477
	AFS financial assets		1,358		1,557,499		—		—		—		—		—		623		63,328		1,621,450
	HTM financial assets		51		58,541		—		—		—		—		—		—		33,646		92,187
	Total		21,411		24,552,168		117,646		1,200,488		1,401		241,459		1,421		1,920,151		2,453,279		30,367,545
Liability	Financial liabilities at FVTPL		53		60,773		89		907		—		—		103		138,974		166,648		367,302
	Deposits due to customer		8,798		10,088,206		145,160		1,481,247		904		155,854		491		662,876		607,469		12,995,652
	Borrowings		6,981		8,005,176		2,485		25,359		19		3,285		375		506,665		187,420		8,727,905
	Debentures		2,979		3,415,538		—		—		700		120,645		—		—		206,040		3,742,223
	Other financial liabilities		3,804		4,361,801		26,471		270,111		3,085		531,755		214		288,676		357,600		5,809,943
	Total		22,615		25,931,494		174,205		1,777,624		4,708		811,539		1,183		1,597,191		1,525,177		31,643,025
	Off-balance accounts		7,316		8,388,877		33,975		346,686		875		150,786		358		484,208		379,526		9,750,083

		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		19,815		23,946,599		108,867		1,128,742		706		122,295		1,541		1,953,058		2,559,691		29,710,385
	Financial assets at FVTPL		60		72,826		57		589		—		—		30		37,562		34,124		145,101
	AFS financial assets		718		868,018		—		—		—		—		—		570		52,977		921,565
	HTM financial assets		—		—		—		—		—		—		—		—		46,068		46,068
	Total		20,593		24,887,443		108,924		1,129,331		706		122,295		1,571		1,991,190		2,692,860		30,823,119
Liability	Financial liabilities at FVTPL		75		90,908		253		2,621		—		—		88		111,098		115,980		320,607
	Deposits due to customer		9,073		10,964,130		124,781		1,293,742		1,098		190,268		650		823,718		953,350		14,225,208
	Borrowings		6,719		8,119,337		3,243		33,625		32		5,621		216		273,289		356,362		8,788,234
	Debentures		2,931		3,541,769		—		—		700		121,282		—		—		201,780		3,864,831
	Other financial liabilities		1,968		2,377,760		12,379		128,347		1,121		194,263		245		310,278		432,565		3,443,213
	Total		20,766		25,093,904		140,656		1,458,335		2,951		511,434		1,199		1,518,383		2,060,037		30,642,093
	Off-balance accounts		8,035		9,710,576		28,646		297,001		751		130,035		373		472,816		364,748		10,975,176

- 15 -

(3) Liquidity risk

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

1) Liquidity risk management

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

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

2) Maturity analysis of non-derivative financial liabilities

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

	September 30, 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		349,409		—		164,647		—		—		—		514,056
Deposits due to customers		137,697,396		29,641,598		24,377,840		18,669,929		7,089,363		773,687		218,249,813
Borrowings		6,122,133		2,486,580		1,126,915		1,536,930		3,747,733		458,302		15,478,593
Debentures		1,135,223		1,571,467		2,060,805		647,493		14,370,888		3,040,865		22,826,741
Other financial liabilities		15,653,304		—		—		—		—		2,792,398		18,445,702
Total		160,957,465		33,699,645		27,730,207		20,854,352		25,207,984		7,065,252		275,514,905

	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		673,906		—		—		—		153,757		—		827,663
Deposits due to customers		131,555,838		28,216,931		18,918,303		28,643,490		5,705,028		891,304		213,930,894
Borrowings		6,763,446		2,134,433		876,836		1,477,040		4,653,676		420,315		16,325,746
Debentures		1,590,890		1,781,431		606,681		1,062,254		10,550,080		4,106,193		19,697,529
Other financial liabilities		14,335,059		—		—		—		—		2,730,148		17,065,207
Total		154,919,139		32,132,795		20,401,820		31,182,784		21,062,541		8,147,960		267,847,039

- 16 -

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		349,409		—		164,647		—		—		—		514,056
Deposits due to customers		149,645,315		30,828,939		19,788,771		11,269,978		6,078,430		254,271		217,865,704
Borrowings		6,122,133		2,486,580		1,126,915		1,536,930		3,747,733		458,302		15,478,593
Debentures		1,135,223		1,571,467		2,060,805		647,493		14,370,888		3,040,865		22,826,741
Other financial liabilities		15,653,304		—		—		—		—		2,792,398		18,445,702
Total		172,905,384		34,886,986		23,141,138		13,454,401		24,197,051		6,545,836		275,130,796

	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		673,906		—		—		—		153,757		—		827,663
Deposits due to customers		142,802,770		29,698,603		17,269,323		18,716,262		4,664,658		374,152		213,525,768
Borrowings		6,763,452		2,134,429		876,835		1,477,039		4,653,676		420,315		16,325,746
Debentures		1,590,890		1,781,431		606,681		1,062,254		10,550,080		4,106,193		19,697,529
Other financial liabilities		14,335,059		—		—		—		—		2,730,148		17,065,207
Total		166,166,077		33,614,463		18,752,839		21,255,555		20,022,171		7,630,808		267,441,913

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

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

	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		2,001,005		—		—		—		10,333		—		2,011,338
December 31, 2016		3,000,098		—		—		208		7,013		—		3,007,319

4) Maturity analysis of off-balance accounts

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

	September 30, 2017		December 31, 2016
Guarantees		13,909,308		14,953,197
Loan commitments		51,610,323		56,313,804

- 17 -

(4) Operational risk

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

1) Operational risk management

The Bank has been running the operational risk management system under Basel II. The Bank 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 the required capital for operational risk, the Bank 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 Bank adopted the Basic Indicator Approach.

(5) Capital management

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

The Bank is required to maintain a minimum common equity Tier 1 ratio of at least 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.

Details of the Bank’s capital adequacy ratio as of September 30, 2017 and December 31, 2016 and 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	%

- 18 -

5. OPERATING SEGMENTS

In evaluating the results of the Bank and allocating resources, the Bank’s Chief Operation Decision Maker (the “CODM”) utilizes the information per 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 Bank’s reporting segments comprise the following customers: consumer banking, corporate banking, investment banking, capital market, and headquarters and others. The reportable segments are classified based on the target customers for whom the service is being provided:

• Consumer banking: Loans/deposits and financial services for retail and individual consumers, 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 securities and derivatives business, 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		Headquarters and others		Sub-total		Adjustment		Total
Assets		107,890,261		105,315,489		6,194,121		11,341,530		66,347,988		297,089,389		588,235		297,677,624
Liabilities		74,336,238		154,285,396		55,651		10,186,345		37,036,027		275,899,657		1,992,915		277,892,572
	December 31, 2016
	Consumer banking		Corporate banking		Investment banking		Capital market		Headquarters and others		Sub-total		Adjustment		Total
Assets		105,931,025		104,937,198		6,337,634		8,111,230		63,365,346		288,682,433		2,089,710		290,772,143
Liabilities		62,294,922		162,937,921		55,785		7,287,850		36,396,452		268,972,930		1,946,695		270,919,625

- 19 -

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			Headquarters and others			Sub-total			Adjustments			Total
Net interest income
Interest income		2,332,134			2,196,051			108,570			14,328			593,056			5,244,139			237,917			5,482,056
Interest expense		(717,709	)		(1,238,742	)		(186	)		—			(459,999	)		(2,416,636	)		199,946			(2,216,690	)
Inter-segment		(379,017	)		358,953			(100,697	)		11,402			109,359			—			—			—
		1,235,408			1,316,262			7,687			25,730			242,416			2,827,503			437,863			3,265,366
Net non-interest income
Non-interest income		598,446			503,820			272,024			6,155,339			1,225,616			8,755,245			133,408			8,888,653
Non-interest expense		(182,815	)		(104,265	)		(152,512	)		(6,125,701	)		(999,431	)		(7,564,724	)		(550,266	)		(8,114,990	)
Inter-segment		73,469			44,857			—			—			(118,326	)		—			—			—
		489,100			444,412			119,512			29,638			107,859			1,190,521			(416,858	)		773,663
Other income (expense)
General and administrative expense		(1,337,679	)		(618,969	)		(8,434	)		(11,309	)		(376,105	)		(2,352,496	)		—			(2,352,496	)
Impairment losses due to credit loss and others		(70,180	)		(240,903	)		15,005			20,356			141,101			(134,621	)		(21,005	)		(155,626	)
		(1,407,859	)		(859,872	)		6,571			9,047			(235,004	)		(2,487,117	)		(21,005	)		(2,508,122	)
Operating income		316,649			900,802			133,770			64,415			115,271			1,530,907			—			1,530,907
Non-operating income (loss)		3,304			(3,097	)		32,832			—			(21,088	)		11,951			—			11,951
Net income before income tax expense		319,953			897,705			166,602			64,415			94,183			1,542,858			—			1,542,858
Income tax expense		(77,429	)		(204,541	)		(40,318	)		(15,588	)		(8,148	)		(346,024	)		—			(346,024	)
Net income		242,524			693,164			126,284			48,827			86,035			1,196,834			—			1,196,834

	For the nine months ended September 30, 2016
	Consumer banking			Corporate banking			Investment banking			Capital Market			Headquarters and others			Sub-total			Adjustments			Total
Net interest income
Interest income		2,228,511			2,293,660			114,282			14,666			694,792			5,345,911			220,856			5,566,767
Interest expense		(772,242	)		(1,349,208	)		(156	)		(227	)		(487,478	)		(2,609,311	)		216,590			(2,392,721	)
Inter-segment		(367,470	)		354,208			(104,388	)		24,648			93,002			—			—			—
		1,088,799			1,298,660			9,738			39,087			300,316			2,736,600			437,446			3,174,046
Net non-interest income
Non-interest income		682,013			399,706			421,359			6,935,357			2,458,504			10,896,939			82,607			10,979,546
Non-interest expense		(286,919	)		(20,284	)		(302,723	)		(6,923,656	)		(2,383,930	)		(9,917,512	)		(535,492	)		(10,453,004	)
Inter-segment		25,747			34,649			—			—			(60,396	)		—			—			—
		420,841			414,071			118,636			11,701			14,178			979,427			(452,885	)		526,542
Other income (expense)
General and administrative expense		(1,310,731	)		(700,794	)		(9,490	)		(12,104	)		(126,291	)		(2,159,410	)		—			(2,159,410	)
Impairment losses due to credit loss and others		(54,742	)		(456,407	)		(79,230	)		9,867			172,269			(408,243	)		15,439			(392,804	)
		(1,365,473	)		(1,157,201	)		(88,720	)		(2,237	)		45,978			(2,567,653	)		15,439			(2,552,214	)
Operating income		144,167			555,530			39,654			48,551			360,472			1,148,374			—			1,148,374
Non-operating income (loss)		(30,997	)		(2,754	)		32,618			—			37,527			36,394			—			36,394
Net income before income tax expense		113,170			552,776			72,272			48,551			397,999			1,184,768			—			1,184,768
Income tax expense		(27,387	)		(132,580	)		(17,490	)		(11,749	)		(30,482	)		(219,688	)		—			(219,688	)
Net income		85,783			420,196			54,782			36,802			367,517			965,080			—			965,080

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(2) Information on financial products and services

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

(3) Information on geographical areas

Of the Bank’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the nine months ended September 30, 2017 and 2016 amounted to 14,095,130 million Won and 16,338,395 million Won, respectively, and revenue from the foreign customers amounted to 275,579 million Won and 207,918 million Won, respectively. Of the Bank’s non-current assets (investments in subsidiaries and associates, investment properties, premises and equipment and intangible assets), non-current assets attributed to domestic subsidiaries as of September 30, 2017 and December 31, 2016 are 7,224,940 million Won and 6,703,013 million Won, respectively, and foreign subsidiaries are 8,713 million Won and 9,059 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		2,307,400		2,150,181
Foreign currencies		674,449		699,667
Demand deposits		1,907,444		3,144,208
Fixed deposits		161,685		109,973
Total		5,050,978		6,104,029

(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			2016
Changes in other comprehensive income due to valuation of AFS financial assets		(32,644	)		19,174
Changes in other comprehensive income (loss) of foreign currencies translation of foreign operations		(12,801	)		(18,313	)
Changes in other comprehensive loss due to re-measurement of defined benefit liabilities		12,868			(52,105	)
Changes in investments in subsidiaries and associates due to debt-equity swap		49,599			—
Changes in investments in subsidiaries and associates due to accounts transfer		—			(137,849	)
Changes in accrued dividends on hybrid equity securities		(1,502	)		23,559

- 21 -

7. FINANCIAL ASSETS AT FVTPL

Details of financial assets held for trading are as follows (Unit: Korean Won in millions):

	September 30, 2017		December 31, 2016
Deposits:
Gold banking assets		26,305		26,180
Securities:
Debt securities
Korean treasury and government agencies		211,966		202,599
Financial institutions		938,549		938,329
Equity securities		2,179		24,762
Securities loaned		—		4,459
Sub-total		1,152,694		1,170,149
Derivative assets		1,835,347		2,880,543
Total		3,014,346		4,076,872

There are no financial assets designated at FVTPL as of September 30, 2017 and December 31, 2016.

8. AFS 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		2,523,774		2,839,623
Financial institutions		5,047,324		4,287,211
Corporates		2,767,763		3,061,002
Bonds in foreign currencies		1,601,812		891,501
Sub-total		11,940,673		11,079,337
Equity securities		1,267,158		1,282,090
Beneficiary certificates		4,103,933		5,250,856
Securities loaned		170,899		493,579
Total		17,482,663		18,105,862

9. HTM 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		3,754,355
Financial institutions		6,658,634		5,168,487
Corporates		5,241,100		4,823,356
Bonds in foreign currencies		92,187		46,068
Total		16,216,094		13,792,266

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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		13,230,329		13,147,281
Loans		223,206,910		221,089,139
Other loans and receivables		11,745,971		7,271,628
Total		248,183,210		241,508,048

(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
Others		59,089			56,355
Allowance for credit losses		(2,755	)		(2,798	)
Sub-total		11,268,367			11,448,719
Due from banks in foreign currencies:
Due from banks on demand		823,380			702,023
Time deposits		574,033			523,473
Others		566,311			474,472
Allowances for credit losses		(1,762	)		(1,406	)
Sub-total		1,961,962			1,698,562
Total		13,230,329			13,147,281

- 23 -

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

	Counterparty	September 30, 2017		Reason of restriction
Due from banks in local currency:
Due from The Bank of Korea	The BOK		11,212,033	Reserve deposits under the BOK Act
Others	The Korea Exchange and others		59,089	Central Counter Party KRW margin and others
Sub-Total			11,271,122
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		816,655	Reserve deposits under the BOK Act and others
Others	Korea Investment & Securities Co., Ltd. and others		566,311	Deposits for foreign futures and option trading and others
Sub-Total			1,382,966
Total			12,654,088
	Counterparty	December 31, 2016		Reason of restriction
Due from banks in local currency:
Due from The Bank of Korea	The BOK		11,395,162	Reserve deposits under the BOK Act
Others	The Korea Exchange and others		55,304	Central Counter Party KRW margin and others
Sub-Total			11,450,466
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		678,999	Reserve deposits under The BOK Act and others
Others	Korea Investment & Securities Co., Ltd. and others		474,472	Deposits for foreign futures and option trading and others
Sub-Total			1,153,471
Total			12,603,937

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

	September 30, 2017			December 31, 2016
Loans in local currency		195,107,274			190,099,544
Loans in foreign currencies		7,732,554			8,697,795
Domestic banker’s letter of credit		2,750,451			3,754,030
Bills bought in foreign currencies		8,310,738			7,691,879
Bills bought in local currency		152,217			322,189
Factoring receivables		47,128			95,173
Advances for customers on guarantees		23,223			24,132
Private placement bonds		161,226			222,926
Call loans		1,794,771			2,813,706
Bonds purchased under resale agreements		8,107,499			8,532,924
Loan origination costs and fees		467,656			447,073
Others		626			21,626
Discounted Present value		(8,577	)		(11,490	)
Allowance for credit losses		(1,439,876	)		(1,622,368	)
Total		223,206,910			221,089,139

- 24 -

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

	September 30, 2017			December 31, 2016
Receivables		9,591,005			4,849,111
Accrued income		907,447			970,789
Telex and telephone subscription rights and refundable deposits		959,626			986,242
Other receivables		350,995			632,875
Allowance for credit losses		(63,102	)		(167,389	)
Total		11,745,971			7,271,628

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

	For the nine months ended September 30, 2017
	Consumers			Corporates			Others			Total
Beginning balance		(155,338	)		(1,467,030	)		(171,593	)		(1,793,961	)
Net reversal of provision (net provision)		(95,254	)		(313,956	)		24,045			(385,165	)
Recoveries		(32,454	)		(63,145	)		—			(95,599	)
Charge-offs		94,733			305,998			50,665			451,396
Sales of loans and receivables		868			61,432			29,264			91,564
Unwinding effect		6,702			28,941			—			35,643
Others (*)		—			188,627			—			188,627
Ending balance		(180,743	)		(1,259,133	)		(67,619	)		(1,507,495	)

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

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

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

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11. THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1) The fair value hierarchy

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

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

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

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

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

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

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

	September 30, 2017
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial assets:
Financial assets at FVTPL
Deposits		26,305		—		—		26,305
Debt securities		211,966		938,549		—		1,150,515
Equity securities		2,179		—		—		2,179
Derivative assets		4,814		1,800,055		30,478		1,835,347
Sub-total		245,264		2,738,604		30,478		3,014,346
AFS financial assets
Debt securities		2,412,277		9,528,396		—		11,940,673
Equity securities		382,184		—		884,974		1,267,158
Beneficiary certificates		—		3,462,355		641,578		4,103,933
Securities loaned		79,955		90,944		—		170,899
Sub-total		2,874,416		13,081,695		1,526,552		17,482,663
Derivative assets		—		109,385		—		109,385
Total		3,119,680		15,929,684		1,557,030		20,606,394

- 26 -

	September 30, 2017
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial liabilities:
Financial liabilities held for trading
Deposits		26,327		—		—		26,327
Derivative liabilities		3,545		1,946,644		37,804		1,987,993
Sub-total		29,872		1,946,644		37,804		2,014,320
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		—		23,345		—		23,345
Total		29,872		2,062,930		387,213		2,480,015
	December 31, 2016
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial assets:
Financial assets at FVTPL
Deposits		26,180		—		—		26,180
Debt securities		202,598		938,330		—		1,140,928
Equity securities		24,762		—		—		24,762
Securities loaned		4,459		—		—		4,459
Derivative assets		3,233		2,854,248		23,062		2,880,543
Sub-total		261,232		3,792,578		23,062		4,076,872
AFS financial assets
Debt securities		1,422,209		9,657,128		—		11,079,337
Equity securities		427,084		—		855,006		1,282,090
Beneficiary certificates		—		4,738,287		512,569		5,250,856
Securities loaned		391,279		102,300		—		493,579
Sub-total		2,240,572		14,497,715		1,367,575		18,105,862
Derivative assets		—		140,478		99		140,577
Total		2,501,804		18,430,771		1,390,736		22,323,311
Financial liabilities:
Financial liabilities held for trading
Deposits		26,501		—		—		26,501
Derivative liabilities		1,750		2,964,912		33,436		3,000,098
Sub-total		28,251		2,964,912		33,436		3,026,599
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		3,065,304		707,145		3,800,700

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

- 27 -

(*2) Certain AFS unquoted equity securities were measured at cost as of September 30, 2017 and December 31, 2016, that are amounting to 44,840 million Won and 38,401 million Won, respectively. These unquoted equity instruments mostly represent minority investments in structured entity vehicles such as asset securitization structures. They are measured at cost because (a) observable inputs of financial information to measure fair value 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 Bank has no intention to dispose these investments in the foreseeable future.

Certain financial assets are carried at cost, even though K-IFRS requires them 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 loss from the disposals is 102 million Won.

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

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

	Fair value measurement technique	Input variables
Debt securities	The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the securities.	Risk-free market rate, 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 Bank.	Risk free market rate of return and forward rate

- 28 -

Techniques for the financial assets and financial liabilities at level 3 and significant, unobservable inputs are as follows:

	Fair value measurement technique	Input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Derivative assets	Option valuation model and others	Correlation 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 compound financial instrument 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 Bank using its own valuation techniques or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Bank and the appropriateness of inputs is reviewed regularly.

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

	For the nine months ended September 30, 2017
	January 1, 2017		Net Income (*1)		Other comprehensive income		Purchases/ Issuances		Disposals/ Settlements			Transfer to or out of level 3 (*2)		September 30, 2017
Financial assets:
Financial assets at FVTPL
Derivative assets		23,062		24,670		—		583		(17,837	)		—		30,478
AFS financial assets
Equity securities		855,006		22,189		15,927		30,016		(38,164	)		—		884,974
Beneficiary certificates		512,569		3,980		1,564		212,666		(89,201	)		—		641,578
Sub-total		1,367,575		26,169		17,491		242,682		(127,365	)		—		1,526,552
Derivative assets		99		185		—		—		(284	)		—		—
Total		1,390,736		51,024		17,491		243,265		(145,486	)		—		1,557,030
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities		33,436		22,161		—		500		(18,293	)		—		37,804
Financial liabilities designated at FVTPL
Equity-linked securities		673,709		104,217		—		—		(428,517	)		—		349,409
Total		707,145		126,378		—		500		(446,810	)		—		387,213

(*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 62,976 million Won for the nine months ended September 30, 2017 which is from financial assets and liabilities that the Bank holds as at the end of the periods, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the separate statement of comprehensive income.

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

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

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

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

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

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

(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 favorable and unfavorable changes based on how changes in unobservable assumptions 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 result 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.

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The following table shows the sensitivity analysis to disclose the effect of reasonably possible volatility on the fair value of a level 3 financial instruments for the nine months ended September 30, 2017 and for the year ended 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 at FVTPL
Derivative assets (*1)(*2)		3,516		(4,690	)		—		—			861		(2,248	)		—		—
AFS Financial Assets
Equity securities (*3) (*4)		—		—			26,989		(16,522	)		—		—			24,270		(16,223	)
Beneficiary certificates (*4)		—		—			2,266		(2,202	)		—		—			2,813		(2,754	)
Total		3,516		(4,690	)		29,255		(18,724	)		861		(2,248	)		27,083		(18,977	)
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 fluctuation rate of stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate and currency related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing volatility of interest rate and credit risk adjustment ratio, which are major unobservable variables, by 10%, respectively.

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

	September 30, 2017
	Fair value								Book value
	Level 1		Level 2		Level 3		Total
Financial assets:
HTM financial assets		1,605,876		14,628,434		—		16,234,310		16,216,094
Loans and receivables		—		—		248,131,457		248,131,457		248,183,210
Financial liabilities:
Deposits due to customers		—		215,896,353		—		215,896,353		215,888,152
Borrowings		—		15,199,577		—		15,199,577		15,204,833
Debentures		—		21,411,662		—		21,411,662		21,255,612
Other financial liabilities		—		22,298,231		—		22,298,231		22,298,777

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	December 31, 2016
	Fair value								Book value
	Level 1		Level 2		Level 3		Total
Financial assets:
HTM financial assets		741,880		13,125,715		—		13,867,595		13,792,266
Loans and receivables		—		—		242,668,472		242,668,472		241,508,048
Financial liabilities:
Deposits due to customers		—		211,370,812		—		211,370,812		211,382,380
Borrowings		—		16,076,215		—		16,076,215		16,060,821
Debentures		—		18,401,138		—		18,401,138		18,166,057
Other financial liabilities		—		20,826,846		—		20,826,846		20,827,284

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

	Fair value measurement technique	Input variables
Debt securities	The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the securities.	Risk-free market rate 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
Deposits 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 Bank.	Risk-free market rate and forward rate

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12. DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS

(1) Derecognition of financial assets

1) Transferred financial assets that meet condition of derecognition

The book value, fair value of, and maximum exposure to loss from the financial assets that were derecognized from the separate financial statements of the Bank through disposals, but the Bank still has continuous involvements are 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 and there are no financial instruments that meet the derecognition conditions but the Bank still has continuous involvements as of September 30, 2017.

	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

(*) As the amounts to be settled after the auction of collaterals are not fixed yet, expected cash flow cannot be reliably measured as of September 30, 2017 and 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, the Bank derecognized the financial asset from the separate financial statements applying the 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 Bank agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, are as follows (Unit: Korean Won in millions):

		September 30, 2017		December 31, 2016
Assets transferred	AFS financial assets		10,018		220,098
	HTM financial assets		5,432		7,133
	Total		15,450		227,231
Related liabilities	Bonds sold under repurchase agreements		3,386		106,605

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b) Securities loaned

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

		September 30, 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 Bank possesses both the uncollected domestic exchange receivables and unpaid domestic exchange payable, which satisfy offsetting criteria of K-IFRS 1032. Therefore, the total number of uncollected domestic exchange receivables or unpaid domestic exchange payable has been countervailed with part of unpaid domestic exchange payable or uncollected domestic exchange receivables, respectively, and has been disclosed in loans and receivables or other financial liabilities of the Bank’s separate statements of financial position respectively.

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

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

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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 follows (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)		1,757,013		2,162		1,754,851
Receivable spot exchange (*2)		8,777,157		—		8,777,157		9,969,738		1,164		561,106
Bonds purchased under resale agreements (*2)		8,107,499		—		8,107,499		8,107,499		—		—
Domestic exchanges receivable (*2)(*5)		27,649,900		27,389,521		260,379		—		—		260,379
Total		46,291,569		27,391,683		18,899,886		18,077,237		1,164		821,485

	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)		2,030,146		2,162		2,027,984
Payable spot exchange (*3)		8,776,351		—		8,776,351		10,125,919		185,152		493,264
Bonds sold under repurchase agreements (*4)		3,386		—		3,386		3,386		—		—
Domestic exchanges payable (*3)(*5)		32,052,706		27,389,521		4,663,185		4,663,185		—		—
Total		42,862,589		27,391,683		15,470,906		14,792,490		185,152		493,264

	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)		2,954,667		8,442		2,946,225
Receivable spot exchange (*2)		4,375,738		—		4,375,738		6,239,981		69,834		1,012,148
Bonds purchased under resale agreements (*2)		8,532,924		—		8,532,924		8,532,924		—		—
Domestic exchanges receivable (*2)(*5)		31,452,718		30,883,281		569,437		—		—		569,437
Total		47,316,047		30,891,723		16,424,324		14,772,905		69,834		1,581,585

	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)		3,459,959		8,442		3,451,517
Payable spot exchange (*3)		4,380,424		—		4,380,424		6,389,463		105,270		1,337,208
Bonds sold under repurchase agreements (*4)		106,605		—		106,605		106,605		—		—
Domestic exchanges payable (*3)(*5)		39,341,233		30,883,281		8,457,952		6,161,151		—		2,296,801
Total		47,288,221		30,891,723		16,396,498		12,657,219		105,270		3,634,009

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

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

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

(*4) The items are included in borrowings.

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

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13. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES

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

Subsidiaries	Location	Capital stock		Main business
Woori FIS Co., Ltd.	Korea	KRW	245	System software development & maintenance
Woori Private Equity Asset Management Co., Ltd.	Korea	KRW	300	Finance
Woori Finance Research Institute Co., Ltd.	Korea	KRW	30	Other service business
Woori Card Co., Ltd. (*1)	Korea	KRW	8,963	Finance
Woori Investment Bank Co., Ltd.	Korea	KRW	2,371	Other credit finance business
Woori Private Equity Fund (*2)	Korea	KRW	—	Other financial business
Woori Credit Information Co., Ltd.	Korea	KRW	50	Credit information
Woori America Bank (*1)	America	USD	19,250	Finance
PT Bank Woori Saudara Indonesia 1906 Tbk (*1)(*3)	Indonesia	IDR	6,720	”
Woori Global Markets Asia Limited	Hong Kong	USD	10,000	”
Woori Bank China Limited	China	CNY	21.6	”
AO Woori Bank	Russia	RUB	14.5	”
Banco Woori Bank do Brasil S.A.	Brazil	BRL	7,709	”
Korea BTL Infrastructure Fund (*1)	Korea	KRW	7,800	”
Woori Fund Service Co., Ltd.	Korea	KRW	100	”
Woori Finance Cambodia PLC. (*1)	Cambodia	USD	1,300	”
Woori Finance Myanmar Co., Ltd. (*1)	Myanmar	USD	1,200	”
Wealth Development Bank	Philippine	PHP	7.7	”
Woori Bank Vietnam Limited	Vietnam	VND	3	”

	September 30, 2017						December 31, 2016
Subsidiaries	Number of shares owned		Percentage of ownership (%)		Financial statements as of		Number of shares owned		Percentage of ownership (%)		Financial statements as of
Woori FIS Co., Ltd.		4,900,000		100.0		Sep.30,2017		4,900,000		100.0		Dec.31,2016
Woori Private Equity Asset Management Co., Ltd.		6,000,000		100.0		Sep.30,2017		6,000,000		100.0		Dec.31,2016
Woori Finance Research Institute Co., Ltd.		600,000		100.0		Sep.30,2017		600,000		100.0		Dec.31,2016
Woori Card Co., Ltd. (*1)		179,266,200		100.0		Sep.30,2017		169,266,200		100.0		Dec.31,2016
Woori Investment Bank Co., Ltd.		275,761,491		58.2		Sep.30,2017		275,761,491		58.2		Dec.31,2016
Woori Private Equity Fund (*2)		—		—		Sep.30,2017		46,061		28.9		Dec.31,2016
Woori Credit Information Co., Ltd.		1,008,000		100.0		Sep.30,2017		1,008,000		100.0		Dec.31,2016
Woori America Bank (*1)		38,500,000		100.0		Sep.30,2017		24,500,000		100.0		Dec.31,2016
PT Bank Woori Saudara Indonesia 1906 Tbk (*3)		5,256,690,211		79.9		Sep.30,2017		3,754,701,359		74.0		Dec.31,2016
Woori Global Markets Asia Limited		78,000,000		100.0		Sep.30,2017		78,000,000		100.0		Dec.31,2016
Woori Bank China Limited		—		100.0		Sep.30,2017		—		100.0		Dec.31,2016
AO Woori Bank		57,999,999		100.0		Sep.30,2017		57,999,999		100.0		Dec.31,2016
Banco Woori Bank do Brasil S.A.		77,093,999		100.0		Sep.30,2017		77,093,999		100.0		Dec.31,2016
Korea BTL Infrastructure Fund (*1)		155,805,801		99.9		Sep.30,2017		155,270,233		99.9		Dec.31,2016
Woori Fund Service Co., Ltd.		2,000,000		100.0		Sep.30,2017		2,000,000		100.0		Dec.31,2016
Woori Finance Cambodia PLC. (*1)		13,000,000		100.0		Sep.30,2017		3,000,000		100.0		Dec.31,2016
Woori Finance Myanmar Co., Ltd. (*1)		1,200,000		100.0		Sep.30,2017		200,000		100.0		Dec.31,2016
Wealth Development Bank		3,931,365		51.0		Sep.30,2017		3,931,365		51.0		Dec.31,2016
Woori Bank Vietnam Limited		—		100.0		Sep.30,2017		—		100.0		Dec.31,2016

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(*1) The Bank’s capital stock and number of holding shares have increased, attributed to capital increase of subsidiaries during the nine months ended September 30, 2017.

(*2) Due to liquidation of Woori Private Equity Asset Management Co., Ltd., the entity was excluded from subsidiaries during the nine months ended September 30, 2017.

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

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

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

	As of September 30, 2017
Structured entities	Location	Main business	Percentage of ownership (%)		Financial statements as of
Structured entities established for securitization of financial assets (*1)
Kumho Trust First Co., Ltd. and 19 structures entities	Korea	Asset securitization		—	Sep.30, 2017
KAMCO Value Recreation First Securitization Specialty Co., Ltd.	Korea	”		15.0	Sep.30, 2017
Money Trust by Trust Business Act (*2)
Principle Guaranteed Trust and Principle and Interest Guaranteed Trust	Korea	Trust		—	Sep.30, 2017
Structured entities established for investment in securities and others
Samsung Plus Private Equity Investment Trust 36th and 20 structures entities	Korea	Securities investments		100.0	Sep.30, 2017
HeungkukWoori Tech Company Private Placement Investment Trust No.1	Korea	”		98.0	Sep.30, 2017
Consus Sakhalin Real Estate Investment Trust 1st	Korea	”		75.0	Sep.30, 2017
	As of December 31, 2016
Structured entities	Location	Main business	Percentage of ownership (%)		Financial statements as of
Structured entities established for securitization of financial assets (*1)
Kumho Trust First Co., Ltd. and 14 structures entities	Korea	Asset securitization		—	Dec.31, 2016
KAMCO Value Recreation First Securitization Specialty Co., Ltd.	Korea	”		15.0	Dec.31, 2016
Money Trust by Trust Business Act (*2)
Principle Guaranteed Trust and Principle and Interest Guaranteed Trust	Korea	Trust		—	Dec.31, 2016
Structured entities established for investment in securities and others
Samsung Plus Private Equity Investment Trust 36th and 33 structures entities	Korea	Securities investments		100.0	Dec.31, 2016
Consus Sakhalin Real Estate Investment Trust 1st	Korea	”		75.0	Dec.31, 2016

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

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

- 37 -

2) The following companies have been excluded from the consolidation scope despite the Bank’s majority ownership interest as of September 30, 2017 and December 31, 2016

	As of September 30, 2017
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities investments		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities investments		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities investments		88.9
Hana Qualified Investor Private Real Estate Investment Trust No.41-1 (*)	Korea	Securities investments		77.0
	As of December 31, 2016
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities investments		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities investments		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities investments		88.9
Kiwoom Frontier Professional Investment Private Fund 6(Bond) (*)	Korea	Securities investments		50.0

(*) The Bank 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 Bank has no power or control on the structured entities.

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

					September 30, 2017
Investee	Location	Capital		Main business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Kumho Tires Co., Inc. (*1)(*5)	Korea		7,900	Manufacturing		22,357,561		14.2	Jun.30, 2017(*6)
Woori Blackstone Korea Opportunity No.1 Private Equity Fund (*15)	Korea		—	Other Finance Business		—		21.4	Sep.30, 2017
Woori Service Networks Co., Ltd. (*3)	Korea		5	Freight & staffing		4,704		4.9	Aug.31, 2017(*6)
Korea Credit Bureau Co., Ltd. (*2)	Korea		100	Credit information		180,000		9.9	Sep.30, 2017
Korea Finance Security Co., Ltd. (*3)	Korea		60	Security service		180,000		15.0	Aug.31, 2017(*6)
Chin Hung International Inc. (*5)(*9)	Korea		733	Construction		37,059,405		25.3	Aug.31, 2017(*6)
Poonglim Industrial Co., Ltd. (*7)	Korea		736	Construction		4,142,782		29.7	Jun.30, 2017(*6)
STX Engine Co., Ltd. (*1)(*5)	Korea		691	Manufacturing		8,082,650		29.2	Jun.30, 2017(*6)
Samho International Co., Ltd. (*5)(*17)	Korea		—	Construction		—		—	—
Force TEC Co., Ltd. (*4)(*11)	Korea		—	Freight & staffing		—		—	—
STX Corporation (*1)(*5)(*12)	Korea		4,785	Wholesale of non-specialized goods		37,724,008		19.7	Jun.30, 2017(*6)
Saman Corporation (*2)	Korea		7	General construction Technology service		12,542		9.2	Jun.30, 2017(*6)
Dongwoo C & C Co., Ltd. (*4)	Korea		7	Construction		13,317		23.2	—
SJCO Co., Ltd. (*4)	Korea		26	Aggregate transportation and Wholesale		70,529		26.5	—
G2 collection Co., Ltd. (*4)	Korea		2	Wholesale and retail sales		12,574		28.9	—
The Base Enterprise Co., Ltd. (*4)	Korea		7	Manufacturing		68,470		48.4	—
Heungjiwon Co., Ltd. (*4)	Korea		6	Other printing		32,849		27.8	—
Kyesan Engineering Co., Ltd. (*4)	Korea		13	Construction		60,581		23.2	—
Good Software Lab Co., Ltd. (*4)	Korea		3	Service		17,121		28.9	—
Wongwang Co., Ltd. (*4)	Korea		1	Wholesale and real estate		2,590		29.0	—
Sejin Construction Co., Ltd. (*4)	Korea		4	Construction		12,123		29.6	—
Deokwon Food Co., Ltd. (*4)(*14)	Korea		—	Poultry processing and storage		—		—	—
QTS Shipping Co., Ltd. (*4)	Korea		4	Complex transportation brokerage		17,460		49.4	—
Reading Doctors Co., Ltd. (*4)(*10)	Korea		1	Other services		7,398		35.4	—
PREXCO Co., Ltd. (*4)(*10)	Korea		16	Manufacturing		919,972		28.1	—
Hyunwoo International Co., Ltd. (*4)(*10)	Korea		12	Manufacturing		59,873		25.9	—
Jiwon Plating Co., Ltd. (*4)(*16)	Korea		7	Plating		28,705		20.5
Cultizm Korea LTD Co., Ltd. (*4)(*16)	Korea		14	Wholesale and retail sales		858		31.3
Woori Growth Partnerships New Technology Private Equity Fund (*13)	Korea		1,222	Other financial services		28,203		23.1	Sep.30, 2017
DAEA SNC Co., Ltd. (*4)	Korea		1	Wholesale and retail sales		1,253		24.0	—
ARES-TECH Co., Ltd.(*4)	Korea		2	Electronic component manufacturing		7,187		23.4	—

- 38 -

					September 30, 2017
Investee	Location	Capital		Main business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
2016KIF-IMM Woori Bank Technology Venture Fund (*13)	Korea		297	Other financial services		5,940,000,000		20.0	Sep.30, 2017
K BANK Co., Ltd. (*2)(*13)	Korea		3,368	Finance		8,734,300		13.0	Aug.31, 2017(*6)
Smart Private Equity Fund No.2 (*8)	Korea		150	Other financial services		3,000		20.0	Sep.30, 2017
Woori Bank-Company K Korea Movie Asset Fund (*8)	Korea		60	Other financial services		1,500		25.0	Sep.30, 2017
Well to Sea No.3 Private Equity Fund (*8)	Korea		2,051	Finance		102,500,000,000		50.0	Jun.30, 2017(*6)
					December 31, 2016
Investee	Location	Capital		Main business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Kumho Tires Co., Inc. (*1)(*5)	Korea		7,900	Manufacturing		22,357,561		14.2	Sep.30, 2016(*6)
Woori Blackstone Korea Opportunity No.1 Private Equity Fund	Korea		295	Other Finance Business		6,332,435,273		21.4	Dec.31, 2016
Woori Service Networks Co., Ltd. (*3)	Korea		5	Freight & staffing		4,704		4.9	Nov.30, 2016(*6)
Korea Credit Bureau Co., Ltd. (*2)	Korea		100	Credit information		180,000		9.9	Dec.31, 2016
Korea Finance Security Co., Ltd. (*3)	Korea		60	Security service		180,000		15.0	Nov.30, 2016(*6)
Chin Hung International Inc. (*5)(*9)	Korea		769	Construction		43,709,400		28.4	Nov.30, 2016(*6)
Poonglim Industrial Co., Ltd. (*7)	Korea		736	Construction		4,146,811		29.7	Sep.30, 2016(*6)
STX Engine Co., Ltd. (*1)(*5)	Korea		691	Manufacturing		8,082,650		29.2	Sep.30, 2016(*6)
Samho International Co., Ltd. (*5)(*17)	Korea		759	Construction		1,190,000		7.8	Dec.31, 2016
Force TEC Co., Ltd. (*4)(*11)	Korea		118	Freight & staffing		8,087,128		34.4	—
STX Corporation (*1)(*5)(*12)	Korea		748	Wholesale of non-specialized goods		4,472,248		9.5	Sep.30, 2016(*6)
Saman Corporation (*2)	Korea		7	General construction Technology service		12,542		9.2	Sep.30, 2016(*6)
Dongwoo C & C Co., Ltd. (*4)	Korea		7	Construction		13,317		23.2	—
SJCO Co., Ltd. (*4)	Korea		26	Aggregate transportation and wholesale		70,529		26.5	—
G2 collection Co., Ltd. (*4)	Korea		2	Wholesale and retail sales		12,574		28.9	—
The Base Enterprise Co., Ltd. (*4)	Korea		7	Manufacturing		68,470		48.4	—
Heungjiwon Co., Ltd. (*4)	Korea		6	Other printing		32,849		27.8	—
Kyesan Engineering Co., Ltd. (*4)	Korea		13	Construction		60,581		23.2	—
Good Software Lab Co., Ltd. (*4)	Korea		3	Service		17,121		28.9	—
Wongwang Co., Ltd. (*4)	Korea		1	Wholesale and real estate		2,590		29.0	—
Sejin Construction Co., Ltd. (*4)	Korea		4	Construction		12,123		29.6	—
Deokwon Food Co., Ltd. (*4) (*14)	Korea		3	Poultry processing and storage		14,300		27.3	—
QTS Shipping Co., Ltd. (*4)	Korea		3	Complex transportation brokerage		17,460		49.4	—
Woori Growth Partnerships New Technology Private Equity Fund (*13)	Korea		589	Other finance services		13,602		23.1	Dec.31, 2016
DAEA SNC Co., Ltd. (*4)	Korea		1	Wholesale and retail sales		1,253		24.0	—
ARES-TECH Co., Ltd. (*4)	Korea		2	Electronic component manufacturing		7,187		23.4	—
2016KIF-IMM Woori Bank Technology Venture Fund (*13)	Korea		90	Other financial services		1,800,000,000		20.0	Dec.31, 2016
K BANK Co., Ltd. (*2)(*13)	Korea		2500	Finance		6,500,000		13.0	Nov.30, 2016(*6)

(*1) The Bank has significant influence in the creditors’ council which makes the financial and operating policy decisions.

(*2) The Bank can participate in the decision making body and exercise significant influence over the associates through business partnerships.

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

- 39 -

(*4) 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. and Deokwon Food Co., Ltd., are nil as of December 31, 2016. Furthermore, those of investments in 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.

(*5) 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).

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

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

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

(*9) Due to the consolidation of stocks and debt-equity swap of the associates, the Bank’s number of holding shares and ownership ratio decreased during the nine months ended September 30, 2017.

(*10) Even though the Bank’s ownership ratio of the entity was more than 20%, the Bank did not have significant influence over the entity due to the fact that the entity was going through workout process under receivership, 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) Force TEC Co., Ltd. is not in scope for the associates, because the Bank 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.

(*12) Due to debt-equity swap of the associate, capital stock, the Bank’s number of holding shares and ownership ratio increased during the nine months ended September 30, 2017.

(*13) Due to capital increase of associates, the Bank’s number of capital stock and holding shares increased during the nine months ended September 30, 2017.

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

(*15) As the associate is on the liquidation process, it has returned the capital contribution of the Bank during the nine months ended September 30, 2017 and the Bank does not have capital stock and holding shares as of September 30, 2017. The residual property of the entity is to be distributed according to ownership ratio.

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

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

(4) The entities excluded from associates, although the Bank’s ownership interest in them is higher than 20% as of September 30, 2017 and December 31, 2016 are as follows:

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

- 40 -

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

(*) Even though the Bank’s ownership interest in the entity is more than 20%, it is determined that the Bank 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.

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

	For the nine months ended September 30, 2017
Investee	January 1, 2017		Acquisitions (*)		Disposals and others			Impairment			September 30, 2017
Woori FIS Co., Ltd.		35,362		—		—			—			35,362
Woori Private Equity Asset Management Co., Ltd.		43,227		—		—			—			43,227
Woori Finance Research Institute Co., Ltd.		3,364		—		—			—			3,364
Woori Card Co., Ltd.		1,174,260		100,000		—			—			1,274,260
Woori Investment Bank		79,992		—		—			—			79,992
Woori Private Equity Fund		9,018		—		(9,018	)		—			—
Woori Credit Information Co., Ltd.		24,666		—		—			—			24,666
Woori America Bank		202,371		79,100		—			—			281,471
PT Bank Woori Saudara Indonesia 1906 Tbk		215,400		112,613		—			—			328,013
Woori Global Markets Asia Limited		113,858		—		—			—			113,858
Woori Bank China Limited		427,802		—		—			—			427,802
AO Woori Bank		51,780		—		—			—			51,780
Banco Woori Bank do Brasil S.A.		44,045		—		—			—			44,045
Korea BTL Infrastructure Fund		780,525		2,698		(59	)		—			783,164
Woori Fund Service Co., Ltd.		10,000		—		—			—			10,000
Woori Finance Cambodia PLC.		4,600		11,250		—			—			15,850
Woori Finance Myanmar Co., Ltd.		2,389		11,260		—			—			13,649
Wealth Development Bank		25,675		—		(1,320	)		—			24,355
Woori Bank Vietnam Limited		155,400		—		—			—			155,400
Kumho Tire Co., Inc.		175,652		—		—			—			175,652
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		5,418		—		(5,418	)		—			—
Woori Service Networks Co., Ltd.		108		—		—			—			108
Korea Credit Bureau Co., Ltd.		3,313		—		—			—			3,313
Korea Finance Security Co., Ltd.		3,267		—		—			—			3,267
Chin Hung International Inc.		67,467		41,053		—			(34,771	)		73,749
Poonglim Industrial Co., Ltd.		4,256		—		—			(4,250	)		6
STX Engine Co., Ltd.		44,615		—		—			—			44,615
SamHo Co., Ltd.		7,492		—		(7,492	)		—			—
STX Corporation		7,424		8,546		—			(8,161	)		7,809
Saman Corporation		8,521		—		—			—			8,521
Woori Growth Partnerships New Technology Private Equity Fund		13,602		15,099		(498	)		—			28,203
2016KIF-IMM Woori Bank Technology Venture Fund		1,800		4,140		—			—			5,940
K BANK Co., Ltd.		32,500		11,172		—			—			43,672

- 41 -

	For the nine months ended September 30, 2017
Investee	January 1, 2017		Acquisitions (*)		Disposals and others			Impairment			September 30, 2017
Smart Private Equity Fund No.2		—		3,000		—			—			3,000
Woori Bank-Company K Korea Movie Asset Fund		—		1,500		—			—			1,500
Well to Sea No.3 Private Equity Fund		—		102,500		(250	)		—			102,250
		3,779,169		503,931		(24,055	)		(47,182	)		4,211,863

(*1) Investments in associates increased by 49,599 million Won through debt-equity swap occurred during the nine months ended September 30, 2017.

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

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

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

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

- 42 -

14. INVESTMENT PROPERTIES

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

	September 30, 2017			December 31, 2016
Acquisition cost		371,000			372,255
Accumulated depreciation		(26,665	)		(23,862	)
Net carrying value		344,335			348,393

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

	For the nine months ended September 30
	2017			2016
Beginning balance		348,393			344,892
Acquisition		2,647			—
Depreciation		(2,679	)		(2,659	)
Transfers		(3,989	)		16,319
Foreign currencies translation adjustments		(37	)		(46	)
Ending balance		344,335			358,506

(3) Fair value of investment properties is amounting to 369,374 million Won and 374,106 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 10,647 million Won and 10,286 million Won for the nine months ended September 30, 2017 and 2016, respectively.

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15. PREMISES AND EQUIPMENT

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

	September 30, 2017
	Land		Buildings			Properties for business use			Structures in leased office			Construction in progress		Total
Acquisition cost		1,476,602		847,426			494,060			385,917			60,422		3,264,427
Accumulated depreciation		—		(172,924	)		(374,670	)		(336,269	)		—		(883,863	)
Net carrying value		1,476,602		674,502			119,390			49,648			60,422		2,380,564
	December 31, 2016
	Land		Buildings			Properties for business use			Structures in leased office			Construction in progress		Total
Acquisition cost		1,472,720		835,671			472,676			381,593			13,663		3,176,323
Accumulated depreciation		—		(155,905	)		(351,103	)		(327,035	)		—		(834,043	)
Net carrying value		1,472,720		679,766			121,573			54,558			13,663		2,342,280

(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			Buildings			Properties for business use			Structures in leased office			Construction in progress			Total
Beginning balance		1,472,720			679,766			121,573			54,558			13,663			2,342,280
Acquisitions		4,244			17,300			30,325			12,041			47,006			110,916
Disposals		(891	)		(2,593	)		(66	)		(593	)		—			(4,143	)
Depreciation		—			(18,811	)		(32,221	)		(21,725	)		—			(72,757	)
Classified to assets held for sale		(3,642	)		(1,059	)		—			—			—			(4,701	)
Transfer		4,200			(58	)		67			—			(220	)		3,989
Foreign currencies translation adjustments		(29	)		(34	)		(69	)		(139	)		(27	)		(298	)
Others		—			(9	)		(219	)		5,506			—			5,278
Ending balance		1,476,602			674,502			119,390			49,648			60,422			2,380,564
	For the nine months ended September 30, 2016
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Total
Beginning balance		1,478,209			691,830			106,155			64,790			522			2,341,506
Acquisitions		—			11,384			42,714			13,730			2,525			70,353
Disposals		(30	)		—			(174	)		(1,583	)		(67	)		(1,854	)
Depreciation		—			(18,436	)		(31,518	)		(36,437	)		—			(86,391	)
Classified to assets held for sale		(4,368	)		(2,941	)		—			—			—			(7,309	)
Transfers		(11,198	)		(5,121	)		—			—			—			(16,319	)
Foreign currencies translation adjustments		(35	)		(84	)		(73	)		(58	)		(13	)		(263	)
Others		145			(9	)		25			19,085			—			19,246
Ending balance		1,462,723			676,623			117,129			59,527			2,967			2,318,969

- 44 -

16. INTANGIBLE ASSETS

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

	September 30, 2017
	Industrial property rights			Development cost			Others			Membership deposits			Total
Acquisition cost		772			214,306			572,381			11,809			799,268
Accumulated amortization		(440	)		(24,175	)		(475,394	)		—			(500,009	)
Accumulated impairment losses		—			—			—			(2,368	)		(2,368	)
Net carrying value		332			190,131			96,987			9,441			296,891
	December 31, 2016
	Industrial property rights			Development cost			Others			Membership deposits			Total
Acquisition cost		625			117,954			566,054			11,921			696,554
Accumulated amortization		(367	)		(17,114	)		(434,540	)		—			(452,021	)
Accumulated impairment losses		—			—			—			(2,303	)		(2,303	)
Net carrying value		258			100,840			131,514			9,618			242,230

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

	For the nine months ended September 30, 2017
	Industrial property rights			Development cost			Others			Membership deposit			Total
Beginning balance		258			100,840			131,514			9,618			242,230
Acquisition		146			96,449			13,541			220			110,356
Disposals		—			—			—			(316	)		(316	)
Amortization (*)		(72	)		(7,067	)		(42,132	)		—			(49,271	)
Impairment loss		—			—			—			(65	)		(65	)
Transfer		—			(36	)		36			—			—
Foreign currencies translation adjustment		—			—			180			(16	)		164
Others		—			(55	)		(6,152	)		—			(6,207	)
Ending balance		332			190,131			96,987			9,441			296,891

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

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		1,979		2,342

- 45 -

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 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	Corporate bonds	Korea Securities Depository		10,018	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government agencies bonds and others	BOK and others		1,578,007	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	BOK and others		8,071,913	Settlement risk and others
Total				10,172,747

(*) The Bank has the agreements to repurchase the sold assets as the pre-determined price or the price which include the rate of return and provide the guarantee on the assets. The transferee has the right to sell or to provide as guarantee. Therefore the Bank does not derecognize the assets, but recognizes the relevant amounts 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		22,870	Margin deposit for future or option and others
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		225,169	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		458,476	Substitute securities and others
AFS financial assets	Korean treasury and government agencies bonds	Korea Securities Depository and others		220,098	Related to bonds sold under repurchase agreements (*)
	Financial institutions debt securities and others	BOK and others		3,116,810	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	BOK and others		6,181,192	Settlement risk and others
		Total		10,231,748

(*) The Bank has the agreements to repurchase the sold assets as the pre-determined price or the price which include the rate of return and provide the guarantee on the assets. The transferee has the right to sell or to provide as guarantee. Therefore the Bank does not derecognize the assets, but recognizes the relevant amounts as liability (bond sold under repurchase agreements).

(2) There is no asset the Bank has acquired through foreclosure as of September 30, 2017 and December 31, 2016, respectively.

- 46 -

(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 Bank 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		8,509,989		—

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

19. OTHER ASSETS

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

	September 30, 2017		December 31, 2016
Prepaid expenses		177,761		92,895
Advance payments		3,168		404
Others		2,540		3,627
Total		183,469		96,926

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20. FINANCIAL LIABILITY 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		2,014,320		3,026,599
Financial liabilities designated at FVTPL		442,350		766,880
Total		2,456,670		3,793,479

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

	September 30, 2017		December 31, 2016
Deposits
Gold banking liabilities		26,327		26,501
Derivative liabilities		1,987,993		3,000,098
Total		2,014,320		3,026,599

(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 are 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 of credit risk adjustments		(15,878	)		(15,814	)

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

(5) The difference between financial liabilities at FVTPL’s carrying amount and nominal amount at maturity is 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	)

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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		8,773,054			9,496,455
Deposits at termination		188,387,034			183,864,984
Mutual installment		34,821			37,128
Certificate of deposits		5,749,197			3,782,549
Sub-total		202,944,106			197,181,116
Deposits in foreign currencies		12,995,652			14,225,208
Present value discount		(51,606	)		(23,944	)
Total		215,888,152			211,382,380

22. BORROWINGS AND DEBENTURES

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

	September 30, 2017
	Lender	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.5 ~ 0.8		1,457,178
Borrowing 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		3,101,186
Sub-total					6,192,899
Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 4.5		7,920,171
Offshore borrowings in foreign currencies	Commonwealth Bank		1.8		30,273
Sub-total					7,950,444
Bills sold	Others		0.0 ~ 1.2		30,643
Call-money	Banks and others		0.0 ~ 4.4		1,027,750
Bonds sold under repurchase agreements	Other financial institutions		0.6 ~ 8.6		3,386
Present value discount					(289	)
Total					15,204,833

	December 31, 2016
	Lender	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.5 ~ 0.8		1,598,553
Borrowing from government funds	Small & Medium Business Corporation and others		0.0 ~ 3.5		1,534,807
Others	Seoul Metropolitan Government and others		0.0 ~ 3.8		3,446,894
Sub-total					6,580,254
Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 5.2		7,547,555
Offshore borrowings in foreign currencies	Wells Fargo		1.4		18,127
Sub-total					7,565,682
Bills sold	Others		0.0 ~ 1.6		26,895
Call-money	Banks and others		0.0 ~ 5.1		1,782,052
Bonds sold under repurchase agreements	Other financial institutions		0.6 ~ 4.5		106,605
Present value discount					(667	)
Total					16,060,821

- 49 -

(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 ~ 5.8		16,575,018			1.5 ~ 7.2		12,889,422
Subordinated bonds		3.4 ~ 5.9		4,708,424			3.0 ~ 5.9		5,309,375
Sub-total				21,283,442					18,198,797
Discount on bonds				(27,830	)				(32,740	)
Total				21,255,612					18,166,057

(*) 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.

23. PROVISIONS

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

	September 30, 2017		December 31, 2016
Asset retirement obligation		56,210		52,838
Provisions for guarantees (*1)		195,387		240,023
Provisions for unused commitments		52,356		53,919
Provisions for customer reward credits		36,751		18,170
Other provisions (*2)		16,296		15,523
Total		357,000		380,473

(*1) Provisions for guarantees include provision for financial guarantee of 66,358 million Won and 70,153 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.

(2) Changes in provision 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		240,023			53,919			18,170			15,523			327,635
Provisions provided		—			—			5,534			3,799			9,333
Provisions used		(17,223	)		(34	)		(50,547	)		(3,026	)		(70,830	)
Reversal of unused amount		(46,946	)		(1,529	)		—			—			(48,475	)
Transfer(*)		—			—			44,893			—			44,893
Others		19,533			—			18,701			—			38,234
Ending balance		195,387			52,356			36,751			16,296			300,790

(*) According to contracts with the third parties, the Bank ultimately will be reimbursed for which it has paid out on behalf of customers through their customer loyalty programs. Therefore, when such obligation incurs, the Bank recognizes it as “transfer”, but there is no impact on the Bank’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		366,873			45,773			—			19,308			431,954
Provisions provided		—			8,245			5,709			2,965			16,919
Provisions used		(81,286	)		(19	)		(12,590	)		(8,928	)		(102,823	)
Reversal of unused amount		(65,571	)		—			—			—			(65,571	)
Transfer		—			—			17,099			—			17,099
Others		13,866			—			858			—			14,724
Ending balance		233,882			53,999			11,076			13,345			312,302

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

	For the nine months ended September 30
	2017			2016
Beginning balance		52,838			35,933
Obligation incurred		1,336			1,437
Settlements		(804	)		(706	)
Reversal of provisions unused		(715	)		—
Accretion expense		312			331
Increase in asset retirement expense and others		3,243			16,688
Ending balance		56,210			53,683

24. NET DEFINED BENEFIT ASSET

Characteristics of the Bank’s defined benefit plans 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 fair value at the end of reporting date. Plan liabilities are measured using the projected unit method, which takes account of projected earnings increases, using actuarial assumptions that give the best estimate of the future cash flows that will arise under the plan liabilities.

The Bank 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 asset are as follows (Unit: Korean Won in millions):

	September 30, 2017			December 31, 2016
Defined benefit obligation		970,351			919,707
Fair value of plan assets		(976,285	)		(990,645	)
Net defined benefit assets		(5,934	)		(70,938	)

- 51 -

(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			2016
Beginning balance		919,707			846,368
Current service cost		101,343			106,745
Interest expense		19,137			17,510
Remeasurements		(28,033	)		62,951
Foreign currencies translation adjustments		(36	)		(4	)
Retirement benefit paid		(30,839	)		(29,550	)
Curtailment or settlement		(10,928	)		(9,242	)
Ending balance		970,351			994,778

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

	For the nine months ended September 30
	2017			2016
Beginning balance		990,645			800,690
Interest income		22,077			18,028
Remeasurements		(11,056	)		(5,789	)
Employer’s contributions		15,000			213,000
Retirement benefit paid		(29,329	)		(29,006	)
Curtailment or settlement		(11,052	)		(8,904	)
Ending balance		976,285			988,019

(4) Plan assets wholly consist of time deposits as of September 30, 2017 and December 31, 2016. Among plan assets, realized returns on plan assets amount to 11,021 million Won and 12,239 million Won for the nine months ended September 30, 2017 and 2016, respectively.

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

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

	For the nine months ended September 30
	2017			2016
Current service cost		101,343			106,745
Net interest income		(2,940	)		(518	)
Loss(gain) on the curtailment or settlement		124			(338	)
Cost recognized in net income		98,527			105,889
Remeasurements		(16,977	)		68,740
Cost recognized in total comprehensive income		81,550			174,629

Retirement benefit service costs related to defined contribution plans recognized amount to 2,894 million Won and 2,683 million Won for the nine months ended September 30, 2017 and 2016, respectively.

- 52 -

(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		(89,342	)		(86,744	)
	Decrease by 1% point		102,446			99,833
Future wage growth rate	Increase by 1% point		102,067			99,225
	Decrease by 1% point		(90,665	)		(87,851	)

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		9,463,787			4,744,622
Accrued expenses		1,930,034			1,886,601
Borrowing from trust accounts		3,372,197			3,391,903
Agency business revenue		687,719			331,159
Foreign exchanges payable		612,005			696,017
Domestic exchanges payable		4,672,794			8,476,475
Other miscellaneous financial liabilities		1,560,758			1,300,954
Present value discount		(517	)		(447	)
Sub-total		22,298,777			20,827,284
Other liabilities:
Unearned income		52,639			46,144
Other miscellaneous liabilities		117,410			107,094
Sub-total		170,049			153,238
Total		22,468,826			20,980,522

- 53 -

26. DERIVATIVES

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

	September 30, 2017
			Assets				Liabilities
	Notional amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Futures		76,034		—		—		—		—
Swaps		131,618,740		109,385		292,126		10,333		311,395
Purchase options		690,000		—		14,065		—		—
Written options		945,000		—		—		—		14,793
Currency:
Futures		578,808		—		—		—		—
Forwards		72,776,400		—		605,795		—		541,347
Swaps		50,805,858		—		729,027		—		766,043
Purchase options		2,853,953		—		30,079		—		—
Written options		4,674,360		—		—		—		38,148
Equity:
Futures		354,803		—		—		—		—
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		279,156,230		109,385		1,835,347		23,345		1,987,993

	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		118,786,359		139,832		473,951		7,013		509,703
Purchase options		860,000		—		21,172		—		—
Written options		1,035,000		—		—		—		21,863
Currency:
Futures		447,749		—		—		—		—
Forwards		61,216,421		—		1,252,273		—		1,005,570
Swaps		39,745,794		—		1,014,994		—		1,221,961
Purchase options		1,120,949		—		42,126		—		—
Written options		907,211		—		—		—		8,589
Equity:
Futures		926,392		—		—		—		—
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		232,654,544		140,577		2,880,543		7,221		3,000,098

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

- 54 -

(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
Gains (losses) from hedged items		18,199			(51,661	)
Gains (losses) from hedging instruments		(15,501	)		45,945

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 and losses		(5,271	)		(13,498	)
Ending balance		8,651			15,847

The Bank has entered into transactions where the fair value is determined using valuation techniques for which not all inputs are observable or available in the market. Those financial instruments are recorded at the fair value produced by the valuation techniques at the time of acquisition, despite the differences between the transaction price and the fair value. The table above presents the difference yet to be realized as profit or losses.

28. CAPITAL STOCK AND CAPITAL SURPLUS

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

	September 30, 2017		December 31, 2016
Shares of common stock Authorized		5,000,000,000 Shares		5,000,000,000 Shares
Par value		5,000 Won		5,000 Won
Shares of common stock Issued		676,000,000 Shares		676,000,000 Shares
Capital stock		3,381,392 million Won		3,381,392 million Won

(2) There are no changes in the number of shares issued and outstanding during 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

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29. HYBRID SECURITIES

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

	Issue date		Maturity		Interest rates (%)		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 Bank to indefinitely extend the maturity date and defer the payment of interest. If the Bank makes a resolution not to pay dividends on common stock, and then, the Bank is exonerated from interest payment on the hybrid securities.

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		287,054			319,698
Gain (loss) on foreign currency translation of foreign operations		(5,401	)		7,400
Remeasurement loss related to defined benefit plan		(141,575	)		(154,443	)
Sub-total		140,078			172,655
Treasury shares		(34,113	)		(34,113	)
Other capital adjustments		(208,158	)		—
Total		(102,193	)		138,542

(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) (*)			Re- classification adjustments (*)			Income tax effect			Ending balance
Gain (loss) on valuation of available-for-sale financial assets		319,698			66,725			(109,792	)		10,423			287,054
Gain (loss) on foreign currency translation of foreign operations		7,400			(16,888	)		—			4,087			(5,401	)
Remeasurement gain (loss) related to defined benefit plan		(154,443	)		16,977			—			(4,109	)		(141,575	)
Total		172,655			66,814			(109,792	)		10,401			140,078

(*) 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” represents disposal or recognition of impairment losses on AFS financial assets.

- 56 -

	For the nine months ended September 30, 2016
	Beginning balance			Increase (decrease)(*)			Reclassif- ication adjustments(*)			Income tax effect			Ending balance
Gain (loss) on valuation of AFS financial assets		329,724			70,248			(44,953	)		(6,121	)		348,898
Gain (loss) on foreign currencies translation of foreign operations		(1,961	)		(24,160	)		—			5,847			(20,274	)
Remeasurement of the net defined benefit liability		(187,634	)		(68,740	)		—			16,634			(239,739	)
Total		140,129			(22,652	)		(44,953	)		16,360			88,885

(*) 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” represents disposal or recognition of impairment losses on AFS financial assets.

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		2,017,342		1,880,447
	Revaluation reserve		751,964		753,908
	Other voluntary reserve		11,700		11,700
	Sub-total		10,443,212		9,962,559
Retained earnings before appropriation			999,797		858,208
	Total		13,218,432		12,488,155

i. Legal reserve

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

ii. Other legal reserve

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

iii. Business rationalization reserve

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

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iv. Reserve for financial structure improvement

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

v. Additional reserve and other voluntary reserve

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

vi. Regulatory reserve for credit loss

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

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

	For the nine months ended September 30
	2017			2016
Beginning balance		12,488,155			11,798,375
Net income		1,196,834			965,080
Dividends on common stock		(336,636	)		(168,317	)
Dividends on hybrid securities		(129,921	)		(149,506	)
Ending balance		13,218,432			12,445,632

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32. REGULATORY RESERVE FOR CREDIT LOSS

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

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

	September 30, 2017		December 31, 2016
Beginning balance		2,017,342		1,880,447
Planned provision of regulatory reserve for credit loss		25,104		136,895
Ending balance		2,042,446		2,017,342

(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		192,408		1,196,834		293,839			965,080
Provision (reversal) of regulatory reserve for credit loss		35,910		25,104		(27,325	)		(45,194	)
Adjusted net income after the provision (reversal) of regulatory reserve		156,498		1,171,730		321,164			1,010,274
Adjusted EPS after the reversal of regulatory reserve (Unit: Korean Won)		174		1,548		404			1,279

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, and such dividend was paid during the nine months ended September 30, 2017.

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 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
Financial assets at FVTPL		4,846		13,724		4,626		14,142
AFS financial assets		51,424		156,691		58,453		183,524
HTM financial assets		76,328		223,391		86,775		272,700
Loans and receivables
Interest of due from banks		18,301		52,367		13,713		38,254
Interest of loans		1,725,221		5,019,385		1,661,207		5,036,874
Interest of other assets		5,153		16,498		6,334		21,273
Sub-total		1,748,675		5,088,250		1,681,254		5,096,401
Total		1,881,273		5,482,056		1,831,108		5,566,767

(2) Interest 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
Interest on deposits due to customers		549,979		1,639,326		579,856		1,799,663
Interest on borrowings		53,815		157,681		48,352		151,043
Interest on debentures		127,187		365,827		122,544		368,334
Other interest expense		16,584		53,856		22,449		73,681
Total		747,565		2,216,690		773,201		2,392,721

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35. NET FEES AND COMMISSIONS INCOME

(1) Details of fees and commissions income occurred 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 (*)		192,455		570,616		183,634		558,915
Fees and commissions received for provision of guarantee		18,168		51,718		17,436		54,299
Fees and commissions received on project financing		5,421		11,755		4,434		17,923
Fees and commissions received on securities		19,658		59,344		19,919		52,844
Other Fees and commissions received		43,426		114,872		26,547		65,500
Total		279,128		808,305		251,970		749,481

(*) 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 expenses occurred 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		38,238		101,451		34,341		109,438
Other fees and commissions paid		64		178		37		129
Total		38,302		101,629		34,378		109,567

36. DIVIDEND INCOME

Details of dividend 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
Financial assets at FVTPL		2		146		85		743
AFS financial assets		48,442		110,034		16,510		175,441
		48,444		110,180		16,595		176,184

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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		61,243			9,856			(7,042	)		(10,376	)
Losses on financial instruments designated at FVTPL		(18,438	)		(104,644	)		(91,598	)		(44,491	)
Total		42,805			(94,788	)		(98,640	)		(54,867	)

(2) Details of gains or 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		(2,062	)		1,158			572			5,412
		Gain on disposals		1,426			7,342			2,366			6,755
		Loss on valuation		(725	)		(1,039	)		(77	)		(1,575	)
		Loss on disposals		(70	)		(317	)		(1,175	)		(3,165	)
		Sub-total		(1,431	)		7,144			1,686			7,427
	Other financial instruments	Gain on valuation		1,742			4,813			1,717			12,085
		Gain on disposals		921			1,803			707			2,248
		Loss on valuation		(2,244	)		(5,783	)		(2,102	)		(12,487	)
		Loss on disposals		(315	)		(549	)		(275	)		(1,590	)
		Sub-total		104			284			47			256
		Total		(1,327	)		7,428			1,733			7,683
Derivatives (for trading)	Interest rates derivatives	Gain on transactions and valuation		242,785			677,012			219,863			1,065,271
		Loss on transactions and valuation		(238,469	)		(661,348	)		(187,128	)		(1,083,824	)
		Sub-total		4,316			15,664			32,735			(18,553	)
	Currencies derivatives	Gain on transactions and valuation		811,938			4,553,070			2,534,958			5,238,013
		Loss on transactions and valuation		(765,754	)		(4,669,704	)		(2,666,654	)		(5,261,830	)
		Sub-total		46,184			(116,634	)		(131,696	)		(23,817	)

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		2017						2016
		Three months ended September 30			Nine months ended September 30			Three months ended September 30			Nine months ended September 30
Equity derivatives	Gain on transactions and valuation		95,400			398,300			109,687			179,260
	Loss on transactions and valuation		(83,339	)		(294,890	)		(19,267	)		(155,284	)
	Sub-total		12,061			103,410			90,420			23,976
Other derivatives	Gain on transactions and valuation		474			2,670			4,972			13,889
	Loss on transactions and valuation		(465	)		(2,682	)		(5,206	)		(13,554	)
	Sub-total		9			(12	)		(234	)		335
	Total		62,570			2,428			(8,775	)		(18,059	)
Total			61,243			9,856			(7,042	)		(10,376	)

(3) Details of gains or losses of 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
Loss on equity-linked securities:
Loss on disposal 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 on other financial instruments:
Gain on valuation of other financial instruments		649			34			734			2,001
Total		(18,438	)		(104,644	)		(91,598	)		(44,491	)

38. GAINS OR LOSSES ON AFS FINANCIAL ASSETS

Details of gains or losses on AFS financial assets 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
Gain on redemptions of securities		—			—			—			594
Gain on sale of securities		49,822			152,682			32,236			71,455
Impairment loss		(2,611	)		(15,233	)		(6,331	)		(14,988	)
Total		47,211			137,449			25,905			57,061

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39. IMPAIRMENT LOSSES DUE TO CREDIT LOSS

Impairment losses on loans and receivables, guarantees and loan commitments 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		(157,455	)		(385,165	)		(195,191	)		(597,830	)
Reversal of provision on (provision provided for) guarantee		1,728			46,946			(11,239	)		65,571
Reversal of provision on (provision provided for) loan commitment		(1,059	)		1,529			(9,432	)		(8,245	)
Total		(156,786	)		(336,690	)		(215,862	)		(540,504	)

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

(1) Details of general and administrative expenses 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
Salaries	Short-term employee benefits	Salaries Employee benefits		278,269		833,618		275,730		823,946
				130,898		322,759		86,919		252,027
	Retirement benefit service costs			33,685		101,421		36,702		108,572
	Termination benefits			298,780		303,191		—		92,039
	Sub-total			741,632		1,560,989		399,351		1,276,584
Depreciation and amortization				27,313		85,609		39,398		127,714
Other general and administrative expenses	Rent			62,020		188,991		63,688		190,800
	Taxes and public dues		18,002		69,926		19,111		71,579
	Service charges		45,032		129,987		54,009		156,791
	Computer and IT related		57,488		167,075		56,473		176,269
	Telephone and communication		8,471		24,266		8,014		23,392
	Operating promotion		8,727		26,651		10,570		30,192
	Advertising		11,353		37,928		11,286		43,177
	Printings		1,603		5,269		1,732		6,136
	Traveling		2,649		6,972		2,126		6,218
	Supplies		1,201		3,572		1,200		3,707
	Insurance premium		826		2,399		1,003		2,909
	Reimbursement		5,163		13,368		5,031		13,131
	Maintenance		3,654		9,408		3,396		9,997
	Water, light and heating		3,301		9,462		3,670		10,248
	Vehicle maintenance		1,988		5,929		2,024		5,767
	Others		1,561		4,695		1,366		4,797
	Sub-total			233,039		705,898		244,699		755,110
	Total			1,001,984		2,352,496		683,448		2,159,408

- 64-

(2) Details of other 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
Gain on transactions of foreign exchange		534,101			2,077,941		858,657			3,256,369
Gain on disposals of loans and receivables		(907	)		197,093		25,103			158,858
Gain on fair value hedging derivatives		(4,316	)		7,038		(33,782	)		77,723
Gain on fair value hedged items		13,195			25,055		12,489			30,602
Others (*)		—			57,644		32,809			80,172
		542,073			2,364,771		895,276			3,603,724

(*) 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 Bank recognized for it is to receive from other creditor financial institutions in accordance with the creditor financial institutions committee agreement.

(3) Details of 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
Loss on transactions of foreign exchange		489,396			1,740,063		724,382			3,083,870
KDIC Deposit insurance premium		76,310			224,684		74,381			216,590
Contribution to miscellaneous funds		70,122			213,172		71,063			220,844
Loss on disposals of loans and receivables		7,411			7,411		2,481			2,486
Loss on fair value hedging derivatives		10,728			22,539		12,766			31,778
Loss on fair value hedged items		(8,990	)		6,856		(36,437	)		82,263
Others (*)		18,753			54,836		13,768			109,945
Total		663,730			2,269,561		862,404			3,747,776

(*) 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 Bank recognized for it is to carry out a payment to other creditor financial institutions in accordance with the creditor financial institutions committee agreement.

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41. OTHER NON-OPERATING INCOME (EXPENSES)

(1) Details of gain or loss on valuation of investments in subsidiaries 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
Impairment loss		(9,635	)		(47,182	)		(3,690	)		(10,543	)

(2) Details of 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 income		39,295			109,709			37,815			123,823
Other non-operating expenses		(16,833	)		(50,576	)		(9,686	)		(76,886	)
Net other non-operating income		22,462			59,133			28,129			46,937

(3) Details of 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		3,674		10,979		3,582		10,652
Dividends from investments in subsidiaries and associates		9,246		27,510		9,641		30,708
Gain on disposal of investments in subsidiaries and associates		1,005		9,232		—		3,679
Gain on disposal of premises and equipment intangible assets and investment properties		11,104		12,713		1,160		1,227
Reversal of impairment of premises and equipment intangible assets and investment properties		56		88		37		480
Others		14,210		49,187		23,395		77,077
Total		39,295		109,709		37,815		123,823

(4) Details of 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 of investment properties		890		2,678		900		2,659
Interest expenses of rent leasehold deposits		111		332		120		367
Loss on disposals of premises and equipment, intangible assets and investment properties		719		1,156		705		6,548
Impairment loss on premises and equipment, intangible assets and investment properties		109		153		72		211
Donation		9,226		21,811		2,362		35,783
Others		5,778		24,446		5,527		31,318
Total		16,833		50,576		9,686		76,886

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42. INCOME TAX EXPENSE

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

	For the nine months ended September 30
	2017			2016
Current tax expense
Current tax expense in respect of the current period		373,700			112,623
Adjustments recognized in the current period in relation to the current tax of prior periods		(4,376	)		(20,676	)
Sub-total		369,324			91,947
Deferred tax expense
Changes in deferred tax assets and liabilities due to temporary differences		(33,701	)		111,381
Deferred tax charged directly to equity		10,401			16,360
Sub-total		(23,300	)		127,741
Income tax expense		346,024			219,688

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

	For the nine months ended September 30
	2017			2016
Net income before income tax expense		1,542,858			1,184,768
Tax calculated at statutory tax rate (*)		372,910			286,252
Adjustments
Effect of income that is exempt from taxation		(34,581	)		(39,474	)
Effect of expenses that are not deductible in determining taxable profit		7,381			7,011
Adjustments recognized in the current period in relation to the current tax of prior periods		(4,376	)		(20,676	)
Others		4,690			(13,425	)
Sub-total		(26,886	)		(66,564	)
Income tax expense		346,024			219,688
Effective tax rate		22.4	%		18.5	%

(*) 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 relating to items that are recognized directly in equity are as follows (Unit: Korean Won in millions):

	September 30, 2017			December 31, 2016
Loss on valuation of AFS securities		(91,644	)		(102,067	)
Foreign currency translation of foreign operations		1,724			(2,363	)
Remeasurement gain related to defined benefit plan		45,199			49,308
Total		(44,721	)		(55,122	)

- 67 -

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		192,408			1,196,834			293,839			965,080
Dividends to hybrid securities		(39,098	)		(129,921	)		(49,269	)		(149,506	)
Net income attributable to common shareholders		153,310			1,066,913			244,570			815,574
Weighted average number of common shares outstanding		673 shares in million			673 shares in million			673 shares in million			673 shares in million
Basic Earnings Per Share (Unit: Korean Won)		228			1,585			363			1,212

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:
Guarantees for loans		89,711		79,566
Acceptances		256,822		333,943
Guarantees in acceptances of imported goods		115,576		97,606
Other confirmed guarantees		6,531,846		7,542,726
Total		6,993,955		8,053,841
Unconfirmed guarantees:
Local letters of credit		433,114		397,588
Letters of credit		3,718,857		3,807,199
Other unconfirmed guarantees		597,665		838,593
Total		4,749,636		5,043,380
Commercial paper purchase commitments and others		2,165,717		1,855,976

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

	September 30, 2017		December 31, 2016
Loan commitments		51,610,323		56,313,804
Other commitments		1,770,176		1,869,253

(3) Litigation case

The Bank is involved in certain legal proceedings that are pending as follows (Unit: Korean Won in millions):

	September 30, 2017
	As plaintiff		As defendant
Number of cases		58 cases		148 cases
Amount of litigation		415,064		321,183
Provisions for litigations		7,750

- 68 -

	December 31, 2016
	As plaintiff		As defendant
Number of cases		54 case		157 case
Amount of litigation		287,146		232,485
Provisions for litigations		5,218

(4) Other

The Bank operates Korean Won currency settlement service as for commercial trade settlements between Korea and Iran. In accordance with the submission request of information from U.S. prosecutors (U.S. Federal Prosecutors and Prosecutors of the State of New York), the Bank is currently performing its own internal investigation to confirm if the Bank has met the requirements of sanction of U.S. Government in respect of its service operation. Meanwhile, as of September 30, 2017, the Bank believes that it cannot make reasonable estimation due to uncertainty of the results of the investigation.

- 69 -

45. RELATED PARTY TRANSACTIONS

Related parties of the Bank as of September 30, 2017, assets and liabilities recognized, guarantees and commitments, and major transactions with related parties for the period ended September 30, 2017 and 2016 are as follows:

(1) Related parties

	Related parties
Subsidiaries	Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Card Co., Ltd., Woori Investment Bank Co., Ltd., Woori Credit Information Co., Ltd., Woori America Bank, PT Bank Woori Saudara Indonesia 1906 Tbk, Woori Global Markets Asia Limited, Woori Bank China Limited, AO Woori Bank, Banco Woori Bank do Brasil S.A., Korea BTL Infrastructure Fund, Woori Fund Service Co., Ltd., Woori Finance Cambodia PLC., Woori Finance Myanmar Co., Ltd., Wealth Development Bank, Woori Bank Vietnam Limited, TUTU Finance-WCI Myanmar Co.,Ltd., Woori Bank Principal and Interest Guaranteed Trust, Woori Bank Principal Guaranteed Trust, Kumho Trust First Co., Ltd. and 24 SPCs, Samsung Plus Private Equity Fund 36th and 22 beneficiary certificates
Associates	Kumho Tires Co., Ltd., Woori Blackstone Korea Opportunity No.1 Private Equity Fund, Woori Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Chin Hung International Inc., Poonglim Industrial Co., Ltd., STX Engine Co., Ltd., 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 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 bank	KDIC (*1)	Other assets		—			270,041
		Deposits due to customers		—			1,894,631
		Other liabilities		—			15,568
Subsidiaries	Woori FIS Co., Ltd.	Other assets		202			99
		Deposits due to customers		11,230			40,078
		Other liabilities		18,724			16,248
	Woori Private Equity Asset Management Co., Ltd.	Deposits due to customers		230			1,258
		Other liabilities		2,842			—
	Woori Finance Research Institute Co., Ltd.	Deposits due to customers		4,034			2,657
		Other liabilities		8			1,534
	Woori Card Co., Ltd.	Other assets		—			13,619
		Deposits due to customers		44,277			64,954
		Other liabilities		12,362			14,769
	Woori Investment Bank Co., Ltd.	Cash and cash equivalents		100,000			70,000
		Loans		25,100			—
		Allowance for credit loss		(38	)		—
		Other assets		22,118			4,876
		Deposits due to customers		10,102			7,936
		Other liabilities		24,197			6,680
	Woori Private Equity Fund(*2)	Other assets		—			3
		Deposits due to customers		—			461
	Woori Credit Information Co., Ltd.	Deposits due to customers		14,799			16,913
		Other liabilities		10,586			10,503
	Woori America Bank	Cash and cash equivalents		3,105			4,394

- 70 -

Related party		A title of account	September 30, 2017			December 31, 2016
Subsidiaries	PT Bank Woori Saudara Indonesia 1906 Tbk	Cash and cash equivalents		5,718			8,728
		Loans		114,670			157,105
		Allowance for credit loss		(175	)		(240	)
		Other assets		—			107
		Deposits due to customers		8			23
	Woori Global Markets Asia Limited	Loans		164,482			146,724
		Allowance for credit loss		(236	)		(187	)
		Deposits due to customers		1,597			272
	Woori Bank China Limited	Cash and cash equivalents		28,951			36,002
		Loans		114,670			247,743
		Allowance for credit loss		(146	)		(347	)
		Other assets		106,520			73,171
		Deposits due to customers		76,328			71,497
		Other liabilities		106,295			74,213
	AO Woori Bank	Cash and cash equivalents		24,742			453
		Loans		49,056			43,861
		Allowance for credit loss		(75	)		(67	)
		Other assets		26			8
	Banco Woori Bank do Brasil S.A.	Loans		1,720			1,813
		Allowance for credit loss		(1	)		(4	)
	Korea BTL Infrastructure Fund	Other assets		9			9
	Woori Fund Service Co., Ltd.	Deposits due to customers		6,801			5,154
		Other liabilities		861			816
	Woori Finance Cambodia PLC.	Loans		22,934			24,170
		Allowance for credit loss		(22	)		(25	)
		Other liabilities		1			—
	Woori Finance Myanmar Co., Ltd.	Loans		4,587			2,417
		Allowance for credit loss		(4	)		(2	)
	Woori EL Co., Ltd.(*2)	Deposits due to customers		—			22
	Woori Bank Vietnam Limited	Loans		18,637			—
		Allowance for credit loss		(163	)		—
		Other assets		114,903			—
	Woori Bank Principal and Interest Guaranteed Trust and Principal Guaranteed Trust	Other assets		8,089			2,317
		Other liabilities		37,627			62,221
	Structured entities	Loans		13,850			13,627
		Allowance for credit loss		(2,667	)		(4,147	)
		Other assets		41			164
		Deposits due to customers		10,296			6,959
		Other liabilities		—			1,153
	Beneficiary certificates	Other assets		16			23
Associates	Kumho Tires Co., Ltd.	Loans		218,812			295,075
		Allowance for credit loss		(42,763	)		(650	)
		Deposits due to customers		8,162			45,957
		Other liabilities		4,651			99
	Woori Service Networks Co., Ltd.	Deposits due to customers		2,481			2,572
		Other liabilities		328			358

- 71 -

Related party		A title of account	September 30, 2017			December 31, 2016
Associates	Korea Credit Bureau Co., Ltd.	Deposits due to customers		5,025			5,069
		Other liabilities		50			40
	Korea Finance Security Co., Ltd.	Deposits due to customers		3,239			2,801
		Other liabilities		5			6
	Chin Hung International Inc.	Loans		—			4,044
		Allowance for credit loss		—			(4,011	)
		Deposits due to customers		75,529			14,047
		Other liabilities		1,678			5
	Poonglim Industrial Co., Ltd.	Deposits due to customers		4			283
	STX Engine Co., Ltd.	Loans		115,281			107,856
		Allowance for credit loss		(97,090	)		(89,436	)
		Deposits due to customers		13,948			13,260
		Other liabilities		27			39
	Samho International Co., Ltd.(*3)	Loans		—			36,568
		Allowance for credit loss		—			(628	)
		Deposits due to customers		—			82,917
		Other liabilities		—			127
	STX Corporation	Loans		58,148			144,006
		Allowance for credit loss		(31,475	)		(92,615	)
		Deposits due to customers		13,754			14,412
		Other liabilities		26			23
	Well to Sea No.3 Private Equity Fund (*4)	Loans		83,040			—
		Allowance for credit loss		(85	)		—
		Other liabilities		56			—
	Others (*5)	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 Bank is lower than 20% as of September 30, 2017, it has been excluded from the corporation that has significant influence over the Bank.

(*2) Woori Private Equity Fund has been excluded from the associates due to its liquidation during the nine months ended September 30, 2017

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

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

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

- 72 -

(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 bank	KDIC(*1)	Interest income		—			9,450
		Interest expenses		15,331			14,123
Subsidiaries	Woori FIS Co., Ltd.	Fees income		385			364
		Other income		5,347			5,083
		Other expenses		159,552			160,994
	Woori Private Equity Asset Management Co., Ltd.	Fees income		9			7
		Interest expenses		5			214
	Woori Finance Research Institute Co.,Ltd.	Fees income		7			6
		Other income		—			224
		Interest expenses		29			26
		Fees expenses		4,218			3,525
	Woori Card Co., Ltd.	Fees income		108,936			98,196
		Other income		567			516
		Interest expenses		33			13
		Fees expenses		8			—
		Other expenses		635			—
	Woori Investment Bank Co.,Ltd.	Fees income		460			343
		Interest income		737			—
		Other income		4,085			2,961
		Interest expenses		16			31
		Other expenses		7,020			2,689
		Impairment losses due to credit loss		38			—
	Woori Private Equity Fund(*2)	Fees income		1			5
		Interest expenses		1			3
	Woori Credit Information Co., Ltd.	Fees income		43			43
		Dividend income		504			1,008
		Other income		294			297
		Interest expenses		141			156
		Fees expenses		8,050			7,079
	PT Bank Woori Saudara Indonesia 1906 Tbk	Interest income		587			381
		Dividend income		3,300			2,643
		Fees expenses		—			54
		Reversal of impairment losses due to credit loss		(65	)		(4	)
	Woori Global Markets Asia Limited	Interest income		1,964			1,299
		Fees income		11			—
		Interest expenses		5			32
		Impairment losses due to credit loss (reversal)		49			(24	)
	Woori Bank China Limited	Interest income		2,551			2,496
		Other income		—			56
		Interest expenses		503			16
		Other expenses		—			141
		Reversal of impairment losses due to credit loss		(201	)		(517	)

- 73 -

			For the nine months ended September 30
Related party		A title of account	2017			2016
Subsidiaries	AO Woori Bank	Interest income		408			361
		Impairment losses due to credit loss (reversal)		8			(17	)
	Banco Woori Bank do Brasil S.A.	Interest income		22			15
		Reversal of impairment losses due to credit loss		(3	)		(2	)
	Korea BTL Infrastructure Fund	Dividend income		20,796			22,288
		Fees income		58			56
	Woori Fund Service Co., Ltd.	Fees income		14			12
		Other income		122			116
		Interest expenses		72			43
	Woori Finance Cambodia PLC.	Interest income		481			356
		Impairment losses due to credit loss (reversal)		(3	)		3
	Woori Finance Myanmar	Interest income		87			5
		Impairment losses due to credit loss		2			1
	Woori Bank Vietnam Limited	Interest income		590			—
		Impairment losses due to credit loss		163			—
	Woori Bank Principal and Interest Guaranteed Trust and Principal Guaranteed Trust	Other income		5,772			6,204
		Interest expenses		502			492
		Other expenses		24			21
	Structured entities	Interest income		8			295
		Fees income		5,256			6,046
		Interest expenses		7			5
		Reversal of impairment losses due to credit loss		(1,480	)		(12,563	)
Associates	Kumho Tires Co., Ltd.	Interest income		2,155			1,941
		Fees income		6			6
		Interest expenses		1			53
		Impairment losses due to credit loss		42,113			147
	Woori Blackstone Korea Opportunity No.1 Private Equity Fund	Dividend income		2,700			4,568
	Woori Service Networks Co., Ltd.	Dividend income		8			12
		Other income		22			22
		Interest expenses		19			38
	Korea Credit Bureau Co., Ltd.	Dividend income		149			136
		Interest expenses		60			108
	Korea Finance Security Co., Ltd.	Dividend income		54			54
		Interest expenses		8			7

- 74 -

			For the nine months ended September 30
Related party		A title of account	2017			2016
Associates	Chin Hung International Inc.	Interest income		364			190
		Fees income		1			1
		Interest expenses		18			20
		Reversal of impairment losses due to credit loss		(4,011	)		(1,016	)
	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		7,654			36,502
	Samho International Co., Ltd(*3)	Interest income		486			687
		Fees income		6			5
		Interest expenses		334			370
		Reversal of impairment losses due to credit loss		(628	)		(533	)
	Force TEC Co., Ltd. (*4)	Interest income		—			153
	STX Corporation	Interest income		219			803
		Fees income		60			52
		Interest expenses		4			5
		Impairment losses due to credit loss (reversal)		(61,140	)		61,596
	Osung LST Co., Ltd. (*5)	Interest income		—			170
		Interest expenses		—			1
		Reversal of impairment losses due to credit loss		—			(338	)
	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

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

(*2) Woori Private Equity Fund has been excluded from the associates due to its liquidation that occurred during the nine months ended September 30, 2017

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

(*4) The entity is not in scope for the associates, because the Bank does not have significant influence over the entity due to an ongoing workout process under receivership as of September 30, 2017.

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

(*6) Due to capital contribution by the Bank 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.

- 75 -

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

	Warranty	September 30, 2017		December 31, 2016
KDIC (*1)	Loan commitment		—		1,500,000
Woori Card Co., Ltd.	Loan commitment		500,000		500,000
Woori Investment Bank	Loan commitment		50,000		50,000
Woori America Bank	Confirmed guarantees in foreign currencies		2,402		26,959
PT Bank Woori Saudara Indonesia 1906 Tbk	Confirmed guarantees in foreign currencies and others		165,293		94,891
Woori Global Markets Asia Limited	Confirmed guarantees in foreign currencies		—		19,336
Woori Bank China Limited	Confirmed guarantees in foreign currencies and others		93,685		104,077
AO Woori Bank	Confirmed guarantees in foreign currencies and others		38,648		44,649
Banco Woori Bank do Brasil S.A.	Confirmed guarantees in foreign currencies		25,748		27,480
Korea BTL Infrastructure Fund	Securities purchase contract		311,078		313,778
Woori Finance Cambodia PLC.	Loan commitment		3,440		3,626
Woori Bank Vietnam Limited	Confirmed guarantees in foreign currencies and others		22,004		—
Structured entities	Loan commitment in local currency		310,400		466,080
	Loan commitment		792		572
Kumho Tires Co., Ltd.	Import credit in foreign currencies and others		19,778		24,187
	Loan commitment		190,068		126,435
Chin Hung International Inc.	Loan commitment		31,749		40,630
STX Engine Co., Ltd.	Import credit in foreign currencies and others		65,082		63,103
Samho International Co., Ltd. (*2)	Loan commitment		—		27,742
STX Corporation	Import credit in foreign currencies and others		19,323		24,316
Well to Sea No.3 Private Equity Fund (*3)	Loan commitment		226,960		—

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

(*2) As the Bank sold its entire ownership interest of the entities, they are excluded from the investment in associates.

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

For the guarantee provided to the related parties, the Bank recognized provisions for guarantees amounting to 73,062 million Won and 73,381 million Won, respectively, as of September 30, 2017 and December 31, 2016.

(5) Commitments of derivatives to the related parties are as follows (Unit: Korean Won in millions):

	Warranty	September 30, 2017		December 31, 2016
Woori Card Co., Ltd.	Unsettled commitment		100,000		50,000
Woori Investment Bank	Unsettled commitment		—		109,974
Woori Bank China Limited	Unsettled commitment		—		96,152
Structured entities	Unsettled commitment		701,000		350,000

(*) The entity is the related party of Well to Sea No.3 Private Equity Fund.

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

	For the nine months ended September 30
	2017		2016
Salaries		9,340		6,878
Severance and retirement benefits		372		423
Total		9,712		7,301

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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, and with respect to the assets, the Bank has not recognized any allowance, nor provision.

46. TRUST ACCOUNTS

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

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

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

	2017				2016
	For three months ended September 30		For nine months ended September 30		For three months ended September 30		For 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 value 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) The amounts that the Bank has to pay by the principle 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

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