Exhibit 99.2

WOORI BANK

SEPARATE INTERIM FINANCIAL STATEMENTS

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

ENDED JUNE 30, 2018 AND 2017

The accompanying separate 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

Headquarters: (Address) 51, Sogong-ro, Jung-gu, Seoul

(Phone Number) 02-2002-3000

WOORI BANK

SEPARATE 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 (Notes 6 and 45)		5,205,509		5,328,960
Financial assets at fair value through profit or loss (“FVTPL”) (K-IFRS 1109) (Notes 4, 7, 11, 12, 18, 26 and 45)		4,256,954		—
Financial assets at FVTPL (K-IFRS 1039) (Notes 4, 7, 11, 12, 18, 26 and 45)		—		4,133,724
Financial assets at FVTOCI (Notes 4, 8, 11, 12, and 18)		13,854,656		—
Available for sale (AFS) financial assets (Notes 4, 8, 11, 12 and 18)		—		14,186,704
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)		17,568,356		—
Held to maturity (HTM) financial assets (Notes 4, 9, 11, 12 and 18)		—		16,638,727
Loans and other financial assets at amortized cost (Notes 4, 10, 11, 12, 18 and 45)		256,037,729		—
Loans and receivables (Notes 4, 10, 11, 12, 18 and 45)		—		248,810,624
Investments in subsidiaries and associates (Note 13)		4,240,906		4,148,795
Investment properties (Note 14)		360,075		350,235
Premises and equipment (Note 15)		2,351,035		2,374,590
Intangible assets (Note 16)		400,008		303,325
Assets held for sale (Note 17)		15,425		46,183
Deferred tax assets		49,827		238,543
Derivative assets (Notes 4,11, 12 and 26)		12,395		59,272
Other assets (Notes 19 and 45)		146,615		117,889
Total assets		304,499,490		296,737,571
LIABILITIES
Financial liabilities at FVTPL (K-IFRS 1109) (Notes 4, 11 12, 20, 26 and 45)		2,575,918		—
Financial liabilities at FVTPL (K-IFRS 1039) (Notes 4, 11, 12, 20, 26 and 45)		—		3,416,978
Deposits due to customers (Notes 4, 11, 21 and 45)		226,726,810		224,384,156
Borrowings (Notes 4, 11, 12 and 22)		13,994,109		13,662,984
Debentures (Notes 4, 11 and 22)		20,091,374		21,707,466
Provisions (Notes 23, 44 and 45)		325,699		368,027
Net defined benefit liability (Note 24)		71,632		14,284
Current tax liabilities		133,625		212,376
Derivative liabilities (Notes 4, 11,12 and 26)		34,540		12,103
Other financial liabilities (Notes 4, 11, 12, 25 and 45)		20,224,875		13,029,421
Other liabilities (Notes 25 and 45)		143,143		135,686
Total liabilities		284,321,725		276,943,481

(Continued)

WOORI BANK

SEPARATE 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
Capital stock (Note 28)		3,381,392			3,381,392
Hybrid securities (Note 29)		2,763,256			3,017,888
Capital surplus (Note 28)		269,533			269,533
Other equity (Note 30)		(327,438	)		(135,282	)
Retained earnings (Notes 31 and 32) (Regulatory reserve for credit loss as of June 30, 2018 and December 31, 2017 is 2,091,721 million Won and 2,017,342 million Won, respectively. Regulatory reserve for credit loss to be reversed (reserved) as of June 30, 2018 and December 31, 2017 is 178,873 million Won and (-) 74,379 million Won, respectively. Planned provision reversed (reserved) of regulatory reserve for credit loss as of June 30, 2018 and December 31, 2017 is 178,873 million Won and (-) 74,379 million Won, respectively)		14,091,022			13,260,559
Total equity		20,177,765			19,794,090
Total liabilities and equity		304,499,490			296,737,571

(*) The separate interim statement of financial position as of June 30, 2018 was prepared in accordance with K-IFRS 1109; however, the comparative separate statement of financial position as of December 31, 2017 was not retrospectively restated in accordance with K-IFRS 1109.

See accompanying notes

WOORI BANK

SEPARATE INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND THE SIX MONTHS ENDED

JUNE 30, 2018 AND 2017

	Korean Won
	2018(*)						2017(*)
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
	(In millions, except for per share data)
Interest income		2,040,139			4,004,923			1,812,779			3,600,783
Financial assets at FVTPL (K-IFRS 1109)		2,055			5,251			—			—
Financial assets at FVTOCI		56,172			108,016			—			—
Financial assets at amortized cost		1,981,912			3,891,656			—			—
Financial assets at FVTPL (K-IFRS 1039)		—			—			4,415			8,878
AFS financial assets		—			—			52,423			105,267
HTM financial assets		—			—			73,683			147,063
Loans and receivables		—			—			1,682,258			3,339,575
Interest expense		(871,402	)		(1,689,634	)		(734,605	)		(1,469,125	)
Net interest income (Notes 34 and 45)		1,168,737			2,315,289			1,078,174			2,131,658
Fees and commissions income		290,396			596,268			257,606			529,177
Fees and commissions expense		(35,995	)		(70,207	)		(36,423	)		(63,327	)
Net fees and commissions income (Notes 35 and 45)		254,401			526,061			221,183			465,850
Dividend income (Notes 36 and 45)		14,031			40,495			31,229			61,736
Net gain on financial instruments at FVTPL (K-IFRS 1109) (Notes 11, 37 and 45)		56,179			107,822			—			—
Net gain(loss) on financial instruments at FVTPL (K-IFRS 1039) (Notes 11, 37 and 45)		—			—			14,430			(137,593	)
Net gain on financial instruments at FVTOCI (K-IFRS 1109) (Notes 11 and 45)		723			723
Net gain on AFS financial assets (Notes 11 and 38)		—			—			77,021			90,238
Net gain on financial assets at amortized cost		5,487			14,853			—			—
Net gain on disposals of securities at amortized cost		—			431			—			—
Net gain on disposals of loans and other financial assets at amortized cost		5,487			14,422			—			—
Impairment reverse (losses) due to credit loss (Notes 39 and 45)		225,607			163,408			(145,750	)		(179,904	)
General and administrative expenses (Notes 40 and 45)		(725,115	)		(1,355,859	)		(691,823	)		(1,350,512	)
Other net operating income (expenses) (Notes 40 and 45)		(102,086	)		(189,753	)		(68,990	)		216,867
Operating income		897,964			1,623,039			515,474			1,298,340
Share of losses on subsidiaries and associates (Note 13)		—			—			(18,563	)		(37,547	)
Net other non-operating income		13,457			25,104			22,164			36,671
Non-operating income (expenses) (Note 41)		13,457			25,104			3,601			(876	)
Net income before income tax expense		911,421			1,648,143			519,075			1,297,464
Income tax expense (Note 42)		252,593			443,328			116,552			293,038

(Continued)

WOORI BANK

SEPARATE INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND THE SIX MONTHS ENDED

JUNE 30, 2018 AND 2017 (CONTINUED)

	Korean Won
	2018(*)						2017(*)
	Three months ended June 30			Six months ended June 30			Three months ended June 30			Six months ended June 30
	(In millions, except for per share data)
Net income (Net income after the provision of regulatory reserve for credit loss for the six months ended June 30, 2018 and 2017 is 1,189,411 million Won and 1,015,232 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 is 678,397 million Won and 414,833 million Won, respectively) (Note 32)		658,828			1,204,815			402,523			1,004,426
Net gain on valuation of equity securities at FVTOCI		922			29,046			—			—
Net gain on valuation of financial liabilities designated as at FVTPL due to own credit risk		40			130			—			—
Remeasurement of the net defined benefit liability		(5,464	)		(58,345	)		16,563			(8,949	)
Items that will not be reclassified to profit or loss		(4,502	)		(29,169	)		16,563			(8,949	)
Net gain on valuation of debt securities at FVTOCI		8,467			12,182			—			—
Net loss on valuation of AFS financial assets		—			—			(38,433	)		(16,218	)
Gain (loss) on foreign currencies translation of foreign operations		11,534			10,095			6,761			(14,513	)
Items that may be reclassified to profit or loss		20,001			22,277			(31,672	)		(30,731	)
Other comprehensive income(loss), net of tax		15,499			(6,892	)		(15,109	)		(39,680	)
Total comprehensive income		674,327			1,197,923			387,414			964,746
Net income per share (Note 43)
Basic and diluted earnings per common share (in Korean Won)		923			1,678			536			1,358

(*) The separate interim statement 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 separate interim statement 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

SEPARATE 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			Total
	(Korean Won in millions)
January 1, 2017		3,381,392		3,574,896			269,533		138,542			12,488,155			19,852,518
Net income		—		—			—		—			1,004,426			1,004,426
Dividends on common stocks		—		—			—		—			(269,308	)		(269,308	)
Loss on valuation of available-for-sale financial assets		—		—			—		(16,218	)		—			(16,218	)
Loss on foreign currency translation of foreign operations		—		—			—		(14,513	)		—			(14,513	)
Remeasurement loss related to defined benefit plan		—		—			—		(8,949	)		—			(8,949	)
Dividends to hybrid securities		—		—			—		—			(90,823	)		(90,823	)
Issuance of hybrid securities		—		559,565			—		—			—			559,565
Redemption of hybrid securities		—		(1,116,573	)		—		(208,158	)		—			(1,324,731	)
June 30, 2017(*)		3,381,392		3,017,888			269,533		(109,296	)		13,132,450			19,691,967
January 1, 2018		3,381,392		3,017,888			269,533		(135,282	)		13,260,559			19,794,090
Cumulative effect of change in accounting policy (Note 2)		—		—			—		(393,473	)		246,464			(147,009	)
Adjusted balance, beginning of period		3,381,392		3,017,888			269,533		(528,755	)		13,507,023			19,647,081
Net income		—		—			—		—			1,204,815			1,204,815
Dividends on common stocks		—		—			—		—			(336,636	)		(336,636	)
Net gain on valuation of financial liabilities designated as at FVTPL due to own credit risk		—		—			—		130			—			130
Changes in other comprehensive income due to redemption of financial liabilities designated as at FVTPL		—		—			—		(5	)		5			—
Net gain on valuation of financial assets at FVTOCI		—		—			—		41,228			—			41,228
Changes in other comprehensive income due to disposal of equity securities at FVTOCI		—		—			—		424			(424	)		—
Gain on foreign currency translation of foreign operations		—		—			—		10,095			—			10,095
Remeasurement loss related to defined benefit plan		—		—			—		(58,345	)		—			(58,345	)
Appropriation of retained earnings		—		—			—		208,158			(208,158	)		—
Dividends to hybrid securities		—		—			—		—			(75,603	)		(75,603	)
Redemption of hybrid securities		—		(254,632	)		—		(368	)		—			(255,000	)
June 30, 2018(*)		3,381,392		2,763,256			269,533		(327,438	)		14,091,022			20,177,765

(*) The separate 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 separate 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

SEPARATE 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		1,204,815			1,004,426
Adjustment to net income:
Income tax expense		443,328			293,038
Interest income		(4,004,923	)		(3,600,783	)
Interest expense		1,689,634			1,469,125
Dividend income		(64,198	)		(80,000	)
		(1,936,159	)		(1,918,620	)
Additions of expenses not involving cash outflows:
Impairment losses due to credit loss		—			179,904
Impairment loss on investments in subsidiaries and associates		—			37,547
Loss on transaction and valuation of derivatives (hedging)		62,336			11,811
Loss on hedged items (fair value hedge)		—			15,846
Loss on provision		4,600			6,800
Retirement benefits		64,182			65,868
Depreciation and amortization		97,649			84,527
Loss on disposal of premises and equipment and other assets		102			437
Impairment loss on premises and equipment and other assets		2			44
		228,871			402,784
Deductions of income not involving cash inflows:
Reversal of impairment losses due to credit loss		163,408			—
Gain on valuation of financial assets at FVTPL (K-IFRS 1109)		155,621			—
Gain on valuation of financial instruments at FVTPL (K-IFRS 1039)		—			14,996
Gain on financial assets at FVTOCI		723			—
Gain on AFS financial assets		—			90,238
Gain on disposal of securities at amortized cost		431			—
Gain on transaction and valuation of derivatives (hedging)		—			11,354
Gain on hedged items (fair value hedge)		66,555			11,860
Gain on provisions		1,177			1,219
Gain on disposal of investment in subsidiaries and associates		—			8,227
Gain on disposal of premises and equipment and other assets		13,866			1,609
Reversal of impairment loss on premises and equipment and other assets		341			32
		402,122			139,535

(Continued)

WOORI BANK

SEPARATE 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)
Changes in operating assets and liabilities:
Financial assets at FVTPL (K-IFRS 1109)		815,764			—
Financial assets at FVTPL (K-IFRS 1039)		—			(201,559	)
Loans and other financial assets at amortized cost		(7,479,751	)		—
Loans and receivables		—			(5,931,291	)
Other assets		(24,210	)		61,129
Deposits due to customers		2,342,706			4,941,718
Provision		8,616			(4,288	)
Net defined benefit liability		(87,337	)		(16,163	)
Other financial liabilities		7,069,301			2,840,767
Other liabilities		10,677			(27,453	)
		2,655,766			1,662,860
Cash received from (paid for) operating activities:
Interest income received		3,981,989			3,674,796
Interest expense paid		(1,598,948	)		(1,574,740	)
Dividend received		64,199			77,629
Income tax paid		(274,388	)		(214,501	)
Net cash provided by operating activities		3,924,023			2,975,099
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 instruments at FVTOCI		4,090,102			—
Disposal of AFS financial assets		—			11,135,794
Redemption of securities at amortized cost		4,872,333			—
Redemption of HTM financial assets		—			4,584,130
Disposal of investments in subsidiaries and associates		15,839			19,099
Disposal of premises and equipment		32			843
Disposal of intangible assets		2,246			383
Disposal of assets held for sale		56,924			5,954
		14,353,666			15,746,203
Cash out-flows from investing activities:
Acquisition of financial assets at FVTPL (K-IFRS 1109)		5,342,986			—
Acquisition of financial instruments at FVTOCI		4,874,442			—
Acquisition of AFS financial assets		—			11,157,104
Acquisition of securities at amortized cost		5,806,238			—
Acquisition of HTM financial assets		—			5,912,247
Acquisition of investments in subsidiaries and associates		115,764			138,695
Acquisition of investment properties		5,336			795
Acquisition of premises and equipment		33,502			49,316
Acquisition of intangible assets		108,787			81,081
		16,287,055			17,339,238
Net cash used in investing activities		(1,933,389	)		(1,593,035	)

(Continued)

WOORI BANK

SEPARATE 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 financing activities:
Cash in-flows from financing activities:
Increase in borrowings		4,177,041			4,077,415
Issuance of debentures		1,701,300			5,100,000
Issuance of hybrid securities		—			559,565
		5,878,341			9,736,980
Cash out-flows for financing activities:
Repayment of borrowings		4,055,690			5,889,920
Repayment of debentures		3,511,488			3,366,476
Dividends paid on hybrid securities		336,636			269,308
Redemption of hybrid securities		255,000			1,323,400
Dividends paid on hybrid securities		75,683			100,627
		8,234,497			10,949,731
Net cash used in financing activities		(2,356,156	)		(1,212,751	)
Net change in cash and cash equivalents		(365,522	)		169,313
Cash and cash equivalents, beginning of the period		5,328,960			6,104,029
Effects of exchange rate changes on cash and cash equivalents		242,071			(177,596	)
Cash and cash equivalents, end of the period		5,205,509			6,095,746

(*) The separate interim statement of cash flows for the six months ended June 30, 2018 was prepared in accordance with K-IFRS 1109; however, the comparative separate interim flows for the six months ended June 30, 2017 was not retrospectively restated in accordance with K-IFRS 1109.

See accompanying notes

WOORI BANK

NOTES TO SEPARATE 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) Woori Bank

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

Previously, Woori Finance Holdings Co., Ltd., the former holding company of Woori Financial Group, established on March 27, 2001, held a 100% ownership of the Bank. Effective November 1, 2014, Woori Finance Holdings Co., Ltd. completed its merger (the “Merger”) with and into the Bank. Accordingly, the shares of the Bank, 597 million shares, prior to the merger, was reduced to nil in accordance with capital reduction procedure, and then, in accordance with the merger ratio, the Bank newly issued 676 million shares. As a result, as of 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 years ended December 31, 2017, KDIC sold additional 33 million shares. As of June 30, 2018 and December 31, 2017, KDIC held 125 million (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 at 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. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The Bank’s separate interim financial statements are prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1034, Interim Financial Reporting and K-IFRS 1027, Separate Financial Statements. It is necessary to use the annual separate financial statements for the year ended December 31, 2017 for understanding of the accompanying interim financial statements.

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

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

• Adoption to K-IFRS 1109 – Financial instruments

The Bank 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 Bank 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 Bank 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 Bank may make the following irrevocable choice or designation at the time of initial recognition of a financial assets.

The Bank 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 of 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		Reclassifica- tion			Remeasure- ment		Classification according to K-IFRS 1109
Deposit	Loans and receivables	Loan and other financial assets at amortized cost		7,394,885		—			—		7,394,885
Deposit	Financial assets at FVTPL	Financial assets at FVTPL		25,972		—			—		25,972
Debt securities	Financial assets at FVTPL	Financial assets at FVTPL(*)		1,008,827		—			—		1,008,827
Equity securities	Financial assets at FVTPL	Financial assets at FVTPL(*)		156		—			—		156
Derivatives	Financial assets at FVTPL	Financial assets at FVTPL(*)		3,098,769		(2,137	)		—		3,096,632
Equity securities	AFS financial assets	Financial assets at FVTPL(*)		1,254,928		1,219			—		1,256,147
Equity securities	AFS financial assets	Financial assets at FVTOCI		684,153		—			—		684,153
Debt securities	AFS financial assets	Financial assets at FVTOCI		12,247,622		—			—		12,247,622
Debt securities	HTM financial assets	Securities at amortized cost		16,638,727		—			—		16,638,727
Loans	Loans and receivables	Financial assets at FVTPL (*)		51,653		918			282		52,853
Loans	Loans and receivables	Loan and other financial assets at amortized cost		236,691,399		—			—		236,691,399
Derivatives	Derivatives	Derivatives		59,272		—			—		59,272
Other financial assets	Loans and receivables	Loan and other financial assets at amortized cost		6,233,677		—			—		6,233,677
Total financial assets				285,390,040		—			282		285,390,322

(*) 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		Reclassific- ation		Remeasure- ment		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		224,384,156		—		—		224,384,156
Borrowings	Borrowings	Financial liabilities at amortized cost		13,662,984		—		—		13,662,984
Debentures	Financial liabilities at FVTPL	Financial liabilities at FVTPL		91,739		—		—		91,739
Debentures	Debentures	Financial liabilities at amortized cost		21,707,466		—		—		21,707,466
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		3,139,218		—		—		3,139,218
Derivatives liabilities	Derivatives liabilities	Derivatives liabilities		12,103		—		—		12,103
Other financial liabilities	Other financial liabilities	Financial liabilities at amortized cost		13,029,421		—		—		13,029,421
Provision for financial guarantee	Provision for financial guarantee	Financial liabilities at amortized cost		74,277		—		—		74,277
Total financial liabilities				276,287,385		—		—		276,287,385

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 initial adoption of K-IFRS 1109, there are no financial assets at FVTPL or FVTOCI reclassified to the amortized cost measurement category.

b) Impairment of financial assets

The impairment model under K-IFRS 1109 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. 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 Bank 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 Bank 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 is already impaired at acquisition, the loss allowance is measured as the expected credit loss for the whole life of financial assets. If the credit risk of a financial instruments do not increase significantly after initial recognition (excluding POCI loans - for financial assets already impaired at initial recognition), the Bank 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 provide 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 Bank used information that could be used to assess the impairment of the Bank’s financial assets, lending arrangements and financial guarantees at the date of initial application. As of January 1, 2018, the application results are as follows (Unit: Korean Won in millions):

Account	Classification according to K-IFRS 1039	Classification according to K-IFRS 1109	Loss allowances per K-IFRS 1039(A)		Loss allowances per K-IFRS 1109 (B)		Increases (B-A)
Deposit	Loans and receivables	Loan and other financial assets at amortized cost		2,080		2,464		384
Debt securities
AFS debt securities	AFS financial assets	Financial assets at FVTOCI		—		3,778		3,778
HTM securities	HTM financial assets	Securities at amortized cost		—		4,996		4,996
Loans and other financial assets	Loans and receivables	Loan and other financial assets at amortized cost		1,558,910		1,728,959		170,049
Payment guarantee				185,557		194,997		9,440
Loan commitment				36,031		55,373		19,342
Total				1,782,578		1,990,567		207,989

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 as fair value through profit or loss due to the change in issuer’s own credit risk. The Bank 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 misstatement 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 replaced with 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 Bank designated 251,796 million Korean Won of FVTPL out of 276,291,854 million of financial liabilities, and recognized 133 million Korean Won as accumualted other comprehensive loss in relation to changes in the 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 Bank’s risk management activities.

In accordance with the transitional provisions of K-IFRS 1109 on hedge accounting, the Bank adopted the hedge accounting provisions of K-IFRS 1109 prospectively from January 1, 2018. As of the date of initial application, the Bank 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 Bank has not designated a hedging relationship as such 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 Bank 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 income as result of financial assets at FVTOCI, etc.

	Effect of K-IFRS 1109
Beginning balance (prior to K-IFRS 1109)		106,989
Reclassification		(393,473	)
Reclassification of available-for-sale financial assets to financial assets at FVTPL		(148,857	)
Recognition of expected credit losses of debt securities at FVTOCI		3,778
Reclassified of available for sale financial assets (equity securities) to financial assets at FVTOCI		(397,508	)
Effect on change in credit risk of financial liabilities at fair value through profit or loss designated as upon initial recognition		(133	)
Income tax effect		149,247
Ending balance (based on K-IFRS 1109)		(286,484	)

• Retained earnings impact

	Effect of K-IFRS 1109
Beginning balance (prior to K-IFRS 1109)		13,260,559
Reclassifications		246,464
Reclassification of available-for-sale financial assets to financial assets at FVTPL		148,857
Recognition of expected credit losses of debt instruments at FVTOCI		(3,778	)
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		(175,429	)
Effect of payment guarantees / unused commitments on liabilities		(28,782	)
Effect on change in credit risk of financial liabilities at fair value through profit or loss designated as upon initial recognition		133
Others		398
Income tax effect		(92,725	)
Ending balance (based on K-IFRS 1109)		13,507,023

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

The Bank adopted K-IFRS 1115 for the first time 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 Bank decided not to restate the prior periods when applying K-IFRS 1115 for the first time. Accordingly, the Bank has not retroactively restated the comparative separate 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 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 FVTPL, 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 Bank has not applied the following K-IFRS that has 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 Bank, the lease agreements entered into by the Bank as of June 30, 2018 are expected to meet the definition of lease under the Standard, and accordingly, if the Bank adopts the Standard, it applies to all leases except short-term leases and leases of low value assets, and the Bank will recognize the right-of-use assets and related liabilities accordingly. The Bank is currently analyzing the potential impact of this standard as of June 30, 2018.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

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

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

(1) Income taxes

The Bank 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 is 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 Bank 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 Bank’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 (Loss allowance, provisions for acceptances and guarantees, and unused loan commitments)

In accordance with K-IFRS 1109, the Bank tests impairment and recognizes loss allowance on financial assets classified at amortized cost, and financial assets 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 Bank’s of loans, guarantees and unused loan commitments.

4. RISK MANAGEMENT

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

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

The risk is managed by the risk management department in accordance with the Bank’s risk management policy. The Risk Management Committee makes decisions on the risk strategies such as the 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 Bank’s credit risk exposure to a permissible degree and to optimize the rate of return considering such credit risk.

1) Credit risk management

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

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

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

2) Maximum exposure to credit risk

The Bank’s maximum exposure to credit risk refers to net book value of financial assets net of allowances, which shows the uncertainties of maximum changes of net value of financial assets attributable to a particular risk without considering collateral and other credit enhancements obtained. However, the maximum exposure is the fair value amount (recorded on the books) for derivatives, maximum contractual obligation for payment guarantees and 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		17,895,165		—
	Banks		18,976,369		—
	Corporates		83,505,903		—
	Consumers		135,660,292		—
	Subtotal		256,037,729		—
Loans and receivables	Korean treasury and government agencies		—		8,792,977
	Banks		—		25,053,476
	Corporates		—		83,568,058
	Consumers		—		131,396,113
	Subtotal		—		248,810,624
Financial assets at FVTPL (K-IFRS 1109)	Deposit		24,921		—
	Debt securities held for trading		289,958		—
	Loans		56,418		—
	Derivative assets		2,377,227		—
	Subtotal		2,748,524		—
Financial assets at FVTPL (K-IFRS 1039)	Deposit		—		25,972
	Debt securities held for trading		—		1,008,827
	Derivative assets		—		3,098,769
	Subtotal		—		4,133,568
Financial assets at FVTOCI	Debt securities		13,117,681		—
AFS financial assets	Debt securities		—		12,247,622
Securities at amortized cost	Debt securities		17,568,356		—
HTM financial assets	Debt securities		—		16,638,727
Derivative assets	Derivative assets (hedging)		12,395		59,272
Off-balance accounts	Guarantees		13,388,994		13,589,728
	Loan commitments		66,910,304		50,214,855
	Subtotal		80,299,298		63,804,583
	total		369,783,983		345,694,396

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		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		246,195,858		2,850,061		1,268,461		400,907		5,322,442		256,037,729
Securities at amortized cost		17,523,478		—		—		—		44,878		17,568,356
Financial assets at FVTPL		2,500,907		—		147,242		—		100,375		2,748,524
Financial assets at FVTOCI		12,652,837		—		—		—		464,844		13,117,681
Derivative assets		7,450		—		4,945		—		—		12,395
Off-balance accounts		79,273,574		108,172		70,503		31,216		815,833		80,299,298
Total		358,154,104		2,958,233		1,491,151		432,123		6,748,372		369,783,983

	December 31, 2017
	Korea		USA		UK		Japan		Others (*)		Total
Loans and receivables		240,912,334		1,209,094		1,094,988		381,889		5,212,319		248,810,624
Financial assets at FVTPL		3,892,601		—		148,955		—		92,012		4,133,568
AFS debt securities		11,972,446		—		—		—		275,176		12,247,622
HTM securities		16,606,692		—		—		—		32,035		16,638,727
Derivative assets		16,590		—		42,682		—		—		59,272
Off-balance accounts		62,856,918		121,784		66,974		25,039		733,868		63,804,583
Total		336,257,581		1,330,878		1,353,599		406,928		6,345,410		345,694,396

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

b) Credit risk exposure by industries

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

	June 30, 2018
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		46,034,279		33,430,534		39,446,384		2,872,088		129,272,797		4,981,647		256,037,729
Securities at amortized cost		1,142,178		—		11,485,091		313,936		—		4,627,151		17,568,356
Financial assets at FVTPL		73,629		116,041		2,367,272		43,171		3,019		145,392		2,748,524
Financial assets at FVTOCI		408,055		—		8,776,721		184,405		—		3,748,500		13,117,681
Derivative assets		—		—		12,395		—		—		—		12,395
Off-balance accounts		15,787,502		23,840,485		8,793,316		3,735,449		22,076,045		6,066,501		80,299,298
Total		63,445,643		57,387,060		70,881,179		7,149,049		151,351,861		19,569,191		369,783,983

	December 31, 2017
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and receivables		45,975,768		33,037,933		36,003,892		2,893,323		125,159,751		5,739,957		248,810,624
Financial assets at FVTPL		96,795		76,373		3,737,672		10,054		1,040		211,634		4,133,568
AFS debt securities		682,706		—		7,055,546		133,572		—		4,375,798		12,247,622
HTM securities		1,348,754		—		10,944,611		296,214		—		4,049,148		16,638,727
Derivative assets		—		—		59,272		—		—		—		59,272
Off-balance accounts		14,510,922		22,363,457		8,759,366		3,614,758		10,057,400		4,498,680		63,804,583
Total		62,614,945		55,477,763		66,560,359		6,947,921		135,218,191		18,875,217		345,694,396

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 Bank 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 bank 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 Bank 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 Bank evaluates whether there has been a significantly increased in the credit risk since initial recognition. The Bank 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 Bank 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 Bank assesses whether there is a significant increase in credit risk at the end of the reporting period compared to its initial recognition. The Bank 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

• Objective evidence of impairment of financial assets are identified

The Bank writes off assets when it is determined that the receivables are virtually impossible to collect. The Bank 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 Bank 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				Stage 3		Total		Loss allowance			Total, net		Collateral value of damaged property
	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)
Loans and other financial assets at amortized cost		228,869,159		16,176,766		5,485,385		5,243,563		1,701,215		257,476,088		(1,438,359	)		256,037,729		749,081
Korean treasury and government agencies		17,899,258		—		—		—		—		17,899,258		(4,093	)		17,895,165		—
Banks		18,728,445		—		266,598		—		—		18,995,043		(18,674	)		18,976,369		—
Corporates		65,753,285		13,544,192		534,340		3,423,838		1,350,251		84,605,906		(1,100,003	)		83,505,903		516,466
General business		39,150,113		4,704,975		487,343		1,491,052		1,132,742		46,966,225		(752,948	)		46,213,277		386,285
Small- and medium-sized enterprise		22,968,832		8,259,833		46,997		1,761,562		216,800		33,254,024		(312,169	)		32,941,855		130,181
Project financing and others		3,634,340		579,384		—		171,224		709		4,385,657		(34,886	)		4,350,771		—
Consumers		126,488,171		2,632,574		4,684,447		1,819,725		350,964		135,975,881		(315,589	)		135,660,292		232,615
Securities at amortized cost		17,573,522		—		—		—		—		17,573,522		(5,166	)		17,568,356		—
Financial assets at FVTOCI (*3)		13,095,395		22,286		—		—		—		13,117,681		(4,220	)		13,117,681		—
Total		257,925,726		16,199,052		5,485,385		5,243,563		1,701,215		288,167,291		(1,447,745	)		286,723,766		749,081

(*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.

(*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
					Corporates
	Korean treasury and government agencies		Banks		General business		Small- and medium-sized enterprise		Project financing and others		Subtotal		Consumers		Total
Loans and receivables neither overdue nor impaired		8,795,163		25,068,417		45,242,266		33,229,188		4,722,748		83,194,202		130,563,920		247,621,702
Loans and receivables overdue but not impaired		—		—		5,954		63,067		—		69,021		728,057		797,078
Impaired loans		—		—		1,354,096		241,776		17,665		1,613,537		339,297		1,952,834
Total		8,795,163		25,068,417		46,602,316		33,534,031		4,740,413		84,876,760		131,631,274		250,371,614
Allowance for loan losses		2,186		14,941		1,019,687		262,628		26,387		1,308,702		235,161		1,560,990
Total, net		8,792,977		25,053,476		45,582,629		33,271,403		4,714,026		83,568,058		131,396,113		248,810,624

• Debt securities

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

	December 31, 2017
	Financial assets at FVTPL		AFS debt securities		HTM securities		Total
AAA		1,008,827		9,836,599		15,806,327		26,651,753
AA- – AA+		—		2,189,269		832,400		3,021,669
BBB- – A+		—		221,754		—		221,754
Total		1,008,827		12,247,622		16,638,727		29,895,176

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				Stage3		Total
	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)
Off-balance accounts
Guarantees		12,031,389		851,782		12,464		311,754		181,605		13,388,994
Loan commitments		62,536,808		2,650,721		1,329,734		393,041		—		66,910,304
Total		74,568,197		3,502,503		1,342,198		704,795		181,605		80,299,298

(*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.

4) Collateral and other credit enhancements

There have been no significant changes in the value of collateral or other credit enhancements held by the Bank during the current quarter, changes in collateral or other credit enhancements due to changes in the collateral policy of the Bank. 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 and non-trading activities in the volatility of market factors such as interest rates, stock prices, and foreign exchange rates. Market risk occurs as a result of changes in the interest rates and foreign exchange rates for financial instruments that are not yet settled, and all contracts are exposed to a certain level of volatility according to the interest rates, credit spreads, foreign exchange rates and the price of equity securities.

1) Market risk management

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

The Bank uses both a standard-based and an internal model-based approach to measure market risk. The standard-based approach is used to calculate individual market risk of owned capital while the internal model-based approach is used to calculate general capital market risk and it is used to measure internal risk management measure.

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

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

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

2) Sensitivity analysis of market risk

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

For trading activities, the Bank uses a VaR model, which uses certain assumptions of possible fluctuations in market condition and, by conducting simulations of gains and losses, under which the model estimates the maximum losses that may occur. A VaR model predicts based on statistics of possible losses on the portfolio at a certain period currently or in the future. It indicates the maximum expected loss with at least 99% confidence level. In short, there exists a 1% possibility that the actual loss might exceed the predicted loss generated from the VaR’s calculation. The actual results are periodically monitored to examine the validity of the assumptions and variables and factors that are used in VaR’s calculations. However, this approach cannot prevent the loss when the market fluctuation exceeds expectation.

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

a) Trading activities

The minimum, maximum and average VaR for the period 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, 2018			For the period ended June 30, 2018									As of December 31, 2017			For the year ended December 31, 2017
Risk factor				Average			Maximum			Minimum						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		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, respectively, by using the simulation method. The scenario responding to interest rate (“IR”) changes are as follows (Unit: Korean Won in millions):

Name of scenario	June 30, 2018				December 31, 2017
	NII(*1)		NPV(*2)		NII(*1)		NPV(*2)
Base case		4,490,836		23,741,794		4,936,457		23,487,317
Base case (Prepay)		4,484,982		23,430,838		4,936,334		23,178,467
IR 100bp up		5,029,573		23,687,729		5,394,161		22,900,740
IR 100bp down		4,045,098		23,819,103		4,401,735		24,141,984
IR 200bp up		6,013,255		23,650,553		5,851,632		22,386,912
IR 200bp down		3,665,541		23,929,321		3,462,869		24,844,803
IR 300bp up		6,883,384		23,625,943		6,309,102		21,943,972
IR 300bp down		3,520,675		24,087,719		2,259,870		26,648,024

(*1) NII: Net Interest Income

(*2) NPV: Net Portfolio Value

The Bank estimates and manages risks related to changes in interest rate due to the difference in the maturities of interest-bearing assets and liabilities and discrepancies in the terms of interest rates. Cash flows (both principal and interest) from non-trading, interest-bearing assets and liabilities, presented by each repricing 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		138,582,023		39,965,004		8,566,400		7,715,085		42,550,311		3,282,629		240,661,452
Financial assets at FVTOCI		2,452,590		2,451,534		1,755,010		1,534,298		5,061,864		151,359		13,406,655
Securities at amortized cost		2,299,182		1,974,912		1,718,478		1,982,982		9,905,003		305,973		18,186,530
Total		143,333,795		44,391,450		12,039,888		11,232,365		57,517,178		3,739,961		272,254,637
Liability:
Deposits due to customers		97,558,833		45,622,715		29,107,767		18,172,673		37,309,022		67,655		227,838,665
Borrowings		8,120,339		1,537,093		845,911		495,228		2,707,275		520,495		14,226,341
Debentures		620,445		1,564,491		1,778,047		1,964,223		13,074,796		2,701,823		21,703,825
Total		106,299,617		48,724,299		31,731,725		20,632,124		53,091,093		3,289,973		263,768,831

	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		148,513,919		39,972,641		6,935,597		5,672,432		50,858,179		25,688,896		277,641,664
AFS financial assets		1,689,689		2,462,484		1,996,401		2,333,618		4,161,439		574,540		13,218,171
HTM financial assets		2,268,640		2,161,467		1,433,425		1,687,362		9,309,427		312,507		17,172,828
Total		152,472,248		44,596,592		10,365,423		9,693,412		64,329,045		26,575,943		308,032,663
Liability:
Deposits due to customers		102,414,072		36,883,763		24,653,930		25,028,280		36,699,604		6,133		225,685,782
Borrowings		8,998,265		874,830		412,966		405,352		2,649,142		479,399		13,819,954
Debentures		1,571,159		2,069,377		677,903		1,520,299		14,614,175		2,843,679		23,296,592
Total		112,983,496		39,827,970		25,744,799		26,953,931		53,962,921		3,329,211		262,802,328

3) Currency risk

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

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

		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		20,520		23,016,794		135,044		1,370,414		6,646		1,125,823		1,156		1,499,731		2,315,863		29,328,625
	Financial assets at FVTPL		76		85,391		359		3,645		—		—		36		46,488		96,643		232,167
	Financial assets at FVTOCI		1,432		1,605,991		—		—		—		—		—		—		153,633		1,759,624
	Securities at amortized cost		50		56,448		—		—		—		—		—		—		44,889		101,337
	Total		22,078		24,764,624		135,403		1,374,059		6,646		1,125,823		1,192		1,546,219		2,611,028		31,421,753
Liability	Financial liabilities at FVTPL		63		70,963		505		5,127		—		—		33		43,070		102,226		221,386
	Deposits due to customer		8,547		9,587,479		145,042		1,471,869		1,202		203,585		1,227		1,591,487		1,120,831		13,975,251
	Borrowings		6,106		6,849,332		2,211		22,438		19		3,303		232		301,371		175,198		7,351,642
	Debentures		3,208		3,598,325		—		—		—		—		—		—		101,490		3,699,815
	Other financial liabilities		2,772		3,109,634		23,527		238,755		5,062		857,632		139		180,146		98,127		4,484,294
	Total		20,696		23,215,733		171,285		1,738,189		6,283		1,064,520		1,631		2,116,074		1,597,872		29,732,388
Off-balance accounts			6,348		7,121,007		32,872		333,577		681		115,408		452		586,208		460,037		8,616,237
		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		19,534		20,928,891		124,167		1,178,480		1,050		171,802		1,143		1,461,960		1,978,164		25,719,297
	Financial assets at FVTPL		29		31,360		25		238		—		—		27		34,583		104,892		171,073
	AFS financial assets		1,712		1,833,836		—		—		—		—		—		590		77,118		1,911,544
	HTM financial assets		51		54,439		—		—		—		—		—		—		32,035		86,474
	Total		21,326		22,848,526		124,192		1,178,718		1,050		171,802		1,170		1,497,133		2,192,209		27,888,388
Liability	Financial liabilities at FVTPL		41		43,423		79		752		—		—		19		24,878		69,977		139,030
	Deposits due to customer		11,303		12,110,340		195,154		1,852,228		1,520		248,808		882		1,127,917		924,008		16,263,301
	Borrowings		6,480		6,942,814		2,218		21,056		14		2,245		247		315,669		107,344		7,389,128
	Debentures		2,967		3,178,711		—		—		700		114,555		—		—		196,620		3,489,886
	Other financial liabilities		2,067		2,214,467		13,411		127,289		2,010		328,902		128		164,357		368,502		3,203,517
	Total		22,858		24,489,755		210,862		2,001,325		4,244		694,510		1,276		1,632,821		1,666,451		30,484,862
Off-balance accounts			7,346		7,870,923		33,601		318,911		885		144,817		406		518,854		371,670		9,225,175

(3) Liquidity risk

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

1) Liquidity risk management

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

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

2) Maturity analysis of non-derivative financial liabilities

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

	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		139,300,877		37,086,269		22,170,064		23,754,212		6,048,956		557,233		228,917,611
Borrowings		5,006,728		2,453,206		1,855,815		1,440,982		3,002,985		520,495		14,280,211
Debentures		620,445		1,564,491		1,778,047		1,964,223		13,075,881		2,700,738		21,703,825
Other financial liabilities		13,681,270		—		—		—		432,751		1,929,339		16,043,360
Total		158,785,417		41,103,966		25,803,926		27,159,417		22,560,573		5,707,805		281,121,104

	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		160,057		154,475		—		—		—		—		314,532
Deposits due to customers		143,085,964		28,776,407		17,749,883		29,951,466		6,723,926		644,187		226,931,833
Borrowings		5,339,315		1,700,358		1,488,848		1,132,055		3,799,707		479,140		13,939,423
Debentures		1,570,513		2,069,703		678,054		1,512,183		14,614,016		2,843,612		23,288,081
Other financial liabilities		6,531,004		—		—		—		—		2,704,197		9,235,201
Total		156,686,853		32,700,943		19,916,785		32,595,704		25,137,649		6,671,136		273,709,070

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		148,834,794		38,657,861		19,224,728		17,201,883		4,522,256		75,055		228,516,577
Borrowings		5,006,728		2,453,206		1,855,815		1,440,982		3,002,985		520,495		14,280,211
Debentures		620,445		1,564,491		1,778,047		1,964,223		13,075,881		2,700,738		21,703,825
Other financial liabilities		13,681,270		—		—		—		432,751		1,929,339		16,043,360
Total		168,319,334		42,675,558		22,858,590		20,607,088		21,033,873		5,225,627		280,720,070

	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		160,057		154,475		—		—		—		—		314,532
Deposits due to customers		154,216,425		30,515,457		16,246,338		19,479,809		5,913,949		183,986		226,555,964
Borrowings		5,339,315		1,700,358		1,488,848		1,132,055		3,799,707		479,140		13,939,423
Debentures		1,570,513		2,069,703		678,054		1,512,183		14,614,016		2,843,612		23,288,081
Other financial liabilities		6,531,004		—		—		—		—		2,704,197		9,235,201
Total		167,817,314		34,439,993		18,413,240		22,124,047		24,327,672		6,210,935		273,333,201

3) Maturity analysis of derivative financial liabilities

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

Derivatives held for hedging purposes 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		2,375,336		2,130		—		—		26,855		5,555		2,409,876
December 31, 2017		3,139,218		—		—		381		11,722		—		3,151,321

4) Maturity analysis of off-balance accounts

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

	June 30, 2018		December 31, 2017
Guarantees		13,388,994		13,589,728
Loan commitments		66,910,304		50,214,855

(4) Operational risk

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

1) Operational risk management

The Bank has been running the operational risk management system under Basel II. The Bank developed Advanced Measurement Approaches (“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 is approved by the Financial Supervisory Service.

2) Operational risk measurement

To quantify the required capital for operational risk, the Bank 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 Bank adopted the Basic Indicator Approach.

(5) Capital management

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

According to the above regulations, Bank 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 Bank’s capital adequacy ratio as of June 30, 2018 and December 31, 2017, and 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 Bank and allocating resources, the Bank’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 Bank’s reporting segments comprise the following customers: consumer banking, corporate banking, investment banking, capital market and headquarters and others. The reportable segments are classified based on the target customers for whom the service is being provided:

• Consumer banking: Loans/deposits and financial services for retail and individual consumers, etc.

• Corporate banking: Loans/deposits and export/import, financial services for corporations, etc.

• Investment banking: Domestic/foreign investment, structured finance, M&A, equity & fund investment-related business, venture advisory related tasks, real estate SOC development practices, etc.

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

• Headquarters 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			Headquarters and others			Subtotal			Adjustments			Total
Net interest income
Interest income		1,703,521			1,638,747			74,670			5,687			420,180			3,842,805			162,118			4,004,923
Interest expense		(499,830	)		(994,523	)		(92	)		—			(332,008	)		(1,826,453	)		136,819			(1,689,634	)
Intersegment		(274,405	)		323,139			(77,656	)		10,259			18,663			—			—			—
		929,286			967,363			(3,078	)		15,946			106,835			2,016,352			298,937			2,315,289
Net non-interest income
Non-interest income		405,145			432,262			137,031			4,765,167			182,539			5,922,144			(3,466	)		5,918,678
Non-interest expense		(127,357	)		(183,814	)		(40,188	)		(4,725,584	)		(55,475	)		(5,132,418	)		(301,069	)		(5,433,487	)
Intersegment		78,522			36,407			—			—			(114,929	)		—			—			—
		356,310			284,855			96,843			39,583			12,135			789,726			(304,535	)		485,191
Other expense
General and administrative expense		(875,328	)		(403,216	)		(5,689	)		(7,852	)		(63,774	)		(1,355,859	)		—			(1,355,859	)
Reversal of allowance for credit loss and impairment losses due to credit loss		(53,008	)		109,283			52,244			(3,268	)		67,569			172,820			5,598			178,418
		(928,336	)		(293,933	)		46,555			(11,120	)		3,795			(1,183,039	)		5,598			(1,177,441	)
Operating income		357,260			958,285			140,320			44,409			122,765			1,623,039			—			1,623,039
Non-operating income (expense)		(9,889	)		671			17,411			—			16,911			25,104			—			25,104
Net income before income tax expense		347,371			958,956			157,731			44,409			139,676			1,648,143			—			1,648,143
Income tax expense		(95,528	)		(260,186	)		(43,377	)		(12,212	)		(32,025	)		(443,328	)		—			(443,328	)
Net income		251,843			698,770			114,354			32,197			107,651			1,204,815			—			1,204,815

	For the six months ended June 30, 2017
	Consumer banking			Corporate banking			Investment banking			Capital market			Headquarters and others			Subtotal			Adjustments			Total
Net interest income
Interest income		1,539,729			1,456,198			72,232			8,938			362,975			3,440,072			160,711			3,600,783
Interest expense		(480,814	)		(818,422	)		(126	)		—			(300,481	)		(1,599,843	)		130,718			(1,469,125	)
Intersegment		(248,116	)		229,029			(66,693	)		8,324			77,456			—			—			—
		810,799			866,805			5,413			17,262			139,950			1,840,229			291,429			2,131,658
Non-interest income
Non-interest income		424,213			333,646			212,107			4,991,598			759,765			6,721,329			92,750			6,814,079
Non-interest expense		(146,630	)		(82,261	)		(121,238	)		(4,968,840	)		(629,123	)		(5,948,092	)		(361,808	)		(6,309,900	)
Intersegment		45,402			29,680			—			—			(75,082	)		—			—			—
		322,985			281,065			90,869			22,758			55,560			773,237			(269,058	)		504,179
Other expense
General and administrative expense		(869,733	)		(402,661	)		(5,696	)		(7,721	)		(64,701	)		(1,350,512	)		—			(1,350,512	)
Reversal of allowance for credit loss and impairment losses due to credit loss		(45,963	)		(128,684	)		31,311			22,135			156,587			35,386			(22,371	)		13,015
		(915,696	)		(531,345	)		25,615			14,414			91,886			(1,315,126	)		(22,371	)		(1,337,497	)
Operating income		218,088			616,525			121,897			54,434			287,396			1,298,340			—			1,298,340
Non-operating income (expense)		8,862			(3,122	)		22,581			—			(29,197	)		(876	)		—			(876	)
Net income before income tax expense		226,950			613,403			144,478			54,434			258,199			1,297,464			—			1,297,464
Income tax expense		(54,922	)		(139,138	)		(34,964	)		(13,173	)		(50,841	)		(293,038	)		—			(293,038	)
Net income		172,028			474,265			109,514			41,261			207,358			1,004,426			—			1,004,426

(2) Information on financial products and services

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

(3) Information on geographical areas

Of the Bank’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the six months ended June 30, 2018 and 2017, amounted to 9,610,480 million Won and 10,224,455 million Won, respectively, and revenue from the foreign customers amounted to 313,121 million Won and 190,407 million Won, respectively. Of the Bank’s non-current assets (investments in subsidiaries and associates, investment properties, premises and equipment and intangible assets), non-current assets attributed to domestic subsidiaries as of June 30, 2018 and December 31, 2017, are 7,344,001 million Won and 7,168,942 million Won, respectively, and foreign subsidiaries are 8,023 million Won and 8,003 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		1,989,725		1,970,810
Foreign currencies		746,205		578,281
Demand deposits		2,305,501		2,407,731
Fixed deposits		164,078		372,138
Total		5,205,509		5,328,960

(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			2017
Changes in other comprehensive gain due to remeasurement of financial assets at FVTOCI		41,228			—
Changes in other comprehensive loss due to valuation of AFS financial assets		—			(16,218	)
Changes in other comprehensive gain(loss) of foreign currency translation of foreign operations		10,095			(14,513	)
Changes in other comprehensive loss due to remeasurement of defined benefit liabilities		(58,345	)		(8,949	)
Changes in investments in subsidiaries and associates due to debt-equity swap		—			49,599
Changes in investments in subsidiaries and associates due to accounts transfer		(7,815	)		(7,492	)
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

Details of 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 assets		24,921		25,972
Securities:
Debt securities
Korean treasury and government agencies		130,413		191,383
Financial institutions		159,545		817,444
Equity securities		358,077		156
Capital contributions		325,005		—
Beneficiary certificates		825,348		—
Subtotal		1,798,388		1,008,983
Loans		56,418		—
Derivative assets		2,377,227		3,098,769
Total		4,256,954		4,133,724

There are no financial assets at fair value through profit or loss designated as upon initial recognition as of June 30, 2018 and financial assets designated as at FVTPL as of December 31, 2017.

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		2,190,523		2,305,954
Financial institutions		7,370,107		5,217,267
Corporates		1,747,289		2,658,032
Bond denominated in foreign currencies		1,759,624		1,896,114
Subtotal		13,067,543		12,077,367
Equity securities		736,974		1,216,809
Beneficiary certificates		—		722,272
Securities loaned		50,139		170,256
Total		13,854,656		14,186,704

(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		568,441
Debt-equity swap		168,533
Total		736,974

(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)		(3,778	)		—		—		(3,778	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of loss allowance		(457	)		—		—		(457	)
Disposal		27			—		—		27
Others (*2)		(12	)		—		—		(12	)
Ending balance		(4,220	)		—		—		(4,220	)

(*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		12,247,623			—		—		12,247,623
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		4,870,851			—		—		4,870,851
Disposal		(4,088,376	)		—		—		(4,088,376	)
Gain (loss) on valuation		13,127			—		—		13,127
Amortization on the effective interest method		(4,293	)		—		—		(4,293	)
Others (*)		78,749			—		—		78,749
Ending balance		13,117,681			—		—		13,117,681

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

(4) The Bank 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		101,337			86,474
Loss allowance		(5,166	)		—
Total		17,568,356			16,638,727

(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 (*)		(4,996	)		—		—		(4,996	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of loss allowance		(192	)		—		—		(192	)
Disposal		22			—		—		22
Ending balance		(5,166	)		—		—		(5,166	)

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

2) Gross carrying amount

	For the six months ended June 30, 2018
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		16,638,727			—		—		16,638,727
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		5,806,238			—		—		5,806,238
Disposal / Redemption		(4,872,333	)		—		—		(4,872,333	)
Amortization on the effective interest method		(3,637	)		—		—		(3,637	)
Others (*)		4,527			—		—		4,527
Ending balance		17,573,522			—		—		17,573,522

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

10. LOAN 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		16,012,149		7,392,805
Loans		229,763,689		235,237,937
Other financial assets(Other receivables)		10,261,891		6,179,882
Total		256,037,729		248,810,624

(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
Others		64,150			79,394
Loss allowance		(3,438	)		(1,541	)
Subtotal		14,561,458			6,324,349
Due from banks in foreign currencies:
Due from banks on demand		903,764			660,582
Due from banks on time		20,296			65,052
Others		528,116			343,361
Loss allowance		(1,485	)		(539	)
Subtotal		1,450,691			1,068,456
Total		16,012,149			7,392,805

(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		901,554	Reserve deposits under the BOK Act and others
Others	Korea Investment & Securities Co., Ltd. and others		528,116	Deposits for foreign futures and options trading and others
Subtotal			1,429,670
Total			15,994,566

	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		79,394	Central counterparty KRW margin and others
Subtotal			6,325,890
Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		654,718	Reserve deposits under the BOK Act and others
Others	Korea Investment & Securities Co., Ltd. and others		72,700	Deposits for foreign futures and options trading and others
Subtotal			727,418
Total			7,053,308

(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 (*)		(2,464	)		—		—		(2,464	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of loss allowance		(2,459	)		—		—		(2,459	)
Ending balance		(4,923	)		—		—		(4,923	)

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

2) Gross carrying amount

	For the six months ended June 30, 2018
	Stage 1		Stage 2		Stage 3		Total
Beginning balance		7,394,885		—		—		7,394,885
Transfer to 12-month expected credit losses		—		—		—		—
Transfer to lifetime expected credit losses		—		—		—		—
Transfer to credit-impaired financial assets		—		—		—		—
Net increase		8,622,187		—		—		8,622,187
Ending balance		16,017,072		—		—		16,017,072

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

	June 30, 2018			December 31, 2017
Loans in local currency		202,966,855			198,504,623
Loans in foreign currencies		8,501,851			7,543,489
Domestic banker’s letter of credit		3,074,011			2,516,907
Bills bought in foreign currencies		6,695,705			8,071,263
Bills bought in local currency		237,623			194,234
Factoring receivables		58,757			134,634
Advances for customers on guarantees		12,727			21,512
Private placement bonds		93,468			158,193
Call loans		2,061,311			2,389,325
Bonds purchased under resale agreements		6,905,159			16,726,510
Others		626			626
Loan origination costs and fees		518,917			489,008
Discounted present value		—			(7,272	)
Loss allowance		(1,363,321	)		(1,505,115	)
Total		229,763,689			235,237,937

(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									Sub-total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance (*1)		(89,404	)		(32,352	)		(108,689	)		(342,916	)		(251,374	)		(849,467	)		(432,320	)		(283,726	)		(958,156	)
Transfer to 12-month expected credit losses		(7,772	)		7,415			357			(20,833	)		20,554			279			(28,605	)		27,969			636
Transfer to lifetime expected credit losses		4,620			(5,957	)		1,337			14,670			(104,369	)		89,699			19,290			(110,326	)		91,036
Transfer to credit-impaired financial assets		18,790			22,325			(41,115	)		2,972			12,080			(15,052	)		21,762			34,405			(56,167	)
Net reversal (provision) of loss allowance		(22,269	)		(28,372	)		(35,475	)		(4,094	)		29,840			167,830			(26,363	)		1,468			132,355
Recoveries of loans previously charged off		—			—			(22,873	)		—			—			(63,472	)		—			—			(86,345	)
Charge-off		—			—			105,931			—			—			119,960			—			—			225,891
Disposal		—			—			780			—			67			17,676			—			67			18,456
Unwinding effect		—			—			3,665			—			—			12,907			—			—			16,572
Others (*2)		—			—			—			28,927			—			(147	)		28,927			—			(147	)
Ending balance		(96,035	)		(36,941	)		(96,082	)		(321,274	)		(293,202	)		(519,787	)		(417,309	)		(330,143	)		(615,869	)

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

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

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

	For the six months ended June 30, 2017
	Consumers			Corporates			Others			Total
Beginning balance		(155,338	)		(1,467,030	)		(171,593	)		(1,793,961	)
Net reversal (provision) of loss allowance		(64,206	)		(188,377	)		24,873			(227,710	)
Recoveries of written-off loans		(21,607	)		(54,202	)		—			(75,809	)
Charge-off		67,133			220,645			50,592			338,370
Disposal		830			58,431			29,264			88,525
Unwinding effect		4,619			19,965			—			24,584
Others (*)		—			187,126			—			187,126
Ending balance		(168,569	)		(1,223,442	)		(66,864	)		(1,458,875	)

(*) 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									Sub-total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		100,815,109			5,432,359			309,302			123,846,853			4,781,030			1,506,875			224,661,962			10,213,389			1,816,177
Transfer to 12-month expected credit losses		1,762,128			(1,758,212	)		(3,916	)		1,112,641			(1,111,317	)		(1,324	)		2,874,769			(2,869,529	)		(5,240	)
Transfer to lifetime expected credit losses		(2,704,129	)		2,719,303			(15,174	)		(2,092,786	)		2,202,395			(109,609	)		(4,796,915	)		4,921,698			(124,783	)
Transfer to credit-impaired financial assets		(78,351	)		(97,369	)		175,720			(155,784	)		(118,299	)		274,083			(234,135	)		(215,668	)		449,803
Charge-off		—			—			(105,931	)		—			—			(119,960	)		—			—			(225,891	)
Disposal		—			(270	)		(13,483	)		—			(884	)		(67,695	)		—			(1,154	)		(81,178	)
Net increase (decrease)		2,377,765			(738,078	)		(36,154	)		(6,084,758	)		(602,769	)		(172,301	)		(3,706,993	)		(1,340,847	)		(208,455	)
Ending balance		102,172,522			5,557,733			310,364			116,626,166			5,150,156			1,310,069			218,798,688			10,707,889			1,620,433

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

	June 30, 2018			December 31, 2017
Receivables		8,175,665			4,201,407
Accrued income		946,802			927,297
Telex and telephone subscription rights and refundable deposits		946,991			947,341
Other receivables		262,548			157,632
Loss allowance		(70,115	)		(53,795	)
Total		10,261,891			6,179,882

(9) Changes in the loss allowance 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 (*)		(1,302	)		(960	)		(52,496	)		(54,758	)
Transfer to 12-month expected credit losses		(99	)		84			15			—
Transfer to lifetime expected credit losses		61			(70	)		9			—
Transfer to credit-impaired financial assets		15			140			(155	)		—
Net reversal (provision) of loss allowance		162			(118	)		(31,142	)		(31,098	)
Charge-off		—			—			15,148			15,148
Disposal		—			—			593			593
Ending balance		(1,163	)		(924	)		(68,028	)		(70,115	)

(*) 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		6,134,524			21,013			78,140			6,233,677
Transfer to 12-month expected credit losses		6,571			(6,551	)		(20	)		—
Transfer to lifetime expected credit losses		(8,857	)		8,869			(12	)		—
Transfer to credit-impaired financial assets		(562	)		(902	)		1,464			—
Disposal		—			(2	)		(735	)		(737	)
Amortization		—			—			(15,148	)		(15,148	)
Net increase (decrease)		4,098,490			(1,371	)		17,095			4,114,214
Ending balance		10,230,166			21,056			80,784			10,332,006

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

The fair value measurement is described in 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 assets or liabilities, 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 the OTC market but do not require significant judgment.

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the assets or liabilities 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 whose valuation techniques require significant judgments and subjectivity.

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

(2) Fair value hierarchy of financial assets and liabilities measured at fair value is as follows (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		130,413		159,545		—		289,958
Equity securities		24,855		—		333,222		358,077
Capital contributions		—		—		325,005		325,005
Beneficiary certificates		—		57,831		767,517		825,348
Loans		—		—		56,418		56,418
Derivative assets		17,439		2,323,550		36,238		2,377,227
Subtotal		197,628		2,540,926		1,518,400		4,256,954
Financial assets at FVTOCI
Debt securities		2,324,824		10,742,719		—		13,067,543
Equity securities		439,986		—		296,988		736,974
Securities loaned		—		50,139		—		50,139
Subtotal		2,764,810		10,792,858		296,988		13,854,656
Derivative assets		—		12,395		—		12,395
Total		2,962,438		13,346,179		1,815,388		18,124,005
Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair value
Deposit due to customers		24,485		—		—		24,485
Derivative liabilities		3,269		2,331,144		40,923		2,375,336
Subtotal		27,754		2,331,144		40,923		2,399,821
Financial liabilities at fair value through profit or loss designated as upon initial recognition
Equity-linked securities		—		—		176,097		176,097
Derivative liabilities		—		34,540		—		34,540
Total		27,754		2,365,684		217,020		2,610,458

	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		191,383		817,444		—		1,008,827
Equity securities		156		—		—		156
Derivative assets		1,021		3,076,369		21,379		3,098,769
Subtotal		218,532		3,893,813		21,379		4,133,724
AFS financial assets
Debt securities		2,536,578		9,540,789		—		12,077,367
Equity securities		398,756		—		818,053		1,216,809
Beneficiary certificates		—		66,765		655,507		722,272
Securities loaned		69,778		100,478		—		170,256
Subtotal		3,005,112		9,708,032		1,473,560		14,186,704
Derivative assets		—		59,272		—		59,272
Total		3,223,644		13,661,117		1,494,939		18,379,700
Financial liabilities:
Financial liabilities held for trading
Deposit due to customers		25,964		—		—		25,964
Derivative liabilities		2,613		3,115,664		20,941		3,139,218
Subtotal		28,577		3,115,664		20,941		3,165,182
Financial liabilities designated as at FVTPL
Equity-linked securities		—		—		160,057		160,057
Debentures		—		91,739		—		91,739
SubTotal		—		91,739		160,057		251,796
Derivative liabilities		—		12,103		—		12,103
Total		28,577		3,219,506		180,998		3,429,081

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

(*2) Certain AFS unquoted equity securities were measured at cost as of December 31, 2017, that amounted to 17,260 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 Bank 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 Bank determines the fair value using valuation techniques. Valuation method 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 Discounted Cash Flow (“DCF”) model, 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 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 whose 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 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 model or Monte Carlo Simulation given the natures of the securities or underlying assets.	Values of underlying assets, risk-free market rate, market rate, dividend and convenience yield, volatility, correlation coefficient, credit spread and foreign exchange rate
Debentures	The fair value is measured by discounting the projected cash flows of a debenture by applying the market discount rate that is reflecting credit rating of the Bank.	Risk-free market rate of return and forward rate

Valuation method for the financial assets and financial liabilities at Level 3 and significant unobservable inputs are as follows:

	Fair value measurement technique	Input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
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	0.9–0.97	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	0.9–0.97	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 Bank 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 Bank and the appropriateness of inputs is audited 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
Equity securities		260,085		23,362			—		50,005			(230	)		—		333,222
Capital contributions		273,789		21,951			—		41,646			(12,381	)		—		325,005
Beneficiary certificates		655,507		12,071			—		182,416			(82,477	)		—		767,517
Loans		52,854		3,064			—		500			—			—		56,418
Derivative assets		19,243		65,922			—		1,937			(50,864	)		—		36,238
Subtotal		1,261,478		126,370			—		276,504			(145,952	)		—		1,518,400
Financial assets at FVTOCI
Equity securities		285,397		—			11,371		220			—			—		296,988
Total		1,546,875		126,370			11,371		276,724			(145,952	)		—		1,815,388
Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair value
Derivative liabilities		20,941		73,951			—		(3,058	)		(50,911	)		—		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		180,998		72,513			—		175,986			(212,477	)		—		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 61,459 million Won for six months ended June 30, 2018, which is from financial assets and liabilities that the Bank holds as at the end of the periods, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on financial assets at FVTOCI in the separate statement of comprehensive income.

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

	For six months ended June 30, 2017
	January 1, 2017		Net Income (loss) (*1)		Other comprehensive income (loss)			Purchases/ issuances		Disposals/ settlements			Transfer to or from level 3 (*2)		June 30, 2017
Financial assets:
Financial assets held for trading
Derivative assets		23,062		21,245		—			472		(17,422	)		—		27,357
AFS financial assets
Equity securities		855,006		19,249		7,488			18,473		(30,534	)		—		869,682
Beneficiary certificates		512,569		3,442		(1,757	)		132,438		(69,785	)		—		576,907
Subtotal		1,367,575		22,691		5,731			150,911		(100,319	)		—		1,446,589
Derivative assets		99		185		—			—		(284	)		—		—
Total		1,390,736		44,121		5,731			151,383		(118,025	)		—		1,473,946
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities		33,436		14,197		—			500		(15,014	)		—		33,119
Financial liabilities designated at FVTPL
Equity-linked securities		673,709		83,962		—			—		(235,296	)		—		522,375
Total		707,145		98,159		—			500		(250,310	)		—		555,494

(*1) The loss amounting to 61,495 million Won for six months ended June 30, 2017 which is from financial assets and liabilities that the Bank holds as at the end of the periods, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the separate statement of comprehensive income.

(*2) The Bank recognizes transfers among 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 favorable and unfavorable changes based on how changes in unobservable assumptions have effects on the fluctuations of financial instruments’ value. When the fair value of a financial instrument is affected by more than one unobservable assumption, the below table reflects the most favorable or the most unfavorable changes that result from varying the assumptions individually. The sensitivity analysis was performed for two types of Level 3 financial instruments: (1) interest rate-related derivatives, currency-related derivatives, equity-related derivatives, 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 shows the sensitivity analysis to disclose the effect of reasonably possible volatility on the fair value of 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 fair value through profit or loss mandatorily measured at fair value
Derivative assets (*1) (*2)		4,305		(2,452	)		—		—
Loans		422		(323	)		—		—
Equity securities (*3)		10,601		(7,475	)		—		—
Beneficiary certificates (*4)		1,295		(1,403	)		—		—
Financial assets at FVTOCI
Equity securities (*3)		—		—			11,676		(6,136	)
Total		16,623		(11,653	)		11,676		(6,136	)
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 at FVTPL
Derivative assets (*1) (*2)		1,234		(526	)		—		—
AFS financial assets
Equity securities (*3) (*4)		—		—			20,594		(12,398	)
Beneficiary certificates (*4)		—		—			1,749		(1,695	)
Total		1,234		(526	)		22,343		(14,093	)
Financial liabilities:
Financial liabilities held for trading
Derivative liabilities (*1) (*2)		5		(513	)		—		—
Financial liabilities designated as at FVTPL
Equity-linked securities (*1)		8		(7	)		—		—
Total		13		(520	)		—		—

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

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

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

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

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

	June 30, 2018
	Fair value								Book value
	Level 1		Level 2		Level 3		Total
Financial assets:
Securities at amortized cost		1,792,215		15,779,311		—		17,571,526		17,568,356
Loans and receivables at amortized cost		—		—		255,731,207		255,731,207		256,037,729
Financial liabilities:
Deposits due to customers		—		226,739,426		—		226,739,426		226,726,810
Borrowings		—		14,017,262		—		14,017,262		13,994,109
Debentures		—		19,906,852		—		19,906,852		20,091,374
Other financial liabilities		—		20,224,029		—		20,224,029		20,224,875
	December 31, 2017
	Fair value								Book value
	Level 1		Level 2		Level 3		Total
Financial assets:
HTM financial assets		1,206,292		15,398,641		—		16,604,933		16,638,727
Loans and other financial assets		—		—		247,784,211		247,784,211		248,810,624
Financial liabilities:
Deposits due to customers		—		224,355,148		—		224,355,148		224,384,156
Borrowings		—		13,631,522		—		13,631,522		13,662,984
Debentures		—		21,733,045		—		21,733,045		21,707,466
Other financial liabilities		—		13,028,595		—		13,028,595		13,029,421

The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Bank determines the fair value using 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 Bank.	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 asset at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Derivatives assets held for hedging		Total
Financial assets
Deposits		24,921		—		16,012,149		—		16,037,070
Securities at fair value through profit or loss		1,798,387		—		—		—		1,798,387
Securities at FVTOCI		—		13,854,656		—		—		13,854,656
Securities at amortized cost		—		—		17,568,356		—		17,568,356
Loans		56,418		—		229,763,689		—		229,820,107
Derivative assets		2,377,227		—		—		12,395		2,389,622
Other financial assets at amortized cost		—		—		10,261,891		—		10,261,891
Total		4,256,953		13,854,656		273,606,085		12,395		291,730,089

	June 30, 2018
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives liabilities held for hedging		Total
Financial liabilities
Deposits due to customers		24,485		226,726,810		—		226,751,295
Borrowings		176,097		13,994,109		—		14,170,206
Debentures		—		20,091,374		—		20,091,374
Derivative liabilities		2,375,336		—		34,540		2,409,876
Other financial liabilities(*)		—		20,283,096		—		20,283,096
Total		2,575,918		281,095,389		34,540		283,705,847

(*) Other financial liabilities include 58,221 million Won of financial guarantee liabilities measured at amortized cost included in provisions (Note23).

	December 31, 2017
	Financial assets at FVTPL		AFS financial assets		HTM financial assets		Loans		Derivatives assets held for hedging		Total
Financial assets
Deposits		25,972		—		—		7,392,805		—		7,418,777
Financial assets at FVTPL		1,008,983		—		—		—		—		1,008,983
AFS financial assets		—		14,186,704		—		—		—		14,186,704
HTM financial assets		—		—		16,638,727		—		—		16,638,727
Loans		—		—		—		235,237,937		—		235,237,937
Derivative assets		3,098,769		—		—		—		59,272		3,158,041
Other financial assets at amortized cost		—		—		—		6,179,882		—		6,179,882
Total		4,133,724		14,186,704		16,638,727		248,810,624		59,272		283,829,051

	December 31, 2017
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives liabilities held for hedging		Total
Financial liabilities
Deposits due to customers		25,964		224,384,156		—		224,410,120
Borrowings		160,057		13,662,984		—		13,823,041
Debentures		91,739		21,707,466		—		21,799,205
Derivative liabilities		3,139,218		—		12,103		3,151,321
Other financial liabilities(*)		—		13,103,698		—		13,103,698
Total		3,416,978		272,858,304		12,103		276,287,385

(*) Other financial liabilities include 74,277 million Won of financial guarantee liabilities measured at amortized cost included in provisions (Note23).

12. DEREGNITION 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 Bank agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, are as follows (Unit: Korean Won in millions):

		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		2,468		3,173

b) Securities loaned

When the Bank loans its securities to outside parties, the legal ownerships of the securities are transferred; however, they should be returned at the end of lending period. Therefore, the Bank does not derecognize them from the separate financial statements as it owns majority of risks and benefits from the securities continuously, regardless of the transfer of legal ownership. The carrying amounts of 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 Bank 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 Bank’s separate statements of financial position.

The Bank 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 Bank 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 Bank has entered into a resale and repurchase agreement and accounted it as a collateralized borrowing. The Bank has also entered into a resale and repurchase 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 Bank recorded the collateralized borrowing in borrowings and the secured loans in loans and receivables. The Bank 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 Bank disclosed bonds sold (purchased) under repurchase (resale) agreements as borrowings loans 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 statement of financial position				Net amounts
							Netting agreements and others		Cash collateral received
Financial assets:
Derivative assets and others (*1)		2,121,945		—		2,121,945		8,706,584		21,543		576,150
Receivable spot exchange (*2)		7,182,332		—		7,182,332
Bonds purchased under resale agreements (*2)		6,905,159		—		6,905,159		6,905,159		—		—
Domestic exchanges receivable (*2) (*5)		27,523,881		27,338,204		185,677		—		—		185,677
Total		43,733,317		27,338,204		16,395,113		15,611,743		21,543		761,827

	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 statement of financial position				Net amounts
							Netting agreements and others		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		2,298,877		—		2,298,877		8,694,927		208,955		568,571
Payable spot exchange (*3)		7,173,576		—		7,173,576
Bonds sold under repurchase agreements (*4)		2,468		—		2,468		2,468		—		—
Domestic exchanges payable (*3) (*5)		31,533,839		27,338,204		4,195,635		3,408,953		—		786,682
Total		41,008,760		27,338,204		13,670,556		12,106,348		208,955		1,355,253

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

(*2) The items are included in loans 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 statement of financial position				Net amounts
							Netting agreements and others		Cash collateral received
Financial assets:
Derivative assets and others (*1)		2,979,492		1,710		2,977,782		5,694,421		174,415		783,810
Receivable spot exchange (*2)		3,674,864		—		3,674,864
Bonds purchased under resale agreements (*2)		16,726,510		—		16,726,510		16,726,510		—		—
Domestic exchanges receivable (*2) (*5)		39,045,597		38,985,354		60,243		—		—		60,243
Total		62,426,463		38,987,064		23,439,399		22,420,931		174,415		844,053

	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 statement of financial position				Net amounts
							Netting agreements and others		Cash collateral pledged
Financial liabilities:
Derivative liabilities and others (*1)		3,137,297		1,710		3,135,587		5,817,331		157,750		835,243
Payable spot exchange (*3)		3,674,737		—		3,674,737
Bonds sold under repurchase agreements (*4)		3,173		—		3,173		3,173		—		—
Domestic exchanges payable (*3) (*5)		40,279,285		38,985,354		1,293,931		1,293,931		—		—
Total		47,094,492		38,987,064		8,107,428		7,114,435		157,750		835,243

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

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

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

(*4) The items are included in borrowings.

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

13. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES

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

Subsidiaries	Location	Capital stock		Main business
Woori FIS Co., Ltd.	Korea	KRW	245	System software development and maintenance
Woori Private Equity Asset Management Co., Ltd.	Korea	KRW	300	Finance
Woori Finance Research Institute Co., Ltd.	Korea	KRW	30	Other service business
Woori Card Co., Ltd.	Korea	KRW	8,963	Finance
Woori Investment Bank Co., Ltd.	Korea	KRW	3,371	Other credit finance business
Woori Credit Information Co., Ltd.	Korea	KRW	50	Credit information
Woori America Bank	America	USD	19,250	Finance
PT Bank Woori Saudara Indonesia 1906 Tbk	Indonesia	IDR	6,720	Finance
Woori Global Markets Asia Limited	Hong Kong	USD	10,000	Finance
Woori Bank China Limited	China	CNY	21.6	Finance
AO Woori Bank	Russia	RUB	14.5	Finance
Banco Woori Bank do Brasil S.A.	Brazil	BRL	7,709	Finance
Korea BTL Infrastructure Fund	Korea	KRW	7,755	Finance
Woori Fund Service Co., Ltd.	Korea	KRW	100	Finance
Woori Finance Cambodia PLC.	Cambodia	USD	1,300	Finance
Woori Finance Myanmar Co., Ltd.	Myanmar	USD	1,200	Finance
Wealth Development Bank	Philippine	PHP	7.7	Finance
Woori Bank Vietnam Limited	Vietnam	VND	3	Finance
WB Finance Co., Ltd.	Cambodia	USD	2,135	Finance

	June 30, 2018						December 31, 2017
Subsidiaries	Number of shares owned		Percentage of ownership (%)		Financial statements as of		Number of shares owned		Percentage of ownership (%)		Financial statements as of
Woori FIS Co., Ltd.		4,900,000		100.0		June.30,2018		4,900,000		100.0		Dec.31,2017
Woori Private Equity Asset Management Co., Ltd.		6,000,000		100.0		June.30,2018		6,000,000		100.0		Dec.31,2017
Woori Finance Research Institute Co., Ltd.		600,000		100.0		June.30,2018		600,000		100.0		Dec.31,2017
Woori Card Co., Ltd.		179,266,200		100.0		June.30,2018		179,266,200		100.0		Dec.31,2017
Woori Investment Bank Co., Ltd.		403,404,538		59.8		June.30,2018		403,404,538		59.8		Dec.31,2017
Woori Credit Information Co., Ltd.		1,008,000		100.0		June.30,2018		1,008,000		100.0		Dec.31,2017
Woori America Bank		38,500,000		100.0		June.30,2018		38,500,000		100.0		Dec.31,2017
PT Bank Woori Saudara Indonesia 1906 Tbk		5,256,690,211		79.9		June.30,2018		5,256,690,211		79.9		Dec.31,2017
Woori Global Markets Asia Limited		78,000,000		100.0		June.30,2018		78,000,000		100.0		Dec.31,2017
Woori Bank China Limited		—		100.0		June.30,2018		—		100.0		Dec.31,2017
AO Woori Bank		57,999,999		100.0		June.30,2018		57,999,999		100.0		Dec.31,2017
Banco Woori Bank do Brasil S.A.		77,093,999		100.0		June.30,2018		77,093,999		100.0		Dec.31,2017
Korea BTL Infrastructure Fund (*1)		154,910,839		99.9		June.30,2018		155,805,801		99.9		Dec.31,2017
Woori Fund Service Co., Ltd.		2,000,000		100.0		June.30,2018		2,000,000		100.0		Dec.31,2017
Woori Finance Cambodia PLC.		13,000,000		100.0		June.30,2018		13,000,000		100.0		Dec.31,2017
Woori Finance Myanmar Co., Ltd.		1,200,000		100.0		June.30,2018		1,200,000		100.0		Dec.31,2017
Wealth Development Bank		3,931,365		51.0		June.30,2018		3,931,365		51.0		Dec.31,2017
Woori Bank Vietnam Limited		—		100.0		June.30,2018		—		100.0		Dec.31,2017
WB Finance Co., Ltd.(*2)		867,457		100.0		June.30,2018		—		—		—

(*1) The Bank’s capital stock and number of shares owned have decreased, attributed to paid capital reduction of the subsidiary during the six months ended June 30, 2018.

(*2) The Bank acquired over 50% ownership of WB Finance Co., Ltd. during the six months ended June 30, 2018.

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

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

	June 30, 2018
Structured entities	Location		Main business		Percentage of ownership (%)		Financial statements as of
Structured entities established for securitization of financial assets (*1)
Kumho Trust First Co., Ltd. and 23 structured entities		Korea		Asset securitization		—		June. 30, 2018
KAMCO Value Recreation First Securitization Specialty Co., Ltd.		Korea		Asset securitization		15.0		June. 30, 2018
Money Trust by Trust Business Act (*2)
Principal Guaranteed Trust and Principal and Interest Guaranteed Trust		Korea		Trust		—		June. 30, 2018
Structured entities established for investment in securities and others
G5 Pro Short-term Bond Investment Fund 13 and 3 structured entities		Korea		Investment securities		100.0		June. 30, 2018
HeungkukWoori Tech Company Private Placement Investment Trust No. 1		Korea		Investment securities		98.0		June. 30, 2018
AI Partners Water Supply Private Placement Investment Trust No.2		England		Investment securities		97.3		June. 30, 2018
Consus Sakhalin Real Estate Investment Trust 1st		Korea		Investment securities		75.0		June. 30, 2018

	December 31, 2017
Structured entities	Location		Main business		Percentage of ownership (%)		Financial statements as of
Structured entities established for securitization of financial assets (*1)
Kumho Trust First Co., Ltd. and 19 structured entities		Korea		Asset securitization		—		Dec. 31, 2017
KAMCO Value Recreation First Securitization Specialty Co., Ltd.		Korea		Asset securitization		15.0		Dec. 31, 2017
Money Trust by Trust Business Act (*2)
Principal Guaranteed Trust and Principal and Interest Guaranteed Trust		Korea		Trust		—		Dec. 31, 2017
Structured entities established for investment in securities and others
G5 Pro Short-term Bond Investment Fund 13 and 3 structured entities		Korea		Investment securities		100.0		Dec. 31, 2017
HeungkukWoori Tech Company Private Placement Investment Trust No. 1		Korea		Investment securities		98.0		Dec. 31, 2017
Consus Sakhalin Real Estate Investment Trust 1		Korea		Investment securities		75.0		Dec. 31, 2017

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

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

2) The following companies have been excluded from the consolidation scope despite the Bank’s majority ownership interest as of June 30, 2018 and December 31, 2017:

	June 30, 2018
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Investment securities		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Investment securities		57.1
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Investment securities		88.3
Hana Qualified Investor Private Real Estate Investment Trust No. 41-1 (*)	Korea	Investment securities		77.0
IGIS Global Private Placement Real Estate Fund No. 148-1 (*)	Korea	Investment securities		69.0
IGIS Global Private Placement Real Estate Fund No. 148-2 (*)	Korea	Investment securities		69.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund 1(*)	Korea	Investment securities		66.2
Hangang sewage treatment plant fund (*)	Korea	Investment securities		55.6
Consus KyungJu Green Private Placement Real Estate Fund 1 (*)	Korea	Investment securities		52.4

	December 31, 2017
Subsidiaries	Location	Main business	Percentage of ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)	Korea	Investment securities		60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)	Korea	Investment securities		59.7
Kiwoom Yonsei Private Equity Investment Trust (*)	Korea	Investment securities		88.9
Hana Qualified Investor Private Real Estate Investment Trust No. 41-1 (*)	Korea	Investment securities		77.0
IGIS Global Private Placement Real Estate Fund No. 148-1(*)	Korea	Investment securities		69.0
IGIS Global Private Placement Real Estate Fund No. 148-2(*)	Korea	Investment securities		69.0

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

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

					June 30, 2018
Investees	Location	Capital		Main business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Kumho Tire Co., Inc. (*1)(*5)	Korea		7,900	Manufacturing		22,357,561		14.2	Mar. 31, 2018 (*6)
Woori Service Networks Co., Ltd. (*3)	Korea		5	Freight and staffing		4,704		4.9	May. 31, 2018 (*6)
Korea Credit Bureau Co., Ltd. (*2)	Korea		100	Credit information		180,000		9.9	June. 30, 2018
Korea Finance Security Co., Ltd. (*3)	Korea		60	Security Service		180,000		15.0	May. 31, 2018 (*6)
Chin Hung International Inc. (*5)	Korea		733	Construction		37,059,405		25.3	May. 31, 2018 (*6)
STX Corporation (*1)(*12)	Korea		478	Wholesale of non- specialized goods		3,772,400		19.7	Mar. 31, 2018 (*6)
Saman Corporation (*2)	Korea		7	General construction and technology service		12,542		9.2	Mar. 31, 2018 (*6)
Dongwoo C & C Co., Ltd. (*4)	Korea		7	Construction		13,317		23.2	—
SJCO Co., Ltd. (*4)	Korea		26	Aggregate transportation and wholesale		70,529		26.5	—
G2 collection Co., Ltd. (*4)	Korea		2	Wholesale and retail sales		12,574		28.9	—
The Base Enterprise Co., Ltd. (*4)	Korea		7	Manufacturing		68,470		48.4	—
Kyesan Engineering Co., Ltd. (*4)	Korea		13	Construction		60,581		23.2	—
Good Software Lab Co., Ltd. (*4)	Korea		3	Service		17,121		28.9	—
Wongwang Co., Ltd. (*4)	Korea		1	Wholesale and real estate		2,590		29.0	—
Sejin Construction Co., Ltd. (*4)	Korea		4	Construction		12,123		29.6	—
QTS Shipping Co., Ltd. (*4)	Korea		4	Poultry processing and storage		17,460		49.4	—
Reading Doctors Co., Ltd. (*4)	Korea		1	Complex transportation brokerage		7,398		35.4	—
PREXCO Co., Ltd. (*4)	Korea		16	Other services		919,972		28.1	—
Hyunwoo International Co., Ltd. (*4)	Korea		12	Manufacturing		59,873		25.9	—
Jiwon Plating Co., Ltd. (*4)	Korea		7	Plating		28,705		20.5	—
Cultizm Korea LTD Co., Ltd. (*4)	Korea		0.14	Wholesale and retail sales		858		31.3	—
Gil Co., Ltd. (*4)	Korea		9	Manufacturing		44,662		26.1	—
NK Eng Co., Ltd. (*4)	Korea		15	Manufacturing		697,033		23.1	—
Woori Growth Partnerships New Technology Private Equity Fund (*14)	Korea		1,167	Other financial services		26,922		23.1	June. 30, 2018
DAEA SNC Co., Ltd. (*4)	Korea		1	Wholesale and retail sales		1,253		24.0	—
ARES-TECH Co., Ltd. (*4)	Korea		2	Electronic component manufacturing		7,187		23.4	—
2016KIF-IMM Woori Bank Technology Venture Fund (*11)	Korea		681	Other financial services		13,620,000,000		20.0	June. 30, 2018
K BANK Co., Ltd. (*2)	Korea		3,500	Finance		9,078,462		13.0	May. 31, 2018 (*6)
Smart Private Equity Fund No. 2	Korea		150	Other financial services		3,000		20.0	June. 30, 2018
Woori Bank-Company K Korea Movie Asset Fund	Korea		120	Other financial services		3,000		25.0	June. 30, 2018
Well to Sea No. 3 Private Equity Fund(*13)	Korea		2,051	Finance		102,500,000,000		50.0	Mar. 31, 2018 (*6)
Youngdong Sea Food Co., Ltd. (*4)(*10)	Korea		3	Processed sea food manufacturing		12,106		24.0	—
Partner one value up 1 private equity fund (*8)	Korea		430	Other financial services		10,000,000,000		23.3	June. 30, 2018
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership(*8)	Korea		163	Other financial services		3,268,000,000		20.0	June. 30, 2018

					December 31, 2017
Investees	Location	Capital		Main business	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Kumho Tire Co., Inc. (*1)(*5)	Korea		7,900	Manufacturing		22,357,561		14.2	Sep. 30, 2017(*6)
Woori Service Networks Co., Ltd. (*3)	Korea		5	Freight and staffing		4,704		4.9	Nov. 30, 2017(*6)
Korea Credit Bureau Co., Ltd. (*2)	Korea		100	Credit information		180,000		9.9	Dec. 31, 2017
Korea Finance Security Co., Ltd. (*3)	Korea		60	Security Service		180,000		15.0	Nov. 30, 2017(*6)
Chin Hung International Inc. (*5)	Korea		733	Construction		37,059,405		25.3	Nov. 30, 2017(*6)
Poonglim Industrial Co., Ltd. (*7)	Korea		736	Construction		4,142,782		29.0	Sep. 30, 2017(*6)
STX Engine Co., Ltd. (*9)	Korea		691	Manufacturing		8,082,650		29.2	—
STX Corporation (*1)(*12)	Korea		478	Wholesale of non- specialized goods		3,772,400		19.7	Sep. 30, 2017(*6)
Saman Corporation (*2)	Korea		7	General construction and technology service		12,542		9.2	Sep. 30, 2017(*6)
Dongwoo C & C Co., Ltd. (*4)	Korea		7	Construction		13,317		23.2	—
SJCO Co., Ltd. (*4)	Korea		26	Aggregate transportation and wholesale		70,529		26.5	—
G2 collection Co., Ltd. (*4)	Korea		2	Wholesale and retail sales		12,574		28.9	—
The Base Enterprise Co., Ltd. (*4)	Korea		7	Manufacturing		68,470		48.4	—
Kyesan Engineering Co., Ltd. (*4)	Korea		13	Construction		60,581		23.2	—
Good Software Lab Co., Ltd. (*4)	Korea		3	Service		17,121		28.9	—
Wongwang Co., Ltd. (*4)	Korea		1	Wholesale and real estate		2,590		29.0	—
Sejin Construction Co., Ltd. (*4)	Korea		4	Construction		12,123		29.6	—
QTS Shipping Co., Ltd. (*4)	Korea		4	Poultry processing and storage		17,460		49.4	—
Reading Doctors Co., Ltd. (*4)	Korea		1	Complex transportation brokerage		7,398		35.4	—
PREXCO Co., Ltd. (*4)	Korea		16	Other services		919,972		28.1	—
Hyunwoo International Co., Ltd. (*4)	Korea		12	Manufacturing		59,873		25.9	—
Jiwon Plating Co., Ltd. (*4)	Korea		7	Plating		28,705		20.5
Cultizm Korea LTD Co., Ltd. (*4)	Korea		0.14	Wholesale and retail sales		858		31.3	—
Gil Co., Ltd. (*4)	Korea		9	Manufacturing		44,662		26.1	—
NK Eng Co., Ltd. (*4)	Korea		15	Manufacturing		697,033		23.1	—
Woori Growth Partnerships New Technology Private Equity Fund (*14)	Korea		1,249	Other financial services		28,833		23.1	Dec. 31, 2017
DAEA SNC Co., Ltd. (*4)	Korea		1	Wholesale and retail sales		1,253		24.0	—
ARES-TECH Co., Ltd. (*4)	Korea		2	Electronic component manufacturing		7,187		23.4	—
2016KIF-IMM Woori Bank Technology Venture Fund (*11)	Korea		342	Other financial services		6,840,000,000		20.0	Dec. 31, 2017
K BANK Co., Ltd. (*2)	Korea		3,500	Finance		9,078,462		13.0	Nov. 30, 2017(*6)
Smart Private Equity Fund No. 2	Korea		150	Other financial services		3,000		20.0	Dec. 31, 2017
Woori Bank-Company K Korea Movie Asset Fund	Korea		120	Other financial services		3,000		25.0	Dec. 31, 2017
Well to Sea No. 3 Private Equity Fund (*13)	Korea		2,051	Finance		102,500,000,000		50.0	Sep. 30, 2017(*6)

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

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

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

(*4) There is no investment amount as of June 30, 2018 and December 31, 2017.

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

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

(*7) The Bank did not have significant influence over the entity due to the fact that the entity was going through workout process, and thus the entity was excluded from the investment in associates for the six months ended June, 30, 2018.

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

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

(*10) Even though the Bank’s ownership ratio of the entity was more than 20%, the Bank did not have significant influence over the entity because the entity was going through workout process under receivership and thus was excluded from the investment in associates. However, as the workout process was completed for the six months ended June 30, 2018, it has been included in the investment in associates.

(*11) Due to paid capital increase of associates, the Bank’s capital stock and number of holding shares increased during the six months ended June 30, 2018.

(*12) The shares of STX Corporation owned by the Bank 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.

(*13) 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.

(*14) Due to paid capital reduction, the Bank’s capital stock and number of holding shares decreased for the six months ended June 30, 2018.

(4) The entities excluded from associates, although the Bank’s ownership interest in them is higher than 20% as of June 30, 2018 and December 31, 2017, are as follows:

	June 30, 2018
Associate (*)	Number of shares owned		Percentage of ownership
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 Company 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	%
Poonglim Industrial Co., Ltd.		4,142,782		29.1	%

	December 31, 2017
Associate (*)	Number of shares owned		Percentage of ownership
Orient Shipyard Co., Ltd.		465,050		21.4	%
Saenuel Co., Ltd.		3,531		37.4	%
E Mirae Tech Co., Ltd.		7,696		41.0	%
Jehin Trading Co., Ltd.		81,610		27.3	%
The Season Company Co., Ltd.		18,187		30.1	%
Yuil PESC Co., Ltd.		8,642		24.0	%
Youngdong Sea Food Co., Ltd.		12,106		24.0	%
Sinseong Trading Co., Ltd.		2,584		27.2	%
CL Tech Co., Ltd.		13,759		38.6	%
Force TEC Co., Ltd.		4,780,907		25.8	%
Protronics Co., Ltd.		95,921		48.1	%
Instern Co., Ltd.		14,296		20.1	%

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

(5) Changes in carrying value of investments in subsidiaries and associates are as follows (Korean Won in millions). Because the investments associated with structured entities were classified as financial assets at FVTPL (K-IFRS 1109) for the six months ended June 30, 2018 and AFS securities (K-IFRS 1039) for the six months ended June 30, 2017, they were excluded from the carrying value of investments in subsidiaries and associates.

	For the six months ended June 30, 2018
Investees	January 1, 2018		Acquisitions		Disposals and others(*)			June 30, 2018
Woori FIS Co., Ltd.		35,362		—		—			35,362
Woori Private Equity Asset Management Co., Ltd.		43,227		—		—			43,227
Woori Finance Research Institute Co., Ltd.		3,364		—		—			3,364
Woori Card Co., Ltd.		1,274,260		—		—			1,274,260
Woori Investment Bank		143,814		—		—			143,814
Woori Credit Information Co., Ltd.		24,666		—		—			24,666
Woori America Bank		281,471		—		—			281,471
PT Bank Woori Saudara Indonesia 1906 Tbk		328,012		—		—			328,012
Woori Global Markets Asia Limited		113,858		—		—			113,858
Woori Bank China Limited		427,802		—		—			427,802
AO Woori Bank		51,780		—		—			51,780
Banco Woori Bank do Brasil S.A.		44,045		—		—			44,045
Korea BTL Infrastructure Fund		783,164		7,500		(11,983	)		778,681
Woori Fund Service Co., Ltd.		10,000		—		—			10,000
Woori Finance Cambodia PLC.		15,850		—		—			15,850
Woori Finance Myanmar Co., Ltd.		13,649		—		—			13,649
Wealth Development Bank		24,355		—		—			24,355
Woori Bank Vietnam Limited		155,400		—		—			155,400
WB Finance Co., Ltd.		—		88,216		—			88,216
Kumho Tire Co., Inc.		98,932		—		—			98,932
Woori Service Networks Co., Ltd.		108		—		—			108
Korea Credit Bureau Co., Ltd.		3,313		—		—			3,313
Korea Finance Security Co., Ltd.		3,267		—		—			3,267
Chin Hung International Inc.		70,969		—		—			70,969
Poonglim Industrial Co., Ltd.		6		—		(6	)		—
STX Corporation		7,809		—		(7,809	)		—
Saman Corporation		1,255		—		—			1,255
Woori Growth Partnerships New Technology Private Equity Fund		28,833		—		(3,346	)		25,487
2016KIF-IMM Woori Bank Technology Venture Fund		6,840		6,780		—			13,620
K BANK Co., Ltd.		45,392		—		—			45,392
Smart Private Equity Fund No. 2		3,000		—		—			3,000
Woori Bank-Company K Korea Movie Asset Fund		3,000		—		—			3,000
Well to Sea No. 3 Private Equity Fund		101,992		—		(509	)		101,483
Partner One Value Up 1 Private Equity Fund		—		10,000		—			10,000
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		—		3,268		—			3,268
	4,148,795		115,764		(23,653)			4,240,906

(*) The amount replaced from investments in associates to assets held for sale is 7,809 million Won and the amount replaced from investments in associates to financial assets at FVTPL (K-IFRS 1109) is 6 million Won.

	For the six months ended June 30, 2017
Investees	January 1, 2017		Acquisitions (*1)		Disposals and others (*2)			Impairment			June 30, 2017
Woori FIS Co., Ltd.		35,362		—		—			—			35,362
Woori Private Equity		43,227		—		—			—			43,227
Woori Finance Research Institute Co., Ltd.		3,364		—		—			—			3,364
Woori Card Co., Ltd.		1,174,260		100,000		—			—			1,274,260
Woori Investment Bank		79,992		—		—			—			79,992
Woori Private Equity Fund		9,018		—		(9,018	)		—			—
Woori Credit Information Co., Ltd.		24,666		—		—			—			24,666
Woori America Bank		202,371		—		—			—			202,371
PT Bank Woori Saudara Indonesia 1906 Tbk		215,400		—		—			—			215,400
Woori Global Markets Asia Ltd.		113,858		—		—			—			113,858
Woori Bank China Limited		427,802		—		—			—			427,802
AO Woori Bank		51,780		—		—			—			51,780
Woori Brazil Bank		44,045		—		—			—			44,045
Korea BTL Infrastructure Fund		780,525		2,700		(36	)		—			783,189
Woori Fund Service Co., Ltd.		10,000		—		—			—			10,000
Woori Finance Cambodia		4,600		11,250		—			—			15,850
Woori Finance Myanmar		2,389		11,260		—			—			13,649
Wealth Development Bank		25,675		—		(1,320	)		—			24,355
Woori Bank Vietnam Limited		155,400		—		—			—			155,400
Kumho Tire Co., Inc.		175,652		—		—			—			175,652
Woori Blackstone Korea Opportunity No.1 Private Equity Fund		5,418		—		—			—			5,418
Woori Service Networks Co., Ltd.		108		—		—			—			108
Korea Credit Bureau Co., Ltd.		3,313		—		—			—			3,313
Korea Finance Security Co., Ltd.		3,267		—		—			—			3,267
Chin Hung International Inc.		67,467		41,053		—			(25,136	)		83,384
Poonglim Industrial Co., Ltd.		4,256		—		—			(4,250	)		6
STX Engine Co., Ltd.		44,615		—		—			—			44,615
SamHo Co., Ltd.		7,492		—		(7,492	)		—			—
STX Corporation		7,424		8,546		—			(8,161	)		7,809
Saman Corporation		8,521		—		—			—			8,521
Woori Growth Partnerships New Technology Private Equity Fund		13,602		5,745		(498	)		—			18,849
2016KIF-IMM Woori Bank Technology Venture Fund		1,800		3,240		—			—			5,040
K BANK Co. Ltd.		32,500		—		—			—			32,500
Smart Private Equity Fund No.2		—		3,000		—			—			3,000
Woori Bank-Company K Korea Movie Asset Fund		—		1,500		—			—			1,500
		3,779,169		188,294		(18,364	)		(37,547	)		3,911,552

(*1) Changes in investments in associates due to debt-equity swaps are 49,599 million Won.

(*2) The amount replaced from investments in associates to assets held for sale is 7,492 million Won.

14. INVESTMENT PROPERTIES

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

	June 30, 2018			December 31, 2017
Acquisition cost		390,829			378,004
Accumulated depreciation		(30,754	)		(27,769	)
Net carrying value		360,075			350,235

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

	For the six months ended June 30
	2018			2017
Beginning balance		350,235			348,393
Acquisition		5,336			795
Depreciation		(1,857	)		(1,789	)
Transfers		6,333			(2,708	)
Foreign currencies translation adjustments		28			(41	)
Ending balance		360,075			344,650

(3) Rental fee earned from investment properties is amounting to 7,044 million Won and 7,084 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		Total
Acquisition cost		1,467,173		844,456			579,193			394,875			3,978		3,289,675
Accumulated depreciation		—		(189,720	)		(401,018	)		(347,902	)		—		(938,640	)
Net carrying value		1,467,173		654,736			178,175			46,973			3,978		2,351,035

	December 31, 2017
	Land		Building			Properties for business use			Structures in leased office			Construction in progress		Total
Acquisition cost		1,472,170		848,668			498,298			385,398			64,241		3,268,775
Accumulated depreciation		—		(178,845	)		(379,232	)		(336,108	)		—		(894,185	)
Net carrying value		1,472,170		669,823			119,066			49,290			64,241		2,374,590

(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			Total
Beginning balance		1,472,170			669,823			119,066			49,290			64,241			2,374,590
Acquisitions		463			4,308			19,450			6,200			3,081			33,502
Disposals		—			—			(12	)		(89	)		—			(101	)
Depreciation		—			(12,505	)		(23,661	)		(15,524	)		—			(51,690	)
Classified to assets held for sale		(3,573	)		(2,477	)		—			—			—			(6,050	)
Transfer		(1,910	)		(4,423	)		63,283			—			(63,283	)		(6,333	)
Foreign currencies translation adjustments		23			16			33			90			(61	)		101
Others		—			(6	)		16			7,006			—			7,016
Ending balance		1,467,173			654,736			178,175			46,973			3,978			2,351,035

	For the six months ended June 30, 2017
	Land			Building			Properties for business use			Structures in leased office			Construction in progress			Total
Beginning balance		1,472,720			679,766			121,573			54,558			13,663			2,342,280
Acquisitions		—			3,198			17,136			4,652			24,330			49,316
Disposals		(606	)		(205	)		(30	)		(409	)		—			(1,250	)
Depreciation		—			(12,494	)		(21,454	)		(16,196	)		—			(50,144	)
Classified to assets held for sale		(1,743	)		(441	)		—			—			—			(2,184	)
Transfer		2,466			403			68			—			(229	)		2,708
Foreign currencies translation adjustments		(33	)		(31	)		73			(151	)		(10	)		(152	)
Others		—			(6	)		(610	)		4,788			—			4,172
Ending balance		1,472,804			670,190			116,756			47,242			37,754			2,344,746

16. INTANGIBLE ASSETS

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

	June 30, 2018
	Industrial property rights			Development cost			Others			Membership deposit			Construction in progress		Total
Acquisition cost		1,066			283,526			657,167			11,651			8,978		962,388
Accumulated amortization		(547	)		(39,115	)		(521,225	)		—			—		(560,887	)
Accumulated impairment losses		—			—			—			(1,493	)		—		(1,493	)
Net carrying value		519			244,411			135,942			10,158			8,978		400,008

	December 31, 2017
	Industrial property rights			Development cost			Others			Membership deposit			Construction in progress		Total
Acquisition cost		951			81,224			575,148			11,870			153,209		822,402
Accumulated amortization		(471	)		(26,827	)		(489,433	)		—			—		(516,731	)
Accumulated impairment losses		—			—			—			(2,346	)		—		(2,346	)
Net carrying value		480			54,397			85,715			9,524			153,209		303,325

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

	June 30, 2018
	Industrial property rights			Development cost			Others			Membership deposit			Construction in progress			Total
Beginning balance		480			54,397			85,715			9,524			153,209			303,325
Acquisitions		116			20,484			35,238			1,000			84,318			141,156
Disposal		—			—			—			(721	)		—			(721	)
Amortization (*)		(77	)		(12,273	)		(31,752	)		—			—			(44,102	)
Reversal of impairment loss		—			—			—			339			—			339
Transfer		—			181,803			46,746			—			(228,549	)		—
Foreign currencies translation adjustments		—			—			4			16			—			20
Others		—			—			(9	)		—			—			(9	)
Ending balance		519			244,411			135,942			10,158			8,978			400,008

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

	June 30, 2017
	Industrial property rights			Development cost			Others			Membership deposit			Construction in progress			Total
Beginning balance		258			41,027			131,514			9,618			59,813			242,230
Acquisitions		35			8,589			8,036			219			55,696			72,575
Disposal		—			—			—			(316	)		—			(316	)
Amortization (*)		(47	)		(4,483	)		(28,064	)		—			—			(32,594	)
Impairment loss		—			—			—			(12	)		—			(12	)
Transfer		—			—			36			—			(36	)		—
Foreign currencies translation adjustments		—			—			178			(18	)		—			160
Others		—			(56	)		(6,145	)		—			—			(6,201	)
Ending balance		246			45,077			105,555			9,491			115,473			275,842

(*) 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 subsidiaries and associates		7,809		44,615
Premises and equipment		7,616		1,568
Total		15,425		46,183

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
Loans at amortized cost and other financial assets	Due from banks in local currency	Samsung Securities Co., Ltd. and others		19,698	Margin deposit for futures or options
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		135,515	Foreign margin deposit for futures or options and others
Financial assets at FVTPL	Korean financial institutions’ debt securities and others	Kyobo Life Insurance Co., Ltd. and others		72,915	CSA collaterals 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, government bonds and others	The BOK and others		1,605,348	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 government bonds and others	The BOK and others		4,877,474	Settlement risk and others
		Total		6,726,396

(*) The Bank 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 Bank 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
Loans and receivables	Due from banks in local currency	Samsung Securities Co., Ltd. and others		10,809	Margin deposit for futures or options
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		9,135	Foreign margin deposit for futures or options 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		9,998	Related to bonds sold under repurchase agreements (*)
	Korean treasury, government bonds and others	The BOK and others		1,540,985	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		7,601,016	Settlement risk and others
		Total		9,678,902

(*) The Bank 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 Bank does not derecognize the assets, but recognizes the relevant amounts as liability (bonds sold under repurchase agreements).

(2) The Bank does not have assets acquired through foreclosure as of June 30, 2018 and December 31, 2017.

(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 Bank does not derecognize these securities, there are no liabilities recognized through such transactions related 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		7,206,817		—
	December 31, 2017
	Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		17,538,936		—

19. OTHER ASSETS

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

	June 30, 2018		December 31, 2017
Prepaid expenses		142,652		113,835
Advance payments		430		839
Others		3,533		3,215
Total		146,615		117,889

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		2,399,821		—
Financial liabilities held for trading		—		3,165,182
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		2,575,918		3,416,978

(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		2,375,336		3,139,218
Total		2,399,821		3,165,182

(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 Bank’s credit risk is considered in measuring the fair value of derivatives. The Bank’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		9,346,065			9,354,122
Deposits at termination		198,899,679			194,426,228
Mutual installment		32,292			34,055
Certificate of deposits		4,514,675			4,341,643
Subtotal		212,792,711			208,156,048
Deposits in foreign currency:
Deposits in foreign currencies		13,975,251			16,263,301
Present value discount		(41,152	)		(35,193	)
Total		226,726,810			224,384,156

22. BORROWINGS AND DEBENTURES

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

	June 30, 2018
	Lender	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from The BOK	The BOK		0.5 ~ 0.8		1,420,990
Borrowing 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 ~ 3.2		3,412,558
Subtotal					6,616,151
Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 3.7		6,745,519
Offshore borrowings in foreign currencies	JPMORGAN CHASE BANK		2.8		33,651
Subtotal					6,779,170
Bills sold	Others		0.0 ~ 1.2		23,874
Call money	Banks and others		0.0 ~ 6.3		572,473
Bonds sold under repurchase agreements	Other financial institutions		0.7 ~ 12.7		2,468
Present value discount					(27	)
Total					13,994,109

	December 31, 2017
	Lender	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from The BOK	The BOK		0.5–0.8		1,404,087
Borrowing 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		3,106,303
Subtotal					6,233,730
Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0–3.1		6,884,235
Offshore borrowings in foreign currencies	Commonwealth Bank		1.8		28,285
Subtotal					6,912,520
Bills sold	Others		0.0–1.2		36,953
Call money	Banks and others		1.5–2.7		476,773
Bonds sold under repurchase agreements	Other financial institutions		0.6–12.7		3,173
Present value discount					(165	)
Total					13,662,984

(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		1.6 ~ 4.5		15,129,480			1.5–5.8		16,965,338
Subordinated bonds		3.0 ~ 5.9		4,991,052			3.4–5.9		4,765,501
Subtotal				20,120,532					21,730,839
Discount on bonds				(29,158	)				(23,373	)
Total				20,091,374					21,707,466

(*) 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.

23. PROVISIONS

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

	June 30, 2018		December 31, 2017
Asset retirement obligation		61,775		56,243
Provisions for guarantees (*1)		109,601		185,557
Provisions for unused commitments		51,508		36,031
Provisions for customer reward credits		43,682		37,256
Other provisions (*2)		59,133		52,940
Total		325,699		368,027

(*1) Provisions for guarantees include provision for financial guarantee of 58,221 million Won and 74,277 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 (*)		49,384			18,102			127,511			194,997
Replaced by 12-month expected credit loss		68			(68	)		—			—
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		(4,142	)		(46,341	)		(35,773	)		(86,256	)
Others		9,366			—			—			9,366
Ending balance		45,195			30,567			33,839			109,601

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

	For the six months ended June 30, 2017
Beginning balance		240,023
Provisions used		(12,337	)
Reversal of provisions unused		(45,218	)
Others		7,920
Ending balance		190,388

2) Provisions for unused commitments

	For the six months ended June 30, 2018
	Stage1			Stage2			Stage3			Total
Beginning balance (*)		42,106			13,100			167			55,373
Replaced by 12-month expected credit loss		1,602			(1,602	)		—			—
Replaced with expected credit loss for the entire period		(1,094	)		1,094			—			—
Replaced with credit-impaired financial assets		(44	)		(28	)		72			—
Net reversal of unused amount		(3,636	)		(23	)		(239	)		(3,898	)
Others		33			—			—			33
Ending balance		38,967			12,541			—			51,508

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

	For the six months ended June 30, 2017
Beginning balance		53,919
Provisions used		(41	)
Reversal of provisions unused		(2,588	)
Ending balance		51,290

(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		56,243			52,838
Provisions provided		1,027			619
Reversal of provisions unused		(989	)		(715	)
Provisions used		(295	)		(416	)
Amortization		258			196
Increase in restoration costs and others		5,531			3,795
Ending balance		61,775			56,317

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 Bank 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 Bank 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		37,256			52,940			90,196
Provisions provided		1,930			2,185			4,115
Provisions used		(38,408	)		(346	)		(38,754	)
Transfer (*)		29,236			—			29,236
Others		13,668			4,354			18,022
Ending balance		43,682			59,133			102,815

(*) As the credits of the affiliates were transferred to the Bank, 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		18,170			15,523			33,693
Provisions provided		3,551			2,247			5,798
Provisions used		(27,744	)		(5,295	)		(33,039	)
Transfer (*)		28,876			—			28,876
Others		5,667			—			5,667
Ending balance		28,520			12,475			40,995

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

24. NET DEFINED BENEFIT LIABILITIES

Characteristics of the Bank’s defined benefit plans are as follows:

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

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

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

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

	June 30, 2018			December 31, 2017
Defined benefit obligation		1,087,291			990,007
Fair value of plan assets		(1,015,659	)		(975,723	)
Net defined benefit liabilities		71,632			14,284

(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			2017
Beginning balance		990,007			919,707
Current service cost		64,961			67,508
Interest cost		15,302			12,758
Remeasurements		71,652			4,121
Foreign currencies translation adjustments		27			(42	)
Retirement benefit paid		(54,658	)		(28,819	)
Curtailment or settlement		—			(10,076	)
Ending balance		1,087,291			965,157

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

	For the six months ended June 30
	2018			2017
Beginning balance		975,723			990,645
Interest income		16,081			14,718
Remeasurements		(8,824	)		(7,685	)
Employer’s contributions		87,000			15,000
Retirement benefit paid		(54,321	)		(27,657	)
Curtailment or settlement		—			(10,395	)
Ending balance		1,015,659			974,626

(4) Plan assets wholly consist of time deposits as of June 30, 2018 and December 31, 2017. Among plan assets, realized returns on plan assets amount to 7,257 million Won and 7,033 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 re-measurements recognized in the separate statements of comprehensive income are as follows (Unit: Korean Won in millions):

	For the six months ended June 30
	2018			2017
Current service cost		64,961			67,508
Net interest income		(779	)		(1,960	)
Loss (gain) on the curtailment or settlement		—			320
Cost recognized in net income		64,182			65,868
Remeasurements (*)		80,476			11,806
Cost recognized in total comprehensive income		144,658			77,674

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

Retirement benefit service costs related to defined contribution plans amount to 991 million Won and 1,868 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		(101,515	)		(91,364	)
	Decrease by 1% point		118,005			106,296
Future wage growth rate	Increase by 1% point		117,600			105,849
	Decrease by 1% point		(103,047	)		(92,682	)

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		8,064,426			4,079,676
Accrued expenses		1,626,667			1,874,837
Borrowing from trust accounts		4,138,102			3,363,579
Agency business revenue		258,497			344,591
Foreign exchanges payable		593,232			576,525
Domestic exchanges payable		4,224,899			1,304,416
Other miscellaneous financial liabilities		1,319,935			1,486,567
Present value discount		(883	)		(770	)
Subtotal		20,224,875			13,029,421
Other liabilities:
Unearned income		52,279			55,019
Other miscellaneous liabilities		90,864			80,667
Subtotal		143,143			135,686
Total		20,368,018			13,165,107

26. DERIVATIVES

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

	June 30, 2018
			Assets				Liabilities
	Notional amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Futures		272,778		—		—		—		—
Swaps		144,282,983		12,395		222,674		34,540		234,920
Purchase options		660,000		—		10,897		—		—
Written options		785,000		—		—		—		11,731
Currency:
Futures		304,721		—		—		—		—
Forwards		79,426,222		—		1,189,618		—		1,160,008
Swaps		55,665,631		—		799,265		—		750,377
Purchase options		2,635,551		—		36,079		—		—
Written options		4,651,496		—		—		—		49,352
Equity:
Futures		122,341		—		—		—		—
Swaps		435,790		—		3,021		—		4,542
Purchase options		4,272,150		—		115,210		—		—
Written options		5,661,146		—		—		—		163,966
Others:
Futures		965		—		—		—		—
Forwards		5,618		—		—		—		—
Swaps		8,081		—		463		—		440
Total		299,190,473		12,395		2,377,227		34,540		2,375,336

	December 31, 2017
			Assets				Liabilities
	Notional amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Futures		75,845		—		—		—		—
Swaps		130,861,378		59,272		224,660		12,103		257,905
Purchase options		630,000		—		12,346		—		—
Written options		795,000		—		—		—		12,869
Currency:
Futures		290,457		—		—		—		—
Forwards		71,333,635		—		1,301,850		—		1,360,945
Swaps		47,445,136		—		1,347,815		—		1,347,905
Purchase options		2,291,154		—		64,267		—		—
Written options		4,038,237		—		—		—		58,687
Equity:
Futures		91,436		—		—		—		—
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		267,430,079		59,272		3,098,769		12,103		3,139,218

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 separate statements of financial position.

(2) Overview of the Bank’s hedge accounting

As of the June 30, 2018, the Bank 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 Bank entered into interest rate swap agreements designated as hedging instruments.

Pursuant to the interest rate swap agreement, by swapping the calculated difference between the fixed interest rate and floating interest rate applied to the nominal value, the fair value fluctuation risk is hedged as the foreign currency denominated debentures fixed interest rate terms are converted to floating interest rate. 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 Bank 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 Bank receives interest at a fixed interest rate and pays interest at a variable interest rate.

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

	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

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

	Average interest rate
Fair value hedge
Interest rate risk
Interest rate swap(USD)	Fixed 3.98% receipt and 3.96% floating paid

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

	Nominal amounts of the hedging		Carrying amounts of the hedging instrument				Line item in the statement of financial position where the hedging instrument is		Changing in fair value used for calculating hedge
	instrument		Assets		Liabilities		located		ineffectiveness
Fair value hedge
Interest rate risk
Interest rate swap		USD 2,850,000,000		12,395		34,540		Derivative assets Derivative liabilities		(62,246	)

(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

Assets

Liabilities

Assets

Liabilities

Fair value hedge

Interest rate risk Debentures

—

3,150,145

—

60,732

Debentures

66,455

(7) Amounts recognized in profit or loss due to the ineffective portion of fair value hedges for the six months ended June 30, 2018 are as follows (Unit: Korean Won in millions):

		Hedge ineffectiveness recognized in profit		Line item in the profit that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		4,209	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

The Bank has entered into transactions where the fair value is determined using valuation techniques for which not all inputs are observable or available in the market. Those financial instruments are recorded at the fair value produced by the valuation techniques at the time of acquisition despite the differences between the transaction price and the fair value. The table above presents the difference yet to be realized as profits 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 are no changes in the number of shares issued and outstanding for the six months ended June 30, 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

29. HYBRID SECURITIES

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

	Issue date		Maturity		Interest rates (%)		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 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 on valuation of financial assets at FVTOCI		(80,165	)		—
Gain on valuation of AFS financial assets		—			271,559
Net gain on financial liabilities at fair value through profit or loss designated as upon initial recognition due to own credit risk		28			—
Loss on foreign currency translation of foreign operations		(16,598	)		(26,693	)
Remeasurement loss related to defined benefit plan		(196,222	)		(137,877	)
Subtotal		(292,957	)		106,989
Treasury shares		(34,113	)		(34,113	)
Other capital adjustments		(368	)		(208,158	)
Total		(327,438	)		(135,282	)

(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
Gain (loss) on valuation of financial assets at FVTOCI		(121,818	)		58,145			(693	)		(15,799	)		(80,165	)
Gain (loss) on financial liabilities at fair value through profit or loss designated as upon initial recognition due to own credit risk		(96	)		171			—			(47	)		28
Gain (loss) on foreign currency translation of foreign operations		(26,693	)		13,924			—			(3,829	)		(16,598	)
Remeasurement gain (loss) related to defined benefit plan		(137,877	)		(80,476	)		—			22,131			(196,222	)
Total		(286,484	)		(8,236	)		(693	)		2,456			(292,957	)

(*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		319,698			47,218			(68,614	)		5,178		303,480
Gain (loss) on foreign currencies translation of foreign operations		7,400			(19,146	)		—			4,633		(7,113	)
Remeasurement gain (loss) related to defined benefit plan		(154,443	)		(11,806	)		—			2,857		(163,392	)
Total		172,655			16,266			(68,614	)		12,668		132,975

(*) 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		2,091,721			2,017,342
	Revaluation reserve		715,860			751,964
	Other voluntary reserve		—			11,700
	Subtotal		10,810,785			10,443,212
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			1,376,518			1,041,925
	Total		14,091,022			13,260,559

i. Earned surplus reserve

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

ii. Other legal reserve

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

iii. Business rationalization reserve

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

iv. Reserve for financial structure improvement

From 2002 to 2014, the Finance Supervisory Services recommended banks in Korea to appropriate at least 10% of net income after accumulated deficit for financial structure improvement until tangible common equity ratio equals 5.5%, 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 Bank 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 Bank discloses such shortfall 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 recognized as complementary capital when the gain or loss occurred in the property revaluation by adopting K-IFRS.

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

	For the six months ended June 30
	2018 (*)			2017
Beginning balance		13,507,023			12,488,155
Net income		1,204,815			1,004,426
Dividends on common stock		(336,636	)		(269,308	)
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		(208,158	)		—
Dividends on hybrid securities		(75,603	)		(90,823	)
Ending balance		14,091,022			13,132,450

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

32. REGULATORY RESERVE FOR CREDIT LOSS

In accordance with paragraphs 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 Bank shall disclose the difference as the planned regulatory reserve for credit loss.

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

	June 30, 2018			December 31, 2017
Beginning balance		2,091,721			2,017,342
Planned provision (reversal) of regulatory reserve for credit loss		(178,873	)		74,379
Ending balance		1,912,848			2,091,721

(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		658,828			1,204,815		402,523			1,004,426
Provision (reversal) of regulatory reserve for credit loss (*)		(19,569	)		15,404		(12,310	)		(10,806	)
Adjusted net income after the provision (reversal) of regulatory reserve		678,397			1,189,411		414,833			1,015,232
Adjusted EPS after the provision (reversal) of regulatory reserve (Unit: Korean Won)		952			1,654		555			1,374

(*) 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)		2,055		5,251		—		—
Financial assets at FVTPL (K-IFRS 1039)		—		—		4,415		8,878
Financial assets at FVTOCI		56,172		108,016		—		—
AFS financial assets		—		—		52,423		105,267
Securities at amortized cost		86,521		166,721		—		—
HTM financial assets		—		—		73,683		147,063
Financial assets at amortized cost:
Interest on due from banks		24,378		53,772		—		—
Interest on loans		1,865,620		3,660,448		—		—
Interest of other receivables		5,393		10,715		—		—
Subtotal		1,895,391		3,724,935		—		—
Loans and receivables:
Interest on due from banks		—		—		16,646		34,066
Interest on loans		—		—		1,659,994		3,294,164
Interest of other receivables		—		—		5,618		11,345
Subtotal		—		—		1,682,258		3,339,575
Total		2,040,139		4,004,923		1,812,779		3,600,783

(2) Interest 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
Interest on deposits due to customers		653,678		1,263,379		544,347		1,089,347
Interest on borrowings		60,105		112,261		51,522		103,866
Interest on debentures		135,412		270,967		120,410		238,640
Other interest expense		22,207		43,027		18,326		37,272
Total		871,402		1,689,634		734,605		1,469,125

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 (*)		187,844		387,184		182,706		378,161
Fees and commissions received for provision of guarantee		17,268		34,287		17,309		33,550
Fees and commissions received on project financing		10,518		16,895		4,614		6,334
Fees and commissions received on securities		21,408		46,530		19,462		39,686
Other fees and commissions received		53,358		111,372		33,515		71,446
Total		290,396		596,268		257,606		529,177

(*) 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		35,882		70,087		36,362		63,213
Others		113		120		61		114
Total		35,995		70,207		36,423		63,327

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)		12,132		31,250		—		—
Financial assets at FVTPL (K-IFRS 1039)		—		—		1		144
Financial assets at FVTOCI		1,899		9,245		—		—
AFS financial assets		—		—		31,228		61,592
Total		14,031		40,495		31,229		61,736

(2) Details of dividends related to financial assets at FVTOCI for the six months ended June 30, 2018 are as follows (Unit: Korean Won in millions):

	June 30, 2018
Dividend income recognized from assets held
Equity securities		8,971
Dividend income recognized in assets derecognized		274
Total		9,245

37. NET GAIN OR LOSS ON FINANCIAL INSTRUMENT 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 instrument at fair value through profit or loss mandatorily measured at fair value		58,602			104,945		—			—
Gains (losses) on financial assets held for trading		—			—		38,516			(51,387	)
Gains(losses) on financial instrument at fair value through profit or loss designated as upon initial recognition		(2,423	)		2,877		—			—
Losses on financial instrument at fair value through profit or loss designated as upon initial recognition		—			—		(24,086	)		(86,206	)
Total		56,179			107,822		14,430			(137,593	)

(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		32,161			71,266			495			3,220
		Gain on disposals		11,731			12,631			1,392			5,916
		Loss on valuation		(10,149	)		(16,534	)		(191	)		(314	)
		Loss on disposals		(1,825	)		(2,234	)		(45	)		(247	)
		Subtotal		31,918			65,129			1,651			8,575
	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			763			882
		Loss on valuation		(320	)		(2,193	)		(1,920	)		(3,539	)
		Loss on disposals		(11	)		(83	)		(211	)		(234	)
		Subtotal		40			98			127			180
Total financial assets held for trading				32,224			68,291			1,778			8,755
Derivatives (for trading)	Interest rate derivatives	Gain on transactions and valuation		234,143			604,983			202,402			434,227
		Loss on transactions and valuation		(246,716	)		(594,375	)		(198,456	)		(422,879	)
		Subtotal		(12,573	)		10,608			3,946			11,348
	Currency derivatives	Gain on transactions and valuation		2,525,598			3,499,386			(100,624	)		3,741,132
		Loss on transactions and valuation		(2,493,436	)		(3,479,005	)		112,300			(3,903,950	)
		Subtotal		32,162			20,381			11,676			(162,818	)
	Equity derivatives	Gain on transactions and valuation		114,581			248,051			92,275			302,900
		Loss on transactions and valuation		(107,805	)		(242,400	)		(71,192	)		(211,551	)
		Subtotal		6,776			5,651			21,083			91,349
	Other derivatives	Gain on transactions and valuation		1,244			1,743			867			2,196
		Loss on transactions and valuation		(1,231	)		(1,729	)		(834	)		(2,217	)
		Subtotal		13			14			33			(21	)
Total derivatives (for trading)				26,378			36,654			36,738			(60,142	)
	Total			58,602			104,945			38,516			(51,387	)

(3) Details of net gain or loss on financial instrument at fair value through profit or loss mandatorily measured at fair value 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 disposal 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	)
Gain(loss) on other financial instruments:
Gain(loss) on valuation of other financial instruments		944			1,597			267			(615	)
Total		(2,423	)		2,877			(24,086	)		(86,206	)

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

Details of net gain or loss 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
Gain on disposal of securities		723		723		83,874			102,860
Impairment loss on securities		—		—		(6,853	)		(12,622	)
Total		723		723		77,021			90,238

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		(641	)		(457	)		—			—
Reversal of credit loss on securities at amortized cost losses		(202	)		(192	)		—			—
Provision for credit loss on loan and other financial assets at amortized cost		151,057			73,903			—			—
Impairment losses due to credit loss		—			—			(153,089	)		(227,710	)
Reversal of provision on guarantee		76,329			86,256			16,381			45,218
Reversal of provision on (provision for) loan commitment		(936	)		3,898			(9,042	)		2,588
Total		225,607			163,408			(145,750	)		(179,904	)

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

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

			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		288,577		530,219		276,845		555,349
		Employee benefits		96,153		188,500		103,500		191,861
	Retirement benefit service costs			32,711		65,173		33,981		67,736
	Termination			17,769		17,769		4,411		4,411
	Sub-total			435,210		801,661		418,737		819,357
Depreciation and amortization				38,289		70,613		27,203		58,296
Other general and administrative expenses	Rent			63,549		127,352		61,391		126,971
	Taxes and public dues			31,210		54,076		28,674		51,924
	Service charges			47,423		94,520		42,012		84,955
	Computer and IT related			62,731		120,597		57,152		109,587
	Telephone and communication			8,643		17,337		8,120		15,795
	Operating promotion			7,824		16,719		8,565		17,924
	Advertising			10,946		16,765		20,892		26,575
	Printing			1,650		3,405		1,851		3,666
	Traveling			1,976		4,447		2,083		4,323
	Supplies			1,326		2,445		1,112		2,371
	Insurance premium			641		1,366		710		1,573
	Reimbursement			4,476		4,898		4,187		8,205
	Maintenance			3,195		6,824		2,825		5,754
	Water, light and heating			2,330		6,222		2,398		6,161
	Vehicle maintenance			1,861		3,579		2,057		3,941
	Others			1,835		3,033		1,854		3,134
	Subtotal			251,616		483,585		245,883		472,859
Total				725,115		1,355,859		691,823		1,350,512

(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
Gain on transactions of foreign exchange		233,797			767,041		535,587			1,543,840
Gain on disposals of loans and receivables (*1)		—			—		14,861			198,000
Gain related to derivatives		—			—		11,290			11,354
Gain on fair value hedging derivatives		18,861			66,555		(7,094	)		11,860
Others (*2)		(1	)		989		(1,424	)		57,644
Total		252,657			834,585		553,220			1,822,698

(*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 that the Bank recognized for it 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		159,377		615,489		447,140			1,250,667
KDIC deposit insurance premium		78,691		154,997		76,258			148,374
Contribution to miscellaneous funds		73,219		145,534		71,311			143,050
Losses (gains) related to derivatives		15,595		62,336		(9,391	)		11,811
Losses on fair value hedged items		—		—		15,820			15,846
Others (*)		27,861		45,982		21,072			36,083
Total		354,743		1,024,338		622,210			1,605,831

(*) For the six months ended June 30, 2018 and 2017, ‘other expense’ includes losses amounting to 1,412 million Won and 3,325 million Won, respectively, which are related to the Bank’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 of intangible asset amortization expense, respectively.

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
Impairment loss		—		—		(18,563	)		(37,547	)

(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 income		32,622			61,339			37,044			70,414
Other non-operating expenses		(19,165	)		(36,235	)		(14,880	)		(33,743	)
Total		13,457			25,104			22,164			36,671

(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		3,698		7,336		3,595		7,305
Dividends from investments in subsidiaries and associates		11,066		23,704		10,308		18,264
Gains on disposal of investments in subsidiaries and associates		—		—		1,916		8,227
Gains on disposal of premises and equipment, intangible assets and investment properties		12,835		13,866		1,459		1,609
Reversal of impairment loss of premises and equipment, intangible assets and investment properties		—		341		—		32
Others		5,023		16,092		19,766		34,977
Total		32,622		61,339		37,044		70,414

(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 of investment properties		927		1,857		893		1,788
Interest expenses of rent leasehold deposits		150		292		104		221
Loss on disposals of premises and equipment, intangible assets and other assets		96		102		180		437
Impairment loss on premises and equipment, intangible assets and other assets		2		2		40		44
Donation		7,540		20,812		8,411		12,585
Others		10,450		13,170		5,252		18,668
Total		19,165		36,235		14,880		33,743

42. INCOME TAX EXPENSE

(1) Details of income tax expense 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		196,844			259,170
Adjustments recognized in the current period in relation to the tax expense of prior periods		(1,210	)		(4,218	)
Subtotal		195,634			254,952
Deferred tax expense:
Deferred tax assets (liabilities) relating to the origination and reversal of temporary differences		188,716			25,418
Deferred tax charged directly to equity		2,456			12,668
Others(tax effect charged directly to equity due to the adoption of K-IFRS 1109)		56,522			—
Subtotal		247,694			38,086
Income tax expense		443,328			293,038

(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		1,648,143			1,297,464
Tax calculated at statutory tax rate (*)		452,777			313,524
Adjustments:
Effect of income that is exempt from taxation		(22,705	)		(25,037	)
Effect of expenses that are not deductible in determining taxable profit		5,372			5,463
Adjustments recognized in the current period in relation to the current tax of prior periods		(1,210	)		(4,218	)
Others		9,094			3,306
Subtotal		(9,449	)		(20,486	)
Income tax expense		443,328			293,038
Effective tax rate		26.9	%		22.6	%

(*) 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 in equity are as follows (Unit: Korean Won in millions):

	June 30, 2018		December 31, 2017
Net gain on valuation of financial assets at FVTOCI		30,397		—
Loss on valuation of AFS securities		—		(103,005	)
Foreign currency translation of foreign operations		6,296		10,125
Remeasurement of the net defined benefit liability		74,429		52,298
Total		111,122		(40,582	)

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		658,828			1,204,815			402,523			1,004,426
Dividends to hybrid securities		(37,748	)		(75,603	)		(41,557	)		(90,823	)
Net income attributable to common shareholders		621,080			1,129,212			360,966			913,603
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 (Unit: Korean Won)		923			1,678			536			1,358

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:
Guarantees for loans		141,193		157,299
Acceptances		200,693		229,705
Guarantees in acceptance of imported goods		106,675		108,238
Other confirmed guarantees		6,022,962		6,322,111
Subtotal		6,471,523		6,817,353
Unconfirmed guarantees:
Local letters of credit		365,302		383,117
Letters of credit		3,183,795		3,615,934
Other unconfirmed guarantees		913,711		485,123
Subtotal		4,462,808		4,484,174
Commercial paper purchase commitments and others		2,454,663		2,288,201
Total		13,388,994		13,589,728

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

	June 30, 2018		December 31, 2017
Loan commitments		66,910,304		50,214,855
Other commitments		2,079,288		1,902,703

(3) Litigation case

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

	June 30, 2018
	As plaintiff		As defendant
Number of cases (*)		49 cases		140 cases
Amount of litigation		398,722		254,236
Provisions for litigations		18,270

	December 31, 2017
	As plaintiff		As defendant
Number of cases (*)		65 cases		130 cases
Amount of litigation		403,832		242,858
Provisions for litigations		7,750

(*) 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 Bank provides settlement services for payments in Korean Won to facilitate trade transactions between Korea and Iran. In connection with these services, the Bank 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 Bank has violated US laws by participating in prohibited transactions with countries sanctioned by the United States. The Bank 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 Bank.

45. RELATED-PARTY TRANSACTIONS

Related parties of the Bank 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 for the year ended December 31, 2017, are as follows:

(1) Related parties

	Related parties
Subsidiaries	Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Card Co., Ltd., Woori Investment Bank Co., Ltd., Woori Credit Information Co., Ltd., Woori America Bank, PT Bank Woori Saudara Indonesia 1906 Tbk, Woori Global Markets Asia Limited, Woori Bank China Limited, AO Woori Bank, Banco Woori Bank do Brasil S.A., Korea BTL Infrastructure Fund, Woori Fund Service Co., Ltd., Woori Finance Cambodia PLC., Woori Finance Myanmar Co., Ltd., Wealth Development Bank, Woori Bank Vietnam Limited, WB Finance Co., Ltd., TUTU Finance-WCI Myanmar Co., Ltd., Woori Bank Principal and Interest Guaranteed Trust, Woori Bank Principal Guaranteed Trust, Kumho Trust First Co., Ltd. and 32 SPCs, Heungkuk Woori Tech Company Private Placement Investment Trust No. 1 and 6 beneficiary certificates
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 25 associates)

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

Related party		Title of account	June 30, 2018			December 31, 2017
Subsidiaries	Woori FIS Co., Ltd.	Other assets		115			114
		Deposits due to customers		18,507			27,216
		Other liabilities		17,215			18,365
	Woori Private Equity Asset Management Co., Ltd.	Deposits due to customers		1,500			2,410
		Other liabilities		1			1
	Woori Finance Research Institute Co., Ltd.	Deposits due to customers		3,746			2,718
		Other liabilities		13			517
	Woori Card Co., Ltd.	Other assets		29,785			20,209
		Deposits due to customers		66,778			65,326
		Other liabilities		14,852			14,457
		Derivative liabilities		935			1,232
	Woori Investment Bank Co., Ltd.	Cash and cash equivalents		100,000			—
		Loans		2,000			22,600
		Loss allowance		(5	)		(23	)
		Other assets		26,487			—
		Deposits due to customers		12,461			7,755
		Other liabilities		28,344			2,391
	Woori Credit Information Co., Ltd.	Other assets		—			2
		Deposits due to customers		16,024			15,585
		Other liabilities		10,689			10,739
	Woori America Bank	Cash and cash equivalents		3,755			3,658
	PT Bank Woori Saudara Indonesia 1906 Tbk	Cash and cash equivalents		15,977			5,180
		Loans		257,991			160,710
		Loss allowance		(581	)		(166	)
		Deposits due to customers		12			72
	Woori Global Markets Asia Limited	Loans		121,851			172,184
		Loss allowance		(122	)		(70	)
		Deposits due to customers		3,071			6,057
		Other liabilities		—			23
	Woori Bank China Limited	Cash and cash equivalents		17,706			23,602
		Loans		381,378			246,422
		Loss allowance		(791	)		(230	)
		Other assets		4,834			108,650
		Deposits due to customers		48,084			73,264
		Other liabilities		2,209			107,791
	AO Woori Bank	Cash and cash equivalents		15,057			16,222
		Loans		47,697			53,426
		Loss allowance		(108	)		(55	)
		Other assets		77			44
	Banco Woori Bank do Brasil S.A.	Loans		1,683			1,607
		Loss allowance		(1	)		(1	)
	Korea BTL Infrastructure Fund	Other assets		9			9
	Woori Fund Service Co., Ltd.	Deposits due to customers		7,577			6,458
		Other liabilities		900			829
	Woori Finance Cambodia PLC.	Loans		51,598			32,142
		Loss allowance		(52	)		(13	)
		Other liabilities		10			2
	Woori Finance Myanmar Co., Ltd.	Loans		4,487			4,286
		Loss allowance		(4	)		(2	)

Related party		Title of account	June 30, 2018			December 31, 2017
Subsidiaries	Woori Bank Vietnam Limited	Loans		18,228			17,410
		Loss allowance		(471	)		(143	)
		Other assets		155,564			111,705
	Woori Bank Principal and Interest Guaranteed Trust and Principal Guaranteed Trust	Other assets		6,180			1,510
		Other liabilities		138,203			91,762
	Structured entities	Loans		2,025			2,102
		Loss allowance		(3	)		(302	)
		Other assets		167			40
		Derivative assets		4,123			725
		Deposits due to customers		13,231			11,853
		Other liabilities		1,580			1,629
		Derivative liabilities		1,332			2,740
	Beneficiary certificates	Other assets		1			2
Associates	Kumho Tire Co., Inc.	Loans		257,517			170,553
		Loss allowance		(62,634	)		(156,621	)
		Deposits due to customers		482			666
		Other liabilities		1			1
	Woori Service Networks Co., Ltd.	Deposits due to customers		1,732			1,311
		Other liabilities		321			325
	Korea Credit Bureau Co., Ltd.	Deposits due to customers		1,063			5,586
		Other liabilities		6			54
	Korea Finance Security Co., Ltd.	Deposits due to customers		3,078			2,854
		Other liabilities		1			7
	Chin Hung International Inc.	Deposits due to customers		61,551			46,220
		Other liabilities		2,884			1,656
	Poonglim Industrial Co., Ltd. (*1)	Deposits due to customers		—			4
	STX Engine Co., Ltd. (*2)	Loans		—			106,044
		Loss allowance		—			(88,603	)
		Deposits due to customers		—			18,092
		Other liabilities		—			29
	STX Corporation	Loans		73,451			47,664
		Loss allowance		(49,667	)		(31,164	)
		Deposits due to customers		2,130			77,555
		Other liabilities		—			27
	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 Bank did not have significant influence over the entity due to the fact that the entity was going through workout process under receivership, and thus the entity was excluded from the investment in associates.

(*2) The entity was sold after it was transferred to assets held for sale during 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 end of December 2017.

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

			For the six months ended June 30
Related party		Title of account	2018			2017
Corporation that has significant influence over the Bank	KDIC(*1)	Interest expenses		—			15,331
Subsidiaries	Woori FIS Co., Ltd.	Fees income		265			257
		Other income		3,761			3,565
		Other expenses		114,828			103,904
	Woori Private Equity Asset Management Co., Ltd.	Fees income		11			7
		Interest expenses		4			3
	Woori Finance Research Institute Co., Ltd.	Fees income		5			5
		Other income		—			77
		Interest expenses		23			18
		Fees expenses		2,750			2,800
	Woori Card Co., Ltd.	Fees income		72,529			72,880
		Gains related to derivatives		297			—
		Other income		741			428
		Interest expenses		339			25
		Fees expenses		76			8
		Losses related to derivatives		4			116
	Woori Investment Bank Co., Ltd.	Fees income		337			306
		Interest income		785			692
		Other income		247			3,326
		Interest expenses		10			12
		Other expenses		—			6,889
		Reversal of provision for credit loss		(18	)		—
	Woori Private Equity Fund(*2)	Fees income		—			1
		Interest expenses		—			1
	Woori Credit Information Co., Ltd.	Fees income		33			29
		Dividends income		—			504
		Other income		200			196
		Interest expenses		106			93
		Fees expenses		6,010			5,365
	PT Bank Woori Saudara Indonesia 1906 Tbk	Interest income		2,504			587
		Dividends income		6,127			3,300
		Impairment losses due to credit loss (reversal of provision for credit loss)		415			(66	)
	Woori Global Markets Asia Limited	Interest income		2,611			1,211
		Fees income		10			8
		Interest expenses		—			4
		Impairment losses due to credit loss		52			41
	Woori Bank China Limited	Interest income		3,707			2,051
		Interest expenses		361			330
		Impairment losses due to credit loss (reversal of provision for credit loss)		561			(190	)
	AO Woori Bank	Interest income		467			240
		Impairment losses due to credit loss		53			1

			For the six months ended June 30
Related party		Title of account	2018			2017
Subsidiaries	Banco Woori Bank do Brasil S. A	Interest income		17			14
		Reversal of provision for credit loss		—			(3	)
	Korea BTL Infrastructure Fund	Dividends income		16,927			14,249
		Fees income		38			38
	Woori Fund Service Co., Ltd.	Fees income		11			9
		Other income		83			80
		Interest expenses		54			46
	Woori Finance Cambodia PLC.	Interest income		861			331
		Impairment losses due to credit loss (reversal of provision for credit loss)		39			(2	)
	Woori Finance Myanmar Co., Ltd	Interest income		79			54
		Impairment losses due to credit loss		2			2
	Woori Bank Vietnam Limited	Interest income		434			424
		Impairment losses due to credit loss		328			217
	Woori Bank Principal and Interest Guaranteed Trust and Principal Guaranteed Trust	Other income		4,670			3,469
		Interest expenses		690			363
		Other expenses		16			16
	Structured entities	Interest income		—			7
		Fees income		4,957			3,146
		Gains related to derivatives		4,458			—
		Interest expenses		5			5
		Reversal of provision for credit loss		(299	)		(1,079	)
Associates	Kumho Tire Co., Inc.	Interest income		1,098			1,501
		Fees income		—			6
		Impairment losses due to credit loss (reversal of provision for credit loss)		(93,987	)		1,103
	Woori Service Networks Co., Ltd.	Dividend income		—			8
		Other income		15			15
		Interest expenses		7			13
	Korea Credit Bureau Co., Ltd.	Dividend income		113			149
		Interest expenses		21			38
	Korea Finance Security Co., Ltd.	Dividends income		54			54
		Interest expenses		4			5
	Chin Hung International Inc.	Interest income		—			53
		Fees income		—			1
		Interest expenses		21			13
		Reversal of provision for credit loss		—			(4,011	)
	STX Engine Co., Ltd.(*3)	Interest income		333			672
		Fees income		—			28
		Interest expenses		86			72
		Reversal of provision for credit loss		(88,603	)		(1,839	)

			For the six months ended June 30
Related party		Title of account	2018			2017
Associates	Samho International Co., Ltd.(*4)	Interest income		—			364
		Fees income		—			6
		Interest expenses		—			214
		Reversal of provision for credit loss		—			(38	)
	STX Corporation	Interest income		—			219
		Fees income		—			58
		Interest expenses		2			4
		Impairment losses due to credit loss (reversal of provision for credit loss)		18,503			(59,532	)
	Well to Sea No. 3 Private	Interest income		1,288			—
	Equity Fund (*5)	Interest expenses		4			—
		Impairment losses due to credit loss		46			—
	Others (*6)	Other income		6			—
		Interest expenses		22			5
		Reversal of provision for credit loss		(236	)		(10	)

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

(*2) The entity is not in scope for the associates due to liquidation for 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.

(*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, the entity was included in the investment in associates for the year ended December 31, 2017.

(*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)
Subsidiaries	PT Bank Woori Saudara Indonesia 1906 Tbk		160,710		145,821		53,570		5,030			257,991
	Woori Global Markets Asia Limited		172,184		116,242		166,827		252			121,851
	Woori Bank China Limited		246,422		347,727		214,280		1,509			381,378
	AO Woori Bank		53,426		47,697		53,426		—			47,697
	Banco Woori Bank do Brasil S.A.		1,607		1,458		1,607		—			1,458
	Woori Finance Cambodia PLC.		32,142		17,947		—		1,509			51,598
	Woori Finance Myanmar Co., Ltd		4,286		—		—		201			4,487
	Woori Bank Vietnam Limited		17,410		—		—		817			18,227
	Woori Investment Bank Co., Ltd.		22,600		—		20,600		—			2,000
	Structured entities		2,102		263		340		—			2,025
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)
Subsidiaries	PT Bank Woori Saudara Indonesia 1906 Tbk		157,105		22,792		60,425		(5,512	)		113,960
	Woori Global Markets Asia Limited		146,724		104,686		91,750		(3,144	)		156,516
	Woori Bank China Limited		247,743		92,877		235,658		(689	)		104,273
	AO Woori Bank		43,861		40,872		40,058		109			44,784
	Banco Woori Bank do Brasil S.A.		1,813		—		—		(103	)		1,710
	Woori Finance Cambodia PLC.		24,170		456		—		(1,378	)		23,248
	Woori Finance Myanmar Co., Ltd		2,417		2,279		—		(138	)		4,558
	Woori Bank Vietnam Limited		—		24,843		—		—			24,843
	Woori Investment Bank Co., Ltd.		—		27,600		—		—			27,600
	Structured entities		13,627		105		267		—			13,465
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 during 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):

	Warranty	June 30, 2018		December 31, 2017
Woori Card Co., Ltd.	Loan commitment		500,000		500,000
Woori Investment Bank Co., Ltd.	Loan commitment		50,000		50,000
Woori America Bank	Confirmed guarantees in foreign currencies		795		1,388
PT Bank Woori Saudara Indonesia 1906 Tbk	Confirmed guarantees in foreign currencies and others		135,913		151,385
Woori Bank China Limited	Confirmed guarantees in foreign currencies and others		56,025		69,940
AO Woori Bank	Confirmed guarantees in foreign currencies		29,011		34,683
Banco Woori Bank do Brasil S.A.	Confirmed guarantees in foreign currencies and others		13,178		22,987
Korea BTL Infrastructure Fund	Securities purchase contract		303,578		311,078
Woori Finance Cambodia PLC.	Loan commitment		38,138		16,071
Woori Bank Vietnam Limited	Confirmed guarantees in foreign currencies and others		77,521		26,285
Structured entities	Loan commitment in local currency		1,155,160		830,100
	Loan commitment		1,271		810
	Securities purchase contract		6,174		—
Kumho Tire Co., Inc.	Import credit in foreign currencies and others		13,830		4,181
Chin Hung International Inc.	Loan commitment		31,749		31,749
STX Engine Co., Ltd. (*)	Import credit in foreign currencies and others		—		68,858
STX Corporation	Import credit in foreign currencies and others		14,914		17,557
Well to Sea No. 3 Private Equity Fund	Loan commitment		225,000		236,190

(*) 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 guarantees provided to the related parties, the Bank recognized provisions for guarantees amounting to 15,111 million Won and 74,205 million Won as of June 30, 2018 and December 31, 2017, respectively.

The amount of guarantees and unused commitments provided by the related parties to the Bank as of June 30, 2018 and December 31, 2017 are as follows. (Unit: Korean Won in millions):

	Warranty	June 30, 2018		December 31, 2017
Woori Card Co., Ltd.	Loan commitment in local currency		181,632		178,893

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

	Warranty	June 30, 2018		December 31, 2017
Woori Card Co., Ltd.	Unsettled commitment		100,000		100,000
Structured entities	Unsettled commitment		1,075,000		782,914

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

	For the six months ended June 30
	2018		2017
Salaries		6,023		6,524
Severance and retirement benefits		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 Bank has not recognized any allowance nor provision.

(9) The Bank and Woori Card Co., Ltd. have joint obligation on the liability of the Bank that arose prior to the spin-off of Woori Card Co., Ltd.

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
					For the three months ended June 30		For the six months ended June 30		For the three months ended June 30		For the 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 receivable		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 values 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 must pay by the principal 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. ESTABLISHMENT OF A FINANCIAL HODING COMPANY AND PLAN OF STOCK TRANSFER

The Bank’s board of directors held a meeting on June 19, 2018, approving a 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 Bank is currently undertaking processes to obtain approval from the Financial Services Committee.

The six companies that are subject to the share transfer plan include a 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 Bank obtains approval from the Financial Services Committee, the Bank 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 Bank 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.