6-K 1 d494866d6k.htm FORM 6-K Form 6-K
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2017

 

 

Commission File Number: 000-53445

 

 

KB Financial Group Inc.

(Translation of registrant’s name into English)

84, Namdaemoon-ro, Jung-gu, Seoul 04534, Korea

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 


Table of Contents

Index

 

1. Summary of the 2017 Third Quarter Business Report

  

2. Exhibit 99.1 KB Financial Group Review Report for the Third Quarter of 2017 (Consolidated)

  

3. Exhibit 99.2 KB Financial Group Review Report for the Third Quarter of 2017 (Separate)

  

 

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Table of Contents

TABLE OF CONTENTS

 

1.    Introduction to the Company      5  
1.1.     Business Purpose      5  
1.2.     History      5  
1.3.     Overview of the Business Group      8  
1.4.     Capital Structure       9  
1.5.     Dividends       9  
2.     Business       10  
2.1.     Results of Operations       10  
2.2.     Sources and Uses of Funds       11  
2.3.     Other Information to Consider in Making an Investment Decision       13  
3.     Financial Information       16  
3.1.     Consolidated Condensed Financial Information       16  
3.2.     Separate Condensed Financial Information       19  
3.3.     Other Selected Financial Data       21  
3.4.     Other Financial Information       24  
4.     Independent Public Accountants      25  
4.1.    Audit/ Review Services      25  
4.2.    Public Company Accounting Oversight Board (“PCAOB”) Audit Services      25  
5.     Corporate Governance and Affiliated Companies       26  
5.1.     Board of Directors & Committees under the Board       26  
5.2.     Audit Committee       26  
5.3.     Compensation to Directors       26  
5.4.     Affiliated Companies       28  
6.     Directors, Senior Management and Employees       29  
6.1.     Executive Directors       29  
6.2.     Non-standing Directors       29  
6.3.     Non-executive Directors       29  
6.4.     Senior Management      29  
6.5.     Employees      31  
7.     Major Shareholders and Related Party Transactions       32  
7.1.     Major Shareholders       32  
7.2.     Changes in the Largest Shareholder       32  
7.3.     Employee Stock Ownership Association       32  
7.4.     Investments in Certain Affiliated Companies       33  
7.5.     Related Party Transactions      34  

 

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Summary of 2017 Third Quarter Business Report

On November 14, 2017, KB Financial Group Inc. (“KB Financial Group”) filed its business report for the third quarter of 2017 (the “Business Report”) with the Financial Services Commission of Korea and the Korea Exchange. This is a summary of the Business Report translated into English.

Except where indicated otherwise, financial information contained in this summary has been prepared in accordance with the Korean equivalent of International Financial Reporting Standards (“K-IFRS”), which differ in certain important respects from generally accepted accounting principles in the United States.

All references to “KB Financial Group,” “we,” “us” or the “Company” are to KB Financial Group and, unless the context requires otherwise, its subsidiaries. In addition, all references to “Won” or “KRW” in this document are to the currency of the Republic of Korea.

 

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Table of Contents
1. Introduction to the Company

 

1.1. Business Purpose

KB Financial Group is a financial holding company that was established in September 2008. Its main business purpose is to hold shares in companies that are engaged in financial or related services, as well as govern and manage such companies. Its consolidated subsidiaries are primarily engaged in the banking business, as well as the credit card business, the financial investment business, the insurance business and other related businesses.

 

1.2. History

 

    September 26, 2008

Obtained final approval from the Financial Services Commission to establish a financial holding company

 

    September 29, 2008

Establishment of the Company through a comprehensive stock transfer and listing on the New York Stock Exchange

 

    October 10, 2008

Listing on the Korea Exchange

 

    October 20, 2008

The largest shareholder of the Company changed from the Korean National Pension Service to ING Bank N.V.

 

    October 31, 2008

The largest shareholder of the Company changed from ING Bank N.V. to the Korean National Pension Service

 

    May 4, 2009

Added Kookmin Bank Cambodia PLC as a second-tier subsidiary

 

    June 22, 2009

Added KB Life Insurance Co., Ltd., formerly a second-tier subsidiary, as a first-tier subsidiary

 

    September 28, 2009

Added Burrill-KB Life Sciences Fund as a second-tier subsidiary

 

    December 1, 2009

Added KB-Glenwood Private Equity Fund No.1 as a second-tier subsidiary

 

    January 22, 2010

The largest shareholder of the Company changed from the Korean National Pension Service to ING Bank N.V.

 

    July 6, 2010

Added KBIC No.3 PEF as a second-tier subsidiary

 

    December 13, 2010

 

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Added KoFC KBIC Frontier Champ 2010-5 PEF as a second-tier subsidiary

 

    March 2, 2011

Added KB Kookmin Card Co., Ltd. as a first-tier subsidiary

 

    March 14, 2011

KB Futures Co., Ltd. was merged into KB Investment & Securities Co., Ltd.

 

    July 8, 2011

The largest shareholder of the Company changed from ING Bank N.V. to the Korean National Pension Service

 

    November 12, 2011

Closed KB Investment & Securities Hong Kong Ltd.

 

    January 13, 2012

Added KB Savings Bank Co., Ltd. as a first-tier subsidiary

 

    May 11, 2012

Added KoFC POSCO HANWHA KB Shared Growth No. 2. Private Equity Fund as a second-tier subsidiary

 

    June 8, 2012

Liquidated Burrill-KB Life Sciences Fund Ltd.

 

    July 2, 2012

Added KoFC Value-up Private Equity Fund as a second-tier subsidiary

 

    October 10, 2012

Added Kookmin Bank (China) Ltd. as a second-tier subsidiary

 

    June 20, 2013

Acquired the remaining shares of KB Life Insurance Co., Ltd., which increased the Company’s shareholding to 100%

 

    September 2, 2013

Added Yehansoul Savings Bank as a first-tier subsidiary

 

    January 13, 2014

Yehansoul Savings Bank was merged into KB Savings Bank Co., Ltd.

 

    March 20, 2014

Added KB Capital Co., Ltd. (“KB Capital”) as a first-tier subsidiary

 

    July 2, 2014

Added Korea GCC Global Cooperation Private Equity Fund as a second-tier subsidiary

 

    June 24, 2015

Added KB Insurance Co., Ltd. (“KB Insurance”) as a non-consolidated first-tier subsidiary

 

    November 23, 2015

Acquired additional shares of KB Insurance, which increased the Company’s shareholding from 19.47% to 33.29%

 

    May 31, 2016

Added Hyundai Securities Co., Ltd. (“Hyundai Securities”) as a non-consolidated first-tier subsidiary

 

    June 21, 2016

 

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Disposed of LIG Investment & Securities, Co., Ltd., a second-tier subsidiary

 

    June 28, 2016

Acquired treasury shares of Hyundai Securities, which increased the Company’s equity ownership in Hyundai Securities from 22.56% to 29.62%

 

    September 9, 2016

Liquidated NPS-KBIC No. 1 Private Equity Fund

 

    November 29, 2016

Established KB Golden Life Care Co., Ltd. as a second-tier subsidiary

 

    December 22, 2016

Established KB Private Equity Fund III as a second-tier subsidiary

 

    December 30, 2016

Purchased new shares of KB Insurance in a rights offering, which increased the Company’s shareholding in KB Insurance from 33.29% to 39.81%

 

    December 30, 2016

Merged KB Investment & Securities with and into Hyundai Securities, with Hyundai Securities as the surviving entity, then changed its name to KB Securities Co., Ltd. (“KB Securities”)

 

    February 8, 2017

Added KB KOLAO LEASING Co., Ltd. as a second-tier subsidiary

 

    March 8, 2017

Added KB Microfinance Myanmar Co., Ltd. as a second-tier subsidiary

 

    March 22, 2017

Liquidated KBIC Private Equity Fund No. 3, a second-tier subsidiary

 

    May 19, 2017

Conducted a tender offer, which increased the Company’s shareholding in KB Insurance from 39.81% to 94.30%

 

    May 19, 2017

Conducted a tender offer, which increased the Company’s shareholding in KB Capital from 52.02% to 79.70%

 

    July 7, 2017

Converted KB Insurance and KB Capital into wholly-owned subsidiaries of the Company through comprehensive stock swaps

 

    September 29, 2017

Added KB Asset Management Singapore Pte. Ltd. as a second-tier subsidiary

(Changed the status of KB Asset Management Singapore Pte. Ltd. from a second-tier subsidiary of KB Securities to a first-tier subsidiary of KB Asset Management Co., Ltd.)

 

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1.3. Overview of the Business Group

 

               (As of September 30, 2017)

Type

  

Name of Company

  

Controlling Company

  

Remarks

Holding Company    KB Financial Group    —      Listed
1st Tier Subsidiaries    Kookmin Bank    KB Financial Group    Not listed
   KB Securities Co., Ltd.    KB Financial Group    Not listed
   KB Insurance Co., Ltd.    KB Financial Group    Not listed
   KB Kookmin Card Co., Ltd.    KB Financial Group    Not listed
   KB Life Insurance Co., Ltd.    KB Financial Group    Not listed
   KB Asset Management Co., Ltd.    KB Financial Group    Not listed
   KB Capital Co., Ltd.    KB Financial Group    Not listed
   KB Savings Bank Co., Ltd.    KB Financial Group    Not listed
   KB Real Estate Trust Co., Ltd.    KB Financial Group    Not listed
   KB Investment Co., Ltd.    KB Financial Group    Not listed
   KB Credit Information Co., Ltd.    KB Financial Group    Not listed
   KB Data Systems Co., Ltd.    KB Financial Group    Not listed
2nd Tier Subsidiaries    Kookmin Bank International Ltd.    Kookmin Bank   

Not listed

(Overseas)

   Kookmin Bank Cambodia PLC    Kookmin Bank   

Not listed

(Overseas)

   Kookmin Bank (China) Ltd.    Kookmin Bank   

Not listed

(Overseas)

   KB Microfinance Myanmar Co., Ltd.    Kookmin Bank   

Not listed

(Overseas)

   Hyundai Savings Bank Co., Ltd.(1)    KB Securities    Not listed
   Hyundai Asset Management Co., Ltd.    KB Securities    Not listed
   KBFG Securities America Inc.    KB Securities   

Not listed

(Overseas)

   KB Securities Hong Kong Ltd.    KB Securities   

Not listed

(Overseas)

   Hyundai-Tongyang Agrifood Private Equity Fund    KB Securities    Not listed
   Keystone-Hyundai Securities No. 1 Private Equity Fund    KB Securities    Not listed
   KB-IGen Private Equity Fund No.1    KB Securities    Not listed
   KB Private Equity Fund III    KB Securities    Not listed
   KB Claims Survey & Adjusting Co., Ltd.    KB Insurance    Not listed
   KB Sonbo CNS    KB Insurance    Not listed
   Leading Insurance Services, Inc.    KB Insurance   

Not listed

(Overseas)

   LIG Insurance (China) Co., Ltd.    KB Insurance   

Not listed

(Overseas)

   PT. Kookmin Best Insurance Indonesia    KB Insurance   

Not listed

(Overseas)

   KB Golden Life Care Co., Ltd.    KB Insurance    Not listed
   KB Asset Management Singapore Pte. Ltd.    KB Asset Management   

Not listed

(Overseas)

   KB Kolao Leasing Co., Ltd.    KB Capital   

Not listed

(Overseas)

   KoFC KBIC Frontier Champ 2010-5 PEF    KB Investment    Not listed
   KoFC POSCO HANWHA KB Shared Growth No. 2. Private Equity Fund    KB Investment    Not listed
   KoFC Value-up Private Equity Fund    KB Investment    Not listed

 

(1) As of the filing date, excluded as a subsidiary pursuant to the sale of Hyundai Savings Bank Co., Ltd. by KB Securities on October 16, 2017.

 

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Table of Contents
1.4. Capital Structure

 

1.4.1. Common Shares

Capital Increase

Not included in quarterly business reports.

Number of Shares

 

(As of September 30, 2017)   

(Unit: shares)

 

 
     Type  
     Common Stock      Other Stock      Total  

Shares Authorized for Issuance

     1,000,000,000                  1,000,000,000  

Shares Issued (A)

     418,111,537                  418,111,537  

Treasury Stock (B)

     17,108,083                  17,108,083  

Shares Outstanding (A-B)

     401,003,454                  401,003,454  

 

1.4.2. Voting Rights

 

(As of September 30, 2017)

 

                    

Items

          Number of Shares      Notes  

Total number of issued shares

     Common shares        418,111,537        —    
     Preferred shares        —          —    

Shares without voting rights

     Common shares        17,108,083        Treasury shares  
     Preferred shares        —          —    

Shares for which voting rights cannot be exercised pursuant to the Articles of Incorporation

     Common shares        —          —    
     Preferred shares        —          —    

Shares for which voting rights are restricted under relevant laws and regulations

     Common shares        —          —    
     Preferred shares        —          —    

Shares with restored voting rights

     Common shares        —          —    
     Preferred shares        —          —    

Total shares for which voting rights may be exercised

     Common shares        401,003,454        —    
     Preferred shares        —          —    

 

1.5. Dividends

Not included in quarterly business reports.

 

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Table of Contents
2. Business

 

  2.1. Results of Operations

 

    

(Unit: in millions of Won)

 

 
     For the nine
months ended
September 30, 2017
    For the nine
months ended
September 30, 2016
    For the year ended
December 31, 2016
    For the year ended
December 31, 2015
 

Net interest income

     5,686,972       4,651,686       6,402,529       6,203,199  

Interest income

     8,378,734       7,412,465       10,021,882       10,375,823  

Interest expense

     (2,691,762     (2,760,779     (3,619,353     (4,172,624

Net fee and commission income

     1,522,176       1,108,040       1,584,892       1,534,983  

Fee and commission income

     2,930,452       2,256,596       3,150,877       2,971,095  

Fee and commission expense

     (1,408,276     (1,148,556     (1,565,985     (1,436,112

Net insurance income (expense)

     399,947       (88,408     (117,803     (105,614

Insurance income

     6,130,566       930,629       1,201,352       1,373,373  

Insurance expense

     (5,730,619     (1,019,037     (1,319,155     (1,478,987

Net gains (losses) on financial assets/liabilities at fair value through profit or loss

     426,339       117,890       (8,768     359,727  

Net other operating expenses

     (590,520     (149,107     (415,908     (610,346

General and administrative expenses

     (3,796,635     (3,117,994     (5,228,711     (4,523,584

Operating profit before provision for credit losses

     3,648,279       2,522,107       2,216,231       2,858,365  

Provision for credit losses

     (479,888     (507,727     (539,283     (1,037,231

Net operating profit

     3,168,391       2,014,380       1,676,948       1,821,134  

 

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Table of Contents
  2.2. Sources and Uses of Funds

 

  2.2.1. Sources of Funds

 

                                            

(Unit: in millions of Won, %)

 

 
         For the nine months ended
September 30, 2017
    For the year ended
December 31, 2016
    For the year ended
December 31, 2015
 
         Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
 

Won Currency

   Deposits     217,645,862       1.21       53.83       207,194,480       1.32       60.76       193,725,814       1.69       62.62  
   Certificate of deposit     2,710,394       1.52       0.67       3,386,647       1.65       0.99       3,645,078       1.92       1.18  
   Borrowings     9,123,423       1.41       2.26       6,803,292       1.54       2.00       5,709,025       1.88       1.85  
   Call money     2,337,572       1.24       0.58       1,414,780       1.35       0.41       2,009,387       1.66       0.65  
   Debentures     34,979,602       2.18       8.65       30,075,804       2.49       8.82       27,365,637       2.78       8.85  
   Other     13,280,478       1.40       3.28       7,700,215       1.45       2.26       4,763,806       2.03       1.53  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    280,077,331       1.35       69.27       256,575,218       1.47       75.24       237,218,747       1.83       76.68  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign Currency

   Deposits     9,876,281       0.80       2.44       8,713,640       0.53       2.56       6,183,499       0.52       2.00  
   Borrowings     6,148,107       1.11       1.52       5,644,047       0.78       1.66       6,121,121       0.46       1.98  
   Call money     1,261,624       1.34       0.31       1,161,517       0.72       0.34       1,007,103       0.28       0.33  
   Debentures     3,216,040       2.68       0.80       4,139,036       2.55       1.21       3,520,324       3.00       1.14  
   Other     318,492       0.53       0.08       222,098       0.94       0.06       163,462       1.31       0.05  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    20,820,544       1.21       5.15       19,880,338       1.04       5.83       16,995,509       1.01       5.50  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

   Total shareholders’
equity
    34,121,869                8.44       30,308,008                8.89       28,252,594                9.13  
   Allowances     794,999                0.20       748,594                0.22       787,604                0.25  
   Other     68,534,304                16.94       33,476,080                9.82       26,126,546                8.44  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    103,451,172                25.58       64,532,682                18.93       55,166,744                17.82  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    404,349,047                100.00       340,988,238                100.00       309,381,000                100.00  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note: Based on K-IFRS (on a consolidated basis)

 

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Table of Contents
  2.2.2. Uses of Funds

 

    

(Unit: in millions of Won, %)

 

 
         For the nine months ended
September 30, 2017
    For the year ended
December 31, 2016
    For the year ended
December 31, 2015
 
         Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
 

Won Currency

  

Due from banks

    6,351,502       1.44       1.57       6,075,873       1.52       1.78       7,197,739       1.83       2.33  
  

Securities

    78,333,891       1.85       19.37       55,999,995       2.12       16.42       45,372,914       3.22       14.67  
  

Loans

    243,740,896       3.28       60.28       225,153,667       3.15       66.03       207,499,414       3.48       67.07  
  

Guarantee payments under payment guarantee

    18,420       0.71                28,005       1.16       0.01       32,644       1.19       0.01  
  

Call loan

    271,568       1.27       0.07       399,843       1.43       0.12       314,179       1.79       0.10  
  

Private placement corporate bonds

    1,790,687       4.25       0.44       1,081,692       3.99       0.32       830,676       3.81       0.27  
  

Credit cards

    14,628,610       8.38       3.62       12,823,200       8.66       3.76       11,904,279       9.03       3.85  
  

Other

    4,040,061       4.01       1.00       5,061,229       4.96       1.48       7,154,906       5.15       2.31  
  

Allowance

    (2,146,982              (0.53     (2,182,313              (0.64     (2,316,563              (0.75
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

       347,028,653       3.17       85.82       304,441,191       3.21       89.28       277,990,188       3.70       89.86  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign Currency

  

Due from banks

    3,008,361       0.99       0.74       2,553,722       0.75       0.75       1,782,048       1.12       0.58  
  

Securities

    9,120,531       3.28       2.26       3,792,545       2.61       1.11       1,285,058       2.06       0.42  
  

Loans

    7,134,323       2.21       1.76       8,125,102       1.76       2.38       9,009,829       1.52       2.91  
  

Call loan

    2,567,448       1.40       0.63       2,220,839       0.65       0.65       1,435,461       0.33       0.46  
  

Bills bought

    2,968,240       1.57       0.73       2,768,692       1.30       0.81       2,728,557       1.10       0.88  
  

Allowance

    (167,537              (0.04     (328,130              (0.10     (234,422              (0.08
  

Other

    72,307                0.02       24,789                0.02       3,143                    
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    24,703,673       2.33       6.10       19,157,559       1.64       5.62       16,009,674       1.37       5.17  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

  

Cash

    1,690,273                0.42       1,724,701                0.51       1,715,237                0.55  
  

Fixed assets held for business

    6,016,867                1.49       3,464,031                1.02       3,230,133                1.04  
  

Other

    24,909,581                6.17       12,200,756                3.57       10,435,768                3.38  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    32,616,721                8.08       17,389,488                5.10       15,381,138                4.97  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    404,349,047                100.00       340,988,238                100.00       309,381,000                100.00  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note: Based on K-IFRS (on a consolidated basis)

 

12


Table of Contents
  2.3. Other Information to Consider in Making an Investment Decision

 

  2.3.1. Capital Adequacy

 

KB Financial Group – Capital Adequacy Ratio      (Unit: in billions of Won, %)  
     As of September 30, 2017(1)      As of June 30, 2017(1)      As of December 31, 2016      As of December 31, 2015  

Total capital (A)

     32,883        32,096        31,103        29,140  

Risk-weighted
assets (B)

     213,918        209,060        203,649        188,213  

BIS ratio (A/B)

     15.37        15.35        15.27        15.48  

*Note: Calculated in accordance with Basel III

(1) Preliminary figures

 

Kookmin Bank – Capital Adequacy Ratio      (Unit: in billions of Won, %)  
     As of September 30, 2017(1)      As of December 31, 2016      As of December 31, 2015  

Total capital (A)

     26,282        24,579        23,686  

Risk-weighted assets (B)

     162,455        150,649        147,973  

BIS ratio (A/B)

     16.18        16.32        16.01  

*Note: Calculated in accordance with Basel III

(1) Preliminary figures

 

KB Securities – Net Capital Ratio    (Unit: in billions of Won, %)  
     As of September 30, 2017(1)     As of June 30, 2017     As of December 31, 2016  

Net Operating Capital (A)

     3,021       2,962       2,844  

Total amount at risk (B)

     946       952       866  

Maintenance equity margin (C)

     134       134       134  

Net capital ratio (A-B)/(C)

     1,544.09     1,495.80     1,471.73

Capital surplus (A-B)

     2,075       2,010       1,978  

*Note: Amended calculation standards apply starting in January 2016

(1) Preliminary figures

 

KB Insurance – Risk-based Capital
(“RBC”) Ratio
         (Unit: in billions of Won, %)  
     As of September 30, 2017(1)(2)     As of December 31, 2016(1)     As of December 31, 2015  

Available capital (A)

     3,139       2,774       2,379  

Required capital (B)

     1,634       1,644       1,398  

RBC ratio(3) (A/B)

     192.1     168.7     170.2

 

(1) Figures as of September 30, 2017 and December 31, 2016 are on a consolidated basis
(2) Preliminary figures
(3) RBC ratio = available capital / required capital x 100

 

13


Table of Contents
  2.3.2. Credit Ratings

 

               (As of September 30, 2017)

Date of
Rating

  

Type

  

Credit
Rating

  

Rating Company

(Rating Range)

6/5/2015    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

9/16/2015    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

11/18/2015    Commercial Paper    A1   

Korea Ratings (A1 ~ D) / KIS Ratings (A1 ~ D) /

NICE Investors Service (A1 ~ D)

11/25/2015    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

5/11/2016    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

6/24/2016    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

6/30/2016    Commercial Paper    A1   

Korea Ratings (A1 ~ D) / KIS Ratings (A1 ~ D) /

NICE Investors Service (A1 ~ D)

7/22/2016    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

8/24/2016    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

11/25/2016    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

1/24/2017    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

2/24/2017    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

4/5/2017    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

5/23/2017    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

6/23/2017    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

6/23/2017    Commercial Paper    A1   

Korea Ratings (A1 ~ D) / KIS Ratings (A1 ~ D) /

NICE Investors Service (A1 ~ D)

8/28/2017    Debentures    AAA   

Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) /

NICE Investors Service (AAA ~ D)

 

14


Table of Contents
  2.3.3. Early Retirement Program

To enhance productivity by improving its labor structure, Kookmin Bank implemented a voluntary early retirement program following negotiations with its labor union.

 

Date of retirement

 

Number of retired persons

January 23, 2017

  2,795

 

  2.3.4. Material Events Following the End of the Reporting Period

Maritime Securities Incorporation in Vietnam was added as a first-tier subsidiary of KB Securities, one of our consolidated subsidiaries, as of November 9, 2017.

Hyundai Savings Bank Co., Ltd. was sold and excluded as a subsidiary of KB Securities as of October 16, 2017. Its largest shareholder was changed from KB Securities to Eugene SB Holdings.

 

15


Table of Contents
3. Financial Information

 

3.1. Consolidated Condensed Financial Information

 

  3.1.1. Consolidated Statements of Financial Position

 

     (Unit: in millions of Won)  
     As of September 30, 2017      As of December 31, 2016      As of December 31, 2015  

Cash and due from financial institutions

     22,974,483        17,884,863        16,316,066  

Financial assets at fair value through profit or loss

     31,585,815        27,858,364        11,174,064  

Derivative financial assets

     2,171,087        3,381,935        2,278,112  

Loans

     285,947,141        265,486,134        245,005,370  

Financial investments

     63,417,761        45,147,797        39,136,759  

Investments in associates

     334,231        1,770,673        1,737,840  

Property and equipment

     4,108,486        3,627,268        3,287,383  

Investment property

     946,349        755,011        211,815  

Intangible assets

     2,973,323        652,316        466,828  

Current income tax assets

     17,880        65,738        18,525  

Deferred income tax assets

     4,619        133,624        8,373  

Assets held for sale

     173,860        52,148        48,628  

Assets of disposal group classified as held for sale

     2,109,121                      

Other assets

     16,044,319        8,857,785        9,375,704  
  

 

 

    

 

 

    

 

 

 

Total assets

     432,808,475        375,673,656        329,065,467  
  

 

 

    

 

 

    

 

 

 

Financial liabilities at fair value through profit or loss

     13,497,934        12,122,836        2,974,604  

Derivative financial liabilities

     2,276,508        3,807,128        2,325,756  

Deposits

     251,404,194        239,729,695        224,268,185  

Debts

     29,606,915        26,251,486        16,240,743  

Debentures

     42,702,671        34,992,057        32,600,603  

Provisions

     587,269        537,717        607,860  

Net defined benefit liabilities

     368,839        96,299        73,197  

Current income tax liabilities

     276,345        441,812        30,920  

Deferred income tax liabilities

     572,018        103,482        179,243  

Insurance liabilities

     31,374,092        7,290,844        6,924,699  

Liabilities of disposal group classified as held for sale

     1,831,674                      

Other liabilities

     24,582,814        19,038,897        13,936,935  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     399,081,273        344,412,253        300,162,745  
  

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders of the parent company

     33,720,742        30,998,044        28,680,621  

Share capital

     2,090,558        2,090,558        1,931,758  

Capital surplus

     17,121,867        16,994,902        15,854,510  

Accumulated other comprehensive income

     653,204        405,329        430,244  

 

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Table of Contents

Accumulated other comprehensive income related to disposal group held for sale

     (1,124                  

Retained earnings

     14,492,438       12,229,228       10,464,109  

Treasury shares

     (636,201     (721,973         

Non-controlling interests

     6,460       263,359       222,101  
  

 

 

   

 

 

   

 

 

 

Total equity

     33,727,202       31,261,403       28,902,722  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

     432,808,475       375,673,656       329,065,467  
  

 

 

   

 

 

   

 

 

 

 

17


Table of Contents
  3.1.2. Consolidated Statements of Comprehensive Income

 

     (Unit: in millions of Won, except per share amounts)  
     For the nine months
ended September 30, 2017
    For the nine months
ended September 30, 2016
    For the year ended
December 31, 2016
    For the year ended
December 31, 2015
 

Net interest income

     5,686,972       4,651,686       6,402,529       6,203,199  

Net fee and commission income

     1,522,176       1,108,040       1,584,892       1,534,983  

Net insurance income (expense)

     399,947       (88,408     (117,803     (105,614

Net gains (losses) on financial assets/liabilities at fair value through profit or loss

     426,339       117,890       (8,768     359,727  

Net other operating expenses

     (590,520     (149,107     (415,908     (610,346

General and administrative expenses

     (3,796,635     (3,117,994     (5,228,711     (4,523,584

Operating profit before provision for credit losses

     3,648,279       2,522,107       2,216,231       2,858,365  

Provision for credit losses

     (479,888     (507,727     (539,283     (1,037,231

Net operating income

     3,168,391       2,014,380       1,676,948       1,821,134  

Net non-operating income

     243,401       217,637       951,707       343,561  

Profit before income tax

     3,411,792       2,232,017       2,628,655       2,164,695  

Income tax expense

     (622,052     (504,983     (438,475     (437,389

Profit for the period

     2,789,740       1,727,034       2,190,180       1,727,306  

Other comprehensive income (loss) for the period, net of tax

     253,060       166,455       (24,937     (31,262

Total comprehensive income for the period

     3,042,800       1,893,489       2,165,243       1,696,044  

Profit attributable to:

     2,789,740       1,727,034       2,190,180       1,727,306  

Shareholders of the parent company

     2,757,686       1,689,813       2,143,744       1,698,318  

Non-controlling interests

     32,054       37,221       46,436       28,988  

Total comprehensive income for the period attributable to:

     3,042,800       1,893,489       2,165,243       1,696,044  

Shareholders of the parent company

     3,007,929       1,856,108       2,118,829       1,666,883  

Non-controlling interests

     34,871       37,381       46,414       29,161  

Earnings per share

        

Basic earnings per share (Won)

     6,927       4,445       5,588       4,396  

Diluted earnings per share (Won)

     6,890       4,425       5,559       4,376  

 

18


Table of Contents
3.2. Separate Condensed Financial Information

 

  3.2.1. Separate Statements of Financial Position

 

 

     (Unit: in millions of Won)  
     As of September 30, 2017      As of December 31, 2016      As of December 31, 2015  

Cash and due from financial institutions

     286,683        115,065        324,947  

Financial assets at fair value through profit or loss

     290,950        246,656        99,118  

Loans

     10,000        29,415            

Investments in subsidiaries

     24,062,116        21,392,745        18,557,566  

Investments in associates

               1,053,690        883,065  

Property and equipment

     384        469        578  

Intangible assets

     8,140        8,092        8,428  

Deferred income tax assets

     6,568        4,604        4,515  

Other assets

     340,034        519,223        137,954  
  

 

 

    

 

 

    

 

 

 

Total assets

     25,004,875        23,369,959        20,016,171  
  

 

 

    

 

 

    

 

 

 

Debts

     200,000        350,000            

Debentures

     5,161,946        3,474,200        1,647,117  

Net defined benefit liabilities

     1,317        (193      591  

Current income tax liabilities

     188,487        419,607        17,178  

Other liabilities

     158,641        104,528        123,281  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     5,710,391        4,348,142        1,788,167  
  

 

 

    

 

 

    

 

 

 

Share capital

     2,090,558        2,090,558        1,931,758  

Capital surplus

     14,742,814        14,656,168        13,513,809  

Accumulated other comprehensive loss

     (4,826      (4,742      (4,979

Retained earnings

     3,102,139        2,998,923        2,787,416  

Treasury Shares

     (636,201      (719,090          
  

 

 

    

 

 

    

 

 

 

Total equity

     19,294,484        19,021,817        18,228,004  
  

 

 

    

 

 

    

 

 

 

Total liabilities and equity

     25,004,875        23,369,959        20,016,171  
  

 

 

    

 

 

    

 

 

 

 

19


Table of Contents
  3.2.2. Separate Statements of Comprehensive Income

 

 

     (Unit: in millions of Won, except per share amounts)  
     For the nine months
ended September 30, 2017
    For the nine months
ended September 30, 2016
    For the year ended
December 31, 2016
    For the year ended
December 31, 2015
 

Net interest expense

     (69,664     (38,282     (55,924     (25,744

Net fee and commission expense

     (6,036     (4,851     (7,214     (8,228

Net gains on financial assets at fair value through profit or loss

     3,777       7,149       5,272       1,658  

Net other operating income

     709,544       694,908       694,908       315,527  

General and administrative expenses

     (38,467     (31,810     (46,734     (39,916

Operating profit before provision for credit losses

     599,154       627,114       590,308       243,297  

Provision for credit losses

                                    

Operating profit

     599,154       627,114       590,308       243,297  

Net non-operating expense

     94       (234     (340     (62

Profit before income tax

     599,248       626,880       589,968       243,235  

Income tax benefit (expense)

     1,937       (1,232     164       190  

Profit for the period

     601,185       625,648       590,132       243,425  

Other comprehensive income (loss) for the period, net of tax

     (84     (79     237       (741

Total comprehensive income for the period

     601,101       625,569       590,369       242,684  

Earnings per share

        

Basic earnings per share (Won)

     1,510       1,646       1,538       630  

Diluted earnings per share (Won)

     1,502       1,638       1,530       627  

 

20


Table of Contents
3.3. Other Selected Financial Data

 

  3.3.1. Won-denominated Liquidity Ratio

 

     (Unit: in millions of Won, %)  

Category

   As of September 30, 2017      As of December 31, 2016      As of December 31, 2015  

Current assets in Won (A)

     288,160        59,429        325,124  

Current liabilities in Won (B)

     203,210        5,554        4,565  

Liquidity ratio (A/B)

     141.80        1,070.02        7,122.10  

Notes:

 

  Based on K-IFRS (on a separate basis)

 

  Calculated based on Won-denominated assets and liabilities due within one month

 

  3.3.2. Selected ratios

 

     (Unit: %)  

Category

   For the nine months ended
September 30, 2017
     For the year ended
December 31, 2016
     For the year ended
December 31, 2015
 

Net income as a percentage of average total assets (ROA)

     0.92        0.63        0.54  

Net income as a percentage of average shareholders’ equity (ROE)

     11.44        7.26        6.06  

Note: Based on K-IFRS (on a consolidated basis)

 

21


Table of Contents
  3.3.3. 20 Largest Exposures of Kookmin Bank by Borrower

 

(As of September 30, 2017)    (Unit: in billions of Won)  

Company

   Credit extended  

Samsung Electronics Co., Ltd.

     1,587  

Kia Motors Corporation

     719  

Hyundai Motor Company

     614  

Bank of Communications Co., Ltd.

     613  

Hyundai Capital Services, Inc.

     611  

LG Electronics Inc.

     606  

S-Oil Corporation

     529  

LG Display Co., Ltd.

     527  

Hyundai Steel Company

     522  

Korea Securities Finance Corp.

     511  

GS Caltex Corporation

     490  

Shinhan Financial Group Co., Ltd.

     459  

Airport Railroad Co., Ltd.

     455  

Agricultural Bank of China Co., Ltd.

     441  

Samsung Display Co., Ltd.

     424  

SK Energy Co., Ltd.

     418  

Shinsegae Inc.

     379  

Hanwha Corporation

     373  

Hankook Tire Co., Ltd.

     371  

China Construction Bank Corporation

     355  
  

 

 

 

Total

     11,004  
  

 

 

 

 

22


Table of Contents
  3.3.4. 10 Largest Exposures of Kookmin Bank by Chaebol Group

 

(As of September 30, 2017)    (Unit: in billions of Won)  

Group

   Credit extended  

Hyundai Motor

     4,330  

Samsung

     3,335  

SK

     2,194  

LG

     1,712  

Lotte

     1,616  

Hanwha

     1,334  

GS

     992  

POSCO

     951  

CJ

     800  

LS

     792  
  

 

 

 

Total

     18,056  
  

 

 

 

 

  3.3.5. Kookmin Bank’s Loan Concentration by Industry

 

(As of September 30, 2017)    (Unit: in billions of Won, %)  

Industry

   Total Credit      Percentage of
Total Credit
 

Manufacturing

     40,784        34.25  

Real estate

     24,632        20.69  

Retail and wholesale

     16,318        13.70  

Accommodation and food service

     7,645        6.42  

Construction

     3,281        2.76  

Financial institutions

     2,392        2.01  

Other

     24,014        20.17  
  

 

 

    

 

 

 

Total

     119,067        100.00  
  

 

 

    

 

 

 

 

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Table of Contents
  3.3.6. Top 20 Non-Performing Loans of Kookmin Bank

 

(As of September 30, 2017)    (Unit: in billions of Won)  
    

Industry

   Total Credit      Allowance
for Loan Losses
 

Borrower A

   Construction      99.1        97.2  

Borrower B

   Construction      68.8        69.2  

Borrower C

   Manufacturing      64.3        60.1  

Borrower D

   Information and communication      55.3        50.9  

Borrower E

   Shipbuilding      51.5        37.4  

Borrower F

   Real estate      42.1        41.7  

Borrower G

   Construction      41.2        40.3  

Borrower H

   Transportation and storage      39.1        15.5  

Borrower I

   Shipping      23.8        23.5  

Borrower J

   Real estate      18.8        2.6  

Borrower K

   Manufacturing      17.7        6.1  

Borrower L

   Information and communication      14.3        13.0  

Borrower M

   Manufacturing      10.1        9.7  

Borrower N

   Wholesale and retail trade      15.4        9.1  

Borrower O

   Construction      9.2        8.5  

Borrower P

   Manufacturing      9.1        5.2  

Borrower Q

   Manufacturing      8.2        4.6  

Borrower R

   Wholesale and retail trade      9.4        6.2  

Borrower S

   Manufacturing      6.2        4.3  

Borrower T

   Manufacturing      8.1        4.7  
     

 

 

    

 

 

 

Total

        611.7        509.8  
     

 

 

    

 

 

 

 

3.4. Other Financial Information

See Exhibits 99.1 and 99.2 attached hereto for our consolidated and separate financial statements and relevant notes, which have been prepared in accordance with K-IFRS and reviewed by our independent auditors as stated in their review reports. The review reports will also be available on our website at www.kbfg.com.

 

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4. Independent Public Accountants

 

4.1. Audit / Review Services

 

Period

  

Auditor

  

Activity

   Compensation(1)
(in millions of Won)
     Accrued Time
(hours)
 

January 1 to September 30, 2017

   Samil PricewaterhouseCoopers    Quarterly / first half and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)      856        5,110  

January 1 to December 31, 2016

   Samil PricewaterhouseCoopers    Quarterly / first half and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)      760        10,505  

January 1 to December 31, 2015

   Samil PricewaterhouseCoopers    Quarterly / first half and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)      760        9,947  

 

(1) Excluding value-added taxes.

 

4.2. Public Company Accounting Oversight Board (“PCAOB”) Audit Services

 

Period

  

Auditor

  

Activity

   Service Period      Compensation(1)
(in millions of Won)
 

January 1 to September 30, 2017

   Samil PricewaterhouseCoopers    PCAOB audit of consolidated financial statements and internal control over financial reporting     

May 1, 2017 to

April 30, 2018

 

 

     540  

January 1 to December 31, 2016

   Samil PricewaterhouseCoopers    PCAOB audit of consolidated financial statements and internal control over financial reporting     

May 1, 2016 to

April 30, 2017


 

     459  

January 1 to December 31, 2015

   Samil PricewaterhouseCoopers    PCAOB audit of consolidated financial statements and internal control over financial reporting     

May 1, 2015 to

April 30, 2016

 

 

     459  

 

(1) Excluding value-added taxes.

 

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5. Corporate Governance and Affiliated Companies

 

  5.1. Board of Directors & Committees under the Board

As of September 30, 2017, our board of directors consisted of nine directors, comprising one executive director, one non-standing director and seven non-executive directors. The following committees currently serve under our board of directors:

 

    Audit Committee;

 

    Risk Management Committee;

 

    Evaluation & Compensation Committee;

 

    Non-Executive Director Nominating Committee;

 

    Corporate Governance Committee; and

 

    Audit Committee Member Nominating Committee.

For the list of our directors, see 6. Directors, Senior Management and Employees — 6.1. Executive Directors, — 6.2. Non-standing Directors and — 6.3. Non-executive Directors below.

 

  5.2. Audit Committee

The audit committee oversees our financial reporting and approves the appointment of our independent auditors and internal compliance officers. The committee also reviews our financial information, auditor’s examinations, key financial statement issues, the plans and evaluation of internal controls and the administration of our financial affairs by the board of directors. In connection with the general meetings of shareholders, the committee examines the agenda for, and financial statements and other reports to be submitted by, the board of directors to each general meeting of shareholders. The committee holds regular meetings every quarter and on an as-needed basis.

 

  5.3. Compensation to Directors

 

  5.3.1. Total Amount Approved at the Meeting of Shareholders

 

(Unit: in millions of Won)  
     Total number of persons(1)     Total amount approved at shareholders’ meeting(2)      Notes  

Registered Directors (Non-executive directors)

     9 (7)      2,500        —    

 

(1) Represents the total number of applicable persons as of September 30, 2017.
(2) Represents the aggregate amount for all directors (including non-executive directors). Excludes compensation in the form of long-term incentive performance share grants.

 

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Table of Contents
  5.3.2. Total Amount Paid as of September 30, 2017

 

    

(Unit: in millions of Won)

 

 

Total number of persons(1)

   Total payment(2)      Average payment per person(3)      Notes  

9

     939        108        —    

 

(1) Represents the total number of applicable persons as of September 30, 2017.
(2) Represents the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2017.
(3) Represents (i) the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2017, divided by (ii) the number of applicable persons for the applicable reporting period.

 

 

     (Unit: in millions of Won)  
     Total number of
persons(1)
     Total payment(2)(4)(5)      Average
payment
per person(3)
     Notes  

Registered Directors (excluding non-executive directors and audit committee members)

     2        564        282        —    

Non-executive Directors (excluding audit committee members)

     3        153        56        —    

Audit committee members

     4        223        56        —    

Internal auditor

     —          —          —          —    

Note: On a separate basis.

 

(1) Represents the total number of applicable persons as of September 30, 2017.
(2) Represents the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2017.
(3) Represents (i) the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2017, divided by (ii) the number of applicable persons for the applicable reporting period.
(4) Payment subject to the Company’s internal policies on compensation to directors.
(5) The total amount paid (rounded to the nearest million) to our registered director for the nine months ended September 30, 2017 (including the amount paid by Kookmin Bank to our registered director who concurrently serves as the president of Kookmin Bank) is Won 1,050 million (Won 564 million by KB Financial Group and Won 486 million by Kookmin Bank). Such amount includes 2017 annual salary of Won 600 million (Won 324 million by KB Financial Group and Won 276 million by Kookmin Bank) and short-term performance-based incentive payments of Won 450 million (Won 240 million by KB Financial Group and Won 210 million by Kookmin Bank), which were based on performance in 2016 and paid in the first quarter of 2017.

 

  5.3.3. Compensation exceeding Won 500 million – Individual basis

Compensation exceeding Won 500 million – Individual Basis

Not included in quarterly business reports.

 

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5.4. Affiliated Companies

 

  5.4.1. List of Affiliated Companies

Affiliated companies of KB Financial Group that are first-tier subsidiaries and KB Financial Group’s ownership of such companies as of September 30, 2017 are as follows:

 

    Kookmin Bank (100%)

 

    KB Securities Co., Ltd. (100%)

 

    KB Insurance Co., Ltd. (100%)

 

    KB Kookmin Card Co., Ltd. (100%)

 

    KB Life Insurance Co., Ltd. (100%)

 

    KB Asset Management Co., Ltd. (100%)

 

    KB Capital Co., Ltd. (100%)

 

    KB Savings Bank Co., Ltd. (100%)

 

    KB Real Estate Trust Co., Ltd. (100%)

 

    KB Investment Co., Ltd. (100%)

 

    KB Credit Information Co., Ltd. (100%)

 

    KB Data Systems Co., Ltd. (100%)

 

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Table of Contents
6. Directors, Senior Management and Employees

 

  6.1. Executive Directors

As of September 30, 2017, we had one executive director. The name, position and the end of the term of our executive director and the number of shares of KB Financial Group’s common stock he owned as of September 30, 2017 are set forth below.

 

Name

  Date of Birth     Position     Common Shares Owned     End of Term  

Jong Kyoo Yoon

    October 1955       Chairman & Chief Executive Officer       14,000       November 20, 2017  

 

  6.2. Non-standing Directors

As of September 30, 2017, we had one non-standing director. The name, position and the end of the term of our non-standing director and the number of shares of KB Financial Group’s common stock he owned as of September 30, 2017 are set forth below.

 

Name

   Date of Birth      Position      Common Shares Owned      End of Term

Hong Lee

     April 1958        Non-standing Director        459      2018 Annual General
Shareholders’ Meeting

 

  6.3. Non-executive Directors

Our non-executive directors, the end of their terms and the number of shares of KB Financial Group’s common stock they respectively owned as of September 30, 2017 are as follows.

 

Name

   Date of Birth    Position    Common
Shares
Owned
     End of Term

Young Hwi Choi

   October 1945    Non-executive Director      —        March 23, 2018

Stuart B. Solomon

   July 1949    Non-executive Director      —        March 23, 2019

Suk Ryul Yoo

   April 1950    Non-executive Director      —        March 23, 2018

Michael Byungnam Lee

   September 1954    Non-executive Director      1,020      March 23, 2018

Jae Ha Park

   November 1957    Non-executive Director      —        March 23, 2018

Eunice Kyonghee Kim

   March 1959    Non-executive Director      —        March 23, 2018

Jongsoo Han

   October 1960    Non-executive Director      —        March 23, 2018

 

  6.4. Senior Management

In addition to our executive director who is also our executive officer, we currently have the following sixteen executive officers as of September 30, 2017.

 

Name

  Date of Birth  

Position

  Common Shares Owned     End of Term

Ok Chan Kim

  July 1956  

President & Chief Operating Officer

    6,574     November 20, 2017

Ki Heon Kim

  October 1955  

Deputy President and Chief Information Technology Officer

    —       December 31, 2017

Dong Cheol Lee

  October 1961  

Deputy President and Chief Strategy Officer

    600     December 31, 2017

Jeong Rim Park

  November 1963  

Deputy President; Wealth Management Planning Department

    540     December 31, 2017

Kwi Sang Jun

  July 1960  

Deputy President; Corporate and Investment Banking Planning Department

    167     December 31, 2017

Ki Hwan Kim

  March 1963  

Senior Managing Director and Chief Risk Management Officer

    321     December 31, 2017

Young-Tae Park

  December 1961  

Senior Managing Director and Chief Data Officer

    450     December 31, 2017

 

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Table of Contents

Jae Hong Park

  April 1967  

Senior Managing Director and Chief Global Strategy Officer

           December 31, 2017

Hong Seob Shin

  September 1962  

Senior Managing Director and Chief Public Relation Officer

    580     December 31, 2017

Kyung Yup Cho

  September 1961  

Senior Managing Director; KB Research

    800     December 31, 2017

Jae Keun Lee

  May 1966  

Managing Director and Chief Financial Officer

    119     December 31, 2018

Chang Kwon Lee

  November 1965  

Managing Director; Strategic Planning Department

           December 31, 2018

Dong Whan Han

  January 1965  

Managing Director and Chief Future Innovation Officer

    100     December 31, 2018

Chai Hyun Sung

  September 1965  

Managing Director and Chief Human Resources Officer

    652     December 31, 2018

Pil Kyu Im

  March 1964  

Managing Director and Chief Compliance Officer

    445     January 10, 2018

Young Hyuk Jo

  April 1963  

Managing Director and Enforcement Officer of the Internal Audit; Audit Department

    461     December 31, 2017

As of September 30, 2017, the following management also serves as senior management at our subsidiaries.

 

Name

  Subsidiary  

Position

  Appointment date  

Jong Kyoo Yoon

  Kookmin Bank  

President and Chief Executive Officer

    November 2014  

Hong Lee

  Kookmin Bank  

Senior Executive Vice President; Shared Service Group

    January 2017  

Ki Heon Kim

  Kookmin Bank  

Senior Executive Vice President; Head of IT Group

    January 2015  

Jeong Rim Park

  Kookmin Bank  

Senior Executive Vice President; Wealth Management Group

    January 2017  
  KB Securities  

Deputy President; Wealth Management Division

    January 2017  

Kwi Sang Jun

  Kookmin Bank  

Senior Executive Vice President, Corporate Investment Banking Group

    January 2016  
  KB Securities  

Deputy President; Investment Banking Division

    January 2017  

Jae Hong Park

  Kookmin Bank  

Senior Managing Director; Global Business Division

    January 2016  

Ki Hwan Kim

  Kookmin Bank  

Senior Managing Director; Risk Management Group

    January 2016  

Hong Seob Shin

  Kookmin Bank  

Senior Managing Director; Consumer Brand Strategy Group

    January 2016  

Dong Whan Han

  Kookmin Bank  

Managing Director; Future Channel Group

    January 2017  

Dong Cheol Lee

  KB Securities  

Non-standing Director

    December 2016  

Jae Keun Lee

  KB Insurance  

Non-standing Director

    March 2017  
  Kookmin Card  

Non-standing Director

    February 2017  

As of September 30, 2017, the following non-executive director also serves as a director at another company.

 

Name

   Company    Position      Appointment date  

Suk Ryul Yoo

   Jungmok Co., Ltd.      CEO        December 2013  

 

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Table of Contents
  6.5. Employees

The following table shows information regarding our employees as of September 30, 2017.

 

    

(Unit: in millions of Won)

 

 
     Number of
Employees
     Average Tenure of
Employees (months)
     Total Amount of Annual Salaries      Average Annual Salary
per Person(1)
 

Total

     160        36        13,634        85  

 

(1) Represents (i) the total amount paid for the nine months ended September 30, 2017 divided by (ii) the total number of employees as of September 30, 2017.

 

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Table of Contents
7. Major Shareholders and Related Party Transactions

 

7.1. Major Shareholders

The following table presents information regarding holders of 5% or more of our total issued shares as of September 30, 2017.

 

(Unit: shares, %)

 

Name

 

Number of Shares of Common Stock

  

Percentage of Total Issued Shares(1)

Korean National Pension Service(2)

  40,950,453    9.79

JP Morgan Chase Bank, N.A.(3)

  27,799,276    6.65

 

(1) Calculated based on 418,111,537 shares of our common stock issued and outstanding as of April 24, 2017.
(2) Percentage of total issued shares as of October 16, 2017 is 9.68%.
(3) Depositary under the Company’s ADR program. The voting rights are held by ADR holders. Percentage of total issued shares as of October 16, 2017 is 6.29%.

 

  7.2. Changes in the Largest Shareholder

 

       (Unit: shares, %)  

Name of Largest Shareholder

   Date of Change in Largest
Shareholder/
Date of Change in Ownership
Level
     Number of Shares of Common
Stock
     Percentage of Total
Issued Shares(1)
 

Korean National Pension Service

     December 31, 2011        26,510,171        6.86  

Korean National Pension Service

     March 14, 2012        27,894,880        7.22  

Korean National Pension Service

     August 1, 2012        31,817,770        8.24  

Korean National Pension Service

     December 31, 2012        33,158,257        8.58  

Korean National Pension Service

     June 12, 2013        34,479,641        8.92  

Korean National Pension Service

     July 23, 2013        35,699,841        9.24  

Korean National Pension Service

     December 31, 2013        38,476,974        9.96  

Korean National Pension Service

     October 14, 2014        36,750,987        9.51  

Korean National Pension Service

     December 31, 2014        36,383,211        9.42  

Korean National Pension Service

     December 31, 2015        35,534,667        9.20  

Korean National Pension Service

     August 12, 2016        36,826,207        9.53  

Korean National Pension Service

     December 31, 2016        41,190,896        9.85  

Korean National Pension Service

     April 24, 2017        40,950,453        9.79  

Korean National Pension Service

     October 16, 2017        40,479,793        9.68  

 

(1) Based on 418,111,537 total issued shares of common stock for dates on or after October 19, 2016, and 386,351,693 total issued shares of common stock for dates prior to October 19, 2016.

 

7.3. Employee Stock Ownership Association

 

(As of September 30, 2017)

 

         

(Unit: shares)

 

Company Name

   Number of shares      Type of shares

KB Financial Group Inc.

     15,379      Common Stock

Kookmin Bank

     1,793,304      Common Stock

 

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Table of Contents

KB Securities Co., Ltd.

     10,777        Common Stock  

KB Insurance Co., Ltd.

     2,108        Common Stock  

KB Kookmin Card Co., Ltd.

     99,492        Common Stock  

KB Life Insurance Co., Ltd.

     7,855        Common Stock  

KB Asset Management Co., Ltd.

     3,706        Common Stock  

KB Capital Co., Ltd.

     747        Common Stock  

KB Savings Bank Co., Ltd.

     833        Common Stock  

KB Real Estate Trust Co., Ltd.

     4,376        Common Stock  

KB Investment Co., Ltd.

     595        Common Stock  

KB Credit Information Co., Ltd.

     5,582        Common Stock  

KB Data Systems Co., Ltd.

     6,383        Common Stock  
  

 

 

    

 

 

 

Total

     1,951,137        Common Stock  
  

 

 

    

 

 

 

 

7.4. Investments in Certain Affiliated Companies

 

(As of September 30, 2017)           (Units: shares, in millions of Won, %)  
     Ending Balance      Total Assets as
of the latest
fiscal year(1)
     Net Income (loss)
for the latest fiscal
year  (1)
 

Name

   Number of
shares
     Shareholding
percentage
     Book value        

Kookmin Bank

     404,379,116        100        14,821,721        301,205,007        967,766  

KB Securities Co., Ltd.

     298,620,424        100        3,342,391        29,463,149        (344

KB Insurance Co., Ltd.

     66,500,000        100        2,375,430        29,352,211        295,780  

KB Kookmin Card Co., Ltd.

     92,000,000        100        1,953,175        15,739,739        318,627  

KB Life Insurance Co., Ltd.

     91,200,000        100        485,314        8,887,383        12,748  

KB Asset Management Co., Ltd.

     7,667,550        100        96,312        170,781        58,756  

KB Capital Co., Ltd.

     21,492,128        100        573,811        7,452,823        96,696  

KB Savings Bank Co., Ltd.

     8,001,912        100        157,544        1,078,130        10,319  

KB Real Estate Trust Co., Ltd.

     16,000,000        100        121,553        216,687        29,270  

KB Investment Co., Ltd.

     8,951,797        100        104,910        146,372        4,513  

KB Credit Information Co., Ltd.

     1,252,400        100        23,621        27,973        43  

KB Data Systems Co., Ltd.

     800,000        100        6,334        27,037        613  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          —          24,062,116                
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Based on K-IFRS (on a separate basis)

 

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7.5. Related Party Transactions

 

  7.5.1. Purchase of capital securities issued by KB Capital Co., Ltd.

 

    (Unit: in billions of Won)

Issuer

 

Relationship

 

Type

 

Issue
Amount

 

Issue Date

  Interest Rate    

Maturity Date

   Use of
Proceeds

KB Capital Co., Ltd.

  Subsidiary    No. 299 Private Placement of Capital Securities in Won   50   March 27, 2015     5.011  

March 27, 2045

(may be extended)

   Working
capital
    (Unit: in billions of Won)

Issuer

 

Relationship

 

Type

 

Issue
Amount

 

Issue Date

  Interest Rate    

Maturity Date

   Use of
Proceeds

KB Capital Co., Ltd.

  Subsidiary    No. 320 Private Placement of Capital Securities in Won   50   September 24, 2015     4.606  

September 24, 2045

(may be extended)

   Working
capital
    (Unit: in billions of Won)

Issuer

 

Relationship

 

Type

 

Issue
Amount

 

Issue Date

  Interest Rate    

Maturity Date

   Use of
Proceeds

KB Capital Co., Ltd.

  Subsidiary    No. 343 Private Placement of Capital Securities in Won   50   March 29, 2016     4.396  

March 29, 2046

(may be extended)

   Working
capital

 

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   (Unit: in billions of Won)

Issuer

  

Relationship

 

Type

  

Issue

Amount

  

Issue Date

   Interest Rate    

Maturity Date

   Use of
Proceeds

KB Capital Co., Ltd.

   Subsidiary   No. 352 Private Placement of Capital Securities in Won    50    June 28, 2016      4.064  

June 28,

2046

(may be extended)

   Working
capital
   (Unit: in billions of Won)

Issuer

  

Relationship

 

Type

  

Issue

Amount

  

Issue Date

   Interest Rate    

Maturity Date

   Use of
Proceeds

KB Capital Co., Ltd.

   Subsidiary   No. 367 Private Placement of Capital Securities in Won    50    November 28, 2016      4.744  

November 28,

2046

(may be extended)

   Working
capital
   (Unit: in billions of Won)

Issuer

  

Relationship

 

Type

  

Issue

Amount

  

Issue Date

   Interest Rate    

Maturity Date

   Use of
Proceeds

KB Capital Co., Ltd.

   Subsidiary   No. 378 Private Placement of Capital Securities in Won    50    April 27, 2017      4.431  

April 27,

2047

(may be extended)

   Working
capital

7.5.2. Loans to KB Investment Co., Ltd.

 

     (Unit: in billions of Won)

Company

   Relationship            Item          Loan
    Amount    
   Current
    Balance    
  

Funding Date

   Interest Rate     Maturity Date   Purpose

KB Investment Co., Ltd.

     Subsidiary      Loans    10    10    July 14, 2017      2.042   July 13,

2018

(may be
extended)

  Working
capital

 

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Table of Contents
  7.5.3. Purchase of Liiv trademark from Kookmin Bank

 

Counterparty    Kookmin Bank
Transaction Type    Purchase of an asset
Transaction Date    April 13, 2017
Transaction Object    Domestic and overseas trademark of “Liiv,” a mobile brand
Purpose    To generate synergy by promoting mobile brands at the group level
Transaction Price    Won 146 million (excluding value-added taxes)
Others    The Transaction Price was calculated based on the actual levels of expenditure made by Kookmin Bank in connection with the trademark and reflects the opinion of an external accounting firm.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

   

KB Financial Group Inc.

    (Registrant)
Date: November 14, 2017    

By: /s/ Jae Keun Lee

    (Signature)
    Name:   Jae Keun Lee
    Title:   Managing Director and Chief Financial Officer

 

37