6-K 1 d616811d6k.htm FORM 6-K Form 6-K
Table of Contents

 

 

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 2018

Commission File Number: 000-53445

 

 

KB Financial Group Inc.

(Translation of registrant’s name into English)

 

 

26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul 07331, 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


Table of Contents

TABLE OF CONTENTS

 

1.

   Introduction to the Company

1.1.

   Business Purpose

1.2.

   History

1.3.

   Overview of the Business Group

1.4.

   Capital Structure

1.5.

   Dividends

2.

   Business

2.1.

   Results of Operations

2.2.

   Sources and Uses of Funds

2.3.

   Other Information to Consider in Making an Investment Decision

3.

   Financial Information

3.1.

   Consolidated Financial Information

3.2.

   Separate Financial Information

3.3.

   Other Selected Financial Data

3.4.

   Other Financial Information

4.

   Independent Public Accountants

4.1.

   Audit/ Review Services

4.2.

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

5.

   Corporate Governance and Affiliated Companies

5.1.

   Board of Directors & Committees under the Board

5.2.

   Audit Committee

5.3.

   Compensation to Directors

5.4.

   Top 5 Highest-Paid Individuals

5.5.

   Affiliated Companies

6.

   Directors, Senior Management and Employees

6.1.

   Executive Directors

6.2.

   Non-standing Directors

6.3.

   Non-executive Directors

6.4.

   Senior Management

6.5.

   Employees

7.

   Major Shareholders and Related Party Transactions

7.1.

   Major Shareholders

7.2.

   Changes in the Largest Shareholder

7.3.

   Employee Stock Ownership Association

7.4.

   Investments in Affiliated Companies

7.5.

   Related Party Transactions


Table of Contents

Summary of 2018 Third Quarter Business Report

On November 14, 2018, KB Financial Group Inc. (“KB Financial Group”) filed its business report for the third quarter of 2018 (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 have 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.


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. (“KB Life Insurance”), formerly a second-tier subsidiary, as a first-tier subsidiary

 

   

September 28, 2009

Added Burrill-KB Life Sciences Fund Ltd. 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 Private Equity Fund No. 3 as a second-tier subsidiary


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December 13, 2010

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. (“KB Investment & Securities”)

 

   

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. (“KB Savings Bank”) 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, 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

 

   

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


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June 21, 2016

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”)

 

   

January 4, 2017

Converted Kookmin Bank Hong Kong Ltd. into Kookmin Bank Hong Kong Branch

 

   

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%

 

   

June 20, 2017

Liquidated Korea GCC Global Cooperation Private Equity Fund, a second-tier subsidiary

 

   

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 from a second-tier subsidiary of KB Securities to a first-tier subsidiary of KB Asset Management Co., Ltd.)


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October 9, 2017

Added Maritime Securities Incorporation as a second-tier subsidiary

 

   

October 16, 2017

Disposed of Hyundai Savings Bank, Co., Ltd., a second-tier subsidiary

 

   

December 22, 2017

Disposed of Hyundai Asset Management, Co., Ltd., a second-tier subsidiary

 

   

January 17, 2018

Added KB-TS Technology Venture Private Equity Fund as a second-tier subsidiary (KB Securities, Kookmin Bank and KB Capital hold 16%, 30% and 10%, respectively)

 

   

May 16, 2018

Converted Kookmin Bank International Ltd. into Kookmin Bank London Branch (Liquidation in progress)

 

   

July 6, 2018

Liquidated Hyundai-Tongyang Agrifood Private Equity Fund, a second-tier subsidiary

 

   

July 6, 2018

Added Daehan Specialized Bank Plc. as a second-tier subsidiary

 

   

August 21, 2018

Added KBAM Shanghai Advisory Services Co., Ltd. as a second-tier subsidiary


Table of Contents
1.3.

Overview of the Business Group

 

(As of September 30, 2018)

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 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)

   KBFG Securities America Inc.    KB Securities   

Not listed

(Overseas)

   KB Securities Hong Kong Ltd.    KB Securities   

Not listed

(Overseas)

   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 SECURITIES VIETNAM JOINT STOCK COMPANY    KB Securities   

Not listed

(Overseas)

   KB-TS Technology Venture Private Equity Fund    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 Daehan Specialized Bank Plc.    KB Kookmin Card   

Not listed

(Overseas)

   KB Asset Management Singapore Pte. Ltd.    KB Asset Management   

Not listed

(Overseas)

   KBAM Shanghai Advisory Services Co., 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


Table of Contents
1.4.

Capital Structure

 

  1.4.1.

Common Shares

Changes in Capital

Not included in quarterly business reports.

Number of Shares                

 

(As of September 30, 2018)                  (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 Shares (B)

     21,877,863        —          21,877,863  

Shares Outstanding (A-B)

     396,233,674        —          396,233,674  

Note: The board of directors of the Company resolved to enter into a trust agreement to acquire treasury shares on February 4, 2016, August 2, 2016 and November 24, 2017. For more information, please refer to the Company’s reports on Form 6-K furnished to the Securities and Exchange Commission on each respective date.


Table of Contents
  1.4.2.

Voting Rights

 

(As of September 30, 2018)                   

Items

        Number of Shares      Notes  

Total number of issued shares

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

Shares without voting rights

   Common shares      21,877,863        Treasury shares  
   Preferred shares      —          —    

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

   —        —          —    

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

   —        —          —    
   —               —    

Shares with restored voting rights

   —        —          —    

Total shares for which voting rights may be exercised

   Common shares      396,233,674        —    
   Preferred shares      —          —    

 

1.5.

Dividends

Not included in quarterly business reports.


Table of Contents
2.

Business

 

2.1.

Results of Operations

 

                   (Unit: in millions of Won)  
     For the nine months
ended September 30, 2018
     For the nine months
ended September 30, 2017
     For the year ended
December 31, 2017
     For the year ended
December 31, 2016
 

Net interest income

     6,591,454        6,080,802        8,246,614        6,715,606  

Interest income

     10,073,077        8,772,564        11,919,057        10,334,959  

Interest expense

     (3,481,623      (2,691,762      (3,672,443      (3,619,353

Net fee and commission income

     1,747,677        1,522,176        2,050,024        1,584,892  

Fee and commission income

     3,365,109        2,930,452        3,988,250        3,150,877  

Fee and commission expense

     (1,617,432      (1,408,276      (1,938,226      (1,565,985

Net insurance income

     443,712        399,947        593,710        (117,803

Insurance income

     8,928,242        6,130,566        8,970,992        1,201,352  

Insurance expense

     (8,484,530      (5,730,619      (8,377,282      (1,319,155

Net gains(losses) on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)

     —          32,509        203,724        (321,845

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

     398,895        —          —          —    

Net other operating expenses

     (800,358      (590,520      (901,890      (415,908

General and administrative expenses

     (4,074,271      (3,796,635      (5,628,664      (5,228,711

Operating profit before provision for credit losses

     4,307,109        3,648,279        4,563,518        2,216,231  

Provision for credit losses

     (427,761      (479,888      (548,244      (539,283

Net operating profit

     3,879,348        3,168,391        4,015,274        1,676,948  

 

Note:

1)         Based on K-IFRS (on a consolidated basis).

  2)

The consolidated financial information for the nine months ended September 30, 2018 is based on K-IFRS 1109. The financial information for previous periods has not been restated.

  3)

For the nine months ended September 30, 2017 and for the years ended December 31, 2017 and 2016, interest income from financial assets/liabilities at fair value through profit or loss has been reclassified from net gains(losses) on financial assets/liabilities at fair value through profit or loss to interest income.


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, 2018
    For the year ended
December 31, 2017
    For the year ended
December 31, 2016
 
        Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
 

Won Currency

  Deposits     235,326,996       1.36       52.70       219,970,681       1.20       54.26       207,194,480       1.32       60.76  
  Certificate of deposit     3,007,416       1.86       0.67       2,862,817       1.57       0.71       3,386,647       1.65       0.99  
  Borrowings     9,965,346       1.62       2.23       9,306,125       1.41       2.30       6,803,292       1.54       2.00  
  Call money     1,555,981       1.51       0.35       2,165,151       1.26       0.53       1,414,780       1.35       0.41  
  Debentures     44,705,473       2.21       10.01       36,393,274       2.17       8.98       30,075,804       2.49       8.82  
  Others     16,537,271       1.56       3.71       13,735,978       1.41       3.38       7,700,215       1.45       2.26  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    311,098,483       1.51       69.67       284,434,026       1.35       70.16       256,575,218       1.47       75.24  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign Currency

  Deposits     10,887,602       1.09       2.44       10,156,743       0.80       2.51       8,713,640       0.53       2.56  
  Borrowings     7,838,591       1.93       1.76       6,438,408       1.17       1.59       5,644,047       0.78       1.66  
  Call money     732,116       2.18       0.16       1,239,627       1.39       0.31       1,161,517       0.72       0.34  
  Debentures     3,902,156       3.30       0.87       3,374,998       2.71       0.83       4,139,036       2.55       1.21  
  Others     287,854       0.78       0.07       321,263       0.56       0.07       222,098       0.94       0.06  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    23,648,319       1.76       5.30       21,531,039       1.24       5.31       19,880,338       1.04       5.83  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others

  Total shareholders’ equity     35,475,458       —         7.95       34,785,839       —         8.58       30,308,008       —         8.89  
  Allowances     741,054       —         0.17       829,075       —         0.20       748,594       —         0.22  
  Others     75,538,388       —         16.91       63,855,888       —         15.75       33,476,080       —         9.82  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    111,754,900       —         25.03       99,470,802       —         24.53       64,532,682       —         18.93  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    446,501,702       —         100.00       405,435,867       —         100.00       340,988,238       —         100.00  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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


Table of Contents
  2.2.2.

Uses of Funds

 

                                            (Unit: in millions of Won)  
        For the nine months
ended September 30, 2018
    For the year ended
December 31, 2017
    For the year ended
December 31, 2016
 
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
 

Won Currency

  Due from banks     4,872,016       1.44       1.09       6,757,757       1.44       1.67       6,075,873       1.52       1.78  
  Securities     93,947,482       2.70       21.04       80,406,670       1.81       19.83       55,999,995       2.12       16.42  
  Loans     267,104,774       3.40       59.82       247,117,982       3.28       60.95       225,153,667       3.15       66.03  
 

Guarantee payments under payment guarantee

    8,582       2.24       —         17,008       0.66       —         28,005       1.16       0.01  
  Call loan     578,890       1.40       0.13       315,950       1.28       0.08       399,843       1.43       0.12  
 

Private placement corporate bonds

    1,441,362       3.27       0.32       1,801,681       4.00       0.44       1,081,692       3.99       0.32  
  Credit cards     16,504,247       8.19       3.70       14,877,741       8.32       3.67       12,823,200       8.66       3.76  
  Others     4,128,114       4.07       0.93       4,123,143       3.87       1.02       5,061,229       4.96       1.48  
  Allowance     (2,441,806     —         (0.55     (2,116,366     —         (0.52     (2,182,313     —         (0.64
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    386,143,661       3.43       86.48       353,301,566       3.15       87.14       304,441,191       3.21       89.28  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign Currency

  Due from banks     3,530,946       1.35       0.79       2,862,165       1.06       0.71       2,553,722       0.75       0.75  
  Securities     12,767,166       2.49       2.86       10,013,637       3.19       2.47       3,792,545       2.61       1.11  
  Loans     7,592,025       2.93       1.70       7,136,381       2.29       1.76       8,125,102       1.76       2.38  
  Call loan     2,678,035       2.27       0.60       2,909,920       1.53       0.72       2,220,839       0.65       0.65  
  Bills bought     3,972,193       1.62       0.89       3,166,307       1.51       0.78       2,768,692       1.30       0.81  
  Allowance     (282,672     —         (0.06     (173,771     —         (0.04     (328,130     —         (0.10
  Others     82,199       —         0.02       72,297       —         0.01       24,789       —         0.02  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    30,339,892       2.36       6.80       25,986,936       2.35       6.41       19,157,559       1.64       5.62  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others

  Cash     1,773,322       —         0.40       1,726,448       —         0.43       1,724,701       —         0.51  
 

Fixed assets held for business

    5,511,725       —         1.23       5,826,159       —         1.44       3,464,031       —         1.02  
  Others     22,733,102       —         5.09       18,594,758       —         4.58       12,200,756       —         3.57  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    30,018,149       —         6.72       26,147,365       —         6.45       17,389,488       —         5.10  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    446,501,702       —         100.00       405,435,867       —         100.00       340,988,238       —         100.00  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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


Table of Contents
2.3.

Other Information to Consider in Making an Investment Decision

 

  2.3.1.

Capital Adequacy

 

KB Financial Group           (Unit: in billions of Won)  
     As of September 30, 2018(1)     As of December 31, 2017     As of December 31, 2016  

Total Capital (A)

     35,041       32,402       31,103  

Risk-weighted assets (B)

     234,666       212,777       203,649  

BIS ratio (A/B)

     14.93     15.23     15.27

 

*

Note: Calculated in accordance with Basel III

(1)

Preliminary figures

 

Kookmin Bank

               (Unit: in billions of Won)  
     As of September 30, 2018     As of December 31, 2017     As of December 31, 2016  

Total Capital (A)

     28,006       25,914       24,579  

Risk-weighted assets (B)

     178,255       161,825       150,649  

BIS ratio (A/B)

     15.71     16.01     16.32

 

*

Note: Calculated in accordance with Basel III

 

KB Securities

               (Unit: in billions of Won)  
     As of September 30, 2018     As of December 31, 2017     As of December 31, 2016  

Net Operating Capital (A)

     3,088       3,211       2,844  

Total amount at risk (B)

     1,137       1,048       866  

Maintenance equity margin (C)

     134       134       134  

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

     1,451.49     1,609.03     1,471.73

Capital surplus (A-B)

     1,951       2,163       1,978  

 

*

Note: Calculated in accordance with amended net capital ratio standards effective as of January 2015

 

KB Insurance

               (Unit: in billions of Won)  
     As of September 30, 2018(1)     As of December 31, 2017     As of December 31, 2016  

Available capital (A)

     3,270       3,080       2,774  

Required capital (B)

     1,754       1,618       1,644  

RBC ratio(2) (A/B)

     186.4     190.3     168.7

 

(1)

Preliminary figures

(2)

RBC ratio: Risk-Based Capital ratio


Table of Contents
  2.3.2.

Credit Ratings

 

               (As of September 30, 2018)

Date of Rating

  

Type

  

Credit Rating

  

Rating Company

(Rating Range)

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)

1/24/2018    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)

2/27/2018    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)

4/5/2018    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)

6/11/2018    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)

6/25/2018    Commercial Paper    A1   

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

NICE Investors Service (A1 ~ D)

7/24/2018    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)

10/4/2018    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)


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 19, 2018

   407

 

  2.3.4.

Acquisition of Shares of Bank Bukopin of Indonesia

Kookmin Bank entered into a share subscription agreement with Bank Bukopin of Indonesia on June 26, 2018 and acquired its new shares on July 27, 2018.

 

     (Unit: in millions of Won)

Ownership

   Acquisition amount

22%

   113,074* (IDR 1,460,910,000,000)

 

*

The acquisition amount in IDR is converted to Won at the exchange rate on July 27, 2018, the acquisition date.


Table of Contents
3.

Financial Information

 

3.1.

Consolidated Financial Information

 

  3.1.1.

Consolidated Statements of Financial Position

 

            (Unit: in millions of Won)  
     As of September 30, 2018      As of December 31, 2017      As of December 31, 2016  

Cash and due from financial institutions

     18,349,698        19,817,825        17,884,863  

Financial assets at fair value through profit or loss (under Korean IFRS 1039)

     —          32,227,345        27,858,364  

Financial assets at fair value through profit or loss

     51,020,841        —          —    

Derivative financial assets

     2,206,870        3,310,166        3,381,935  

Loans at amortized cost

     316,430,970        290,122,838        265,486,134  

Financial investments

     59,193,078        66,608,243        45,147,797  

Investments in associates and joint ventures

     485,966        335,070        1,770,673  

Property and equipment

     4,155,629        4,201,697        3,627,268  

Investment property

     1,755,451        848,481        755,011  

Intangible assets

     2,782,013        2,943,060        652,316  

Net defined benefit assets

     —          894        —    

Current income tax assets

     15,682        6,324        65,738  

Deferred income tax assets

     739        3,991        133,624  

Assets held for sale

     16,503        155,506        52,148  

Other assets

     21,302,186        16,204,169        8,857,785  
  

 

 

    

 

 

    

 

 

 

Total assets

     477,715,626        436,785,609        375,673,656  
  

 

 

    

 

 

    

 

 

 

Financial liabilities at fair value through profit or loss (under Korean IFRS 1039)

     —          12,023,058        12,122,836  

Financial liabilities at fair value through profit or loss

     16,033,010        —          —    

Derivative financial liabilities

     2,605,969        3,142,765        3,807,128  

Deposits

     271,155,184        255,800,048        239,729,695  

Debts

     31,902,454        28,820,928        26,251,486  

Debentures

     51,549,915        44,992,724        34,992,057  

Provisions

     515,421        568,033        537,717  

Net defined benefit liabilities

     286,130        154,702        96,299  

Current income tax liabilities

     623,779        433,870        441,812  

Deferred income tax liabilities

     611,651        533,069        103,482  

Insurance contract liabilities

     33,154,402        31,801,275        7,290,844  

Other liabilities

     33,688,472        24,470,308        19,038,897  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     442,126,387        402,740,780        344,412,253  
  

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders of the parent company

     35,580,672        34,038,685        30,998,044  

Share capital

     2,090,558        2,090,558        2,090,558  


Table of Contents
     As of September 30, 2018      As of December 31, 2017      As of December 31, 2016  

Capital surplus

     17,121,970        17,122,228        16,994,902  

Accumulated other comprehensive income

     230,212        537,668        405,329  

Retained earnings

     17,074,126        15,044,204        12,229,228  

Treasury shares

     (936,194      (755,973      (721,973

Non-controlling interests

     8,567        6,144        263,359  
  

 

 

    

 

 

    

 

 

 

Total equity

     35,589,239        34,044,829        31,261,403  
  

 

 

    

 

 

    

 

 

 

Total liabilities and equity

     477,715,626        436,785,609        375,673,656  
  

 

 

    

 

 

    

 

 

 

 

Note:

The consolidated financial information as of September 30, 2018 is based on K-IFRS 1109. The financial information as of prior dates has not been restated.


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, 2018
    For the nine months ended
September 30, 2017
    For the year ended
December 31, 2017
    For the year ended
December 31, 2016
 

Net interest income

     6,591,454       6,080,802       8,246,614       6,715,606  

Net fee and commission income

     1,747,677       1,522,176       2,050,024       1,584,892  

Net insurance income(expense)

     443,712       399,947       593,710       (117,803

Net gains(losses) on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)

     —         32,509       203,724       (321,845

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

     398,895       —         —         —    

Net other operating expenses

     (800,358     (590,520     (901,890     (415,908

General and administrative expenses

     (4,074,271     (3,796,635     (5,628,664     (5,228,711

Operating profit before provision for credit losses

     4,307,109       3,648,279       4,563,518       2,216,231  

Provision for credit losses

     (427,761     (479,888     (548,244     (539,283

Net operating income

     3,879,348       3,168,391       4,015,274       1,676,948  

Net non-operating income(loss)

     96,050       243,401       123,150       951,707  

Profit before income tax

     3,975,398       3,411,792       4,138,424       2,628,655  

Income tax expense

     (1,106,239     (622,052     (794,963     (438,475

Profit for the period

     2,869,159       2,789,740       3,343,461       2,190,180  

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

     41,798       253,060       136,226       (24,937

Total comprehensive income for the period

     2,910,957       3,042,800       3,479,687       2,165,243  

Profit attributable to:

     2,869,159       2,789,740       3,343,461       2,190,180  

Shareholders of the parent company

     2,868,752       2,757,686       3,311,438       2,143,744  

Non-controlling interests

     407       32,054       32,023       46,436  

Total comprehensive income for the period attributable to:

     2,910,957       3,042,800       3,479,687       2,165,243  

Shareholders of the parent company

     2,910,772       3,007,929       3,445,285       2,118,829  

Non-controlling interests

     185       34,871       34,402       46,414  

Earnings per share

        

Basic earnings per share (Won)

     7,233       6,927       8,305       5,588  

Diluted earnings per share (Won)

     7,191       6,890       8,257       5,559  

 

Note: 1)

The consolidated financial information for the nine months ended September 30, 2018 is based on K-IFRS 1109. The financial information for previous periods has not been restated.

          2)

For the nine months ended September 30, 2017 and for the years ended December 31, 2017 and 2016, interest income from financial assets/liabilities at fair value through profit or loss has been reclassified from net gains(losses) on financial assets/liabilities at fair value through profit or loss to interest income.    


Table of Contents
3.2.

Separate Financial Information

 

  3.2.1.

Separate Statements of Financial Position

 

     (Unit: in millions of Won)  
     As of September 30, 2018      As of December 31, 2017      As of December 31, 2016  

Cash and due from financial institutions

     211,265        245,400        115,065  

Financial assets at fair value through profit or loss (under Korean IFRS 1039)

     —          284,485        246,656  

Financial assets at fair value through profit or loss

     288,157        —          —    

Loans at amortized cost

     50,000        10,000        29,415  

Investments in subsidiaries

     24,062,116        24,062,116        21,392,745  

Investments in associates

     —          —          1,053,690  

Property and equipment

     685        697        469  

Intangible assets

     8,652        8,864        8,092  

Net defined benefit assets

     —          201        193  

Deferred income tax assets

     7,869        10,282        4,604  

Other assets

     751,036        480,789        519,223  
  

 

 

    

 

 

    

 

 

 

Total assets

     25,379,780        25,102,834        23,370,152  
  

 

 

    

 

 

    

 

 

 

Debts

     —          300,000        350,000  

Debentures

     5,462,828        5,162,600        3,474,200  

Net defined benefit liabilities

     1,378        —          —    

Current income tax liabilities

     613,994        308,854        419,607  

Other liabilities

     150,050        204,835        104,528  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     6,228,250        5,976,289        4,348,335  
  

 

 

    

 

 

    

 

 

 

Share capital

     2,090,558        2,090,558        2,090,558  

Capital surplus

     14,742,814        14,742,814        14,656,168  

Accumulated other comprehensive loss

     (5,342      (5,233      (4,742

Retained earnings

     3,259,694        3,054,379        2,998,923  

Treasury Shares

     (936,194      (755,973      (719,090
  

 

 

    

 

 

    

 

 

 

Total equity

     19,151,530        19,126,545        19,021,817  
  

 

 

    

 

 

    

 

 

 

Total liabilities and equity

     25,379,780        25,102,834        23,370,152  
  

 

 

    

 

 

    

 

 

 

 

Note:

The consolidated financial information as of September 30, 2018 is based on K-IFRS 1109. The financial information as of prior dates has not been restated.


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, 2018
     For the nine months
ended September 30, 2017
     For the year ended
December 31, 2017
     For the year ended
December 31, 2016
 

Net interest expense

     (86,331      (69,664      (97,218      (55,924

Net fee and commission expense

     (4,237      (6,036      (7,808      (7,214

Net gains on financial assets at fair value through profit or loss (under Korean IFRS 1039)

     —          3,777        745        5,272  

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

     13,865        —          —          —    

Net other operating income

     1,089,556        709,544        709,544        694,908  

General and administrative expenses

     (37,975      (38,467      (57,485      (46,734

Operating profit before provision for credit losses

     974,878        599,154        547,778        590,308  

Provision for credit losses

     —          —          —          —    

Operating profit

     974,878        599,154        547,778        590,308  

Net non-operating expense

     (381      94        125        (340

Profit before income tax

     974,497        599,248        547,903        589,968  

Income tax benefit (expense)

     (2,454      1,937        5,522        164  

Profit for the period

     972,043        601,185        553,425        590,132  

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

     (109      (84      (491      237  

Total comprehensive income for the period

     971,934        601,101        552,934        590,369  

Earnings per share

           

Basic earnings per share (Won)

     2,451        1,510        1,388        1,538  

Diluted earnings per share (Won)

     2,437        1,502        1,380        1,530  

 

Note:

The consolidated financial information for the nine months ended September 30, 2018 is based on K-IFRS 1109. The financial information for previous periods has not been restated.


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, 2018      As of December 31, 2017      As of December 31, 2016  

Current assets in Won (A)

     22,405        47,253        59,429  

Current liabilities in Won (B)

     5,335        6,792        5,554  

Liquidity ratio (A/B)

     419.97        695.72        1,070.02  

 

Note:

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

  2)

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

 

  3.3.2.

Profitability Ratios

 

            (Unit: %)  

Category

   For the nine months ended
September 30, 2018
     For the year ended
December 31, 2017
     For the year ended
December 31, 2016
 

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

     0.84        0.82        0.63  

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

     11.10        10.18        7.26  

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


Table of Contents
  3.3.3.

20 Largest Exposures of Kookmin Bank by Borrower

 

     (As of September 30, 2018)  

Company

   Credit extended  
     (Unit: in billions of Won)  

Samsung Electronics Co., Ltd.

     2,271  

LG Display Co., Ltd.

     1,008  

Hyundai Motor Company

     875  

Korea Securities Finance Corp.

     762  

Hyundai Capital Services, Inc.

     661  

Hyundai Steel Co., Ltd.

     656  

S-Oil Corporation

     616  

LG Electronics Inc.

     586  

Kia Motors Corporation

     532  

GS Caltex Corporation.

     524  

SK Energy Co., Ltd.

     417  

SK Holdings Co., Ltd.

     407  

Shinsegae Inc.

     399  

Lotte Property & Development Co., Ltd.

     399  

Shinhan Financial Group Co., Ltd.

     379  

Samsung SDI Co., Ltd.

     377  

Hyundai Mobis Co., Ltd.

     362  

Hotel Lotte Co., Ltd.

     353  

LS Nikko Copper Inc.

     346  

China Construction Bank

     339  
  

 

 

 

Total

     12,269  
  

 

 

 


Table of Contents
  3.3.4.

10 Largest Exposures of Kookmin Bank by Chaebol Group

 

     (As of September 30, 2018)  

Group

   Credit extended  
     (Unit: in billions of Won)  

Hyundai Motor

     4,674  

Samsung

     3,983  

SK

     2,443  

LG

     2,206  

Lotte

     1,845  

Hanwha

     1,624  

GS

     896  

LS

     858  

Shinsegae

     815  

Hyundai Heavy

     742  
  

 

 

 

Total

     20,086  
  

 

 

 

 

  3.3.5.

Kookmin Bank’s Loan Concentration by Industry

 

     (As of September 30, 2018)  

Industry

   Total Credit      Percentage of
Total Credit
 
     (Unit: in billions of Won, %)  

Manufacturing

     45,651.0        34.42  

Real estate

     27,399.2        20.66  

Retail and wholesale

     27,170.7        20.48  

Hotel, lodging and food service

     18,107.9        13.65  

Construction

     8,478.7        6.39  

Financial institutions

     3,113.9        2.35  

Others

     2,713.5        2.05  
  

 

 

    

 

 

 

Total

     132,634.9        100.00  
  

 

 

    

 

 

 


Table of Contents
  3.3.6.

Top 20 Non-Performing Loans of Kookmin Bank

 

          (As of September 30, 2018)  

Borrower

  

Industry

   Total Credit      Allowance
for Loan Losses
 
          (Unit: in billions of Won)  

Borrower A

   Construction      99.1        97.2  

Borrower B

   Construction      69.5        67.5  

Borrower C

   Information and communication      55.3        53.5  

Borrower D

   Shipbuilding      51.5        37.2  

Borrower E

   Construction      40.6        39.7  

Borrower F

   Shipping      23.8        23.5  

Borrower G

   Construction      16.1        15.2  

Borrower H

   Manufacturing      15.6        7.5  

Borrower I

   Information and communication      14.3        13.6  

Borrower J

   Retail and wholesale      14.2        8.4  

Borrower K

   Retail and wholesale      10.7        7.7  

Borrower L

   Manufacturing      9.8        9.5  

Borrower M

   Real estate      9.0        9.0  

Borrower N

   Manufacturing      8.0        4.9  

Borrower O

   Manufacturing      7.9        3.9  

Borrower P

   Construction      7.3        6.7  

Borrower Q

   Manufacturing      6.4        4.3  

Borrower R

   Manufacturing      6.2        5.9  

Borrower S

   Manufacturing      6.1        1.9  

Borrower T

   Professional, Scientific, and Technical      6.0        1.3  
     

 

 

    

 

 

 

Total

        477.4        418.4  
     

 

 

    

 

 

 

 

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.


Table of Contents
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, 2018

   Samil PricewaterhouseCoopers    Quarterly / first half and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)   949      4,726  

January 1 to

December 31, 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      11,080  

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  

 

(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, 2018

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

May 1, 2018 to

April 30, 2019

 

 

     571  

January 1 to December 31, 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  

 

(1)

Excluding value-added taxes.


Table of Contents
5.

Corporate Governance and Affiliated Companies

 

5.1.

Board of Directors & Committees under the Board

As of September 30, 2018, 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;

 

   

Subsidiaries’ CEO Director Nominating Committee;

 

   

CEO Nominating 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.


Table of Contents
5.3.

Compensation to Directors

 

  5.3.1.

Total Compensation 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, 2018.

(2)

Represents the aggregate amount for all directors (including non-executive directors). Excludes compensation in the form of long-term performance-based stock grants.

 

  5.3.2.

Total Compensation Paid

 

(As of September 30, 2018)    (Unit: in millions of Won)  

Total number of persons(1)

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

9

     1,067        118        —    

 

(1)

Represents the total number of applicable persons as of September 30, 2018.

(2)

Represents the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2018.

(3)

Represents (i) the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2018, divided by (ii) the annualized number of applicable persons for the applicable reporting period.

*Suk Ho Sonu, Myung Hee Choi and Kouwhan Jeong were newly appointed as non-executive directors on March 23, 2018.

*Young Hwi Choi, Michael Byungnam Lee and Eunice Kyonghee Kim retired on March 23, 2018.

 

  5.3.3.

Compensation Breakdown

 

(As of September 30, 2018)    (Unit: in millions of Won)  
     Total number of
persons(1)
     Total payment (2)(4)      Average payment
per person (3)
     Notes  

Registered Directors (excluding non-executive directors and Audit Committee members)

     2        651        325        —    

Non-executive Directors (excluding Audit Committee members)

     3        183        61        —    

Audit Committee members

     4        234        58        —    

Internal Auditor

     —          —          —          —    

 

(1)

Represents the total number of applicable persons as of September 30, 2018.

(2)

Represents the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2018.

(3)

Represents (i) the total amount paid (rounded to the nearest million) for the nine months ended September 30, 2018, divided by (ii) the annualized number of applicable persons for the applicable reporting period.

(4)

Payment subject to the Company’s internal policies on compensation to directors.


Table of Contents
  5.3.4.

Compensation exceeding Won 500 million – Individual basis

Not included in quarterly business reports.

 

5.4.

Top 5 Highest-Paid Individuals

Not included in quarterly business reports.

 

5.5.

Affiliated Companies

 

  5.5.1.

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, 2018 are as follows.

 

  1)

Kookmin Bank (100.00%)

 

  2)

KB Securities Co., Ltd. (100.00%)

 

  3)

KB Insurance Co., Ltd. (100.00%)

 

  4)

KB Kookmin Card Co., Ltd. (100.00%)

 

  5)

KB Life Insurance Co., Ltd. (100.00%)

 

  6)

KB Asset Management Co., Ltd. (100.00%)

 

  7)

KB Capital Co., Ltd. (100.00%)

 

  8)

KB Savings Bank Co., Ltd. (100.00%)

 

  9)

KB Real Estate Trust Co., Ltd. (100.00%)

 

  10)

KB Investment Co., Ltd. (100.00%)

 

  11)

KB Credit Information Co., Ltd. (100.00%)

 

  12)

KB Data Systems Co., Ltd. (100.00%)


Table of Contents
6.

Directors, Senior Management and Employees

 

6.1.

Executive Directors

As of September 30, 2018, we had one executive director. The name, position and the end of the term of our executive director and the number of shares of our common stock he owned as of September 30, 2018 are set forth below.

 

Name

   Date of Birth      Position      Common Shares Owned      End of Term  

Jong Kyoo Yoon

     October 1955        Chairman & Chief Executive Officer        18,000        November 20, 2020  

 

6.2.

Non-standing Directors

As of September 30, 2018, 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 our common stock he owned as of September 30, 2018 are set forth below.

 

Name

   Date of Birth      Position      Common Shares Owned      End of Term  

Yin Hur

     December 1961        Non-standing Director        2,000        March 22, 2020  

 

6.3.

Non-executive Directors

Our non-executive directors, the end of their terms and the number of shares of our common stock they respectively owned as of September 30, 2018 are as follows.

 

Name

   Date of Birth    Position    Common Shares Owned      End of Term

Suk Ryul Yoo

   April 1950    Non-executive Director      —        March 22, 2019

Stuart B. Solomon

   July 1949    Non-executive Director      —        March 23, 2019

Suk Ho Sonu

   September 1951    Non-executive Director      —        March 22, 2020

Myung Hee Choi

   February 1952    Non-executive Director      —        March 22, 2020

Kouwhan Jeong

   September 1953    Non-executive Director      —        March 22, 2020

Jae Ha Park

   November 1957    Non-executive Director      —        March 22, 2019

Jongsoo Han

   October 1960    Non-executive Director      —        March 22, 2019


Table of Contents
6.4.

Senior Management

In addition to our executive director who is also our executive officer, we had the following fifteen executive officers as of September 30, 2018.

 

Name

 

Date of Birth

 

Position

  Common Shares
Owned
   

End of Term

Ki Heon Kim

 

October 1955

 

Deputy President and Chief Information Technology Officer

    —       December 31, 2018

Kyung Eun Yoon

 

May 1962

 

Deputy President and Head of the Capital Market Business Units

    3,814     December 31, 2018

Jeong Rim Park

 

November 1963

 

Deputy President; Wealth Management Planning Department

    540     December 31, 2018

Ki-Hwan Kim

 

March 1963

 

Senior Managing Director and Chief Finance Officer

    321     December 31, 2018

Young-Tae Park

 

December 1961

 

Senior Managing Director and Chief Data Officer

    450     December 31, 2018

Pil Kyu Im

 

March 1964

 

Senior Managing Director and Chief Compliance Officer

    445     January 10, 2020 

Kyung Yup Cho

  September 1961  

Senior Managing Director; KB Research

    1,500     December 31, 2018

Bo Youl Oh

 

January 1962

 

Senior Managing Director; Corporate and Investment Banking Planning Department

    —       December 31, 2018

Young Hyuk Jo

 

April 1963

 

Senior Managing Director and Head of the Audit Department

    461     December 31, 2018

Chang Kwon Lee

 

November 1965

 

Managing Director and Chief Strategy Officer

    500     December 31, 2018

Hyun Jin Shin

 

February 1965

 

Managing Director and Chief Risk Management Officer

    —       December 31, 2019

Dong Whan Han

 

January 1965

 

Managing Director and Chief Digital Innovation Officer

    100     December 31, 2018

Nam Hoon Cho

 

June 1968

 

Managing Director and Chief Global Strategy

Officer

    —       December 31, 2018

Soon Bum Kwon(1)

 

October 1966

 

Managing Director and Chief Human Resources Officer

    1,255     December 31, 2019

Chai Hyun Sung

 

September 1965

 

Managing Director and Chief Public Relations Officer

    731     December 31, 2018

 

(1)

Served as Chief Human Resources Officer from January 1, 2018 to April 4, 2018.

As of September 30, 2018, the following management also served as senior management at our subsidiaries.

 

Name

  

Subsidiary

  

Position

  

Appointment Date

Yin Hur

   Kookmin Bank    President and Chief Executive Officer    November 2017

Kyung Eun Yoon

   KB Securities    Chief Executive Officer    December 2016

Ki Heon Kim

   KB Data Systems    Chief Executive Officer    January 2018

Jeong Rim Park

   Kookmin Bank    Senior Executive Vice President; Wealth Management Group    January 2017
   KB Securities    Deputy President; Wealth Management Division    January 2017

Young-Tae Park

   Kookmin Bank    Senior Managing Director; Data Strategy Division    January 2018
   KB Kookmin Card    Senior Managing Director; Data Strategy Division    January 2018

Bo Youl Oh

   Kookmin Bank    Senior Managing Director; Corporate and Investment Banking Customer Group    January 2018
   KB Securities    Deputy President; Investment Banking Division    January 2018

Dong Whan Han

   Kookmin Bank    Managing Director; Digital Business Group    January 2017

Chai Hyun Sung

   Kookmin Bank    Managing Director; Consumer Brand Strategy Group    January 2018

Chang Kwon Lee

   KB Securities    Non-standing Director    February 2018

Ki-Hwan Kim

   KB Insurance    Non-standing Director    February 2018
   KB Kookmin Card    Non-standing Director    February 2018


Table of Contents

As of September 30, 2018, the following non-executive directors also served as a director at another company.

 

Name

  

Company

  

Position

  

Appointment Date

Suk Ryul Yoo

   Jungmok    CEO    December 2013

Kouwhan Jeong

   Nambujeil Law and Notary Office Inc.    President Attorney at Law    May 2016

 

6.5.

Employees

The following table shows information regarding our employees as of September 30, 2018.

 

     (Unit: in millions of Won)  

Number of

Employees(A)

   Average Tenure of
Employees (months)
     Total Amount of Annual
Salaries(B)
     Average Annual Salary
per Person(B/A)
 

169

     39        15,137        90  

 

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, 2018.

 

     (Unit: shares, %)  

Name

   Number of Shares of Common Stock      Percentage of Total Issued Shares(1)  

Korean National Pension Service

     40,204,583        9.62  

JP Morgan Chase Bank, N.A.(2)

     25,755,140        6.16  

 

(1)

Based on 418,111,537 shares of our common stock issued as of December 31, 2017.

(2)

Depositary under the Company’s ADR program. The voting rights are held by ADR holders.


Table of Contents
7.2.

Changes in the Largest Shareholder

 

 

(As of September 30, 2018)    (Unit: shares, %)  

Name of the Largest Shareholder

   Date of Change in the Largest
Shareholder/
Date of Change in Number of
Shares Owned
     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  

Korean National Pension Service

     December 31, 2017        40,204,583        9.62  

 

(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, 2018)    (Unit: shares)  

Company Name

   Number of Shares of
Common Stock Owned
 

KB Financial Group Inc.

     14,143  

Kookmin Bank

     2,065,530  

KB Securities Co., Ltd.

     12,645  

KB Insurance Co., Ltd.

     64,438  

KB Kookmin Card Co., Ltd.

     111,326  

KB Life Insurance Co., Ltd.

     7,164  

KB Asset Management Co., Ltd.

     3,912  

KB Capital Co., Ltd.

     808  

KB Savings Bank Co., Ltd.

     1,267  

KB Real Estate Trust Co., Ltd.

     2,605  

KB Investment Co., Ltd.

     595  

KB Credit Information Co., Ltd.

     5,782  

KB Data Systems Co., Ltd.

     6,274  
  

 

 

 

Total

     2,296,489  
  

 

 

 


Table of Contents
7.4.

Investments in Affiliated Companies

 

(As of September 30, 2018)           (Units: shares, %, millions of Won)  

Company Name

   Ending Balance      Total assets as of
the latest fiscal
year(1)
     Net income (loss) for
the latest fiscal year(1)
 
   Number of
Shares Owned
     Ownership      Book value  

Kookmin Bank

     404,379,116        100        14,821,721        323,419,161        2,262,916  

KB Securities Co., Ltd.

     298,620,424        100        3,342,391        36,079,842        271,534  

KB Insurance Co., Ltd.

     66,500,000        100        2,375,430        31,538,102        360,489  

KB Kookmin Card Co., Ltd.

     92,000,000        100        1,953,175        17,659,957        302,106  

KB Life Insurance Co., Ltd.

     91,200,000        100        485,314        9,125,712        18,955  

KB Asset Management Co., Ltd.

     7,667,550        100        96,312        197,641        52,279  

KB Capital Co., Ltd.

     21,492,128        100        573,811        8,736,903        120,109  

KB Savings Bank Co., Ltd.

     8,001,912        100        157,544        1,158,829        21,150  

KB Real Estate Trust Co., Ltd.

     16,000,000        100        121,553        246,685        36,407  

KB Investment Co., Ltd.

     8,951,797        100        104,910        146,555        (2,602

KB Credit Information Co., Ltd.

     1,252,400        100        23,621        26,121        (5,316

KB Data Systems Co., Ltd.

     800,000        100        6,334        41,945        945  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          —          24,062,116        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

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


Table of Contents
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


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  7.5.2.

Prepayments and Loans to Subsidiaries

 

     (Unit: in billions of Won)

Name

  

Relationship

  

Account

   Loan Amount     

Current
Balance

   Credit Offering
Date
    

Interest Rate

   Maturity Date

KB Investment Co., Ltd.

   Subsidiary    Loans(1)      10      10      July 14, 2017      2.150%(2)    July 12, 2019

 

(1)

Unsecured credit loans

(2)

The interest rate changed from 2.042% to 2.150% when extended on July 13, 2018.

 

     (Unit: in billions of Won)

Name

  

Relationship

  

Account

   Loan Amount     

Current
Balance

   Credit Offering
Date
    

Interest Rate

   Maturity Date

KB Investment Co., Ltd.

   Subsidiary    Loans(1)      40      40      July 13, 2018      2.150%    July 12, 2019

 

(1)

Unsecured credit loans


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  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, 2018              By:  

/s/ Ki-Hwan Kim

    (Signature)
    Name: Ki-Hwan Kim
    Title:   Senior Managing Director and Chief Finance Officer