Exhibit 99.1

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018 AND FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017

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

Tae Seung Sohn

President and Chief Executive Officer

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

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017

	June 30, 2018 (*)		December 31, 2017 (*)
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Note 6)		5,920,568		6,908,286
Financial assets at fair value through profit or loss (“FVTPL”) (K-IFRS 1109) (Notes 4, 7, 11, 12, 18 and 26)		6,340,704		—
Financial assets at FVTPL (K-IFRS 1039) (Notes 4, 7, 11, 12, 18 and 26)		—		5,843,077
Financial assets at FVTOCI (Notes 4, 8, 11, 12, and 18)		14,644,608		—
Available-for-sale (“AFS”) financial assets (Notes 4,8,11,12 and 18)		—		15,352,950
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)		17,702,129		—
Held to maturity (“HTM”) financial assets (Notes 4, 9, 11, 12 and 18)		—		16,749,296
Loans and other financial assets at amortized cost (Notes 4, 10, 11, 12, 18 and 45)		277,720,003		—
Loans and receivables (Notes 4,10,11,12,18 and 45)		—		267,106,204
Investments in joint ventures and associates (Note 13)		412,940		417,051
Investment properties (Note 14)		381,177		371,301
Premises and equipment (Notes 15 and 18)		2,450,754		2,477,545
Intangible assets and goodwill (Note 16)		653,514		518,599
Assets held for sale (Note 17)		18,705		48,624
Current tax assets		11,322		4,722
Deferred tax assets		89,711		280,130
Derivative assets (Notes 4,11,12 and 26)		12,395		59,272
Other assets (Notes 19 and 45)		202,800		158,404
Total assets		326,561,330		316,295,461
LIABILITIES
Financial liabilities at FVTPL (K-IFRS 1109) (Notes 4, 11, 12, 20 and 26)		2,578,332		—
Financial liabilities at FVTPL (K-IFRS 1039) (Notes 4, 11, 12, 20 and 26)		—		3,427,909
Deposits due to customers (Notes 4,11,21 and 45)		237,900,166		234,695,084
Borrowings (Notes 4, 11, 12 and 22)		15,899,599		14,784,706
Debentures (Notes 4, 11 and 22)		26,752,725		27,869,651
Provisions (Notes 23, 44 and 45)		386,374		410,470
Net defined benefit liability (Note 24)		99,859		43,264
Current tax liabilities		154,202		232,600
Deferred tax liabilities		14,777		22,681
Derivative liabilities (Notes 4,11,12 and 26)		67,505		67,754
Other financial liabilities (Notes 4,11,12, 25 and 45)		21,408,267		13,892,461
Other liabilities (Notes 25 and 45)		302,913		283,981
Total liabilities		305,564,719		295,730,561

(Continued)

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 (CONTINUED)

	June 30, 2018 (*)			December 31, 2017 (*)
	(Korean Won in millions)
EQUITY
Owners’ equity:		20,790,188			20,365,892
Capital stock (Note 28)		3,381,392			3,381,392
Hybrid securities (Note 29)		2,763,256			3,017,888
Capital surplus (Note 28)		285,885			285,880
Other equity (Note 30)		(2,113,798	)		(1,939,274	)
Retained earnings (Notes 31 and 32) (Regulatory reserve for credit loss as of June 30, 2018 and December 31, 2017 is 2,578,457 million Won and 2,438,191 million Won, respectively Regulatory reserve for credit loss to be reversed (reserved) as of June 30, 2018 and December 31, 2017 is 224,914 million Won and (-)140,266 million Won, respectively Planned provision reversed(reserved) of regulatory reserve for credit loss as of June 30, 2018 and December 31, 2017 is 224,914 million Won and (-)140,266 million Won, respectively		16,473,453			15,620,006
Non-controlling interests		206,423			199,008
Total equity		20,996,611			20,564,900
Total liabilities and equity		326,561,330			316,295,461

The consolidated interim statements of financial position as of June 30, 2018 was prepared in accordance with K-IFRS 1109; however, the comparative consolidated statements of financial position as of December 31, 2017 were not retrospectively restated accordance with K-IFRS 1109.

See accompanying notes

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017

	2018 (*)						2017 (*)
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
	(Korean Won in millions, except per share data)
Interest income		2,368,669			4,643,416			2,105,808			4,189,584
Financial assets at FVTPL (K-IFRS 1109)		13,367			28,537			—			—
Financial assets at FVTOCI		62,170			119,446			—			—
Financial assets at amortized cost		2,293,132			4,495,433			—			—
Financial assets at FVTPL (K-IFRS 1039)		—			—			13,074			26,806
AFS financial assets		—			—			67,667			144,067
HTM financial assets		—			—			74,690			149,673
Loans and receivables		—			—			1,950,377			3,869,038
Interest expense		(971,346	)		(1,878,942	)		(818,232	)		(1,639,264	)
Net interest income (Notes 34 and 45)		1,397,323			2,764,474			1,287,576			2,550,320
Fees and commissions income		555,400			1,113,006			506,281			1,013,893
Fees and commissions expense		(258,053	)		(510,351	)		(243,533	)		(476,193	)
Net fees and commissions income (Notes 35 and 45)		297,347			602,655			262,748			537,700
Dividend Income (Note 36 and 45)		14,151			49,704			19,617			59,445
Net gain on financial instruments at FVTPL (K-IFRS 1109) (Notes 11, 37 and 45)		67,693			117,023			—			—
Gain (loss) on financial instruments at FVTPL (K-IFRS 1039) (Notes 11, 37 and 45)		—			—			12,066			(146,409	)
Net gain on financial assets at FVTOCI (Notes 11 and 38)		475			1,287			—			—
Net gain on AFS financial assets (Notes 11 and 38)		—			—			88,387			104,172
Net gain arising on financial assets at amortized cost		9,361			30,886			—			—
Net gain on disposals of securities at amortized cost		—			431			—			—
Net gain on disposals of loans and other financial assets at amortized cost		9,361			30,455			—			—
Impairment reverse(losses) due to credit loss (Notes 39 and 45)		150,673			28,438			(204,486	)		(283,763	)
General and administrative expenses (Notes 40 and 45)		(827,654	)		(1,567,338	)		(784,157	)		(1,538,427	)
Other net operating income (expenses) (Notes 40 and 45)		(122,951	)		(219,414	)		(77,267	)		201,190
Operating income		986,418			1,807,715			604,484			1,484,228
Share of profits(losses) of joint ventures and associates (Note 13)		7,681			(1,462	)		(14,863	)		(64,278	)
Net other non-operating income (expenses)		1,398			(4,721	)		11,697			9,998
Non-operating income(expenses) (Note 41)		9,079			(6,183	)		(3,166	)		(54,280	)
Net income before income tax expense		995,497			1,801,532			601,318			1,429,948
Income tax expense (Note 42)		(273,701	)		(485,216	)		(135,034	)		(320,933	)
Net income (Net income after the provision of regulatory reserve for credit loss for the six months ended June 30, 2018 and 2017 are 1,278,144 million Won and 1,059,054 million Won, respectively, and net income after the provision of regulatory reserve for credit loss for the three months ended June 30, 2018 and 2017 are 733,642 million Won and 417,872 million Won, respectively) (Note 32)		721,796			1,316,316			466,284			1,109,015

(Continued)

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017

	2018 (*)						2017 (*)
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
	(Korean Won in millions, except per share data)
Net gain on valuation of equity securities at FVTOCI		2,490			31,428			—			—
Net gain on valuation of financial liabilities designated as at FVTPL due to own credit risk		40			130			—			—
Items out of change in equity method securities due to change in equity of investee that will not be reclassified to profit or loss		1,145			1,456			(41	)		(3,087	)
Remeasurement gain (loss) related to defined benefit plan		(6,113	)		(59,573	)		16,840			(9,677	)
Items that will not be reclassified to profit or loss		(2,438	)		(26,559	)		16,799			(12,764	)
Net gain on valuation of debt securities at FVTOCI		8,009			10,024			—			—
Net loss on valuation of AFS financial assets		—			—			(41,680	)		(28,706	)
Share of other comprehensive gain (loss) of joint ventures and associates		955			(246	)		(156	)		4,594
Gain (loss) on foreign currency translation for foreign operations		37,268			35,526			31,450			(69,010	)
Net loss on valuation of cash flow hedge		(2,787	)		(6,213	)		(673	)		(1,526	)
Net loss on disposal of assets held for sale		(4,709	)		(4,709	)		—			—
Items that may be reclassified to profit or loss		38,736			34,382			(11,059	)		(94,648	)
Other comprehensive income (loss), net of tax		36,298			7,823			5,740			(107,412	)
Total comprehensive income		758,094			1,324,139			472,024			1,001,603
Net income attributable to:
Net income attributable to owners		716,142			1,305,878			460,888			1,098,361
Net income attributable to non-controlling interests		5,654			10,438			5,396			10,654
Total comprehensive income attributable to:
Comprehensive income attributable to owners		751,528			1,315,322			464,129			995,742
Comprehensive income attributable to non-controlling interests		6,566			8,817			7,895			5,861
Basic and diluted earnings per share (In Korean Won) (Note 43)		1,008			1,828			623			1,497

The consolidated interim statements of comprehensive income for the three months and six months ended June 30, 2018 was prepared in accordance with K-IFRS 1109; however, the comparative consolidated interim statements of comprehensive income for the three months and six months ended June 30, 2017 was not retrospectively restated in accordance with K-IFRS 1109.

See accompanying notes

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

	Capital Stock		Hybrid securities			Capital surplus			Other equity			Retained earnings			Controlling interests			Non-controlling interests			Total equity
	(Korean Won in millions)
January 1, 2017		3,381,392		3,574,896			286,331			(1,468,025	)		14,611,566			20,386,160			159,793			20,545,953
Net income		—		—			—			—			1,098,361			1,098,361			10,654			1,109,015
Dividends to common stocks		—		—			—			—			(269,308	)		(269,308	)		(1,534	)		(270,842	)
Capital increase of subsidiaries		—		—			(257	)		—			—			(257	)		—			(257	)
Gain on valuation of available-for-sale financial assets		—		—			—			(29,033	)		—			(29,033	)		327			(28,706	)
Changes in equity of joint ventures and associates		—		—			—			1,507			—			1,507			—			1,507
Loss on foreign currency translation of foreign operations		—		—			—			(63,944	)		—			(63,944	)		(5,066	)		(69,010	)
Loss on valuation of cash flow hedge		—		—			—			(1,526	)		—			(1,526	)		—			(1,526	)
Remeasurement loss related to defined benefit plan		—		—			—			(9,622	)		—			(9,622	)		(55	)		(9,677	)
Dividends to hybrid securities		—		—			—			—			(90,823	)		(90,823	)		—			(90,823	)
Issuance of hybrid securities		—		559,565			—			—			—			559,565			—			559,565
Redemption of hybrid securities		—		(1,116,573	)		—			(208,158	)		—			(1,324,731	)		—			(1,324,731	)
June 30, 2017 (*)		3,381,392		3,017,888			286,074			(1,778,801	)		15,349,796			20,256,349			164,119			20,420,468
January 1, 2018		3,381,392		3,017,888			285,880			(1,939,274	)		15,620,006			20,365,892			199,008			20,564,900
Cumulative effect of change in accounting policy (Note 2)		—		—			—			(392,176	)		177,091			(215,085	)		723			(214,363	)
Adjusted balance, beginning of period		3,381,392		3,017,888			285,880			(2,331,450	)		15,797,097			20,150,807			199,731			20,350,538
Net income		—		—			—			—			1,305,878			1,305,878			10,438			1,316,316
Dividends to common stocks		—		—			—			—			(336,636	)		(336,636	)		(2,108	)		(338,744	)
Net gain on valuation of financial liabilities designated as at FVTPL due to own credit risk		—		—			—			130			—			130			—			130
Changes in other comprehensive income due to redemption of financial liabilities designated as at FVTPL		—		—			—			(5	)		5			—			—			—
Gain (loss) on valuation of financial assets at FVTOCI		—		—			—			41,736			—			41,736			(284	)		41,452
Changes in other comprehensive income due to disposal of equity securities at FVTOCI		—		—			—			424			(424	)		—			—			—
Change in equity method securities due to change in equity of investees’		—		—			—			1,210			(8,706	)		(7,496	)		—			(7,496	)
Gain (loss) on foreign currency translation of foreign operations		—		—			—			36,769			—			36,769			(1,243	)		35,526
Loss on valuation of cash flow hedge		—		—			—			(6,213	)		—			(6,213	)		—			(6,213	)
Remeasurement loss related to defined benefit plan		—		—			—			(59,480	)		—			(59,480	)		(93	)		(59,573	)
Equity related to non-current assets held for sale		—		—			—			(4,709	)		—			(4,709	)		—			(4,709	)
Dividends to hybrid securities		—		—			—			—			(75,603	)		(75,603	)		—			(75,603	)
Redemption of hybrid securities		—		(254,632	)		—			(368	)		—			(255,000	)		—			(255,000	)
Appropriation of retained earnings		—		—			—			208,158			(208,158	)		—			—			—
Capital decrease of subsidiaries		—		—			5			—			—			5			(18	)		(13	)
June 30, 2018 (*)		3,381,392		2,763,256			285,885			(2,113,798	)		16,473,453			20,790,188			206,423			20,996,611

The consolidated interim statements of changes in equity for the six months ended June 30, 2018 was prepared in accordance with K-IFRS 1109; however, the comparative consolidated interim statements of changes in equity for the six months ended June 30, 2017 was not retrospectively restated in accordance with K-IFRS 1109.

See accompanying notes

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

	For the six months ended June 30
	2018 (*)			2017 (*)
	(Korean Won in millions)
Cash flows from operating activities:
Net income		1,316,316			1,109,015
Adjustments to net income:
Income tax expense		485,216			320,933
Interest income		(4,643,416	)		(4,189,584	)
Interest expense		1,878,942			1,639,264
Dividend income		(49,704	)		(59,445	)
		(2,328,962	)		(2,288,832	)
Additions of expenses not involving cash outflows:
Impairment losses due to credit loss		—			283,763
Share of losses of investments in joint ventures and associates		16,809			67,594
Loss on disposal of investments in joint ventures and associates		2,931			27,730
Loss on transaction and valuation of derivatives (hedging)		62,366			31,131
Loss on hedged items (fair value hedge)		—			15,846
Loss on provision		38,553			35,665
Retirement benefits		71,631			71,902
Depreciation and amortization		126,886			121,361
Loss on disposal of premises and equipment and other assets		221			608
Impairment loss on premises and equipment and other assets		2			160
Loss on financial assets at FVTOCI		477			—
		319,876			655,760
Deductions of income not involving cash inflows:
Reversal of impairment losses due to credit loss		28,438			—
Gain on valuation of financial assets at FVTPL (K-IFRS 1109)		167,268			—
Gain on valuation of financial instruments at FVTPL (K-IFRS 1039)		—			7,859
Gain on financial assets at FVTOCI		1,764			—
Gain on AFS financial assets		—			104,172
Gain on disposal of securities at amortized cost		431			—
Share of profits of investments in joint ventures and associates		15,347			3,316
Gain on disposal of investments in joint ventures and associates		—			32,886
Gain on transaction and valuation of derivatives (hedging)		28,943			11,656
Gain on hedged items (fair value hedge)		66,555			11,860
Gain on provisions		1,220			1,285
Gain on disposal of premises and equipment and other assets		17,037			1,675
Reversal of impairment loss on premises and equipment and other assets		341			32
		327,344			174,741
Changes in operating assets and liabilities:
Financial assets at FVTPL (K-IFRS 1109)		440,367			—
Financial assets at FVTPL (K-IFRS 1039)		—			(187,086	)
Loans and other financial assets at amortized cost		(10,667,142	)		—
Loans and receivables		—			(7,908,486	)
Other assets		85,119			(995	)
Deposits due to customers		3,149,083			5,182,735
Provisions		(26,838	)		(98,114	)
Net defined benefit liability		(97,206	)		(19,799	)
Other financial liabilities		7,366,307			2,790,480
Other liabilities		11,536			(29,837	)
		261,226			(271,102	)
Cash received from (paid for) operating activities:
Interest income received		4,609,449			4,281,385
Interest expense paid		(1,776,933	)		(1,749,917	)
Dividends received		49,917			62,014
Income tax paid		(312,471	)		(236,246	)
Net cash provided by operating activities		1,811,074			1,387,336

(Continued)

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017(CONTINUED)

	For the six months ended June 30
	2018 (*)			2017 (*)
	(Korean Won in millions)
Cash flows from investing activities:
Cash in-flows from investing activities:
Disposal of financial assets at FVTPL (K-IFRS 1109)		5,316,190			—
Disposal of financial assets at FVTOCI		4,280,921			—
Disposal of AFS financial assets		—			13,312,489
Redemption of securities at amortized cost		4,873,896			—
Redemption of HTM financial assets		—			4,665,209
Disposal of investments in joint ventures and associates		3,855			62,974
Disposal of investment properties		2,076			162
Disposal of premises and equipment		119			1,042
Disposal of intangible assets		3,779			933
Disposal of assets held for sale		50,190			6,488
		14,531,026			18,049,297
Cash out-flows from investing activities:
Net cash in-flows of business combination		71,559			—
Acquisition of financial assets at FVTPL (K-IFRS 1109)		5,342,987			—
Acquisition of financial assets at FVTOCI		5,075,580			—
Acquisition of AFS financial assets		—			11,268,756
Acquisition of securities at amortized cost		5,829,462			—
Acquisition of HTM financial assets		—			5,945,147
Acquisition of investments in joint ventures and associates		20,048			13,485
Acquisition of investment properties		7,311			1,221
Acquisition of premises and equipment		42,695			68,596
Acquisition of intangible assets		107,344			97,977
		16,496,986			17,395,182
Net cash provided by(used in) investing activities		(1,965,960	)		654,115
Cash flows from financing activities:
Cash in-flows from financing activities:
Increase in borrowings		4,972,075			4,349,952
Issuance of debentures		10,100,189			10,299,507
Issuance of hybrid securities		—			559,565
		15,072,264			15,209,024
Cash out-flows from financing activities:
Repayment of borrowings		4,114,751			7,432,992
Repayment of debentures		11,441,709			8,223,263
Payment of dividends		336,636			269,308
Dividends paid on hybrid securities		75,683			100,627
Redemption of hybrid securities		255,000			1,323,400
Dividends paid on non-controlling interests		2,108			1,534
		16,225,887			17,351,124
Net cash used in financing activities		(1,153,623	)		(2,142,100	)
Net decrease in cash and cash equivalents		(1,308,509	)		(100,649	)
Cash and cash equivalents, beginning of the period		6,908,286			7,591,324
Effects of exchange rate changes on cash and cash equivalents		320,791			(113,551	)
Cash and cash equivalents, end of the period		5,920,568			7,377,124

The consolidated interim statements of cash flows for the six months ended June 30, 2018 was prepared in accordance with K-IFRS 1109; however, the comparative consolidated interim statements of cash flows for the six months ended June 30, 2017 was not retrospectively restated to apply K-IFRS 1109.

See accompanying notes

WOORI BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018 AND FOR THE THREE MONTHS AND THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

1. GENERAL

(1) Summary of the parent company

Woori Bank (hereinafter referred to the “Bank”), which is a controlling entity in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1110 – Consolidated Financial Statements, was established in 1899 and is engaged in the commercial banking business under the Banking 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 the Bank. Accordingly, the shares of the Bank, 597 million shares, prior to the merger, were reduced to nil in accordance with capital reduction procedure, and then, in accordance with the merger ratio, the Bank newly issued 676 million shares. As a result, as of June 30, 2018, the common stock of the Bank amounts to 3,381,392 million Korean 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 year ended December 31, 2017, KDIC sold additional 33 million shares. As of June 30, 2018 and December 31, 2017, KDIC held 125 million shares (18.43% ownership interest), 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 headquarters of the Bank is located in 51, Sogong-ro, Jung Gu, Seoul, Korea. The Bank has 880 branches and offices in Korea, and 23 branches and offices overseas as of June 30, 2018.

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

			Percentage of ownership (%)				Location		Financial statements as of (2018)
Subsidiaries	Main business		June 30, 2018		December 31, 2017
Woori Bank:
Woori FIS Co., Ltd.		System software development & maintenance		100.0		100.0		Korea		June 30
Woori Private Equity Asset Management Co., Ltd.		Finance		100.0		100.0		Korea		June 30
Woori Finance Research Institute Co., Ltd.		Other service business		100.0		100.0		Korea		June 30
Woori Card Co., Ltd.		Finance		100.0		100.0		Korea		June 30
Woori Investment Bank Co., Ltd.		Other credit finance business		59.8		59.8		Korea		June 30
Woori Credit Information Co., Ltd.		Credit information		100.0		100.0		Korea		June 30
Woori America Bank		Finance		100.0		100.0		U.S.A.		June 30
Woori Global Markets Asia Limited		”		100.0		100.0		Hong Kong		June 30
Woori Bank China Limited		”		100.0		100.0		China		June 30
AO Woori Bank		”		100.0		100.0		Russia		June 30
PT Bank Woori Saudara Indonesia 1906 Tbk		”		79.9		79.9		Indonesia		June 30
Banco Woori Bank do Brasil S.A.		”		100.0		100.0		Brazil		June 30
Korea BTL Infrastructure Fund		”		99.9		99.9		Korea		June 30
Woori Fund Service Co., Ltd.		”		100.0		100.0		Korea		June 30
Woori Finance Cambodia PLC.		”		100.0		100.0		Cambodia		June 30
Woori Finance Myanmar Co., Ltd.		”		100.0		100.0		Myanmar		June 30
Wealth Development Bank		”		51.0		51.0		Philippines		June 30
Woori Bank Vietnam Limited		”		100.0		100.0		Vietnam		June 30
WB Finance Co., Ltd.		”		100.0		—		Cambodia		June 30
Kumho Trust First Co., Ltd. (*1)		Asset securitization		0.0		0.0		Korea		June 30
Asiana Saigon Inc. (*1)		”		0.0		0.0		Korea		June 30
Consus Eighth Co., LLC (*1)		”		0.0		0.0		Korea		June 30
KAMCO Value Recreation First Securitization Specialty Co., Ltd. (*1)		”		15.0		15.0		Korea		June 30
Hermes STX Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
BWL First Co., LLC (*1)		”		0.0		0.0		Korea		June 30
Deogi Dream Fourth Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Jeonju Iwon Ltd. (*1)		”		0.0		0.0		Korea		June 30
Wonju I one Inc. (*1)		”		0.0		0.0		Korea		June 30
Heitz Third Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Woorihansoop 1st Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Electric Cable First Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Woori International First Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Woori HJ First Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Woori WEBST 1st Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Wibihansoop 1st Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
HNLD 1st Inc.(*4)		”		—		0.0		Korea		—
Uri QS 1st Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Uri Display 1st Co., Ltd.(*1)		”		0.0		0.0		Korea		June 30
Tiger Eyes 2nd Co., Ltd.(*1)		”		0.0		0.0		Korea		June 30
Woori Serveone 1st Co., Ltd. (*1)		”		0.0		0.0		Korea		June 30
Uri Display 2nd Co.,Ltd. (*1)		”		0.0		—		Korea		June 30
Woori the Colony Unjung Securitization Specialty Co., Ltd. (*1)		”		0.0		—		Korea		June 30
Woori Dream 1st Co., Ltd. (*1)		”		0.0		—		Korea		June 30
Woori HS 1st Co., Ltd. (*1)		”		0.0		—		Korea		June 30
Smart Casting Inc. (*1)		”		0.0		—		Korea		June 30
HeungkukWoori Tech Company Private Placement Investment Trust No. 1 and 6 beneficiary certificates (*2)		Securities investment and others		—		—		Korea		June 30
Principle Guaranteed Trust (*3)		Trust		0.0		0.0		Korea		June 30
Principle and Interest Guaranteed Trust (*3)		”		0.0		0.0		Korea		June 30

			Percentage of ownership (%)				Location		Financial statements as of (2018)
Subsidiaries	Main business		June 30, 2018		December 31, 2017
Woori Investment Bank:
Dongwoo First Securitization Specialty Co., Ltd. (*1)		Asset securitization		5.0		5.0		Korea		June 30
Seari First Securitization Specialty Co., Ltd. (*1)		”		5.0		5.0		Korea		June 30
Namjong 1st Securitization Specialty Co., Ltd. (*1)		”		5.0		5.0		Korea		June 30
Bukgeum First Securitization Specialty Co., Ltd. (*1)		”		5.0		5.0		Korea		June 30
Seori Second Securitization Specialty Co., Ltd. (*1)		Asset securitization		5.0		—		Korea		June 30
Bukgeum Second Securitization Specialty Co., Ltd. (*1)		”		5.0		—		Korea		June 30
Woori Card Co., Ltd.:
TUTU Finance-WCI Myanmar Co., Ltd.		Finance		100.0		100.0		Myanmar		June 30
Woori Card one of 2017-1 Securitization Specialty Co., Ltd. (*1)		Asset securitization		0.5		0.5		Korea		June 30
Woori Card one of 2017-2 Securitization Specialty Co., Ltd. (*1)		”		0.5		0.5		Korea		June 30

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

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

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

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

(3) As of June 30, 2018, and December 31, 2017, despite having more than 50% ownership interest, the Group has not consolidated the following companies as the Group does not have the ability to control following subsidiaries:

	As of June 30, 2018
Subsidiaries	Location	Main Business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities Investment		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities Investment		57.1
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities Investment		88.3
Hana Walmart Real Estate Investment Trust 41-1 (*)	Korea	Securities Investment		77.0
IGIS Global Private Placement Real Estate Fund No. 148-1 (*)	Korea	Securities Investment		75.0
IGIS Global Private Placement Real Estate Fund No. 148-2 (*)	Korea	Securities Investment		75.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund I (*)	Korea	Securities Investment		66.2
Hangkang Sewage Treatment Plant Fund (*)	Korea	Securities Investment		55.6
Consus KyungJu Green Private Placement Real Estate Fund 1st (*)	Korea	Securities Investment		52.4

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

	As of December 31, 2017
Subsidiaries	Location	Main Business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Securities Investment		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Securities Investment		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Securities Investment		88.9
Hana Walmart Real Estate Investment Trust 41-1 (*)	Korea	Securities Investment		90.1
IGIS Global Private Placement Real Estate Fund No. 148-1 (*)	Korea	Securities Investment		75.0
IGIS Global Private Placement Real Estate Fund No. 148-2 (*)	Korea	Securities Investment		75.0

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

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

	As of and for the six months ended June 30, 2018
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori FIS Co., Ltd.		80,851		55,312		138,088		(7,006	)		(7,040	)
Woori Private Equity Asset Management Co., Ltd.		40,799		2,064		556		(1,493	)		(1,490	)
Woori Finance Research Institute Co., Ltd.		4,314		615		2,776		258			258
Woori Card Co., Ltd.		9,100,890		7,462,577		944,657		67,618			62,866
Woori Investment Bank Co., Ltd.		2,723,251		2,418,664		109,428		14,722			14,878
Woori Credit Information Co., Ltd.		34,130		6,167		17,601		839			839
Woori America Bank		2,073,420		1,777,327		42,624		11,186			24,091
Woori Global Markets Asia Limited		406,684		287,622		7,302		2,156			7,298
Woori Bank China Limited		5,120,070		4,596,883		143,390		7,382			25,267
AO Woori Bank		277,555		224,860		8,778		2,570			200
PT Bank Woori Saudara Indonesia 1906 Tbk		2,349,222		1,858,176		96,177		22,401			15,947
Banco Woori Bank do Brasil S.A.		155,083		125,288		7,341		882			(2,515	)
Korea BTL Infrastructure Fund		777,576		297		14,704		12,865			12,865
Woori Fund Service Co., Ltd.		13,411		977		4,922		1,023			1,023
Woori Finance Cambodia PLC.		73,212		52,584		4,912		1,277			2,197
Woori Finance Myanmar Co., Ltd.		19,837		6,496		2,086		(187	)		412
Wealth Development Bank		185,866		152,414		6,240		(2	)		(788	)
Woori Bank Vietnam Limited		1,142,018		990,228		23,746		3,545			8,822
WB Finance Co., Ltd.		227,582		186,772		—		—			—
Money trust under the FISCM Act (*)		1,573,367		1,543,491		24,029		(36	)		(36	)
Structured entity for the securitization of financial assets		1,226,022		1,631,837		32,089		12,202			5,725
Structured entity for the investments in securities		41,221		40		785		(798	)		(1,869	)

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

	As of and for the year ended December 31, 2017
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori FIS Co., Ltd.		103,932		71,386		252,460		1,940			(2,963	)
Woori Private Equity Asset Management Co., Ltd.		42,894		2,670		7,257		(4,114	)		(4,074	)
Woori Finance Research Institute Co., Ltd.		3,790		350		4,733		83			64
Woori Card Co., Ltd.		8,605,993		6,973,705		1,771,157		101,214			107,321
Woori Investment Bank Co., Ltd.		1,880,157		1,588,610		183,376		20,023			20,210
Woori Credit Information Co., Ltd.		33,298		6,175		31,580		861			752
Woori America Bank		1,954,301		1,679,248		81,337		11,869			(16,833	)
Woori Global Markets Asia Limited		290,226		178,343		11,345		1,922			(12,544	)
Woori Bank China Limited		4,960,637		4,458,683		388,913		13,809			(15,252	)
AO Woori Bank		201,704		149,101		15,656		4,748			1,217
PT Bank Woori Saudara Indonesia 1906 Tbk		2,230,617		1,745,171		192,485		38,488			(18,689	)
Banco Woori Bank do Brasil S.A.		213,889		181,544		20,455		1,843			(2,840	)
Korea BTL Infrastructure Fund		786,480		301		30,240		26,390			26,390
Woori Fund Service Co., Ltd.		12,653		1,242		9,021		1,398			1,398
Woori Finance Cambodia PLC.		51,304		32,873		5,895		983			(473	)
Woori Finance Myanmar Co., Ltd.		18,236		5,307		2,506		791			15
Wealth Development Bank		191,049		156,808		13,632		1,323			(1,093	)
Woori Bank Vietnam Limited		775,758		632,160		29,698		2,436			(15,347	)
Money trust under the FISCM Act (*)		1,560,672		1,530,760		44,344		582			582
Structured entity for the securitization of financial assets		867,583		1,275,719		22,730		1,179			(2,800	)
Structured entity for the investments in securities		34,939		76		377		(475	)		(38,592	)

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

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

• Structured entity for the securitization of financial assets

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

• Structured entity for the investments in securities

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

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

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

• The Group is providing purchase commitment and credit facilities to structured entities that are subsidiaries of the Group. Purchase commitments guarantee the purchase and payment of outstanding commercial papers that were issued but were not repurchased by the structured entities. Credit facilities allow lending of funds to structured entities under certain conditions when there are grounds for discontinuing the issuance of commercial papers, or when structured entities default due to some reasons.

As of June 30, 2018, the Group is providing credit facilities (including ABCP purchase commitments, etc.) amounting to 1,156,431 million Won to aforementioned structured entities.

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

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

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

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

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

Total assets of the unconsolidated structured entities, the carrying value of the related items recorded, the maximum exposure to risks, and the loss recognized in conjunction with the unconsolidated structured entities as of June 30, 2018 and December 31, 2017 are as follows (Unit: Korean Won in millions):

	June 30, 2018
	Asset securitization vehicle		Structured finance		Investment Funds
Total asset of the unconsolidated structured entities		7,955,990		36,949,944		14,777,372
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		2,956,395		2,162,493		1,333,612
Financial assets at FVTPL		232,931		69,259		1,079,544
Financial assets at FVTOCI		499,861		49,538		—
Financial assets at amortized cost		2,223,211		2,039,184		10,697
Investments in joint ventures and associates		—		885		243,371
Derivative assets		392		3,627		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		1,442		1,587		81
Derivative liabilities		361		749		—
Other liabilities (including provisions)		1,081		838		81
The maximum exposure to risks		3,697,522		2,818,678		1,398,067
Investments		2,956,395		2,162,493		1,333,612
Credit facilities		741,127		656,185		64,455
Loss recognized on unconsolidated structured entities		158		8,757		9,110
	December 31, 2017
	Asset securitization vehicle		Structured finance		Investment Funds
Total asset of the unconsolidated structured entities		7,295,601		40,172,830		13,641,135
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		3,215,159		2,314,043		1,138,523
Loans and receivables		43,180		1,969,760		—
Financial assets held for trading		—		233,428		10,160
AFS financial assets		902,390		106,819		904,774
HTM financial assets		2,269,451		—		—
Investments in joint ventures and associates		—		—		223,589
Derivative assets		138		4,036		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		1,433		1,506		—
Derivative liabilities		575		968		—
Other liabilities (including provisions)		858		538		—
The maximum exposure to risks		4,032,531		2,918,448		1,138,523
Investments		3,215,159		2,314,043		1,138,523
Credit facilities		817,372		604,405		—
Loss recognized on unconsolidated structured entities		837		3,939		5,993

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

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

	June 30, 2018		December 31, 2017
Woori Investment Bank		125,809		119,111
PT Bank Woori Saudara Indonesia 1906 Tbk		66,004		64,877
Wealth Development Bank		16,391		16,778

2) Net income attributable to non-controlling interests

	For the six months ended June 30, 2018			For the six months ended June 30, 2017
Woori Investment Bank		5,912			5,072
PT Bank Woori Saudara Indonesia 1906 Tbk		4,508			5,048
Wealth Development Bank		(1	)		515

3) Dividends to non-controlling interests

	For the six months ended June 30, 2018		For the six months ended June 30, 2017
PT Bank Woori Saudara Indonesia 1906 Tbk		2,082		1,513

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) Basis of presentation

The Group’s consolidated interim financial statements are prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1034, Interim Financial Reporting and K-IFRS 1110, Consolidated Financial Statements. It is necessary to use the annual consolidated financial statements for the year ended December 31, 2017 for understanding of the accompanying interim financial statements.

Unless stated below, the accounting policies applied in preparing the accompanying consolidated interim financial statements have been applied consistently with the annual consolidated financial statements as of and for the year ended December 31, 2017.

1) The Group has newly adopted the following adoption of K-IFRS that affected the Group’s accounting policies:

• Adoption of K-IFRS 1109 – Financial instruments (enacted)

The Group applied for the first time as of January 1, 2018, the adoption to K-IFRS 1109 and other standards related to K-IFRS 1109, which introduces new rules: 1) classification and measurement of financial assets and financial liabilities, 2) impairment of financial assets, and 3) hedge accounting.

The Group decided not to restate the prior period figures when applying the Standard for the first time, thus the comparative financial statements presented are not restated.

The main contents of the new accounting standard and the effect on the financial statements of the Group are as follows:

a) Classification and measurement of financial assets and financial liabilities

All financial assets included in the scope of K-IFRS 1109 are subsequently measured at amortized cost or fair value based on the business model for the management of financial assets and the nature of the contractual cash flows.

Debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods (financial assets at amortized cost).

Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are generally measured at fair value through other comprehensive income (financial assets at fair value through other comprehensive income (“FVTOCI”)).

All other debt instruments and equity instruments are measured at their fair value at the end of subsequent accounting periods (financial assets at fair value through profit or loss (“FVTPL”)).

Notwithstanding the foregoing, the Group may make the following irrevocable choice or designation at the time of initial recognition of financial assets.

The Group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of this Standard that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which K-IFRS 1103 applies.

At initial recognition, financial assets at amortized cost or FVTOCI may be irrevocably designated as financial assets at fair value through profit or loss mandatorily measured at fair value if doing so eliminate or significantly reduce a measurement or recognition inconsistency.

As of the date of first adoption of K-IFRS 1109, there are no debt instruments classified either as financial assets at amortized cost or FVTOCI that are designated as financial assets at fair value through profit or loss.

When debt instruments measured at FVTOCI are removed, the cumulative gain or loss recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. On the other hand, for equity instruments designated as financial assets at fair value through other comprehensive income, cumulative gains or losses previously recognized in other comprehensive income are not subsequently reclassified to profit or loss. Debt instruments measured subsequently at amortized cost or fair value through other comprehensive income are subject to impairment provisions.

The classification and measurement of financial assets and financial liabilities in accordance with K-IFRS 1109 and K-IFRS 1039 as of January 1, 2018 are as follows (Unit: Korean Won in millions):

Account	Classification according to K-IFRS 1039	Classification according to K-IFRS 1109	Classification according to K-IFRS 1039		Reclassification			Remeasurement		Classification according to K-IFRS 1109
Deposit	Loans and receivables	Loan and other financial assets at amortized cost		8,870,835		—			—		8,870,835
Deposit	Financial assets at FVTPL	Financial assets at FVTPL		25,972		—			—		25,972
Debt securities	Financial assets at FVTPL	Financial assets at FVTPL(*)		2,654,027		—			—		2,654,027
Equity securities	Financial assets at FVTPL	Financial assets at FVTPL(*)		47,304		—			—		47,304
Derivatives	Financial assets at FVTPL	Financial assets at FVTPL(*)		3,115,775		(2,137	)		—		3,113,638
Equity securities	Available-for-sale financial assets	Financial assets at FVTPL(*)		1,273,498		1,219			—		1,274,717
Equity securities	Available-for-sale financial assets	Financial assets at FVTOCI		850,207		—			—		850,207
Debt securities	Available-for-sale financial assets	Financial assets at FVTPL		46,855		—			—		46,855
Debt securities	Available-for-sale financial assets	Financial assets at FVTOCI		12,874,209		—			—		12,874,209
Debt securities	Available-for-sale financial assets	Securities at amortized cost		308,181		—			14,119		322,300
Debt securities	Held to maturity financial assets	Securities at amortized cost		16,749,296		—			—		16,749,296
Loans	Loans and receivables	Financial assets at FVTPL (*)		279,032		918			50		280,000
Loans	Loans and receivables	Loan and other financial assets at amortized cost		253,014,491		—			—		253,014,491
Derivatives	Derivatives	Derivatives		59,272		—			—		59,272
Other financial assets	Loans and receivables	Loan and other financial assets at amortized cost		6,772,088		—			—		6,772,088
Total financial assets				306,941,042		—			14,169		306,955,211

(*) Under K-IFRS 1039, the embedded derivatives out of hybrid financial instruments are accounted for as derivatives assets or liabilities if the criteria for separation of the embedded derivative are met and the rest of host contracts in those instruments are recorded as available-for-sale financial assets or loans and receivables respectively. Since K-IFRS 1109 requires financial instruments be accounted for based on the terms of the entire financial instruments, the hybrid financial assets are revalued and recorded as financial assets at fair value through profit or loss.

Account	Classification according to K-IFRS 1039	Classification according to K-IFRS 1109	Classification according to K-IFRS 1039		Reclassification		Remeasurement		Classification according to K-IFRS 1109
Deposit due to customers	Financial liabilities at FVTPL	Financial liabilities at FVTPL		25,964		—		—		25,964
Deposit due to customers	Deposit due to customers	Financial liabilities at amortized cost		234,695,084		—		—		234,695,084
Borrowings	Borrowings	Financial liabilities at amortized cost		14,784,706		—		—		14,784,706
Debentures	Financial liabilities at FVTPL	Financial liabilities at FVTPL		91,739		—		—		91,739
Debentures	Debentures	Financial liabilities at amortized cost		27,869,651		—		—		27,869,651
Equity-linked securities	Financial liabilities at FVTPL	Financial liabilities at FVTPL		160,057		—		—		160,057
Derivatives liabilities	Financial liabilities at FVTPL	Financial liabilities at FVTPL		3,150,149		—		—		3,150,149
Derivatives liabilities	Derivatives liabilities	Derivatives liabilities		67,754		—		—		67,754
Other financial liabilities	Other financial liabilities	Financial liabilities at amortized cost		13,892,461		—		—		13,892,461
Provision for financial guarantee	Provision for financial guarantee	Financial liabilities at amortized cost		71,697		—		—		71,697
Total financial liabilities				294,809,262		—		—		294,809,262

At the date of the initial application of K-IFRS 1109, there were no financial assets or liabilities measured at FVTPL that were reclassified to FVTOCI or amortized cost category.

As of the date of first adoption of K-IFRS 1109, the amount of valuation gain or loss and fair value of financial assets that would have been recognized in the book, had the entity decided not to reclassify financial assets at FVTPL or FVTOCI that has been reclassified into financial assets at amortized cost, is as follows: (Unit: Korean Won in millions)

Account subject	Category before the adoption of K-IFRS 1109	Amount of valuation gain/loss had it not been reclassified			Fair value
Debt securities	AFS securities		(236	)		302,638

b) Impairment of financial assets

The impairment model under K-IFRS 1109 reflects expected credit losses, as opposed to incurred credit losses under K-IFRS 1039. 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, the Group 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.

The Group is required to recognize the expected credit losses for financial instruments measured at amortized cost or FVTOCI, and loan commitments and financial guarantee contracts that are subject to the impairment provisions of K-IFRS 1109. In particular, when the credit risk of the financial instruments are significantly increased after initial recognition, or when the credit quality of the financial instruments are already impaired at acquisition, the loss allowance is measured as the expected credit loss for the whole life of the financial assets. If the credit risk of a financial instruments does not increase significantly after initial recognition (excluding POCI loans - for financial assets already impaired at initial recognition), the Group measures the loss allowance on the financial instruments at the amount equivalent to the expected 12-month credit loss.

Management determined the credit risk at the date of initial recognition of the financial instrument in accordance with K-IFRS 1109 and provided a reasonable and supportive measure that can be used without undue cost or effort in comparison with the credit risk of the initial application date (January 1, 2018) the Group used information that could be used to assess the impairment of the Group’s financial assets, lending arrangements and financial guarantees at the date of initial application. As of January 1, 2018, the evaluation results are as follows (Unit: Korean Won in millions):

Account	Classification according to K-IFRS 1039	Classification according to K-IFRS 1109	Loss allowance per K-IFRS 1039(A)		Loss allowance per K-IFRS 1109 (B)		Increases (B-A)
Deposit	Loans and receivables	Loans and other financial assets at amortized cost		2,458		3,092		634
Debt securities
AFS debt securities	AFS financial assets	Financial assets at FVTOCI		—		4,236		4,236
HTM securities	HTM financial assets	Securities at amortized cost		—		5,078		5,078
Loans and other financial assets	Loans and receivables	Loans and other financial assets at amortized cost		1,827,785		2,076,873		249,088
Payment guarantee				183,247		192,924		9,677
Loan commitment				66,115		104,985		38,870
Total				2,079,605		2,387,188		307,583

c) Classification and measurement of financial liabilities

One of the major changes related to the classification and measurement of financial liabilities as a result of the adoption of K-IFRS 1109 is the change in the fair value of financial liabilities designated at fair value through profit or loss due to the changes in issuer’s own credit risk. The Group recognizes the effect of changes in the credit risk of financial liabilities designated as at FVTOCI in other comprehensive income, except for cases where it causes or disproves accounting mismatch of the profit or loss. Changes in fair value due to credit risk of financial liabilities are not subsequently reclassified to profit or loss, but are reclassified as retained earnings when financial liabilities are eliminated.

In accordance with K-IFRS 1039, the entire of changes in fair value of financial liabilities designated as at FVTPL are recognized in profit or loss. As of January 1, 2018, the Group designated 251,796 million Korean Won of FVTPL out of 294,813,795 million of financial liabilities, and recognized 133 million Korean Won as accumulated other comprehensive loss in relation to the changes in credit risk of financial liabilities.

d) Hedge accounting

The new hedge accounting model maintains three types of hedge accounting. However, it is introduced more flexibility in the types of transactions that are eligible for hedge accounting and is expanded the types of hedging instruments and non-financial hedge items that qualify for hedge accounting. As a whole, it has been amended and replaced by the principle of “economic relationship” between the hedged item and the hedging instrument. Retrospective assessment of the hedging effectiveness is no longer required. Additional disclosure requirements have been introduced in relation to the Group’s risk management activities.

In accordance with the transitional provisions of K-IFRS 1109 on hedge accounting, the Group adopted the hedge accounting provisions of K-IFRS 1109 prospectively from January 1, 2018. As of the date of initial application, the Group has considered that the hedging relationship in accordance with K-IFRS 1039 is appropriate for hedge accounting under K-IFRS 1109, thus the hedging relationship is considered to exist continually. Since the major conditions for hedging instruments and the hedged items are consistent, all hedging relationships are consistent with the effectiveness assessment requirements of K-IFRS 1109. The Group has not designated a hedging relationship in accordance with K-IFRS 1109 in which the hedge relationship would not have met the requirements for hedge accounting under K-IFRS 1039.

Consistent with prior periods, the Group continues to designate fair value changes in interest rate swaps as hedging instruments in the fair value hedge relationship.

e) Effect on equity as a result of adoption of K-IFRS 1109

The effect on equity due to the adoption of K-IFRS 1109 as of January 1, 2018 is as follows (Unit: Korean Won in millions):

• Impact on accumulated other comprehensive loss as result of financial assets at FVTOCI, etc.

	Amount
Beginning balance (prior to K-IFRS 1109)		(89,724	)
Reclassification		(392,176	)
Reclassification of available-for-sale financial assets to financial assets at Amortized cost		494
Reclassification of available-for-sale financial assets to financial assets at FVTPL		(152,124	)
Recognition of expected credit losses of debt securities at FVTOCI		4,293
Reclassified of available for sale financial assets(equity securities) to financial assets at FVTOCI		(397,508	)
Effect on changes in credit risk of financial liabilities at fair value through profit or loss designated as upon initial recognition		(133	)
Others		3,006
Income tax effect		149,796
Ending balance (based on K-IFRS 1109)		(481,900	)

• Retained earnings impact

	Amount
Beginning balance (prior to K-IFRS 1109)		15,620,006
Reclassification		177,091
Reclassification of available-for-sale financial assets to financial assets at Amortized cost		(494	)
Reclassification of available-for-sale financial assets to financial assets at FVTPL		152,067
Recognition of expected credit losses of debt instruments at FVTOCI		(4,236	)
Reclassified of available for sale financial assets(equity securities) to financial assets at FVTOCI		397,508
Effect on revaluation of financial assets at amortized cost from loan and receivables or AFS financial assets		282
Recognition of expected credit losses of financial assets at amortized cost which were previously loan and receivables		(240,683	)
Effect of payment guarantees / unused commitments on liabilities		(48,548	)
Effect on changes in credit risk of financial liabilities at fair value through profit or loss designated as upon initial recognition		133
Others		(4,457	)
Income tax effect		(74,482	)
Ending balance(based on K-IFRS 1109)		15,797,097

• Adoption of K-IFRS 1115 – Revenue from contracts with customers (enacted)

The Group adopted K-IFRS 1115 for the first time and decided to retrospectively apply the cumulative effect of the first application of K-IFRS 1115 as of January 1, 2018. In addition, the Standard has been retrospectively applied only to contracts that are not completed on the date of initial application, and all contractual changes made prior to the first application date are not rewritten.

In addition, the Group decided not to restate the prior periods when applying K-IFRS 1115 for the first time. Accordingly, the Group has not retroactively restated the comparative consolidated financial statements presented herein.

• Amendments to K-IFRS 1102 – Classification and Measurement of Share-based Payment Transactions

The amendments clarify the following; i) In estimating the fair value of a cash-settled share-based payment, the accounting for the effects of vesting and non-vesting conditions should follow the same approach as for equity-settled share-based payments ii) Where tax law or regulation requires an entity to withhold a specified number of equity instruments equal to the monetary value of the employee’s tax obligation to meet the employee’s tax liability which is then remitted to the tax authority, i.e. the share-based payment arrangement has a ‘net settlement feature’, such an arrangement should be classified as equity-settled in its entirety, provided that the share-based payment would have been classified as equity-settled had it not included the net settlement feature, iii) A modification of a share-based payment that changes the transaction from cash-settled to equity-settled should be accounted for as follows; a) the original liability is derecognized; b) the equity-settled share-based payment is recognized at the modification date fair value of the equity instrument granted to the extent that services have been rendered up to the modification date; and c) any difference between the carrying amount of the liability at the modification date and the amount recognized in equity should be recognized in profit or loss immediately.

• Amendments to K-IFRS 1040 – Transfers of Investment Property

The amendments clarify that a transfer to, or from, investment property necessitates an assessment of whether a property meets the definition of investment property, supported by observable evidence that a change in use has occurred. The amendments further clarify that the situations listed in K-IFRS 1040 are not exhaustive and that a change in use is possible for properties under construction (i.e. a change in use is not limited to completed properties).

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

K-IFRS 2122 addresses how to determine the ‘date of transaction’ for the purpose of determining the exchange rate to use on initial recognition of an asset, expense or income (or part of them), when consideration for that item has been paid or received in advance in a foreign currency which resulted in the recognition of a non-monetary asset or non-monetary liability (e.g. a non-refundable deposit or deferred revenue).

The Interpretation specifies that the date of transaction is the date on which the entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the Interpretation requires an entity to determine the date of transaction for each payment or receipt of advance consideration.

• Annual Improvements to K-IFRS 2014-2016 Cycle

The amendments include partial amendments to K-IFRS 1101 ‘First-time Adoption of K-IFRS’ and K-IFRS 1028 ‘Investments in Associates and Joint Ventures.’ Amendments to K-IFRS 1028 provide that an investment company such as a venture capital investment vehicle may selectively designate each of its investment in associates and/or joint ventures to be measured at fair value through profit or loss mandatorily measured at fair value, and that such designation must be made at the time of each investment’s initial recognition. In addition, when non-investment companies apply equity method to investment in associates and/or joint ventures that are investment companies, these companies may apply the same fair value measurement used by the said associates to value their own subsidiaries. This accounting treatment may be selectively applied to each associate.

There are no significant impacts on financial statements due to newly adopted accounting standards except for K-IFRS 1109.

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

• K-IFRS 1116—Leases(enacted)

K-IFRS 1116 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees. K-IFRS 1116 will supersede the current lease guidance including K-IFRS 1017 Leases and the related interpretations, and will be applied to periods beginning on or after January 1, 2019.

K-IFRS 1116 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a customer. Distinctions of operating leases and finance leases are removed for lessee accounting, and is replaced by model where a right-of-use asset and corresponding liability have to be recognized for all leases by lessees except for short-term leases and leases of low value assets.

The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others. Furthermore, the classification of cash flows will also be affected as operating lease payments under K-IFRS 1017 are presented as operating cash flows; whereas under the K-IFRS 1116 model, the lease payments will be split into a principal and an interest portion which will be presented as financing and operating cash flows respectively.

In contrast to lessee accounting, K-IFRS 1116 substantially carries forward the lessor accounting requirements in K-IFRS 1017, and continues to require a lessor to classify a lease either as an operating lease or a finance lease. Also, K-IFRS 1116 requires expanded disclosures.

According to the preliminary assessment of the Group, the lease agreements entered into by the Group as of June 30, 2018 are expected to meet the definition of lease under the Standard, and accordingly, if the Group adopts the Standard, it applies to all leases except short-term leases and leases of low value assets, and the Group will recognize the right-of-use assets and related liabilities accordingly. The Group is currently analyzing the potential impact of this standards as of June 30, 2018.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

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

The significant judgments which management has made about the application of the Group’s accounting policies and key sources of uncertainty in estimate do not differ from those used in preparing the consolidated financial statements for the year ended December 31, 2017, except the Group’s policy, accounting estimates and assumptions described below;

(1) Income taxes

The Group is operating in numerous countries and the income generated from these operations is subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations which makes the ultimate tax determination uncertain. If certain portion of the taxable income is not used for investments, increase in wages, and others in accordance with the Tax System for Promotion of investment and Collaborative Cooperation (Recirculation of Corporate Income), the Group is liable to pay additional income tax calculated based on the tax laws. The new tax system is effective for three years from 2018. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new system. As the Group’s income tax is dependent on the investments, increase in wages, and others, there exists uncertainty with regard to measuring the final tax effects.

(2) Provisions for credit losses (allowances for loan losses, provisions for acceptances and guarantees, and unused loan commitments)

In accordance with K-IFRS 1109, the Group tests impairment and recognizes allowances for losses on financial assets classified at amortized cost, and debt instruments measured at fair value through other comprehensive income and lease receivables through impairment testing and recognizes provisions for guarantees, and unused loan commitments. Accuracy of provisions for credit losses is dependent upon estimation of expected cash flows of the borrower for individually assessed allowances of loans, and upon assumptions and methodology used for collectively assessed allowances for the Group’s of loans, guarantees and unused loan commitments.

4. RISK MANAGEMENT

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

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

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

(1) Credit risk

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

1) Credit risk management

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

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

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

2) Maximum exposure to credit risk

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

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

		June 30, 2018		December 31, 2017
Loans and other financial assets at amortized cost	Korean treasury and government agencies		17,912,135		—
	Banks		21,942,788		—
	Corporates		92,333,155		—
	Consumers		145,531,925		—
	Subtotal		277,720,003		—
Loans and receivables	Korean treasury and government agencies		—		8,823,584
	Banks		—		26,845,309
	Corporates		—		90,570,551
	Consumers		—		140,866,760
	Subtotal		—		267,106,204
Financial assets at FVTPL (K-IFRS 1109)	Deposit		24,921		—
	Debt securities		1,993,851		—
	Loans and receivables		336,967		—
	Derivative assets		2,391,211		—
	Subtotal		4,746,950		—
Financial assets at FVTPL (K-IFRS 1039)	Deposit		—		25,972
	Debt securities		—		2,644,333
	Financial assets designated at FVTPL		—		9,694
	Derivative assets		—		3,115,775
	Subtotal		—		5,795,774
Financial assets at FVTOCI	Debt securities		13,738,829		—
AFS financial assets	Debt securities		—		13,229,244
Securities at amortized cost	Debt securities		17,702,129		—
HTM financial assets	Debt securities		—		16,749,296
Derivative assets	Derivative assets (hedging)		12,395		59,272
Off-balance accounts	Guarantees		12,372,573		12,859,715
	Loan commitments		98,251,006		80,760,325
	Subtotal		110,623,579		93,620,040
	total		424,543,885		396,559,830

a) Credit risk exposure by geographical areas

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

	June 30, 2018
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		258,023,468		4,589,930		4,514,541		1,268,461		400,907		8,922,696		277,720,003
Securities at amortized cost		17,531,402		—		64,856		—		—		105,871		17,702,129
Financial assets at FVTPL		4,493,256		6,077		—		147,242		—		100,375		4,746,950
Financial assets at FVTOCI		12,749,695		50,874		43,352		78,485		2,274		814,149		13,738,829
Derivative assets		7,450		—		—		4,945		—		—		12,395
Off-balance accounts		108,052,029		928,841		175,050		70,503		31,216		1,365,940		110,623,579
Total		400,857,300		5,575,722		4,797,799		1,569,636		434,397		11,309,031		424,543,885
	December 31, 2017
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and receivables		250,678,479		4,104,912		2,823,247		1,094,988		381,890		8,022,688		267,106,204
Financial assets at FVTPL		5,551,870		2,937		—		148,955		—		92,012		5,795,774
AFS debt securities		12,407,602		52,259		151,131		—		—		618,252		13,229,244
HTM securities		16,606,692		—		63,732		—		—		78,872		16,749,296
Derivative assets		16,590		—		—		42,682		—		—		59,272
Off-balance accounts		91,603,852		529,193		172,570		66,974		25,039		1,222,412		93,620,040
Total		376,865,085		4,689,301		3,210,680		1,353,599		406,929		10,034,236		396,559,830

(*) Others consist of financial assets in Indonesia, Hong Kong, Singapore, and other countries.

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):

	June 30, 2018
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		48,025,922		35,583,702		42,207,115		3,657,220		138,906,711		9,339,333		277,720,003
Securities at amortized cost		1,142,178		—		11,516,407		313,936		—		4,729,608		17,702,129
Financial assets at FVTPL		97,529		166,054		3,404,674		43,899		3,019		1,031,775		4,746,950
Financial assets at FVTOCI		434,389		54,445		9,020,012		214,549		—		4,015,434		13,738,829
Derivative assets		—		—		12,395		—		—		—		12,395
Off-balance accounts		18,236,857		22,675,034		9,503,718		4,052,757		49,105,163		7,050,050		110,623,579
Total		67,936,875		58,479,235		75,664,321		8,282,361		188,014,893		26,166,200		424,543,885
	December 31, 2017
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and receivables		47,192,641		34,502,509		38,260,051		3,574,746		133,094,287		10,481,970		267,106,204
Financial assets at FVTPL		100,766		83,239		4,640,068		15,073		1,040		955,588		5,795,774
AFS debt securities		707,737		37,719		7,331,774		153,534		—		4,998,480		13,229,244
HTM securities		1,348,754		—		10,962,149		296,214		—		4,142,179		16,749,296
Derivative assets		—		—		59,272		—		—		—		59,272
Off-balance accounts		16,892,926		21,427,378		9,841,379		3,842,479		36,928,554		4,687,324		93,620,040
Total		66,242,824		56,050,845		71,094,693		7,882,046		170,023,881		25,265,541		396,559,830

3) Credit risk exposure

The allowance to be recognized under K-IFRS 1109 is the amount of expected 12-month credit loss or the expected lifetime credit loss, according to the three stages of credit risk deterioration since initial recognition as shown below:

	Stage 1	Stage 2	Stage 3
	Credit risk has not significantly increased since initial recognition(*)	Credit risk has significantly increased since initial recognition	Credit has been impaired
Allowance for expected credit losses	Expected 12-month credit losses:	Expected lifetime credit losses:
	Expected credit losses due to possible defaults on financial instruments within a 12-month period from the reporting date.	Expected credit losses from all possible defaults during the expected lifetime of the financial instruments.

(*) Credit risk may be considered to not have been significantly increased when credit risk is low at the reporting date.

The Group has estimated the allowance for credit losses based on experience losses with taken account of forward-looking information.

The probability of default and loss at given default per financial assets considering account type of borrowers, credit rate grade, portfolio are used in estimation of allowance for expected credit losses and those factors are reviewed periodically to reduce the difference of expected losses and actual losses.

The Group also measures expected credit losses using supportive and reasonable macroeconomic indicators, such as economic growth rates, interest rates, and composite stock indices. The methods for the estimation of forward-looking are also regularly reviewed.

The Group undertakes the following procedures in order to predict and apply the forward-looking economic information:

• Development of a prediction model by analyzing the correlation between macroeconomic data and yearly default rate of corporate and retail exposures.

• Calculation of predicted annual default rate by applying forward-looking economic information, which includes estimated macroeconomic indices provided by verified institutions such as Bank of Korea and National Assembly Budget Office, to the prediction model developed.

• If the predicted default rate is above the applicable default rate of the current period, application of the increase in default rate as a form of adjustment coefficient to the forward-looking economic information, thereby adjusting the current period estimation.

At the end of each period the Group evaluates whether there has been a significant increase in the credit risk since initial recognition. The Group is assessing the change in the risk of a default occurring over the expected life of the financial instruments instead of the change in the amount of expected credit losses. The Group distinguishes corporates/consumers exposures when determining significant increase in credit risk, and the applied methodology is as follows:

Corporates exposure	Consumers exposure
Under precautionary in assets quality	Under precautionary in assets quality
More than 30 days past due	More than 30 days past due
Watch grade in early warning system	Significant decreases in credit ratings
Significant change of borrower financial situation (Working capital deficiencies, Adverse opinion, Disclaimer of opinion)
Significant decreases in credit ratings

At the end of each reporting period, the Group assesses whether there is a significant increase in credit risk at the end of the reporting period compared to its initial recognition. The Group uses credit ratings, asset soundness, early warning systems, and delinquency days to determine whether the credit risk has significantly increased.

The financial assets are impaired if the following conditions are met;

• The principal and interest of the loan has been overdue for more than 90 days due to the serious deterioration of the credit condition,

• It is deemed that the borrowers will not pay any portion of the debts without actions of recourse such as the disposition of the collateral is not taken

• Objective evidence of impairment of financial assets are identified

The Group writes off assets when it is determined that the receivables are virtually impossible to collect. The Group determines which receivable to write-off and subsequently writes them off in accordance with the company’s policy. Regardless of whether assets have been written off, the Group may continue to exercise its right of collection in accordance with company’s policy on receivables collection.

a) Financial assets

The maximum exposure to credit risk, except for financial assets at FVTPL and derivative asset is as follows (Unit: Korean Won in millions):

	June 30, 2018
	Stage 1				Stage 2
	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Stage 3		Total		Loss allowance			Total, net		Collateral value of damaged property
Loans and other financial assets at amortized cost		246,719,865		18,794,529		6,195,331		5,772,369		2,068,664		279,550,758		(1,830,755	)		277,720,003		789,660
Korean treasury and government agencies		17,916,231		—		—		—		—		17,916,231		(4,096	)		17,912,135		—
Banks		21,599,560		83,471		269,742		—		10,905		21,963,678		(20,890	)		21,942,788		—
Corporates		72,113,414		15,745,380		582,857		3,618,576		1,482,948		93,543,175		(1,210,020	)		92,333,155		555,228
General business		42,620,870		6,674,237		510,663		1,681,120		1,231,634		52,718,524		(843,365	)		51,875,159		405,304
Small- and medium-sized enterprise		25,012,286		8,491,759		72,194		1,766,232		222,804		35,565,275		(327,323	)		35,237,952		130,181
Project financing and others		4,480,258		579,384		—		171,224		28,510		5,259,376		(39,332	)		5,220,044		19,743
Consumers		135,090,660		2,965,678		5,342,732		2,153,793		574,811		146,127,674		(595,749	)		145,531,925		234,432
Securities at amortized cost		17,707,379		—		—		—		—		17,707,379		(5,250	)		17,702,129		—
Financial assets at FVTOCI (*3)		13,675,528		48,126		15,175		—		—		13,738,829		(4,670	)		13,738,829		—
Total		278,102,772		18,842,655		6,210,506		5,772,369		2,068,664		310,996,966		(1,840,675	)		309,160,961		789,660

(*1) Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2) Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 10.

(*3) Financial assets at FVTOCI has not been disclosed as the amount before deducting provisions because the carrying amount does not decrease.

• Loans and receivables

	December 31, 2017
	Korean treasury and government agencies				Corporates								Consumers
			Banks		General business		Small and medium sized enterprise		Project financing and others		Subtotal				Total
Loans and receivables neither overdue nor impaired		8,825,767		26,861,286		50,463,112		34,107,547		5,547,950		90,118,609		139,886,407		265,692,069
Loans and receivables overdue but not impaired		8		—		65,616		63,067		—		128,683		878,406		1,007,097
Impaired loans and receivables		—		—		1,402,131		251,431		46,717		1,700,279		537,001		2,237,280
Total		8,825,775		26,861,286		51,930,859		34,422,045		5,594,667		91,947,571		141,301,814		268,936,446
Allowance for credit losses		2,191		15,977		1,078,733		267,162		31,125		1,377,020		435,054		1,830,242
Total, net		8,823,584		26,845,309		50,852,126		34,154,883		5,563,542		90,570,551		140,866,760		267,106,204

• Debt securities

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

	December 31, 2017
	Financial assets at FVTPL (*)		AFS debt securities		HTM securities		Total
AAA		1,685,099		9,897,689		15,806,327		27,389,115
AA- ~ AA+		722,923		2,386,567		888,547		3,998,037
BBB- ~ A+		236,311		876,482		52,188		1,164,981
Below BBB-		9,694		68,506		2,234		80,434
Total		2,654,027		13,229,244		16,749,296		32,632,567

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

b) Guarantees and loan commitments

The credit quality of the guarantees and loan commitments as of June 30, 2018 as follows (Unit: Korean Won in millions):

	June 30, 2018
Financial assets	Stage 1				Stage 2
	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Stage 3		Total
Off-balance accounts
Guarantees		10,684,154		1,104,097		12,464		390,253		181,605		12,372,573
Loan commitments		92,335,107		3,717,790		1,455,884		740,283		1,942		98,251,006
Total		103,019,261		4,821,887		1,468,348		1,130,536		183,547		110,623,579

(*1) Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2) Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~ 10.

4) Collateral and other credit enhancements

There have been no significant changes in the value of collateral or other credit enhancements held by the Group during the current quarter, changes in collateral or other credit enhancements due to changes in the collateral policy of the Group. As of June 30, 2018, there are no financial assets that do not recognize the allowance for losses due to collateral.

(2) Market risk

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

1) Market risk management

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

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

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

2) Sensitivity analysis of market risk

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

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

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

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

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

a) Trading activities

The minimum, maximum and average VaR for the six months ended June 30, 2018 and for the year ended December 31, 2017, respectively, and the VaR as of June 30, 2018 and December 31, 2017, respectively, are as follows (Unit: Korean Won in millions):

	As of June 30,			For the six months ended June 30, 2018									As of December 31,			For the year ended December 31, 2017
Risk factor	2018			Average			Maximum			Minimum			2017			Average			Maximum			Minimum
Interest rate		2,179			3,787			4,992			1,730			4,183			3,799			4,918			2,467
Stock price		2,872			2,524			4,618			1,138			909			2,863			4,419			909
Foreign currencies		4,224			4,853			6,136			3,695			4,750			5,051			6,636			4,061
Commodity price		2			1			4			—			—			31			188			—
Diversification		(4,095	)		(4,745	)		(7,136	)		(1,749	)		(4,472	)		(4,621	)		(6,798	)		(2,067	)
Total VaR(*)		5,182			6,420			8,614			4,814			5,370			7,123			9,363			5,370

(*) VaR : Maximum losses

b) Non-trading activities

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

	June 30, 2018				December 31, 2017
	NII(*1)		NPV(*2)		NII(*1)		NPV(*2)
Base case		4,497,407		23,856,916		4,916,138		23,472,792
Base case (Prepay)		4,491,363		23,546,002		4,916,015		23,163,942
IR 100bp up		5,022,303		23,803,250		5,361,546		22,886,122
IR 100bp down		4,051,601		23,933,844		4,386,437		24,127,559
IR 200bp up		5,992,145		23,766,488		5,806,723		22,372,208
IR 200bp down		3,672,050		24,043,703		3,452,590		24,830,482
IR 300bp up		6,848,435		23,742,304		6,251,897		21,929,189
IR 300bp down		3,527,210		24,201,770		2,254,609		26,633,807

(*1) NII: Net Interest Income

(*2) NPV: Net Portfolio Value

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

June 30, 2018		December 31, 2017
EaR (*1)	VaR (*2)	EaR (*1)	VaR (*2)
209,621	148,818	255,679	130,821

(*1) EaR: Earning at Risk

(*2) VaR: Value at Risk

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

	June 30, 2018
	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 other financial assets at amortized cost		148,324,408		41,273,662		9,372,945		8,650,081		47,212,644		4,314,787		259,148,527
Financial assets at FVTOCI		6,771,707		3,243,204		1,902,718		1,637,346		5,246,163		180,998		18,982,136
Securities at amortized cost		2,350,831		1,983,421		1,725,286		2,005,103		9,955,809		350,744		18,371,194
Total		157,446,946		46,500,287		13,000,949		12,292,530		62,414,616		4,846,529		296,501,857
Liability:
Deposits due to customers		101,367,145		48,458,377		29,955,015		19,029,698		38,912,199		296,042		238,018,476
Borrowings		9,390,749		2,020,828		859,698		513,068		2,823,334		523,418		16,131,095
Debentures		979,221		1,801,149		2,183,459		2,407,879		18,625,611		2,727,547		28,724,866
Total		111,737,115		52,280,354		32,998,172		21,950,645		60,361,144		3,547,007		282,874,437
	December 31, 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		161,653,892		41,671,530		7,614,159		6,411,841		54,150,998		26,272,958		297,775,378
AFS financial assets		2,150,708		2,500,103		2,016,711		2,367,762		4,229,000		601,735		13,866,019
HTM financial assets		2,286,179		2,161,467		1,433,425		1,687,362		9,369,794		345,868		17,284,095
Total		166,090,779		46,333,100		11,064,295		10,466,965		67,749,792		27,220,561		328,925,492
Liability:
Deposits due to customers		106,815,564		37,750,367		25,117,556		27,585,458		37,518,878		91,246		234,879,069
Borrowings		9,865,249		1,056,579		412,966		437,431		2,709,010		479,827		14,961,062
Debentures		1,955,902		2,452,240		1,018,563		1,752,847		19,770,538		2,869,766		29,819,856
Total		118,636,715		41,259,186		26,549,085		29,775,736		59,998,426		3,440,839		279,659,987

3) Currency risk

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

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

		June 30, 2018
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Korean Won equivalent		Korean Won equivalent
Asset	Loans and other financial assets at amortized cost		24,664		27,694,163		135,138		1,371,362		31,972		5,416,294		1,172		1,520,044		4,472,890		40,474,753
	Financial assets at FVTPL		84		94,261		359		3,645		—		—		36		46,488		75,122		219,516
	Financial assets at FVTOCI		1,726		1,936,385		—		—		300		50,874		—		—		338,214		2,325,473
	Securities at amortized cost		115		129,245		—		—		—		—		—		—		105,949		235,194
	Total		26,589		29,854,054		135,497		1,375,007		32,272		5,467,168		1,208		1,566,532		4,992,175		43,254,936
Liability	Financial liabilities at FVTPL		63		70,963		505		5,127		—		—		33		43,070		102,226		221,386
	Deposits due to customer		11,160		12,517,349		145,058		1,472,035		21,633		3,664,842		1,230		1,595,651		2,700,164		21,950,041
	Borrowings		6,417		7,201,536		2,211		22,438		—		—		232		303,001		476,871		8,003,846
	Debentures		3,708		4,159,175		—		—		—		—		—		—		284,293		4,443,468
	Other financial liabilities		3,240		3,633,942		23,541		238,890		5,568		943,321		140		182,002		4,602		5,002,757
	Total		24,588		27,582,965		171,315		1,738,490		27,201		4,608,163		1,635		2,123,724		3,568,156		39,621,498
Off-balance accounts			6,374		7,149,273		32,887		333,730		4,804		813,812		453		587,615		827,004		9,711,434

		December 31, 2017
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Korean Won equivalent		Korean Won equivalent
Asset	Loans and receivables		23,000		24,642,900		126,944		1,204,843		25,224		4,127,936		1,156		1,479,351		3,937,733		35,392,763
	Financial assets at FVTPL		32		34,303		25		238		—		—		27		34,583		104,892		174,016
	AFS financial assets		1,966		2,105,972		—		—		319		52,259		—		590		302,801		2,461,622
	HTM financial assets		111		118,868		—		—		—		—		—		—		78,175		197,043
	Total		25,109		26,902,043		126,969		1,205,081		25,543		4,180,195		1,183		1,514,524		4,423,601		38,225,444
Liability	Financial liabilities at FVTPL		41		43,423		79		752		—		—		19		24,878		69,977		139,030
	Deposits due to customer		13,744		14,725,686		195,176		1,852,440		21,865		3,578,142		883		1,129,802		2,396,826		23,682,896
	Borrowings		6,604		7,080,118		2,218		21,056		—		—		247		315,685		242,874		7,659,733
	Debentures		3,467		3,714,411		—		—		700		114,555		—		—		375,749		4,204,715
	Other financial liabilities		2,392		2,562,740		16,125		153,043		1,802		294,950		129		165,189		588,625		3,764,547
	Total		26,248		28,126,378		213,598		2,027,291		24,367		3,987,647		1,278		1,635,554		3,647,051		39,450,921
Off-balance accounts			8,108		8,687,009		33,624		319,127		1,199		196,261		406		519,843		176,886		9,899,126

(3) Liquidity risk

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

1) Liquidity risk management

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

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

2) Maturity analysis of non-derivative financial liabilities

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

	June 30, 2018
	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		176,097		—		—		—		—		—		176,097
Deposits due to customers		145,033,422		38,505,386		22,976,591		24,574,059		7,487,432		2,144,802		240,721,692
Borrowings		6,407,137		2,639,064		1,876,893		1,478,115		3,238,353		545,403		16,184,965
Debentures		979,221		1,801,149		2,183,459		2,407,879		18,626,696		2,726,462		28,724,866
Other financial liabilities		14,098,508		216,627		3,644		908		621,127		1,955,992		16,896,806
Total		166,694,385		43,162,226		27,040,587		28,460,961		29,973,608		7,372,659		302,704,426

	December 31, 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		168,442		155,984		1,717		512		375		—		327,030
Deposits due to customers		148,008,777		29,563,310		18,175,348		32,468,110		7,409,118		2,624,594		238,249,257
Borrowings		6,115,732		1,893,173		1,489,272		1,178,107		3,924,681		479,568		15,080,533
Debentures		1,955,255		2,452,565		1,018,714		1,744,731		19,770,380		2,869,699		29,811,344
Other financial liabilities		7,121,342		162,871		825		1,003		128,940		2,730,001		10,144,982
Total		163,369,548		34,227,903		20,685,876		35,392,463		31,233,494		8,703,862		293,613,146

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

	June 30, 2018
	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		176,097		—		—		—		—		—		176,097
Deposits due to customers		154,934,637		40,340,567		20,220,152		18,154,029		6,115,894		348,774		240,114,053
Borrowings		6,407,137		2,639,064		1,876,893		1,478,115		3,242,839		540,917		16,184,965
Debentures		979,221		1,801,149		2,183,459		2,407,879		18,626,696		2,726,462		28,724,866
Other financial liabilities		14,098,508		216,627		3,644		908		621,127		1,955,992		16,896,806
Total		176,595,600		44,997,407		24,284,148		22,040,931		28,606,556		5,572,145		302,096,787

	December 31, 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		168,442		155,984		1,717		512		375		—		327,030
Deposits due to customers		159,146,602		31,298,562		16,667,130		21,995,294		6,487,047		2,278,756		237,873,391
Borrowings		6,115,732		1,893,173		1,489,272		1,178,107		3,924,681		479,568		15,080,533
Debentures		1,955,255		2,452,565		1,018,714		1,744,731		19,770,380		2,869,699		29,811,344
Other financial liabilities		7,121,342		162,871		825		1,003		128,940		2,730,001		10,144,982
Total		174,507,373		35,963,155		19,177,658		24,919,647		30,311,423		8,358,024		293,237,280

3) Maturity analysis of derivative financial liabilities

Derivatives held for trading purpose are not managed in accordance with their contractual maturity, since the Group holds such financial instruments with the purpose of disposing or redemption before their maturity. As such, those derivatives are incorporated as “within 3 months” in the table below.

Derivatives held for hedging purpose are estimated by offsetting cash inflows and cash outflows.

The cash flow by the maturity of derivative financial liabilities as of June 30, 2018 and December 31, 2017 is as follows (Unit: Korean Won in millions):

	Remaining maturity
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
June 30, 2018		2,377,750		2,130		—		—		59,820		5,555		2,445,255
December 31, 2017		3,150,149		—		—		381		67,373		—		3,217,903

4) Maturity analysis of off-balance accounts

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

	June 30, 2018		December 31, 2017
Guarantees		12,372,573		12,859,715
Loan commitments		98,251,005		80,760,325

(4) Operational risk

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

1) Operational risk management

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

2) Operational risk measurement

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

(5) Capital management

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

According to the above regulations, the Group is required to meet the following new minimum requirements: Common Equity Tier 1 capital ratio of 7.13% and 6.25%, a minimum Tier 1 ratio of 8.63% and 7.75% and a minimum total regulatory capital of 10.63% and 9.75% as of June 30, 2018 and December 31, 2017, respectively.

Details of the Group’s capital adequacy ratio as of June 30, 2018 and December 31, 2017 are as follows (Unit: Korean Won in millions):

	June 30, 2018 (*)			December 31, 2017
Tier 1 capital		16,952,436			16,074,987
Other Tier 1 capital		2,748,005			3,041,664
Tier 2 capital		3,499,122			3,486,555
Total risk-adjusted capital		23,199,563			22,603,206
Risk-weighted assets for credit risk		139,868,803			134,767,711
Risk-weighted assets for market risk		2,292,979			2,316,938
Risk-weighted assets for operational risk		9,826,809			9,677,559
Total risk-weighted assets		151,988,591			146,762,208
Common Equity Tier 1 ratio		11.15	%		10.95	%
Tier 1 capital ratio		12.96	%		13.03	%
Total capital ratio		15.26	%		15.40	%

(*) Capital adequacy ratio as of June 30, 2018 is tentatively measured.

5. OPERATING SEGMENTS

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

(1) Segment by type of customers

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

• Consumer banking: Loans/deposits and financial services for 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 in securities and derivatives, etc.

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

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

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

	For the six months ended June 30, 2018
	Consumer banking			Corporate banking			Investment banking			Capital market			Credit cards			Headquarters and others			Subtotal			Adjust- ments			Total
Net Interest income
Interest income		1,703,521			1,638,747			74,670			5,687			323,443			747,596			4,493,664			149,752			4,643,416
Interest expense		(499,830	)		(994,523	)		(92	)		—			(75,716	)		(458,733	)		(2,028,894	)		149,952			(1,878,942	)
Inter-segment		(274,405	)		323,139			(77,656	)		10,259			—			18,663			—			—			—
		929,286			967,363			(3,078	)		15,946			247,727			307,526			2,464,770			299,704			2,764,474
Net non-interest income
Non-interest income		405,145			432,262			137,031			4,765,167			605,165			516,766			6,861,536			(236,269	)		6,625,267
Non-interest expense		(127,357	)		(183,814	)		(40,188	)		(4,725,584	)		(562,210	)		(218,710	)		(5,857,863	)		(182,141	)		(6,040,004	)
Inter-segment		78,522			36,407			—			—			—			(114,929	)		—			—			—
		356,310			284,855			96,843			39,583			42,955			183,127			1,003,673			(418,410	)		585,263
Other income (expense)
Administrative expense		(875,328	)		(403,216	)		(5,689	)		(7,852	)		(83,575	)		(327,244	)		(1,702,904	)		135,566			(1,567,338	)
Reversal of allowance for credit loss and impairment losses due to credit loss		(53,008	)		109,283			52,244			(3,268	)		(113,960	)		62,729			54,020			(28,704	)		25,316
		(928,336	)		(293,933	)		46,555			(11,120	)		(197,535	)		(264,515	)		(1,648,884	)		106,862			(1,542,022	)
Operating income (expenses)		357,260			958,285			140,320			44,409			93,147			226,138			1,819,559			(11,844	)		1,807,715
Non-operating income (expenses)		(9,889	)		671			17,411			—			(2,988	)		17,615			22,820			(29,003	)		(6,183	)
Net income before income tax expense		347,371			958,956			157,731			44,409			90,159			243,753			1,842,379			(40,847	)		1,801,532
Income tax expense		(95,528	)		(260,186	)		(43,377	)		(12,212	)		(22,541	)		(52,320	)		(486,164	)		948			(485,216	)
Net income		251,843			698,770			114,354			32,197			67,618			191,433			1,356,215			(39,899	)		1,316,316

	For the six months ended June 30, 2017
	Consumer banking			Corporate banking			Investment banking			Capital market			Credit cards			Headquarters and others			Subtotal			Adjust- ments			Total
Net Interest income
Interest income		1,539,729			1,456,198			72,232			8,938			288,648			668,644			4,034,389			155,195			4,189,584
Interest expense		(480,814	)		(818,422	)		(126	)		—			(65,600	)		(411,449	)		(1,776,411	)		137,147			(1,639,264	)
Inter-segment		(248,116	)		229,029			(66,693	)		8,324			—			77,456			—			—			—
		810,799			866,805			5,413			17,262			223,048			334,651			2,257,978			292,342			2,550,320
Net non-interest income
Non-interest income		424,214			333,646			212,107			4,991,598			566,107			1,129,696			7,657,368			(126,727	)		7,530,641
Non-interest expense		(146,630	)		(82,261	)		(121,238	)		(4,968,840	)		(520,469	)		(862,571	)		(6,702,009	)		(240,504	)		(6,942,513	)
Inter-segment		45,402			29,680			—			—			—			(75,082	)		—			—			—
		322,986			281,065			90,869			22,758			45,638			192,043			955,359			(367,231	)		588,128
Other income (expense)
General and administrative expense		(869,732	)		(402,661	)		(5,696	)		(7,721	)		(77,909	)		(298,578	)		(1,662,297	)		123,870			(1,538,427	)
Reversal of allowance for credit loss and impairment losses due to credit loss		(45,964	)		(128,685	)		31,311			22,135			(106,698	)		152,836			(75,065	)		(40,728	)		(115,793	)
		(915,696	)		(531,346	)		25,615			14,414			(184,607	)		(145,742	)		(1,737,362	)		83,142			(1,654,220	)
Operating income		218,089			616,524			121,897			54,434			84,079			380,952			1,475,975			8,253			1,484,228
Non-operating income (expense)		8,862			(3,122	)		22,581			—			(2,399	)		(26,180	)		(258	)		(54,022	)		(54,280	)
Net income before income tax expense		226,951			613,402			144,478			54,434			81,680			354,772			1,475,717			(45,769	)		1,429,948
Income tax expense		(54,923	)		(139,138	)		(34,964	)		(13,173	)		(19,816	)		(50,841	)		(312,855	)		(8,078	)		(320,933	)
Net income		172,028			474,264			109,514			41,261			61,864			303,931			1,162,862			(53,847	)		1,109,015

(2) Information on products and services

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

(3) Information on geographical areas

Among the Group’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the six months ended June 30, 2018 and 2017 amounted to 10,626,155 million Won and 11,185,991 million Won, respectively, and revenue from the foreign customers amounted to 642,528 million Won and 534,234 million Won, respectively. Among the Group’s non-current assets (investments in joint ventures and associates, investment properties, premises and equipment and intangible assets), non-current assets attributed to domestic subsidiaries as of June 30, 2018 and December 31, 2017 are 3,664,521 million Won and 3,550,764 million Won, respectively, and foreign subsidiaries are 233,864 million Won and 233,732 million Won, respectively.

6. CASH AND CASH EQUIVALENTS

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

	June 30, 2018		December 31, 2017
Cash		1,889,739		2,009,363
Foreign currencies		795,692		617,155
Demand deposits		2,777,874		3,423,355
Fixed deposits		457,263		858,413
Total		5,920,568		6,908,286

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

	For the six months ended June 30, 2018			For the six months ended June 30, 2017
Changes in other comprehensive gain due to remeasurement of financial assets designated at FVTOCI		41,452			—
Changes in other comprehensive loss due to valuation of AFS financial assets		—			(28,706	)
Changes in other comprehensive income of investment in associates		1,210			1,507
Changes in other comprehensive gain (loss) of foreign operations translation		35,526			(69,010	)
Changes in other comprehensive loss related to valuation of cash flow hedging		(6,213	)		(1,526	)
Changes in other comprehensive loss due to remeasurement of the net defined benefit liability		(59,573	)		(9,677	)
Changes in investments in associates due to debt-equity swap		—			51,405
Changes in investments in associates due to accounts transfer		(5,865	)		(16,354	)
Changes in accrued dividends of hybrid equity securities		(80	)		(9,804	)
Changes in intangible assets related to accounts payable		32,369			(8,506	)
Classified to assets held for sale from premises and equipment		6,050			2,184

7. FINANCIAL ASSETS AT FVTPL

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

	June 30, 2018		December 31, 2017
Financial assets at fair value through profit or loss mandatorily measured at fair value		6,340,704		—
Financial assets held for trading		—		5,820,787
Financial assets designated at FVTPL		—		22,290
Total		6,340,704		5,843,077

(2) Financial assets at fair value through profit or loss mandatorily measured at fair value and financial assets held for trading are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Deposits:
Gold banking asset		24,921		25,972
Securities:
Debt securities
Korean treasury and government agencies		639,476		540,438
Financial institutions		639,711		1,476,498
Corporates		714,508		627,397
Others		156		—
Equity securities		433,316		21,666
Capital contributions		349,470		—
Beneficiary certificates		810,968		13,041
Subtotal		3,587,605		2,679,040
Loans		336,967		—
Derivatives assets		2,391,211		3,115,775
Total		6,340,704		5,820,787

(3) Financial assets at fair value through profit or loss designated as upon initial recognition is nil as of June 30, 2018 and financial assets at fair value through profit or loss designated as upon initial recognition as of December 31, 2017 is as follows (Unit: Korean Won in millions):

	December 31, 2017
Debt securities		9,694
Equity securities		12,596
Total		22,290

8. FINANCIAL ASSETS AT FVTOCI AND AFS FINANCIAL ASSETS

(1) Details of financial assets at FVTOCI as of June 30, 2018 and AFS financial assets as of December 31, 2017 are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Debt securities:
Korean treasury and government agencies		2,195,526		2,330,567
Financial institutions		7,370,107		5,217,266
Corporates		1,797,635		2,725,232
Asset-backed securities		—		308,181
Bond denominated in foreign currencies		2,325,422		2,442,579
Others		—		35,163
Subtotal		13,688,690		13,058,988
Equity securities		905,779		1,411,078
Beneficiary certificates		—		712,628
Securities loaned		50,139		170,256
Total		14,644,608		15,352,950

(2) Details of equity securities designated as financial assets at FVTOCI are as follows (Unit: Korean Won in millions):

	June 30, 2018
Purpose of acquisition	Fair value
Strategic business partnership		737,104
Debt-equity swap		168,533
Others(*)		142
Total		905,779

(*) Cooperate insurance, etc.

(3) Changes in the loss allowance and gross carrying amount of financial assets at FVTOCI are as follows (Unit: Korean Won in millions):

1) Loss allowance

	For the six months ended June 30, 2018
	Stage 1			Stage 2			Stage 3		Total
Beginning balance (*1)		(4,107	)		(129	)		—		(4,236	)
Transfer to 12-month expected credit losses		—			—			—		—
Transfer to lifetime expected credit losses		—			—			—		—
Transfer to credit-impaired financial assets		—			—			—		—
Net reversal (provision) of loss allowance		(562	)		103			—		(459	)
Disposal		27			—			—		27
Others (*2)		(2	)		—			—		(2	)
Ending balance		(4,644	)		(26	)		—		(4,670	)

(*1) The beginning balance was restated in accordance with K-IFRS 1109.

(*2) Others consist of foreign currencies translation, etc.

2) Gross carrying amount

	For the six months ended June 30, 2018
	Stage 1			Stage 2			Stage 3		Total
Beginning balance		12,843,997			30,212			—		12,874,209
Transfer to 12-month expected credit losses		—			—			—		—
Transfer to lifetime expected credit losses		—			—			—		—
Transfer to credit-impaired financial assets		—			—			—		—
Acquisition		5,075,597			—			—		5,075,597
Disposal		(4,294,135	)		(15,047	)		—		(4,309,182	)
Gain (loss) on valuation		12,874			10			—		12,884
Amortization on the effective interest method		(2,289	)		—			—		(2,289	)
Others (*)		87,610			—			—		87,610
Ending balance		13,723,654			15,175			—		13,738,829

(*) Others consist of foreign currencies translation, etc.

(4) The Group disposed equity securities designated as financial assets at FVTOCI in accordance with the resolution of disposal from the creditors’ council for the six months ended June 30, 2018. The fair value and accumulative loss on valuation of that equity securities at disposal date are 3,974 million Won and 424 million Won, respectively.

9. SECURITIES AT AMORTIZED COST AND HTM FINANCIAL ASSETS

(1) Details of securities at amortized cost as of June 30, 2018 and HTM financial assets as of December 31, 2017 are as follows (Unit: Korean Won in millions):

	June 30, 2018			December 31, 2017
Korean treasury and government agencies		4,630,598			3,994,857
Financial institutions		7,767,490			7,245,426
Corporates		5,074,097			5,311,970
Bond denominated in foreign currencies		235,194			197,043
Loss allowance		(5,250	)		—
Total		17,702,129			16,749,296

(2) Changes in the loss allowance and gross carrying amount of securities at amortized cost are as follows (Unit: Korean Won in millions):

1) Loss allowance

	For the six months ended June 30, 2018
	Stage 1			Stage 2		Stage 3		Total
Beginning balance (*1)		(5,078	)		—		—		(5,078	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of loss allowance		(191	)		—		—		(191	)
Disposal		22			—		—		22
Others (*2)		(3	)		—		—		(3	)
Ending balance		(5,250	)		—		—		(5,250	)

(*1) The beginning balance was restated in accordance with K-IFRS 1109.

(*2) Others consist of foreign currencies translation, etc.    

2) Gross carrying amount

	For the six months ended June 30, 2018
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		16,749,296			—		—		16,749,296
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		5,829,462			—		—		5,829,462
Disposal / Redemption		(4,873,896	)		—		—		(4,873,896	)
Amortization on the effective interest method		(6,008	)		—		—		(6,008	)
Others (*)		8,525			—		—		8,525
Ending balance		17,707,379			—		—		17,707,379

(*) Others consist of foreign currencies translation, etc.    

10. LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST, AND LOANS AND RECEIVABLES

(1) Details of loans and other financial assets at amortized cost as of June 30, 2018 and loans and receivables as of December 31, 2017 are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Due from banks		17,770,356		8,868,378
Loans		248,794,014		251,523,301
Other financial assets(other receivables)		11,155,633		6,714,525
Total		277,720,003		267,106,204

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

	June 30, 2018			December 31, 2017
Due from banks in local currency:
Due from The Bank of Korea (“BOK”)		14,500,746			6,246,496
Due from depository banks		90,003			30,003
Due from non-depository institutions		33			150
Due from the Korea Exchange		—			50,000
Others		68,132			97,365
Loss allowance		(3,475	)		(1,541	)
Subtotal		14,655,439			6,422,473
Due from banks in foreign currencies:
Due from banks on demand		1,055,513			794,353
Due from banks on time		1,237,312			972,915
Others		824,229			679,554
Loss allowance		(2,137	)		(917	)
Subtotal		3,114,917			2,445,905
Total		17,770,356			8,868,378

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

	Counterparty	June 30, 2018		Reason of restriction
Due from banks in local currency:
Due from BOK	The BOK		14,500,746	Reserve deposits under the BOK Act
Others	The Korea Exchange and others		64,150	Central counterparty KRW margin and others
Subtotal			14,564,896
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		1,048,609	Reserve deposits under the BOK Act and others
Others	The People’s Bank of China and others		824,229	Reserve deposits and others
Due from banks on time	National Bank of Cambodia		56	Fast And Secure Transfer (Payment system)
Subtotal			1,872,894
Total			16,437,790

	Counterparty	December 31, 2017		Reason of restriction
Due from banks in local currency:
Due from BOK	The BOK		6,246,496	Reserve deposits under the BOK Act
Others	The Korea Exchange and others		94,394	Central counterparty KRW margin and others
Subtotal			6,340,890
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		787,520	Reserve deposits under the BOK Act and others
Others	The People’s Bank of China and others		367,108	Reserve deposits and others
Subtotal			1,154,628
Total			7,495,518

(4) Changes in the loss allowance and gross carrying amount of due from banks are as follows (Unit: Korean Won in millions):

1) Loss allowance

	For the six months ended June 30, 2018
	Stage 1			Stage 2		Stage 3		Total
Beginning balance (*1)		(3,092	)		—		—		(3,092	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of loss allowance		(2,500	)		—		—		(2,500	)
Others (*2)		(20	)		—		—		(20	)
Ending balance		(5,612	)		—		—		(5,612	)

(*1) The beginning balance was restated in accordance with K-IFRS 1109.

(*2) Others consist of foreign currencies translation and etc.

2) Gross carrying amount

	For the six months ended June 30, 2018
	Stage 1		Stage 2		Stage 3		Total
Beginning balance		8,870,835		—		—		8,870,835
Transfer to 12-month expected credit losses		—		—		—		—
Transfer to lifetime expected credit losses		—		—		—		—
Transfer to credit-impaired financial assets		—		—		—		—
Net increase		8,855,041		—		—		8,855,041
Others (*)		50,092		—		—		50,092
Ending balance		17,775,968		—		—		17,775,968

(*) Others consist of foreign currencies translation and etc.

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

	June 30, 2018			December 31, 2017
Loans in local currency		204,830,133			200,213,230
Loans in foreign currencies		14,731,407			13,147,888
Domestic banker’s letter of credit		3,074,011			2,516,907
Credit card accounts		7,570,281			6,827,295
Bills bought in foreign currencies		6,830,374			8,197,159
Bills bought in local currency		257,405			334,714
Factoring receivables		61,382			137,523
Advances for customers on guarantees		14,910			23,620
Private placement bonds		433,591			362,319
Securitized loans		1,228,212			563,152
Call loans		3,135,670			3,003,455
Bonds purchased under resale agreements		6,999,881			16,859,064
Loan origination costs and fees		545,864			510,860
Others		836,266			607,325
Discounted present value		(5,068	)		(10,988	)
Loss allowance		(1,750,305	)		(1,770,222	)
Total		248,794,014			251,523,301

(6) Changes in the loss allowance on loans for the six months ended June 30, 2018 are as follows (Unit: Korean Won in millions):

	For the six months ended June 30, 2018
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance (*1)		(101,479	)		(41,358	)		(117,168	)		(365,246	)		(255,926	)		(905,243	)
Transfer to 12-month expected credit losses		(9,219	)		8,797			421			(20,913	)		20,634			280
Transfer to lifetime expected credit losses		6,076			(7,514	)		1,438			17,263			(106,963	)		89,700
Transfer to credit-impaired financial assets		19,177			23,228			(42,406	)		2,976			12,016			(14,991	)
Net reversal (provision) of loss allowance		(22,903	)		(29,025	)		(51,219	)		(5,600	)		30,121			154,111
Recoveries of loans previously charged off		—			—			(23,392	)		—			—			(52,273	)
Charge-off		—			—			117,228			—			—			121,847
Disposal		—			—			780			—			67			17,676
Unwinding effect		—			—			3,665			—			—			12,961
Others (*2)		(1,994	)		(39	)		(1,156	)		23,916			(87	)		(312	)
Ending balance		(110,342	)		(45,911	)		(111,809	)		(347,604	)		(300,138	)		(576,244	)

	For the six months ended June 30, 2018
	Credit card accounts									Sub-total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance (*1)		(57,134	)		(71,463	)		(102,858	)		(523,859	)		(368,747	)		(1,125,269	)
Transfer to 12-month expected credit losses		(12,969	)		12,880			89			(43,101	)		42,311			790
Transfer to lifetime expected credit losses		6,963			(7,307	)		344			30,302			(121,784	)		91,482
Transfer to credit-impaired financial assets		698			2,537			(3,235	)		22,851			37,781			(60,632	)
Net reversal (provision) of loss allowance		(409	)		(11,715	)		(90,448	)		(28,912	)		(10,619	)		12,444
Recoveries of loans previously charged off		—			—			(28,706	)		—			—			(104,371	)
Charge-off		—			—			104,478			—			—			343,553
Disposal		—			—			—			—			67			18,456
Unwinding effect		—			—			—			—			—			16,626
Others (*2)		(2	)		—			—			21,920			(126	)		(1,468	)
Ending balance		(62,853	)		(75,068	)		(120,336	)		(520,799	)		(421,117	)		(808,389	)

(*1) The beginning balance was restated in accordance with K-IFRS 1109.

(*2) Others consist of debt-equity swap, foreign currencies translation and etc.

Changes in the loss allowances on loans and receivables for the six months ended June 30, 2017, are as follows (Unit: Korean Won in millions):

	For six months ended June 30, 2017
	Consumers			Corporates			Credit card			Others			Total
Beginning balance		(163,858	)		(1,498,842	)		(155,372	)		(209,024	)		(2,027,096	)
Net reversal (provision) of loss allowance		(65,582	)		(191,263	)		(91,022	)		13,891			(333,976	)
Recoveries of loans previously charged off		(21,659	)		(55,319	)		(24,808	)		(3	)		(101,789	)
Charge-off		67,593			220,598			104,195			51,260			443,646
Disposal		830			58,431			—			29,264			88,525
Unwinding effect		4,620			20,047			—			—			24,667
Others(*)		416			179,068			—			(633	)		178,851
Ending balance		(177,640	)		(1,267,280	)		(167,007	)		(115,245	)		(1,727,172	)

(*) Others consist of debt-equity swap, foreign currencies translation and etc.

(7) Changes in the gross carrying amount of loans are as follows (Unit: Korean Won in millions):

	For the six months ended June 30, 2018
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		103,502,347			5,487,758			326,739			130,561,786			5,000,966			1,622,410
Transfer to 12-month expected credit losses		1,772,982			(1,768,978	)		(4,004	)		1,113,857			(1,112,533	)		(1,324	)
Transfer to lifetime expected credit losses		(2,731,516	)		2,746,818			(15,302	)		(2,112,755	)		2,222,364			(109,609	)
Transfer to credit-impaired financial assets		(84,885	)		(101,151	)		186,036			(155,933	)		(118,707	)		274,640
Charge-off		—			—			(117,228	)		—			—			(121,847	)
Disposal		—			(270	)		(13,483	)		—			(883	)		(67,695	)
Net increase (decrease)		2,913,765			(742,949	)		(22,980	)		(4,520,684	)		(688,875	)		(149,456	)
Ending balance		105,372,693			5,621,228			339,778			124,886,271			5,302,332			1,447,119

	For the six months ended June 30, 2018
	Credit card accounts									Sub-total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		5,721,743			935,266			177,983			239,785,876			11,423,990			2,127,132
Transfer to 12-month expected credit losses		243,044			(242,932	)		(112	)		3,129,883			(3,124,443	)		(5,440	)
Transfer to lifetime expected credit losses		(299,729	)		300,190			(461	)		(5,144,000	)		5,269,372			(125,372	)
Transfer to credit-impaired financial assets		(27,288	)		(24,128	)		51,416			(268,106	)		(243,986	)		512,092
Charge-off		—			—			(104,478	)		—			—			(343,553	)
Disposal		—			—			—			—			(1,153	)		(81,178	)
Net increase (decrease)		722,640			46,551			75,193			(884,279	)		(1,385,273	)		(97,243	)
Ending balance		6,360,410			1,014,947			199,541			236,619,374			11,938,507			1,986,438

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

	June 30, 2018			December 31, 2017
CMA accounts		200,000			135,000
Receivables		8,721,745			4,459,318
Accrued income		1,055,713			1,026,273
Telex and telephone subscription rights and refundable deposits		980,611			984,620
Other receivables		272,403			166,877
Loss allowance		(74,839	)		(57,563	)
Total		11,155,633			6,714,525

(9) Changes in the loss allowances on other financial assets are as follows (Unit: Korean Won in millions):

	For the six months ended June 30, 2018
	Stage 1			Stage 2			Stage 3			Total
Beginning balance (*)		(2,955	)		(1,832	)		(54,211	)		(58,998	)
Transfer to 12-month expected credit losses		(161	)		146			15			—
Transfer to lifetime expected credit losses		112			(122	)		10			—
Transfer to credit-impaired financial assets		23			167			(190	)		—
Net provision of loss allowance		(360	)		(256	)		(30,854	)		(31,470	)
Recoveries of other financial assets previously charged off		—			—			(2	)		(2	)
Charge-off		—			—			15,225			15,225
Disposal		—			—			593			593
Others		(208	)		—			21			(187	)
Ending balance		(3,549	)		(1,897	)		(69,393	)		(74,839	)

(*) The beginning balance was restated in accordance with K-IFRS 1109.

(10) Changes in the gross carrying amount of other financial assets are as follows (Unit: Korean Won in millions):

	For the six months ended June 30, 2018
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		6,662,335			29,124			79,912			6,771,371
Transfer to 12-month expected credit losses		8,130			(8,109	)		(21	)		—
Transfer to lifetime expected credit losses		(10,935	)		10,949			(14	)		—
Transfer to credit-impaired financial assets		(768	)		(1,120	)		1,888			—
Charge-off		—			—			(15,225	)		(15,225	)
Disposal		—			(2	)		(735	)		(737	)
Net increase and others		4,460,291			(1,650	)		16,422			4,475,063
Ending balance		11,119,053			29,192			82,227			11,230,472

11. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1) The fair value hierarchy

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

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

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

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

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

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

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

	June 30, 2018
	Level 1 (*1)		Level 2 (*1)		Level 3		Total
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Deposits		24,921		—		—		24,921
Debt securities		375,280		1,611,129		7,442		1,993,851
Equity securities		80,536		—		352,780		433,316
Capital contributions		—		—		349,470		349,470
Beneficiary certificates		—		62,173		748,795		810,968
Loans		—		85,000		251,967		336,967
Derivative assets		17,439		2,337,601		36,171		2,391,211
Subtotal		498,176		4,095,903		1,746,625		6,340,704
Financial assets at FVTOCI
Debt securities		2,463,992		11,224,698		—		13,688,690
Equity securities		440,038		—		465,741		905,779
Securities loaned		—		50,139		—		50,139
Subtotal		2,904,030		11,274,837		465,741		14,644,608
Derivative assets		—		12,395		—		12,395
Total		3,402,206		15,383,135		2,212,366		20,997,707

	June 30, 2018
	Level 1 (*1)		Level 2 (*1)		Level 3		Total
Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair value
Deposits due to customers		24,485		—		—		24,485
Derivative liabilities		3,269		2,333,558		40,923		2,377,750
Subtotal		27,754		2,333,558		40,923		2,402,235
Financial liabilities at fair value through profit or loss designated as upon initial recognition
Equity-linked securities		—		—		176,097		176,097
Derivative liabilities		—		67,505		—		67,505
Total		27,754		2,401,063		217,020		2,645,837
	December 31, 2017
	Level 1 (*1)		Level 2 (*1)		Level 3 (*2)		Total
Financial assets:
Financial assets held for trading
Deposits		25,972		—		—		25,972
Debt securities		405,942		2,238,391		—		2,644,333
Equity securities		21,666		—		—		21,666
Beneficiary certificates		—		13,041		—		13,041
Derivative assets		1,021		3,093,272		21,482		3,115,775
Subtotal		454,601		5,344,704		21,482		5,820,787
Financial assets designated at FVTPL
Debt securities		—		—		9,694		9,694
Equity securities		—		—		12,596		12,596
Subtotal		—		—		22,290		22,290
AFS financial assets
Debt securities		2,710,172		10,348,815		—		13,058,987
Equity securities		399,214		—		1,011,864		1,411,078
Beneficiary certificates		—		68,722		643,906		712,628
Securities loaned		69,778		100,478		—		170,256
Subtotal		3,179,164		10,518,015		1,655,770		15,352,949
Derivative assets		—		59,272		—		59,272
Total		3,633,765		15,921,991		1,699,542		21,255,298
Financial liabilities:
Financial liabilities held for trading
Deposits due to customers		25,964		—		—		25,964
Derivative liabilities		2,613		3,126,585		20,951		3,150,149
Subtotal		28,577		3,126,585		20,951		3,176,113
Financial liabilities designated at FVTPL
Equity-linked securities		—		—		160,057		160,057
Debentures		—		91,739		—		91,739
Subtotal		—		91,739		160,057		251,796
Derivative liabilities		—		67,754		—		67,754
Total		28,577		3,286,078		181,008		3,495,663

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

(*2) Certain AFS unquoted equity securities were measured at cost as of December 31, 2017, that amounted to 37,092 million Won. These unquoted equity instruments mostly represent minority investments in structured entity vehicles, such as asset securitization structures. They are measured at cost because (a) observable inputs of financial information to measure fair value were not available to obtain, (b) there was a significant variance in likely estimated cash flows or (c) the probabilities for various estimated cash flows could not be measured reliably. In addition, the Group has no intention to dispose these investments in the foreseeable future.

Financial assets and liabilities at fair value through profit or loss mandatorily measured at fair value, financial liabilities at fair value through profit or loss designated as upon initial recognition, financial assets at FVTOCI, 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 Group determines the fair value using valuation methods. Valuation methods and input variables for each type of financial instruments are as follows:

	Valuation methods	Input variables
Loans	The fair value of Loans is measured by the Binomial tree given the values of underlying assets and volatility.	Values of underlying assets, Volatility
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, capital contribution and Beneficiary certificates	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, etc.
Derivatives	The in-house developed model which is based on the models that are used by market participants in the valuation of general OTC derivative products, such as options, interest rate swaps, currency swap and currency forward that are based on inputs observable in the market. However, for some complicated financial instruments of which valuation should be based on some assumptions since some significant or all inputs to be used in the model are not observable in the market, the in-house derived model which is developed from the general valuation models, such as Finite Difference Method (“FDM”) or Monte Carlo Simulation.	Risk-free market rate, forward rate, volatility, foreign exchange rate, stock prices, etc.
Equity-linked securities	The fair value of security linked to stock prices or derivatives is measured by the models such as DCF model, FDM, or Monte Carlo Simulation given the natures of the securities or underlying assets.	Values of underlying assets, risk-free market rate, market rate, dividend and convenience yield, volatility, correlation coefficient, credit spread, and foreign exchange rate
Debentures	The fair value is measured by discounting the projected cash flows of a debenture by applying the market discount rate that is reflecting credit rating of the Group.	Risk-free market rate, forward rate

Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but unobservable inputs are as follows:

	Fair value measurement technique	Input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Loans	Binomial tree	Stock, Volatility of underlying asset	14.92%-41.24%	Variation of fair value increases as volatility increases.
Derivative assets	Option valuation model and others	Correlation coefficient	0.900–0.970	Variation of fair value increases as correlation coefficient increases.
		Volatility of underlying asset	10.61%–27.59%	Variation of fair value increases as volatility increases.
Derivative liabilities	Option valuation model and others	Correlation coefficient	0.900–0.970	Variation of fair value increases as correlation coefficient increases.
		Volatility of underlying asset	10.61%–27.59%	Variation of fair value increases as volatility increases.
Equity-linked securities	Monte Carlo Simulation and others	Correlation coefficient	0.0861–0.688	Equity-linked securities’ variation of fair value increases if both volatility and correlation coefficient increase. However, when correlation coefficient decreases despite the increase in volatility, the variation of fair value of a compound financial instrument may decrease.
		Volatility of underlying asset	18.60%–26.88%
Equity securities and beneficiary certificates	External appraisal value and others	Expected growth rate	0.00%	Fair value increases as expected growth rate increases.
		Discount rate	0.99%-18.73%	Fair value increases as discount rate decreases.
		Volatility of real estate sale price	0.00%	Fair value increases as sale price increases.

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

(3) Changes in financial assets and liabilities measured at fair value classified into Level 3 are as follows (Unit: Korean Won in millions):

	For six months ended June 30, 2018
	January 1, 2018		Net Income (loss) (*1)			Other comprehensive income		Purchases/ issuances			Disposals/ settlements			Transfer to or out of Level 3 (*2)		June 30, 2018
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Debt securities		9,694		(111	)		—		—			(2,141	)		—		7,442
Equity securities		280,171		22,834			—		50,005			(230	)		—		352,780
Capital contributions		294,121		21,934			—		49,367			(15,952	)		—		349,470
Beneficiary certificates		654,066		12,973			—		1,9294,763			(1,843,007	)		—		748,795
Loans		165,001		3,616			—		125,807			(42,457	)		—		251,967
Derivative assets		19,346		65,856			—		1,936			(50,967	)		—		36,171
Subtotal		1,422,399		127,102			—		2,151,878			(1,954,754	)		—		1,746,625
Financial assets at FVTOCI
Equity securities		451,287		(393	)		14,557		290			—			—		465,741
Total		1,873,686		126,709			14,557		2,152,168			(1,954,754	)		—		2,212,366
Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair value
Derivative liabilities		20,951		73,951			—		(3,058	)		(50,921	)		—		40,923
Financial liabilities at fair value through profit or loss designated as upon initial recognition
Equity-linked securities		160,057		(1,438	)		—		179,044			(161,566	)		—		176,097
Total		181,008		72,513			—		175,986			(212,487	)		—		217,020

(*1) The losses that increase financial liabilities are presented as positive amounts, and the gains that decrease financial liabilities are presented as negative amounts. The gain amounting to 61,323 million Won for six months ended June 30, 2018, which is from financial assets and liabilities that the Group holds as at the end of the periods, has been recognized in net gain (loss) on financial assets at FVTPL and net gain (loss) on financial assets at FVTOCI in the consolidated statement of comprehensive income.

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

	For the six months ended June 30, 2017
	January 1, 2017		Net Income (loss) (*1)			Other comprehensive income (loss)			Purchases/ Issuances		Disposals/ Settlements			Transfer to or out of level 3 (*2)		June 30, 2017
Financial assets:
Financial assets held for trading
Derivative assets		23,153		21,217			—			472		(17,420	)		—		27,422
Financial assets designed at FVTPL
Debt securities		4,348		191			—			2,000		—			—		6,539
Equity securities		12,652		(207	)		—			—		—			—		12,445
Sub-total		17,000		(16	)		—			2,000		—			—		18,984
AFS financial assets
Equity securities		1,024,935		19,241			10,175			27,289		(31,692	)		—		1,049,948
Beneficiary certificates		530,511		3,442			(2,188	)		127,147		(70,600	)		—		588,312
Sub-total		1,555,446		22,683			7,987			154,436		(102,292	)		—		1,638,260
Derivative assets		99		185			—			—		(284	)		—		—
Total		1,595,698		44,069			7,987			156,908		(119,996	)		—		1,684,666
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities		33,524		14,142			—			501		(15,015	)		—		33,152
Financial liabilities designated at FVTPL
Equity-linked securities		673,709		83,962			—			—		(235,296	)		—		522,375
Total		707,233		98,104			—			501		(250,311	)		—		555,527

(*1) The loss amounting to 61,518 million Won for the six months ended June 30, 2017, which is from financial assets and liabilities that the Group holds, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the statement of comprehensive income.

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

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

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

The equity investments classified as Level 3 equity securities whose costs are considered to provide the best estimate of fair value are excluded from sensitivity analysis.

The following table presents the sensitivity analysis to disclose the effect of reasonably possible volatility on the fair value of a Level 3 financial instruments (Unit: Korean Won in millions):

	June 30, 2018
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*1) (*2)		4,305		(2,452	)		—		—
Loans		422		(323	)		—		—
Debt securities		914		(784	)		—		—
Equity securities (*3) (*4)		10,740		(7,562	)		—		—
Beneficiary certificates (*4)		1,436		(1,544	)		—		—
Financial assets at FVTOCI		—		—			—		—
Equity securities (*3) (*4)		—		—			19,464		(8,704	)
Total		17,817		(12,665	)		19,464		(8,704	)
Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair value
Derivative liabilities (*1) (*2)		2,409		(4,285	)		—		—
Financial liabilities at fair value through profit or loss designated as upon initial recognition
Equity-linked securities (*1)		1,083		(1,158	)		—		—
Total		3,492		(5,443	)		—		—
	December 31, 2017
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets held for trading
Derivatives assets (*1)(*2)		1,234		(526	)		—		—
Financial assets designed at FVTPL
Debt securities (*5)		265		(309	)		—		—
Equity securities (*5)		670		(624	)		—		—
AFS Financial assets
Equity securities (*3)(*4)		—		—			28,583		(15,246	)
Beneficiary certificates (*4)		—		—			1,861		(1,857	)
Total		2,169		(1,459	)		30,444		(17,103	)
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities (*1)(*2)		5		(513	)		—		—
Financial liabilities designated at FVTPL
Equity-linked securities (*1)		8		(7	)		—		—
Total		13		(520	)		—		—

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

(*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%). The growth rate, discount rate, and liquidation value are major unobservable variables.

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

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

(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):

	June 30, 2018
	Fair value								Book value
	Level 1		Level 2		Level 3		Total
Financial assets:
Securities at amortized cost		1,792,215		15,911,262		—		17,703,477		17,702,129
Loans and other financial assets at amortized cost		—		—		277,718,440		277,718,440		277,720,003
Financial liabilities:
Deposits due to customers		—		237,811,780		—		237,811,780		237,900,166
Borrowings		—		15,924,417		—		15,924,417		15,899,599
Debentures		—		26,586,897		—		26,586,897		26,752,725
Other financial liabilities		—		21,405,921		—		21,405,921		21,408,267
	December 31, 2017
	Fair value								Book value
	Level 1		Level 2		Level 3		Total
Financial assets:
HTM financial assets		1,206,292		15,509,387		—		16,715,679		16,749,296
Loans and receivables		—		—		265,570,649		265,570,649		267,106,204
Financial liabilities:
Deposits due to customers		—		234,682,775		—		234,682,775		234,695,084
Borrowings		—		14,754,506		—		14,754,506		14,784,706
Debentures		—		27,889,781		—		27,889,781		27,869,651
Other financial liabilities		—		13,890,789		—		13,890,789		13,892,461

The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Group determines the fair value using valuation methods. Valuation methods and input variables for financial assets and liabilities that are measured at amortized costs are given as follows:

	Valuation methods	Input variables
Securities at amortized cost(HTM financial assets in previous year)	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 other financial assets at amortized cost (Loans and receivables in previous year)	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 Group.	Risk-free market rate and forward rate

(6) Financial instruments by category

Carrying amounts of financial assets and liabilities are as follows (Unit: Korean Won in millions):

	June 30, 2018
Financial assets	Financial asset at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Derivatives assets held for hedging		Total
Deposits		24,921		—		17,770,356		—		17,795,277
Securities at fair value through profit or loss		3,587,605		—		—		—		3,587,605
Securities at FVTOCI		—		14,644,608		—		—		14,644,608
Securities at amortized cost		—		—		17,702,129		—		17,702,129
Loans		336,967		—		248,794,014		—		249,130,981
Derivative assets		2,391,211		—		—		12,395		2,403,606
Other financial assets at amortized cost		—		—		11,155,633		—		11,155,633
Total		6,340,704		14,644,608		295,422,132		12,395		316,419,839

Financial liabilities	June 30, 2018
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives liabilities held for hedging		Total
Deposits due to customers		24,485		237,900,166		—		237,924,651
Borrowings		176,097		15,899,599		—		16,075,696
Debentures		—		26,752,725		—		26,752,725
Derivative liabilities		2,377,750		—		67,505		2,445,255
Other financial liabilities		—		21,463,163		—		21,463,163
Total		2,578,332		302,015,653		67,505		304,661,490

(*) Other financial liabilities include 54,896 million Won of financial guarantee liabilities measured at amortized cost included in provisions (Note23).

	December 31, 2017
Financial assets	Financial assets at FVTPL		AFS financial assets		HTM financial assets		Loans		Derivatives assets held for hedging		Total
Deposits		25,972		—		—		8,868,378		—		8,894,350
Financial assets at FVTPL		2,701,330		—		—		—		—		2,701,330
AFS financial assets		—		15,352,950		—		—		—		15,352,950
HTM financial assets		—		—		16,749,296		—		—		16,749,296
Loans		—		—		—		251,523,301		—		251,523,301
Derivative assets		3,115,775		—		—		—		59,272		3,175,047
Other financial assets at amortized cost		—		—		—		6,714,525		—		6,714,525
Total		5,843,077		15,352,950		16,749,296		267,106,204		59,272		305,110,799

Financial liabilities	June 30, 2017
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives liabilities held for hedging		Total
Deposits due to customers		25,964		234,695,084		—		234,721,048
Borrowings		160,057		14,784,706		—		14,944,763
Debentures		91,739		27,869,651		—		27,961,390
Derivative liabilities		3,150,149		—		67,754		3,217,903
Other financial liabilities		—		13,964,158		—		13,964,158
Total		3,427,909		291,313,599		67,754		294,809,262

(*) Other financial liabilities include 71,697 million Won of financial guarantee liabilities measured at amortized cost included in provisions (Note23).

12. DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS

(1) Derecognition of financial instruments

Transferred financial assets that do not meet the condition of derecognition in their entirety.

a) Disposal of securities under repurchase agreements

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

		June 30, 2018		December 31, 2017
Assets transferred	Financial assets at FVTOCI		10,002		—
	AFS financial assets		—		9,998
	Securities at amortized cost		5,444		—
	HTM financial assets		—		5,436
	Total		15,446		15,434
Related liabilities	Bonds sold under repurchase agreements		5,372		3,173

b) Securities loaned

When the Group loans its securities to outside parties, the legal ownerships of the securities are transferred; however, they should be returned at the end of lending period. Therefore, the Group does not derecognize them from the 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 the securities loaned are as follows (Unit: Korean Won in millions):

		June 30, 2018		December 31, 2017		Loaned to
Financial assets at FVTOCI	Korean treasury, corporation bonds and others		50,139		—	Korea Securities Finance Corporation
AFS financial assets	Korean treasury, government bonds and others		—		170,256	Korea Securities Finance Corporation and others
	Total		50,139		170,256

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

(2) The offset of financial assets and liabilities

The Group possesses both the uncollected domestic exchange receivables and the 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 and has been disclosed in loans at amortized cost and other financial assets (loans and receivables in previous year) or other financial liabilities of the Group’s statements of financial position.

The Group possesses the derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange that do not satisfy the offsetting criteria of K-IFRS 1032, but provide the Group under the circumstances of the trading party’s defaults, insolvency or bankruptcy, the right of 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 net amount of derivative assets and derivative liabilities, receivable spot exchange and payable spot exchange can be offset.

The Group has entered into a resale and repurchase agreement and accounted it as a collateralized borrowing. The Group has also entered into a resale and purchase agreement and accounted it as a secured advance. The resale and repurchase 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 Group recorded the collateralized borrowing in borrowings and the secured loans in loans and receivables. The Group under the repurchase agreements has offsetting right only upon the counterparty’s default, insolvency or bankruptcy; thus, the repurchase agreements are applied by the TBMA/ISMA Global Master Repurchase Agreement, which does not satisfy the offsetting criteria of K-IFRS 1032. The Group disclosed bonds sold (purchased) under repurchase(resale) agreements as borrowings loan at amortized cost and other financial assets (loans and receivables in previous year).

As of June 30, 2018 and December 31, 2017, the financial instruments to be off set and may be covered by master netting agreements and similar agreements are as follows (Unit: Korean Won in millions):

	June 30, 2018
	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 consolidated statement of financial position				Net amounts
							Netting agreements and others		Cash collateral received
Financial assets:
Derivative assets and others (*1)		2,132,698		—		2,132,698		8,716,272		21,543		857,980
Receivable spot exchange (*2)		7,463,097		—		7,463,097
Bonds purchased under resale agreements (*2)		6,999,881		—		6,999,881		6,999,881		—		—
Domestic exchanges receivable (*2)(*5)		27,527,610		27,338,204		189,406		—		—		189,406
Total		44,123,286		27,338,204		16,785,082		15,716,153		21,543		1,047,386
	June 30, 2018
	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 consolidated statement of financial position				Net amounts
							Netting agreements and others		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		2,305,516		—		2,305,516		8,704,614		208,955		856,626
Payable spot exchange (*3)		7,464,679		—		7,464,679
Bonds sold under repurchase agreements (*4)		5,372		—		5,372		5,372		—		—
Domestic exchanges payable (*3)(*5)		31,538,065		27,338,204		4,199,861		3,408,953		—		790,908
Total		41,313,632		27,338,204		13,975,428		12,118,939		208,955		1,647,534

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

(*2) The items are included in loan at amortized cost and other financial assets.

(*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.

	December 31, 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 consolidated statement of financial position				Net amounts
							Netting agreements and others		Cash collateral received
Financial assets:
Derivative assets and others (*1)		2,992,476		1,710		2,990,766		5,787,448		174,415		796,629
Receivable spot exchange (*2)		3,767,726		—		3,767,726
Bonds purchased under resale agreements (*2)		16,859,064		—		16,859,064		16,859,064		—		—
Domestic exchanges receivable (*2)(*5)		39,050,227		38,985,354		64,873		—		—		64,873
Total		62,669,493		38,987,064		23,682,429		22,646,512		174,415		861,502
	December 31, 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 consolidated statement of financial position				Net amounts
							Netting agreements and others		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		3,160,217		1,710		3,158,507		5,866,682		157,750		857,961
Payable spot exchange (*3)		3,723,886		—		3,723,886
Bonds sold under repurchase agreements (*4)		3,173		—		3,173		3,173		—		—
Domestic exchanges payable (*3)(*5)		40,284,515		38,985,354		1,299,161		1,293,931		—		5,230
Total		47,171,791		38,987,064		8,184,727		7,163,786		157,750		863,191

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

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

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

(*4) The items are included in borrowings.

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

13. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

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

			Percentage of ownership (%)
Joint ventures and Associates	Main business		June 30, 2018		December 31, 2017		Financial statements as of (2018)
Woori Bank:
Kumho Tire Co., Inc. (*1)(*2)		Manufacturing		14.2		14.2		March 31 (*3)
Woori Service Networks Co., Ltd. (*4)		Freight & staffing services		4.9		4.9		May 31 (*3)
Korea Credit Bureau Co., Ltd. (*5)		Credit information		9.9		9.9		June 30
Korea Finance Security Co., Ltd. (*4)		Security service		15.0		15.0		May 31 (*3)
Chin Hung International Inc. (*2)		Construction		25.3		25.3		May 31 (*3)
Poonglim Industrial Co., Ltd. (*6)(*9)		Construction		—		29.4		—
STX Engine Co., Ltd. (*10)		Manufacturing		—		29.2		—
STX Corporation (*1)(*11)		Wholesale of non-specialized goods		19.7		19.7		May 31 (*3)
Saman Corporation (*5)		General construction Technology service		9.2		9.2		May 31 (*3)
Dongwoo C & C Co., Ltd. (*6)		Construction		23.2		23.2		—
SJCO Co., Ltd. (*6)		Aggregate transportation and wholesale		26.5		26.5		—
G2 Collection Co., Ltd. (*6)		Wholesale and retail sales		28.9		28.9		—

			Percentage of ownership (%)
Joint ventures and Associates	Main business		June 30, 2018		December 31, 2017		Financial statements as of (2018)
The Base Enterprise Co., Ltd. (*6)		Manufacturing		48.4		48.4		—
Kyesan Engineering Co., Ltd. (*6)		Construction		23.2		23.2		—
Good Software Lap Co., Ltd. (*6)		Service		28.9		28.9		—
Wongwang Co., Ltd. (*6)		Wholesale and real estate		29.0		29.0		—
Sejin Construction Co., Ltd. (*6)		Construction		29.6		29.6		—
QTS Shipping Co., Ltd. (*6)		Composite transportation Arrangement		49.4		49.4		—
DAEA SNC Co., Ltd. (*6)		Wholesale and retail sales		24.0		24.0
ARES-TECH Co., Ltd. (*6)		Electronic component manufacturing		23.4		23.4		—
Reading Doctors Co., Ltd. (*6)		Other service business		35.4		35.4		—
PREXCO Co., Ltd. (*6)		Manufacturing		28.1		28.1		—
Hyunwoo International Co., Ltd. (*6)		Manufacturing		25.9		25.9		—
Jiwon Plating Co., Ltd. (*6)		Plating		20.5		20.5		—
Cultizm Korea LTD Co., Ltd. (*6)		Wholesale and retail sales		31.3		31.3		—
Gil Co.,Ltd. (*6)		Manufacturing		26.1		26.1		—
NK Eng Co., Ltd. (*6)		Manufacturing		23.1		23.1		—
Youngdong Sea Food Co., Ltd. (*6)(*7)		Processed sea food manufacturing		24.0		—		—
Woori Growth Partnerships New Technology Private Equity Fund		Other financial business		23.1		23.1		June 30
2016KIF-IMM Woori Bank Technology Venture Fund		Other financial business		20.0		20.0		June 30
K BANK Co., Ltd. (*5)		Finance		13.0		13.0		May 31 (*3)
Smart Private Equity Fund No.2		Other financial business		20.0		20.0		June 30
Woori Bank-Company K Korea Movie Asset Fund		Other financial business		25.0		25.0		June 30
Well to Sea No. 3 Private Equity Fund (*12)		Finance		50.0		50.0		March 31 (*3)
Partner One Value Up I Private Equity Fund (*8)		Other financial business		23.3		—		June 30
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership(*8)		Other Finance business		20.0		—		June 30
Woori Investment Bank Co., Ltd.
Nomura-Rifa Private Real Estate Investment Trust No.17		Other financial business		21.9		25.0		June 30

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

(*2) The investments in associates that have quoted market prices are Kumho Tire Co., Ltd. (current period: KRW 6,310, previous year: KRW 4,425), Chin Hung International Inc. (current period: KRW 1,935, previous year: KRW 1,915).

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

(*4) Most of the significant business transactions of associates are with the Group as of June 30, 2018 and December 31, 2017.

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

(*6) The carrying values of investments in associates are nil as of June 30, 2018 and December 31, 2017.

(*7) As of December 31, 2017, the ownership ratio of the common stocks was more than 20%, but the entity was excluded from investments in associates because it has been under rehabilitation and not able to exercise significant influence. However, as of June 30, 2018, it was included in investments in associates by finalizing rehabilitation process by the court administration.

(*8) Due to capital contribution by the Group for the six months ended June 30, 2018, the entities has been included in the investment in associates.

(*9) The Group does not have significant influence over the entity since it is going through work-out process under receivership, thus it is excluded from the investment in associates for the six months ended June 30, 2018.

(*10) The entity was sold after it was transferred to assets held for sale for the year ended June 30, 2018.

(*11) The shares of STX Corporation owned by the Group were reclassified as assets held for sale, as the creditor financial institutions committee entered into a contract with AFC Korea Co., Ltd. during the previous year to sell STX Corporation shares.

(*12) The Bank has entered into a contract whereas the Bank (or a third party designated by the Bank) obtains a preemptive right to acquire the base assets (Aju Capital Co. Ltd.) of Well to Sea No. 3 Private Equity Fund, an affiliate of the Bank, when the Fund disposes them.

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

	For the six months ended June 30, 2018
	Acquisition cost		January 1, 2018		Share of profits (losses)			Acquisi- tion		Disposal and others (*1)			Dividends			Change in Capital			June 30, 2018
Kumho Tire Co., Inc.		175,652		98,933		(10,451	)		—		—			—			(5,196	)		83,286
Woori Service Networks Co., Ltd.		108		158		(20	)		—		—			—			—			138
Korea Credit Bureau Co., Ltd.		3,313		5,816		692			—		—			(113	)		—			6,395
Korea Finance Security Co., Ltd.		3,267		3,519		4			—		—			(54	)		1			3,470
Chin Hung International Inc.		130,779		45,101		3,179			—		—			—			(484	)		47,796
Poonglim Industrial Co., Ltd.		13,916		—		—			—		—			—			—			—
STX Corporation		50,760		6,947		(816	)		—		(5,865	)		—			(266	)		—
Saman Corporation		8,521		1,254		(48	)		—		—			—			34			1,240
Woori Growth Partnerships New Technology Private Equity Fund		28,833		27,611		1,139			—		(3,346	)		(484	)		—			24,920
2016KIF-IMM Woori Bank Technology Venture Fund		6,840		6,840		—			6,780		—			—			—			13,620
K BANK Co., Ltd.		45,392		31,735		(5,384	)		—		—			—			7			26,358
Smart Private Equity Fund No.2		3,000		2,932		(21	)		—		—			—			—			2,911
Woori Bank-Company K Korea Movie Asset Fund		3,000		2,957		10			—		—			—			—			2,967
Well to Sea No.3 Private Equity Fund		101,992		182,309		10,321			—		(508	)		—			(6,423	)		185,699
Partner One Value Up I Private Equity Fund		10,000		—		(13	)		10,000		—			—			—			9,987
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		3,268		—		—			3,268		—			—			—			3,268
Nomura-Rifa Private Real Estate Investment Trust No.17		1,000		939		(54	)		—		—			—			—			885
Total		589,641		417,051		(1,462	)		20,048		(9,719	)		(651	)		(12,327	)		412,940

(*1) Investments in joint ventures and associates decreased by 5,865 million Won through transfers to assets held for sale which occurred during the six months ended June 30, 2018.

	For the six months ended June 30, 2017
	Acquisition cost		January 1, 2017		Share of profits (losses)			Acquisi- tion (*1)		Disposal and others(*2)			Divide- nds			Change in Capital			Others (*1)			June 30, 2017
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		6,881		15,289		(1,460	)		—		—			—			—			—			13,829
Kumho Tire Co., Inc.		175,652		200,332		2			—		—			—			(1,623	)		—			198,711
Woori Service Networks Co., Ltd.		108		145		(10	)		—		—			(8	)		—			—			127
Korea Credit Bureau Co., Ltd.		3,313		5,592		508			—		—			(149	)		—			—			5,951
Korea Finance Security Co., Ltd.		3,266		3,376		63			—		—			(54	)		—			—			3,385
Chin Hung International Inc.		89,725		43,032		(20,050	)		41,053		—			—			171			(25,966	)		38,240
Poonglim Industrial Co., Ltd.		13,916		—		—			—		—			—			—			—			—
STX Engine Co., Ltd.		92,038		43,036		722			—		—			—			4,047			—			47,805
SamHo Co., Ltd.		7,492		19,729		2,021			—		(16,354	)		—			(73	)		(5,323	)		—
STX Corporation		42,215		—		(33,739	)		8,546		—			—			(215	)		27,772			2,364
Saman Corporation		8,521		8,699		(96	)		—		—						26			—			8,629
Woori Growth Partnerships New Technology Private Equity Fund		13,602		13,118		(371	)		5,745		(498	)		—			(156	)		—			17,838
2016KIF-IMM Woori Bank Technology Venture Fund		1,800		1,800		—			3,240		—			—			—			—			5,040

	For the six months ended June 30, 2017
	Acquisition cost		January 1, 2017		Share of profits (losses)			Acquisi- tion (*1)		Disposal and others(*2)			Divide- nds			Change in Capital			Others (*1)			June 30, 2017
K BANK Co., Ltd.		32,500		30,442		(5,861	)		—		—			—			(139	)		—			24,442
Smart Private Equity Fund No.2		3,000		—		(47	)		3,000		—			—			—			—			2,953
Woori Bank-Company K Korea Movie Asset Fund		1,500		—		(15	)		1,500		—			—			—			—			1,485
Woori Renaissance Holdings		63,000		54,422		(622	)		—		—			(57,109	)		—			3,309			—
		558,529		439,012		(58,955	)		63,084		(16,852	)		(57,320	)		2,038			(208	)		370,799

(*1) Changes in investments in joint ventures and associates due to debt-equity swap is 51,405 million Won.

(*2) Investments in joint ventures and associates decreased by 16,354 million Won through transfers to assets held for sale occurred for the six months ended June 30, 2017.

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

	June 30, 2018
	Assets		Liabilities		Operating revenue		Net income (loss)
Kumho Tire Co., Inc.		4,513,972		3,521,608		624,981		(10,774	)
Woori Service Networks Co., Ltd.		4,909		2,111		7,250		456
Korea Credit Bureau Co., Ltd.		80,792		18,764		37,342		5,919
Korea Finance Security Co., Ltd.		32,635		9,501		27,161		91
Chin Hung International Inc.		403,962		311,502		263,861		19,062
Saman Corporation		89,932		61,583		26,418		(326	)
Woori Growth Partnerships New Technology Private Equity Fund		108,427		441		7,865		4,936
2016KIF-IMM Woori Bank Technology Venture Fund		65,760		383		6		(754	)
K BANK Co., Ltd.		1,758,930		1,557,206		24,296		(32,126	)
Smart Private Equity Fund No.2		14,605		51		1		(106	)
Woori Bank-Company K Korea Movie Asset Fund		11,872		3		893		769
Well to Sea No.3 Private Equity Fund		5,297,764		4,759,158		140,041		13,450
Partner One Value Up I Private Equity Fund		43,114		172		114		(58	)
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		15,843		744		4		(822	)
Nomura-Rifa Private Real Estate Investment Trust No.17		20,433		16,407		56		(55	)
	December 31, 2017
	Assets		Liabilities		Operating revenue		Net income (loss)
Kumho Tire Co., Inc.		5,105,107		3,928,327		2,136,569		(61,748	)
Woori Service Networks Co., Ltd.		4,982		1,780		14,887		1,003
Korea Credit Bureau Co., Ltd.		75,504		19,323		68,750		3,580
Korea Finance Security Co., Ltd.		33,915		10,461		55,610		1,071
Chin Hung International Inc.		341,284		259,454		513,285		28,698
Poonglim Industrial Co., Ltd.		241,063		309,925		107,360		(29,812	)
STX Corporation		595,348		543,458		1,371,272		342,869
Saman Corporation		98,435		69,929		76,135		(6,096	)
Woori Growth Partnerships New Technology Private Equity Fund		120,133		485		1,024		(3,199	)
2016KIF-IMM Woori Bank Technology Venture Fund		32,815		380		6		(1,515	)
K BANK Co., Ltd.		1,244,270		1,001,121		19,231		(74,403	)
Smart Private Equity Fund No.2		14,711		51		1		(340	)
Woori Bank-Company K Korea Movie Asset Fund		11,830		2		16		(172	)
Well to Sea No.3 Private Equity Fund		5,068,424		4,534,957		131,488		162,743
Nomura-Rifa Private Real Estate Investment Trust No.17		20,265		16,507		62		(242	)

(4) The entities that the Group has not applied equity method of accounting although the Group’s ownership interest is more than 20% as of June 30, 2018 and December 31, 2017, are as follows:

	June 30, 2018
Associate (*)	Number of shares owned		Ownership (%)
Poonglim Industrial Co., Ltd.		4,142,782		29.1
Orient Shipyard Co., Ltd.		464,812		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
The season Co., Ltd.		18,187		30.1
Yuil PESC Co., Ltd.		8,642		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
Instern Co., Ltd.		14,296		20.1

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

	As of December 31, 2017
Associate (*)	Number of shares owned		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
The season 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
Instern Co., Ltd.		14,296		20.1

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

(5) As of June 30, 2018 and December 31, 2017, the reconciliations from the net assets of associates based on the ownership ratio of the Group to its corresponding book value of investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):

	June 30, 2018
	Total net asset		Ownership (%)		Ownership portion of net assets		Cost-book value differential and others		Impairment			Intercompany transaction and others			Book value
Kumho Tire Co., Inc. (*)		954,857		14.2		135,122		48,459		(102,843	)		2,548			83,286
Woori Service Networks Co., Ltd.		2,798		4.9		138		—		—			—			138
Korea Credit Bureau Co., Ltd.		62,028		9.9		6,149		246		—			—			6,395
Korea Finance Security Co., Ltd.		23,134		15.0		3,470		—		—			—			3,470
Chin Hung International Inc. (*)		92,316		25.3		23,361		24,565		—			(130	)		47,796
Saman Corporation		28,349		9.2		2,605		5,373		(6,738	)		—			1,240
Woori Growth Partnerships New Technology Private Equity Fund		107,986		23.1		24,920		—		—			—			24,920
2016KIF-IMM Woori Bank Technology Venture Fund		65,377		20.0		13,075		—		—			545			13,620
K BANK Co., Ltd.		201,724		13.0		26,162		—		—			196			26,358
Smart Private Equity Fund No.2		14,554		20.0		2,911		—		—			—			2,911
Woori Bank-Company K Korea Movie Asset Fund		11,869		25.0		2,967		—		—			—			2,967
Well to Sea No.3 Private Equity Fund (*)		371,813		50.0		185,816		—		—			(117	)		185,699
Partner One Value Up I Private Equity Fund		42,942		23.3		9,987		—		—			—			9,987
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		15,099		20.0		3,020		—		—			248			3,268
Nomura-Rifa Private Real Estate Investment Trust No.17		4,026		21.9		882		—		—			3			885

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

	December 31, 2017
	Total net asset			Ownership (%)		Ownership portion of net assets			Cost-book value differential and others		Impairment			Intercompany transaction and others			Book value
Kumho Tire Co., Inc. (*)		1,065,421			14.2		150,767			48,459		(102,843	)		2,549			98,932
Woori Service Networks Co., Ltd.		3,202			4.9		158			—		—			—			158
Korea Credit Bureau Co., Ltd.		56,181			9.9		5,568			248		—			—			5,816
Korea Finance Security Co., Ltd.		23,454			15.0		3,519			—		—			—			3,519
Chin Hung International Inc. (*)		81,686			25.3		20,671			24,565		—			(136	)		45,100
Poonglim Industrial Co., Ltd. (*)		(168,154	)		29.4		(49,446	)		54,542		(20,504	)		15,408			—
STX Corporation		51,890			19.7		10,232			24,614		(27,904	)		5			6,947
Saman Corporation		28,506			9.2		2,619			5,373		(6,738	)		—			1,254
Woori Growth Partnerships New Technology Private Equity Fund		119,648			23.1		27,611			—		—			—			27,611
2016KIF-IMM Woori Bank Technology Venture Fund		32,435			20.0		6,487			—		—			353			6,840
K BANK Co., Ltd.		243,149			13.0		31,535			—		—			200			31,735
Smart Private Equity Fund No.2		14,660			20.0		2,932			—		—			—			2,932
Woori Bank-Company K Korea Movie Asset Fund		11,828			25.0		2,957			—		—			—			2,957
Well to Sea No.3 Private Equity Fund (*)		364,909			50.0		182,366			—		—			(57	)		182,309
Nomura-Rifa Private Real Estate Investment Trust No.17		3,758			25.0		939			—		—			—			939

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

14. INVESTMENT PROPERTIES

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

	June 30, 2018			December 31, 2017
Acquisition cost		417,692			404,741
Accumulated depreciation		(36,515	)		(33,440	)
Net carrying value		381,177			371,301

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

	For the six months ended June 30
	2018			2017
Beginning balance		371,301			358,497
Acquisition		7,311			1,221
Disposal		(1,738	)		(225	)
Depreciation		(2,010	)		(1,991	)
Transfers		6,333			(2,708	)
Classified to held for sale		—			(534	)
Foreign currencies translation adjustments		(79	)		(120	)
Others		59			5,797
Ending balance		381,177			359,937

(3) Rental fee earned from investment properties is amounting to 2,396 million Won and 2,411 million Won for the six months ended June 30, 2018 and 2017, respectively.

15. PREMISES AND EQUIPMENT

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

	June 30, 2018
	Land		Building			Properties for business use			Structures in leased office			Construction in progress		Structures			Total
Acquisition cost		1,482,169		863,503			1,105,029			441,835			4,421		20			3,896,977
Accumulated depreciation		—		(197,688	)		(868,768	)		(379,750	)		—		(17	)		(1,446,223	)
Net carrying value		1,482,169		665,815			236,261			62,085			4,421		3			2,450,754
	December 31, 2017
	Land		Building			Properties for business use			Structures in leased office			Construction in progress		Structures			Total
Acquisition cost		1,487,278		867,804			1,024,186			429,665			64,559		20			3,873,512
Accumulated depreciation		—		(186,958	)		(844,114	)		(364,878	)		—		(17	)		(1,395,967	)
Net carrying value		1,487,278		680,846			180,072			64,787			64,559		3			2,477,545

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

	For the six months ended June 30, 2018
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Structures			Total
Beginning balance		1,487,278			680,846			180,072			64,787			64,559			3			2,477,545
Acquisitions		463			4,326			27,635			6,928			3,342			—			42,694
Disposals		—			—			(72	)		(89	)		—			—			(161	)
Depreciation		—			(12,960	)		(36,144	)		(17,696	)		—			—			(66,800	)
Classified to held for sale		(3,573	)		(2,477	)		—			—			—			—			(6,050	)
Transfer		(1,910	)		(4,423	)		63,433			—			(63,433	)		—			(6,333	)
Foreign currencies translation adjustments		(89	)		(121	)		352			489			(47	)		—			584
Acquisition through business combination		—			—			969			661			—			—			1,630
Others		—			624			16			7,005			—			—			7,645
Ending balance		1,482,169			665,815			236,261			62,085			4,421			3			2,450,754
	For the six months ended June 30, 2017
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Structures			Total
Beginning balance		1,488,745			691,699			189,902			68,958			18,717			4			2,458,025
Acquisitions		—			3,831			31,624			8,120			25,053			—			68,628
Disposals		(606	)		(205	)		(235	)		(423	)		—			—			(1,469	)
Depreciation		—			(13,029	)		(38,063	)		(18,253	)		—			(1	)		(69,346	)
Classified to assets held for sale		(1,743	)		(441	)		—			—			—			—			(2,184	)
Transfer		2,466			403			5,485			—			(5,646	)		—			2,708
Foreign currencies translation adjustments		(596	)		(560	)		(676	)		(675	)		(247	)		—			(2,754	)
Others		—			(6	)		188			5,386			—			—			5,568
Ending balance		1,488,266			681,692			188,225			63,113			37,877			3			2,459,176

16. INTANGIBLE ASSETS

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

	June 30, 2018
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership deposit			Construction in progress		Total
Acquisition cost		154,644		208,383			1,180			463,361			717,332			26,087			8,978		1,579,965
Accumulated amortization		—		(170,700	)		(611	)		(199,179	)		(550,996	)		—			—		(921,486	)
Accumulated impairment losses		—		—			—			—			(137	)		(4,828	)		—		(4,965	)
Net carrying value		154,644		37,683			569			264,182			166,199			21,259			8,978		653,514
	December 31, 2017
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership deposit			Construction in progress		Total
Acquisition cost		108,707		203,418			1,063			260,087			634,150			27,337			153,209		1,387,971
Accumulated amortization		—		(162,746	)		(524	)		(182,846	)		(516,467	)		—			—		(862,583	)
Accumulated impairment losses		—		—			—			—			(137	)		(6,652	)		—		(6,789	)
Net carrying value		108,707		40,672			539			77,241			117,546			20,685			153,209		518,599

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

	June 30, 2018
	Goodwill			Software			Industrial property rights			Development cost			Others			Membership deposit			Construction in progress			Total
Beginning balance		108,707			40,672			539			77,241			117,546			20,685			153,209			518,599
Acquisitions		—			3,737			117			21,455			36,191			2,311			84,318			148,129
Disposal		—			—			—			—			—			(2,107	)		—			(2,107	)
Amortization (*)		—			(7,510	)		(87	)		(16,317	)		(34,162	)		—			—			(58,076	)
Reversal of impairment loss		—			—			—			—			—			339			—			339
Transfer		—			—			—			181,803			46,746			—			(228,549	)		—
Acquisition through business combination		47,406			763			—			—			—			—			—			48,169
Foreign currencies translation adjustment		(1,469	)		21			—			—			243			74			—			(1,131	)
Others		—			—			—			—			(365	)		(43	)		—			(408	)
Ending balance		154,644			37,683			569			264,182			166,199			21,259			8,978			653,514

(*) Amortization of other intangible assets amounting to 25,179 million Won is included in other operating expenses.

	June 30, 2017
	Goodwill			Software			Industrial property rights			Development cost			Others			Membership deposit			Construction in progress			Total
Beginning balance		124,803			35,477			313			70,697			164,364			20,086			67,999			483,739
Acquisitions		105			10,152			54			12,628			10,276			480			55,984			89,679
Disposal		—			—			—			—			—			(866	)		—			(866	)
Amortization (*)		—			(8,064	)		(56	)		(11,515	)		(30,389	)		—			—			(50,024	)
Impairment loss		—			—			—			—			—			(128	)		—			(128	)
Transfer		—			8,091			—			—			36			—			(8,127	)		—
Foreign currencies translation adjustment		(7,479	)		(68	)		—			—			(1,053	)		(81	)		(383	)		(9,064	)
Others		—			(22	)		—			(55	)		(6,371	)		(6	)		—			(6,454	)
Ending balance		117,429			45,566			311			71,755			136,863			19,485			115,473			506,882

(*) Amortization of other intangible assets amounting to 24,443 million Won is included in other operating expenses.

17. ASSETS HELD FOR SALE

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

	June 30, 2018		December 31, 2017
Investments in joint ventures and associates		5,865		46,217
Premises and equipment, etc (*)		12,840		2,407
Total		18,705		48,624

(*) As of June 30, 2018 and December 31, 2017, non-operating assets of the subsidiaries include land and buildings classified as assets held for sale amounting to 5,223 million Won and 840 million Won, respectively.

18. ASSETS SUBJECT TO LIEN AND ASSETS ACQUIRED THROUGH FORECLOSURES

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

		June 30, 2018
		Collateral given to	Amount	Reason for collateral
Loan at amortized cost and other financial assets	Due from banks on time in local currency	DaishinAMC and others	1,500	Right of pledge
	Due from banks in local currencies	Samsung Securities Co., Ltd. and others	19,698	Margin deposit for futures or option
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others	135,515	Foreign margin deposit for future or option and others
Financial assets at FVTPL	Korean financial institutions’ debt securities and others	Kyobo Life Insurance Co., Ltd. and others	72,915	CSA collateral and others
Financial assets at FVTOCI	Korean treasury and corporate bonds	Korea Securities Depository	10,002	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government bonds and others	The BOK and others	1,621,221	Settlement risk and others
Securities at amortized cost	Korean treasury and government bonds	Korea Securities Depository	5,444	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government bonds and others	The BOK and others	4,908,149	Settlement risk and others
Premises and equipment	Land and building	Credit Counselling & Recovery Service and others	6,065	Right to collateral and others
		Total	6,780,509

(*) The Group has the agreements to repurchase the sold assets at the predetermined price or the price that includes the rate of return and to provide the guarantee on the assets. The transferee has the right to sell or to provide as guarantee. Therefore, the Group does not derecognize the assets, but recognizes the relevant amounts as liability (bonds sold under repurchase agreements).

		December 31, 2017
		Collateral given to	Amount	Reason for collateral
Loan and receivables	Due from banks on time in local currency	Bank of China and others	6,629	Collaterals for issuing letter of guarantee and others
	Due from banks in local currencies	Samsung Securities Co., Ltd. and others	10,809	Margin deposit for futures or option
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others	9,136	Foreign margin deposit for future or option and others
Financial assets at FVTPL	Korean financial institutions’ debt securities and others	Yuanta Securities Co., Ltd. and others	501,523	Substitute securities and others
AFS financial assets	Korean treasury and corporate bonds	Korea Securities Depository and others	9,998	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government bonds and others	The BOK and others	1,570,608	Settlement risk and others
HTM financial assets	Korean treasury and government bonds	Korea Securities Depository	5,436	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions’ debt securities and others	The BOK and others	7,605,292	Settlement risk and others
Premises and equipment	Land and building	Credit Counselling & Recovery Service and others	6,186	Leasehold rights and others
		Total	9,725,617

(*) The Group has the agreements to repurchase the sold assets at the predetermined price or the price that includes the rate of return and to provide the guarantee on the assets. The transferee has the right to sell or to provide as guarantee. Therefore, the Group does not derecognize the assets, but recognizes the relevant amounts as liability (bonds sold under repurchase agreements).

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

	June 30, 2018		December 31, 2017
Land		327		332
Buildings		—		44
Total		327		376

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

		June 30, 2018		December 31, 2017		Loaned to
Financial assets at FVTOCI	Korean treasury, corporate bonds and others		50,139		—	Korea Securities Finance Corporation
AFS financial assets	Korean treasury, government bonds and others		—		170,256	Korea Securities Finance Corporation and others
	Total		50,139		170,256

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

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

Fair values of collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties as of June 30, 2018 and December 31, 2017 are as follows (Unit: Korean Won in millions):

	June 30, 2018
	Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		7,303,137		—
	December 31, 2017
	Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		17,671,490		—

19. OTHER ASSETS

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

	June 30, 2018		December 31, 2017
Prepaid expenses		165,150		130,245
Advance payments		24,879		18,363
Non-operative assets		327		376
Others		12,444		9,420
Total		202,800		158,404

20. FINANCIAL LIABILITIES AT FVTPL

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

	June 30, 2018		December 31, 2017
Financial liabilities at fair value through profit or loss mandatorily measured at fair value		2,402,235		—
Financial liabilities held for trading		—		3,176,113
Financial liabilities at fair value through profit or loss designated as upon initial recognition		176,097		—
Financial liabilities designated as at FVTPL		—		251,796
Total		2,578,332		3,427,909

(2) Financial liabilities at fair value through profit or loss mandatorily measured at fair value(Financial liabilities held for trading) are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Deposits
Gold banking liabilities		24,485		25,964
Derivative liabilities		2,377,750		3,150,149
Total		2,402,235		3,176,113

(3) Financial liabilities at fair value through profit or loss designated as upon initial recognition(Financial liabilities designated as at FVTPL) are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Equity linked securities index:
Equity linked securities index in short position		176,097		160,057
Debentures:
Debentures in local currency		—		91,739
Total		176,097		251,796

Financial liabilities at fair value through profit or loss designated are designated as such in order to eliminate or significantly reduce accounting mismatch arising from recognition or measurement.

(4) Credit risk adjustments to financial liabilities at fair value through profit or loss designated as upon initial recognition(Financial liabilities designated as at FVTPL) are as follows (Unit: Korean Won in millions):

	For the six months ended June 30, 2018			For the six months ended June 30, 2017
Financial liabilities at fair value through profit or loss designated as upon initial recognition		176,097			—
Financial liabilities designated as at FVTPL		—			616,177
Changes in fair value for credit risk adjustments		(179	)		(261	)
Accumulated changes in credit risk adjustments		(39	)		89

The adjustment to reflect Group’s credit risk is considered in measuring the fair value of derivatives. The Group’s credit risk is determined by adjusting credit spread observed in credit rating of bank.

(5) The difference between financial liabilities at fair value through profit or loss designated as upon initial recognition’s(Financial liabilities designated as at FVTPL) carrying amount and nominal amount at maturity is as follows (Unit: Korean Won in millions):

	June 30, 2018			December 31, 2017
Carrying amount		176,097			251,796
Nominal amount at maturity		212,259			255,408
Difference		(36,162	)		(3,612	)

(6) Changes in equity in relation to Financial liabilities at fair value through profit or loss designated as upon initial recognition

1) Realized cumulative gain or loss designated in other comprehensive income due to derecognition of financial liabilities designated at FVTPL is nil for the six months ended June 30, 2018.

2) Cumulative gains on financial liabilities designated at FVTPL replaced to retained earnings from other comprehensive income are as follows (Unit: Korean Won in millions):

	For the six months ended June 30, 2018
Equity-linked securities index:		(8	)

21. DEPOSITS DUE TO CUSTOMERS

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

	June 30, 2018			December 31, 2017
Deposits in local currency:
Deposits on demand		9,337,563			9,349,070
Deposits at termination		198,768,356			194,292,679
Mutual installment		32,292			34,055
Deposits on notes payables		1,705,871			1,323,679
Deposits on CMA		154,782			164,431
Certificate of deposits		4,592,575			4,436,443
Other deposits		1,401,853			1,451,841
Subtotal		215,993,292			211,052,198
Deposits in foreign currency:
Deposits in foreign currencies		21,950,041			23,682,896
Present value discount		(43,167	)		(40,010	)
Total		237,900,166			234,695,084

22. BORROWINGS AND DEBENTURES

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

	June 30, 2018
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from The BOK	The BOK		0.5 ~ 0.8		1,420,990
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 2.5		1,782,603
Others	The Korea Development Bank and others		0.0 ~ 4.0		4,665,845
Subtotal					7,869,438
Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 6.5		7,148,402
Offshore borrowings in foreign currencies	JPMORGAN CHASE BANK		2.8		33,651
Subtotal					7,182,053
Bills sold	Others		0.0 ~ 1.2		23,874
Call money	Bank and others		0.0 ~ 6.3		818,889
Bonds sold under repurchase agreements	Other financial institutions		0.7 ~ 12.7		5,372
Present value discount					(27	)
Total					15,899,599

	December 31, 2017
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from The BOK	The BOK		0.5 ~ 0.8		1,404,087
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 2.9		1,723,340
Others	The Korea Development Bank and others		0.0 ~ 3.2		3,957,421
Subtotal					7,084,848
Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 6.8		6,996,551
Offshore borrowings in foreign currencies	Commonwealth Bank		1.8		28,285
Subtotal					7,024,836
Bills sold	Others		0.0 ~ 1.2		36,953
Call money	Bank and others		1.5 ~ 2.7		635,061
Bonds sold under repurchase agreements	Other financial institutions		0.6 ~ 12.7		3,173
Present value discount					(165	)
Total					14,784,706

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

	June 30, 2018					December 31, 2017
	Interest rate (%)		Amount			Interest rate (%)		Amount
Face value of bond(*):
Ordinary bonds		1.5 ~ 4.5		21,105,565			1.5 ~ 5.8		22,468,908
Subordinated bonds		3.0 ~ 12.6		5,006,632			3.4 ~ 12.6		4,781,301
Other bonds		1.9 ~ 17.0		676,144			1.6 ~ 17.0		649,615
Subtotal				26,788,341					27,899,824
Discounts on bonds				(35,616	)				(30,173	)
Total				26,752,725					27,869,651

(*) Included debentures under fair value hedge relationships are 3,150,145 million Won and 3,089,751 million Won as of June 30, 2018 and December 31, 2017, respectively. Also, debentures under cash flow hedge amounting to 724,487 million Won and 694,548 million Won are included as of June 30, 2018 and December 31, 2017.

23. PROVISIONS

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

	June 30, 2018		December 31, 2017
Asset retirement obligation		67,458		61,872
Provisions for guarantees (*1)		106,827		183,247
Provisions for unused commitments		101,874		66,115
Provisions for customer reward credits		46,735		40,445
Other provisions (*2)		63,480		58,791
Total		386,374		410,470

(*1) Provisions for guarantees includes provision for financial guarantee of 54,896 million Won and 71,697 million Won as of June 30, 2018 and December 31, 2017, respectively.

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

(2) Changes in provisions for guarantees and loan commitments are as follows (Unit: Korean Won in millions):

1) Provisions for guarantees

	For the six months ended June 30, 2018
	Stage1			Stage2			Stage3			Total
Beginning balance (*)		47,132			18,281			127,511			192,924
Replaced by 12-month expected credit loss		76			(76	)		—			—
Replaced with expected credit loss for the entire period		(954	)		58,894			(57,940	)		—
Replaced with credit-impaired financial assets		(21	)		(20	)		41			—
Provisions used		(8,506	)		—			—			(8,506	)
Net reversal of unused amount		(4,873	)		(46,344	)		(35,773	)		(86,990	)
Others		9,393			6			—			9,399
Ending balance		42,247			30,741			33,839			106,827

(*) The beginning balance was restated in accordance with K-IFRS 1109.

	For the six months ended June 30, 2017
Beginning balance		238,117
Provisions provided		1,003
Provisions used		(12,335	)
Reversal of provisions unused		(45,971	)
Foreign currencies translation adjustments		20
Others		7,920
Ending balance		188,754

2) Provisions for unused commitment

	For the six months ended June 30, 2018
	Stage1			Stage2			Stage3			Total
Beginning balance (*)		75,232			27,875			1,878			104,985
Replaced by 12-month expected credit loss		6,262			(6,145	)		(117	)		—
Replaced with expected credit loss for the entire period		(2,543	)		2,614			(71	)		—
Replaced with credit-impaired financial assets		(159	)		(325	)		484			—
Net provision(reversal) of unused amount		(6,183	)		3,356			(328	)		(3,155	)
Others		44			—			—			44
Ending balance		72,653			27,375			1,846			101,874

(*) The beginning balance was restated in accordance with K-IFRS 1109.

	For the six months ended June 30, 2017
Beginning balance		87,909
Provisions provided		491
Provisions used		(42	)
Reversal of provisions unused		(5,736	)
Foreign currencies translation adjustments		(1	)
Ending balance		82,621

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

	For the six months ended June 30
	2018			2017
Beginning balance		61,872			58,076
Provisions provided		1,083			654
Provisions used		(295	)		(416	)
Reversal of provisions unused		(993	)		(727	)
Amortization		259			203
Increase in restoration costs and others		5,532			4,163
Ending balance		67,458			61,953

The amount of the asset retirement obligation is the present value of the best estimate of future expected recovery cost arising from leased premises as of June 30, 2018, discounted by appropriate discount rate. The expenditure of the recovery cost is expected to occur by the end of each premise’s lease period, and the Group has used average lease period of each category of leases terminated during the past years in order to rationally estimate the lease period. In addition, the Group used average amount of actual recovery cost for the past 3 years and the average inflation rate for last year in order to estimate future recovery cost.

(4) Changes in other provisions are as follows (Unit: Korean Won in millions):

	For the six months ended June 30, 2018
	Provisions for customer reward credits			Other provisions			Total
Beginning balance		40,445			58,791			99,236
Provisions provided		36,044			2,236			38,280
Provisions used		(48,891	)		(2,199	)		(51,090	)
Reversal of unused amount		—			(40	)		(40	)
Foreign currencies translation adjustments		—			(7	)		(7	)
Transfer (*)		5,467			—			5,467
Others		13,670			4,699			18,369
Ending balance		46,735			63,480			110,215

(*) As the credits of the affiliates were transferred to the Group, the allowance for the provisions for customer reward credits increased for the six months ended June 30, 2018.

	For the six months ended June 30, 2017
	Provisions for customer reward credits			Other provisions			Total
Beginning balance		22,093			22,282			44,375
Provisions provided		32,208			2,390			34,598
Provisions used		(39,402	)		(9,013	)		(48,415	)
Reversal of unused amount		—			(40	)		(40	)
Foreign currencies translation adjustments		—			(146	)		(146	)
Transfer (*)		11,482			—			11,482
Amortization		—			53			53
Others		5,667			128			5,795
Ending balance		32,048			15,654			47,702

(*) As the credits of the affiliates were transferred to the Group, the allowance for the provisions for customer reward credits increased for the six months ended June 30, 2017.

24. NET DEFINED BENEFIT LIABILITY

The characteristics of the Group’s defined benefit retirement pension plans characteristics are as follows:

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

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

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

(1) Details of net defined benefit liability are as follows (Unit: Korean Won in millions):

	June 30, 2018			December 31, 2017
Defined benefit obligation		1,175,786			1,071,170
Fair value of plan assets		(1,075,927	)		(1,027,906	)
Net defined benefit liability		99,859			43,264

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

	For the six months ended June 30, 2018			For the six months ended June 30, 2017
Beginning balance		1,071,170			984,381
Current service cost		72,460			73,564
Interest cost		15,797			13,144
Remeasurements		72,374			4,639
Foreign currencies translation adjustments		8			(121	)
Retirement benefit paid		(57,109	)		(31,022	)
Curtailment or settlement		—			(10,076	)
Others		1,086			127
Ending balance		1,175,786			1,034,636

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

	For the six months ended June 30, 2018			For the six months ended June 30, 2017
Beginning balance		1,027,906			990,653
Interest income		16,626			15,127
Remeasurements		(9,088	)		(7,847	)
Employer’s contributions		96,273			18,000
Retirement benefit paid		(55,790	)		(29,431	)
Curtailment or settlement		—			(10,396	)
Others		—			43,113
Ending balance		1,075,927			1,019,219

(4) Plan assets wholly consist of time deposits as of June 30, 2018 and December 31, 2017, respectively. Among plan assets, realized returns on plan assets amount to 7,538 million Won and 7,280 million Won for the six months ended June 30, 2018 and 2017, respectively.

Meanwhile, the contribution expected to be paid in the current accounting year amounts to 125,818 million Won.

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

	For the six months ended June 30, 2018			For the six months ended June 30, 2017
Current service cost		72,460			73,564
Net interest income		(829	)		(1,983	)
Loss(gain) on the curtailment or settlement		—			321
Cost recognized in net income		71,631			71,902
Remeasurements(*)		81,462			12,486
Cost recognized in total comprehensive income		153,093			84,388

(*) This is an amount before considering the tax effects.

Retirement benefit service costs related to defined contribution plans amount to 1,304 million Won and 2,155 million Won for the six months ended June 30, 2018 and 2017, respectively.

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

	June 30, 2018	December 31, 2017
Discount rate	3.25%	3.18%
Future wage growth rate	6.18%	6.18%
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

The weighted average maturity of defined benefit liability is 12.94 years.

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

		June 30, 2018			December 31, 2017
Discount rate	Increase by 1% point		(124,157	)		(116,405	)
	Decrease by 1% point		146,273			137,151
Future wage growth rate	Increase by 1% point		145,794			136,707
	Decrease by 1% point		(125,567	)		(117,765	)

25. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

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

	June 30, 2018			December 31, 2017
Other financial liabilities:
Accounts payable		9,021,786			4,692,320
Accrued expenses		1,809,499			2,049,861
Borrowings from trust accounts		3,999,899			3,271,817
Agency business revenue		258,497			344,591
Foreign exchange payables		604,344			590,667
Domestic exchange payables		4,229,125			1,309,646
Other miscellaneous financial liabilities		1,487,513			1,635,156
Present value discount		(2,396	)		(1,597	)
Subtotal		21,408,267			13,892,461
Other liabilities:
Unearned income		178,799			180,664
Other miscellaneous liabilities		124,114			103,317
Subtotal		302,913			283,981
Total		21,711,180			14,176,442

26. DERIVATIVES

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

	June 30, 2018
			Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For cash flow hedge		For fair value hedge		For trading
Interest rate:
Futures		272,778		—		—		—		—		—
Swaps		143,307,983		12,395		218,551		—		34,540		232,719
Purchase options		660,000		—		10,897		—		—		—
Written options		785,000		—		—		—		—		11,731
Currency:
Futures		371,529		—		—		—		—		—
Forwards		80,082,126		—		1,200,200		—		—		1,164,623
Swaps		56,427,354		—		806,790		32,965		—		750,377
Purchase options		2,635,551		—		36,079		—		—		—
Written options		4,651,496		—		—		—		—		49,352
Equity:
Futures		124,009		—		—		—		—		—
Swaps		435,790		—		3,021		—		—		4,542
Purchase options		4,272,150		—		115,210		—		—		—
Written options		5,661,146		—		—		—		—		163,966
Others:
Futures		965		—		—		—		—		—
Forward		5,618		—		—		—		—		—
Swaps		8,081		—		463		—		—		440
Total		299,701,576		12,395		2,391,211		32,965		34,540		2,377,750
	December 31, 2017
			Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For cash flow hedge		For fair value hedge		For trading
Interest rate:
Futures		75,845		—		—		—		—		—
Swaps		130,197,378		59,272		223,935		—		12,103		253,972
Purchase options		630,000		—		12,346		—		—		—
Written options		795,000		—		—		—		—		12,869
Currency:
Futures		318,217		—		—		—		—		—
Forwards		72,526,956		—		1,314,368		—		—		1,375,799
Swaps		48,176,306		—		1,352,924		55,651		—		1,347,905
Purchase options		2,291,154		—		64,267		—		—		—
Written options		4,038,237		—		—		—		—		58,687
Equity:
Futures		91,436		—		—		—		—		—
Swaps		15,000		—		103		—		—		10
Purchase options		5,060,706		—		146,775		—		—		—
Written options		4,504,290		—		—		—		—		99,770
Others:
Futures		—		—		—		—		—		—
Swaps		7,805		—		1,056		—		—		1,037
Purchase options		—		—		—		—		—		—
Written options		5,000		—		—		—		—		100
Total		268,733,330		59,272		3,115,774		55,651		12,103		3,150,149

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

(2) Overview of the Group’s hedge accounting

1) Fair value hedge

As of the current period end, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 3,150,145 million Won. The purpose of the hedging is to avoid fair value volatility risk of fixed interest rate foreign currency denominated debentures derived from fluctuations of market interest rate, and as such the Group entered into interest rate swap agreements designated as hedging instruments.

The Group entered into interest rate swap agreements to manage its exposure to interest rate risk and designated as hedging instruments. Pursuant to the interest rate swap agreement, hedge ratio is determined by matching the nominal value to the face value of the hedging instrument.

In this hedging relationship, only the market interest rate fluctuation, which is the most significant part of the fair value change of the hedged item, is designated as the hedged risk, and other risk factors including credit risk are not included in the hedged risk. Therefore, the ineffective portion of the hedge could arise from fluctuations in the timing of the cash flow of the hedged item, the change in the total amount and price of the hedged item, or significant credit risk fluctuation of either party of the hedged item.

The interest rate swap agreements and the hedged items are subject to fluctuations in the underlying market rate of interest and the Group expects the value of the interest rate swap contract and the value of the hedged item to generally change in the opposite direction.

The fair value of the interest rate swap at the end of the reporting period is determined by discounting future cash flows estimated using the yield curve at the end of the reporting period and the credit risk embedded in the contract and the average interest rate is determined based on the outstanding balance at the end of the reporting period. The variable interest rate applied to the interest rate swap is USD Libor 3M (6M) plus spread. In accordance with the terms of each interest rate swap contract designated as a hedging instrument, the Group receives interest at a fixed interest rate and pays interest at a variable interest rate.

2) Cash Flow Hedge

As of the current period end, the Group has applied Cash Flow hedge on foreign currency denominated bonds amounting to 724,487 million Won. The Group’s objectives of hedging are to ① Mitigate risks of cash flow fluctuation from principal and interest of variable interest rate debentures denominated in foreign currency, which arise from changes in foreign exchange rate and market interest rate; and ② Mitigate the risks of cash flow fluctuation from principal and interest of fixed-interest rate debentures denominated in foreign currency, which arise from changes in foreign exchange rates. The Group has designated foreign currency swap contracts as hedging instruments in order to achieve such objectives.

(3) The nominal amounts of the hedging instrument as of June 30, 2018 are as follows (Unit: USD, SGD):

	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedging derivatives
Interest rate risk
Interest rate swap(USD)		500,000,000		1,350,000,000		1,000,000,000		2,850,000,000
Cash flow hedge
Foreign currencies translation risk and interest rate risk
Currency swap(USD)		50,000,000		450,000,000		—		500,000,000
Foreign currencies translation risk
Currency swap(SGD)		—		204,000,000		—		204,000,000

(4) The average interest rate and average currency rate of the hedging instrument as of June 30, 2018 is as follows:

	Average interest rate and average currency rate
Fair value hedging derivatives
Interest rate risk
Interest rate swaps(USD)	Fixed 3.98% receipt and 3.96% floating paid
Cash flow hedge
Foreign currencies translation risk and interest rate risk
Currency swap(USD)	USD 2.65% receipt, KRW 1.71% paid, USD/KRW =1,173 Won
Foreign currencies translation risk
Currency swap(SGD)	SGD 1.91% receipt, KRW 1.98% paid, SGD/KRW = 828 Won

(5) The amounts related to items designated as hedging instruments as of June 30, 2018 are as follows (Unit: Korean Won in millions, USD, SGD):

			Carrying amounts of the hedging instrument				Line item in the
	Nominal amounts of the hedging instrument		Assets		Liabilities		statement of financial position where the hedging instrument is located	Changing in fair value used for calculating hedge ineffectiveness
Fair value hedge
Interest rate risk
Interest rate swaps	USD	2,850,000,000		12,395		34,540	Derivative assets, Derivative liabilities		(62,246	)
Cash flow hedge
Foreign currencies translation risk and interest rate risk
Currency swap	USD	500,000,000		—		27,594	Derivative liabilities		22,013
Foreign currencies translation risk
Currency swap	SGD	204,000,000		—		5,372	Derivative liabilities		672

(6) Details of carrying amount to hedged and amount adjusted due to hedge accounting as of June 30, 2018 are as follows (Unit: Korean won in millions):

	Carrying amounts of the hedging item				Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item				Line item in the statement of financial position in which the hedged item is included	Changing in fair value used for calculating hedge ineffectiveness			Cash flow hedge reserve (*)
	Assets		Liabilities		Assets		Liabilities
Fair value hedging
Interest rate risk
Debenture		—		3,150,145		—		60,732	Debentures		66,455			—
Cash flow hedge
Foreign currencies translation risk and interest rate risk
Debenture		—		558,258		—		—	Debentures		(21,725	)		(1,665	)
Foreign currencies translation risk
Debenture		—		166,229		—		—	Debentures		(505	)		(3,770	)

(*) Amount after tax deduction

(7) Amounts recognized in profit or loss due to the ineffective portion of fair value hedges during the current period are as follows (Unit: Korean Won in millions):

		Hedge ineffectiveness recognized in profit or loss		Line item in the profit that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		4,209	Other net operating income

(8) Reclassification of profit or loss from other comprehensive income and equity related to cash flow hedges is as follows (Unit: Korean Won in millions):

		Changes in the value of hedging instruments recognized in cash flow hedge reserve		Hedge ineffectiveness recognized in profit or loss			Line item in the profit or loss that includes hedge ineffectiveness	Amounts reclassified from cash flow hedge reserve to profit or loss		Line item affected in profit or loss because of the reclassification
Cash flow hedge	Foreign currencies translation risk and interest rate risk		22,043		(30	)	Other net operating expense		25,049	Other net operating income
	Foreign currencies translation risk		672		—		Other net operating income		3,894	Other net operating income

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 six months ended June 30
	2018			2017
Beginning balance		7,416			13,422
New transactions		20,820			500
Amounts recognized in losses		(3,000	)		(3,613	)
Ending balance		25,236			10,309

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

28. CAPITAL STOCK AND CAPITAL SURPLUS

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

	June 30, 2018		December 31, 2017
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 is no change to be disclosed in numbers of issued and outstanding shares of common stock for the six months ended June, 2018 and 2017.

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

	June 30, 2018		December 31, 2017
Capital in excess of par value		269,533		269,533
Other capital surplus		16,352		16,347
Total		285,885		285,880

29. HYBRID SECURITIES

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

	Issue date		Maturity		Interest rate (%)		June 30, 2018			December 31, 2017
Securities in local currency		June 20, 2008		June 20, 2038		7.7		—			255,000
		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		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			562,700
Issuance cost								(12,544	)		(12,912	)
Total								2,763,256			3,017,888

The hybrid securities mentioned above are either without a maturity date or its maturity can be extended indefinitely at the maturity date without change of terms. Further, if a resolution is passed not to pay dividends on common stock, interest payments on the hybrid securities may be not occur.

30. OTHER EQUITY

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

	June 30, 2018			December 31, 2017
Accumulated other comprehensive loss:
Net gain or loss on valuation of financial assets at FVTOCI		(46,746	)		—
Gain on valuation of AFS financial assets		—			301,930
Gain (loss) on financial liabilities at fair value through profit or loss designated as upon initial recognition due to own credit risk		29			—
Share of other comprehensive loss of joint ventures and associates		(1,446	)		(1,251	)
Loss on foreign currency translation of foreign operations		(206,037	)		(242,700	)
Remeasurement loss related to defined benefit plan		(211,838	)		(152,624	)
Gain (loss) on valuation of cash flow hedges		(5,436	)		777
Equity related to non-current assets held for sale		(564	)		4,145
Subtotal		(472,038	)		(89,723	)
Treasury shares		(34,113	)		(34,113	)
Other capital adjustments		(1,607,647	)		(1,815,438	)
Total		(2,113,798	)		(1,939,274	)

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

	For the six months ended June 30, 2018
	Beginning balance (*1)			Increase (decrease) (*2)			Reclassification adjustments			Income tax effect			Ending balance
Net gain or loss on valuation of financial assets at FVTOCI		(88,906	)		58,846			(694	)		(15,992	)		(46,746	)
Gain (loss) on financial liabilities at fair value through profit or loss designated as upon initial recognition due to own credit risk		(96	)		172			—			(47	)		29
Share of other comprehensive gain (loss) of joint ventures and associates		(2,656	)		1,669			—			(459	)		(1,446	)
Gain (loss) on foreign currency translation of foreign operations		(242,806	)		50,717			—			(13,948	)		(206,037	)
Remeasurement gain (loss) related to defined benefit plan		(152,358	)		(82,041	)		—			22,561			(211,838	)
Gain (loss) on valuation of cash flow hedges		777			(8,570	)		—			2,357			(5,436	)
Transfer to non-current assets held for sale		4,145			(564	)		(4,145	)		—			(564	)
Total		(481,900	)		20,229			(4,839	)		(5,528	)		(472,038	)

(*1) The beginning balance was restated in accordance with K-IFRS 1109.

(*2) Net gain or loss on valuation of financial assets at FVTOCI included the 1,500 million Won transfer to retained earnings due to disposal of equity securities.

	For the six months ended June 30, 2017
	Beginning balance			Increase (decrease)(*)			Reclassification adjustments(*)			Income tax effect			Ending balance
Gain (loss) on valuation of AFS financial assets		386,981			46,479			(81,114	)		5,602			357,948
Share of other comprehensive income (loss) of joint ventures and associates		(1,863	)		2,038			—			(531	)		(356	)
Gain (loss) on foreign currency translation of foreign operations		(48,353	)		(81,571	)		—			17,627			(112,297	)
Remeasurement gain (loss) related to defined benefit plan		(163,397	)		(12,642	)		—			3,020			(173,019	)
Gain (loss) on valuation of cash flow hedges		—			(1,947	)		—			421			(1,526	)
Total		173,368			(47,643	)		(81,114	)		26,139			70,750

(*) 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):

		June 30, 2018			December 31, 2017
Legal reserve	Earned surplus reserve		1,857,754			1,729,754
	Other legal reserve		46,384			45,668
	Subtotal		1,904,138			1,775,422
Voluntary reserve	Business rationalization reserve		8,000			8,000
	Reserve for financial structure improvement		235,400			235,400
	Additional reserve		7,759,804			7,418,806
	Regulatory reserve for credit loss		2,578,457			2,438,191
	Revaluation reserve		715,860			751,964
	Other voluntary reserve		—			11,700
	Subtotal		11,297,521			10,864,061
Conversion of loss on disposal of equity securities at FVTOCI to retained earnings			(424	)		—
Derecognition of the credit risk on financial liabilities designated at FVTPL			5			—
Retained earnings before appropriation			3,272,213			2,980,523
	Total		16,473,453			15,620,006

i. Earned surplus reserve

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

ii. Other legal reserve

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

iii. Business rationalization reserve

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

iv. Reserve for financial structure improvement

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

v. Additional reserve

Additional reserve was appropriated for capital adequacy and other management purpose.

vi. Regulatory reserve for credit loss

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

vii. Revaluation reserve

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

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

	For the six months ended June 30
	2018 (*)			2017
Beginning balance		15,797,097			14,611,566
Net attributable to owners		1,305,878			1,098,361
Dividends on common stock		(336,636	)		(269,308	)
Dividends on hybrid securities		(75,603	)		(90,823	)
Loss on disposal of equity securities at FVTOCI		(424	)		—
Derecognition of the credit risk on financial liabilities designated at FVTPL		5			—
Capital adjustments due to appropriation of retained earnings		(216,864	)		—
Ending balance		16,473,453			15,349,796

(*) The beginning balance as of 2018 was restated in accordance with K-IFRS 1109.

32. REGULATORY RESERVE FOR CREDIT LOSS

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

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

	June 30, 2018			December 31, 2017
Beginning balance		2,578,457			2,438,191
Planned provision (reversal) of regulatory reserve for credit loss		(224,914	)		140,266
Ending balance		2,353,543			2,578,457

(2) Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the planned reserves provided are as follows (Unit: Korean Won in millions, except for EPS amount):

	2018					2017
	Three months ended June 30			Six months ended June 30		Three months ended June 30		Six months ended June 30
Net income		721,796			1,316,316		466,284		1,109,015
Provision (reversal) of regulatory reserve for credit loss(*)		(11,846	)		38,172		48,412		49,961
Adjusted net income after the provision(reversal) of regulatory reserve		733,642			1,278,144		417,872		1,059,054
Adjusted EPS after the provision (reversal) of regulatory reserve(Unit: Korean Won)		1,034			1,786		559		1,439

(*) The amount of reserve for credit loss for the six months ended June 30, 2018 is calculated considering only the change in the reserve for credit loss after the accounting policy change due to adoption of K-IFRS 1109. Therefore, the effect of reducing the reserve for credit losses due to changes in accounting policies was excluded.

33. DIVIDENDS

At the shareholders’ meeting on March 23, 2018, dividend payment for the year ended December 31, 2017 amounting to 336,636 million Won (500 Won per share) was approved and paid for the six months ended June 30, 2018.

34. NET INTEREST INCOME

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Financial assets at FVTPL (K-IFRS 1109)		13,367		28,537		—		—
Financial assets at FVTPL (K-IFRS 1039)		—		—		13,074		26,806
Financial assets at FVTOCI		62,170		119,446		—		—
AFS financial assets		—		—		67,667		144,067
Securities at amortized cost		87,587		168,789		—		—
HTM financial assets		—		—		74,690		149,673
Financial assets at amortized cost:
Interest on due from banks		28,323		61,461		—		—
Interest on loans		2,170,291		4,251,497		—		—
Interest of other receivables		6,931		13,686		—		—
Subtotal		2,205,545		4,326,644		—		—
Loans and receivables:
Interest on due from banks		—		—		20,182		41,403
Interest on loans		—		—		1,921,359		3,810,008
Interest of other receivables		—		—		8,836		17,627
Subtotal		—		—		1,950,377		3,869,038
Total		2,368,669		4,643,416		2,105,808		4,189,584

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Interest on deposits due to customers		704,007		1,358,964		586,051		1,174,384
Interest on borrowings		70,519		129,929		57,666		115,548
Interest on debentures		174,890		346,948		154,445		305,804
Other interest expense		21,930		43,101		20,070		43,528
Total		971,346		1,878,942		818,232		1,639,264

35. NET FEES AND COMMISSIONS INCOME

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Fees and commissions received (*)		169,171		346,925		163,688		336,322
Fees and commissions received for provision of guarantee		14,660		30,263		15,911		31,700
Fees and commissions received on project financing		10,528		16,945		4,614		6,334
Fees and commissions received on Credit card		283,407		556,984		268,887		527,566
Fees and commissions received on securities		23,767		50,238		19,757		40,267
Other fees and commissions received		53,867		111,651		33,424		71,704
Total		555,400		1,113,006		506,281		1,013,893

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

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Fees and commissions paid		41,532		80,866		41,930		73,167
Credit card commission		213,887		425,204		200,275		400,349
Brokerage commission		934		1,268		121		348
Others		1,700		3,013		1,207		2,329
Total		258,053		510,351		243,533		476,193

36. DIVIDEND INCOME

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Financial assets at FVTPL (K-IFRS 1109)		12,210		31,860		—		—
Financial assets at FVTPL (K-IFRS 1039)		—		—		47		190
Financial assets at FVTOCI		1,941		17,844		—		—
AFS financial assets		—		—		19,570		59,255
Total		14,151		49,704		19,617		59,445

(2) Details of dividends related to financial assets at FVTOCI are as follows (Unit: Korean Won in millions):

	Six month ended June 30, 2018
Dividend income recognized from assets held
Equity securities		17,570
Dividend income recognized in assets derecognized		274
Total		17,844

37. NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS MANDATORILY MEASURED AT FAIR VALUE (K-IFRS 1109 AND 1039)

(1) Details of gains or losses related to net gain or loss on financial instruments at FVTPL (K-IFRS 1109 and 1039) are as follows (Unit: Korean Won in millions):

	2018					2017
	Three months ended June 30			Six months ended June 30		Three months ended June 30			Six months ended June 30
Gains on financial assets at fair value through profit or loss mandatorily measured at fair value		70,116			114,146		—			—
Gains (losses) on financial instruments held for trading		—			—		36,266			(60,186	)
Gains(losses) on financial instrument at fair value through profit or loss designated as upon initial recognition		(2,423	)		2,877		—			—
Losses on financial instruments at fair value through profit or loss designated as upon initial recognition		—			—		(24,200	)		(86,223	)
Total		67,693			117,023		12,066			(146,409	)

(2) Details of net gain or loss on financial instrument at fair value through profit or loss mandatorily measured at fair value and financial assets held for trading are as follows (Unit: Korean Won in millions):

			2018						2017
			Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
Financial assets at FVTPL (financial assets held for trading)	Securities	Gain on valuation		36,982			81,861			1,055			5,895
		Gain on disposals		18,885			22,377			3,936			9,860
		Loss on valuation		(11,957	)		(23,795	)		(2,785	)		(6,511	)
		Loss on disposals		(7,481	)		(9,180	)		(1,308	)		(2,057	)
		Subtotal		36,429			71,263			898			7,187
	Loans	Gain on valuation		373			3,191			—			—
		Loss on valuation		(107	)		(127	)		—			—
		Subtotal		266			3,064			—			—
	Other financial assets	Gain on valuation		228			1,969			1,495			3,071
		Gain on disposals		143			405			814			933
		Loss on valuation		(320	)		(2,193	)		(1,971	)		(3,590	)
		Loss on disposals		(11	)		(83	)		(211	)		(234	)
		Subtotal		40			98			127			180
	Total of financial assets held for trading			36,735			74,425			1,025			7,367
Derivatives (for trading)	Interest rates derivatives	Gain on transactions and valuation		231,372			600,362			201,637			433,349
		Loss on transactions and valuation		(247,381	)		(594,525	)		(198,170	)		(421,734	)
		Subtotal		(16,009	)		5,837			3,467			11,615
	Currency derivatives	Gain on transactions and valuation		2,546,154			3,535,106			(94,206	)		3,773,565
		Loss on transactions and valuation		(2,502,934	)		(3,505,890	)		105,055			(3,943,609	)
		Subtotal		43,220			29,216			10,849			(170,044	)
	Equity derivatives	Gain on transactions and valuation		115,712			249,364			92,302			302,927
		Loss on transactions and valuation		(109,288	)		(244,063	)		(71,116	)		(211,551	)
		Subtotal		6,424			5,301			21,186			91,376
	Other derivatives	Gain on transactions and valuation		2,142			2,790			2,295			12,312
		Loss on transactions and valuation		(2,396	)		(3,423	)		(2,556	)		(12,812	)
		Subtotal		(254	)		(633	)		(261	)		(500	)
	Total of derivatives(for trading)			33,381			39,721			35,241			(67,553	)
	Total			70,116			114,146			36,266			(60,186	)

(3) Details of net gain or loss on financial instrument at fair value through profit or loss designated as upon initial recognition are as follows (Unit: Korean Won in millions):

	2018						2017
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
Gain (loss) on equity-linked securities:
Loss on disposals of equity-linked securities		(1,203	)		(1,534	)		(3,686	)		(15,877	)
Gain (loss) on valuation of equity-linked securities		(2,164	)		2,814			(20,667	)		(69,714	)
Subtotal		(3,367	)		1,280			(24,353	)		(85,591	)
Loss on other securities:
Loss on valuation of other securities		—			—			(114	)		(16	)
Gain (loss) on other financial instruments:
Gain (loss) on valuation of other financial instruments		944			1,597			267			(616	)
Total		(2,423	)		2,877			(24,200	)		(86,223	)

38. NET GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI AND AFS FINANCIAL ASSETS

Details of net gain on financial assets at FVTOCI and AFS financial assets recognized are as follows (Unit: Korean Won in millions):

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30			Six months ended June 30
Gains on redemption of securities		11		16		220			547
Gains on transaction of securities		464		1,271		95,019			116,262
Impairment losses on securities		—		—		(6,852	)		(12,637	)
Total		475		1,287		88,387			104,172

39. IMPAIRMENT REVERSE(LOSSES) DUE TO CREDIT LOSS

Impairment reverse (losses) due to credit loss are as follows (Unit: Korean Won in millions):

	2018						2017
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
Reversal of credit loss on financial assets at financial assets at FVTOCI		(679	)		(459	)		—			—
Reversal of credit loss on securities at amortized cost losses		(199	)		(191	)		—			—
Provision for credit loss on loans and other financial assets at amortized cost		76,699			(61,057	)		—			—
Impairment losses due to credit loss		—			—			(211,842	)		(333,976	)
Reversal of provision on guarantee		76,354			86,990			16,071			44,968
Reversal of provision on (provision for) loan commitment		(1,502	)		3,155			(8,715	)		5,245
Total		150,673			28,438			(204,486	)		(283,763	)

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

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

			2018				2017
			Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Salaries	Short term employee benefits	Salaries		341,645		644,663		326,034		654,191
		Employee benefits		108,933		213,627		114,170		213,600
	Retirement benefit service costs			36,610		72,936		36,972		74,057
	Termination			20,994		20,994		5,477		5,477
	Subtotal			508,182		952,220		482,653		947,325
Depreciation and amortization				52,222		99,698		45,380		94,927
Other general and administrative expenses	Rent			79,546		159,126		76,297		156,708
	Taxes and public dues			38,275		67,385		34,077		63,178
	Service charges			52,807		104,970		47,611		96,418
	Computer and IT related			21,704		43,581		16,089		30,477
	Telephone and communication			16,819		33,729		16,111		31,590
	Operating promotion			9,339		19,768		10,003		21,053
	Advertising			13,808		20,493		22,434		29,880
	Printing			1,928		3,892		2,095		4,237
	Traveling			2,679		6,034		2,920		6,024
	Supplies			1,737		3,223		1,517		3,117
	Insurance premium			1,961		4,002		1,956		4,169
	Reimbursement			4,964		5,902		4,710		9,177
	Maintenance			3,672		8,027		3,331		6,882
	Water, light, and heating			2,809		7,203		2,883		7,146
	Vehicle maintenance			2,379		4,594		2,602		4,964
	Others			12,823		23,491		11,488		21,155
	Subtotal			267,250		515,420		256,124		496,175
	Total			827,654		1,567,338		784,157		1,538,427

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30			Six months ended June 30
Gains on transaction of foreign exchange		157,245		847,397		619,297			1,698,987
Gains on disposal of loans and receivables(*1)		—		—		14,861			201,860
Gains related to derivatives		26,373		28,943		11,592			11,656
Gains on fair value hedged items		18,861		66,555		(7,094	)		11,860
Others (*2)		1,741		17,522		5,813			68,668
Total		204,220		960,417		644,469			1,993,031

(*1) Gain on disposal of loan and receivables occurred for the six month ended June 30, 2018 was presented into a separate account for gain related to financial assets at amortized cost in accordance with the adoption of K-IFRS 1109.

(*2) Other income includes such income amounting to 28,800 million Won for the six months ended June 30, 2017, respectively, that the Group 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):

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30			Six months ended June 30
Losses on transactions of foreign exchange		114,971		726,348		534,740			1,374,764
KDIC deposit insurance premium		79,585		156,765		77,146			150,256
Contribution to miscellaneous funds		73,849		146,781		71,927			144,262
Losses(Gains) on disposals of loans and receivables(*1)		—		—		(40	)		28
Losses(Gains) related to derivatives		13,059		62,366		(16,441	)		31,131
Losses on fair value hedged items		—		—		15,820			15,846
Others (*2)		45,707		87,571		38,584			75,554
Total		327,171		1,179,831		721,736			1,791,841

(*) Loss on disposal of loan and receivables occurred for the six month ended June 30, 2018 was presented into a separate account for loss related to financial assets at amortized cost in accordance with the adoption of K-IFRS 1109.

(*) Other expense includes such expenses amounting to 1,412 million Won and 3,325 million Won for the six months ended June 30, 2018 and 2017, respectively, which are related to the Group’s expected payments to other creditor financial institutions in accordance with the creditor financial institutions committee agreement. In addition, ‘Other expense’ for the six months ended June 30, 2018 and 2017 includes 25,179 million Won and 24,443 million Won, respectively, of intangible asset amortization expense.

41. OTHER NON-OPERATING INCOME (EXPENSES)

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

	2018						2017
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
Gain on valuation		10,687			15,347			(10,061	)		3,316
Loss on valuation		(3,006	)		(16,809	)		521			(62,271	)
Impairment loss		—			—			(5,323	)		(5,323	)
Total		7,681			(1,462	)		(14,863	)		(64,278	)

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

	2018						2017
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
Other non-operating incomes		23,345			39,041			30,411			77,185
Other non-operating expenses		(21,947	)		(43,762	)		(18,714	)		(67,187	)
Total		1,398			(4,721	)		11,697			9,998

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Rental fee income		1,687		3,203		1,880		3,700
Gains on disposal of investments in joint ventures and associates		—		—		4,466		32,886
Gains on disposal of premises and equipment, intangible assets and other assets		15,760		17,037		1,494		1,675
Reversal of impairment loss of premises and equipment, intangible assets and other assets		1		341		—		32
Others		5,897		18,460		22,571		38,892
Total		23,345		39,041		30,411		77,185

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Depreciation on investment properties		1,004		2,010		992		1,991
Interest expense of rent leasehold deposits		150		292		105		223
Losses on disposal of investment in joint ventures and associates		—		2,931		46		27,730
Losses on disposal of premises and equipment, intangible assets and other assets		167		221		271		608
Impairment losses of premises and equipment, intangible assets and other assets		2		2		40		160
Donation		8,551		22,042		10,426		14,980
Others		12,073		16,264		6,834		21,495
Total		21,947		43,762		18,714		67,187

42. INCOME TAX EXPENSE

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

	For the six months ended June 30
	2018			2017
Current tax expense
Current tax expense in respect of the current period		231,393			284,030
Adjustments recognized in the current period in relation to the current tax of prior periods		(3,632	)		(4,919	)
Subtotal		277,761			279,111
Deferred tax expense
Deferred tax assets(liabilities) relating to the origination and reversal of temporary differences		182,515			13,889
Deferred tax charged directly to equity		(378	)		27,933
Others (tax effect charged directly to equity due to the adoption of K-IFRS 1109)		75,318			—
Subtotal		257,455			41,822
Income tax expense		485,216			320,933

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

	For the six months ended June 30
	2018			2017
Net income before income tax expense		1,801,532			1,429,948
Tax calculated at statutory tax rate (*)		490,240			345,585
Adjustments
Effect of income that is exempt from taxation		(19,695	)		(32,683	)
Effect of expense not deductible in determining taxable profit		9,395			9,624
Adjustments recognized in the current period in relation to the current tax of prior periods		(3,632	)		(4,919	)
Others		8,908			3,326
Subtotal		(5,024	)		(24,652	)
Income tax expense		485,216			320,933
Effective tax rate		26.9	%		22.4	%

(*) The applicable income tax rate; 1) 11% for below 200 million Won, 2) 22% for above 200 million Won and below 20 billion Won, 3) 24.2% for above 20 billion Won and below 300 billion Won, 4) 27.5% for above 300 billion Won.

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

	June 30, 2018		December 31, 2017
Net gain on valuation of financial assets at FVTOCI		18,568		—
Loss on valuation of AFS securities		—		(114,169	)
Share of other comprehensive gain (loss) of joint ventures and associates		378		(954	)
Foreign currency translation of foreign operations		6,852		15,855
Remeasurements of the net defined benefit liability		78,685		56,317
Gain (loss) on cash flow hedge		1,735		(248	)
Total		106,218		(43,199	)

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):

	2018						2017
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
Net income attributable to Owners		716,142			1,305,878			460,888			1,098,361
Dividends to hybrid securities		(37,748	)		(75,603	)		(41,557	)		(90,823	)
Net income attributable to common shareholders		678,394			1,230,275			419,331			1,007,538
Weighted average number of common shares outstanding		673 shares in million			673 shares in million			673 shares in million			673 shares in million
Basic EPS		1,008			1,828			623			1,497

Diluted EPS is equal to basic EPS because there is no dilution effect for the six months ended June 30, 2018 and 2017.

44. CONTINGENT LIABILITIES AND COMMITMENTS

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

	June 30, 2018		December 31, 2017
Confirmed guarantees
Guarantee for loans		141,193		157,299
Acceptances		333,365		320,519
Guarantees in acceptances of imported goods		106,675		108,238
Other confirmed guarantees		5,981,767		6,288,965
Sub-total		6,563,000		6,875,021
Unconfirmed guarantees
Local letter of credit		365,302		383,117
Letter of credit		3,207,797		3,637,787
Other unconfirmed guarantees		936,971		505,689
Sub-total		4,510,070		4,526,593
Commercial paper purchase commitments and others		1,299,503		1,458,101
Total		12,372,573		12,859,715

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

	June 30, 2018		December 31, 2017
Loan commitments		98,251,006		80,760,325
Other commitments		5,942,784		4,546,090

(3) Litigation case

Legal cases where the Group is involved are as follows (Unit: Korean Won in millions):

	June 30, 2018				December 31, 2017
	As plaintiff		As defendant		As plaintiff		As defendant
Number of cases (*)		68 cases		161 cases		83 cases		155 cases
Amount of litigation		443,234		256,147		413,267		244,767
Provisions for litigations				19,887				9,277

(*) The number of lawsuits as of June 30, 2018 and December 31, 2017 does not include fraud lawsuits, etc. and those lawsuits that are filed only to extend the statute of limitation.

(4) Other

The Group provides settlement services for payments in Korean Won to facilitate trade transactions between Korea and Iran. In connection with these services, the Group is currently being investigated by US government agencies including US prosecutors (United States Attorney’s Office and New York State Attorney General’s Office) as to whether the Group has violated United States laws by participating in prohibited transactions involving countries sanctioned by the US. The Group has decided not to disclose the required disclosures stated in K-IFRS 1037 ‘Provisions, Contingent Liabilities and Contingent Assets’ as such information may adversely affect the current investigation against the Group.

45. RELATED PARTY TRANSACTIONS

Related parties of the Group as of June 30, 2018, assets and liabilities recognized, guarantees and commitments, and major transactions with related parties for the six months ended June 30, 2018 and 2017 are as follows:

(1) Related parties

	Related parties
Associates	Kumho Tire Co., Inc., Woori Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Chin Hung International Inc., STX Corporation, 2016KIF-IMM Woori Bank Technology Venture Fund, K BANK Co., Ltd., Well to Sea No. 3 Private Equity Fund, and Others (Dongwoo C & C Co., Ltd. and other 25 associates)

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

Related party		A title of account	June 30, 2018			December 31, 2017
Associates	Kumho Tire Co., Inc.	Loans		257,856			170,917
		Loss allowance		(62,957	)		(156,712	)
		Deposits due to customers		482			666
		Other liabilities		489			50
	Woori Service Networks Co., Ltd.	Loans		22			45
		Deposits due to customers		1,732			1,311
		Other liabilities		339			357
	Korea Credit Bureau Co., Ltd.	Loans		4			6
		Deposits due to customers		1,063			5,586
		Other liabilities		6			54
	Korea Finance Security Co., Ltd.	Loans		42			56
		Loss allowance		(2	)		—
		Deposits due to customers		3,078			2,854
		Other liabilities		4			7
	Chin Hung International Inc.	Loans		182			408
		Loss allowance		(24	)		(22	)
		Deposits due to customers		61,551			46,220
		Other liabilities		2,899			1,658
	Poonglim Industrial Co., Ltd.(*1)	Deposits due to customers		—			4
	STX Engine Co., Ltd.(*2)	Loans		—			106,176
		Loss allowance		—			(88,734	)
		Deposits due to customers		—			18,092
		Other liabilities		—			29
	STX Corporation	Loans		73,519			47,711
		Loss allowance		(49,734	)		(31,210	)
		Deposits due to customers		2,130			77,555
		Other liabilities		131			80

Related party		A title of account	June 30, 2018			December 31, 2017
Associates	K BANK Co., Ltd.	Loans		103			212
	Well to Sea No.3 Private Equity Fund	Loans		85,000			73,810
		Loss allowance		(85	)		(39	)
		Deposits due to customers		3,213			61
		Other liabilities		69			27
	Others (*3)	Loans		260			499
		Loss allowance		(235	)		(471	)
		Other assets		1			1
		Deposits due to customers		6,369			2,906
		Other liabilities		153			73

(*1) The Group did not have significant influence over the entity due to the fact that the entity was going through workout process under receivership, and thus the entity was excluded from the investment in associates

(*2) The entity was sold after it was transferred to assets held for sale for the year ended December 31, 2017 and was excluded from the investment in associates as of June 30, 2018.

(*3) Others include Saman Corporation, Kyesan Engineering Co., Ltd., Hyunwoo International Co., Ltd., DAEA SNC Co., Ltd. and others as of June 30, 2018 and December 31, 2017.

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

			For the six months ended June 30
Related party		A title of account	2018			2017
Corporation that has significant influence over the group	KDIC(*1)	Interest expenses		—			15,331
Associates	Kumho Tire Co., Inc.	Interest income		1,098			1,501
		Fees income		—			6
		Impairment losses due to credit loss (reversal of allowance for credit loss)		(93,755	)		1,042
	Woori Blackstone Korea Opportunity Private Equity Fund No.1 (*2)	Fees income		—			29
	Woori Service Networks Co., Ltd.	Other income		15			15
		Interest expenses		7			13
		Fees expenses		270			335
		Other expenses		231			249
	Korea Credit Bureau Co., Ltd.	Interest expenses		21			38
		Fees expenses		1,038			1,023
	Korea Finance Security Co., Ltd.	Interest expenses		4			5
		Impairment losses due to credit loss		2			—
		Fees expenses		71			—
	Chin Hung International Inc.	Interest income		—			53
		Fees income		—			1
		Interest expenses		21			13
		Impairment losses due to credit loss (reversal of allowance for credit loss)		2			(4,270	)

			For the six months ended June 30
Related party		A title of account	2018			2017
Associates	STX Engine Co., Ltd (*3).	Interest income		333			672
		Fees income		—			28
		Interest expenses		86			72
		Reversal of allowance for credit loss		(88,734	)		(1,835	)
	Samho International Co., Ltd.(*4)	Interest income		—			364
		Fees income		—			6
		Interest expenses		—			214
		Reversal of allowance for credit loss		—			(116	)
	STX Corporation	Interest income		—			219
		Fees income		—			58
		Interest expenses		2			4
		Impairment losses due to credit loss (reversal of allowance for credit loss)		18,524			(59,507	)
	K BANK Co., Ltd.	Fees income		514			396
		Other income		5			1,051
	Well to Sea No.3	Interest incomes		1,288			—
	Private Equity Fund (*5)	Interest expenses		4			—
		Impairment losses due to credit loss		46			—
	Others (*6)	Other income		6			—
		Interest expenses		22			5
		Reversal of impairment losses due to credit loss		(236	)		(10	)

(*1) As its ownership interest in the Group is lower than 20% as of December 31, 2017, it has been excluded from the corporation that have significant influence over the Group.

(*2) Due to disposition previous year, the entity is not in scope for associate.

(*3) The entity was sold after it was transferred to assets held for sale for the year ended December 31, 2017 and was excluded from the investment in associates as of June 30, 2018.

(*4) The entity was sold after it was transferred to assets held for sale and was excluded from the investment in associates for the year ended December 31, 2017.

(*5) Due to capital contribution for the year ended December 31, 2017, the entity has been included in the investment in associates.

(*6) Others include the amount transacted with Saman Corporation, Kyesan Engineering Co., Ltd., Hyunwoo International Co., Ltd., DAEA SNC Co., Ltd. and others for the six months ended June 30, 2018 and 2017.

(4) Major loan transactions with related parties for the six months ended June 30, 2018 and June 30, 2017 are as follows (Unit: Korean Won in millions):

		For the six months ended June 30, 2018
	Related parties	Beginning balance		Loan		Collection		Others			Ending balance(*1)
Associates	Kumho Tire Co., Inc.		57,470		—		7,057		—			50,413
	Well to Sea No. 3 Private Equity Fund (*2)		73,810		11,190		—		—			85,000
	STX Engine Co., Ltd. (*3)		39,886		—		2,177		(37,709	)		—
		For the six months ended June 30, 2017
	Related parties	Beginning balance		Loan		Collection		Others			Ending balance(*1)
Associates	Kumho Tire Co., Inc.		50,413		—		—		—			50,413
	STX Engine Co., Ltd. (*3)		44,797		—		7,088		—			37,709

(*1) Settlement payment caused in operation among the related parties were excluded, and in the case of a limited loan, it was presented as a net increase (decrease).

(*2) The entity is in scope for the associates due to contribution as of the year ended December 31, 2017.

(*3) The entity was sold after it was transferred to assets held for sale for the year ended December 31, 2017 and was excluded from the investment in associates as of June 30, 2018.

(5) There are no major borrowing transactions with related parties for the six months ended June 30, 2018 and June 30, 2017.

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

	June 30, 2018		December 31, 2017		Warranty
Kumho Tire Co., Inc.		13,830		4,181	Import credit in foreign currencies and others
		511		636	Loan commitment
Korea Finance Security Co., Ltd.		218		204	Loan commitment
Korea Credit Bureau Co., Ltd.		31		29	Loan commitment
Woori Service Networks Co., Ltd.		178		155	Loan commitment
Chin Hung International Inc.		32,117		31,891	Loan commitment
STX Engine Co., Ltd.(*)		—		68,858	Import credit in foreign currencies and others
STX corporation		14,914		17,557	Import credit in foreign currencies and others
		132		53	Loan commitment
K BANK Co., Ltd.		101		—	Loan commitment
Well to Sea No.3 Private Equity Fund		225,000		236,190	Loan commitment

(*) The entity was sold after it was transferred to assets held for sale for the year ended December 31, 2017 and was excluded from the investment in associates as of June 30, 2018.

For the guarantee provided to the related parties, the Group recognized provisions for guarantees amounting to 11,525 million Won and 71,459 million Won, as of June 30, 2018 and December 31, 2017, respectively.

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

	For the six months ended June 30
	2018		2017
Short term benefits		6,023		6,524
Severance payments		280		280
Total		6,303		6,804

Key management includes registered executives and non-registered executives. Outstanding assets and liabilities from transactions with key management amount to 2,155 million Won and 6,946 million Won, respectively, as of June 30, 2018, and with respect to the assets, the Group 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
	June 30, 2018		December 31, 2017		2018				2017
					Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Trust accounts		53,196,044		43,895,511		257,076		541,368		213,300		416,316

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

	June 30, 2018		December 31, 2017
Receivables:
Trust fees receivables		29,603		25,286
Payables:
Deposits due to customers		627,884		585,832
Borrowings from trust accounts		3,155,348		2,711,529
Total		3,783,232		3,297,361

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

	2018				2017
	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Revenue:
Trust fees		49,375		100,092		30,472		65,207
Termination fees		835		5,034		—		—
		50,210		105,126		30,472		65,207
Expense:
Interest expenses on deposits due to customers		2,037		4,019		5,257		12,400
Interest expenses on borrowings from trust accounts		10,034		20,101		7,569		15,686
		12,071		24,120		12,826		28,086

(4) Principal guaranteed trusts and principal and fixed rate of return guaranteed trusts are as follows;

1) As of June 30, 2018 and December 31, 2017, the carrying of principal guaranteed trusts and principal and fixed rate of return guaranteed trusts are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Principal guaranteed trusts
Old-age pension trusts		3,741		4,058
Personal pension trusts		524,132		530,556
Pension trusts		803,613		791,920
Retirement trusts		46,238		50,035
New personal pension trusts		8,223		8,563
New old-age pension trusts		2,304		2,467
Subtotal		1,388,251		1,387,599
Principal and fixed rate of return guaranteed trusts
Development trusts		19		19
Unspecified money trusts		814		801
Subtotal		833		820
Total		1,389,084		1,388,419

2) As of June 30, 2018 and December 31, 2017, the amounts that the Bank has to pay by the capital guaranteed contract or the operating results of the principal and return guaranteed trusts are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Liabilities for the account (subsidy for trust account adjustment)		16		32

47. BUSINESS COMBINATION

The business combination occurred during the current period is as follows:

(1) Acquisition of WB Finance Co., Ltd.

For expand Cambodia’s retail business, the Group had acquired 100% ownership of Vision Fund Cambodia on June, 2018. And The Group changed its name to WB Finance Co., Ltd..

(2) Details of the accounting for the business combination are as follows (Unit: Korean Won in millions):

	June 30, 2018
Consideration transferred:
Cash and cash equivalents		88,216
Identifiable assets and liabilities recognized:
Cash and cash equivalents		16,657
Financial assets at FVTOCI		17
Loans and other financial assets at amortized cost		205,451
Premises and equipment		1,630
Intangible assets		763
Current tax assets		173
Deferred tax assets		1,381
Other assets		1,510
Asset total		227,582

	June 30, 2018
Deposits due to customers		54,615
Borrowings		120,644
Other financial liabilities		6,149
Current tax liabilities		640
Other liabilities		4,724
Liabilities total		186,772
Identifiable net fair value		40,810
Goodwill(*)		47,406

(*) Identifying the intangible assets and measuring the fair value of identifiable assets acquired are incomplete as the acquisition date was June 21, 2018. The amount of Goodwill could change due to the result of the measurement of the identifiable assets and liabilities.

48. ESTABLISHMENT OF A FINANCIAL HODING COMPANY AND PLAN OF STOCK TRANSFER

The Group’s board of directors held a meeting on June 19, 2018, approving the plan to transfer shares which was formulated to facilitate the establishment of a financial holding company by means of comprehensive share transfer. In relation to the establishment of the financial holding company, the Group is currently undertaking processes to obtain approval from the Financial Services Committee.

The six companies that are subject to the share transfer plan include the Bank, Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd., Woori Private Equity Asset Management Co., Ltd. After the Group obtains approval from the Financial Services Committee, the Group is planning to establish the financial holding company during the first half of 2019 through processes such as annual shareholders’ meeting. Following the establishment of the financial holding company, the six companies mentioned above will become fully owned subsidiaries of the holding company.

After the financial holding company is established, the shares of the Group will be delisted from the Korea Stock Exchange and New York Stock Exchange during the first half of the 2019, and the shares of the newly established financial holding company will be listed on both Korea Stock Exchange and New York Stock Exchange.