6-K 1 d780897d6k.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 August 2019

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      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      10  

2.

  Business      11  

2.1.

  Results of Operations      11  

2.2.

  Sources and Uses of Funds      12  

2.3.

  Other Information to Consider in Making an Investment Decision      14  

3.

  Financial Information      17  

3.1.

  Consolidated Financial Information      17  

3.2.

  Separate Financial Information      20  

3.3.

  Other Selected Financial Data      22  

3.4.

  Other Financial Information      25  

4.

  Independent Public Accountants      26  

4.1.

  Audit/ Review Services      26  

4.2.

  Public Company Accounting Oversight Board (“PCAOB”) Audit Services      26  

5.

  Corporate Governance and Affiliated Companies      27  

5.1.

  Board of Directors & Committees under the Board      27  

5.2.

  Audit Committee      27  

5.3.

  Compensation to Directors      27  

5.4.

  Top 5 Highest-Paid Individuals      29  

5.5.

  Affiliated Companies      32  

6.

  Directors, Senior Management and Employees      33  

6.1.

  Executive Directors      33  

6.2.

  Non-standing Directors      33  

6.3.

  Non-executive Directors      33  

6.4.

  Senior Management      34  

6.5.

  Employees      36  

7.

  Major Shareholders and Related Party Transactions      36  

7.1.

  Major Shareholders      36  

7.2.

  Changes in the Largest Shareholder      37  

7.3.

  Employee Stock Ownership Association      37  

7.4.

  Investments in Affiliated Companies      38  

7.5.

  Related Party Transactions      39  

 

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Summary of 2019 First Half Business Report

On August 14, 2019, KB Financial Group Inc. (“KB Financial Group”) filed its business report for the first half of 2019 (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.

 

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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. (“KB Kookmin Card”) 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., a subsidiary, 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

Acquired additional shares of KB Insurance in a tender offer, which increased the Company’s shareholding in KB Insurance from 39.81% to 94.30%.

 

   

May 19, 2017

Acquired additional shares of KB Capital in 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 (equity interests of 16%, 30% and 10% held by KB Securities, Kookmin Bank and KB Capital, respectively)

 

   

May 16, 2018

Converted Kookmin Bank International Ltd., a subsidiary, 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 KB Daehan Specialized Bank Plc. as a second-tier subsidiary

 

   

August 21, 2018

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

 

   

December 31, 2018

Added KB-Stonebridge Secondary Private Equity Fund as a second-tier subsidiary

 

   

January 9, 2019

Added KB-SPROTT Renewable Private Equity Fund I as a second-tier subsidiary

 

   

February 22, 2019

Liquidated KoFC KBIC Frontier Champ 2010-5 PEF, a second-tier subsidiary

 

1.3.

Overview of the Business Group

 

 

     (As of June 30, 2019)

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 Asset Management Co., Ltd.    KB Financial Group    Not listed
   KB Capital Co., Ltd.    KB Financial Group    Not listed
   KB Life Insurance Co., Ltd.    KB Financial Group    Not listed
   KB Real Estate Trust Co., Ltd.    KB Financial Group    Not listed
   KB Savings Bank Co., Ltd.    KB Financial Group    Not listed
   KB Investment Co., Ltd.    KB Financial Group    Not listed
   KB Data Systems Co., Ltd.    KB Financial Group    Not listed
   KB Credit Information Co., Ltd.    KB Financial Group        Not listed

 

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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-Stonebridge Secondary Private Equity Fund    KB Securities    Not listed
   KB-SPROTT Renewable Private Equity Fund I    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 POSCO HANWHA KB Shared Growth No. 2. Private Equity Fund    KB Investment    Not listed
   KoFC Value-up Private Equity Fund    KB Investment    Not listed

 

1.4.

Capital Structure

 

  1.4.1.

Common Shares

 

Changes in Capital

Not included in the half-year business reports.

 

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Number of Shares

 

(As of June 30, 2019)                  (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)

     28,477,202        —          28,477,202  

Shares Outstanding (A-B)

     389,634,335        —          389,634,335  

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, November 24, 2017 and November 30, 2018. 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.

 

  1.4.2.

Voting Rights

 

(As of June 30, 2019)                     

Items

          Number of Shares      Notes  

Total number of issued shares

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

Shares without voting rights

     Common shares        28,477,202        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        389,634,335        —    
     Preferred shares        —          —    

 

1.5.

Dividends

Not included in the half-year business reports.

 

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2.

Business

 

2.1.

Results of Operations

 

                 (Unit: in millions of Won)  
     For the six months     For the six months     For the year ended     For the year ended  
     ended June 30, 2019     ended June 30, 2018     December 31, 2018     December 31, 2017  

Net interest income

     4,549,167       4,340,155       8,904,928       8,246,614  

Interest income

     7,340,389       6,558,014       13,734,569       11,919,057  

Interest expense

     (2,791,222     (2,217,859     (4,829,641     (3,672,443

Net fee and commission income

     1,135,678       1,224,709       2,243,376       2,050,024  

Fee and commission income

     1,877,476       1,928,887       3,717,720       3,988,250  

Fee and commission expense

     (741,798     (704,178     (1,474,344     (1,938,226

Net insurance income

     230,578       321,019       490,116       593,710  

Insurance income

     6,156,219       5,996,109       11,975,070       8,970,992  

Insurance expense

     (5,925,641     (5,675,090     (11,484,954     (8,377,282

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

     —         —         —         203,724  

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

     329,085       216,718       351,303       —    

Net other operating expenses

     (480,511     (526,385     (1,130,036     (901,890

General and administrative expenses

     (3,000,845     (2,743,731     (5,918,512     (5,628,664

Operating profit before provision for credit losses

     2,763,152       2,832,485       4,941,175       4,563,518  

Provision for credit losses

     (293,745     (281,329     (673,694     (548,244

Net operating profit

     2,469,407       2,551,156       4,267,481       4,015,274  

 

Note:

The consolidated financial information for the six months ended June 30, 2019, the six months ended June 30, 2018 and the year ended December 31, 2018 is based on K-IFRS 1109 and 1115. The corresponding financial information for the year ended December 31, 2017 has not been restated.

 

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2.2.

Sources and Uses of Funds

 

  2.2.1.

Sources of Funds

 

         

(Unit: in millions of Won)

 

 
        For the six months
ended June 30, 2019
    For the year ended
December 31, 2018
    For the year ended
December 31, 2017
 
        Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
 

Won

Currency

  Deposits     250,814,790       1.52       52.27       238,468,014       1.39       52.82       219,970,681       1.20       54.26  
  Certificate of deposit     4,770,535       2.04       0.99       3,044,609       1.91       0.67       2,862,817       1.57       0.71  
  Borrowings     10,658,196       1.76       2.22       10,312,988       1.59       2.28       9,306,125       1.41       2.30  
  Call money     546,629       1.83       0.11       1,437,887       1.53       0.32       2,165,151       1.26       0.53  
  Debentures     47,448,853       2.37       9.89       44,072,110       2.29       9.76       36,393,274       2.17       8.98  
  Others     14,964,796       2.02       3.12       16,665,395       1.60       3.69       13,735,978       1.41       3.38  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    329,203,799       1.68       68.60       314,001,003       1.54       69.54       284,434,026       1.35       70.16  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign Currency

  Deposits     12,126,998       1.34       2.53       11,039,672       1.15       2.45       10,156,743       0.80       2.51  
  Borrowings     9,249,030       2.44       1.93       8,249,765       2.02       1.83       6,438,408       1.17       1.59  
  Call money     603,799       2.55       0.13       751,171       2.35       0.17       1,239,627       1.39       0.31  
  Debentures     5,259,945       2.87       1.10       4,076,096       3.40       0.90       3,374,998       2.71       0.83  
  Others     381,036       1.42       0.07       297,657       0.89       0.07       321,263       0.56       0.07  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    27,620,808       2.03       5.76       24,414,361       1.85       5.42       21,531,039       1.24       5.31  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others

  Total shareholders’ equity     36,754,159       —         7.66       35,690,200       —         7.90       34,785,839       —         8.58  
  Allowances     837,265       —         0.17       750,262       —         0.17       829,075       —         0.20  
  Others     85,467,843       —         17.81       76,643,695       —         16.97       63,855,888       —         15.75  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    123,059,267       —         25.64       113,084,157       —         25.04       99,470,802       —         24.53  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    479,883,874       —         100.00       451,499,521       —         100.00       405,435,867       —         100.00  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

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  2.2.2.

Uses of Funds

 

                                           

(Unit: in millions of Won)

 

 
        For the six months
ended June 30, 2019
    For the year ended
December 31, 2018
    For the year ended
December 31, 2017
 
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
    Average
Balance
    Interest Rate
(%)
    Ratio
(%)
 

Won Currency

  Due from banks     5,250,140       1.59       1.09       4,817,024       1.43       1.07       6,757,757       1.44       1.67  
  Securities     100,245,192       2.87       20.89       95,395,973       2.84       21.13       80,406,670       1.81       19.83  
  Loans     284,995,038       3.53       59.39       269,569,916       3.43       59.71       247,117,982       3.28       60.95  
 

Guarantee payments under payment guarantee

    8,019       0.70       —         8,206       1.87       —         17,008       0.66       —    
  Call loan     721,882       1.79       0.15       632,317       1.48       0.14       315,950       1.28       0.08  
 

Private placement corporate bonds

    1,432,518       3.71       0.30       1,452,396       3.44       0.32       1,801,681       4.00       0.44  
  Credit cards     17,659,957       8.02       3.68       16,722,691       8.15       3.70       14,877,741       8.32       3.67  
  Others     3,893,490       4.92       0.81       4,209,878       4.08       0.93       4,123,143       3.87       1.02  
  Allowance     (2,491,030     —         (0.52     (2,434,872     —         (0.54     (2,116,366     —         (0.52
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    411,715,206       3.57       85.79       390,373,529       3.49       86.46       353,301,566       3.15       87.14  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign Currency

  Due from banks     4,487,394       1.56       0.94       3,666,805       1.36       0.81       2,862,165       1.06       0.71  
  Securities     12,206,724       4.84       2.54       12,704,025       2.47       2.81       10,013,637       3.19       2.47  
  Loans     10,010,045       3.20       2.09       8,050,597       2.96       1.78       7,136,381       2.29       1.76  
  Call loan     2,247,558       2.82       0.47       2,553,987       2.38       0.57       2,909,920       1.53       0.72  
  Bills bought     3,280,401       2.74       0.68       4,113,332       1.93       0.91       3,166,307       1.51       0.78  
  Allowance     (183,857     —         (0.04     (262,835     —         (0.06     (173,771     —         (0.04
  Others     583,463       —         0.12       153,277       —         0.03       72,297       —         0.01  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    32,631,728       3.55       6.80       30,979,188       2.41       6.85       25,986,936       2.35       6.41  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others

  Cash     1,758,657       —         0.37       1,769,656       —         0.39       1,726,448       —         0.43  
 

Fixed assets held for business

    7,026,180       —         1.46       5,639,374       —         1.25       5,826,159       —         1.44  
  Others     26,752,103       —         5.58       22,737,774       —         5.05       18,594,758       —         4.58  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    35,536,940       —         7.41       30,146,804       —         6.69       26,147,365       —         6.45  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    479,883,874       —         100.00       451,499,521       —         100.00       405,435,867       —         100.00  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

13


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 June 30, 2019(1)     As of December 31, 2018     As of December 31, 2017  

Total capital (A)

     36,417       34,476       32,402  

Risk-weighted assets (B)

     243,782       236,099       212,777  

BIS ratio (A/B)

     14.94     14.60     15.23

Note: Calculated in accordance with Basel III.

(1)

Preliminary figures

 

Kookmin Bank

               (Unit: in billions of Won)  
     As of June 30, 2019     As of December 31, 2018     As of December 31, 2017  

Total capital (A)

     29,103       27,694       25,914  

Risk-weighted assets (B)

     182,245       178,433       161,825  

BIS ratio (A/B)

     15.97     15.52     16.01

Note: Calculated in accordance with Basel III.

 

KB Securities

               (Unit: in billions of Won)  
     As of June 30, 2019     As of December 31, 2018     As of December 31, 2017  

Net operating capital (A)

     3,077       2,969       3,211  

Total amount at risk (B)

     1,333       1,251       1,048  

Maintenance equity margin (C)

     134       134       134  

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

     1,299.43     1,278.45     1,609.03

Capital surplus (A-B)

     1,744       1,718       2,163  

 

KB Insurance

               (Unit: in billions of Won)  
     As of June 30, 2019     As of December 31, 2018     As of December 31, 2017  

Available capital (A)

     3,655       3,333       3,080  

Required capital (B)

     1,891       1,782       1,618  

RBC ratio (A/B)

     193.3     187.1     190.3

Note: RBC ratio: Risk-Based Capital ratio.

 

14


Table of Contents
  2.3.2.

Overseas Credit Ratings

 

(As of June 30, 2019)

                                     Moody’s                                                 

Long-term

  

Short-term

A1    P-1

 

  2.3.3

Domestic Credit Ratings

 

          (As of June 30, 2019)

Date of
Rating

  

Type

  

Credit Rating

  

Rating Company

(Rating Range)

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)

2/21/2019    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)

4/8/2019    Contingent Convertible Bonds    AA-   

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

NICE Investors Service (AAA ~ D)

6/18/2019    Debentures    AAA   

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

NICE Investors Service (AAA ~ D)

6/26/2019    Commercial Paper    A1   

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

NICE Investors Service (A1 ~ D)

 

15


Table of Contents
  2.3.4.

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 28, 2019

   613

 

  2.3.5.

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%

   116,422(1)(2) (IDR 1,460,910,000,000)

 

(1)

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

(2)

Includes consulting fees of Won 3,348 million paid in connection with the acquisition.

 

16


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 June 30, 2019      As of December 31, 2018      As of December 31, 2017  

Cash and due from financial institutions

     22,521,290        20,274,490        19,817,825  

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

     —          —          32,227,345  

Financial assets at fair value through profit or loss

     48,711,872        50,987,847        —    

Derivative financial assets

     2,891,518        2,025,962        3,310,166  

Loans at amortized cost

     324,900,461        319,201,603        290,122,838  

Financial investments

     64,290,715        61,665,094        66,608,243  

Investments in associates and joint ventures

     526,937        504,932        335,070  

Property and equipment

     4,907,014        4,272,127        4,201,697  

Investment property

     2,591,919        2,119,811        848,481  

Intangible assets

     2,713,678        2,755,783        2,943,060  

Net defined benefit assets

     —          —          894  

Current income tax assets

     19,310        10,004        6,324  

Deferred income tax assets

     4,338        4,158        3,991  

Assets held for sale

     13,084        16,952        155,506  

Other assets

     24,086,930        15,749,535        16,204,169  
  

 

 

    

 

 

    

 

 

 

Total assets

     498,179,066        479,588,298        436,785,609  
  

 

 

    

 

 

    

 

 

 

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

     —          —          12,023,058  

Financial liabilities at fair value through profit or loss

     17,282,640        15,326,859        —    

Derivative financial liabilities

     3,257,205        2,901,247        3,142,765  

Deposits

     288,423,297        276,770,449        255,800,048  

Debts

     30,219,021        33,004,834        28,820,928  

Debentures

     50,851,003        53,278,697        44,992,724  

Provisions

     536,814        525,859        568,033  

Net defined benefit liabilities

     338,239        262,213        154,702  

Current income tax liabilities

     326,248        698,634        433,870  

Deferred income tax liabilities

     836,954        492,534        533,069  

Insurance contract liabilities

     34,226,218        33,412,949        31,801,275  

Other liabilities

     34,679,117        27,200,996        24,470,308  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     460,976,756        443,875,271        402,740,780  
  

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders of the parent company

     37,192,215        35,703,916        34,038,685  

Share capital

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

 

17


Table of Contents
     As of June 30, 2019     As of December 31, 2018     As of December 31, 2017  

Hybrid securities

     399,085       —         —    

Capital surplus

     17,123,338       17,121,660       17,122,228  

Accumulated other comprehensive income

     476,423       177,806       537,668  

Retained earnings

     18,338,999       17,282,441       15,044,204  

Treasury shares

     (1,236,188     (968,549     (755,973

Non-controlling interests

     10,095       9,111       6,144  

Total equity

     37,202,310       35,713,027       34,044,829  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

     498,179,066       479,588,298       436,785,609  
  

 

 

   

 

 

   

 

 

 

 

Note:

The consolidated financial information as of June 30, 2019 and December 31, 2018 is based on K-IFRS 1109 and 1115. The corresponding financial information as of December 31, 2017 has not been restated.

 

18


Table of Contents
  3.1.2.

Consolidated Statements of Comprehensive Income

 

          

(Unit: in millions of Won, except per share amounts)

 
     For the six months
ended June 30, 2019
    For the six months
ended June 30, 2018
    For the year ended
December 31, 2018
    For the year ended
December 31, 2017
 

Net interest income

     4,549,167       4,340,155       8,904,928       8,246,614  

Net fee and commission income

     1,135,678       1,224,709       2,243,376       2,050,024  

Net insurance income(expense)

     230,578       321,019       490,116       593,710  

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

     —         —         —         203,724  

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

     329,085       216,718       351,303       —    

Net other operating expenses

     (480,511     (526,385     (1,130,036     (901,890

General and administrative expenses

     (3,000,845     (2,743,731     (5,918,512     (5,628,664

Operating profit before provision for credit losses

     2,763,152       2,832,485       4,941,175       4,563,518  

Provision for credit losses

     (293,745     (281,329     (673,694     (548,244

Net operating income

     2,469,407       2,551,156       4,267,481       4,015,274  

Net non-operating income(loss)

     55,341       95,368       34,051       123,150  

Profit before income tax

     2,524,748       2,646,524       4,301,532       4,138,424  

Income tax expense

     (687,351     (731,338     (1,239,586     (794,963

Profit for the period

     1,837,397       1,915,186       3,061,946       3,343,461  

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

     280,576       1,286       (10,482     136,226  

Total comprehensive income for the period

     2,117,973       1,916,472       3,051,464       3,479,687  

Profit attributable to:

     1,837,397       1,915,186       3,061,946       3,343,461  

Shareholders of the parent company

     1,836,844       1,914,983       3,061,191       3,311,438  

Non-controlling interests

     553       203       755       32,023  

Total comprehensive income for the period attributable to:

     2,117,973       1,916,472       3,051,464       3,479,687  

Shareholders of the parent company

     2,117,052       1,916,263       3,050,805       3,445,285  

Non-controlling interests

     921       209       659       34,402  

Earnings per share

        

Basic earnings per share (Won)

     4,678       4,826       7,721       8,305  

Diluted earnings per share (Won)

     4,647       4,796       7,676       8,257  

 

Note:

The consolidated financial information for the six months ended June 30, 2019, the six months ended June 30, 2018 and the year ended December 31, 2018 is based on K-IFRS 1109 and 1115. The corresponding financial information for the year ended December 31, 2017 has not been restated.

 

19


Table of Contents
3.2.

Separate Financial Information

 

  3.2.1.

Separate Statements of Financial Position

 

     (Unit: in millions of Won)  
     As of June 30, 2019       As of December 31, 2018       As of December 31, 2017  

Cash and due from financial institutions

     66,283       344,302       245,400  

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

     —         —         284,485  

Financial assets at fair value through profit or loss

     474,105       289,179       —    

Loans at amortized cost

     120,000       50,000       10,000  

Investments in subsidiaries

     24,162,116       24,062,116       24,062,116  

Property and equipment

     5,508       2,185       697  

Intangible assets

     10,182       9,646       8,864  

Net defined benefit assets

     —         —         201  

Deferred income tax assets

     6,733       8,184       10,282  

Other assets

     508,006       857,462       480,789  
  

 

 

   

 

 

   

 

 

 

Total assets

     25,352,933       25,623,074       25,102,834  
  

 

 

   

 

 

   

 

 

 

Debts

     —         300,000       300,000  

Debentures

     5,542,687       5,373,266       5,162,600  

Net defined benefit liabilities

     1,351       183       —    

Current income tax liabilities

     319,228       691,909       308,854  

Other liabilities

     206,955       186,481       204,835  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     6,070,221       6,551,839       5,976,289  
  

 

 

   

 

 

   

 

 

 

Share capital

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

Hybrid securities

     399,085       —         —    

Capital surplus

     14,742,814       14,742,814       14,742,814  

Accumulated other comprehensive loss

     (7,185     (7,144     (5,233

Retained earnings

     3,293,628       3,213,556       3,054,379  

Treasury Shares

     (1,236,188     (968,549     (755,973
  

 

 

   

 

 

   

 

 

 

Total equity

     19,282,712       19,071,235       19,126,545  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

     25,352,933       25,623,074       25,102,834  
  

 

 

   

 

 

   

 

 

 

 

Note:

The separate financial information as of June 30, 2019 and December 31, 2018 is based on K-IFRS 1109 and 1115. The corresponding financial information as of December 31, 2017 has not been restated.

 

20


Table of Contents
  3.2.2.

Separate Statements of Comprehensive Income

 

     (Unit: in millions of Won, except per share amounts)  
     For the six months
ended June 30, 2019
    For the six months
ended June 30, 2018
    For the year ended
December 31, 2018
    For the year ended
December 31, 2017
 

Net interest expense

     (59,425     (57,019     (115,835     (97,218

Net fee and commission expense

     (2,868     (3,631     (5,208     (7,808

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

     —         —         —         745  

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

     9,765       8,732       18,319       —    

Net other operating income

     926,934       1,089,556       1,089,556       709,544  

General and administrative expenses

     (30,942     (25,228     (57,845     (57,485

Operating profit before provision for credit losses

     843,464       1,012,410       928,987       547,778  

Provision for credit losses

     —         —         —         —    

Operating profit

     843,464       1,012,410       928,987       547,778  

Net non-operating expense

     (48     (101     (259     125  

Profit before income tax

     843,416       1,012,309       928,728       547,903  

Income tax benefit (expense)

     (1,466     (2,348     (2,823     5,522  

Profit for the period

     841,950       1,009,961       925,905       553,425  

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

     (41     (73     (1,911     (491

Total comprehensive income for the period

     841,909       1,009,888       923,994       552,934  

Earnings per share

        

Basic earnings per share (Won)

     2,144       2,545       2,335       1,388  

Diluted earnings per share (Won)

     2,130       2,529       2,322       1,380  

 

Note:

The separate financial information for the six months ended June 30, 2019, the six months ended June 30, 2018 and the year ended December 31, 2018 is based on K-IFRS 1109 and 1115. The corresponding financial information for the year ended December 31, 2017 has not been restated.

 

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3.3.

Other Selected Financial Data

 

  3.3.1.

Won-denominated Liquidity Ratio

 

    

(Unit: in millions of Won)

 

 

Category

   As of June 30, 2019     As of December 31, 2018     As of December 31, 2017  

Current assets in Won (A)

     263,111       30,150       47,253  

Current liabilities in Won (B)

     181,365       9,300       6,792  

Liquidity ratio (A/B)

     145.07     324.20     695.72

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 six months ended
June 30, 2019
     For the year ended
December 31, 2018
     For the year ended
December 31, 2017
 

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

     0.76        0.66        0.82  

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

     10.22        8.82        10.18  

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

 

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  3.3.3.

20 Largest Exposures of Kookmin Bank by Borrower

 

     (As of June 30, 2019)  

Company

   Credit extended  
     (Unit: in billions of Won)  

Samsung Electronics Co., Ltd.

     1,207  

LG Display Co., Ltd.

     1,164  

Hyundai Motor Company

     1,136  

Hyundai Steel Company

     1,002  

GS Caltex Corporation

     782  

Hyundai Capital Services, Inc.

     737  

LG Electronics Inc.

     689  

S-OIL Corporation

     687  

Korea Securities Finance Corp.

     684  

Hyundai Heavy Industries Co., Ltd.

     679  

Agricultural Bank

     560  

Kia Motors Corporation

     554  

Samsung Heavy Industries Co., Ltd.

     546  

SK Energy Co., Ltd.

     533  

CJ Cheiljedang Corp.

     497  

LS-Nikko Copper Inc.

     469  

Lotte Corporation

     460  

Daewoo Shipbuilding & Marine Engineering Co., Ltd.

     440  

Shinsegae Inc.

     434  

KT Corporation

     428  
  

 

 

 

Total

     13,688  
  

 

 

 

 

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  3.3.4.

10 Largest Exposures of Kookmin Bank by Chaebol Group

 

     (As of June 30, 2019)  

Group

   Credit extended  
     (Unit: in billions of Won)  

Hyundai Motor

     5,257  

Samsung

     3,570  

SK

     2,957  

LG

     2,594  

Lotte

     2,073  

Hanwha

     1,867  

GS

     1,252  

Shinsegae

     897  

CJ

     885  

LS

     818  
  

 

 

 

Total

     22,170  
  

 

 

 

 

  3.3.5.

Kookmin Bank’s Loan Concentration by Industry

 

     (As of June 30, 2019)  

Industry

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

Manufacturing

     45,145.4        33.6  

Real estate

     27,514.2        20.5  

Retail and wholesale

     19,353.5        14.4  

Hotel, lodging and food service

     8,648.4        6.5  

Construction

     3,169.4        2.4  

Financial institutions

     3,113.0        2.3  

Others

     27,302.9        20.3  
  

 

 

    

 

 

 

Total

     134,246.8        100.00  
  

 

 

    

 

 

 

 

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  3.3.6.

Top 20 Non-Performing Loans of Kookmin Bank

 

         (As of June 30, 2019)  

Borrower

 

Industry

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

Borrower A

  Construction      70.2        67.5  

Borrower B

  Publishing, Media, Broadcasting and Information Service      55.3        55.2  

Borrower C

  Shipbuilding      51.5        13.3  

Borrower D

  Construction      40.4        39.6  

Borrower E

  Shipping      23.8        23.5  

Borrower F

  Construction      21.1        20.7  

Borrower G

  Construction      17.6        16.7  

Borrower H

  Retail and wholesale      15.0        9.0  

Borrower I

  Manufacturing      13.0        5.7  

Borrower J

  Retail and wholesale      13.0        10.2  

Borrower K

  Real estate and leasing      12.7        1.0  

Borrower L

  Manufacturing      9.9        9.6  

Borrower M

  Shipbuilding      9.1        1.9  

Borrower N

  Manufacturing      8.3        5.3  

Borrower O

  Manufacturing      7.9        4.2  

Borrower P

  Real estate and leasing      6.6        1.7  

Borrower Q

  Construction      6.5        6.0  

Borrower R

  Construction      6.2        0.3  

Borrower S

  Manufacturing      6.2        4.3  

Borrower T

  Manufacturing      6.2        2.3  
    

 

 

    

 

 

 

Total

       400.5        298.0  
    

 

 

    

 

 

 

 

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
June 30, 2019

   Samil PricewaterhouseCoopers    Quarterly / first half and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)   1,081    3,120

January 1 to
December 31, 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    9,820

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

 

(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
June 30, 2019

   Samil PricewaterhouseCoopers    PCAOB audit of consolidated financial statements and internal control over financial reporting    May 1, 2019 to
April 30, 2020
   573

January 1 to
December 31, 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

 

(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 June 30, 2019, 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.

 

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)

     (7)      2,500        —    

 

(1)

Represents the total number of applicable persons as of June 30, 2019.

(2)

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

 

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  5.3.2.

Total Amount Paid

 

(As of June 30, 2019)    (Unit: in millions of Won)  

Total number of persons(1)

   Total payment(2)(4)      Average payment per person(3)      Notes  

9

     847        94        —    

 

(1)

Represents the total number of applicable persons as of June 30, 2019.

(2)

Represents the total amount paid (rounded to the nearest million) for the six months ended June 30, 2019.

(3)

Represents (i) the total amount paid (rounded to the nearest million) for the six months ended June 30, 2019, divided by (ii) the number of applicable persons for the applicable reporting period.

*Jongsoo Han resigned from his post as a non-executive director on March 25, 2019.

*Kyung Ho Kim was newly appointed as a non-executive director on March 27, 2019.

 

(4)

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

 

  5.3.3.

Compensation Breakdown

 

(As of June 30, 2019)                  (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        578        289        —    

Non-executive Directors (excluding Audit Committee members)

     3        116        39        —    

Audit Committee members

     4        154        38        —    

Internal Auditor

     —          —          —          —    

 

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5.4.

Top 5 Highest-Paid Individuals

 

  5.4.1.

Compensation exceeding Won 500 million – Individual basis

 

(As of June 30, 2019)

 

            

(Unit: in millions of Won)

 

Name

  

Position

  

Total Compensation

  

Additional Compensation

Jong Kyoo Yoon

   Chairman & CEO    578   

Over 60% of the performance-based incentive payment is granted in cash on a deferred basis over a three-year period, based on the stock price in order to reflect the long-term performance of the Company.

 

24,036 shares (representing the remaining deferred portion) are expected to be granted in the form of cash based on the fair market price of the Company’s stock at the time of payment, pursuant to a long-term performance-based stock grant determined in December 2017 based on a performance evaluation with respect to the three-year period from November 21, 2014 to November 20, 2017.

 

5,649 shares (representing the deferred share portion) are expected to be granted in the form of cash based on the fair market price of the Company’s stock at the time of payment, pursuant to a short-term performance-based stock grant determined in February 2019 based on a performance evaluation for 2018.

 

In addition to the above compensation, a maximum amount of 46,890 shares over three years (15,630 shares per year) are expected to be granted as a long-term performance-based stock grant. The actual share amount, which may range from 0% to 100% of the above maximum amount, will be determined in the future based on a performance evaluation with respect to the three-year period from November 21, 2017 to November 20, 2020 and will be paid based on the fair market price of the Company’s stock at the time of payment.

 

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5.4.2. Criteria and method of calculating compensation

(Unit: in millions of Won)

Name

 

Compensation
Type

 

Classification

 

Total
Compensation

 

Calculation Criteria and Method

Jong Kyoo Yoon   Earned income   Salary   400   A monthly salary was paid, which was derived by dividing (i) the amount of annual salary determined by resolution of the Evaluation & Compensation Committee within the limit of the total amount of compensation approved at the shareholders’ meeting by (ii) 12 months. (This amount includes allowances for business expenses of Won 175 million.)
    Bonus   178  

The bonus of Won 178 million represents 40% of the short-term performance-based incentive payment based on performance in 2018. The remaining 60% will be granted as 5,649 restricted stock units over a three-year period based on the fair market price of the Company’s stock at the time of payment.

 

The short-term performance-based incentive payment based on performance in 2018 was approved at the third meeting of the Evaluation & Compensation Committee held in 2019 based on the final performance evaluation and resolution by the Evaluation & Compensation Committee, in accordance with the “Proposal on Long- and Short-Term Performance Evaluation and Compensation Scheme for the CEO,” which was approved at the first meeting of the Evaluation & Compensation Committee held in 2018.

 

The short-term performance evaluation index for 2018 comprises financial results (e.g., ROE, net profit, RAROC, CIR, real NPL ratio, Tier 1 ratio, cooperation among subsidiaries, increase in customers) and results related to strategic initiatives (e.g., enhancing the Company’s competitive edge and establishing a “One-Firm KB” by implementing innovative business models and customer-centric service and process). The amount of the short-term incentive payment is determined based on the aggregate score of the index items above and is within the range of 0%-100% of the base salary.    

 

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With respect to financial results, although the Company’s net profit for 2018 decreased by 7.6% YoY to Won 3,061.2 billion due to, among others, an increase in early retirement program costs and weak performance of the insurance business, the major achievements reflected in the performance evaluation included the improvement of asset quality (e.g. real NPL ratio decreased from 1.19% in 2017 to 1.01% in 2018), cost efficiency (e.g. CIR decreased from 55.2% in 2017 to 54.5% in 2018) and risk management through qualitative growth improving quality of prime assets (e.g. loans in Won increased by 9.6% YoY from Won 235 trillion in 2017 to Won 257 trillion in 2018).

 

With respect to non-financial results, the major achievements considered included securing the Company’s competitive edge by improving its core businesses, identifying and expanding businesses in promising markets, improving customer-centric processes, providing specialized and differentiated financial services and strengthening sustainable management, and enhancing the Company’s competitive edge and establishing a “One-Firm KB” by improving corporate governance, establishing shared values within the Company, strengthening intra-group collaboration, improving capital efficiency and risk management.

 

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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 June 30, 2019 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 Asset Management Co., Ltd. (100.00%)

 

  6)

KB Capital Co., Ltd. (100.00%)

 

  7)

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

 

  8)

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

 

  9)

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

 

  10)

KB Investment Co., Ltd. (100.00%)

 

  11)

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

 

  12)

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

 

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Table of Contents
6.

Directors, Senior Management and Employees

 

6.1.

Executive Directors

As of June 30, 2019, 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 June 30, 2019 are set forth below.

 

Name

   Date of Birth      Position      Common Shares Owned      End of Term  

Jong Kyoo Yoon

     October 1955        Chairman & Chief Executive Officer        21,000        November 20, 2020  

 

6.2.

Non-standing Directors

As of June 30, 2019, 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 June 30, 2019 are set forth below.

 

Name

   Date of Birth      Position      Common Shares Owned      End of Term  

Yin Hur

     December 1961        Non-standing Director        7,500        March 22, 2020  

 

6.3.

Non-executive Directors

As of June 30, 2019, we had seven non-executive directors. The names, positions and the end of the terms of our non-executive directors and the number of shares of our common stock they respectively owned as of June 30, 2019 are set forth below.

 

Name

   Date of Birth    Position    Common Shares Owned      End of Term

Suk Ryul Yoo

   April 1950    Non-executive Director      —        March 26, 2020

Stuart B. Solomon

   July 1949    Non-executive Director      —        March 26, 2020

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

Kyung Ho Kim

   December 1954    Non-executive Director      —        March 26, 2021

Jae Ha Park

   November 1957    Non-executive Director      —        March 26, 2020

 

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Table of Contents
6.4.

Senior Management

In addition to our executive director who is also our executive officer, we had the following executive officers as of June 30, 2019.

 

Name

  

Date of Birth

  

Position

   Common Shares Owned     

End of Term

Ki-Hwan Kim

   March 1963    Deputy President and Chief Finance Officer      1,471      December 31, 2019

Pil Kyu Im

   March 1964    Deputy President and Chief Human Resources Officer      1,005      December 31, 2019

Kyung Yup Cho

   September 1961    Deputy President; KB Research      1,500      December 31, 2019

Young Hyuk Jo

   April 1963    Deputy President; Audit Department      961      December 31, 2019

Chang Kwon Lee

   November 1965    Senior Managing Director and Chief Strategy Officer      500      December 31, 2019

Hyun Jin Shin

   February 1965    Senior Managing Director and Chief Risk Management Officer      1,000      December 31, 2019

Nam Hoon Cho

   June 1968    Managing Director and Chief Global Strategy Officer      1,000      December 31, 2019

Chan Il Park

   March 1963    Managing Director and Chief Compliance Officer      989      December 31, 2020

Soon Bum Kwon

   October 1966    Managing Director      1,255      December 31, 2019

Jeong Rim Park

   November 1963    Head of Capital Market Business Unit      3,150      December 31, 2019

Jong Hee Yang

   June 1961    Head of Insurance Business Unit      914      December 31, 2019

Dong Cheol Lee

   October 1961    Head of Retail Customer Business Unit      1,010      December 31, 2019

Bo Youl Oh

   January 1962    Head of Corporate and Investment Banking Business Unit      463      December 31, 2019

Young Gil Kim

   January 1963    Head of Wealth Management Business Unit      152      December 31, 2019

Deok Soon Shin

   February 1963    Head of Small and Medium Enterprise Business Unit      1,843      December 31, 2019

Chai Hyun Sung

   September 1965    Chief Public Relation Officer      2,288      December 31, 2019

Dong Whan Han

   January 1965    Chief Digital Innovation Officer      1,100      December 31, 2019

Woo Yeul Lee

   November 1964    Chief Information Technology Officer      1,119      December 31, 2019

Jin Soo Yoon

   February 1964    Chief Data Officer      —        March 31, 2021

Jae Young Choi

   June 1967    Head of Pension Business Division      534      May 26, 2021

Jin Gyu Maeng

   January 1966    General Manager of Planning and Coordination Office      630      December 31, 2019

 

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Table of Contents

As of June 30, 2019, the following management personnel also served as senior management at our subsidiaries.

 

Name

   Subsidiary   

Position

   Appointment Date

Yin Hur

   Kookmin Bank    President and Chief Executive Officer    November 2017

Jeong Rim Park

   KB Securities    Chief Executive Officer    January 2019

Jong Hee Yang

   KB Insurance    Chief Executive Officer    March 2016

Dong Cheol Lee

   KB Kookmin Card    Chief Executive Officer    January 2018

Bo Youl Oh

   Kookmin Bank    Senior Executive Vice President; Corporate and Investment Banking Customer Group    January 2019
   KB Securities    Deputy President; Investment Banking Division    January 2018

Chai Hyun Sung

   Kookmin Bank    Senior Managing Director; Consumer Brand Strategy Group    January 2019

Dong Whan Han

   Kookmin Bank    Senior Managing Director; Digital Business Group    January 2019

Woo Yeul Lee

   Kookmin Bank    Senior Managing Director; Information Technology Group    January 2019

Jin Soo Yoon

   Kookmin Bank    Senior Managing Director; Data Strategy Division    April 2019
   KB Kookmin Card    Senior Managing Director; Data Strategy Division    April 2019

Young Gil Kim

   Kookmin Bank    Senior Managing Director; Wealth Management Group    January 2019
   KB Securities    Deputy President; Wealth Management Division    January 2019

Deok Soon Shin

   Kookmin Bank    Senior Managing Director; Small and Medium Enterprise Group    January 2019

Jae Young Choi

   Kookmin Bank    Head of Pension Business Division    May 2019
   KB Securities    Head of Pension Planning Department    May 2019
   KB Insurance    Head of Pension Planning Department    May 2019

Jin Gyu Maeng

   Kookmin Bank    General Manager; Planning and Coordination Office    January 2019

Ki-Hwan Kim

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

Chang Kwon Lee

   KB Securities    Non-standing Director    February 2018

As of June 30, 2019, 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

 

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Table of Contents
6.5.

Employees

The following table shows information regarding our employees as of June 30, 2019.

 

                

(Unit: in millions of Won)

 

 

Number of

Employees(A)(1)

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

161

    

3 years and 6 months

(14 years and 1 month


(2) 

    12,950 (3)      80 (3) 

 

(1)

Includes executive officers.

(2)

The term in parentheses includes tenure at our subsidiaries.

(3)

Includes retroactively paid bonus and wage increase for 2018. The average annual salary per person excluding such amounts is Won 70.6 million.

The following table shows information regarding our executive officers as of June 30, 2019.

 

    

(Unit: in millions of Won)

 

 

Number of

Executive Officers(A)*

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

9

     1,769        197  

 

*

Excludes twelve executive officers who serve primarily as executive officers of our subsidiaries.

 

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 June 30, 2019.

 

 

    

(Unit: shares, %)

 

 

Name

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

Korean National Pension Service

     39,704,733 (2)      9.50  

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

     26,726,442 (2)      6.39  

Franklin Resources, Inc.

     22,681,596 (4)      5.42  

 

(1)

Based on 418,111,537 total issued shares of our common stock.

(2)

Based on our shareholder registry as of December 31, 2018.

(3)

Depositary under our ADR program. The voting rights are held by ADR holders.

(4)

Based on the filing made by Franklin Resources, Inc. with the Financial Supervisory Service on July 9, 2019.

 

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7.2.

Changes in the Largest Shareholder

 

(As of June 30, 2019)

 

                

(Unit: shares, %)

 

 

Name of Largest Shareholder

   Date of Change in 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  

Korean National Pension Service

     December 31, 2018        39,704,733        9.50  

 

(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 June 30, 2019)

 

  

(Unit: shares)

 

 

Company Name

   Number of Shares of
Common Stock Owned
 

KB Financial Group Inc.

     31,027  

Kookmin Bank

     3,696,881  

KB Securities Co., Ltd.

     16,403  

KB Insurance Co., Ltd.

     122,706  

KB Kookmin Card Co., Ltd.

     138,474  

KB Asset Management Co., Ltd.

     5,082  

KB Capital Co., Ltd.

     750  

KB Life Insurance Co., Ltd.

     8,363  

KB Real Estate Trust Co., Ltd.

     11,880  

KB Savings Bank Co., Ltd.

     2,431  

KB Investment Co., Ltd.

     798  

KB Data Systems Co., Ltd.

     8,002  

KB Credit Information Co., Ltd.

     6,097  
  

 

 

 

Total

     4,048,894  
  

 

 

 

 

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7.4.

Investments in Affiliated Companies

 

(As of June 30, 2019)

 

     (Units: shares, %, millions of Won)  

Company Name

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

Kookmin Bank

     404,379,116        100        14,821,721        356,959,258        2,259,198  

KB Securities Co., Ltd.

     298,620,424        100        3,342,391        45,086,292        178,850  

KB Insurance Co., Ltd.

     66,500,000        100        2,375,430        34,785,551        262,266  

KB Kookmin Card Co., Ltd.

     92,000,000        100        1,953,175        20,528,951        286,598  

KB Asset Management Co., Ltd.

     7,667,550        100        96,312        254,256        39,586  

KB Capital Co., Ltd.

     23,349,208        100        623,811        9,517,239        111,939  

KB Life Insurance Co., Ltd.

     91,200,000        100        485,314        9,680,379        14,824  

KB Real Estate Trust Co., Ltd.

     16,000,000        100        121,553        293,063        47,004  

KB Savings Bank Co., Ltd.

     8,001,912        100        157,544        1,388,844        11,018  

KB Investment Co., Ltd.

     22,525,328        100        154,910        528,701        14,532  

KB Data Systems Co., Ltd.

     800,000        100        6,334        40,197        2,942  

KB Credit Information Co., Ltd.

     1,252,400        100        23,621        26,276        185  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —          —          24,162,116        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

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

 

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Table of Contents
7.5.

Related Party Transactions

 

  7.5.1.

Purchase of capital securities issued by Subsidiaries

(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  
                (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      

 

39


Table of Contents
                (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  

 

40


Table of Contents
  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      2.195 %(2)    July 12, 2020

 

(1)

Unsecured credit loans

(2)

Changed from 2.150% to 2.195% upon extension of the loans on July 13, 2019.

(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      2.195 %(2)    July 12, 2020

 

(1)

Unsecured credit loans

(2)

Changed from 2.150% to 2.195% upon extension of the loans on July 13, 2019.

(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)     70        70      March 8, 2019      2.176   March 7, 2020

 

(1)

Unsecured credit loans

 

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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: August 14, 2019    

By: /s/ Ki-Hwan Kim

    (Signature)
    Name:   Ki-Hwan Kim
    Title:   Deputy President and Chief Finance Officer

 

42