EX-99.2 3 d780897dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

KB Financial Group Inc.

Separate Interim Financial Statements

June 30, 2019 and 2018



Report on Review of Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of

Directors of KB Financial Group Inc.

Reviewed Financial Statements

We have reviewed the accompanying separate interim financial statements of KB Financial Group Inc. (the “Company”). These financial statements consist of the separate interim statement of financial position of the Company as at June 30, 2019, and the related separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2019 and 2018, and separate interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2019 and 2018, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these separate interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to issue a report on these separate interim financial statements based on our review.

We conducted our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.


Conclusion

Based on our review, nothing has come to our attention that causes us to believe the accompanying separate interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

Other Matters

We have audited the separate statement of financial position of the Company as at December 31, 2018, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 12, 2019. The separate statement of financial position as at December 31, 2018, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2018.

Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries.

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

August 14, 2019

 

This report is effective as of August 14, 2019, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

 

2


KB Financial Group Inc.

Separate Interim Statements of Financial Position

June 30, 2019 and December 31, 2018

 

 

(In millions of Korean won)    Notes      June 30, 2019
(Unaudited)
    December 31, 2018  

Assets

       

Cash and due from financial institutions

     4,5,6,28      W 66,283     W 344,302  

Financial assets at fair value through profit or loss

     4,5,7        474,105       289,179  

Loans at amortized cost

     4,5,8        120,000       50,000  

Investments in subsidiaries

     9        24,162,116       24,062,116  

Property and equipment

     10        5,508       2,185  

Intangible assets

     11        10,182       9,646  

Deferred income tax assets

     12        6,733       8,184  

Other assets

     4,5,13        508,006       857,462  
     

 

 

   

 

 

 

Total assets

      W 25,352,933     W 25,623,074  
     

 

 

   

 

 

 

Liabilities

       

Debts

     4,5,14      W —       W 300,000  

Debentures

     4,5,15        5,542,687       5,373,266  

Net defined benefit liabilities

     16        1,351       183  

Current income tax liabilities

        319,228       691,909  

Other liabilities

     4,5,17        206,955       186,481  
     

 

 

   

 

 

 

Total liabilities

        6,070,221       6,551,839  
     

 

 

   

 

 

 

Equity

       

Share capital

     18        2,090,558       2,090,558  

Hybrid securities

     18        399,085       —    

Capital surplus

     18        14,742,814       14,742,814  

Accumulated other comprehensive income

     18        (7,185     (7,144

Retained earnings

     18        3,293,628       3,213,556  

Treasury shares

     18        (1,236,188     (968,549
     

 

 

   

 

 

 

Total equity

        19,282,712       19,071,235  
     

 

 

   

 

 

 

Total liabilities and equity

      W 25,352,933     W 25,623,074  
     

 

 

   

 

 

 

The above separate interim statements of financial position should be read in conjunction with the accompanying notes.

 

3


KB Financial Group Inc.

Separate Interim Statements of Comprehensive Income

Three-Month and Six-month Periods Ended June 30, 2019 and 2018

 

 

(In millions of Korean won, except per share amounts)    Notes      2019     2018  
            (Unaudited)     (Unaudited)  
            Three months     Six months     Three months     Six months  

Interest income

      W 3,737     W 5,321     W 2,344     W 3,342  

Interest expense

        (33,120     (64,746     (31,262     (60,361
     

 

 

   

 

 

   

 

 

   

 

 

 

Net interest expense

     20        (29,383     (59,425     (28,918     (57,019
     

 

 

   

 

 

   

 

 

   

 

 

 

Fee and commission income

        214       350       152       269  

Fee and commission expense

        (2,360     (3,218     (2,547     (3,900
     

 

 

   

 

 

   

 

 

   

 

 

 

Net fee and commission expense

     21        (2,146     (2,868     (2,395     (3,631
     

 

 

   

 

 

   

 

 

   

 

 

 

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

     22        4,968       9,765       6,123       8,732  
     

 

 

   

 

 

   

 

 

   

 

 

 

Net other operating income

     23        —         926,934       —         1,089,556  
     

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses

     24        (16,544     (30,942     (12,111     (25,228
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss) before provision for credit losses

        (43,105     843,464       (37,301     1,012,410  

Provision for credit losses

        —         —         —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

        (43,105     843,464       (37,301     1,012,410  

Net non-operating income (expenses)

     25        22       (48     (15     (101
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) before income tax

        (43,083     843,416       (37,316     1,012,309  

Income tax benefit (expense)

     26        356       (1,466     (802     (2,348
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

        (42,727     841,950       (38,118     1,009,961  
     

 

 

   

 

 

   

 

 

   

 

 

 

Items that will not be reclassified to profit or loss:

           

Remeasurements of net defined benefit liabilities

        (21     (41     (35     (73
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss for the period, net of tax

        (21     (41     (35     (73
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the period

      W (42,748   W 841,909     W (38,153   W 1,009,888  
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share

           

Basic earnings (loss) per share

     27      W (109   W 2,144     W (96   W 2,545  

Diluted earnings (loss) per share

     27        (109     2,130       (96     2,529  

The above separate interim statements of comprehensive income should be read in conjunction with the accompanying notes.

 

4


KB Financial Group Inc.

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2019 and 2018

 

 

                      Accumulated                    
                      Other                    
(In millions of Korean won)   Share     Hybrid     Capital     Comprehensive     Retained     Treasury     Total  
    Capital     Securities     Surplus     Income     Earnings     Shares     Equity  

Balance at January 1, 2018

  W 2,090,558     W —       W 14,742,814     W (5,233   W 3,054,379     W (755,973   W 19,126,545  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

             

Profit for the period

    —         —         —         —         1,009,961       —         1,009,961  

Remeasurements of net defined benefit liabilities

    —         —         —         (73     —         —         (73
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

    —         —         —         (73     1,009,961       —         1,009,888  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with shareholders

             

Annual dividends

    —         —         —         —         (766,728     —         (766,728

Acquisition of treasury shares

    —         —         —         —         —         (180,221     (180,221
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with shareholders

    —         —         —         —         (766,728     (180,221     (946,949
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at June 30, 2018 (Unaudited)

  W 2,090,558     W —       W 14,742,814     W (5,306   W 3,297,612     W (936,194   W 19,189,484  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at January 1, 2019

  W 2,090,558     W —       W 14,742,814     W (7,144   W 3,213,556     W (968,549   W 19,071,235  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

             

Profit for the period

    —         —         —         —         841,950       —         841,950  

Remeasurements of net defined benefit liabilities

    —         —         —         (41     —         —         (41
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

    —         —         —         (41     841,950       —         841,909  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with shareholders

             

Annual dividends

    —         —         —         —         (759,736     —         (759,736

Acquisition of treasury shares

    —         —         —         —         —         (267,639     (267,639

Issuance of hybrid securities

    —         399,085       —         —         —         —         399,085  

Dividends on hybrid securities

    —         —         —         —         (2,142     —         (2,142
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with shareholders

    —         399,085       —         —         (761,878     (267,639     (630,432
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at June 30, 2019 (Unaudited)

  W 2,090,558     W 399,085     W 14,742,814     W (7,185   W 3,293,628     W (1,236,188   W 19,282,712  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The above separate interim statements of changes in equity should be read in conjunction with the accompanying notes.

 

5


KB Financial Group Inc.

Separate Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2019 and 2018

 

 

(In millions of Korean won)    Note      2019     2018  
            (Unaudited)     (Unaudited)  

Cash flows from operating activities

       

Profit for the period

      W 841,950     W 1,009,961  
     

 

 

   

 

 

 

Adjustment for non-cash items

       

Depreciation and amortization

        2,408       347  

Share-based payments

        1,713       (145

Net interest expense

        2,378       2,273  

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

        (2,981     (1,948

Other non-cash items

        1,121       1,096  
     

 

 

   

 

 

 
        4,639       1,623  
     

 

 

   

 

 

 

Changes in operating assets and liabilities

       

Deferred income tax assets

        1,458       2,321  

Other assets

        (893     (375

Other liabilities

        (7,980     (5,590
     

 

 

   

 

 

 
        (7,415     (3,644
     

 

 

   

 

 

 

Net cash inflow from operating activities

        839,174       1,007,940  
     

 

 

   

 

 

 

Cash flows from investing activities

       

Acquisition of financial assets at fair value through profit or loss

        (2,010,000     —    

Disposal of financial assets at fair value through profit of loss

        1,828,054       —    

Acquisition of investments in subsidiaries

        (100,000     —    

Increase in loans at amortized cost

        (70,000     —    

Acquisition of property and equipment

        (4,028     (209

Acquisition of intangible assets

        (703     (41

Disposal of intangible assets

        41       34  

Net increase in guarantee deposits paid

        (1,515     (359

Other investing activities

        (86     (6
     

 

 

   

 

 

 

Net cash outflow from investing activities

        (358,237     (581
     

 

 

   

 

 

 

Cash flows from financing activities

       

Increase in debts

        418,705       —    

Decrease in debts

        (717,026     (298,485

Increase in debentures

        818,087       628,399  

Decrease in debentures

        (648,579     (149,676

Dividends paid to shareholders

        (759,736     (766,728

Principal elements of lease payments

        (273     —    

Acquisition of treasury shares

        (269,219     (199,023

Issuance of hybrid securities

        399,085       —    
     

 

 

   

 

 

 

Net cash outflow from financing activities

        (758,956     (785,513
     

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

        (278,019     221,846  

Cash and cash equivalents at the beginning of the period

     28        344,299       245,397  
     

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

     28      W 66,280     W 467,243  
     

 

 

   

 

 

 

The above separate interim statements of cash flows should be read in conjunction with the accompanying notes.

 

6


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

1. The Company

KB Financial Group Inc. (the “Company”), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 26, Gukjegeumyung-ro-8-gil, Yeongdeungpo-gu, Seoul. The Company’s share capital as of June 30, 2019, is W2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary on October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed the name to KB Securities Co., Ltd. in January 2017. KB Insurance Co., Ltd. became one of the subsidiaries through a tender after in May 2017.

The Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized on its Articles of Incorporation is 1,000 million.

2. Basis of Preparation

2.1 Application of Korean IFRS

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (“Hangeul”) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying separate financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Company’s financial position, financial performance or cash flows, is not presented in the accompanying separate financial statements.

The separate financial statements of the Company have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.

The preparation of separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 2.4.

 

7


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

The separate financial statements were prepared in accordance with Korean IFRS 1027, Separate Financial Statements.

The Company’s interim separate financial statements as of and for the six-month period ended June 30, 2019, have been prepared in accordance with Korean IFRS 1034, Interim Financial Reporting. These interim separate financial statements have been prepared in accordance with the Korean IFRS which is effective or early adopted as of June 30, 2019.

2.1.1 New and amended standards and interpretations adopted by the Company

The Company has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2019.

 

   

Enactment of Korean IFRS 1116 Leases

Korean IFRS 1116 Leases replaces Korean IFRS 1017 Leases. Under Korean IFRS 1116, with implementation of a single lease model, lessee is required to recognize assets and liabilities for all lease which lease term is over 12 months and underlying assets are not low value assets. A lessee is required to recognize a right-of-use asset and a lease liability representing its obligation to make lease payments.

With implementation of Korean IFRS 1116 Lease, the Company has changed accounting policy. The Company has adopted Korean IFRS 1116 retrospectively, as permitted under the specific transitional provisions in the standard, and recognized the cumulative impact of initially applying the standard as at January 1, 2019, the date of initial application. The Company has not restated comparatives for the 2018 reporting period. The impact of the adoption of the leasing standard and the new accounting policies are disclosed in Note 31.

 

   

Amendments to Korean IFRS 1109 Financial Instruments

The narrow-scope amendments made to Korean IFRS 1109 Financial Instruments enable entities to measure certain prepayable financial assets with negative compensation at amortized cost. When a modification of a financial liability measured at amortized cost that does not result in the derecognition, a modification gain or loss shall be recognized in profit or loss. The amendment does not have a significant impact on the Company’s financial statements.

 

   

Amendments to Korean IFRS 1019 Employee Benefits

The amendments require that an entity shall calculate current service cost and net interest for the remainder of the reporting period after a plan amendment, curtailment or settlement based on updated actuarial assumptions from the date of the change. The amendments also require that a reduction in a surplus must be recognized in profit or loss even if that surplus was not previously recognized because of the impact of the asset ceiling. The amendment does not have a significant impact on the Company’s financial statements.

 

8


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

   

Amendments to Korean IFRS 1028 Investments in Associates and Joint Ventures

The amendments clarify that an entity shall apply Korean IFRS 1109 to financial instruments in an associate or joint venture to which the equity method is not applied. These include long-term interests that, in substance, form part of the entity’s net investment in an associate or joint venture. The amendment does not have a significant impact on the Company’s financial statements.

 

   

Enactment of Interpretation of Korean IFRS 2123 Uncertainty over Income Tax Treatments

The Interpretation explains how to recognize and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment, and includes guidance on how to determine whether each uncertain tax treatment is considered separately or together. It also presents examples of circumstances where a judgement or estimate is required to be reassessed. The enactment does not have a significant impact on the Company’s financial statements.

 

   

Annual Improvements to Korean IFRS 1103 Business Combination

The amendments clarify that when a party to a joint arrangement obtains control of a business that is a joint operation, and had rights to the assets and obligations for the liabilities relating to that joint operation immediately before the acquisition date, the transaction is a business combination achieved in stages. In such cases, the acquirer shall remeasure its entire previously held interest in the joint operation. The amendments have no significant effect on the Company’s financial statements.

 

   

Annual Improvements to Korean IFRS 1111 Joint Agreements

The amendments clarify that when a party that participates in, but does not have joint control of, a joint operation might obtain joint control of the joint operation in which the activity of the joint operation constitutes a business. In such cases, previously held interests in the joint operation are not remeasured. The amendments have no significant effect on the Company’s financial statements.

 

   

Annual Improvements to Paragraph 57A of Korean IFRS 1012 Income Tax

The amendment is applied to all the income tax consequences of dividends and requires an entity to recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events. The amendments have no significant effect on the Company’s financial statements.

 

   

Annual Improvements to Korean IFRS 1023 Borrowing Cost

The amendments clarify that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use (or sale), it becomes part of general borrowings. The amendments have no significant effect on the Company’s financial statements.

2.1.2 New and amended standards and interpretations not yet adopted by the Company

There are no new accounting standards and interpretations that are effective for the annual reporting period commencing January 1, 2019 and have not been early adopted by the Company.

 

9


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

2.2 Measurement Basis

The separate financial statements have been prepared under the historical cost convention unless otherwise specified.

2.3 Functional and Presentation Currency

Items included in the separate financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (“the functional currency”). The separate financial statements are presented in Korean won, which is the Company’s functional and presentation currency.

2.4 Critical Accounting Estimates

The preparation of separate financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.

Estimates and assumptions are continually evaluated and any change in an accounting estimate is recognized prospectively by including it in profit or loss in the period of the change, if the change affects that period only. Alternatively, if the change in accounting estimate affects both the period of change and future periods, that change is recognized in the profit or loss of all those periods.

The significant accounting estimates and assumptions are consistently applied to all periods presented, except for the assumptions for income tax expense.

3. Significant Accounting Policies

The significant accounting policies and calculation methods applied in the preparation of these separate financial statements have been consistently applied to all periods presented, except for the impact of changes due to enactment of new standards, amendments and interpretations disclosed in Note 2.1 and the following paragraph.

3.1 Income Tax Expenses for the Interim Period

Income tax expense for the interim period is measured by expected average annual income tax rate applicable on expected total annual income.

3.2 Hybrid securities

If the Company is an issuer of financial instruments, an amount of financial instruments can be classified as either financial liabilities or equity in accordance with the terms of the contract. The Company classifies hybrid securities as an equity if the Company has the unconditional right to avoid any contractual obligation to deliver financial assets such as cash in relation to the financial instruments.

 

10


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

4. Financial Risk Management

4.1 Summary

4.1.1 Overview of financial risk management policy

The financial risks that the Company is exposed to are credit risk, market risk, liquidity risk and others.

The note regarding financial risk management provides information about the risks that the Company is exposed to, including the objectives, policies, assessment and management process of risks. Additional quantitative information is disclosed throughout the separate financial statements.

The Company’s risk management system focuses on increasing transparency, developing the risk management environment, and the preemptive response to risk due to rapid changes in the financial environment to support the Company’s long-term strategy and business decisions efficiently. Credit risk, market risk and liquidity risk have been recognized as the Company’s key risks. These risks are measured and managed in Internal Capital or VaR (Value at Risk) using a statistical method.

4.1.2 Risk management organization

Risk Management Committee

The Risk Management Committee establishes risk management strategies in accordance with the directives of the Board of Directors and determines the Company’s target risk appetite. The committee approves significant risk matters and reviews the level of risks that the Company is exposed to and the appropriateness of the Company’s risk management operations as an ultimate decision-making authority.

Risk Management Council

The Risk Management Council is a consultative group which reviews and makes decisions on matters delegated by the Risk Management Committee, and discusses the detailed issues relating to the Company’s risk management.

Risk Management Division

The Risk Management Division is responsible for conducting detailed policies, procedures and working processes relating to the Company’s risk management.

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of possible losses in an asset portfolio in the event of counterparty’s default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrower’s default risk is considered.

 

11


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

4.2.2 Credit risk management

The Company measures expected losses on assets that are subject to credit risk management and uses it as a management indicator.

4.2.3 Maximum exposure to credit risk

The Company’s maximum exposures of financial instruments to credit risk without consideration of collateral values as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Due from financial institutions

   W 66,283      W 344,302  

Loans at amortized cost

     120,000        50,000  

Loans at fair value through profit or loss

     181,946        —    

Other financial assets

     24,895        17,116  
  

 

 

    

 

 

 
   W 393,124      W 411,418  
  

 

 

    

 

 

 

4.2.4 Credit risk of loans

The Company maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.

The Company assesses expected credit loss on financial asset at amortized cost and financial asset at fair value through other comprehensive income other than financial asset at fair value through profit or loss and recognizes loss allowance. Expected credit losses are a probability-weighted estimate of possible credit losses within certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. For financial assets at amortized cost, the Company measures the expected credit losses and presents it in the financial statements netting the allowance from the related loans; for financial assets measured at fair value through other comprehensive income, the Company presents it in the statements using other comprehensive income.

 

12


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Loans as of June 30, 2019 and December 31, 2018, are classified as follows:

 

(In millions of Korean won)    June 30, 2019  
    

The financial

instruments
applying 12-
month
expected
credit losses

     The financial instruments
applying lifetime expected
credit losses
     Financial
instruments
applying
credit loss
model
    

Financial
instruments
not incurred
expected
credit

losses

     Total  
     Non-impaired      Impaired  

Financial assets at amortized cost

                 

Corporate

                 

Grade 1

   W 120,000      W —        W —        W —        W —        W 120,000  

Grade 2

     —          —          —          —          —          —    

Grade 3

     —          —          —          —          —          —    

Grade 4

     —          —          —          —          —          —    

Grade 5

     —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 120,000      W —        W —        W —        W —        W 120,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
(In millions of Korean won)    December 31, 2018  
    

The financial

instruments
applying 12-
month
expected
credit losses

     The financial instruments
applying lifetime expected
credit losses
     Financial
instruments
applying
credit loss
model
    

Financial
instruments
not incurred
expected
credit

losses

     Total  
     Non-impaired      Impaired  

Financial assets at amortized cost

                 

Corporate

                 

Grade 1

   W 50,000      W —        W —        W —        W —        W 50,000  

Grade 2

     —          —          —          —          —          —    

Grade 3

     —          —          —          —          —          —    

Grade 4

     —          —          —          —          —          —    

Grade 5

     —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 50,000      W —        W —        W —        W —        W 50,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

13


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Credit quality of loans graded according to the probability of default as of June 30, 2019 and December 31, 2018, are as follows:

 

    

Range of PD (%)

(Probability of Default)

Grade 1

   0.0 ~ 1.0

Grade 2

   1.0 ~ 5.0

Grade 3

   5.0 ~ 15.0

Grade 4

   15.0 ~ 30.0

Grade 5

   30.0 ~

4.2.5 Credit risk of due from financial institutions

The credit quality of due from financial institutions as of June 30, 2019 and December 31, 2018, are classified as follows:

 

(In millions of Korean won)    June 30, 2019  
    

The financial

instruments
applying 12-
month
expected
credit losses

     The financial instruments
applying lifetime expected
credit losses
    

Financial
instruments
not incurred
expected
credit

losses

     Total  
     Non-impaired      Impaired  

Due from financial institutions at amortized cost

 

Grade 1

   W 66,283      W —        W —        W —        W 66,283  

Grade 2

     —          —          —          —          —    

Grade 3

     —          —          —          —          —    

Grade 4

     —          —          —          —          —    

Grade 5

     —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 66,283      W —        W —        W —        W 66,283  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(In millions of Korean won)

 

     December 31, 2018  
    

The financial

instruments
applying 12-
month
expected
credit losses

     The financial instruments
applying lifetime expected
credit losses
    

Financial
instruments
not incurred
expected
credit

losses

     Total  
     Non-impaired      Impaired  

Due from financial institutions at amortized cost

              

Grade 1

   W 344,302      W —        W —        W —        W 344,302  

Grade 2

     —          —          —          —          —    

Grade 3

     —          —          —          —          —    

Grade 4

     —          —          —          —          —    

Grade 5

     —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 344,302      W —        W —        W —        W 344,302  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

14


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

4.2.6 Credit risk concentration analysis

Details of the Company’s loans by country as of June 30, 2019 and December 31, 2018, are as follows:

 

 

(In millions of Korean won)    June 30, 2019  
     Corporate loans      %      Allowances      Carrying amount  

Korea

   W 120,000        100.00      W —        W 120,000  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 120,000        100.00      W —        W 120,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2018  
     Corporate loans      %      Allowances      Carrying amount  

Korea

   W 50,000        100.00      W —        W 50,000  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 50,000        100.00      W —        W 50,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Details of the Company’s corporate loans by industry as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Corporate loans      %      Allowances      Carrying amount  

Financial institutions

   W 120,000        100.00      W —        W 120,000  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 120,000        100.00      W —        W 120,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2018  
     Corporate loans      %      Allowances      Carrying amount  

Financial institutions

   W 50,000        100.00      W —        W 50,000  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 50,000        100.00      W —        W 50,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Details of the Company’s due from financial institutions by industry as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Corporate loans      %      Allowances      Carrying amount  

Due from financial institutions at amortized cost

 

Financial institutions

   W 66,283        100.00      W —        W 66,283  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 66,283        100.00      W —        W 66,283  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

15


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

 

(In millions of Korean won)    December 31, 2018  
     Corporate loans      %      Allowances      Carrying amount  

Due from financial institutions at amortized cost

 

Financial institutions

   W 344,302        100.00      W —        W 344,302  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 344,302        100.00      W —        W 344,302  
  

 

 

    

 

 

    

 

 

    

 

 

 

Details of the Company’s due from financial institutions by country as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Corporate loans      %      Allowances      Carrying amount  

Due from financial institutions at amortized cost

 

Korea

   W 66,283        100.00      W —        W 66,283  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 66,283        100.00      W —        W 66,283  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2018  
     Corporate loans      %      Allowances      Carrying amount  

Due from financial institutions at amortized cost

 

Korea

   W 344,302        100.00      W —        W 344,302  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 344,302        100.00      W —        W 344,302  
  

 

 

    

 

 

    

 

 

    

 

 

 

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Company becomes insolvent due to uncertain liquidity caused by unexpected cash outflows, or a risk of borrowing high interest debts or disposal of liquid and other assets at a substantial discount. The Company manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other cash flow, and off-balance sheet items related to cash flow of currency derivative instruments and others.

Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and; thus, are not identical to the amount in the financial statements that are based on the present value of expected cash flows in some cases. The amount of interest to be received or paid on floating rate assets and liabilities is measured on the assumption that the current interest rate would be the same through the maturity.

4.3.2. Liquidity risk management

The liquidity risk is managed by liquidity management principles and related guidelines which are applied to the risk management policies and procedures that address all the possible risks that arise from the overall business of the Company.

 

16


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities

The remaining contractual maturity of financial assets and liabilities as of June 30, 2019 and December 31, 2018, are as follows:

(In millions of Korean won)

 

     June 30, 2019  
    

On

demand

    

Up to

1 month

    

1-3

months

    

3-12

months

    

1-5

years

    

Over 5

years

     Total  

Financial assets

                    

Cash and due from financial institutions1

   W 36,291      W —        W 30,141      W —        W —        W —        W 66,432  

Financial assets at fair value through profit or loss2

     181,946        —          —          —          —          292,159        474,105  

Loans at amortized cost

     —          51,075        —          71,523        —          —          122,598  

Other financial assets

     —          6,017        —          16,580        —          —          22,597  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 218,237      W 57,092      W 30,141      W 88,103      W —        W 292,159      W 685,732  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

                    

Debentures

   W —        W 176,009      W 24,396      W 707,503      W 3,779,546      W 1,380,961      W 6,068,415  

Other financial liabilities

     —          11,414        2,232        5,682        366        —          19,694  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 187,423      W 26,628      W 713,185      W 3,779,912      W 1,380,961      W 6,088,109  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

17


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

(In millions of Korean won)

 

     December 31, 2018  
    

On

demand

    

Up to

1 month

    

1-3

months

    

3-12

months

    

1-5

years

    

Over 5

years

     Total  

Financial assets

                    

Cash and due from financial institutions1

   W 284,350      W 20,030      W 40,178      W —        W —        W —        W 344,558  

Financial assets at fair value through profit or loss2

     —          —          —          —          —          289,179        289,179  

Loans at amortized cost

     —          —          —          51,075        —          —          51,075  

Other financial assets

     —          1,532        —          14,399        —          —          15,931  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 284,350      W 21,562      W 40,178      W 65,474      W —        W 289,179      W 700,743  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

                    

Debts

   W —        W —        W 300,000      W —        W —        W —        W 300,000  

Debentures

     —          6,009        103,180        870,199        3,636,044        1,187,038        5,802,470  

Other financial liabilities

     —          7,555        —          —          —          —          7,555  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 13,564      W 403,180      W 870,199      W 3,636,044      W 1,187,038      W 6,110,025  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

1

The amount of W3 million, which is restricted due from the financial institutions as of June 30, 2019 and December 31, 2018, is excluded.

2

Hybrid securities included in financial assets at fair value through profit or loss are included in the ‘Over 5 years’ category since the point of disposal is uncertain.

4.4 Market Risk

4.4.1 Concept

Market risk is the risk of possible losses which arise from changes in market factors; such as, interest rate, stock price, foreign exchange rate and other market factors that affect the fair value of future cash flows of financial instruments. The most significant risk of the Company is interest rate risk.

4.4.2 Interest rate risk

Definition of interest rate risk

Interest rate risk is the risk that the fair value or future cash flows arising from interest income and interest cost that will fluctuate due to changes in interest.

 

18


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Observation method and management indicator on interest rate risk

The main objective of interest rate risk management is to protect asset values against interest rate fluctuations. The Company manages the risk through measurement and management of Value at Risk for the interest rate.

5. Financial Assets and Financial Liabilities

5.1 Classification and Fair value of Financial Instruments

The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Carrying amount      Fair value  

Financial assets

     

Financial assets at fair value through profit or loss

   W 474,105      W 474,105  

Financial assets at amortized cost

     

Due from financial institutions

     66,283        66,283  

Loans

     120,000        120,000  

Other financial assets

     24,895        24,895  
  

 

 

    

 

 

 
     685,283        685,283  
  

 

 

    

 

 

 

Financial liabilities

     

Financial liabilities at amortized cost

     

Debentures

     5,542,687        5,647,877  

Other financial liabilities

     32,023        32,023  
  

 

 

    

 

 

 
   W 5,574,710      W 5,679,900  
  

 

 

    

 

 

 
(In millions of Korean won)    December 31, 2018  
     Carrying amount      Fair value  

Financial assets

     

Financial assets at fair value through profit or loss

   W 289,179      W 289,179  

Financial assets at amortized cost

     

Due from financial institutions

     344,302        344,302  

Loans

     50,000        50,000  

Other financial assets

     17,116        17,116  
  

 

 

    

 

 

 
     700,597        700,597  
  

 

 

    

 

 

 

Financial liabilities

     

Financial liabilities at amortized cost

     

Debts

     300,000        300,000  

Debentures

     5,373,266        5,398,656  

Other financial liabilities

     19,953        19,953  
  

 

 

    

 

 

 
   W 5,693,219      W 5,718,609  
  

 

 

    

 

 

 

 

19


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Fair value is the amount for which an asset could be exchanged, or a liability could be settled, between knowledgeable, willing parties in an arm’s length transaction. For each class of financial assets and financial liabilities, the Company discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is quoted price in an active market.

Methods of determining fair value of financial instruments are as follows:

 

Cash and due from financial institutions

   The carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are a reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using DCF model.

Investment securities

   The fair value of financial instruments that are quoted in active markets is determined using the quoted prices. Fair value is determined through the use of external professional valuation institution where quoted prices are not available. The institutions use one or more of the following valuation techniques including DCF Model, Free Cash Flow to Equity Model, Imputed Market Value Model, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method.

Derivatives

   For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Company uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method and the Monte Carlo Simulation or valuation results from independent external professional valuation institution.

Loans at amortized cost

   DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at appropriate discount rate.

Debts

   Carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other debts is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate.

Debentures

   Fair value is determined by using the valuations of external professional valuation institution, which are calculated using market inputs.

Other financial assets and liabilities

   The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined.

 

20


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Fair value hierarchy

The Company believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.

The Company classifies and discloses fair value of the financial instruments into the three-level hierarchy as follows:

Level 1: The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: The fair values are based on unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position

The fair value hierarchy of financial assets measured at fair value in the statement of financial position as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Fair value hierarchy         
     Level 1      Level 2      Level 3      Total  

Financial assets

           

Financial assets at fair value through profit or loss

           

Hybrid securities

   W —        W —        W 292,159      W 292,159  

Loans

     —          181,946        —          181,946  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 181,946      W 292,159      W 474,105  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

21


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

(In millions of Korean won)    December 31, 2018  
     Fair value hierarchy         
     Level 1      Level 2      Level 3      Total  

Financial assets

           

Financial assets at fair value through profit or loss

           

Hybrid securities

   W —        W —        W 289,179      W 289,179  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W —        W 289,179      W 289,179  
  

 

 

    

 

 

    

 

 

    

 

 

 

Valuation techniques and inputs of financial assets and liabilities at fair value in the statements of financial position and classified as Level 2 as at June 30, 2019, are as follows:

 

     Fair value     

Valuation techniques

   Inputs  
     June 30, 2019  

Financial assets

        

Financial assets at fair value through profit or loss

        

Loans

   W 181,946      DCF Model      Interest rate, discount rate, etc  

Fair value hierarchy of financial assets and liabilities whose fair values are disclosed

The fair value hierarchy of financial assets and liabilities whose fair values are disclosed as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Fair value hierarchy         
     Level 1      Level 2      Level 3      Total  

Financial assets

           

Cash and due from financial institutions1

   W —        W 36,283      W 30,000      W 66,283  

Loans at amortized cost2

     —          —          120,000        120,000  

Other financial assets3

     —          —          24,895        24,895  
  

 

 

    

 

 

    

 

 

    

 

 

 

-

        36,283        174,895        211,178  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Debentures

     —          5,647,877        —          5,647,877  

Other financial liabilities3

     —          —          32,023        32,023  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 5,647,877      W 32,023      W 5,679,900  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2018  
     Fair value hierarchy         
     Level 1      Level 2      Level 3      Total  

Financial assets

           

Cash and due from financial institutions1

   W —        W 284,302      W 60,000      W 344,302  

Loans at amortized cost2

     —          —          50,000        50,000  

Other financial assets3

     —          —          17,116        17,116  
  

 

 

    

 

 

    

 

 

    

 

 

 
     —          284,302        127,116        411,418  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Debts4

     —          300,000        —          300,000  

Debentures

     —          5,398,656        —          5,398,656  

Other financial liabilities3

     —          —          19,953        19,953  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 5,698,656      W 19,953      W 5,718,609  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

22


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

1 

Because due from financial institutions classified as level 2 are deposits on demand, carrying amounts are reasonable approximations of fair values. And due from financial institutions classified as level 3 are due from financial institutions with residual maturity of less than 3 months, carrying amounts are reasonable approximations of fair values.

2 

Because loans at amortized cost classified as level 3 are loans with residual maturity of less than one year, carrying amounts are reasonable approximations of fair values.

3 

For other financial assets and other financial liabilities classified as level 3, carrying amounts are reasonable approximations of fair values.

4 

Since the remaining maturity of debts classified as level 2 is less than a year, carrying amounts are reasonable approximations of fair values.

Valuation techniques and inputs used in the fair value measurement

For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, we do not disclose valuation techniques and inputs.

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    Fair value      Valuation
Techniques
     Inputs  
    

June 30,

2019

     December 31,
2018
 

Financial liabilities

           

Debentures

   W 5,647,877      W 5,398,656        DCF model        Discount rate  

5.2 Level 3 of the Fair Value Hierarchy Disclosure

5.2.1 Valuation policy and process for fair value measurement categorized as Level 3

The Company uses external, independent and qualified professional valuer’s valuation to determine the fair value of the Company’s assets at the end of every reporting period.

5.2.2 Changes in fair value (Level 3) measured using valuation technique based on assumption that is unobservable in the market

 

23


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Details of changes in Level 3 of the fair value hierarchy for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    Financial assets at
fair value

through profit or
loss
 
     June 30, 2019  

Beginning balance

   W 289,179  

Total gains or losses

  

- Profit or loss for the period

     2,980  

- Other comprehensive income

     —    

Purchases

     —    

Sales

     —    

Issues

     —    

Settlements

     —    

Transfers into Level 3

     —    

Transfers out of Level 3

     —    
  

 

 

 

Ending balance

   W 292,159  
  

 

 

 

 

(In millions of Korean won)    Financial assets at
fair value

through profit or
loss
 
     June 30, 2018  

Beginning balance

   W 284,485  

Total gains or losses

  

- Profit or loss for the period

     1,948  

- Other comprehensive income

     —    

Purchases

     —    

Sales

     —    

Issues

     —    

Settlements

     —    

Transfers into Level 3

     —    

Transfers out of Level 3

     —    
  

 

 

 

Ending balance

   W 286,433  
  

 

 

 

 

24


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and profit or loss from financial instruments held at the end of the reporting period in the statement of comprehensive income for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      June 30, 2018  
     Gains from financial
investments at fair value
through profit or loss
     Other
operating
income
     Net
interest
income
     Gains from financial
investments at fair value
through profit or loss
     Other
operating
income
    

Net

interest
income

 

Total gains or losses included in profit or loss for the period

   W 2,980      W —        W —        W 1,948      W —        W —    

Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period

   W 2,980      W —        W —        W 1,948      W —        W —    

 

25


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

5.2.3 Sensitivity analysis of changes in unobservable inputs

Information about fair value measurements using unobservable inputs as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019
     Fair value      Valuation
technique
   Inputs    Unobservable
inputs
   Range of
unobservable
inputs (%)
     Relationship of
unobservable inputs to
fair value

Financial assets

                 

Financial assets at fair value through profit or loss

                 

Hybrid securities

   W 292,160     

Hull and White Model, Monte Carlo Simulation

  

Matrix YTM, Additional spread by grade, Risk spread of company,

   Discount rate      2.08~4.46     

The lower the discount rate, the higher the fair value

     

Information of issue by stock, Valid credit rating, Interest rate estimation variability

  

Volatility of interest rate

     0.47     

The higher the volatility, the higher the fair value fluctuation

 

(In millions of Korean won)    December 31, 2018
     Fair value      Valuation
technique
   Inputs    Unobservable
inputs
   Range of
unobservable
inputs (%)
     Relationship of
unobservable inputs to
fair value

Financial assets

                 

Financial assets at fair value through profit or loss

                 

Hybrid securities

   W 289,179     

Hull and White Model, Monte Carlo Simulation

  

Matrix YTM, Additional spread by grade, Risk spread of company,

   Discount rate      2.43~4.80     

The lower the discount rate, the higher the fair value

     

Information of issue by stock, Valid credit rating, Interest rate estimation variability

  

Volatility of interest rate

     0.47     

The higher the volatility, the higher the fair value fluctuation

 

26


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Sensitivity analysis of changes in unobservable inputs

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable outcome. There are hybrid securities whose fair value changes are recognized in profit or loss.

The results of the sensitivity analysis from changes in inputs are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Recognition
in profit or loss
     Other comprehensive
income
 
     Favorable
changes
     Unfavorable
changes
     Favorable
changes
     Unfavorable
changes
 

Financial assets

           

Financial assets at fair value through profit or loss

           

Hybrid securities1

   W 4,554      W (4,456    W —        W —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,554      W (4,456    W —        W —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2018  
     Recognition
in profit or loss
     Other comprehensive
income
 
     Favorable
changes
     Unfavorable
changes
     Favorable
changes
     Unfavorable
changes
 

Financial assets

           

Financial assets at fair value through profit or loss

           

Hybrid securities1

   W 5,882      W (5,782    W —        W —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,882      W (5,782    W —        W —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1 

For equity securities, the changes in fair value are calculated by shifting principal unobservable input parameters; such as, discount rate, the correlation of rates of long-term interest rate and short-term interest rate, or the volatility of the interest rate is shifted by ± 1%.

 

27


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

6. Due from Financial Institution

Details of due from financial institution as June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)      Financial Institution    Interest rate (%)
(As of June 30, 2019)
     June 30, 2019      December 31,
2018
 

Due from financial institution in Korean won

     Due from banks      Kookmin Bank      0.00~1.84      W 59,592      W 69,621  
      Standard Chartered Bank      —          —          41,350  
      The Korea Securities Finance
Corporation
     1.79        6,691        100,000  
      BNK Busan Bank      —          —          133,331  
           

 

 

    

 

 

 
            W 66,283      W 344,302  
           

 

 

    

 

 

 

Details of a maturity analysis of due from financial institution, excluding restricted cash, as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
    

Up to

3 months

     3~6
months
     6~12
months
     1~3
years
    

Over

3 years

     Total  

Due from financial institution in Korean won

   W 66,280      W —        W —        W —        W —        W 66,280  

 

(In millions of Korean won)    December 31, 2018  
    

Up to

3 months

     3~6
months
     6~12
months
     1~3
years
    

Over

3 years

     Total  

Due from financial institution in Korean won

   W 344,299      W —        W —        W —        W —        W 344,299  

Restricted cash from financial institution as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)   

Financial

Institution

   June 30, 2019      December 31, 2018      Reason for restriction

Due from financial
institution in Korean won

   Kookmin
Bank
     W3        W3      Pledged as collateral for
the overdraft
establishment
     

 

 

    

 

 

    
        W3        W3     
     

 

 

    

 

 

    

 

28


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

7. Financial Assets at Fair Value through Profit or Loss

Details of financial assets at fair value through profit or loss as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Financial assets at fair value through profit or loss

     

Hybrid securities

   W 292,159      W 289,179  

Loans

     181,946        —    
  

 

 

    

 

 

 
   W 474,105      W 289,179  
  

 

 

    

 

 

 

8. Loans at amortized cost

Details of loans at amortized cost as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Financial assets at fair value through profit or loss

     

Loans at amortized cost

   W 120,000      W 50,000  

Less: Allowances for loan losses

     —          —    
  

 

 

    

 

 

 

Carrying amount

   W 120,000      W 50,000  
  

 

 

    

 

 

 

 

29


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

9. Investments in Subsidiaries

Details of subsidiaries as of June 30, 2019, are as follows:

 

Name of subsidiary    Industry    Location

Kookmin Bank

  

Banking and domestic, foreign exchange transaction

   Korea

KB Securities Co., Ltd.

  

Financial investment

   Korea

KB Insurance Co., Ltd

  

Insurance

   Korea

KB Kookmin Card Co., Ltd.

  

Credit card

   Korea

KB Asset Management Co., Ltd.

  

Investment advisory and collective investment

   Korea

KB Capital Co., Ltd.

  

Financial leasing

   Korea

KB Life Insurance Co., Ltd.

  

Life insurance

   Korea

KB Real Estate Trust Co., Ltd.

  

Real estate trust management

   Korea

KB Savings Bank Co., Ltd.

  

Savings banking

   Korea

KB Investment Co., Ltd.

  

Capital investment

   Korea

KB Data System Co., Ltd.

  

System software, development and supply

   Korea

KB Credit Information Co., Ltd.

  

Collection of receivables and credit investigation

   Korea

Investments in subsidiaries as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won, except for shares and ownership %)    Number of
Issued Shares
     Ownership
(%)
     Carrying amount  
Name of subsidiary    As of June 30, 2019     

June 30,

2019

     December 31,
2018
 

Kookmin Bank

     404,379,116        100.00      W 14,821,721      W 14,821,721  

KB Securities Co., Ltd.

     298,620,424        100.00        3,342,391        3,342,391  

KB Insurance Co., Ltd

     66,500,000        100.00        2,375,430        2,375,430  

KB Kookmin Card Co., Ltd.

     92,000,000        100.00        1,953,175        1,953,175  

KB Asset Management Co., Ltd.

     7,667,550        100.00        96,312        96,312  

KB Capital Co., Ltd.1

     23,349,208        100.00        623,811        573,811  

KB Life Insurance Co., Ltd.

     91,200,000        100.00        485,314        485,314  

KB Real Estate Trust Co., Ltd.

     16,000,000        100.00        121,553        121,553  

KB Savings Bank Co., Ltd.

     8,001,912        100.00        157,544        157,544  

KB Investment Co., Ltd. 1

     22,525,328        100.00        154,910        104,910  

KB Data System Co., Ltd.

     800,000        100.00        6,334        6,334  

KB Credit Information Co., Ltd.

     1,252,400        100.00        23,621        23,621  
        

 

 

    

 

 

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

 

 

    

 

 

 

 

1 

Carrying amount of investments in KB Capital Co., Ltd and KB investment Co., Ltd increased respectively by W50,000 in million and W50,000 in million due to paid-in capital increase for the six-month period ended June 30, 2019.

 

30


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Changes in accumulated impairment losses on investments in subsidiaries for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Beginning      Impairment      Others      Ending  

Accumulated impairment losses on investments in subsidiaries

   W (51,742    W —        W —        W (51,742

 

(In millions of Korean won)    June 30, 2018  
     Beginning      Impairment      Others      Ending  

Accumulated impairment losses on investments in subsidiaries

   W (51,742    W —        W —        W (51,742

10. Property and Equipment

Details of property and equipment as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Acquisition
cost
     Accumulated
depreciation
     Accumulated
impairment
losses
     Carrying
amount
 

Leasehold improvements

   W 4,640      W (1,828    W —        W 2,812  

Equipment and others

     5,877        (4,035      —          1,842  

Right-of-use property and equipment-Buildings

     461        (215      —          246  

Right-of-use property and equipment -Vehicles

     905        (305      —          600  

Right-of-use property and equipment -Others

     16        (8      —          8  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 11,899      W (6,391    W —        W 5,508  
  

 

 

    

 

 

    

 

 

    

 

 

 
(In millions of Korean won)    December 31, 2018  
     Acquisition
cost
     Accumulated
depreciation
     Accumulated
impairment
losses
     Carrying
amount
 

Leasehold improvements

   W 1,034      W (842    W —        W 192  

Equipment and others

     5,455        (3,462      —          1,993  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 6,489      W (4,304    W —        W 2,185  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

31


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

11. Intangible Assets

Details of intangible assets as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Acquisition
cost
    

Accumulated

amortization

     Accumulated
impairment
losses
     Carrying
amount
 

Software

   W 3,905      W (2,897    W —        W 1,008  

Membership rights

     9,765        —          (1,786      7,979  

Other intangible assets

     5,095        (3,900      —          1,195  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 18,765      W (6,797    W (1,786    W 10,182  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2018  
     Acquisition
cost
    

Accumulated

amortization

     Accumulated
impairment
losses
     Carrying
amount
 

Software

   W 3,679      W (2,748    W —        W 931  

Membership rights

     9,623        —          (1,814      7,809  

Other intangible assets

     4,635        (3,729      —          906  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 17,937      W (6,477    W (1,814    W 9,646  
  

 

 

    

 

 

    

 

 

    

 

 

 

12. Deferred Income Tax Assets and Liabilities

Details of deferred income tax assets and liabilities as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Assets      Liabilities      Net
amounts
 

Share-based payments

   W 2,816      W —        W 2,816  

Membership rights

     491        —          491  

Defined benefit obligation

     2,465        —          2,465  

Plan assets

     —          (1,518      (1,518

Short-term employee benefits

     191        —          191  

Gains on valuation of hybrid securities

     2,156        —          2,156  

Others

     328        (196      132  
  

 

 

    

 

 

    

 

 

 
     8,447        (1,714      6,733  
  

 

 

    

 

 

    

 

 

 

Offsetting of deferred tax assets and liabilities

     (1,714      1,714        —    
  

 

 

    

 

 

    

 

 

 
   W 6,733      W —        W 6,733  
  

 

 

    

 

 

    

 

 

 

 

32


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

(In millions of Korean won)    December 31, 2018  
     Assets      Liabilities      Net
amounts
 

Share-based payments

   W 2,922      W —        W 2,922  

Membership rights

     499        —          499  

Defined benefit obligation

     2,523        —          2,523  

Plan assets

     —          (1,604      (1,604

Short-term employee benefits

     748        —          748  

Gains on valuation of hybrid securities

     2,976        —          2,976  

Others

     120        —          120  
  

 

 

    

 

 

    

 

 

 
     9,788        (1,604      8,184  
  

 

 

    

 

 

    

 

 

 

Offsetting of deferred tax assets and liabilities

     (1,604      1,604        —    
  

 

 

    

 

 

    

 

 

 
   W 8,184      W —        W 8,184  
  

 

 

    

 

 

    

 

 

 

13. Other Assets

Details of other assets as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Other financial assets

     

Receivables

   W 5,589      W 675  

Accrued income

     2,812        2,251  

Guarantee deposits

     16,494        14,190  
  

 

 

    

 

 

 
     24,895        17,116  
  

 

 

    

 

 

 

Other non-financial assets

     

Receivables

     482,302        838,450  

Prepaid expenses

     776        1,763  

Advanced payments

     33        133  
  

 

 

    

 

 

 
     483,111        840,346  
  

 

 

    

 

 

 
   W 508,006      W 857,462  
  

 

 

    

 

 

 

 

33


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

14. Debts

Debts as of June 30, 2019 and December 31, 2018, consist of:

 

(In millions of Korean won)    June 30,
2019
     December 31,
2018
 

Borrowings

   W —        W 300,000  

Details of borrowings as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)         Lender   

Annual interest
rates (%)

As of June 30,
2019

    

June 30,

2019

     December 31,
2018
 

Borrowings in Korean won

   Other borrowings    MERITZ Securities Co., Ltd.      —        W —        W 300,000  
           

 

 

    

 

 

 
            W —        W 300,000  
           

 

 

    

 

 

 

The maturities of debts as of December 31, 2018, are as follows:

 

(In millions of Korean won)    December 31, 2018  
    

Up to

3 months

    

3~6

months

    

6~12

months

    

1~3

years

    

Over

3 years

     Total  

Borrowings in Korean won

   W 300,000      W —        W —        W —        W —        W 300,000  

 

34


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

15. Debentures

Details of debentures as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)  
     Issued date      Expiration date     

Annual interest rates (%)

As of June 30, 2019

     June 30,
2019
    December 31,
2018
 

Unguaranteed debentures No. 3-3

     Aug. 13, 2013        Aug. 13, 2020        3.65      W 70,000     W 70,000  

Unguaranteed debentures No. 5-1

     Mar. 19, 2014        Mar. 19, 2019        3.31        —         80,000  

Unguaranteed debentures No. 5-2

     Mar. 19, 2014        Mar. 19, 2021        3.50        50,000       50,000  

Unguaranteed debentures No. 6

     Feb. 26, 2015        Feb. 26, 2022        2.38        30,000       30,000  

Unguaranteed debentures No. 8

     June 23, 2015        June 23, 2020        2.34        100,000       100,000  

Unguaranteed debentures No. 9

     June 23, 2015        June 23, 2022        2.52        150,000       150,000  

Unguaranteed debentures No. 10

     Sept. 17, 2015        Sept. 17, 2020        2.16        20,000       20,000  

Unguaranteed debentures No. 11

     Sept. 23, 2015        Sept. 23, 2020        2.06        30,000       30,000  

Unguaranteed debentures No. 12-2

     Nov. 27, 2015        Nov. 27, 2020        2.26        110,000       110,000  

Unguaranteed debentures No. 12-3

     Nov. 27, 2015        Nov. 27, 2022        2.38        50,000       50,000  

Unguaranteed debentures No. 14-1

     Dec. 09, 2015        Dec. 09, 2020        2.27        140,000       140,000  

Unguaranteed debentures No. 14-2

     Dec. 09, 2015        Dec. 09, 2022        2.38        30,000       30,000  

Unguaranteed debentures No. 15-1

     May 12, 2016        May 12, 2019        1.61        —         180,000  

Unguaranteed debentures No. 15-2

     May 12, 2016        May 12, 2021        1.72        220,000       220,000  

Unguaranteed debentures No. 15-3

     May 12, 2016        May 12, 2026        2.01        200,000       200,000  

Unguaranteed debentures No. 16-1

     May 27, 2016        May 27, 2019        1.67        —         240,000  

Unguaranteed debentures No. 16-2

     May 27, 2016        May 27, 2021        1.78        60,000       60,000  

Unguaranteed debentures No. 16-3

     May 27, 2016        May 27, 2023        1.91        150,000       150,000  

Unguaranteed debentures No. 17

     June 27, 2016        June 27, 2021        1.51        50,000       50,000  

Unguaranteed debentures No. 18-1

     July 25, 2016        July 25, 2019        1.38        170,000       170,000  

Unguaranteed debentures No. 18-2

     July 25, 2016        July 25, 2021        1.45        110,000       110,000  

Unguaranteed debentures No. 18-3

     July 25, 2016        July 25, 2026        1.69        80,000       80,000  

Unguaranteed debentures No. 19-2

     Aug. 25, 2016        Aug. 25, 2021        1.46        100,000       100,000  

Unguaranteed debentures No. 19-3

     Aug. 25, 2016        Aug. 25, 2026        1.69        120,000       120,000  

Unguaranteed debentures No. 20-1

     Nov. 28, 2016        Nov. 28, 2019        2.13        50,000       50,000  

Unguaranteed debentures No. 20-2

     Nov. 28, 2016        Nov. 28, 2021        2.28        50,000       50,000  

Unguaranteed debentures No. 21

     Jan. 25, 2017        Jan. 23, 2020        1.82        100,000       100,000  

Unguaranteed debentures No. 22-1

     Feb. 28, 2017        Feb. 28, 2020        1.89        120,000       120,000  

Unguaranteed debentures No. 22-2

     Feb. 28, 2017        Feb. 28, 2022        2.11        110,000       110,000  

Unguaranteed debentures No. 23

     Mar. 23, 2017        Mar. 23, 2020        1.95        80,000       80,000  

Unguaranteed debentures No. 24

     Apr. 06, 2017        Apr. 06, 2020        1.97        70,000       70,000  

Unguaranteed debentures No. 25-1

     May 24, 2017        May 24, 2019        1.79        —         150,000  

Unguaranteed debentures No. 25-2

     May 24, 2017        May 24, 2020        1.97        100,000       100,000  

Unguaranteed debentures No. 25-3

     May 24, 2017        May 24, 2022        2.23        270,000       270,000  

Unguaranteed debentures No. 25-4

     May 24, 2017        May 24, 2027        2.62        80,000       80,000  

Unguaranteed debentures No. 26-1

     June 27, 2017        June 27, 2022        2.18        50,000       50,000  

Unguaranteed debentures No. 26-2

     June 27, 2017        June 27, 2024        2.34        200,000       200,000  

Unguaranteed debentures No. 27

     July 19, 2017        July 19, 2024        2.41        100,000       100,000  

Unguaranteed debentures No. 28-1

     Aug. 30, 2017        Aug. 30, 2022        2.30        60,000       60,000  

Unguaranteed debentures No. 28-2

     Aug. 30, 2017        Aug. 30, 2024        2.43        30,000       30,000  

Unguaranteed debentures No. 28-3

     Aug. 30, 2017        Aug. 30, 2027        2.60        60,000       60,000  

Unguaranteed debentures No. 29-1

     Sept. 19, 2017        Sept. 19, 2022        2.29        150,000       150,000  

Unguaranteed debentures No. 29-2

     Sept. 19, 2017        Sept. 19, 2024        2.44        110,000       110,000  

Unguaranteed debentures No. 30

     Jan. 25, 2018        Jan. 25, 2021        2.45        80,000       80,000  

Unguaranteed debentures No. 31-1

     Feb. 28, 2018        Feb. 26, 2021        2.57        150,000       150,000  

Unguaranteed debentures No. 31-2

     Feb. 28, 2018        Feb. 28, 2023        2.81        50,000       50,000  

Unguaranteed debentures No. 31-3

     Feb. 28, 2018        Feb. 28, 2028        3.02        60,000       60,000  

Unguaranteed debentures No. 32-1

     Apr. 06, 2018        Apr. 06, 2021        2.50        60,000       60,000  

Unguaranteed debentures No. 32-2

     Apr. 06, 2018        Apr. 06, 2023        2.71        80,000       80,000  

Unguaranteed debentures No. 32-3

     Apr. 06, 2018        Apr. 06, 2028        2.86        20,000       20,000  

Unguaranteed debentures No. 33-1

     June 12, 2018        June 12, 2023        2.81        100,000       100,000  

Unguaranteed debentures No. 33-2

     June 12, 2018        June 12, 2028        2.92        30,000       30,000  

Unguaranteed debentures No. 34-1

     July 25, 2018        July 23, 2021        2.41        40,000       40,000  

Unguaranteed debentures No. 34-2

     July 25, 2018        July 25, 2023        2.65        70,000       70,000  

Unguaranteed debentures No. 34-3

     July 25, 2018        July 25, 2025        2.71        20,000       20,000  

Unguaranteed debentures No. 34-4

     July 25, 2018        July 25, 2028        2.76        20,000       20,000  

Unguaranteed debentures No. 35

     Oct. 05, 2018        Oct. 05, 2023        2.52        120,000       120,000  

Unguaranteed debentures No. 36-1

     Feb. 22, 2019        Feb. 22, 2022        2.03        120,000       —    

Unguaranteed debentures No. 36-2

     Feb. 22, 2019        Feb. 22, 2024        2.11        230,000       —    

Unguaranteed debentures No. 36-3

     Feb. 22, 2019        Feb. 22, 2029        2.22        60,000       —    

Unguaranteed debentures No. 37-1

     Mar. 15, 2019        Mar. 15, 2024        2.06        140,000       —    

Unguaranteed debentures No. 37-2

     Mar. 15, 2019        Mar. 15, 2029        2.16        70,000       —    

Unguaranteed debentures No. 38-1

     June 19, 2019        June 19, 2026        1.73        80,000       —    

Unguaranteed debentures No. 38-2

     June 19, 2019        June 19, 2029        1.77        120,000       —    
           

 

 

   

 

 

 
     5,550,000       5,380,000  
        Less: Bond Discounts           (7,313     (6,734
     

 

 

   

 

 

 
            W 5,542,687     W 5,373,266  
           

 

 

   

 

 

 

 

35


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

The maturities of debentures as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
    

Up to

3 months

    

3~6

months

    

6~12

months

    

1~3

years

    

Over

3 years

     Total  

Debentures in Korean won

   W 170,000      W 50,000      W 570,000      W 2,070,000      W 2,690,000      W 5,550,000  

 

(In millions of Korean won)    December 31, 2018  
     Up to
3 months
    

3~6

months

    

6~12

months

    

1~3

years

    

Over

3 years

     Total  

Debentures in Korean won

   W 80,000      W 570,000      W 220,000      W 1,910,000      W 2,600,000      W 5,380,000  

Changes in debentures based on face value for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Beginning      Issue      Repayment      Ending  

Debentures in Korean won

   W 5,380,000      W 820,000      W (650,000    W 5,550,000  

 

(In millions of Korean won)    June 30, 2018  
     Beginning      Issue      Repayment      Ending  

Debentures in Korean won

   W 5,170,000      W 630,000      W (150,000    W 5,650,000  

 

36


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

16. Net Defined Benefit Liabilities

Defined benefit plan

The Company operates defined benefit plans which have the following characteristics:

 

   

The Company has the obligation to pay the agreed benefits to all its current and former employees.

 

   

Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Company.

The net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods using market data; such as, interest rates, future salary increase rate and mortality rate based on historical data. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.

Changes in the defined benefit obligation for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Present value of
defined benefit
obligation
     Fair value of plan
assets
     Net defined benefit
liabilities
 

Beginning

   W 20,363      W (20,180    W 183  

Current service cost

     1,110        —          1,110  

Interest cost(income)

     233        (231      2  

Remeasurements:

        

Return on plan assets (excluding amounts
included in interest income)

     —          56        56  

Payments from plans (benefit payments)

     (1,554      1,554        —    

Transfer in

     1,158        (1,158      —    

Transfer out

     (2,574      2,574        —    
  

 

 

    

 

 

    

 

 

 

Ending

   W 18,736      W (17,385    W 1,351  
  

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    June 30, 2018  
     Present value of
defined benefit
obligation
     Fair value of
plan assets
     Net defined benefit
liabilities
 

Beginning

   W 16,594      W (16,795    W (201

Current service cost

     982        —          982  

Interest cost(income)

     239        (242      (3

Remeasurements:

        

Return on plan assets (excluding amounts
included in interest income)

     —          101        101  

Payments from plans (benefit payments)

     (1,224      1,224        —    

Payments from the Company

     (39      —          (39

Transfer in

     2,528        (2,528      —    

Transfer out

     (1,865      1,865        —    
  

 

 

    

 

 

    

 

 

 

Ending

   W 17,215      W (16,375    W 840  
  

 

 

    

 

 

    

 

 

 

 

37


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Details of the net defined benefit liabilities as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Present value of defined benefit obligation

   W 18,736      W 20,363  

Fair value of plan assets

     (17,385      (20,180
  

 

 

    

 

 

 

Net defined benefit liabilities

   W 1,351      W 183  
  

 

 

    

 

 

 

Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      June 30, 2018  

Current service cost

   W 1,110      W 982  

Net interest expenses of net defined benefit liabilities

     2        (3
  

 

 

    

 

 

 

Post-employment benefits

   W 1,112      W 979  
  

 

 

    

 

 

 

 

38


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

17. Other Liabilities

Details of other liabilities as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Other financial liabilities

     

Payables

   W 10,767      W 7,375  

Accrued expenses

     20,402        12,578  

Lease liability

     854        —    
  

 

 

    

 

 

 
     32,023        19,953  
  

 

 

    

 

 

 

Other non-financial liabilities

     

Payables

     70,518        49,348  

Accrued expenses

     104,148        116,800  

Withholding taxes

     266        380  
  

 

 

    

 

 

 
     174,932        166,528  
  

 

 

    

 

 

 
   W 206,955      W 186,481  
  

 

 

    

 

 

 

18. Equity

Share Capital

Details of share capital and number of issued shares as of June 30, 2019 and December 31, 2018, are as follows:

 

     June 30, 2019      December 31, 2018  
Type of share    Ordinary share      Ordinary share  

Number of authorized shares

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

Par value per share

   W 5,000      W 5,000  

Number of issued shares

     418,111,537        418,111,537  

Share capital1

   W 2,090,558      W 2,090,558  

 

1

In millions of Korean won.

Changes in shares outstanding for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In number of shares)    June 30, 2019      June 30, 2018  

Beginning

     395,551,297        399,037,583  

Increase

     —          —    

Decrease

     (5,916,962      (2,803,909
  

 

 

    

 

 

 

Ending

     389,634,335        396,233,674  
  

 

 

    

 

 

 

 

39


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Hybrid securities

Details of hybrid securities classified as equity as at June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    Issuance date      Maturity      Interest
rate (%)
     June 30,
2019
     December 31,
2018
 

The 1-1st Hybrid securities

     May 2, 2019        Perpetual bond        3.23      W 349,204      W —    

The 1-2nd Hybrid securities

     May 2, 2019        Perpetual bond        3.44        49,881        —    
           

 

 

    

 

 

 
            W 399,085      W —    
           

 

 

    

 

 

 

The above hybrid securities may be redeemed by the Company after 5 or 10 years from the issuance date.

Capital Surplus

Details of capital surplus as at June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Share premium

   W 13,190,275      W 13,190,275  

Other capital surplus

     1,465,893        1,465,893  

Gain on sales of treasury share

     86,646        86,646  
  

 

 

    

 

 

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

 

 

    

 

 

 

Accumulated Other Comprehensive Income

Details of accumulated other comprehensive income as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Remeasurements of net defined benefit liabilities

   W (7,185    W (7,144
  

 

 

    

 

 

 
   W (7,185    W (7,144
  

 

 

    

 

 

 

Changes in accumulated other comprehensive income for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019  
     Beginning      Changes      Tax effect      Ending  

Remeasurements of net defined benefit liabilities

   W (7,144    W (56    W 15      W (7,185
  

 

 

    

 

 

    

 

 

    

 

 

 
   W (7,144    W (56    W 15      W (7,185
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    June 30, 2018  
     Beginning      Changes      Tax effect      Ending  

Remeasurements of net defined benefit liabilities

   W (5,233    W (101    W 28      W (5,306
  

 

 

    

 

 

    

 

 

    

 

 

 
   W (5,233    W (101    W 28      W (5,306
  

 

 

    

 

 

    

 

 

    

 

 

 

 

40


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Retained Earnings

Details of retained earnings as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Legal reserves

   W 482,806      W 390,216  

Voluntary reserves

     982,000        982,000  

Regulatory reserve for credit losses

     4,458        2,374  

Retained earnings before appropriation

     1,824,364        1,838,966  
  

 

 

    

 

 

 
   W 3,293,628      W 3,213,556  
  

 

 

    

 

 

 

With respect to the allocation of net profit earned in a fiscal term, the Company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax as reported in the separate statement of comprehensive income each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its share capital in accordance with Article 53 of the Financial Holding Company Act. The reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit.

Regulatory reserve for credit losses

Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 26 through 28 of the Supervisory Regulations on Financial Holding Companies.

Details of the regulatory reserve for credit losses as of June 30, 2019 and December 31, 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      December 31, 2018  

Beginning

   W 4,458      W 2,374  

Estimated amounts subject to provision(reversal)

     (495      2,084  
  

 

 

    

 

 

 

Ending

   W 3,963      W 4,458  
  

 

 

    

 

 

 

The adjustments to the regulatory reserve for credit losses for the three-month and the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won, except per share amounts)    June 30, 2019      June 30, 2018  
     Three
months
    

Six

months

     Three
months
    

Six

months

 

Provision of regulatory reserve for credit losses

   W (998    W (495    W (70    W 654  

Adjusted profit after provision of regulatory reserve for credit losses1

     (41,730      842,444        (38,048      1,009,307  

Adjusted basic earnings per share after provision of regulatory reserve for credit losses1

     (107      2,146        (95      2,540  

Adjusted diluted earnings per share after provision of regulatory reserve for credit losses1

   W (107    W 2,131      W (95    W 2,527  

 

41


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

1

Adjusted profit after provision of regulatory reserve for credit losses is not in accordance with Korean IFRS and calculated on the assumption that provision of regulatory reserve for credit losses before income tax is adjusted to the profit for the period.

Treasury Shares

Changes in treasury shares outstanding for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won and in number of shares)    June 30, 2019  
     Beginning      Acquisition      Disposal      Ending  

Number of treasury shares

     22,560,240        5,916,962        —          28,477,202  

Carrying amount

   W (968,549    W (267,639    W —        W (1,236,188

 

(In millions of Korean won and in number of shares)    June 30, 2018  
     Beginning      Acquisition      Disposal      Ending  

Number of treasury shares

     19,073,954        2,803,909        —          21,877,863  

Carrying amount

   W (755,973    W (180,221    W —        W (936,194

19. Dividends

The dividends to the shareholders of the Company in respect of the year ended December 31, 2018, of W1,920 per share, amounting to total dividends of W759,736 million, were paid in April 2019. The dividends paid to the shareholders of the Company in 2018 were W766,728 million (W1,920 per share).

20. Net Interest Income(expense)

Interest income(expense) and net interest income(expense) for the three-month and the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      June 30, 2018  
     Three months      Six months      Three months      Six months  

Interest income

           

Due from financial institutions

   W 831      W 1,895      W 2,234      W 3,120  

Loans at amortized cost

     934        1,013        51        105  

Loans at fair value through profit or loss

     1,890        2,255        —          —    

Other

     82        158        59        117  
  

 

 

    

 

 

    

 

 

    

 

 

 
     3,737        5,321        2,344        3,342  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense

           

Debts

     1,294        2,488        1        973  

Debentures

     31,821        62,249        31,261        59,388  

Other

     5        9        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
     33,120        64,746        31,262        60,361  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income(expense)

   W (29,383    W (59,425    W (28,918    W (57,019
  

 

 

    

 

 

    

 

 

    

 

 

 

 

42


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

21. Net Fee and Commission Income(Expense)

Fee and commission income(expense) and net fee and commission income(expense) for the three-month and six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      June 30, 2018  
     Three
months
     Six
months
     Three
months
     Six
months
 

Fee and commission income

   W 214      W 350      W 152      W 269  

Fee and commission expense

           

Fees paid in Korean won

     2,360        3,139        2,547        3,828  

Fees paid in foreign currency

     —          79        —          72  
  

 

 

    

 

 

    

 

 

    

 

 

 
     2,360        3,218        2,547        3,900  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net fee and commission income(expense)

   W (2,146    W (2,868    W (2,395    W (3,631
  

 

 

    

 

 

    

 

 

    

 

 

 

22. Net Gains on Financial assets at fair value through profit or loss

Net Gains on Financial assets at fair value through profit or loss consist of gains or losses related to financial instrument that includes dividend income and gains or losses arising from changes in the fair values, sales and redemptions. Details for the three-month and six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      June 30, 2018  
     Three
months
     Six
months
     Three
months
     Six
months
 

Gains related to financial instruments at fair value through profit or loss

           

Financial assets at fair value through profit or loss

   W 5,144      W 10,088      W 6,123      W 8,732  
  

 

 

    

 

 

    

 

 

    

 

 

 
     5,144        10,088        6,123        8,732  
  

 

 

    

 

 

    

 

 

    

 

 

 

Losses related to financial instruments at fair value through profit or loss

           

Financial assets at fair value through profit or loss

     176        323        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
     176        323        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

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

   W 4,968      W 9,765      W 6,123      W 8,732  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

43


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

23. Net Other Operating Income

Other operating income or other operating expense for the three-month and the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      June 30, 2018  
     Three
months
     Six months      Three
months
     Six months  

Other operating income

           

Dividend income from subsidiaries

   W —        W 926,934      W —        W 1,089,556  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net other operating income

   W —        W 926,934      W —        W 1,089,556  
  

 

 

    

 

 

    

 

 

    

 

 

 

24. General and Administrative Expenses

Details of general and administrative expenses for the three-month and the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(In millions of Korean won)    June 30, 2019      June 30, 2018  
     Three
months
     Six
months
     Three
months
     Six
months
 

Employee benefits

           

Salaries and other short-term employee benefits - Salaries

   W 5,829      W 10,770      W 5,659      W 11,763  

Salaries and other short-term employee benefits - Others

     1,052        1,955        1,013        1,940  

Post-employment benefits

     557        1,112        490        979  

Share-based payments

     1,929        1,713        (583      (145
  

 

 

    

 

 

    

 

 

    

 

 

 
     9,367        15,550        6,579        14,537  
  

 

 

    

 

 

    

 

 

    

 

 

 

Depreciation and amortization

     1,259        2,408        180        347  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other general and administrative expenses

           

Travel

     440        636        239        293  

Communications

     229        398        135        320  

Tax and dues

     79        291        79        231  

Publication

     91        148        89        130  

Rental expense

     241        408        351        722  

Vehicle

     39        61        39        62  

Service fees

     2,919        6,793        2,857        4,940  

Advertising

     15        397        82        466  

Training

     233        538        157        321  

Others

     1,632        3,314        1,324        2,859  
  

 

 

    

 

 

    

 

 

    

 

 

 
     5,918        12,984        5,352        10,344  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 16,544      W 30,942      W 12,111      W 25,228  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

44


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Share-based Payments

The Company entered into share-based payment plan for executives and employees of the Company and its subsidiaries.

Details of stock grants linked to long-term performance as of June 30, 2019, are as follows:

 

(In number of shares)    Grant date    Number of granted
shares1
     Vesting conditions2

KB Financial Group Inc.

     

Series 18

   July 17, 2017      7,826     

Services fulfillment,

Achievement of targets on the basis of market3 30~50% and non-market performance4 50~70%

Series 19

   Nov. 21, 2017      46,890     

Services fulfillment,

Achievement of targets on the basis of market3 35% and non-market performance5 65%

Series 20

   Jan. 01, 2018      38,826     

Services fulfillment,

Achievement of targets on the basis of market3 30~50% and non-market performance4 50~70%

Series 21

   Jan. 01, 2019      29,859     

Services fulfillment,

Achievement of targets on the basis of market3 30% and non-market performance4 70%

Series 22

   Apr. 01, 2019      3,227     

Services fulfillment,

Achievement of targets on the basis of market3 30% and non-market performance4 70%

Series 23

   May 27, 2019      1,392     

Services fulfillment,

Achievement of targets on the basis of market3 30% and non-market performance4 70%

Deferred grant in 2012

   —        5,415      Satisfied

Deferred grant in 2013

   —        588      Satisfied

Deferred grant in 2015

   —        10,043      Satisfied

Deferred grant in 2016

   —        12,093      Satisfied

Deferred grant in 2017

   —        57,746      Satisfied

Deferred grant in 2018

   —        8,057      Satisfied
     

 

 

    
        221,962     
     

 

 

    

Kookmin Bank

        

Series 72

   Aug. 28, 2017      5,715      Service fulfillment, Achievement of targets on the basis of market3 30~50%, and non-market performance4 50~70%

Series 73

   Nov. 21, 2017      27,786      Service fulfillment, Achievement of targets on the basis of market3 30%, and non-market performance5 70%

Series 74

   Jan. 01, 2018      134,465      Service fulfillment, Achievement of targets on the basis of market3 30~50%, and non-market performance4 50~70%

Series 75

   Jan. 01, 2019      234,711      Service fulfillment, Achievement of targets on the basis of market3 30~50%, and non-market performance4 50~70%

Series 76

   Apr. 01, 2019      5,380      Service fulfillment, Achievement of targets on the basis of market3 30~50%, and non-market performance4 50~70%

Series 77

   May 27, 2019      5,569      Service fulfillment, Achievement of targets on the basis of market3 30~50%, and non-market performance4 50~70%

Deferred grant in 2015

        4,756     

Satisfied

Deferred grant in 2016

        65,419     

Satisfied

Deferred grant in 2017

        106,212     

Satisfied

Deferred grant in 2018

        97,244     

Satisfied

     

 

 

    
        687,257     
     

 

 

    

 

45


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

Other subsidiaries and associate

 

     

Stock granted in 2010

     —          106     

Services fulfillment,

Achievement of targets on the basis of market3 10~50% and non-market performance4 50~90%

Stock granted in 2011

     —          146  

Stock granted in 2012

     —          420  

Stock granted in 2013

     —          1,007  

Stock granted in 2014

     —          1,223  

Stock granted in 2015

     —          4,456  

Stock granted in 2016

     —          22,887  

Stock granted in 2017

     —          82,919  

Stock granted in 2018

     —          260,189  

Stock granted in 2019

     —          249,733     
     

 

 

    
        623,086     
     

 

 

    
        1,532,305     
     

 

 

    

 

1

Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period (Deferred grants are residual shares at the end of the reporting period).

2

Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed.

3

Relative TSR (Total Shareholders Return): [(Fair value at the end of the contract—Fair value at the beginning of the contract) + (Total amount of dividend per share paid during the contract period)] / Fair value at the beginning of the contract)

4

Accomplishment of subsidiaries’ performance and accomplishment of performance results

5

EPS, Asset Quality, HCROI, Non-banking sector profit

 

46


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

The stock grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual stock granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.

Details of stock grants linked to short-term performances as of June 30, 2019, are as follows:

 

     Grant date    Estimated number
of vested shares1
    

Vesting

Conditions

KB Financial Group Inc.

        

Stock granted in 2010

   Jan. 01, 2010      322      Satisfied

Stock granted in 2011

   Jan. 01, 2011      1,728      Satisfied

Stock granted in 2012

   Jan. 01, 2012      2,642      Satisfied

Stock granted in 2013

   Jan. 01, 2013      474      Satisfied

Stock granted in 2015

   Jan. 01, 2015      9,690      Satisfied

Stock granted in 2016

   Jan. 01, 2016      11,783      Satisfied

Stock granted in 2017

   Jan. 01, 2017      12,273      Satisfied

Stock granted in 2018

   Jan. 01, 2018      20,664      Satisfied

Stock granted in 2019

   Jan. 01, 2019      15,777      Proportional to service period

Kookmin Bank

        

Stock granted in 2015

   Jan. 01, 2015      15,831      Satisfied

Stock granted in 2016

   Jan. 01, 2016      52,855      Satisfied

Stock granted in 2017

   Jan. 01, 2017      55,490      Satisfied

Stock granted in 2018

   Jan. 01, 2018      109,296      Satisfied

Stock granted in 2019

   Jan. 01, 2019      58,263      Proportional to service period

Other subsidiaries

        

Stock granted in 2015

   —        16,922      Satisfied

Stock granted in 2016

   —        94,198      Satisfied

Stock granted in 2017

   —        238,234      Satisfied

Stock granted in 2018

   —        458,338      Satisfied

Stock granted in 2019

   —        148,087      Proportional to service period
     

 

 

    
     1,322,867     
     

 

 

    

 

1