UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2022

Commission File Number: 000-53445

KB Financial Group Inc.

(Translation of registrant’s name into English)

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

(Address of principal executive office)

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

Form 20-F  ☒             Form 40-F  ☐

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

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

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

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

Audit Report of KB Securities Co., Ltd. for Fiscal Year 2021

On March 8, 2022, KB Financial Group Inc. disclosed audit reports of KB Securities Co., Ltd. (“KB Securities”), its wholly-owned subsidiary, for fiscal year 2021 based on the International Financial Reporting Standards as adopted by the Republic of Korea (including the consolidated and separate financial statements of KB Securities as of and for the years ended December 31, 2021 and 2020 and related notes) received from KPMG Samjong Accounting Corp., its independent auditor. The financial statements in such reports have not been approved by the shareholders of KB Securities and remain subject to change.

KB Financial Group Inc. is furnishing the following documents as exhibits to this Form 6-K filing:

Exhibit 99.1: An English-language translation of the Consolidated Audit Report of KB Securities for FY 2021.

Exhibit 99.2: An English-language translation of the Separate Audit Report of KB Securities for FY 2021.

SIGNATURES

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

	KB Financial Group Inc.
	(Registrant)
Date: March 8, 2022	By:	/s/ Scott Y. H. Seo
	(Signature)
	Name: Scott Y. H. Seo
	Title: Senior Managing Director and Chief Finance Officer

Exhibit 99.1

KB SECURITIES CO., LTD. and Subsidiaries

Consolidated Financial Statements

December 31, 2021 and 2020

(With Independent Auditors’ Report Thereon)

KB SECURITIES CO., LTD. and Subsidiaries

Index

December 31, 2021 and 2020

	Page(s)
Independent Auditors’ Report		1~3
Consolidated Financial Statements
Consolidated Statements of Financial Position		4
Consolidated Statements of Profit or Loss		5
Consolidated Statements of Comprehensive Income		6
Consolidated Statements of Changes in Equity		7
Consolidated Statements of Cash Flows		8
Notes to the Consolidated Financial Statements		9~140

Independent Auditors’ Report

(Based on a report originally issued in Korean)

The Board of Directors and Stockholder

KB Securities Co., Ltd.:

Opinion

We have audited the consolidated financial statements of KB Securities Co., Ltd. and its subsidiaries (“the Group”), which comprise the consolidated statements of financial position as of December 31, 2021 and 2020, the consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

Basis for Opinion

We conducted our audit in accordance with Korean Standards on Auditing (“KSAs”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

As a matter that does not affect our audit opinion, we draw attention to the following matter.

As described in note 40 to the consolidated financial statements, the proliferation of COVID-19 has had a negative impact on the global economy, which may have a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, and it could negatively affect the profit generation capability of the Group.

Other Matters

The procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

2

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in the internal controls that we identify during our audit.

KPMG Samjong Accounting Corp.

Seoul, Korea

March 7, 2022

This report is effective as of March 7, 2022, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

3

KB SECURITIES CO., LTD. and Subsidiaries

Consolidated Statements of Financial Position

December 31, 2021 and 2020

(in Korean won)	Notes		2021		2020
Assets
Cash and deposits		5,35,36,37,42		3,834,048,674,705		3,889,064,252,198
Financial assets at fair value through profit or loss		6,35,36,37		34,182,334,301,081		33,415,470,014,464
Derivative financial assets		7,35,36,37,38		817,518,307,305		928,690,440,172
Financial assets at fair value through other comprehensive income		8,35,36,37		3,839,877,806,177		3,905,038,843,780
Investments in associates		9		137,621,441,023		312,090,836,287
Financial assets measured at amortised cost		10,35,36,37,39		7,186,208,182,322		6,644,454,998,421
Property and equipment		11,39		210,755,849,488		226,120,569,861
Investment properties		12		1,147,746,979,871		1,173,404,223,897
Intangible assets		13		185,272,286,741		169,082,214,065
Current tax assets				4,948,083,454		5,971,446,984
Deferred tax assets		34		—		—
Other financial assets		14,35,36,37,38		3,661,821,844,639		6,789,449,197,296
Other assets		15		50,892,344,080		40,821,543,674
Disposal group classified as held for sale		45		171,749,315,076		—
Total assets				55,430,795,415,962		57,499,658,581,099
Liabilities
Deposit liabilities		16,35,36,37		8,391,075,182,612		7,686,410,760,723
Financial liabilities at fair value through profit or loss		6,35,36,37,38		11,986,846,570,347		11,681,634,705,089
Derivative financial liabilities		7,35,36,37,38		874,641,742,107		863,332,004,471
Borrowings		17,35,36,37,38		24,649,381,850,266		25,029,132,760,730
Current tax liabilities				2,196,195,146		7,773,770,945
Net defined benefit liabilities		18		55,619,888,673		53,636,423,458
Deferred tax liabilities		34		16,878,468,859		4,915,992,113
Provisions		19		106,123,390,303		82,870,710,240
Other financial liabilities		20,35,36,37,38,39		3,484,650,270,838		6,704,330,326,110
Other liabilities		21		427,826,239,552		387,601,021,477
Total liabilities				49,995,239,798,703		52,501,638,475,356
Equity
Share capital		22		1,493,102,120,000		1,493,102,120,000
Other paid-in capital		23		1,478,687,978,420		1,478,716,745,754
Retained earnings		24		2,247,970,109,154		1,847,509,495,299
Other components of equity		25		204,500,516,202		178,381,856,637
Other Comprehensive Income for the disposal group classified as held for sale		45		7,670,746,146		—
Equity attributable to shareholders of the Parent Company				5,431,931,469,922		4,997,710,217,690
Non-controlling interest				3,624,147,337		309,888,053
Total equity				5,435,555,617,259		4,998,020,105,743
Total liabilities and equity				55,430,795,415,962		57,499,658,581,099

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

4

KB SECURITIES CO., LTD. and Subsidiaries

Consolidated Statements of Profit or Loss

Years Ended December 31, 2021 and 2020

(in Korean won)	Notes		2021			2020
Operating income
Fee and commission income		26		1,144,248,378,743			986,396,263,250
Gain on valuation and disposal of financial instruments		27		5,550,641,843,434			7,068,696,085,166
Interest income		28		826,686,736,401			822,598,489,784
Interest income from financial instruments at FVTPL				402,414,577,880			430,354,396,329
Interest income in applying of effective interest rate				424,272,158,521			392,244,093,455
Gain on valuation and disposal of financial assets measured at amortised costs		29		7,839,928,487			29,252,916,198
Gain on foreign currency transactions		30		793,253,127,269			961,701,785,975
Other operating income		31		226,880,484,789			187,220,475,943
				8,549,550,499,123			10,055,866,016,316
Operating expenses
Fee and commission expense		26		186,868,006,666			120,787,340,778
Loss on valuation and disposal of financial instruments		27		5,581,543,512,545			7,062,893,770,938
Interest expense		28		268,260,223,608			309,414,129,773
Loss on valuation and disposal of financial assets measured at amortised costs		29		22,862,121,814			29,038,084,846
Loss on foreign currency transactions		30		744,492,109,236			1,092,936,571,849
Selling and administrative expenses		32		855,262,728,540			837,463,427,511
Other operating expenses		31		68,987,483,624			24,536,653,032
				7,728,276,186,033			9,477,069,978,727
Operating profit				821,274,313,090			578,796,037,589
Non-operating income		33		48,129,525,832			114,338,476,575
Non-operating expenses		33		51,360,194,503			99,898,443,996
Profit before income tax				818,043,644,419			593,236,070,168
Income tax expense		34		217,752,228,397			159,284,706,620
Profit for the year				600,291,416,022			433,951,363,548
Profit attributable to:
Shareholders of the Parent Company				600,439,340,042			433,925,816,556
Non-controlling interest				(147,924,020	)		25,546,992

The above consolidated statements of profit or loss should be read in conjunction with the accompanying notes.

5

KB SECURITIES CO., LTD. and Subsidiaries

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2021 and 2020

(in Korean won)	Notes		2021			2020
Profit for the year				600,291,416,022			433,951,363,548
Other comprehensive income(loss)
Items that will not be reclassified to profit or loss
Net gains on valuation of equity instruments at fair value through other comprehensive income		8,25		27,779,973,437			30,958,040,138
Fair value changes on financial liabilities designated at fair value due to own credit risk		6,25		13,714,607,803			8,832,146,927
Remeasurements of the net defined benefit liabilities		18,25		(2,237,583,109	)		(4,785,482,165	)
Items that may be subsequently reclassified to profit or loss
Net gains (losses) on valuation of debt instrument at fair value through other comprehensive income		8,25		(17,213,330,222	)		2,690,383,182
Share of other comprehensive income (loss) of associates		9,25		23,492,222			(138,895,503	)
Gains (Losses) on hedge of net investments in foreign operations		7,25		(13,082,538,140	)		3,261,527,418
Exchange difference on translation of foreign operations		25		25,060,921,541			(17,060,194,229	)
Other comprehensive income for the year, net of tax				34,045,543,532			23,757,525,768
Total comprehensive income for the year				634,336,959,554			457,708,889,316
Total comprehensive income for the year attributable to:
Shareholders of the Parent Company				634,250,019,566			457,702,825,149
Non-controlling interest				86,939,988			6,064,167

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

6

KB SECURITIES CO., LTD. and Subsidiaries

Consolidated Statements of Changes in Equity

Years Ended December 31, 2021 and 2020

	Attributable to the Shareholder of the Parent Company
	Share Capital		Other Paid In Capital			Retained Earnings			Other Components of Equity			Other Comprehensive Income for the Disposal Group		Total			Non-controlling Interest			Total Equity
Balance at January 1, 2020		1,493,102,120,000		1,478,716,745,754			1,493,402,661,346			154,785,865,441			—		4,620,007,392,541			303,823,886			4,620,311,216,427
Dividends		—		—			(80,000,000,000	)		—			—		(80,000,000,000	)		—			(80,000,000,000	)
Revaluations of property and equipments		—		—			181,017,397			(181,017,397	)		—		—			—			—
Total comprehensive income
Profit for the year		—		—			433,925,816,556			—			—		433,925,816,556			25,546,992			433,951,363,548
Gains on equity instruments at fair value through other comprehensive income		—		—			—			33,648,423,320			—		33,648,423,320			—			33,648,423,320
Fair value changes on financial liabilities designated at fair value due to own credit risk		—		—			—			8,832,146,927			—		8,832,146,927			—			8,832,146,927
Share of other comprehensive income of associates		—		—			—			(138,895,503	)		—		(138,895,503	)		—			(138,895,503	)
Remeasurements of net defined benefit liabilities		—		—			—			(4,785,482,165	)		—		(4,785,482,165	)		—			(4,785,482,165	)
Losses on hedge of net investments in foreign operations		—		—			—			3,261,527,418			—		3,261,527,418			—			3,261,527,418
Exchange difference on translation of foreign operations		—		—			—			(17,040,711,404	)		—		(17,040,711,404	)		(19,482,825	)		(17,060,194,229	)
Balance at December 31, 2020		1,493,102,120,000		1,478,716,745,754			1,847,509,495,299			178,381,856,637			—		4,997,710,217,690			309,888,053			4,998,020,105,743
Balance at January 1, 2021		1,493,102,120,000		1,478,716,745,754			1,847,509,495,299			178,381,856,637			—		4,997,710,217,690			309,888,053			4,998,020,105,743
Dividends		—		—			(200,000,000,000	)		—			—		(200,000,000,000	)		—			(200,000,000,000	)
Revaluations of property and equipments		—		—			21,273,813			(21,273,813	)		—		—			—			—
Changes in ownership of subsidiaries		—		(28,767,334	)		—			—			—		(28,767,334	)		3,227,319,296			3,198,551,962
Total comprehensive income
Profit for the year		—		—			600,439,340,042			—			—		600,439,340,042			(147,924,020	)		600,291,416,022
Gains on equity instruments at fair value through other comprehensive income		—		—			—			10,566,643,215			—		10,566,643,215			—			10,566,643,215
Fair value changes on financial liabilities designated at fair value due to own credit risk		—		—			—			13,714,607,803			—		13,714,607,803			—			13,714,607,803
Share of other comprehensive loss of associates		—		—			—			23,492,222			—		23,492,222			—			23,492,222
Remeasurements of net defined benefit liabilities		—		—			—			(2,237,583,109	)		—		(2,237,583,109	)		—			(2,237,583,109	)
Gains on hedge of net investments in foreign operations		—		—			—			(13,082,538,140	)		—		(13,082,538,140	)		—			(13,082,538,140	)
Exchange difference on translation of foreign operations		—		—			—			24,826,057,533			—		24,826,057,533			234,864,008			25,060,921,541
Other
Other Comprehensive income for the disposal group classified as held for sale		—		—			—			(7,670,746,146	)		7,670,746,146		—			—			—
Balance at December 31, 2021		1,493,102,120,000		1,478,687,978,420			2,247,970,109,154			204,500,516,202			7,670,746,146		5,431,931,469,922			3,624,147,337			5,435,555,617,259

The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes

7

KB SECURITIES CO., LTD. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31, 2021 and 2020

(in Korean won)	Notes	2021			2020
Cash flows from operating activities
Cash generated from operating activities
Profit for the year			600,291,416,022			433,951,363,548
Adjustment for non-cash items	42		(417,312,391,023	)		(248,544,938,485	)
Changes in operating assets and liabilities	42		(1,734,309,882,567	)		(4,578,264,403,066	)
			(1,551,330,857,568	)		(4,392,857,978,003	)
Interest received			867,556,903,180			864,814,417,368
Interest paid			(262,543,247,334	)		(301,546,264,932	)
Dividends received			48,254,346,434			43,381,180,350
Income taxes paid			(211,033,728,541	)		(117,986,634,762	)
Net cash used in operating activities			(1,109,096,583,829	)		(3,904,195,279,979	)
Cash flows from investing activities
Decrease in long-term deposit held by bank			445,606,747,492			1,637,546,400,000
Acquisition of financial assets at fair value through other comprehensive income			(4,678,422,757,635	)		(7,177,688,217,371	)
Disposal of financial assets at fair value through other comprehensive income			4,731,871,208,238			5,913,177,631,905
Acquisition of investments of associates	9		(238,418,796,834	)		(312,428,478,000	)
Disposal of investment of associates	9		94,278,366,786			60,460,896,710
Net cash flows from the change in subsidiaries	9		(4,020,649,275	)		(3,375,470,308	)
Acquisition of property and equipment	11		(23,586,057,672	)		(24,533,604,849	)
Disposal of property and equipment	11		683,373,612			4,023,409,090
Acquisition of intangible assets	13		(36,856,058,060	)		(26,838,714,187	)
Disposal of intangible assets	13		2,086,788,000			6,024,675,739
Acquisition of investment properties	12		—			(53,070,982,551	)
Disposal of investment properties	12		58,071,100,474			378,427,620,851
Disposal of assets held for sale			—			20,184,660,053
Others			(26,298,576,016	)		(458,672,754	)
Net cash provided by investing activities			324,994,689,110			421,451,154,328
Cash flows from financing activities
Increase in borrowings	42		1,243,604,095,870			3,604,511,139,722
Increase(decrease) in guarantee deposit liabilities	42		(816,464,491	)		1,120,018,476
Dividends paid	24		(200,000,000,000	)		(80,000,000,000	)
Redemption of principal elements of lease payments			(32,271,499,249	)		(25,090,407,972	)
Increase in share capital			3,218,525,903			—
Increase in other liabilities			23,956,770,027			8,321,432,308
Net cash provided by financing activities			1,037,691,428,060			3,508,862,182,534
Effect of exchange rate changes on cash and cash equivalents			1,379,611,661			(491,340,927	)
Net increase in cash and cash equivalents			254,969,145,002			25,626,715,956
Cash and cash equivalents at the beginning of the year	5		421,397,220,746			395,770,504,790
Cash and cash equivalents at the end of the year	5		676,366,365,748			421,397,220,746
Cash and cash equivalents from the disposal group classified as held for sale	45		512,346,130			—
Cash and cash equivalents in consolidated statement of financial position as at the end of the year	5		675,854,019,618			421,397,220,746

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

8

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

1. General Information

General information of KB Securities Co., Ltd. (the “Parent Company” or “KB Securities”) which is a controlling company in accordance with Korean IFRS No.1110 Consolidated Financial Statements, and 102 subsidiaries including KBFG Securities America Inc. is as follows:

The Parent Company was established on June 1, 1962, under the name of Kookil Securities Co., Ltd. On June 5, 1986, the Parent Company changed its name to “Hyundai Securities Co., Ltd.”. After several capital increases, the share capital of the Parent Company amounts to W 1,493,102 million as at December 31, 2020.

The Parent Company became a wholly owned subsidiary of KB Financial Group Inc. on October 19, 2016, through a comprehensive exchange of shares. At the end of the reporting period, KB Financial Group Inc. owns 100% of ordinary shares of the Parent Company.

Meanwhile, the Parent Company merged with KB Investment & Securities Co., Ltd. (the “KB Investment & Securities”) on December 30, 2016 as a surviving company and changed its name to KB Securities Co., Ltd. As at December 31, 2021, the Parent Company has 108 branch offices in Korea and one overseas branch office.

Details of the consolidated subsidiaries as at December 31, 2021 and 2020, are as follows:

	2021
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
The Parent Company	KBFG Securities America Inc.		100.00	USA	December	Investment, advisory
	KB Securities Hong Kong Ltd.		100.00	Hong Kong	December	Investment, advisory
	KB Securities Vietnam Joint Stock Company		99.81	Vietnam	December	Investment, advisory
	KB FINA Joint Stock Company		77.82	Vietnam	December	IT(Fintech)
	KB Digital Innovation&growth New Technology Business Investment Fund 1		20.00	Korea	December	Other financial
	KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund 1		42.86	Korea	December	Other financial
	JB New Jersey Private Real Estate Fund 1		98.15	Korea	December	Funds
	Heungkuk Global Highclass Private Real Estate Trust 23		100.00	Korea	December	Funds
	DGB Qualified Investor Private Real Estate Investment Trust No.8		98.77	Korea	December	Funds
	LB Ireland Private Real Estate Investment Trust 8		96.64	Korea	December	Funds
	Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No.15		99.50	Korea	December	Funds
	KTB Aircraft Private Investment Trust No.21-1		99.61	Korea	December	Funds
	Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		54.84	Korea	December	Funds
	JB Dry Street Private Fund 1		100.00	Korea	December	Funds
	JB Australia108 Private Fund 1		100.00	Korea	December	Funds
	JB Forge Private Fund 1		100.00	Korea	December	Funds
	JB Hall Street Private Fund 1		100.00	Korea	December	Funds
	JB Margaret Street Private Fund 1		100.00	Korea	December	Funds
	GH Real Estate I LP		81.00	Guernsey	December	Investment
	Alpha Spain Real Estate Private Investment Trust 1		99.85	Korea	December	Funds

9

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2021
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	Hanwha US Equity StrategyPrivate Real Estate Fund 3		99.95	Korea	December	Funds
	MS Sejong 4th Co.,Ltd 1		—	Korea	December	Asset-backed securitization
	KB UK Center 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Gwonseon 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	AJH 3rd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Paradise Yeongjong 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar IP Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Enewstay 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Panorama 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Papyrus Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	SJ Jongno 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar DS 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Newstar DS 2nd Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Able Gamsam 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Songdo PFive 2nd Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Newstar Gimpo 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Polar EH 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Polar EH 2nd Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Able Gongpyeong 1st Co.,Ltd 1		—	Korea	December	Asset-backed securitization
	Able Chowall 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	FN Gasan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	ABR Mareuk 1st Co.,Ltd 1		—	Korea	December	Asset-backed securitization
	Newstar Believe Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Electronics 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Echo 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	ABR Joongang2 1st Co.,Ltd 1		—	Korea	December	Asset-backed securitization
	KB Tongyoung 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Able Guwol 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Sky 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Gimpo 2nd Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Hyosung 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Poongdong 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Sewoon Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Infra 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization

10

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2021
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	Intgreen 1st Inc. 1		—	Korea	December	Asset-backed securitization
	Able Gasan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Pocheon 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Seotan Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Able PT 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Unbroken 1st co.ltd 1		—	Korea	December	Asset-backed securitization
	JOSH Bujeon 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Plus1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	KB MyeongJi 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Dangjin 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Yongdap 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Osansegyo 2nd Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Hyeongok Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Mapo 2nd Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	GDIC 1st co.ltd 1		—	Korea	December	Asset-backed securitization
	Able Wonchang 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Zitaress 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB PF 3rd Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Beomeo-one Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Yucheon 1st co.ltd 1		—	Korea	December	Asset-backed securitization
	KB Infra 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KBillite 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Sina Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Gold 1st Co.,Ltd. 1		—	Korea	December	Asset-backed securitization
	Inspire Gold 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Inspire Gold 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able MK 1st co.ltd 1		—	Korea	December	Asset-backed securitization
	Yeoksam The Gallery KB 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Y Three Ulsan Sinjeong 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Mangrove Feeder Fund		92.88	Cayman Islands	December	Funds
The parent Company and others	LB UK Private Real Estate Investment Trust No.18		100.00	Korea	December	Funds
	LB UK Private Real Estate Investment Trust No.19		100.00	Korea	December	Funds
Mangrove Feeder Fund	Mangrove Master Fund		100.00	Cayman Islands	December	Funds
KB Securities Hong Kong Ltd.	Global Investment Opportunity Limited		100.00	Malaysia	December	Financial & real-estate

11

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2021
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
LB Ireland Private Real Estate Investment Trust 8	Beckett Acquisition Limited		100.00	Ireland	December	Real-estate Investment
SJ Jongno 1st Co., Ltd.	KB Wise Star Real Estate Feeder Fund 2		59.86	Korea	December	Funds
KB Wise Star Real Estate Feeder Fund 2	KB Wise Star Jongno Tower Real Estate Master Fund		63.27	Korea	December	Funds
JB New Jersey Private Real Estate Fund 1	Able NJ DSM Investment REIT		99.18	USA	December	Real-estate Investment
Able NJ DSM Investment REIT	ABLE NJ DSM, LLC		100.00	USA	December	Real-estate Investment
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38	Lumen International Developments		100.00	Luxemburg	December	Real-estate Investment
Lumen International Developments	VREF Shaftesbury ScSp		100.00	Luxemburg	December	Real-estate Investment
LB UK Private Real Estate Investment Trust No.18 and others	Hillswood Finco Ltd.		100.00	Jersey	December	Real-estate Investment
	Hillswood Holdings Ltd.		100.00	Jersey	December	Real-estate Investment
	Hillswood Holding Property Unit Trust		100.00	Jersey	December	Real-estate Investment
Hillswood Holding Property Unit Trust and others	Hillswood Property Unit Trust		100.00	Jersey	December	Real-estate Investment
Hanwha US Equity Strategy Private Real Estate Fund 3	498 Seventh KOR Holdco LP		100.00	USA	December	Real-estate Investment
498 Seventh KOR Holdco LP	498 Seventh KOR LLC		100.00	USA	December	Real-estate Investment
Polar EH 1st Co., Ltd and Others	Multiasset PR Private Fund 4		100.00	Korea	December	Funds

¹  The Group has a substantive power over the special purpose entities (“SPEs”) or investment trusts and is exposed to variable returns. Accordingly, these SPEs and investment trusts are included in subsidiaries although the Group’s ownership is less than 50%.

	2020
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
The Parent Company	KBFG Securities America Inc.		100.00	USA	December	Investment, advisory
	KB Securities Hong Kong Ltd.		100.00	Hong Kong	December	Investment, advisory
	KB Securities Vietnam Joint Stock Company		99.70	Vietnam	December	Investment, advisory
	KB FINA Joint Stock Company		100.00	Vietnam	December	IT(Fintech)
	KB Digital Innovation&growth New Technology Business Investment Fund 1		20.00	Korea	December	Other financial
	KB Pre-IPO 2nd (TCB) NewTechnology Business InvestmentFund1		42.86	Korea	December	Other financial
	Hyundai Dynamic Mix Securities Feeder Investment Trust 1		100.00	Korea	December	Funds
	Hyundai Kon-tiki Specialized Privately Placed Fund 1		82.06	Korea	December	Funds
	JB New Jersey Private Real Estate Fund 1		98.15	Korea	December	Funds
	Heungkuk Global Highclass Private Real Estate Trust 23		100.00	Korea	December	Funds
	DGB Qualified Investor Private Real Estate Investment Trust No.8		98.77	Korea	December	Funds
	LB Ireland Private Real Estate Investment Trust 8		96.64	Korea	December	Funds

12

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		99.50	Korea	December	Funds
	KTB Aircraft Private Investment Trust No.21-1		99.61	Korea	December	Funds
	Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		54.84	Korea	December	Funds
	Aquila Global Real Assets Fund No.1 LP		99.96	Cayman Islands	December	Funds
	JB Dry Street Private Fund 1		100.00	Korea	December	Funds
	JB Australia108 Private Fund 1		100.00	Korea	December	Funds
	JB Forge Private Fund 1		100.00	Korea	December	Funds
	JB Hall Street Private Fund 1		100.00	Korea	December	Funds
	JB Margaret Street Private Fund 1		100.00	Korea	December	Funds
	GH Real Estate I LP		81.00	Guernsey	December	Investment
	Alpha Spain Real Estate Private Investment Trust 1		99.85	Korea	December	Funds
	Hangang Domestic Private Real Estate Fund No.14		99.45	Korea	December	Funds
	MS Sejong 4th Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Able Hana Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB UK Center 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	AKB 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Crescendo Muju Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Gwonseon 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Great GM 12th Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	AJH 3rd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Youto 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Paradise Yeongjong 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Hakgok Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Songdo PSeven 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Janghyun Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar SH Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar IP Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Daerim Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Enewstay 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Dangsan Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Panorama 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Papyrus Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	SJ Jongno 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Cheonwon Co., Ltd 1		—	Korea	December	Asset-backed securitization

13

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	Able KD 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar DS 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Newstar DS 2nd Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Able Yongin 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Newstar Wanee 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Gamsam 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Songdo PFive 2nd Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Able Sungnae 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Gimpo 1st Co., Ltd 1		—	Korea	December	Asset-backed securitization
	Able Ali 2nd Co., Ltd1		—	Korea	December	Asset-backed securitization
	KB PF 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Daepo 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Ansung 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Polar EH 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Polar EH 2nd Co., Ltd1		—	Korea	December	Asset-backed securitization
	Polar SQ 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Polar SQ 2nd Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Mojong 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Sungsoo 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Daenong Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Chimsan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Forsythia 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able IFP 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar JY Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Gorim 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Asan Baebang 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	KB Icheon logistics 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Unicity 4th Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Gongpyeong 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Hamilton Power First Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Chowall 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Startwithone Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Silver Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Osansaegyo Co., Ltd1		—	Korea	December	Asset-backed securitization
	Hd Yongin 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	FN Gasan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization

14

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	ABR Mareuk 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Newstarbelieve Co., Ltd.1		—	Korea	December	Asset-backed securitization
	Able Electronics 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Echo 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	KB Wondong 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Newstar Joongbong Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Island 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Gumi 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Gwangmyeong 2nd Co., Ltd1		—	Korea	December	Asset-backed securitization
	ABR Joongang2 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Bucheon Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Kumo 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Tongyoung 1st Co., Ltd1		—	Korea	December	Asset-backed securitization
	Able Seoho 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KS Beta Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Mangrove Feeder Fund		100.00	Cayman Islands	December	Funds
The Parent Company and Others	LB UK Private Real Estate Investment Trust No.18		100.00	Korea	December	Funds
	LB UK Private Real Estate Investment Trust No.19		100.00	Korea	December	Funds
Mangrove Feeder Fund	Mangrove Master Fund		100.00	Cayman Islands	December	Funds
KB Securities Hong Kong Ltd.	Global Investment Opportunity Limited		100.00	Malaysia	December	Financial & real-estate investment
Hyundai Dynamic Mix Securities Feeder Investment Trust 1	Hyundai Dynamic Mix Securities Master Investment Trust		99.30	Korea	December	Funds
LB Ireland Private Real Estate Investment Trust 8	Beckett Acquisition Limited		100.00	Ireland	December	Real-estate Investment
SJ Jongno 1st Co., Ltd.	KB Wise Star Real Estate Feeder Fund 2		59.69	Korea	December	Funds
KB Wise Star Real Estate Feeder Fund 2	KB Wise Star Jongno Tower Real Estate Master Fund		63.27	Korea	December	Funds
Aquila Global Real Assets Fund No.1 LP	AGRAF Real Estate Holding No.1, Senningerberg		100.00	Luxemburg	December	Asset-backed securitization
AGRAF Real Estate Holding No.1, Senningerberg	Vierte CasaLog GmbH & Co. KG		100.00	Germany	December	Real-estate Investment
JB New Jersey Private Real Estate Fund 1	Able NJ DSM Investment REIT		99.18	USA	December	Real-estate Investment
Able NJ DSM Investment REIT	ABLE NJ DSM, LLC		100.00	USA	December	Real-estate Investment
Heungkuk Global Highclass Private Real Estate Trust 23	Hyundai Able Investment REIT		99.90	USA	December	Real-estate Investment
Hyundai Able Investment REIT	Hyundai Able Patriots Park, LLC		100.00	USA	December	Real-estate Investment

15

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38	Lumen International Developments		100.00	Luxemburg	December	Real-estate Investment
Lumen International Developments	VREF Shaftesbury ScSp		100.00	Luxemburg	December	Real-estate Investment
LB UK Private Real Estate Investment Trust No.18 and others	Hillswood Finco Ltd.		100.00	Jersey	December	Real-estate Investment
LB UK Private Real Estate Investment Trust No.18 and others	Hillswood Holdings Ltd.		100.00	Jersey	December	Real-estate Investment
LB UK Private Real Estate Investment Trust No.18 and others	Hillswood Holding Property Unit Trust		100.00	Jersey	December	Real-estate Investment
Hillswood Holding Property Unit Trust and others	Hillswood Property Unit Trust		100.00	Jersey	December	Real-estate Investment
Polar EH 1st Co., Ltd and Others	Multiasset PR Private Fund 3		100.00	Korea	December	Funds
Polar SQ 1st Co., Ltd and Others	Multiasset PR Private Fund 4		100.00	Korea	December	Funds

¹  The Group has a substantive power over the special purpose entities (“SPEs”) or investment trusts and is exposed to variable returns. Accordingly, these SPEs and investment trusts are included in subsidiaries although the Group’s ownership is less than 50%.

Summarized financial information of major subsidiaries as at and for the years ended December 31, 2021 and 2020, is as follows:

(in thousands of Korean won)	December 31, 2021				2021
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
KBFG Securities America Inc.		21,580,938		4,206,235		2,764,166		(346,673	)		1,099,379
KB Securities Hong Kong Ltd.		268,831,976		42,369,875		12,809,339		952,820			8,117,459
KB Securities Vietnam Joint Stock Company		459,400,541		264,703,900		48,674,216		11,562,680			22,854,982
KB FINA Joint Stock Company		14,703,822		40,048		132,397		(791,669	)		461,738
Hyundai Dynamic Mix Securities Feeder Investment Trust 1 1		—		—		623		1,776,805			1,776,805
Hyundai Kon-tiki Specialized Privately Placed Fund 1 1		—		—		105,752		102,481			102,481
JB New Jersey Private Real Estate Fund 1		17,280,644		13,210		8,780		1,366,923			1,366,923
Heungkuk Global Highclass Private Real Estate Trust 23		2,334,694		382		269,624		340,571			340,571
DGB Qualified Investor Private Real Estate Investment Trust No.8		7,096,984		4,039		416,708		384,386			384,386
LB Ireland Private Real Estate Investment Trust 8		71,323,756		3,815,738		4,276,418		3,735,362			3,690,262
Aquila Global Real Assets Fund No.1 LP 1		—		—		—		(36,818	)		(2,575,440	)
MS Sejong 4th Co.,Ltd		1,982,145		2,300,224		3,048,532		2,483,249			2,483,249
Able Hana Co., Ltd. 1		—		—		—		—			—
KB UK Center 1st Co., Ltd.		12,832,231		12,320,000		748,451		15,595			15,595
AKB 1st Co., Ltd. 1		—		—		—		—			—
Mangrove Feeder Fund		78,341,942		835,822		6,375,067		4,799,816			10,737,381
Mangrove Master Fund		78,763,150		442,176		8,257,033		6,400,494			9,284,184
GH Real Estate I LP		26,701,788		736,468		—		(9,511,479	)		(9,321,938	)
Global Investment Opportunity Limited		221,660		—		13		(17,637	)		46,411

16

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2021				2021
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Hyundai Dynamic Mix Securities Master Investment Trust 1 1		—		—		1,334,540		662,176			662,176
Beckett Acquisition Limited		147,825,721		139,715,758		6,225,571		(1,598,561	)		(1,549,839	)
AGRAF Real Estate Holding No.1, Senningerberg 1		—		—		—		(7,091	)		(302,872	)
Vierte CasaLog GmbH & Co. KG 1		—		—		—		(1,474	)		7,968
Able NJ DSM Investment REIT		18,024,689		93,207		451		1,319,458			2,811,740
ABLE NJ DSM, LLC		33,998,186		32,699,331		3,366,644		368,253			536,964
Hyundai Able Investment REIT 1		—		—		—		(59,279	)		(14,347,711	)
Hyundai Able Patriots Park, LLC 1		—		—		13,446		(609,596	)		(13,931,605	)
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		18,833,391		1,122,501		2,573,430		444,171			444,171
KTB Aircraft Private Investment Trust No.21-1		27,792,980		1,005		3,861,535		1,781,831			1,781,831
KB Digital Innovation&growth New Technology Business Investment Fund		9,106,621		—		499,687		(173,987	)		(173,987	)
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		33,499,341		—		1,316,449		(1,474,661	)		(1,474,661	)
Crescendo Muju Co., Ltd. 1		—		—		284,915		(109,840	)		(109,840	)
Able Gwonseon 1st Co., Ltd.		32,779,838		32,968,244		1,377,937		(11,855	)		(11,855	)
Great GM 12th Co., Ltd. 1		—		—		88,964		(49,171	)		(49,171	)
AJH 3rd Co., Ltd.		10,110,238		9,699,103		652,509		384,693			384,693
Able Youto 1st Co., Ltd. 1		—		—		241,382		24,308			24,308
Paradise Yeongjong 2nd Co., Ltd.		18,947,086		20,224,283		713,825		96,773			96,773
Newstar Hakgok Co., Ltd. 1		—		—		83,725		(73,045	)		(73,045	)
Songdo PSeven 1st Co., Ltd. 1		—		—		735,419		103,203			103,203
Newstar Janghyun Co., Ltd. 1		—		—		63,603		4,294			4,294
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		191,874,304		20,829,940		24,444,349		11,671,992			9,550,692
Lumen International Developments		187,921,665		169,411,650		—		(3,092,883	)		(1,621,941	)
VREF Shaftesbury ScSp		417,474,574		256,829,371		15,588,207		(932,583	)		11,523,839
Alpha Spain Real Estate Private Investment Trust 1		70,314,496		699,149		6,513,674		3,779,385			3,779,385
Hangang Domestic Private Real Estate Fund No.14 1		—		—		3,073,203		2,930,614			2,930,614
Pacific Bric Professional Investors’ Private Real Estate Fund #53 1		—		—		306,611		(3,387,196	)		(3,387,196	)
Newstar SH Co., Ltd. 1		—		—		—		—			—
Newstar IP Co., Ltd.		57,759,138		51,058,792		9,949,392		7,902,486			7,902,486
Newstar Daerim Co., Ltd. 1		—		—		—		—			—
Enewstay 1st Co., Ltd.		33,891,253		25,602,225		6,195,490		4,598,576			4,598,576
Able Dangsan Co., Ltd. 1		—		—		516,589		146,735			146,735
Newstar Panorama 1st Co., Ltd.		11,737,029		11,058,494		1,815,003		(146,738	)		(146,738	)
Newstar Papyrus Co., Ltd.		23,623,123		24,136,636		3,488,162		194,277			194,277
SJ Jongno 1st Co., Ltd.		66,995,875		70,000,315		243		(452,638	)		(452,638	)
KB Wise Star Real Estate Feeder Fund 2		112,043,149		155,695		164		366,559			366,559
Newstar Cheonwon Co., Ltd 1		—		—		142,977		49,106			49,106
Able KD 2nd Co., Ltd. 1		—		—		79,490		9,548			9,548
KB Wise Star Jongno Tower Real Estate Master Fund		506,092,706		343,917,362		25,784,666		4,169,466			4,169,466
Newstar DS 1st Co., Ltd		15,650,452		15,459,429		825,274		47,314			47,314
Newstar DS 2nd Co., Ltd		39,084,153		38,559,691		2,755,661		874,314			874,314
Able Yongin 1st Co., Ltd 1		—		—		637,515		(333,931	)		(333,931	)
JB Dry Street Private Fund1		810,359		9,331		18,168		(183,979	)		(183,979	)
JB Australia108 Private Fund1		569,525		3,559		22,681		(118,023	)		(118,023	)

17

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2021				2021
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
JB Forge Private Fund1		400,525		2,890		22,234		(91,765	)		(91,765	)
JB Hall Street Private Fund1		752,539		3,212		16,937		(169,292	)		(169,292	)
JB Margaret Street Private Fund1		213,009		713		4,785		(48,065	)		(48,065	)
LB UK Private Real Estate Investment Trust No.18		33,865,289		1,435,798		756,376		1,074,466			(193,840	)
LB UK Private Real Estate Investment Trust No.19		10,781,038		520,304		704,364		341,262			(62,572	)
Hillswood Finco Ltd.		14,601,547		28,965		1,172,915		1,115,585			1,964,926
Hillswood Holdings Ltd.		800,128		51,390		—		46,376			90,083
Hillswood Holding Property Unit Trust		30,623,011		7,302		—		2,314,470			4,119,977
Hillswood Property Unit Trust		101,477,561		74,903,616		10,286,987		3,182,999			3,328,330
Hanwha US Equity Strategy Private Real Estate Fund 3		177,311,233		8,216,449		1,194,090		(2,653,191	)		(10,493,191	)
498 Seventh KOR Holdco LP		175,275,036		—		—		3,482,029			9,445,146
498 Seventh KOR LLC		174,675,770		—		—		3,439,624			9,260,088
Newstar Wanee 1st Co., Ltd. 1		—		—		80,433		6,137			6,137
Able Gamsam 1st Co., Ltd.		41,137,786		41,061,686		1,869,333		157,804			157,804
Songdo PFive 2nd Co., Ltd		120,732,282		119,433,425		3,427,099		(148,924	)		(148,924	)
Able Sungnae 1st Co., Ltd. 1		—		—		166,500		11,720			11,720
Newstar Gimpo 1st Co., Ltd		26,487,012		26,550,765		1,297,627		(493,592	)		(493,592	)
Able Ali 2nd Co., Ltd 1		—		—		334,739		76,137			76,137
KB PF 1st Co., Ltd. 1		—		—		—		—			—
Able Daepo 1st Co., Ltd. 1		—		—		10,225		(10,756	)		(10,756	)
KB Ansung 1st Co., Ltd 1		—		—		841,784		625,535			625,535
Polar EH 1st Co., Ltd		17,283,232		16,715,582		—		(30,553	)		(30,553	)
Polar EH 2nd Co., Ltd		17,611,212		16,700,829		—		293,964			293,964
Polar SQ 1st Co., Ltd 1		—		—		—		—			—
Polar SQ 2nd Co., Ltd 1		—		—		—		—			—
Able Mojong 1st Co., Ltd 1		—		—		378,965		14,531			14,531
Able Sungsoo 1st Co., Ltd. 1		—		—		—		—			—
Multiasset PR Private Fund 3 1		—		—		—		—			—
Multiasset PR Private Fund 4		33,070,238		7,823		2,472,127		2,310,401			2,310,401
Able Daenong Co., Ltd. 1		—		—		650,042		502,386			502,386
Newstar Chimsan 1st Co., Ltd. 1		—		—		63,468		39,690			39,690
Able Forsythia 1st Co., Ltd. 1		—		—		148,431		(217	)		(217	)
Able IFP 1st Co., Ltd. 1		—		—		—		—			—
Newstar JY Co., Ltd. 1		—		—		—		—			—
Able Gorim 1st Co., Ltd. 1		—		—		562,999		(216,354	)		(216,354	)
KB Asan Baebang 1st Co., Ltd 1		—		—		275,164		(11,642	)		(11,642	)
KB Icheon logistics 1st Co., Ltd 1		—		—		926,169		186,398			186,398
Able Unicity 4th Co., Ltd 1		—		—		219,123		15,162			15,162
Able Gongpyeong 1st Co., Ltd		12,385,645		12,293,780		489,653		100,623			100,623
Hamilton Power First Co., Ltd 1		—		—		—		—			—
Able Chowall 1st Co., Ltd.		30,315,210		30,530,637		867,342		(371,278	)		(371,278	)
Startwithone Co., Ltd. 1		—		—		—		—			—
Able Silver Co., Ltd. 1		—		—		—		—			—
KB Osansaegyo Co., Ltd 1		—		—		1,277,375		317,179			317,179
HD Yongin 1st Co., Ltd 1		—		—		—		—			—
FN Gasan 1st Co., Ltd.		5,613,186		5,615,094		271,985		23,350			23,350
ABR Mareuk 1st Co., Ltd		5,726,164		5,771,880		323,057		(33,590	)		(33,590	)
Newstar Believe Co., Ltd.		5,094,388		5,358,236		300,674		(78,470	)		(78,470	)
Able Electronics 1st Co., Ltd.		70,918,879		70,743,905		2,906,579		501,688			501,688
KB Echo 1st Co., Ltd		31,945,662		31,709,287		825,673		99,261			99,261
KB Wondong 1st Co., Ltd 1		—		—		—		—			—
Newstar Joongbong Co., Ltd. 1		—		—		—		—			—

18

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2021				2021
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Able Island 1st Co., Ltd 1		—		—		—		—			—
Able Gumi 1st Co., Ltd. 1		—		—		—		—			—
Able Gwangmyeong 2nd Co., Ltd 1		—		—		—		—			—
ABR Joongang2 1st Co., Ltd		17,317,313		17,200,000		669,187		33,369			33,369
Able Bucheon Co., Ltd. 1		—		—		—		—			—
Newstar Kumo 1st Co., Ltd. 1		—		—		130,911		(90,714	)		(90,714	)
KB Tongyoung 1st Co., Ltd		22,993,998		23,238,024		1,116,564		(74,534	)		(74,534	)
Able Seoho 1st Co., Ltd. 1		—		—		751,975		200,137			200,137
KS Beta Co., Ltd. 1		—		—		247,812		(423,157	)		(423,157	)
Able Guwol 1st Co., Ltd.		42,548,129		42,708,587		3,452,641		(160,459	)		(160,459	)
Able Bukcheonan logis Co,. Ltd. 1		—		—		109,195		(36,105	)		(36,105	)
ABR Sosa 1st Co., Ltd. 1		—		—		284,549		4,731			4,731
Able Sky 1st Co., Ltd.		26,887,526		27,350,210		1,236,493		(462,685	)		(462,685	)
Newstar Gimpo 2nd Co., Ltd.		12,922,823		12,583,875		643,724		338,948			338,948
Able HD 1st Co., Ltd. 1		—		—		745,078		(104,167	)		(104,167	)
Able Eumsung 1st Co., Ltd. 1		—		—		175,342		(1,034,305	)		(1,034,305	)
Able Jinjeop 1st Co., Ltd. 1		—		—		516,497		1,143			1,143
Able Hyosung 1st Co., Ltd.		41,042,856		41,157,513		4,504,061		(114,657	)		(114,657	)
Able Poongdong 1st Co., Ltd.		4,317,224		4,335,090		1,263,346		(17,867	)		(17,867	)
Able Ansan Logistics 1st Co., Ltd. 1		—		—		654,753		(66,114	)		(66,114	)
Able Sewoon Co., Ltd.		48,749,772		49,868,038		2,672,645		(1,118,267	)		(1,118,267	)
Newstar Sinchun 1st Co., Ltd. 1		—		—		1,395,945		(1,214,862	)		(1,214,862	)
Songam Park Development Co., Ltd. 1		—		—		989,226		(806,250	)		(806,250	)
KB Infra 1st Co., Ltd.		12,303,652		12,076,752		883,940		226,899			226,899
Pinetridavil Co., Ltd. 1		—		—		52,515		(41,987	)		(41,987	)
Able Udong 1st Co., Ltd. 1		—		—		346,093		(160,092	)		(160,092	)
Intgreen 1st Inc.		47,999,345		48,660,080		3,721,145		(660,736	)		(660,736	)
Able Gasan 1st Co., Ltd.		37,445,837		37,495,224		779,336		(49,397	)		(49,397	)
Able Pocheon 1st Co., Ltd.		12,433,033		12,386,939		767,388		46,084			46,084
Able HD 1st co.ltd 1		—		—		182,154		(6,593	)		(6,593	)
Newstar Seotan Co., Ltd.		25,453,253		25,244,391		909,922		208,861			208,861
Able PT 1st Co., Ltd		5,320,918		5,479,961		235,449		(159,043	)		(159,043	)
Unbroken 1st co.ltd		30,139,281		30,594,090		1,444,316		(454,818	)		(454,818	)
JOSH Bujeon 1st Co., Ltd.		43,824,332		44,414,622		2,162,798		(590,291	)		(590,291	)
Newstar Plus1st Co., Ltd.		16,291,848		16,000,000		983,294		291,847			291,847
KB MyeongJi 1st Co., Ltd.		20,274,550		20,227,645		1,010,483		46,904			46,904
Able Dangjin 1st Co., Ltd.		4,816,012		4,900,184		213,318		(84,173	)		(84,173	)
Able Yongdap 1st Co., Ltd.		29,400,401		29,472,471		419,921		(72,071	)		(72,071	)
Newstar Cold Co., Ltd. 1		—		—		680,990		33,877			33,877
Betares Co., Ltd. 1		—		—		25,957		(51,103	)		(51,103	)
KB Osansegyo 2nd Co., Ltd.		8,783,276		8,803,570		94,489		(20,295	)		(20,295	)
Able Hyeongok Co., Ltd.		40,810,870		40,874,717		437,768		(63,847	)		(63,847	)
KB Mapo 1st Co., Ltd. 1		—		—		129,548		(175,522	)		(175,522	)
KB Mapo 2nd Co., Ltd.		10,226,260		10,106,541		607,135		119,718			119,718
GDIC 1st co.ltd		39,725,004		40,141,819		379,002		(416,816	)		(416,816	)
Able Wonchang 1st Co., Ltd.		6,922,644		7,149,163		242,590		(226,520	)		(226,520	)
Zitaress 1st Co., Ltd.		120,820,787		121,553,173		1,429,381		(732,387	)		(732,387	)
KB PF 3rd Co., Ltd.		4,563,969		4,572,360		58,149		(8,391	)		(8,391	)
Able Beomeo-one Co., Ltd.		30,299,257		30,364,248		917,194		(65,001	)		(65,001	)
Able UC 1st co.ltd		61,068,251		62,074,292		1,543,816		(1,006,051	)		(1,006,051	)
KB Infra 2nd Co., Ltd.		54,638,508		56,774,000		3		(2,135,493	)		(2,135,493	)
KBillite 1st Co., Ltd.		407,670		445,261		4,706		(37,591	)		(37,591	)
Newstar Sina Co., Ltd.		23,631,797		24,000,954		391,866		(369,158	)		(369,158	)
KB Gold 1st Co., Ltd.		17,837,500		17,798,070		176,400		39,420			39,420

19

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2021				2021
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Inspire Gold 1st Co., Ltd.		24,066,879		24,707,879		200,902		(641,001	)		(641,001	)
Inspire Gold 2nd Co., Ltd.		15,646,996		15,941,709		193,834		(294,714	)		(294,714	)
Able MK 1st co. ltd		16,095,465		16,134,601		47,695		(39,137	)		(39,137	)
Yeoksam The Gallery KB 1st Co., Ltd.		18,689,485		18,711,272		25,547		(21,797	)		(21,797	)
Y Three Ulsan Sinjeong 1st Co., Ltd.		60,232,975		60,507,108		54,968		(274,136	)		(274,136	)

¹  The company is excluded from subsidiaries as at December 31, 2021.

(in thousands of Korean won)	December 31, 2020				2020
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
KBFG Securities America Inc.		20,576,590		4,301,266		2,911,760		60,891			(984,391	)
KB Securities Hong Kong Ltd.		160,977,453		45,874,089		11,878,492		3,336,004			(3,555,472	)
KB Securities Vietnam Joint Stock Company		283,011,455		180,399,517		33,232,587		8,459,269			2,008,002
KB FINA Joint Stock Company		10,880,100		—		—		—			(138,600	)
Hyundai Smart Index Alpha Derivative Feeder Trust 11		—		—		321		(2,853	)		(2,853	)
Hyundai Strong Korea Equity Trust 11		—		—		1,253		(28,206	)		(28,206	)
Hyundai Kidzania Equity Feeder Trust 1 1		—		—		700		(2,674	)		(2,674	)
Hyundai Value Plus Equity Feeder Trust 11		—		—		556		(15,214	)		(15,214	)
Hyundai Dynamic Mix Securities Feeder Investment Trust 1		4,342,006		12,953		1,458		(68,419	)		(68,419	)
Hyundai Quant Long Short Securities Feeder Investment Trust 11		—		—		—		(8,122	)		(8,122	)
Hyundai Kon-tiki Specialized Privately Placed Fund 1		456,844		40		59		(89,302	)		(89,302	)
Hyundai Strong-small Corporate Trust 11		—		—		3,580		(31,020	)		(31,020	)
Heungkuk Highclass Private Real Estate Trust 211		—		—		1,778		2,946,469			2,946,469
JB New Jersey Private Real Estate Fund 1		16,888,544		12,033		1,823,420		1,611,079			1,637,119
Heungkuk Global Highclass Private Real Estate Trust 23		4,259,731		678		10,023,714		18,132,377			18,361,777
DGB Qualified Investor Private Real Estate Investment Trust No.8		7,468,429		4,380		436,772		404,651			404,651
LB Ireland Private Real Estate Investment Trust 8		71,245,673		2,840,102		5,193,836		3,485,453			3,036,543
Aquila Global Real Assets Fund No.1 LP		130,759		180,255		837,071		1,254,424			1,227,811
MS Sejong 4th Co.,Ltd		7,652,278		10,453,605		823,586		100,750			100,750
Able NS Co., Ltd. 1		—		—		3,553,037		2,836,681			2,836,681
Able Hana Co., Ltd.		15,454,991		15,391,561		1,257,025		193,360			193,360
KB Park 1st Co., Ltd. 1		—		—		1,229,919		(7,124	)		(7,124	)
SDW 2 Co.,Ltd. 1		—		—		—		—			—
Start3 Thefirst Co., Ltd1		—		—		—		—			—
KB UK Center 1st Co., Ltd.		10,996,635		10,500,000		720,194		124,269			124,269
AKB 1st Co.,Ltd.		26,225,999		25,036,027		976,127		(433,587	)		(433,587	)
Newstar Jungbu 1st Co., Ltd. 1		—		—		618,834		209,985			209,985
Gaehwasanyeokgaebal 1st Co., Ltd. 1		—		—		286,766		(2,732	)		(2,732	)
Newstar Gangneung 1st Co., Ltd. 1		—		—		—		—			—

20

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2020				2020
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Mangrove Feeder Fund		61,883,735		102,396		6,067,328		4,773,247			719,701
Mangrove Master Fund		62,891,926		1,051,651		11,849,504		6,045,423			1,988,123
GH Real Estate I LP		35,736,330		441,140		—		(1,099,465	)		(1,376,195	)
Global Investment Opportunity Limited		220,197		—		56		(17,297	)		(31,097	)
Hyundai Smart Index Alpha Derivative Master Trust 1		—		—		161,558		(306,960	)		(306,960	)
Hyundai Value Plus Equity Master Trust 1		—		—		355,327		(1,118,639	)		(1,118,639	)
Hyundai Dynamic Mix Securities Master Investment Trust		6,404,772		7,882		2,635,361		1,367,723			1,367,723
Hyundai Quant Long Short Securities Master Investment Trust1		—		—		385,023		(161,719	)		(161,719	)
Hyundai Strong Korea Equity Master Trust 1		—		—		1,034,968		(1,471,837	)		(1,471,837	)
Beckett Acquisition Limited		149,603,733		139,675,256		6,135,285		(1,568,425	)		(1,187,090	)
AGRAF Real Estate No.1, Senningerberg1				—		—		—			1,943
AGRAF Real Estate Holding No.1, Senningerberg		13,929,669		540,507		199,576		(46,400	)		384,091
Vierte CasaLog GmbH & Co. KG		59,913		3,823,391		359,857		348,974			313,568
HD 1 Grundstucksgesellschaft MbH & Co. KG1		—		—		—		—			(41,997	)
Sechste Casalog KG1		—		—		—		—			(33,565	)
Able NJ DSM Investment REIT		16,566,587		36,907		1,878,727		1,799,138			738,694
ABLE NJ DSM, LLC		32,179,308		30,010,014		3,471,467		(6,729,514	)		(6,707,644	)
Hyundai Able Investment REIT		14,740,298		9,477		9,958,387		9,374,002			10,807,172
Hyundai Able Patriots Park, LLC		3,338,108		583,491		24,938,432		46,715,394			48,212,814
Able Samgi Co., Ltd. 1		—		—		2,731,258		(207,726	)		(207,726	)
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		14,985,773		917		2,092,464		797,260			797,260
KTB Aircraft Private Investment Trust No.21-1		27,145,124		1,110		2,229,357		1,324,194			1,324,194
KB Digital Innovation&growth New Technology Business Investment Fund		6,781,713		1,106		198,586		(229,446	)		(229,446	)
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		8,724,002		—		623		(25,998	)		(25,998	)
Crescendo Muju Co., Ltd.		20,206,449		20,382,241		1,067,065		(82,778	)		(82,778	)
Able Gwonseon 1st Co., Ltd.		31,178,112		31,354,663		1,559,453		(120,465	)		(120,465	)
Great GM 12th Co., Ltd.		13,159,214		13,194,513		641,772		(36,455	)		(36,455	)
Newstar SM No.1 Co., Ltd. 1		—		—		221,213		(10,795	)		(10,795	)
AJH 1st Co., Ltd. 1		—		—		—		—			—
AJH 2nd Co., Ltd. 1		—		—		525,084		76,853			76,853
AJH 3rd Co., Ltd.		10,930,349		10,903,907		636,089		5,774			5,774
Able Youto 1st Co., Ltd.		10,156,561		10,240,557		534,817		(11,626	)		(11,626	)
Paradise Yeongjong 2nd Co., Ltd.		18,816,116		20,190,086		642,691		(1,340,798	)		(1,340,798	)
Newstar Hakgok Co., Ltd.		4,492,609		4,540,704		198,439		(75,298	)		(75,298	)
Songdo PSeven 1st Co., Ltd.		36,152,595		36,256,592		1,442,641		21,392			21,392
Newstar Janghyun Co., Ltd.		4,827,704		4,917,696		352,518		(43,577	)		(43,577	)
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		177,754,046		7,240,407		14,092,288		5,436,331			6,089,551
Lumen International Developments		174,648,831		154,589,017		9,987,430		(1,203,677	)		(1,699,240	)
VREF Shaftesbury ScSp		395,913,023		238,175,512		15,326,411		2,763,804			(1,124,227	)

21

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2020				2020
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Capstone US Private Investment Trust No. 61		—		—		3,760,094		693,558			693,558
Hyundai Strong-small Corporate Master Trust1		—		—		2,676,405		(879,516	)		(879,516	)
Alpha Spain Real Estate Private Investment Trust 1		67,428,000		2,526,707		6,703,476		3,400,500			3,400,500
Hangang Domestic Private Real Estate Fund No.14		55,262,052		38,418,009		5,226		(516,956	)		(516,956	)
YJS Ilsan Co., Ltd. 1		—		—		387,625		(76,483	)		(76,483	)
Dongtan 1st Co., Ltd. 1		—		—		101,102		41,082			41,082
Newstar ENE Co., Ltd. 1		—		—		637,921		(87,984	)		(87,984	)
Newstar SH Co., Ltd.		30,164,416		30,328,926		1,403,589		(150,066	)		(150,066	)
Able Alri 1st Co., Ltd1		—		—		—		—			—
Newstar IP Co., Ltd.		51,034,770		52,236,910		2,101,052		(1,346,392	)		(1,346,392	)
Newstar Daerim Co., Ltd.		166,542		150,717		39,276		(47,039	)		(47,039	)
First Jongno 1st Co., Ltd. 1		—		—		605,382		(64,392	)		(64,392	)
Enewstay 1st Co., Ltd.		29,292,787		25,602,335		4,437,427		3,334,861			3,334,861
Able Dangsan Co., Ltd.		17,420,064		17,427,679		1,112,561		183,392			183,392
Newstar Panorama 1st Co., Ltd.		11,453,401		10,628,128		5,381,155		164,173			164,173
Newstar Papyrus Co., Ltd.		23,396,516		24,104,306		2,845,843		(789,195	)		(789,195	)
Able Daejang Co., Ltd.1		—		—		991,862		(55,938	)		(55,938	)
KB Southgate Co., Ltd. 1		—		—		445,616		30,013			30,013
SJ Dream 1st Co., Ltd. 1		—		—		645,568		(7,002	)		(7,002	)
Able Namyangju Co., Ltd. 1		—		—		683,755		(55,215	)		(55,215	)
SJ Jongno 1st Co., Ltd.		66,915,193		69,466,996		200		(411,589	)		(411,589	)
KB Wise Star Real Estate Feeder Fund 2		111,994,886		153,682		50		(73,418	)		(73,418	)
APDC Co., Ltd. 1		—		—		5,874,026		5,349,098			5,349,098
Newstar Cheonwon Co., Ltd		6,300,330		6,297,928		269,722		21,558			21,558
Able Power 1st Co., Ltd. 1		—		—		—		—			—
DS Gimpo Hagun 1st Co., Ltd. 1		—		—		142,345		156,530			156,530
Able KD 2nd Co., Ltd.		9,048,506		9,064,257		1,276,866		(301,556	)		(301,556	)
KB Wise Star Jongno Tower Real Estate Master Fund		503,451,905		339,746,027		87,869		(1,578,851	)		(1,578,851	)
Young3 Southgate Co.,Ltd. 1		—		—		492,291		(6,482	)		(6,482	)
Able Parkway 2nd Co., Ltd1		—		—		676,061		(7,992	)		(7,992	)
Truefriend Wondi 3rd Co., Ltd1		—		—		1,537,849		5,265			5,265
Newstar FE Co., Ltd. 1		—		—		2,588,741		(519,350	)		(519,350	)
Newstar Goeun 1st Co., Ltd1		—		—		357,820		(5,500	)		(5,500	)
Newstar Goeun 2nd Co., Ltd1		—		—		—		—			—
Newstar DS 1st Co., Ltd		15,354,172		15,210,463		827,510		95,443			95,443
Newstar DS 2nd Co., Ltd		37,355,681		37,705,532		2,412,350		(564,383	)		(564,383	)
Able Yongin 1st Co.,Ltd		5,601,855		5,671,496		273,821		(69,627	)		(69,627	)
JB Dry Street Private Fund1		994,339		9,332		87,739		(60,180	)		(60,180	)
JB Australia108 Private Fund1		687,542		3,552		60,434		(42,462	)		(42,462	)
JB Forge Private Fund1		492,285		2,885		48,423		(30,384	)		(30,384	)
JB Hall Street Private Fund1		921,818		3,200		81,882		(54,392	)		(54,392	)
JB Margaret Street Private Fund1		261,076		714		23,126		(15,545	)		(15,545	)
LB UK Private Real Estate Investment Trust No.18		35,285,997		305,820		188,265		1,598,483			1,989,037
LB UK Private Real Estate Investment Trust No.19		11,192,754		140,312		69,036		508,586			632,940
Hillswood Finco Ltd.		13,531,753		—		1,196,177		1,196,177			551,715
Hillswood Holdings Ltd.		741,201		33,962		—		9,982			(24,901	)
Hillswood Holding Property Unit Trust		28,354,552		1		153		1,703,243			1,009,107
Hillswood Property Unit Trust		96,045,052		70,393,909		5,279,941		(1,127,564	)		(1,766,154	)

22

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2020				2020
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
KB Wolpyeongjunglim 1st Co., Ltd1		—		—		—		—			—
Newstar Wanee 1st Co., Ltd.		9,413,799		9,123,666		684,141		103,391			103,391
Able Gamsam 1st Co., Ltd.		40,702,130		40,783,834		1,825,778		(24,448	)		(24,448	)
Able SP Co., Ltd. 1		—		—		913,235		158,392			158,392
Songdo PFive 2nd Co., Ltd		117,932,381		116,484,600		3,918,762		816,337			816,337
Songdo PFive 3rd Co., Ltd1		—		—		—		—			—
Able Sungnae 1st Co., Ltd.		17,510,039		17,531,182		703,798		(820	)		(820	)
Newstar Haenam 1st Co., Ltd. 1		—		—		—		—			—
Newstar Gimpo 1st Co., Ltd		34,663,960		34,234,120		2,055,685		210,707			210,707
KB Yeoncheon Co., Ltd. 1		—		—		120,687		22,407			22,407
Goseong Hills 1st Co., Ltd1		—		—		2,481,253		435,391			435,391
Able Ali 2nd Co., Ltd		20,251,064		20,103,568		828,660		147,495			147,495
KB PF 1st Co., Ltd.		2,494,745		2,509,297		206,810		(14,553	)		(14,553	)
Able BS 1st Co., Ltd. 1		—		—		107,432		(90,489	)		(90,489	)
Able Daepo 1st Co., Ltd.		1,253,048		1,279,815		569,433		(26,768	)		(26,768	)
Able Daepo 2nd Co., Ltd. 1		—		—		452,491		(138,058	)		(138,058	)
KB Ansung 1st Co., Ltd		35,532,308		35,716,955		1,024,142		(184,649	)		(184,649	)
Polar EH 1st Co., Ltd		30,887,550		30,289,346		—		598,203			598,203
Polar EH 2nd Co., Ltd		30,905,766		30,289,346		—		616,418			616,418
Polar SQ 1st Co., Ltd		30,178,678		30,191,764		—		(13,087	)		(13,087	)
Polar SQ 2nd Co., Ltd		30,178,678		30,191,764		—		(13,087	)		(13,087	)
Able Mojong 1st Co., Ltd		49,257,354		49,470,144		1,334,740		(212,791	)		(212,791	)
TS 3rd Co., Ltd 1		—		—		323,344		116,908			116,908
Able Sungsoo 1st Co., Ltd.		21,790,965		21,908,436		667,011		(117,472	)		(117,472	)
Newstar EJ Co., Ltd. 1		—		—		403,121		268,016			268,016
Multiasset PR Private Fund 3		59,912,399		9,908		3,103,477		2,417,559			2,417,559
Multiasset PR Private Fund 4		59,846,957		14,438		4,669,665		3,608,473			3,608,473
Newstar Wanee 2nd Co., Ltd. 1		—		—		527,687		(74,127	)		(74,127	)
Able GD 1st Co., Ltd1		—		—		1,046,973		(533,421	)		(533,421	)
Able Daenong Co., Ltd.		22,254,325		22,273,609		989,243		(19,285	)		(19,285	)
Newstar Chimsan 1st Co., Ltd.		7,929,844		7,896,601		156,607		33,242			33,242
Able Forsythia 1st Co., Ltd.		12,155,174		12,174,970		332,896		(19,796	)		(19,796	)
JK Banpo 1st Co., Ltd. 1		—		—		211,237		(105,565	)		(105,565	)
Able IFP 1st Co., Ltd.		4,165,709		4,193,021		1,055,720		(27,312	)		(27,312	)
Newstar JY Co., Ltd.		9,074,445		9,077,856		465,115		(3,413	)		(3,413	)
Newstar Jije Co., Ltd. 1		—		—		664,618		(18,023	)		(18,023	)
Able Gorim 1st Co., Ltd.		17,825,030		17,867,405		1,287,460		(42,376	)		(42,376	)
KB Asan Baebang 1st Co., Ltd		13,265,638		13,387,254		362,603		(121,627	)		(121,627	)
KB Asan Baebang 2nd Co., Ltd1		—		—		291,319		(132,347	)		(132,347	)
KB Icheon logistics 1st Co., Ltd		27,133,765		27,109,003		799,663		24,761			24,761
Able Unicity 4th Co., Ltd		20,356,084		20,456,441		843,886		(100,358	)		(100,358	)
Able Gongpyeong 1st Co., Ltd		11,473,343		11,482,101		229,359		(8,758	)		(8,758	)
Able Gongpyeong 2nd Co., Ltd1		—		—		659,101		(24,971	)		(24,971	)
Hamilton Power First Co., Ltd		26,293,496		29,397,684		3,131,302		(3,104,189	)		(3,104,189	)
Newstar Yeonje 1st Co., Ltd. 1		—		—		16,323		(453,895	)		(453,895	)
Newstar Yeonje 2nd Co., Ltd. 1		—		—		20,597		(679,698	)		(679,698	)
Able Sepung industrial estate Co., Ltd1		—		—		337,559		(153,196	)		(153,196	)
Able Hakwoono Co., Ltd1		—		—		471,007		(312,296	)		(312,296	)
Able Chowall 1st Co., Ltd.		23,835,099		23,679,248		1,116,003		155,850			155,850
Newstar Daedeok Co., Ltd. 1		—		—		82,937		(40,026	)		(40,026	)
Able Kangil 1st Co., Ltd1		—		—		292,807		(85,063	)		(85,063	)
Startwithone Co., Ltd.		20,715,035		20,561,458		603,779		153,576			153,576
Able Silver Co., Ltd.		8,109,550		8,236,113		300,094		(126,564	)		(126,564	)
Able Balgok Co., Ltd. 1		—		—		1,462,707		—			—

23

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	December 31, 2020				2020
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Newstar Yaecheon Co., Ltd. 1		—		—		15,161		(24,629	)		(24,629	)
KB Osansaegyo Co., Ltd		46,485,438		46,749,140		779,831		(263,703	)		(263,703	)
Hd Yongin 1st Co.,Ltd		60,870,057		60,843,107		926,116		26,949			26,949
FN Gasan 1st Co., Ltd.		11,069,124		11,094,383		436,124		(25,260	)		(25,260	)
ABR Mareuk 1st Co.,Ltd		5,799,675		5,811,800		292,512		(12,126	)		(12,126	)
Newstarbelieve Co., Ltd.		10,846,033		11,031,411		156,095		(185,379	)		(185,379	)
Able Electronics 1st Co., Ltd.		50,998,060		51,324,773		573,410		(326,714	)		(326,714	)
KB Echo 1st Co., Ltd		29,810,778		29,673,664		345,263		137,114			137,114
KB Wondong 1st Co., Ltd		25,086,237		25,185,124		187,617		(98,888	)		(98,888	)
Newstar Joongbong Co., Ltd.		30,180,753		30,307,774		188,870		(127,021	)		(127,021	)
Able Island 1st Co., Ltd		44,241,734		44,304,990		187,285		(63,257	)		(63,257	)
Able Gumi 1st Co., Ltd.		39,852,880		40,115,615		137,867		(262,736	)		(262,736	)
Able Gwangmyeong 2nd Co., Ltd		29,964,962		30,205,631		106,444		(240,670	)		(240,670	)
ABR Joongang2 1st Co.,Ltd		16,399,344		16,315,400		157,276		83,943			83,943
Able Bucheon Co., Ltd.		33,139,525		33,202,163		73,070		(62,639	)		(62,639	)
Newstar Kumo 1st Co., Ltd.		2,674,400		2,581,516		150,535		92,883			92,883
KB Tongyoung 1st Co., Ltd		29,743,060		29,912,553		33,807		(169,494	)		(169,494	)
Able Seoho 1st Co., Ltd.		32,323,088		32,501,149		29,893		(178,063	)		(178,063	)
KS Beta Co., Ltd.		10,592,673		10,767,110		10,500		(174,437	)		(174,437	)

¹  The company is excluded from subsidiaries as at December 31, 2020.

The details of changes in scope for consolidation for the year ended December 31, 2021, are as follows:

(a) Subsidiaries newly included in the consolidation

Name of entity	Reason
Able Guwol 1st Co., Ltd.	Gain of controlling power
Able Bukcheonan logis Co,. Ltd.	Gain of controlling power
ABR Sosa 1st Co., Ltd.	Gain of controlling power
Able Sky 1st Co., Ltd.	Gain of controlling power
Newstar Gimpo 2nd Co.,Ltd.	Gain of controlling power
Able HD 1st Co., Ltd.	Gain of controlling power
Able Eumsung 1st Co., Ltd.	Gain of controlling power
Able Jinjeop 1st Co., Ltd.	Gain of controlling power
Able Hyosung 1st Co., Ltd.	Gain of controlling power
Able Poongdong 1st Co., Ltd.	Gain of controlling power
Hanwha US Equity Strategy Private Real Estate Fund 3	Controlling ownership interest
Able Ansan Logistics 1st Co., Ltd.	Gain of controlling power
Able Sewoon Co., Ltd.	Gain of controlling power
Newstar Sinchun 1st Co., Ltd.	Gain of controlling power
Songam Park Development Co.,Ltd.	Gain of controlling power
KB Infra 1st Co., Ltd.	Gain of controlling power
Pinetridavil Co., Ltd.	Gain of controlling power
Able Udong 1st Co., Ltd.	Gain of controlling power
Intgreen 1st Inc.	Gain of controlling power
Able Gasan 1st Co., Ltd.	Gain of controlling power
498 Seventh KOR Holdco LP	Controlling ownership interest
498 Seventh KOR LLC	Controlling ownership interest
Pacific Bric Professional Investors’ Private Real Estate Fund No.53	Controlling ownership interest
Able Pocheon 1st Co., Ltd.	Gain of controlling power
Able HD 1st co.ltd	Gain of controlling power
Newstar Seotan Co.,Ltd.	Gain of controlling power
Able PT 1st Co., Ltd	Gain of controlling power

24

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Name of entity	Reason
Unbroken 1st co.ltd	Gain of controlling power
JOSH Bujeon 1st Co.,Ltd.	Gain of controlling power
Newstarplus1st Co.,Ltd.	Gain of controlling power
KB MyeongJi 1st Co.,Ltd.	Gain of controlling power
Able Dangjin 1st Co.,Ltd.	Gain of controlling power
Able Yongdap 1st Co., Ltd.	Gain of controlling power
Newstar Cold Co., Ltd.	Gain of controlling power
Betares Co., Ltd.	Gain of controlling power
KB Osansegyo 2nd Co.,Ltd.	Gain of controlling power
Able Hyeongok Co.,Ltd.	Gain of controlling power
KB Mapo 1st Co.,Ltd.	Gain of controlling power
KB Mapo 2nd Co.,Ltd.	Gain of controlling power
GDIC 1st co.ltd	Gain of controlling power
Able Wonchang 1st Co., Ltd.	Gain of controlling power
Zitaress 1st Co., Ltd.	Gain of controlling power
KB PF 3rd Co.,Ltd.	Gain of controlling power
Able Beomeo-one Co., Ltd.	Gain of controlling power
Able UC 1st co.ltd	Gain of controlling power
KB Infra 2nd Co., Ltd.	Gain of controlling power
KBillite 1st Co.,Ltd.	Gain of controlling power
Newstar Sina Co., Ltd.	Gain of controlling power
KB Gold 1st Co.,Ltd.	Gain of controlling power
Inspire Gold 1st Co., Ltd.	Gain of controlling power
Inspire Gold 2nd Co., Ltd.	Gain of controlling power
Able MK 1st co.ltd	Gain of controlling power
Yeoksam The Gallery KB 1st Co.,Ltd.	Gain of controlling power
Y Three Ulsan Sinjeong 1st Co., Ltd.	Gain of controlling power

25

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(b) Subsidiaries excluded from the consolidation

Name of entity	Reason
Aquila Global Real Assets Fund No.1 LP	Disposal
AGRAF Real Estate Holding No.1, Senningerberg	Disposal
Vierte CasaLog GmbH & Co. KG	Disposal
Able Hana Co., Ltd.	End of payment guarantee contract
AKB 1st Co., Ltd.	End of payment guarantee contract
Newstar SH Co., Ltd.	End of payment guarantee contract
Newstar Daerim Co., Ltd.	End of payment guarantee contract
KB PF 1st Co., Ltd.	End of payment guarantee contract
Polar SQ 1st Co., Ltd	End of payment guarantee contract
Polar SQ 2nd Co., Ltd	End of payment guarantee contract
Able Sungsoo 1st Co., Ltd.	End of payment guarantee contract
Multiasset PR Private Fund 3	End of payment guarantee contract
Able IFP 1st Co., Ltd.	End of payment guarantee contract
Newstar JY Co., Ltd.	End of payment guarantee contract
Hamilton Power First Co., Ltd	End of payment guarantee contract
Startwithone Co., Ltd.	End of payment guarantee contract
Able Silver Co., Ltd.	End of payment guarantee contract
HD Yongin 1st Co., Ltd	End of payment guarantee contract
KB Wondong 1st Co., Ltd	End of payment guarantee contract
Newstar Joongbong Co., Ltd.	End of payment guarantee contract
Able Island 1st Co., Ltd	End of payment guarantee contract
Able Gumi 1st Co., Ltd.	End of payment guarantee contract
Able Gwangmyeong 2nd Co., Ltd	End of payment guarantee contract
Able Bucheon Co., Ltd.	End of payment guarantee contract
Great GM 12th Co., Ltd.	End of payment guarantee contract
Able HD 1st Co., Ltd.	End of payment guarantee contract
Newstar Wanee 1st Co., Ltd.	End of payment guarantee contract
Able Jinjeop 1st Co., Ltd.	End of payment guarantee contract
Hyundai Dynamic Mix Securities Feeder Investment Trust 1	Disposal
Hyundai Dynamic Mix Securities Master Investment Trust	Disposal
Able Daenong Co., Ltd.	End of payment guarantee contract
Newstar Chimsan 1st Co., Ltd.	End of payment guarantee contract
Able Sungnae 1st Co., Ltd.	End of payment guarantee contract
Able Forsythia 1st Co., Ltd.	End of payment guarantee contract
Able Unicity 4th Co., Ltd	End of payment guarantee contract
Able Daepo 1st Co., Ltd.	End of payment guarantee contract
Able Eumsung 1st Co., Ltd.	End of payment guarantee contract
Crescendo Muju Co., Ltd.	End of payment guarantee contract
Able Mojong 1st Co., Ltd	End of payment guarantee contract
Newstar Janghyun Co., Ltd.	End of payment guarantee contract
Able Bukcheonan logis Co,. Ltd.	End of payment guarantee contract
Able KD 2nd Co., Ltd.	End of payment guarantee contract
Able Seoho 1st Co., Ltd.	End of payment guarantee contract
KS Beta Co., Ltd.	End of payment guarantee contract
Able Ali 2nd Co., Ltd	End of payment guarantee contract
Pinetridavil Co., Ltd.	End of payment guarantee contract
Able Ansan Logistics 1st Co., Ltd.	End of payment guarantee contract
Newstar Cheonwon Co., Ltd	End of payment guarantee contract
Able Dangsan Co., Ltd.	End of payment guarantee contract
Newstar Hakgok Co., Ltd.	End of payment guarantee contract
Hyundai Kon-tiki Specialized Privately Placed Fund 1	Disposal
Able Youto 1st Co., Ltd.	End of payment guarantee contract
KB Osansaegyo Co., Ltd	End of payment guarantee contract
KB Asan Baebang 1st Co., Ltd	End of payment guarantee contract

26

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Name of entity	Reason
KB Icheon logistics 1st Co., Ltd	End of payment guarantee contract
ABR Sosa 1st Co., Ltd.	End of payment guarantee contract
KB Ansung 1st Co., Ltd	End of payment guarantee contract
Songam Park Development Co., Ltd.	End of payment guarantee contract
Newstar Sinchun 1st Co., Ltd.	End of payment guarantee contract
Songdo PSeven 1st Co., Ltd.	End of payment guarantee contract
Newstar Cold Co., Ltd.	End of payment guarantee contract
Able Gorim 1st Co., Ltd.	End of payment guarantee contract
Betares Co., Ltd.	End of payment guarantee contract
Able Yongin 1st Co., Ltd	End of payment guarantee contract
KB Mapo 1st Co., Ltd.	End of payment guarantee contract
Able HD 1st co.ltd	End of payment guarantee contract
Pacific Bric Professional Investors’ Private Real Estate Fund No.53	Disposal
Hangang Domestic Private Real Estate Fund No.14	Disposal
Hyundai Able Investment REIT	Disposal
Hyundai Able Patriots Park, LLC	Disposal
Newstar Kumo 1st Co., Ltd.	End of payment guarantee contract
Able Udong 1st Co., Ltd.	End of payment guarantee contract

27

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2. Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of Preparation

The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated 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 Group’s financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.

The consolidated financial statements of the Group have been prepared in accordance with Korean IFRS. These are the standards and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.

The consolidated financial statements have been prepared on the historical cost basis except for the following items:

• Certain financial assets and liabilities (including derivatives instruments), certain classes of property, plant and equipment and investment properties measured at fair value

• Assets held for sale measured at fair value less costs to sell, and

• Defined benefit plans

• Plan assets measured at fair value

The preparation of the consolidated financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgement in applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

2.2 Changes in Accounting Policy and Disclosures

2.2.1 New and amended standards adopted by the Group

The Group has applied the following amended standards for the first time for its annual reporting period commencing January 1, 2021.

• Amendments to Korean IFRS No. 1116 Leases – Practical expedient for COVID-19-Related Rent Exemption, Concessions, Suspension

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the COVID-19-related rent concession the same way it would account for the change applying this standard if the change were not a lease modification. These amendments do not have a significant impact on the consolidated financial statements.

• Amendments to Korean IFRS No. 1109 Financial Instruments, Korean IFRS No. 1039 Financial Instruments: Recognition and Measurement, Korean IFRS No. 1107 Financial Instruments: Disclosure, Korean IFRS No. 1104 Insurance Contracts and Korean IFRS No. 1116 Lease – Interest Rate Benchmark Reform

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

In relation to interest rate benchmark reform, the amendments provide a practical expedient allowing entities to change the effective interest rate instead of changing the carrying amount and apply hedge accounting without discontinuance although the interest rate benchmark is replaced in hedging relationship. These amendments do not have a significant impact on the consolidated financial statements.

2.2.2 The following amended standards have been published that are not mandatory for December 31, 2021 reporting periods and have not been early adopted by the Group.

• Amendments to Korean IFRS No. 1103 Business Combination – Reference to the Conceptual Framework

The amendments update a reference of definition of assets and liabilities to qualify for recognition in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korean IFRS No. 1037 Provisions, Contingent Liabilities and Contingent Assets, and Korean IFRS No. 2121 Levies. The amendments also confirm that contingent assets should not be recognized at the acquisition date. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

• Amendments to Korean IFRS No. 1016 Property, Plant and Equipment – Proceeds before intended use

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, as profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

• Amendments to Korean IFRS No. 1037 Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts: Cost of Fulfilling a Contract

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

• Amendments to Korean IFRS No. 1116 Leases – COVID-19-Related Rent Concessions, etc. beyond June 30, 2021

The application of the practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification, is extended to lease payments originally due on or before June 30, 2022. A lessee shall apply the practical expedient consistently to eligible contracts with similar characteristics and in similar circumstances. The amendments should be applied for annual periods beginning on or after April 1, 2021, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

• Amendments to Korean IFRS No.1001 Presentation of Financial Statements – Classification of Liabilities as Current or Non-current

The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise the right to defer settlement of the liability or the management’s expectations thereof. Also, the settlement of liability includes the transfer of the entity’s own equity instruments; however, it would be excluded if an option to settle the liability by the transfer of the entity’s own equity instruments is recognized separately from the liability as an equity component of a compound financial instrument. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

• Amendments to Korean IFRS No.1001 Presentation of Financial Statements – Accounting Policy Disclosure

The amendments require an entity to define and disclose their material accounting policy information. IFRS Practice Statement 2 Making Materiality Judgements was amended to explain and demonstrate how to apply the concept of materiality. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

• Amendments to Korean IFRS No.1008 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates

The amendments introduce the definition of accounting estimates and clarify how to distinguish changes in accounting estimates from changes in accounting policies. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

• Amendments to Korean IFRS No.1012 Income Taxes – Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction

The amendments narrow the scope of the deferred tax recognition exemption so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

2.3 Consolidation

The Group has prepared the consolidated financial statements in accordance with Korean IFRS No.1110 Consolidated Financial Statements.

(a) Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred is measured at the fair values of the assets transferred, and identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. All other non-controlling interests are measured at fair values, unless otherwise required by other standards. Acquisition-related costs are expensed as incurred.

The Group applies the book-value method to account for business combinations of entities under a common control. Identifiable assets acquired and liabilities assumed in a business combination are measured at their book values on the consolidated financial statements of the ultimate parent entity. In addition, the difference between the sum of consolidated book values of the assets and liabilities transferred and accumulated other comprehensive income; and the consideration paid is recognized as capital surplus.

The excess of consideration transferred, amount of any non-controlling interest in the acquired entity and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recoded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in the profit or loss as a bargain purchase.

Intergroup transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Associates

Associates are entities over which the Group has significant influence but not control or joint control. Investments in associates are accounted for using the equity method of accounting, after initially being recognized at cost. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. If the Group’s share of losses of an associate equals or exceeds its interest in the associate (including long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

If there is objective evidence of impairment for the investment in the associate, the Group recognizes the difference between the recoverable amount of the associate and its book amount as impairment loss.

If an associate uses accounting policies other than those of the Group for like transactions and events in similar circumstances, if necessary, adjustments shall be made to make the associate’s accounting policies conform to those of the Group when the associate’s financial statements are used by the Group in applying the equity method.

(c) Joint Arrangements

A joint arrangement, wherein two or more parties have joint control, is classified as either a joint operation or a joint venture. A joint operator has rights to the assets, and obligations for the liabilities, relating to the joint operation and recognizes the assets, liabilities, revenues and expenses relating to its interest in a joint operation. A joint-venturer has rights to the net assets relating to the joint venture and accounts for that investment using the equity method.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2.4 Foreign Currency Translation

(a) Functional and presentation currency

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

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges and qualifying effective portion of hedge of net investments in foreign operations, or are attributable to monetary part of the net investment in a foreign operation.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognized in other comprehensive income.

2.5 Recognition and Measurement of Financial Instruments

2.5.1 Classification

The Group classifies financial assets as follows.

• Those to be measured at fair value (through profit or loss or other comprehensive income)

• Those to be measured at amortised cost

The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. The Group reclassifies debt investments when, and only when its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Changes in fair value of non-designated equity investment are recognized in profit or loss.

2.5.2 Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

32

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2.5.2.1 Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. The Group classifies its debt instruments into one of the following three measurement categories:

(a) Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in ‘interest income’ using the effective interest rate method.

(b) Fair value through other comprehensive income

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment loss (reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these financial assets is included in ‘interest income’ using the effective interest rate method. Foreign exchange gains and losses are presented in ‘gain or loss on foreign currency transaction’ and impairment losses are presented in ‘loss on valuation and disposal of financial instrument’.

(c) Fair value through profit or loss

Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit or loss within ‘gain or loss on valuation and disposal of financial instrument’ in the year in which it arises.

2.5.2.2 Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividend income from such investments continue to be recognized in profit or loss when the right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘gain or loss on valuation and disposal of financial instrument’ in the statement of profit or loss. Impairment loss (reversal of impairment loss) on equity investments measured at fair value through other comprehensive income are not reported separately from other changes in fair value.

33

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2.5.3 Impairment

The Group assesses on a forward-looking basis expected credit losses associated with its debt instruments carried at amortised cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial instrument. The Group measures expected credit losses 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.

The Group uses the following three measurement techniques in accordance with Korean IFRS:

• General approach: for financial assets and off-balance-sheet unused credit line that are not applied below two approaches

• Simplified approach: for receivables, contract assets and lease receivables

• Credit-impaired approach: for purchased or originated credit-impaired financial assets

Different measurement approaches are applied depending on significant increase in credit risk. 12 month expected credit losses is recognized when credit risk has not significantly increased since initial recognition. A loss allowance at an amount equal to lifetime expected credit losses is recognized when credit risk has significantly increased since initial recognition. Lifetime is presumed to be a period to the contractual maturity date of a financial asset (the expected life of the financial asset).

The Group determines whether the credit risk has increased significantly since initial recognition using the following information. One or more of the following items is deemed significant increase in credit risk.

• More than 30 days past due;

• Decline in credit rating at period end by more than certain notches as compared to that at initial recognition;

• Decline in ratings below certain level in the early warning system;

Under simplified approach, the Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses. Under credit-impaired approach, the Group shall only recognize the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financial assets.

The Group generally deems one or more of the following items credit-impaired:

• 90 days or more past due;

• Legal proceedings related to collection;

• Refinancing;

• Corporate borrowers that are rated C or D;

• Debt restructuring.

34

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2.5.3.1 Forward-looking information

The Group uses forward-looking information, when it determines whether the credit risk has increased significantly since initial recognition and measures expected credit losses.

The Group assumes the risk component has a certain correlation with the business cycle, and calculates the expected credit loss by reflecting the forward-looking information with macroeconomic variables on the measurement inputs.

Forward-looking information used in calculation of expected credit loss is derived after comprehensive consideration of a variety of factors including scenario in management planning, risk situation scenario for stress test, third party forecast, and others.

2.5.3.2 Measuring expected credit losses on financial assets at amortised cost

The amount of the loss on financial assets at amortised cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The Group estimates expected future cash flows for financial assets that are individually significant (individual assessment of impairment).

For financial assets that are not individually significant, the Group collectively estimates expected credit loss by grouping loans with homogeneous credit risk profile (collective assessment of impairment).

• Individual assessment of impairment

Individual assessment of impairment losses are calculated using management’s best estimate on present value of expected future cash flows. The Group uses all the available information including operating cash flow of the borrower and net realizable value of any collateral held.

• Collective assessment of impairment

Collective assessment of loss allowance involves historical loss experience along with incorporation of forward-looking information. Such process incorporates factors such as type of collateral, product and borrowers, credit rating, size of portfolio and recovery period and applies ‘probability of default’ (PD) on a company of assets and ‘loss given default’ (LGD) by type of recovery method. Also, the expected credit loss model involves certain assumption to determine input based on loss experience and forward-looking information. These models and assumptions are periodically reviewed to reduce gap between loss estimate and actual loss experience.

2.5.3.3 Measuring expected credit losses on financial assets at fair value through other comprehensive income

Measuring method of expected credit losses on financial assets at fair value through other comprehensive income is equal to the method of financial assets at amortised cost, except for loss allowances that are recognized as other comprehensive income. Amounts recognized in other comprehensive income for sale or repayment of financial assets at fair value through other comprehensive income are reclassified to profit or loss.

35

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2.5.4 Recognition and Derecognition

Regular way purchases and sales of financial assets are recognized or derecognized on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

If a transfer does not result in derecognition because the Group has retained substantially all the risks and rewards of ownership of the transferred asset, the Group continues to recognize the transferred asset in its entirety and recognizes a financial liability for the consideration received. The Group classified the financial liability as “borrowings” in the statement of financial position.

The Group writes off the carrying amount and allowance of financial assets in its entirety or to a portion thereof when the principal and interest are determined to be no longer recoverable. In general, the Group considers write-off when it is determined that the debtor does not have sufficient resources or income to cover the principal and interest, and this write-off decision is made in accordance with internal regulations.

2.5.5 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statements of financial position where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

2.6 Financial Liabilities

2.6.1 Classification and Measurement

The Group’s financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading.

The Group classifies non-derivative financial liabilities, except for financial liabilities at fair value through profit or loss, financial guarantee contracts and financial liabilities that arise when a transfer of financial assets does not qualify for derecognition, as financial liabilities carried at amortised cost and present as ‘deposits liabilities’, ‘borrowings’, and ‘other financial liabilities’ in the statement of financial position.

2.6.2 Derecognition

Financial liabilities are removed from the statement of financial position when it is extinguished; for example, when the obligation specified in the contract is discharged or canceled or expired or when the terms of an existing financial liability are substantially modified. The difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

The Group’s financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading. Financial liabilities designated the financial liabilities at fair value through profit or loss is the structured financial liabilities contain of embedded derivatives issued by the Group.

36

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The changes in fair value of financial liabilities at FVTPL due to the change of credit risk is recognized as other comprehensive income(instead of profit and loss) and this other comprehensive income can not be transferred to profit and loss in subsequent events.

2.7 Derivative Financial Instruments

The Group enters into numerous derivative financial instrument contracts such as stock options, stock swaps, interest rate swaps and others for trading purposes or sale and issue of derivative combined securities. These derivative financial instruments are presented as derivative financial instruments within the financial statements irrespective of transaction purpose and subsequent measurement requirement.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The changes of the fair value of derivatives financial instruments held for trading are recognized in profit or loss as ‘gain or loss on valuation and disposal of financial instrument’.

Fair value of derivative instrument traded in active market is a quoted price. In case of fair value of relatively simple derivative instruments such as options, interest rate or currency swaps and others is calculated using one or more valuation techniques like cash flow discount model, option pricing model which is based on observable data and appropriate considering the nature of objects.

Also, fair value of more complex derivative instrument is calculated using valuation techniques based on unobservable data in market is periodically reviewed and approved its accuracy.

2.7.1 Day 1 gain & loss

Accordance with Korean IFRS, if there is no available price from active market and if the Group uses a valuation technique that uses data using unobservable valuation parameters from market for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is amortised by using the straight line method over the life of the financial instruments.

2.7.2 Credit risk adjustments

In case of exchange-traded derivative instrument, credit risk is not reflected on the fair value because exchange-traded derivative instrument is traded in public exchange, and it is not available to identify certain counterparties. Fair value of OTC derivative instrument only reflects credit risk.

2.7.3 Hedge accounting

The accounting treatment of changes of fair value for the derivatives are varied as the character of hedging items and the purpose of hedging. The Group holds derivative contracts for the purpose of hedging the risk and the Group designates certain derivatives as hedging instruments to hedge the risk as follows.

(a) Fair value hedge : a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment

(b) Cash flow hedge : a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component of, a recognised asset or liability or a highly probable forecast transaction

(c) Hedge of net investments in foreign operations

On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged items, including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

37

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The fair value of derivatives for hedge is disclosed in note 36.

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit or loss. The gain or loss from remeasuring the hedging instrument at fair value for a derivative hedging instrument and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item is fully amortised to profit or loss by the maturity of the financial instrument using the effective interest method.

The accounting treatments of hedge of net investments in foreign operations are similar to the one of cash flow hedge.

If hedging instruments qualify for a hedge of net investments in foreign operations, the effective portion of changes in fair value of hedging instrument is recognized in other comprehensive income or loss and the ineffective portion is recognized in profit or loss. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognized in other comprehensive income will be reclassified from other comprehensive income or loss to profit or loss as a reclassification adjustment on the disposal or partial disposal of the foreign operation.

2.8 Property and Equipment

All property and equipment except for land are recognized at its cost less any accumulated depreciation and any accumulated impairment losses. The cost of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Land is measured at fair value on the basis of the valuation performed by an independent valuer. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.

If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognized in other comprehensive income and the amount net of deferred tax is accumulated in equity under the heading of revaluation surplus after netting deferred tax. However, the increase is recognized in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognized in profit or loss. If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognized in profit or loss. However, the decrease is recognized in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognized in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. The revaluation surplus included in equity in respect of an item of property and equipment is transferred directly to retained earnings when the asset is derecognized.

Depreciation of all property and equipment, except for land, is calculated using the following method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows:

Property and equipment	Estimated useful lives	Depreciation method
Buildings	40 years	Straight-line method
Vehicles	4 years	Straight-line method
Furniture and equipment	4 years	Straight-line method
Other	4 years	Straight-line method
Right-of-use assets	1~10 years (initial date of the contract entered into ~ maturity date)	Straight-line method

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The residual value, the useful life and the depreciation method applied to an asset are reviewed at least at each financial year-end and, if needed, the changes are accounted for as a change in an accounting estimate.

2.9 Investment Property

Property held to earn rentals or for capital appreciation or both is classified as investment property. Investment property is measured initially at its cost. After recognition as an asset, investment property is carried at cost less accumulated depreciation and impairment losses. Investment property, except for land, is depreciated using the straight-line method over their useful lives of 40 years.

2.10 Intangible Assets

Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets, except for goodwill, comprise software and membership rights, and are amortised using the straight-line method with no residual value over following estimated useful economic life since the asset is available for use. However, goodwill and membership rights are not amortised by considering their useful life as indefinite, because there is no expectable limit to period for use.

Intangible assets	Estimated useful lives	Amortization method
Development costs	4 years	Straight-line method
Software	4 years	Straight-line method

The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at the end of each financial year. The management reviews the useful life of intangible assets that is not being amortised each period to determine whether events and circumstances continue to support an indefinite useful life. If management judges that previous estimates should be adjusted, the change is accounted for as a change in an accounting estimate.

2.11 Impairment of Non-financial Assets

Goodwill or intangible assets with indefinite useful lives are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Non-financial assets, other than goodwill, that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

2.12 Lease

Lease income from operating leases where the Group is a lessor is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.

39

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The Group should assess whether a contract is, or contains a lease at the date of the contract entered into and the initial application date under Korean IFRS No.1116. But the Group may elect not to reassess whether a contract is, or contains a lease for the contract entered into before the transition date by applying practical expedient permitted by Korean IFRS No.1116. The Group has gone through all the contract to assess whether the contract is, or contains, a lease at the contract entered into after the date of initial application.

A lessee is required to recognize a right-of-use assets (lease assets) representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Assets and liabilities arising from a lease are initially measured on a present value basis.

Lease liabilities include the net present value of the following lease payments:

• Fixed payments (including in-substance fixed payments), less any lease incentives receivable

• Variable lease payment that are based on an index or a rate

• Amounts expected to be payable by the lessee under residual value guarantees

• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate can not be readily determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

• The amount of the initial measurement of lease liability

• Any lease payments made at or before the commencement date less any lease incentives received

• Any initial direct costs incurred by the lessee, and

• An estimate of restoration costs

However, short-term lease (lease that, at the commencement date, has a lease term of 12 months or less) and lease of low-value assets (For example, underlying leased asset under $ 5,000) are permitted to elect exceptional conditions.

The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term.

Related to sale and leaseback, the Group (seller-lessee) is required to applying the Korean IFRS No.1115 ‘Revenue from Contracts with Customers’ to determine whether the transfer of an asset is accounted for as a sale of that asset. However, the Group shall not reassess sale and leaseback transactions entered into before the date of initial application.

Large number of lease contracts held by the Group have extension option and termination option. These conditions are generally used for the maximizing the flexibility of lease operation in a view of managing the contracts. Extension option or termination option included in the lease contracts are generally owned by the Group, not lessor. The Group re-evaluated the lease term of the lease contracts by taking into account the contract type, operation plan for branch offices, and costs related to lease termination. As a result, no significant change in the existing lease term has occurred.

2.13 Provisions

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation and the increase in the provision due to passage of time is recognized as interest expense.

40

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2.14 Financial Guarantee Contracts

Financial guarantees contracts provided by the Group are initially measured at fair value on the date the guarantee was given. Subsequent to initial recognition, the Group’s liabilities under such guarantees are measured at the higher of the amounts below and recognized as ‘other financial liabilities’:

• Loss allowance in accordance with Korean IFRS No.1109, ‘Financial Instruments’

• The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Korean IFRS No.1115, ‘Revenue from Contracts with Customers’

2.15 Revenue Recognition

The Group recognizes revenues in accordance with the following five-step revenue recognition standard (Korean IFRS No.1115 Revenue from Contracts with Customers).

• Step 1: Identify the contract with a customer.

• Step 2: Identify the performance obligations in the contract.

• Step 3: Determine the transaction price.

• Step 4: Allocate the transaction price to the performance obligations in the contract.

• Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

2.16 Employee Benefits

2.16.1 Retirement benefit liabilities: Defined benefit plans and Defined contribution plans

The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The contributions are recognized as employee benefit expenses when an employee has rendered service. A defined benefit plan is a pension plan that is not a defined contribution plan.

Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds and that have terms to maturity approximating to the terms of the related pension obligation. The remeasurements of the net defined benefit liability are recognized in other comprehensive income.

If any plan amendments, curtailments, or settlements occur, past service costs or any gains or losses on settlement are recognized as profit or loss for the year.

2.16.2 Short-term employee benefits

Short-term employee benefits, which are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the service, are recognized in profit or loss at the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.

The expected cost of profit-sharing and bonus payments are recognized as liabilities when the Group has a present legal or constructive obligation to make such payments as a result of past events rendered by employees and a reliable estimate of the obligation can be made.

41

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

2.16.3 Share-based payment

The Group is under share-based payment arrangements that grant shares to the executives of the Group. When the arrangements are exercised, the Group provides share or cash equal to the monetary value of the share.

The Group measures the services acquired and the liability incurred at fair value, and the fair value is recognized as expense and accrued expenses over the vesting period. Until the liability is settled, the Group remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss as share-based payments.

2.17 Income Tax Expenses

Income tax expense comprises current income tax and deferred income tax and are recognized in profit or loss for the year, except to the extent that the tax arises from (a) a transaction or event which is recognized either in other comprehensive income or directly in equity and (b) a business combination.

2.17.1 Current income tax

Current income tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation or expenses that is not deductible in determining taxable profit (tax loss). Current income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The Group offsets current income tax assets and current income tax liabilities if, and only if, the Group (a) has a legally enforceable right to set off the recognized amounts and (b) intends to settle on a net basis.

2.17.2 Deferred income tax

Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax based of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit or loss.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference, will not reverse in the foreseeable future.

The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Group reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.

42

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and deferred income tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Current income tax and deferred income tax are included in the calculation of income tax expense. Income taxes related to prior period are included in current income tax.

Deferred income taxes, recognized directly in equity or arisen from business combination, are directly deducted from equity or goodwill.

2.18 Operating Segment Reporting

Operating segments are components of the Group, about which separate internal reporting information is evaluated regularly by the chief operating decision makers including board of directors in deciding how to allocate resources and to assess performance. Each segment is a strategic business unit that offers different products and services, and is managed separately because each business has different risks and opportunities, different technology required and marketing strategies.

Segment information includes the items which are directly attributable and reasonably allocated to the segment.

2.19 Other Receivables and Payables Related to Brokerage Transactions

Regarding customer brokerage transactions, the Group recognizes the receivable from and payable to the Korea Exchange (Clearing and settlement organization) and customers in total amounts, which the Group recognizes as other financial assets and other financial liabilities. The Group offsets the receivable and payable that arise between Korea Exchange and the Group within the same day, and that arise between a customer and the Group within the same day and through the same account.

2.20 Approval of Issuance of the Financial Statements

The issuance of the December 31, 2021 consolidated financial statements of the Group was approved by the Board of Directors on February 7, 2022, which is subject to change with approval at the annual shareholders’ meeting.

3. Critical Accounting Estimates and Assumptions

The preparation of financial statements requires the Group to make estimates and assumptions concerning the future. Management also needs to exercise judgement in applying the Group’s accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the related actual results, it can contain a significant risk of causing a material adjustment.

43

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. Additional information of significant judgment and assumptions of certain items are included in relevant notes.

3.1 Income taxes

The Group recorded, based on its best estimate, current taxes and deferred taxes that the Group will be liable in the future for the operating results at the end of the reporting period. However, the final tax outcome in the future may be different from the amounts that were initially recorded. Such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

If certain portion of the taxable income is not used for investments or increase in wages in accordance with the Special Taxation for Facilitation of Investment and Mutually-Beneficial Cooperation, the Group is liable to pay additional income tax calculated based on the tax law. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the tax law. As the Group’s income tax is dependent on the investments and increase in wages, there exists uncertainty with regard to measuring the final tax effects.

3.2 Fair value of financial instruments

The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors and assumptions in price determination and other risks.

As described in Note 2.5, ‘Recognition and Measurement of Financial Instruments’, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables.

3.3 Impairment of financial assets

In accordance of Korean IFRS No.1109, the provision for impairment for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgment in making these assumptions and selecting the inputs to the impairment calculation based on the Group’s past history, existing market conditions as well as forward-looking estimates at the end of each reporting period (Note 2.5).

3.4 Measurement of defined benefit obligation

The present value of the defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of the defined benefit liability. The Group determines the appropriate discount rate at the end of the reporting period. This is the interest rate that is used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit liability. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the pension benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Other key assumptions for defined benefit liability are based in part on current market conditions.

44

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

4. Segment Information

4.1 Types of services from which each reportable segment derives its revenues

Management of the Group decides operating segment based on the information, which is to be reported to the Group’s chief executive officer, in order to allocate resources to the segment and evaluate performance of the segment. The Group’s operating segments consist of brokerage and wealth management, investment banking, trading and other business.

In accordance with Korean IFRS No.1108, reporting segments of the Group by type of services categories are as follows:

Reporting segment	Main business activities
Brokerage and wealth management	Sales and services relating to wealth management and brokerage provided to individuals, corporations and institutional investors
Investment banking	Underwriting and advisory services related to bond issuance, structured finance, initial public offering, and mergers and acquisition
Trading	Trading of securities and derivatives, and proprietary trading
Others	Other services and support services

4.2 Revenue and income of segment reporting

Financial information by operating segment for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)
	2021
	Operating income		Operating expense		Operating profit (loss)		Non-operating income(expense)			Income tax expense		Profit(loss) for the year
Brokerage and wealth management		1,876,590,453		1,526,877,616		349,712,837		(4,282,084	)		3,238,863		342,191,890
Investment banking		670,323,268		389,625,460		280,697,808		32,438,352			3,894,106		309,242,054
Trading		5,813,364,712		5,733,921,862		79,442,850		(9,527,949	)		13,481		69,901,420
Others1		189,272,066		77,851,248		111,420,818		(21,858,988	)		210,605,778		(121,043,948	)
		8,549,550,499		7,728,276,186		821,274,313		(3,230,669	)		217,752,228		600,291,416

¹  All income tax expenses are allocated to the others segment, due to the difficulty of reasonable allocation.

(in thousands of Korean won)
	2020
	Operating income		Operating expense		Operating profit (loss)			Non-operating income(expense)			Income tax expense		Profit(loss) for the year
Brokerage and wealth management		1,983,906,458		1,679,303,841		304,602,617			(33,237,419	)		2,030,532		269,334,666
Investment banking		563,650,756		364,975,913		198,674,843			31,038,553			50,701		229,662,695
Trading		7,286,601,282		7,297,120,572		(10,519,290	)		30,067,909			—		19,548,619
Others1		221,707,520		135,669,652		86,037,868			(13,429,010	)		157,203,474		(84,594,616	)
		10,055,866,016		9,477,069,978		578,796,038			14,440,033			159,284,707		433,951,364

¹  All income tax expenses are allocated to the others segment, due to the difficulty of reasonable allocation.

The above reported operating income is generated from external customers and inter-segment transactions, and expense includes expenses that can be directly attributed or reasonably allocated to each segment including internal interests. Segment profit represents the profit earned by each segment, reported to the chief executive officer to determine the allocation of resources and to measure the respective segments’ performance.

45

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

4.3 Assets and liabilities of segments

Total assets and liabilities by each segment as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Total assets		Total liabilities
Brokerage and wealth management		7,301,547,473		8,598,279,396
Investment banking		4,001,269,431		1,710,091,571
Trading		29,113,741,003		20,800,704,765
Others		15,014,237,509		18,886,164,067
		55,430,795,416		49,995,239,799

(in thousands of Korean won)	2020
	Total assets		Total liabilities
Brokerage and wealth management		7,032,457,658		7,476,908,676
Investment banking		3,632,622,050		1,621,395,021
Trading		31,923,543,701		23,175,131,960
Others		14,911,035,172		20,228,202,818
		57,499,658,581		52,501,638,475

4.4 Information on principal customers

No single customer contributed 10% or more to the Group’s revenue for the years ended December 31, 2021 and 2020.

5. Cash and Deposits

The details of cash and deposits as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Cash and cash equivalents
Cash on hand		173			48
Demand deposits		149,590,806			106,219,969
Checking deposit		2,000,976			10,219,982
Foreign currency deposits		504,695,901			161,240,130
Certificates of deposit		8,298,500			6,639,042
MMDA		9,712,212			67,078,049
Accommodation notes		1,555,452			70,000,000
		675,854,020			421,397,220
Deposits
Deposits for securities subscription		—			18,677,943
Reserve for claims of customers’ deposits		351,745,802			177,071,379
Guarantee deposits for securities lending and borrowing		95,528,832			129,910,583
Deposits for exchange-traded derivatives		821,697,818			923,361,475
Guarantee deposits for KSFC trading		2,114,517			—
Long-term deposits		1,088,255,761			1,532,268,664
Restricted due from financial institutes		39,000			42,500
Others		799,445,549			687,074,057
Allowances for credit losses of deposits		(632,624	)		(739,569	)
		3,158,194,655			3,467,667,032
		3,834,048,675			3,889,064,252

46

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Restricted deposits as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Deposits for securities subscription 1		—		18,677,943
Reserve for claims of customers’ deposits 2		351,745,802		177,071,379
Guarantee deposits for securities lending and borrowing 3		95,528,832		129,910,583
Deposits for exchange-traded derivatives 4		821,697,818		923,361,475
Guarantee deposits for KSFC trading 5		2,114,517		—
Long-term deposits 6		778,799,807		778,402,964
Restricted due from financial institutes 7		39,000		42,500
Others 8		799,445,549		687,074,057
		2,849,371,325		2,714,540,901

¹ Subscription deposits are subscription margin of investors and the Group that are separately deposited at Korea Securities Finance Corporation(KSFC) or other relevant financial institutions until due date for payment for the subscription of the newly issued or sold securities in accordance with the provisions of Article 4-44 of the Regulation on Financial Investment Business.

² The reserve for claims of customers’ deposits is deposited separately in a form of trust in KSFC to meet the demands of investors, such as return of deposit and others, in accordance with Article 74 of the Financial Investment Services and Capital Markets Act.

³ Deposited in Korea Securities Depository to guarantee for securities lending and borrowing.

⁴ The deposits for exchange-traded derivatives that the investors and the Group pay for foreign futures option trading to KEB Hana Bank and Forex Dealer Member.

⁵ In the case of an investor’s loan transaction, a certain portion of the price of securities sold is deposited at KSFC as margin.

⁶ Pledged deposits provided for securities lending and borrowing, repurchase agreements between institutions and retail payment through investment & securities companies are included.

⁷ Guarantee deposits for checking accounts

⁸ Deposits in foreign currency and others consist of the margin accounts for trading financial instruments in foreign markets and deposits to court.

Changes in allowances for credit losses of deposits for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	12-month expected credit losses			Lifetime expected credit losses
				Non-Impaired		Impaired
Beginning		739,569			—		—
Reversal of provision		(105,375	)		—		—
Others (foreign exchange and etc)		(1,570	)		—		—
		632,624			—		—

(in thousands of Korean won)	2020
	12-month expected credit losses		Lifetime expected credit losses
			Non-Impaired		Impaired
Beginning		655,154		—		—
Provision		84,398		—		—
Others (foreign exchange and etc)		17		—		—
		739,569		—		—

47

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

6. Financial Instruments at FVTPL

The details of financial instruments at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Financial Assets at FVTPL				Financial Liabilities at FVTPL
	2021		2020		2021		2020
Financial assets required to be mandatorily measured at FVTPL		34,182,334,301		33,415,470,014		2,825,922,918		1,884,675,400
Financial assets designated at FVTPL		—		—		9,160,923,652		9,796,959,305
		34,182,334,301		33,415,470,014		11,986,846,570		11,681,634,705

6.1 Financial assets required to be mandatorily measured at FVTPL

The details of financial assets required to be mandatorily measured at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Deposits
Reserve for claims of customers’ deposits (trust) 1		5,704,580,963		4,695,211,146
Equity instruments
Stocks		498,608,397		635,558,657
Debt instruments
Government and local government bonds		5,292,775,017		6,021,742,890
Special bonds		2,498,873,337		3,945,432,344
Corporate bonds		8,318,369,010		7,296,659,553
Corporate commercial papers		4,170,294,875		2,773,309,326
Asset-backed short-term bonds		1,490,591,859		997,243,645
Hybrid bond with security-like features		110,295,800		52,192,636
Investment in partnerships		334,361,963		169,159,281
Collective investment securities		2,846,352,569		3,194,568,526
Hybrid stock with bond-like features		134,027,729		61,179,352
Loans
Privately placed bonds		173,459,362		212,021,021
Loan receivables		1,907,034		1,839,848
Derivative linked securities
Equity-linked securities		41,493,507		62,122,313
Other derivative linked securities		139,326,096		310,165,730
Other OTC derivative combined contract		114,887,471		422,455,749
Securities in foreign currency
Stocks in foreign currency		14,529,061		9,664,484
Bonds in foreign currency		1,352,049,465		1,586,981,323
Investment in partnerships in foreign currency		25,840,354		83,245,819
Collective investment securities in foreign currency		260,551,771		255,898,311
Collective fund for default loss		73,273,475		78,755,999
Hybrid bonds		585,355,259		459,694,314
Exchange traded notes		529,927		—
Other held for trading securities		—		90,367,747
		34,182,334,301		33,415,470,014

¹ The reserve for claims of customers’ deposits is restricted to use because this reserve is deposited separately in a form of trust in KSFC to meet the demands of investors, such as return of deposit and others, in accordance with Article 74 of the Financial Investment Services and Capital Markets Act. Among the reserve for claims of customers’ deposits deposited in a form of trust in KSFC, beneficiaries amount to W 98,000 million are provided as a collateral for the payment to Kookmin Bank which is an agent bank of payment, in accordance with Article 72 Clause 3 of the Financial Investment Services and Capital Markets Act.

48

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Details of securities sold which are classified as financial liabilities at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Equity Securities
Stocks		509,897,766		602,009,122
Collective investment securities		3,056,061		2,961,692
Debt Securities
Government and local government bonds		2,282,891,241		1,279,704,586
Special bonds		30,077,850		—
		2,825,922,918		1,884,675,400

The details of financial assets pledged as collateral as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Description	2021		2020		Security right holder
Financial assets at FVTPL	Guarantee deposits for lending and borrowing securities and bonds		9,294,924,447		6,956,737,812	Korea Securities Depository, etc.
	Margin required and guarantee deposits for derivatives trading		955,030,966		741,196,389	Korea Stock Exchange, etc.
	Guarantee deposits for clearing fund		1,653,330		1,736,116	Korea Securities Depository
	Guarantee deposits for reverse repurchase agreements		8,422,134,434		10,510,176,878	Customer, Institution
Financial assets at FVOCI	Guarantee deposits for lending and borrowing securities and bond		1,523,592,569		1,322,997,543	Korea Securities Depository, etc.
	Guarantee deposits for derivatives trading		—		59,098,805	Hana Financial Investment Co., Ltd., etc
	Guarantee deposits for reverse repurchase agreements		1,990,336,464		2,117,185,736	Customer, Institution
			22,187,672,210		21,709,129,279

(*) As at December 31, 2021 and 2020, the accrued interests related to debt securities provided as collateral of W 279,423 million and W 263,403 million, respectively, are excluded.

The Group provides W 6,165,555 million and W 4,680,816 million of its borrowing securities held as collateral to KSFC and others as at December 31, 2021 and 2020, respectively.

As at December 31, 2021 and 2020, the fair values of collaterals sold or repledged as collateral regardless of default are as follows:

(in thousands of Korean won)	Securities
	2021		2020
Fair value of collateral held		488,172,002		762,396,545
Fair value of collaterals sold or re-provided as collateral		—		—
		488,172,002		762,396,545

49

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

6.2 Financial liabilities designated at FVTPL

The details of financial liabilities designated at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Derivative linked securities
Equity-linked securities		6,252,543,366		7,210,237,105
Other derivative linked securities		1,972,278,390		1,979,326,585
Other OTC derivative combined contract		899,164,069		606,355,771
Exchange traded notes		36,937,827		1,039,844
		9,160,923,652		9,796,959,305

The differences between the contractual value to be paid at maturity and the carrying amount of financial liabilities at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Contractual value to be paid at maturity		8,957,601,834			9,583,186,260
Carrying amount		9,160,923,652			9,796,959,305
Differences		(203,321,818	)		(213,773,045	)

Accumulated changes in fair value of financial liabilities at FVTPL due to the change of credit risk as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Other comprehensive income recognized from changes of fair value due to the change of credit risk (before tax) 1
	2021			2020
Beginning of the year		15,846,655			28,028,927
Change of fair value		(18,916,700	)		(12,182,272	)
End of the year		(3,070,045	)		15,846,655

¹ The Group assessed OCI based on the probability of default corresponding to the Group’s credit rating and loss given default. The amount is before tax.

50

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

7. Derivatives and Hedge Accounting

Derivatives owned by the Group as at December 31, 2021 and 2020, are as follows:

	2021
	Assets				Liabilities				Unsettled amount
(in thousands of Korean won)	Hedging		Trading		Hedging		Trading
Exchange-traded derivatives
Interest rate:
Futures		—		1,903,458		—		2,464,302		4,616,641,898
Equity:
Futures		—		14,338,186		—		6,529,579		1,585,281,541
Purchase options		—		51,905,242		—		—		1,412,231,541
Written options		—		—		—		188,099,589		2,423,244,090
Currency:
Futures		—		464,226		—		877,434		359,457,571
Goods:
Futures		—		42,891		—		81,769		6,370,216
		—		68,654,003		—		198,052,673		10,403,226,857
OTC derivatives
Interest rate:
Forwards		—		125,452,803		—		136,232,672		3,684,000,000
Swaps		—		55,032,397		—		79,573,686		135,999,784,725
Options		—		5,121,493		—		4,809,190		1,010,000,000
Currency:
Forwards		—		147,949,552		16,338,320		115,995,239		13,696,294,964
Swaps		—		6,900,127		915,127		12,190,618		512,493,576
Options		—		2,400,866		—		—		165,970,000
Equity:
Swaps		—		322,887,583		—		132,618,848		5,207,198,079
Purchase options		—		43,280,731		—		—		1,748,428,964
Written options		—		—		—		53,270,931		2,024,447,957
Credit:
Swaps		—		18,979,327		—		7,408,651		2,588,958,733
Others:
Swaps		—		20,859,425		—		117,235,787		1,601,240,180
		—		748,864,304		17,253,447		659,335,622		168,238,817,178
		—		817,518,307		17,253,447		857,388,295		178,642,044,035

	2020
	Assets				Liabilities
(in thousands of Korean won)	Hedging		Trading		Hedging		Trading		Unsettled amount
Exchange-traded derivatives
Interest rate:
Futures		—		43,180		—		1,833,863		3,132,550,449
Equity:
Futures		—		20,061,358		—		2,245,195		1,016,121,962
Purchase options		—		54,275,300		—		—		1,262,500,390
Written options		—		—		—		192,851,867		2,380,430,922
Currency:

51

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Futures		—		157,658		—		695,064		348,899,584
Goods:
Futures		—		151,488		—		81,382		11,609,428
	—		74,688,984		—		197,707,371		8,152,112,735
OTC derivatives
Interest rate:
Forwards		—		49,212,755		—		110,263,267		1,834,000,000
Swaps		—		138,228,763		—		103,169,860		121,251,241,391
Options		—		3,106,553		—		5,932,213		1,120,000,000
Currency:
Forwards		—		93,344,831		1,124,520		70,531,073		5,424,420,935
Swaps		1,082,173		7,845,855		280,060		13,991,235		491,000,801
Equity:
Swaps		—		423,296,778		—		123,242,355		5,434,056,549
Purchase options		—		81,438,447		—		—		1,389,645,515
Written options		—		—		—		82,429,795		1,441,274,230
Credit:
Swaps		—		19,395,007		—		9,700,485		3,015,782,400
Goods:
Swaps		—		267,562		—		991,466		13,923,100
Others:
Swaps		—		36,782,732		—		143,968,304		1,402,010,347
	1,082,173		852,919,283		1,404,580		664,220,053		142,817,355,268
	1,082,173		927,608,267		1,404,580		861,927,424		150,969,468,003

The Group entered into the derivative contracts for hedging fair value change of the foreign exchanges and hedge of net investments in foreign operations accounting for foreign currency risk of a foreign operation.

Gain or loss on hedge of net investments in foreign operations for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Gain(loss) on the hedging instrument		(18,044,880	)		4,498,658
Effective portion of changes in fair value of hedging (other comprehensive income)		(18,044,880	)		4,498,658
Ineffective portion of changes in fair value of hedging (profit or loss)		—			—

The effective portion of changes in fair value of hedge of net investments in foreign operations recognized as other comprehensive income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Other comprehensive income		(18,044,880	)		4,498,658
Tax effect		4,962,342			(1,237,131	)
Other comprehensive income-net of tax		(13,082,538	)		3,261,527

52

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The average price condition for the nominal future cash flow related to hedge of net investments in foreign operations as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	The nominal amount of the hedging instrument		Average price condition(KRW/USD, Korean won)		Average price condition(KRW/GBP, Korean won)		Average price condition(KRW/EUR, Korean won)
1 year		257,606,000		1,113.44		1,465.26		—
2 year		14,765,740		—		—		1,312.78
3 year		22,705,493		—		1,558.67		—
Over 3 year		100,767,500		1,172.73		—		—
		395,844,733		1,131.56		1,506.43		1,312.78

(in thousands of Korean won)	2020
	The nominal amount of the hedging instrument		Average price condition(KRW/USD, Korean won)		Average price condition(KRW/GBP, Korean won)		Average price condition(KRW/EUR, Korean won)
1 year		52,224,000		1,071.00		—		—
2 year		26,683,200		—		1,465.26		—
3 year		14,720,640		—		—		1,312.78
Over 3 year		21,033,353		—		1,558.67		—
		114,661,193		1,071.00		1,506.43		1,312.78

8. Financial Assets at FVOCI

The details of financial assets at FVOCI as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Equity instruments
Stocks 1		365,576,095		307,370,199
Investment in partnerships		1,200,000		1,200,000
Other		78,876,642		70,356,906
Debt instruments
Government and local government bonds		20,989,065		105,141,465
Special bonds		549,741,426		735,513,757
Corporate bonds		2,698,701,899		2,508,024,161
Securities in foreign currency
Debt instruments		123,213,103		176,174,957
Investment in partnerships		1,579,576		1,257,399
	3,839,877,806		3,905,038,844

¹ Equity investment on Korea Stock Exchange and other relative institutions

53

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Changes in gains and losses on valuation of financial assets at FVOCI (before tax) for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Beginning balance			Valuation1			Disposal / Transfer			Ending balance
Stocks		278,961,566			39,799,222			—			318,760,788
Government and local government bonds		(44,428	)		1,768			44,428			1,768
Special bonds		107,785			(3,839,248	)		(120,870	)		(3,852,333	)
Corporate bonds		3,046,331			(16,055,846	)		(1,247,051	)		(14,256,566	)
Securities in foreign currency		1,609,775			(1,083,912	)		(1,441,794	)		(915,931	)
Other Securities in Won currency		356,906			(1,482,017	)		—			(1,125,111	)
	284,037,935			17,339,967			(2,765,287)			298,612,615

¹  Provision for credit loss of debt instruments at FVOCI of W 598 million is excluded.

(in thousands of Korean won)	2020
	Beginning balance			Valuation1			Disposal / Transfer			Ending balance
Stocks		236,617,727			42,343,839			—			278,961,566
Government and local government bonds		(63,198	)		(44,428	)		63,198			(44,428	)
Special bonds		(74,744	)		107,785			74,744			107,785
Corporate bonds		629,978			2,342,739			73,614			3,046,331
Securities in foreign currency		516,553			1,319,203			(225,981	)		1,609,775
Other Securities in Won currency		—			356,906			—			356,906
		237,626,316			46,426,044			(14,425	)		284,037,935

¹  Provision for credit loss of debt instruments at FVOCI of W 368 million is excluded.

There are no equity investments at FVOCI derecognized for the year ended December 31, 2021.

The dividend income from equity investments at FVOCI for the years ended December 31, 2021 and 2020, are as follows;

(in thousands of Korean won)	2021				2020
	Derecognised		Held at the reporting period		Derecognised		Held at the reporting period
Equity investments at FVOCI
Non marketable securities		—		7,411,793		—		5,169,035
Other equity investments		—		2,668,697		—		2,023,154

The Group recognized provision for credit loss of debt instruments at FVOCI amount (before tax) to W 1,479 million and W 881 million, as at December 31, 2021 and 2020, respectively.

54

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

9. Investments in Associates

Investments in associates as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)						2021						2020
	Location	Industry	Closing month	Percentage of ownership (%)		Acquisition cost		Net asset amount		Book amount		Acquisition cost		Net asset amount		Book amount
Wise Asset Management Co., Ltd. 1	Korea	Asset management	—		33		4,629,876		—		—		4,629,876		—		—
KB Special Purpose Acquisition Company No.17 2	Korea	SPAC	November		0.01		500		955		955		500		959		959
KB Special Purpose Acquisition Company No.18 2	Korea	SPAC	November		0.01		1,000		1,955		1,955		1,000		1,958		1,958
KB Special Purpose Acquisition Company No.19 2	Korea	SPAC	November		0.02		1,000		1,906		1,906		1,000		1,914		1,914
KB Special Purpose Acquisition Company No.20 2	Korea	SPAC	November		0.02		1,000		1,913		1,913		1,000		1,911		1,911
KB Private Equity FundIII	Korea	Investment	—		—		—		—		—		8		93,893		93,893
Keystone-Hyundai Sec. No.1 Private Equity Fund	Korea	Investment	—		—		—		—		—		1,925,000		1,556,346		1,556,346
KB New Paradigm Agriculture Venture Fund	Korea	Investment	December		25		2,725,000		2,940,867		2,940,867		5,000,000		4,922,012		4,922,012
KB KONEX Market Vitalization Fund	Korea	Investment	December		23.44		615,000		5,445,338		5,445,338		6,165,000		9,745,342		9,745,342
KB-KDBC Pre-IPO New Technology Business Investment Fund	Korea	Investment	December		33.33		4,400,000		5,894,529		5,894,529		6,800,000		8,020,843		8,020,843
KBTS Technology Venture Private Equity Fund 2	Korea	Investment	December		16		4,080,000		4,808,098		4,808,098		4,736,000		5,037,119		5,037,119
KB-SJ Tourism Venture Fund 2	Korea	Investment	December		18.52		5,000,000		4,146,315		4,146,315		4,500,000		4,133,510		4,133,510
KB Shinjasanaubo Fund 2	Korea	Investment	December		14.67		1,936,000		1,897,195		1,897,195		1,320,000		1,317,089		1,317,089
UNION Media Commerce Fund	Korea	Investment	December		28.99		1,000,000		958,907		958,907		1,000,000		959,811		959,811
KB-Brain KOSDAQ Scale-Up Fund 2	Korea	Investment	December		15.96		9,750,000		11,125,821		11,125,821		10,050,000		10,317,253		10,317,253
KB SPROTT Renewable Private Equity Fund I 2	Korea	Investment	December		7.69		1,182,775		954,286		954,286		1,182,775		1,029,697		1,029,697
KB-Stonebridge Secondary Private Equity Fund 2	Korea	Investment	December		4.16		6,183,416		6,270,906		6,270,906		4,088,000		4,753,133		4,753,133
KB-SP Private Equity Fund IV 2	Korea	Investment	December		14.95		6,100,000		5,627,717		5,627,717		6,100,000		5,949,785		5,949,785
KB-UTC Inno-Tech Venture Fund 2	Korea	Investment	December		14.76		7,125,000		6,990,821		6,990,821		5,805,000		5,666,113		5,666,113
KB-NAU Special Situation Corporate Restructuring Private Equity Fund 2	Korea	Investment	December		6		6,696,000		7,626,992		7,626,992		2,850,000		2,805,442		2,805,442
JR GLOBAL REIT	Korea	REIT	—		—		—		—		—		215,854,340		215,854,340		215,854,340
Project Vanilla Co., Ltd.	Korea	System software development	December		49		2,450,000		525,344		525,344		2,450,000		2,150,514		2,150,514
December & Company Inc. 2	Korea	System software development	December		16.78		30,000,000		9,053,043		21,388,370		30,000,000		11,439,476		24,401,295
KB Material and Parts No. 1 PEF 2	Korea	Investment	December		14.47		3,400,000		3,342,698		3,342,698		3,400,000		3,370,557		3,370,557
KB Bio Private Equity Fund III Ltd. 2	Korea	Investment	December		12.2		10,000,000		9,950,054		9,950,054		—		—		—
KB Global Commerce Private Equity Investment Fund 2	Korea	Investment	December		16.28		7,000,000		6,820,331		6,820,331		—		—		—

55

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

KB-KTB Technology Venture Fund 2	Korea	Investment	December	18.18	2,000,000	1,983,162	1,983,162	—	—	—
KB Bio Global Expansion Private Equity Fund No.1	Korea	Investment	December	39.47	15,000,000	14,967,033	14,967,033	—	—	—
KB Digital Platform Fund 2	Korea	Investment	December	16.67	4,500,000	4,499,746	4,499,746	—	—	—
KB-SOLIDUS Healthcare Investment Fund 2	Korea	Investment	December	4.9	100,000	100,000	100,000	—	—	—
G payment Joint Stock Company	Vietnam	Electronic payment & settlement agency	December	43.84	9,028,760	3,174,609	9,350,182	—	—	—
498 Seventh Owners LLC 3	USA	Investment	—	49.9	166,851,037	—	—	—	—	—
					311,756,364	119,110,541	137,621,441	317,859,499	299,129,017	312,090,836

¹  The Group recognized the entire book amount as a loss before the year ended December 31, 2020, as a big loss was expected. Disposal of securities are restricted due to stock lock-up requirements as at December 31, 2021.

²  Although the ownership of the Group is less than 20%, these are included as associates, since the Group has a significant influence over investee’s policy and operations.

³  This investment was reclassified to disposal group held for sale as at December 31, 2021.

56

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Changes in investments in associates for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Beginning balance		Acquisition		Dividends			Disposal			Re- classification		Changes in equity of associates			Profit (loss) of associates			Ending balance
KB Special Purpose Acquisition Company No.17		959		—		—			—			—		(12	)		8			955
KB Special Purpose Acquisition Company No.18		1,958		—		—			—			—		—			(3	)		1,955
KB Special Purpose Acquisition Company No.19		1,914		—		—			—			—		—			(8	)		1,906
KB Special Purpose Acquisition Company No.20		1,911		—		—			—			—		—			2			1,913
KB Private Equity FundIII		93,893		—		(80,872	)		(13,021	)		—		—			—			—
Keystone-Hyundai Sec. No.1 Private Equity Fund		1,556,346		—		(511,575	)		(1,044,771	)		—		—			—			—
KB New Paradigm Agriculture Venture Fund		4,922,012		—		—			(2,275,000	)		—		—			293,855			2,940,867
KB KONEX Market Vitalization Fund		9,745,342		—		—			(5,550,000	)		—		—			1,249,996			5,445,338
KB-KDBC Pre-IPO New Technology Business Investment Fund		8,020,843		—		—			(2,400,000	)		—		—			273,686			5,894,529
KBTS Technology Venture Private Equity Fund		5,037,119		880,000		—			(1,536,000	)		—		—			426,979			4,808,098
KB-SJ Tourism Venture Fund		4,133,510		500,000		—			—			—		—			(487,195	)		4,146,315
KB Shinjasanaubo Fund		1,317,089		880,000		—			(264,000	)		—		—			(35,894	)		1,897,195
UNION Media Commerce Fund		959,811		—		—			—			—		—			(904	)		958,907
KB-Brain KOSDAQ Scale-Up Fund		10,317,253		3,750,000		—			(4,050,000	)		—		—			1,108,568			11,125,821
KB SPROTT Renewable Private Equity Fund I		1,029,697		—		—			—			—		—			(75,411	)		954,286
KB-Stonebridge Secondary Private Equity Fund		4,753,133		3,788,000		(2,827,038	)		(1,692,584	)		—		—			2,249,395			6,270,906

57

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

KB-SP Private Equity Fund IV	5,949,785	—	—		—		—		—	(322,068	)	5,627,717
KB-UTC Inno-Tech Venture Fund	5,666,113	1,695,000	—		(375,000	)	—		—	4,708		6,990,821
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	2,805,442	3,846,000	—		—		—		—	975,550		7,626,992
JR GLOBAL REIT 1	215,854,340	—	(6,605,143	)	(58,419,857	)	(150,829,340	)	—	—		—
Project Vanilla Co., Ltd.	2,150,514	—	—		—		—		—	(1,625,170	)	525,344
December & Company Inc.	24,401,295	—	—		—		—		492,279	(3,505,204	)	21,388,370
KB Material and Parts No. 1 PEF	3,370,557	—	(34,000	)	—		—		—	6,141		3,342,698
KB Bio Private Equity Fund III Ltd.	—	10,000,000	—		—		—		—	(49,946	)	9,950,054
K The fifteenth Real Estate Investment Trust	—	8,600,000	—		(8,600,000	)	—		—	—		—
KB Global Commerce Private Equity Investment Fund	—	7,000,000	—		—		—		—	(179,669	)	6,820,331
KB-KTB Technology Venture Fund	—	2,000,000	—		—		—		—	(16,838	)	1,983,162
KB Bio Global Expansion Private Equity Fund No.1	—	15,000,000	—		—		—		—	(32,967	)	14,967,033
KB Digital Platform Fund	—	4,500,000	—		—		—		—	(254	)	4,499,746
KB-SOLIDUS Healthcare Investment Fund	—	100,000	—		—		—		—	—		100,000
G Payment Joint Stock Company	—	9,028,760	—		—		—		655,449	(334,027	)	9,350,182
498 Seventh Owners LLC 2	—	166,851,037	(3,482,501	)	—		(169,424,284	)	6,055,748	—		—
	312,090,836	238,418,797	(13,541,129	)	(86,220,233	)	(320,253,624	)	7,203,464	(76,670	)	137,621,441

¹ This company was excluded from the associates because of disposal of some portion of equity for the year ended December 31, 2021.

² This investment was reclassified to the disposal group held for sale for the year ended December 31, 2021.

58

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	Beginning balance		Acquisition		Dividends			Disposal			Changes in equity of associates			Profit (loss) of associates			Ending balance
KB Special Purpose Acquisition Company No.17		964		—		—			—			(12	)		7			959
KB Special Purpose Acquisition Company No.18		1,945		—		—			—			1			12			1,958
KB Special Purpose Acquisition Company No.19		1,906		—		—			—			—			8			1,914
KB Special Purpose Acquisition Company No.20		1,235		—		—			(1,140	)		1,807			9			1,911
KB Private Equity FundIII		7,754,143		—		(2,082,104	)		(8,000,265	)		—			2,422,119			93,893
Keystone-Hyundai Sec. No.1 Private Equity Fund		1,625,390		—		—			—			—			(69,044	)		1,556,346
KB IGen Private Equity Fund No 1		55		—		—			(55	)		—			—			—
KB New Paradigm Agriculture Venture Fund		4,613,579		—		—			—			—			308,433			4,922,012
KB KONEX Market Vitalization Fund		7,193,572		—		—			(1,335,000	)		—			3,886,770			9,745,342
KB-KDBC Pre-IPO New Technology Business Investment Fund		9,494,447		—		—			(3,200,000	)		—			1,726,396			8,020,843
GH Real Estate I LP 1		19,042,209		—		—			—			(19,042,209	)		—			—
KBTS Technology Venture Private Equity Fund		5,637,326		640,000		—			(1,568,000	)		(84,910	)		412,703			5,037,119
KB-SJ Tourism Venture Fund		2,761,088		1,500,000		—			—			—			(127,578	)		4,133,510
KB Shinjasanaubo Fund		1,261,893		—		—			—			—			55,196			1,317,089
UNION Media Commerce Fund		960,715		—		—			—			—			(904	)		959,811
KB-Brain KOSDAQ Scale-Up Fund		7,688,927		3,000,000		—			(1,200,000	)		—			828,326			10,317,253
KB SPROTT Renewable Private Equity Fund I		264,159		842,523		—			—			—			(76,985	)		1,029,697
KB-Stonebridge Secondary Private Equity Fund		1,412,535		2,598,000		—			—			—			742,598			4,753,133
KB-SP Private Equity Fund IV		5,904,073		—		—			—			—			45,712			5,949,785
KB-UTC Inno-Tech Venture Fund		138,946		5,655,000		—			—			—			(127,833	)		5,666,113
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		—		2,850,000		—			—			—			(44,558	)		2,805,442
JR GLOBAL REIT		—		219,492,955		—			(3,638,615	)		—			—			215,854,340
IGIS NO371 Professional Investors’ Real Estate Investment Company		—		10,000,000		—			(10,000,000	)		—			—			—
Koreit Tower Real Estate Investment Trust Company		—		30,000,000		—			(30,000,000	)		—			—			—
Project Vanilla Co., Ltd.		—		2,450,000		—			—			—			(299,486	)		2,150,514
December & Company Inc.		—		30,000,000		—			(5,151,367	)		—			(447,338	)		24,401,295
KB Material and Parts No. 1 PEF		—		3,400,000		—			—			—			(29,443	)		3,370,557
		75,759,107		312,428,478		(2,082,104	)		(64,094,442	)		(19,125,323	)		9,205,120			312,090,836

¹  This company was reclassified to a subsidiary due to additional acquisition of investments for the year ended December 31, 2020.

59

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Summarized financial information of the associates as at and for the years ended December 31, 2021 and 2020, are as follows:

	December 31, 2021						2021
(in thousands of Korean won)	Assets		Liabilities		Equity		Operating Revenue			Profit (loss) for the period			Total comprehensive Income(loss)
KB Special Purpose Acquisition Company No.17		11,974,917		1,542,330		10,432,587		—			86,837			86,837
KB Special Purpose Acquisition Company No.18		17,410,086		2,117,458		15,292,628		—			(21,971	)		(21,971	)
KB Special Purpose Acquisition Company No.19		9,158,626		961,254		8,197,372		—			(34,031	)		(34,031	)
KB Special Purpose Acquisition Company No.20		13,890,288		1,451,405		12,438,883		—			14,741			14,741
KB New Paradigm Agriculture Venture Fund		12,094,989		331,522		11,763,467		1,617,565			1,175,418			1,175,418
KB KONEX Market Vitalization Fund		23,315,388		82,273		23,233,115		8,144,773			5,333,316			5,333,316
KB-KDBC Pre-IPO New Technology Business Investment Fund		18,068,890		385,268		17,683,622		529,527			821,056			821,056
KBTS Technology Venture Private Equity Fund		35,279,435		5,228,823		30,050,612		2,093,762			2,668,615			2,668,615
KB-SJ Tourism Venture Fund		22,947,296		557,141		22,390,155		170,143			(2,630,850	)		(2,630,850	)
KB Shinjasanaubo Fund		12,942,679		7,256		12,935,423		127,355			(244,730	)		(244,730	)
UNION Media Commerce Fund		3,318,493		10,260		3,308,233		—			(3,118	)		(3,118	)
KB-Brain KOSDAQ Scale-Up Fund		69,942,815		220,953		69,721,862		14,244,262			6,947,028			6,947,028
KB SPROTT Renewable Private Equity Fund I		13,885,890		1,467,103		12,418,787		330			(980,352	)		(980,352	)
KB-Stonebridge Secondary Private Equity Fund		151,003,629		315,806		150,687,823		55,571,834			54,052,960			54,052,960
KB-SP Private Equity Fund IV		37,645,651		4,525		37,641,126		(1,357,783	)		(2,154,157	)		(2,154,157	)
KB-UTC Inno-Tech Venture Fund		47,847,776		496,602		47,351,174		1,080,275			31,887			31,887
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		127,960,429		843,902		127,116,527		20,594,269			16,259,169			16,259,169
Project Vanilla Co., Ltd.		1,283,040		210,910		1,072,130		158			(3,240,504	)		(3,240,504	)
December & Company Inc.		71,218,592		17,275,345		53,943,247		3,981,614			(20,766,009	)		(20,766,009	)
KB Material and Parts No. 1 PEF		23,103,939		—		23,103,939		451,280			42,445			42,445
KB Bio Private Equity Fund III Ltd.		81,691,268		100,822		81,590,446		4,434			(409,554	)		(409,554	)
KB Global Commerce Private Equity Investment Fund		41,896,320		—		41,896,320		2,291			(1,103,680	)		(1,103,680	)
KB-KTB Technology Venture Fund		11,008,216		100,827		10,907,389		8,481			(92,611	)		(92,611	)
KB Bio Global Expansion Private Equity Fund No.1		38,031,914		115,430		37,916,484		91,107			(83,516	)		(83,516	)
KB Digital Platform Fund		27,000,148		1,674		26,998,474		148			(1,526	)		(1,526	)
KB-SOLIDUS Healthcare Investment Fund		2,040,000		—		2,040,000		—			—			—
G payment Joint Stock Company		7,797,085		555,733		7,241,352		818,790			(761,924	)		(761,924	)

Summarized financial information of associates for which financial information is not available as at December 31, 2021 are excluded.

60

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	December 31,2020						2020
(in thousands of Korean won)	Assets		Liabilities		Equity		Operating Revenue		Profit (loss) for the year			Total comprehensive Income(loss)
KB Special Purpose Acquisition Company No.17		11,956,818		1,484,678		10,472,140		—		76,656			76,656
KB Special Purpose Acquisition Company No.18		17,399,387		2,084,789		15,314,598		—		94,678			94,678
KB Special Purpose Acquisition Company No.19		9,170,950		939,547		8,231,403		—		32,879			32,879
KB Special Purpose Acquisition Company No.20		13,857,836		1,433,695		12,424,141		—		55,552			55,552
KB Private Equity Fund III		1,132,288		533,721		598,567		—		15,441,616			15,441,616
Keystone-Hyundai Sec. No.1 Private Equity Fund		178,847,952		132,123,089		46,724,863		16,585,605		(1,536,378	)		(1,536,378	)
KB IGen Private Equity Fund No 1		—		—		—		—		35,552			35,552
KB New Paradigm Agriculture Venture Fund		19,862,877		174,827		19,688,050		2,256,303		1,233,733			1,233,733
KB KONEX Market Vitalization Fund		41,703,184		123,386		41,579,798		18,198,062		16,583,196			16,583,196
KB-KDBC Pre-IPO New Technology Business Investment Fund		24,654,880		592,314		24,062,566		5,151,238		5,179,241			5,179,241
KBTS Technology Venture Private Equity Fund		34,971,722		3,489,725		31,481,997		5,341,939		2,579,393			2,048,707
KB-SJ Tourism Venture Fund		22,326,963		5,958		22,321,005		—		(688,904	)		(688,904	)
KB Shinjasanaubo Fund		8,993,041		12,889		8,980,152		821,384		376,331			376,331
UNION Media Commerce Fund		3,318,492		7,141		3,311,351		—		(3,118	)		(3,118	)
KB-Brain KOSDAQ Scale-Up Fund		64,968,056		313,223		64,654,833		5,257,405		5,190,988			5,190,988
KB SPROTT Renewable Private Equity Fund I		13,896,252		497,113		13,399,139		750		(990,922	)		(990,922	)
KB-Stonebridge Secondary Private Equity Fund		114,711,739		496,003		114,215,736		20,067,870		17,842,342			17,842,342
KB Private Equity Fund IV		39,795,283		—		39,795,283		1,684		305,743			305,743
KB-UTC Inno-Tech Venture Fund		38,584,879		206,392		38,378,487		—		(865,842	)		(865,842	)
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		47,607,400		850,042		46,757,358		2,901,042		(742,641	)		(742,641	)
JR GLOBAL REIT		1,859,214,122		1,043,068,482		816,145,640		—		—			—
Project Vanilla Co., Ltd.		4,445,406		132,773		4,312,633		—		(611,196	)		(611,196	)
December & Company Inc.		68,172,547		3,304,131		64,868,416		755,637		(2,468,966	)		(2,468,966	)
KB Material and Parts No. 1 PEF		23,296,494		—		23,296,494		112		(203,506	)		(203,506	)

Summarized financial information of associates for which financial information is not available as at December 31, 2020 are excluded.

61

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The fair value of marketable Investments in associates as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Market value		Carrying amount
KB Special Purpose Acquisition Company No.17		1,000		955
KB Special Purpose Acquisition Company No.18		2,035		1,955
KB Special Purpose Acquisition Company No.19		2,065		1,906
KB Special Purpose Acquisition Company No.20		2,060		1,913
		7,160		6,729

(in thousands of Korean won)	2020
	Market value		Carrying amount
KB Special Purpose Acquisition Company No.17		1,028		959
KB Special Purpose Acquisition Company No.18		2,035		1,958
KB Special Purpose Acquisition Company No.19		2,045		1,914
KB Special Purpose Acquisition Company No.20		2,030		1,911
JR GLOBAL REIT		222,761,679		215,854,340
		222,768,817		215,861,082

10. Loans Measured at Amortised Cost

The details of loans measured at amortised cost as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Total amount			Allowances			Book amount
Retails
Broker’s loans		3,141,043,225			(29,651	)		3,141,013,574
Loans to employees		15,067,486			—			15,067,486
Present value discount		(25,619	)		—			(25,619	)
		3,156,085,092			(29,651	)		3,156,055,441
Corporate
Broker’s loans		270,439,064						270,439,064
Securities purchased under repurchase agreements		442,100,000			—			442,100,000
Loans receivable		3,135,425,896			(36,433,068	)		3,098,992,828
Purchased loans		122,776,789			(33,697,663	)		89,079,126
Advances for customers		11,404,578			(11,404,578	)		—
Privately placed bonds		98,528,167			(742,527	)		97,785,640
Financial lease receivables		41,127,430			—			41,127,430
Net deferred origination fees and costs		(5,222,467	)		—			(5,222,467	)
Present value discount		(4,148,880	)		—			(4,148,880	)
		4,112,430,577			(82,277,836	)		4,030,152,741
		7,268,515,669			(82,307,487	)		7,186,208,182

62

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Total amount			Allowances			Book amount
Retails
Broker’s loans		2,716,730,809			(26,029	)		2,716,704,780
Loans to employees		19,185,817			—			19,185,817
Present value discount		(55,440	)		—			(55,440	)
		2,735,861,186			(26,029	)		2,735,835,157
Corporate
Broker’s loans		388,915,360			—			388,915,360
Securities purchased under repurchase agreements		706,600,000			—			706,600,000
Loans receivable		2,582,764,768			(23,163,215	)		2,559,601,553
Purchased loans		68,237,962			(33,546,231	)		34,691,731
Advances for customers		11,469,419			(11,469,419	)		—
Privately placed bonds		182,269,546			(812,357	)		181,457,189
Financial lease receivables		42,826,306			—			42,826,306
Net deferred origination fees and costs		(610,178	)		—			(610,178	)
Present value discount		(4,862,120	)		—			(4,862,120	)
		3,977,611,063			(68,991,222	)		3,908,619,841
		6,713,472,249			(69,017,251	)		6,644,454,998

The changes in in book amount of loans measured at amortised cost for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Retails								Corporates
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying credit loss model
			Non- impaired		Impaired							Non-impaired			Impaired
Beginning		2,735,835,157		—		26,029		—		3,843,579,468			84,724,768			49,306,827			—
Transfer between stages
Transfer to 12-month expected credit losses		—		—		—		—		7,010,483			(7,010,483	)		—			—
Transfer to lifetime expected credit losses		—		—		—		—		—			—			—			—
Sale		—		—		—		—		(137,590,000	)		—			—			—
Other changes (recover, etc)		420,220,285		—		3,622		—		291,190,755			(18,714,285	)		(66,956	)		—
Ending		3,156,055,442		—		29,651		—		4,004,190,706			59,000,000			49,239,871			—

63

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	Retails									Corporates
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses					The financial instruments applying credit loss model		The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying credit loss model
			Non-impaired		Impaired								Non-impaired			Impaired
Beginning		2,286,095,527		—		28,899			—		3,869,568,409			42,500,000			52,731,440			—
Transfer between stages
Transfer to lifetime expected credit (Non-impaired) losses		—		—		—			—		(108,738,919	)		108,738,919			—			—
Transfer to lifetime expected credit losses (Impaired)		—		—		—			—		—			—			—			—
Other changes (recover, etc)		449,739,630		—		(2,870	)		—		82,749,978			(66,514,151	)		(3,424,613	)		—
Ending		2,735,835,157		—		26,029			—		3,843,579,468			84,724,768			49,306,827			—

The changes in allowances for loan losses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Retails								Corporates
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying credit loss model
			Non-impaired		Impaired							Non-impaired			Impaired
Beginning		—		—		26,029		—		13,854,964			6,037,794			49,098,464			—
Transfer between stages
Transfer to 12-month expected credit losses		—		—		—		—		38,443			(38,443	)		—			—
Transfer to lifetime expected credit losses		—		—		—		—		—			—			—			—
Provision (Reversal)		—		—		—		—		19,913,706			(3,431,871	)		(66,957	)		—
Other transfer (changes in for FX rate, etc)		—		—		3,622		—		(3,128,625	)		361			—			—
Ending 1		—		—		29,651		—		30,678,488			2,567,841			49,031,507			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

64

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	Retails									Corporates
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses					The financial instruments applying credit loss model		The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying credit loss model
			Non-impaired		Impaired								Non-impaired			Impaired
Beginning		—		—		28,899			—		7,730,401			7,387,260			49,407,092			—
Transfer between stages
Transfer to lifetime expected credit Losses (Non-impaired)		—		—		—			—		(445,256	)		445,256			—			—
Transfer to lifetime expected credit losses (Impaired)		—		—		—			—		—			—			—			—
Provision (Reversal)		—		—		—			—		5,598,370			(299,311	)		(102,582	)		—
Other transfer (changes in for FX rate, etc)		—		—		(2,870	)		—		971,449			(1,495,411	)		(206,046	)		—
Ending 1		—		—		26,029			—		13,854,964			6,037,794			49,098,464			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

Broker’s loan

The Group provides loans for stock purchases with credit period of 180 days (can be extended for six times) for investors using margin transaction. As at December 31, 2021, interest rate of the loan is differentiated from 4.3% to 8.7% based on maturities, and overdue interest rate is 9.9%.

Also, as the Group operates loans secured by securities. At the initial transaction, in case of superior shares and common shares, the Group requires trading securities or cash as collateral, corresponding to 167% and 250% of the loan, respectively. Over 140% collateral of the loan is required. As at December 31, 2021, the interest rate of loans secured by securities is differentiated from Annual Percentage Rate (APR) 6.5% to 8.7% based on maturities, from APR 6.0% to 7.5% based on credit rating, and the loan with past due date is 9.9%.

For margin loan to customers, trading securities or cash is required to be pledged corresponding to 140% of the loan. Because of this condition, the Group pledged securities as collateral which are purchased with margin to customer loan. If the value of the pledged securities do not reach to 140% of the loan, the Group requires additional cash or trading securities as collateral.

Advances for Customers

Advances for customers consists of advanced payments on loss compensation and advanced payments for others.

Advanced payments on loss compensation are the monetary amount of claim for reimbursement, paid by the Group, if any losses from embezzlement and arbitrary trading are occurred.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Advanced payments for others consist of two types. The first type is the amount of recourse from paid Investor Protection Fund based on the previous Securities Exchange Act Article 69 Clause 2 or Clause 4. This recourse is driven by preferred payments to the securities company with reasonable reason for taking the preferred payments. The second type is the amount of recourse from Joint Compensation Fund based on Law relating to the Financial Investment Services and Capital Markets Act Article 323 Clause 14 and related Enforcement Decree Article 318 Clause 8. This recourse is driven by preferred payments to the securities company that occurred reasonable reasons for taking the preferred payments.

11. Property and Equipment

The details of property and equipment as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation		Book amount
Land		29,301,991		—			35,727,831		65,029,822
Buildings		42,017,785		(18,619,751	)		—		23,398,034
Furniture and equipment		153,875,006		(121,636,402	)		—		32,238,604
Others		51,878,021		(38,488,699	)		—		13,389,322
Right-of-use assets		120,064,333		(43,364,266	)		—		76,700,067
		397,137,136		(222,109,118	)		35,727,831		210,755,849
	2020
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation		Book amount
Land		29,151,086		—			36,112,640		65,263,726
Buildings		43,070,137		(18,153,577	)		—		24,916,560
Furniture and equipment		154,081,876		(124,577,785	)		—		29,504,091
Others		46,454,540		(29,957,477	)		—		16,497,063
Right-of-use assets		130,224,506		(40,285,376	)		—		89,939,130
		402,982,145		(212,974,215	)		36,112,640		226,120,570

The details of right-of-use assets as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Book amount
Buildings		112,086,115		(38,666,617	)		73,419,498
Vehicles		3,528,320		(1,958,126	)		1,570,194
Others		4,449,898		(2,739,523	)		1,710,375
		120,064,333		(43,364,266	)		76,700,067
	2020
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Book amount
Buildings		122,184,158		(36,291,685	)		85,892,473
Vehicles		3,191,691		(1,845,804	)		1,345,887
Others		4,848,657		(2,147,887	)		2,700,770
		130,224,506		(40,285,376	)		89,939,130

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The changes in property and equipment for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others 1			Ending balance
Land		65,263,726		—		(272,921	)		—			39,017			65,029,822
Buildings		24,916,560		—		(237,867	)		(1,064,308	)		(216,351	)		23,398,034
Furniture and equipment		29,504,091		17,073,312		(12,780	)		(14,378,347	)		52,328			32,238,604
Others		16,497,063		6,512,746		(174,045	)		(9,461,399	)		14,957			13,389,322
Right-of-use assets		89,939,130		10,459,410		(669,858	)		(18,573,645	)		(4,454,970	)		76,700,067
		226,120,570		34,045,468		(1,367,471	)		(43,477,699	)		(4,565,019	)		210,755,849

¹ Others consist of reclassification to investment properties, foreign exchange differences and others.

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others 1			Ending balance
Land		67,586,839		—		(2,323,113	)		—			—			65,263,726
Buildings		27,411,583		—		(1,380,879	)		(1,114,144	)		—			24,916,560
Furniture and equipment		23,599,603		19,963,962		(50,890	)		(13,971,211	)		(37,373	)		29,504,091
Others		21,342,127		4,569,643		(139,782	)		(9,265,057	)		(9,868	)		16,497,063
Right-of-use assets		93,503,843		24,208,056		(4,463,384	)		(23,660,705	)		351,320			89,939,130
		233,443,995		48,741,661		(8,358,048	)		(48,011,117	)		304,079			226,120,570

¹ Others consist of reclassification to investment properties, foreign exchange differences and others.

The changes in right-of-use assets for the year ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others 1			Ending balance
Buildings		85,892,473		8,199,226		(98,178	)		(16,115,606	)		(4,458,417	)		73,419,498
Vehicles		1,345,887		1,729,628		(329,252	)		(1,176,069	)		—			1,570,194
Others		2,700,770		530,556		(242,428	)		(1,281,970	)		3,447			1,710,375
		89,939,130		10,459,410		(669,858	)		(18,573,645	)		(4,454,970	)		76,700,067

¹ Others consist of foreign exchange differences and others.

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others 1		Ending balance
Buildings		90,328,072		20,423,197		(3,814,694	)		(21,374,850	)		330,748		85,892,473
Vehicles		2,146,651		1,058,593		(636,339	)		(1,223,018	)		—		1,345,887
Others		1,029,120		2,726,266		(12,351	)		(1,062,837	)		20,572		2,700,770
		93,503,843		24,208,056		(4,463,384	)		(23,660,705	)		351,320		89,939,130

¹ Others consist of foreign exchange differences and others.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The Group applies the revaluation model in relation to the measurement after the initial recognition of the land and the date of revaluation of the land was June 15, 2016. The Group used the assessed price provided by a qualified appraiser for the revaluation of the land.

The land was measured using sales value of similar land, and the access condition, environment condition and other specific factors are considered when the value is adjusted. There is no change in the valuation technique for the year ended December 31, 2021.

Classification of land that is measured at fair value by fair value hierarchy levels as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		65,029,822		65,029,822

	2020
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		65,263,726		65,263,726

Changes in land which is classified to Level 3 for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		65,263,726			67,586,839
Reclassification to property and equipment		491,317			—
Reclassification to investment properties		(452,300	)		—
Disposal		(272,921	)		(2,323,113	)
Ending balance		65,029,822			65,263,726

Book amounts of land under cost model as at December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Under revaluation model		Under cost model		Under revaluation model		Under cost model
Land		65,029,822		29,301,991		65,263,726		29,151,086

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Change in other comprehensive income related to the revaluation for the year ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance			Reclassification			Disposal and others			Ending balance
Land		36,517,219			(355,466	)		(29,344	)		36,132,409
Income tax effects		(10,042,235	)		—			8,070			(10,034,165	)
		26,474,984			(355,466	)		(21,274	)		26,098,244

	2020
(in thousands of Korean won)	Beginning balance			Reclassification		Disposal and others			Ending balance
Land		36,597,759			—		(80,540	)		36,517,219
Income tax effects		(10,064,384	)		—		22,149			(10,042,235	)
		26,533,375			—		(58,391	)		26,474,984

12. Investment Properties

The details of investment properties as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated impairment			Accumulated revaluation			Book amount
Land		756,633,169		—			(446,687	)		(59,928	)		756,126,554
Buildings		445,162,487		(48,678,965	)		(4,863,096	)		—			391,620,426
		1,201,795,656		(48,678,965	)		(5,309,783	)		(59,928	)		1,147,746,980

	2020
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated impairment			Accumulated revaluation			Book amount
Land		770,051,158		—			(409,950	)		(415,394	)		769,225,814
Buildings		445,317,200		(36,675,654	)		(4,463,137	)		—			404,178,409
		1,215,368,358		(36,675,654	)		(4,873,087	)		(415,394	)		1,173,404,223

The changes in investment properties for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Impairment		Others 1		Ending balance
Land		769,225,814		28,568,447		(63,117,477	)		—			—		21,449,770		756,126,554
Buildings		404,178,409		90,392,980		(107,679,883	)		(12,253,077	)		—		16,981,997		391,620,426
		1,173,404,223		118,961,427		(170,797,360	)		(12,253,077	)		—		38,431,767		1,147,746,980

¹ Others consist of foreign exchange differences and transfer from/to property and equipment.

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Impairment			Others 1			Ending balance
Land		772,957,852		34,404,634		(33,153,457	)		—			(444,633	)		(4,538,582	)		769,225,814
Buildings		715,443,043		18,666,349		(300,783,659	)		(20,495,458	)		(4,840,740	)		(3,811,126	)		404,178,409
		1,488,400,895		53,070,983		(333,937,116	)		(20,495,458	)		(5,285,373	)		(8,349,708	)		1,173,404,223

¹ Others consist of foreign exchange differences and transfer from/to property and equipment.

69

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Details of income and expenditure on investment properties for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Rental income		59,289,744			72,791,783
Expenditure on operating investment properties		(4,971,843	)		(23,441,046	)
Expenditure on non-operating investment properties		(153,330	)		(644,664	)
		54,164,571			48,706,073

Details of fair value of investment properties as at December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Book amount		Fair value		Book amount		Fair value
Land		756,126,554		797,881,841		769,225,814		801,998,414
Buildings		391,620,426		438,756,547		404,178,409		437,414,531
		1,147,746,980		1,236,638,388		1,173,404,223		1,239,412,945

The fair values of investment properties as at December 31, 2021 was evaluated by an independent appraiser. The independent appraiser has appropriate qualification and experience in evaluating real estate in the location of investment properties.

The fair value of investment property was measured by using benchmark price of similar properties and discounted cash flow (DCF) method. The fair value of investment property measured by DCF method is assessed by discounting net cash flow from investment property with risk adjusted discount rate, which is reflected by expected growth rate of rent market, period of empty, proportion of rent, period without rent charge and other cost related to promotion for rent. The factors which are significant but non-observable inputs for fair valuation are expected growth rate of rent market, period of empty, proportion of rent, period without rent charge and risk adjusted discount rate.

The fair value of investment property measured by using sales value of similar land is calculated by analyzing and comparing the sale prices of similar land, and also the access condition, environment condition and other specific factors for the purpose of estimation for fair value are considered.

The fair values of investment properties are classified as Level 3 based upon the inputs, which are used in valuation method.

There is no significant change in the valuation technique for the year ended December 31, 2021

70

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Details of investment properties provided as collaterals as at December 31, 2021 and 2020 is as follows:

	2021
(in thousands of Korean won)	Secured amount		Secured party	Details
Land and buildings		32,364,150	Hana Bank
		81,345,804	Landesbank Hessen- Thuringen Girozentrale
		57,609,000	Pfandbriefbank	Collateralized borrowing
		248,038,750	LGIM COMMERCIAL LENDING LIMITED
		252,000,000	Hanhwa Life Insurance
		126,000,000	Tongyang Life Insurance
		12,000,000	Kookmin Bank

	2020
(in thousands of Korean won)	Secured amount		Secured party	Details
Land and buildings		17,487,360	Hana Bank
		18,000,000	Daegu Bank
		7,704,000	Shinhan Capital Co
		29,702,400	Signature Bank
		81,097,344	Landesbank Hessen- Thuringen Girozentrale
		53,366,400	Pfandbriefbank		Collateralized borrowing
		229,772,000	LGIM COMMERCIAL LENDING LIMITED
		252,000,000	Hanhwa Life Insurance
		126,000,000	Tongyang Life Insurance
		12,000,000	Kookmin Bank

Investment properties are provided as collaterals for rental deposits and lease hold right, which amounts to W 7,774,547 thousand and W 12,808,206 thousand as at December 31, 2021 and 2020, respectively.

13. Intangible Assets

The details of intangible assets as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated amortization			Accumulated impairment			Book amount
Goodwill		72,422,758		—			—			72,422,758
Development costs		157,728,820		(122,075,492	)		—			35,653,328
Software		106,286,170		(80,030,694	)		—			26,255,476
Memberships		37,138,036		(161,619	)		(9,330,409	)		27,646,008
Others		27,831,662		(3,776,235	)		(760,710	)		23,294,717
		401,407,446		(206,044,040	)		(10,091,119	)		185,272,287

71

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Acquisition cost		Accumulated amortization			Accumulated impairment			Book amount
Goodwill		71,123,932		—			—			71,123,932
Development costs		139,813,005		(107,636,686	)		—			32,176,319
Software		87,222,173		(72,007,950	)		—			15,214,223
Memberships		39,226,767		(80,537	)		(11,873,206	)		27,273,024
Others		27,458,526		(3,465,663	)		(698,147	)		23,294,716
		364,844,403		(183,190,836	)		(12,571,353	)		169,082,214

The changes in intangible assets for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition 1		Disposal			Amortization			Impairment 2			Reversal of Impairment 3		Others 4			Ending balance
Goodwill		71,123,932		—		—			—			—			—		1,298,826			72,422,758
Development costs		32,176,319		17,915,813		—			(14,438,805	)		—			—		1			35,653,328
Software		15,214,223		18,905,463		—			(7,925,949	)		—			—		61,739			26,255,476
Memberships		27,273,024		34,781		(2,124,082	)		(33,008	)		(121,016	)		2,630,059		(13,750	)		27,646,008
Others		23,294,716		—		—			—			—			—		1			23,294,717
		169,082,214		36,856,057		(2,124,082	)		(22,397,762	)		(121,016	)		2,630,059		1,346,817			185,272,287

¹ Advance payments and others transferred from other accounts are included

² Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Group recognized a impairment loss because the market price of the asset is lower than book amount.

³ Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Group recognized a reversal of impairment loss because the market price of the asset is higher than book amount.

⁴ Others consist of foreign exchange differences and others.

	2020
(in thousands of Korean won)	Beginning balance		Acquisition 1		Disposal			Amortization			Impairment 2			Reversal of Impairment 3		Others 4			Ending balance
Goodwill		71,877,251		—		—			—			—			—		(753,319	)		71,123,932
Development costs		30,190,778		14,915,631		—			(12,930,090	)		—			—		—			32,176,319
Software		9,690,683		10,542,647		—			(4,994,143	)		—			—		(24,964	)		15,214,223
Memberships		29,786,098		1,000,436		(5,810,193	)		(17,651	)		(172,148	)		2,505,542		(19,060	)		27,273,024
Others		23,854,520		380,000		—			(200,652	)		(757,213	)		—		18,061			23,294,716
		165,399,330		26,838,714		(5,810,193	)		(18,142,536	)		(929,361	)		2,505,542		(779,282	)		169,082,214

¹ Advance payments and others transferred from other accounts are included

² Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Group recognized a impairment loss because the market price of the asset is lower than book amount.

³ Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Group recognized a reversal of impairment loss because the market price of the asset is higher than book amount.

⁴ Others consist of foreign exchange differences and others.

14. Other Financial Assets

The details of other financial assets as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Other receivables		3,195,524,965			6,376,192,248
Accrued income		175,194,245			166,043,983
Accrued interest on bonds		209,164,728			197,977,102
Guarantee deposits		67,903,379			71,669,907
Other		49,579,115			12,047,284
Provision for other financial assets		(35,544,587	)		(34,481,327	)
		3,661,821,845			6,789,449,197

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

15. Other Assets

The details of other assets as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Other receivables		84,740		—
Advance payments		26,351,186		18,549,005
Prepaid expenses		16,962,969		10,348,648
Prepaid value-added taxes		186,676		33,285
Others		7,306,773		11,890,606
		50,892,344		40,821,544

16. Deposit Liabilities

The details of deposit liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Customers’ deposits
Customers’ deposits for brokerage		6,640,427,057		5,780,352,166
Customers’ deposits for exchange-traded derivatives trading		590,669,251		822,433,470
Customers’ deposits for subscription		—		208,200
Customers’ deposits for savings		8,609,240		8,324,850
Customers’ deposits for repo		61,627		61,678
Customers’ deposits for the investor of collective investment securities		223,800,663		169,740,311
Others		48,729		48,031
		7,463,616,567		6,781,168,706
Guarantee deposits
Guarantee deposits in foreign currency		474,568,902		300,472,860
Guarantee deposits in won currency		452,889,714		604,769,195
		927,458,616		905,242,055
		8,391,075,183		7,686,410,761

17. Borrowings

The details of borrowings as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Call money		40,000,000			290,000,000
Borrowings:
Borrowing from banks		485,868,544			358,461,005
Borrowing from KSFC		1,093,096,057			1,350,000,000
Asset-backed short-term bonds		2,027,557,581			1,841,864,968
CP borrowings		—			8,900,000
Others		572,851,733			621,166,489
Securities sold under repurchase agreements		13,531,208,950			15,004,515,752
Short-term note issued		4,475,145,330			3,732,727,578
Debentures:
Debentures		2,428,734,874			1,823,900,000
Less: discount on debentures issued		(5,081,219	)		(2,403,031	)
		24,649,381,850			25,029,132,761

73

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The details of call money as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Interest rate (%)	2021		2020
Korea Investment Management Co,Ltd. and others	1.52		40,000,000		290,000,000

The details of borrowings as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)		Interest rate (%)		2021		2020
Borrowings from banks	Kookmin Bank and other		0.90~7.40		485,868,544		358,461,005
Borrowings from KSFC	KSFC		1.37~1.55		1,093,096,057		1,350,000,000
Asset-backed short-term bonds	BNK Securities co., Ltd., and other		1.52~5.00		2,027,557,581		1,841,864,968
CP borrowings			—		—		8,900,000
Others	Hanwha Life Insurance and other		0.00 ~ 3.20		572,851,733		621,166,489
					4,179,373,915		4,180,392,462

The details of securities sold under repurchase agreements as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Interest rate (%)		2021		2020
Customers		0.00~3.00		6,973,309,166		8,221,408,247
Financial institution		0.38~3.50		6,557,899,784		6,783,107,505
				13,531,208,950		15,004,515,752

The details of short-term note issued as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Interest rate (%)		2021		2020
Individual		0.25~4.00		1,724,366,358		1,194,332,495
Corporate		0.40~2.10		2,750,778,972		2,538,395,083
				4,475,145,330		3,732,727,578

74

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The details of debentures as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Date issued		Maturity		Interest rate (%)		2021			2020
The 34-1st unsecured public debenture		2018.3.9		2021.3.9		—		—			290,000,000
The 34-2nd unsecured public debenture		2018.3.9		2023.3.9		3.02		210,000,000			210,000,000
The 35th unsecured public debenture		2018.6.12		2021.6.11		—		—			250,000,000
The 36-1st unsecured public debenture		2019.4.18		2022.4.18		2.00		250,000,000			250,000,000
The 36-2nd unsecured public debenture		2019.4.18		2024.4.18		2.09		250,000,000			250,000,000
The 37-1st unsecured public debenture		2019.6.14		2022.6.14		1.74		100,000,000			100,000,000
The 37-2nd unsecured public debenture		2019.6.14		2024.6.14		1.80		150,000,000			150,000,000
The 38-1st unsecured public debenture		2020.6.11		2022.6.10		1.45		170,000,000			170,000,000
The 38-2nd unsecured public debenture		2020.6.11		2023.6.9		1.54		130,000,000			130,000,000
The 39-1st unsecured public debenture		2021.3.4		2024.3.4		1.31		110,000,000			—
The 39-2nd unsecured public debenture		2021.3.4		2026.3.4		1.70		120,000,000			—
The 40-1st unsecured public debenture		2021.4.23		2024.4.23		1.53		300,000,000			—
The 40-2nd unsecured public debenture		2021.4.23		2026.4.23		1.94		200,000,000			—
The 1st unsecured privately placed bond 1		2019.5.27		2022.5.27		2.05		23,900,000			23,900,000
The 1st unsecured privately placed bond 2		2021.6.30		2022.5.31		4.31		23,000,000			—
The 1st unsecured privately placed bond 3		2021.9.7		2023.3.6		5.30		8,316,583			—
The 1st unsecured privately placed bond 4		2021.10.29		2023.3.6		5.30		4,158,291			—
The 1st privately placed bond in foreign currency 5		2021.10.25		2024.10.25		2.35		23,710,000			—
The 21-1 public debenture in foreign currency 6		2021.11.1		2026.11.1		2.13		355,650,000			—
Less: Discount on debentures issued								(5,081,219	)		(2,403,031	)
								2,423,653,655			1,821,496,969

¹ This privately placed bond was issued by subsidiary named Newstar Papyrus Co., Ltd.

² This privately placed bond was issued by subsidiary named Able Hyosung 1st Co., Ltd.

³ This privately placed bond was issued by subsidiary named Polar EH 1st Co., Ltd

⁴ This privately placed bond was issued by subsidiary named Polar EH 2nd Co., Ltd

⁵ This privately placed bond was issued by subsidiary named Newstar Sina Co., Ltd.

⁶ The issuance price of this public debenture is US$ 300,000,000.

75

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The changes in borrowings for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		25,029,132,761			19,876,664,217
Increase(decrease) in call money		(250,000,000	)		125,000,000
Increase in borrowings from banks		127,407,539			358,461,005
Increase(decrease) in borrowings from KSFC		(256,903,943	)		180,000,000
Increase in asset-backed short-term bond		185,692,613			256,624,468
Increase(decrease) in CP borrowings		(8,900,000	)		8,900,000
Decrease in other borrowings		(48,314,756	)		(534,897,204	)
Increase(decrease) in securities sold under repurchase agreements		(1,473,306,802	)		2,829,905,276
Increase in short-term note issued		742,417,752			1,627,862,702
Increase in debentures		602,156,686			300,612,297
Ending balance		24,649,381,850			25,029,132,761

18. Post-employment Benefits

18.1 Defined Benefit Plans

The details of defined benefit liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Present value of defined benefit obligations		70,914,622			72,288,500
Fair value of plan assets		(15,294,733	)		(18,652,077	)
Net defined benefit liabilities		55,619,889			53,636,423

The changes in the defined benefit obligation for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		72,288,500			68,027,108
Current service cost		18,145,235			15,359,347
Past service cost		1,315,190			—
Interest cost		780,607			907,330
Remeasurements
Actuarial gains and losses arising from changes in demographic assumptions		20,113,645			—
Actuarial gains and losses arising from changes in financial assumptions		(1,706,991	)		3,756,997
Actuarial gains and losses arising from experience adjustment		(15,407,457	)		2,786,630
Payments from plans		(1,416,118	)		(2,014,834	)
Payments from the Group		(14,513,685	)		(15,773,057	)
Transfer from related companies		1,823,363			414,573
Transfer to related companies		(895,469	)		(1,175,594	)
Settlement		(5,301,320	)		—
Gain or loss on settlement		(4,310,878	)		—
Ending balance		70,914,622			72,288,500

76

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The changes in the fair value of plan assets for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(18,652,077	)		(18,577,975	)
Interest income		(204,480	)		(320,100	)
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		87,124			57,038
Contributions by employers		(2,297,614	)		(2,586,895	)
Payments from plans:
Benefits paid		1,416,119			2,014,834
Settlement		5,284,089			—
Transfer from related companies		(1,823,363	)		(414,573	)
Transfer to related companies		895,469			1,175,594
Ending balance		(15,294,733	)		(18,652,077	)

Plan assets are composed of the detail assets that have no quoted price in active market. The details of plan assets as at December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Fair value		Composition(%)		Fair value		Composition(%)
Cash and deposits		9,539,927		62.37		15,199,118		81.49
Investment funds		2,327,801		15.22		1,523,310		8.16
Derivatives		3,427,005		22.41		1,929,649		10.35
		15,294,733		100.00		18,652,077		100.00

Key actuarial assumptions used as at December 31, 2021 and 2020, are as follows:

	2021	2020
Discount rate	DB(Special retirement by salaries peak plan) 2.5% Compensation promotion DC 2.3 %	DB 1.2~1.7 % Special retirement by salaries peak plan 1.8% Compensation promotion DC 1.2 %
Expected salary growth rate	DB : executives 0% DC: Promotion + Base up (December 31, 2021 : 2.3%, After December 31, 2022 : 2.0%) Special retirement by salaries peak plan : January 1st, 2022 : 4.6%(2.3% + Promotion added 2.3%) After January 1st, 2023 : 4.3% (2.0% + Promotion added 2.3%)	DB : executives 0% DC: Promotion + Base up (December 31, 2020 : 2%, After December 31, 2021 : 1.7%) Special retirement by salaries peak plan : January 1st, 2021 : 4.36%(2.0% + Promotion added 2.36%) After January 1st, 2022 : 4.06% (1.7% + Promotion added 2.36%) DB : January 1st, 2021 : 4.36% , after January 1st, 2022 : 4.06%

77

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The sensitivity analysis for significant actuarial assumptions used to determine the present value of the defined benefit obligation as at December 31, 2021, are as follows:

	Effect on the present value of defined benefit obligation
(in thousands of Korean won)	Changes in assumption			Increase			Decrease
Discount rate		0.50	%		(1,786,004	)		1,891,348
Expected salary growth rate1		0.50	%		1,705,749			(1,617,655	)
Retirement rate		0.50	%		(1,164,586	)		1,217,894

¹ The sensitivity analysis for the expected salary growth rate is limited to special retirement by salaries peak plan and DB.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. The sensitivity of the present value of the defined benefit obligation to changes in actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations.

The methods and assumptions used in preparing the sensitivity analyses did not change compared to the previous period.

The effect of defined benefit plan on future cash inflows: Expected maturity analysis of undiscounted pension benefits as at December 31, 2021, is as follows:

(in thousands of Korean won)	Less than 1 year 1		Between 1 and 2 years		Between 2 and 5 years		Between 5 and 10 years		Over 10 years		Total
Pension benefits1		11,764,609		4,827,786		27,486,101		36,239,221		65,558,364		145,876,081

¹ Fixed pension benefits of W12.4 billion under promotion compensation defined contribution plan is excluded.

The weighted average duration of the defined benefit obligations is 5.7 years.

Expected contribution to post-employment benefit plans for the year ending December 31, 2022 are W1,187 million.

18.2 Defined Contribution Plans

The Group recognized the expenses of W5,766,377 thousand and W6,860,403 thousand for defined contribution plans for the years ended December 31, 2021 and 2020, respectively.

19. Provisions

The details of provisions as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Provisions for non-financial guarantees		1,680,410		1,342,023
Provisions for asset retirement obligation 1		7,997,559		8,114,793
Provisions for lawsuits		25,150,111		10,643,375
Provisions for the points		2,569,985		2,205,019
Provisions for others		68,725,325		60,565,500
		106,123,390		82,870,710

¹ The Group recognized the provision for asset retirement obligation in connection with the leased asset for the expenditures expected to recover the asset.

78

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The changes in provisions for non-financial guarantees for the years ended December 31, 2021 and 2020 are as follows,

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired		Impaired
Beginning		1,342,023			—		—
Transfer between stages
Transfer to lifetime expected Credit losses (non-impaired)		(23,238	)		23,238		—
Provision for losses (Reversal of provision)		323,272			14,908		—
Other transfer(foreign exchange and other)		207			—		—
Ending 1		1,642,264			38,146		—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired			Impaired
Beginning		1,078,479			425,126			—
Provision for losses (Reversal of provision)		269,859			(425,126	)		—
Other transfer(foreign exchange and other)		(6,315	)		—			—
Ending 1		1,342,023			—			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

The changes in other provisions for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Provisions for asset retirement obligation			Provisions for lawsuits			Provisions for the points			Provisions for others			Total
Beginning		8,114,793			10,643,375			2,205,019			60,565,500			81,528,687
Contribution		57,684			8,892			4,520,637			36,725,325			41,312,538
Use		(304,037	)		(206,240	)		(4,155,671	)		(13,861,416	)		(18,527,364	)
Amortization of discounts		129,119			—			—			—			129,119
Other 1		—			14,704,084			—			(14,704,084	)		—
Ending		7,997,559			25,150,111			2,569,985			68,725,325			104,442,980

¹ As a lawsuit was filed during the year ended December 31, 2021, the estimated loss on the sale of funds related to Lime Asset Management was replaced to provisions for lawsuits.

79

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Provisions for asset retirement obligation			Provisions for lawsuits			Provisions for the points			Provisions for others		Total
Beginning		5,782,187			10,531,027			1,530,704			—		17,843,918
Contribution		2,671,746			197,348			4,109,548			60,565,500		67,544,142
Reversal		—			(85,000	)		(24,373	)		—		(109,373	)
Use		(458,673	)		—			(3,410,860	)		—		(3,869,533	)
Amortization of discounts		119,533			—			—			—		119,533
Ending		8,114,793			10,643,375			2,205,019			60,565,500		81,528,687

20. Other Financial Liabilities

The details of other financial liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Other payables		3,048,066,867		6,283,394,824
Accrued expenses		49,457,140		40,141,813
Financial guarantee liabilities		2,213,138		3,468,243
Provisions for financial guarantee contracts		66,218		—
Leasehold deposits received		26,518,264		27,209,689
Non-controlling liabilities		228,717,913		195,601,085
Lease liabilities		127,992,813		148,849,442
Others		1,617,918		5,665,230
		3,484,650,271		6,704,330,326

The changes in liabilities of the provisions for financial guarantee contracts for the years ended December 31, 2021 and 2020 are as follows:

(in thousands of Korean won)	2021
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses
			Non-impaired		Impaired
Beginning		—		—		—
Provision for losses (Reversal of provision)		66,218		—		—
Ending 1		66,218		—		—

¹  The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

(in thousands of Korean won)	2020
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired			Impaired
Beginning		106,274			544,999			—
Provision for losses (Reversal of provision)		(106,274	)		(544,999	)		—
Ending 1		—			—			—

¹  The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

80

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

21. Other Liabilities

The details of other liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Accounts payables		43,216,188		45,459,314
Accrued expenses		258,774,213		249,449,785
Advances from customers		4,832,377		4,053,726
Unearned revenue		74,881,733		42,429,767
Taxes withheld		34,664,311		32,126,469
Other long-term employee benefits		7,630,850		5,954,258
Others		3,826,568		8,127,702
		427,826,240		387,601,021

22. Share Capital

The details of share capital as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won except per share)	Authorized shares	Outstanding shares	Par value per share	2021	2020
Ordinary share	1,000,000,000 shares	298,620,424 shares	5,000 won	1,493,102,120	1,493,102,120

There are no changes in ordinary shares for the years ended December 31, 2021 and 2020.

23. Other Paid-in Capital

The details of other paid-in capital as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Share premium 1		1,142,353,750			1,142,353,750
Gains and losses on sale of treasury share		(45,331,811	)		(45,331,811	)
Other equity 2		381,666,039			381,694,807
		1,478,687,978			1,478,716,746

¹ Share premium was previously paid from stock issuance and new stock issuance due to merger and can only be used for capitalization and deficit recovery.

² Other equity arose from the paid-in capital increase of preferred share and gains on merger.

Changes in other paid-in capital for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		1,478,716,746			1,478,716,746
Changes in ownership percentage due to the paid-in capital increase of subsidiaries		(28,768	)		—
Ending balance		1,478,687,978			1,478,716,746

81

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

24. Retained Earnings

The details of retained earnings as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Legal reserve
Earned surplus reserve 1		101,656,298		88,656,298
Reserve for liability to compensate for damages 2		500,000		500,000
Voluntary reserves		1,540,948,010		1,310,663,602
Regulatory reserve for credit losses 3		100,223,524		99,058,565
Unappropriated retained earnings		504,642,277		348,631,030
		2,247,970,109		1,847,509,495

¹ The Commercial Act of the Republic of Korea requires the Group to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued share capital. The reserve is not available for the payment of cash dividends, but may be transferred to share capital or used to reduce accumulated deficit.

² The Parent Company provides reserve for loss on electronic financial transactions to make reparation for the damage in process of the electronic transfers or operations. Also, the Parent Company provides reserve to compensate for inflicted damage on a credit information subject when violating the Credit Information Use and Protection Act.

³ The Group accumulates allowances for possible loan losses in accordance with Korean IFRS and reserve for possible loan losses as much as the amount below the provision of allowances according to minimum accumulation ratio required by Financial Supervisory Service.

Changes in retained earnings for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		1,847,509,495			1,493,402,661
Profit for the year		600,439,340			433,925,817
Dividends		(200,000,000	)		(80,000,000	)
Transfer to gain due to disposal of revaluation assets		21,274			181,017
Ending balance		2,247,970,109			1,847,509,495

The amount of dividends and dividends per share for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in Korean won and number of shares)	Type of share	Number of shares outstanding		Number of treasury shares		Number of dividend shares		Dividend per share		Total dividend (In thousands of Korean won)
Interim dividend	Ordinary share		298,620,424 shares		—		298,620,424 shares		234		70,000,000
Annual dividend	Ordinary share		298,620,424 shares		—		298,620,424 shares		435		130,000,000

	2020
(in Korean won and number of shares)	Type of share	Number of shares outstanding		Number of treasury shares		Number of dividend shares		Dividend per share		Total dividend (In thousands of Korean won)
Annual dividend	Ordinary share		298,620,424 shares		—		298,620,424 shares		267		80,000,000

82

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Payout and dividend yield ratios as at December 31, 2021 and 2020, are as follows:

	2021						2020
	Ordinary share						Ordinary share
	Interim dividend			Annual dividend			Annual dividend
Number of shares outstanding		298,620,424 shares			298,620,424 shares			298,620,424 shares
Number of treasury shares		—			—			—
Number of dividend shares		298,620,424 shares			298,620,424 shares			298,620,424 shares
Par value per share (in Korean won)		5,000			5,000			5,000
Payout ratio		4.68	%		13.40	%		8.71	%
Scheduled dividends (in thousands of Korean won)		70,000,000			200,000,000			130,000,000
Dividends per share (in Korean won)		234			670			435

The Group accumulates allowances for possible loan losses in accordance with Korean IFRS and reserve for possible loan losses as much as the amount below the provision of allowances according to minimum accumulation ratio required by Regulation on Supervision of Financial Investment.

Regulatory reserve for credit losses, a type of voluntary reserve for retained earnings, reverses the exceeding amount if the beginning balance of the reserve exceeds the ending balance at the closing date. Regulatory reserve for credit losses is generally recognized after unappropriated deficit is disposed.

The details of the regulatory reserve for credit losses to be appropriated as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Beginning		100,223,524		99,058,565
Amounts to be reserved		1,618,637		1,164,959
Ending		101,842,161		100,223,524

The adjusted profit of the year after reflection of reserve for credit losses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Profit for the year before reserve for credit loss		600,291,416			433,951,364
Amounts to be reserved		(1,618,637	)		(1,164,959	)
Adjusted profit after reversal (provision) of reserve for credit losses1		598,672,779			432,786,405

¹ Reserve for credit loss is announced by Article 3 Clause 8 of the Regulation on Financial Investment Business. Adjusted profit after reserve for credit losses is not based on Korean IFRS and is calculated on the assumption that provision or reversal of reserve for credit losses before tax is adjusted to the profit.

83

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

25. Other Components of Equity

The details of other components of equity as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Changes in the fair value of financial assets at FVOCI		216,494,145			205,927,502
Share of other comprehensive income of associates		(9,779	)		(33,271	)
Revaluation surplus		26,749,635			26,770,909
Remeasurements of net defined benefit liabilities		(40,520,752	)		(38,283,169	)
Exchange differences on translation of foreign operations		12,877,767			(4,277,544	)
Hedge of net investments in foreign operations		(13,316,283	)		(233,745	)
Gain or loss on financial liabilities designated at FVTPL due to the change of credit risk		2,225,783			(11,488,825	)
		204,500,516			178,381,857

The changes in gain or loss on valuation of financial assets at FVOCI for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		205,927,502			172,279,079
Gain (loss) on valuation		17,339,966			46,426,044
Tax effect of gain (loss) on valuation 1		(4,768,491	)		(12,767,162	)
Transfer to gain due to disposal or impairment		(2,765,286	)		(14,425	)
Tax effect of transfer 1		760,454			3,966
Ending balance		216,494,145			205,927,502

¹ Including income tax effect (Note 34).

The changes in the Group’s share of other comprehensive income of associates for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(33,271	)		105,624
Changes of other comprehensive income of associates		23,559			(191,580	)
Tax effect 1		(67	)		52,685
Ending balance		(9,779	)		(33,271	)

¹ Including income tax effect (Note 34).

The changes in gain on revaluation of property and equipment for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		26,770,909			26,951,926
Transfer to retained earnings due to disposal of Property and equipment and others		(21,274	)		(181,017	)
Ending balance		26,749,635			26,770,909

84

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The changes in remeasurements of the net defined benefit liability for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(38,283,169	)		(33,497,687	)
Changes due to valuation		(3,086,321	)		(6,600,665	)
Tax effect 1		848,738			1,815,183
Ending balance		(40,520,752	)		(38,283,169	)

¹ Including income tax effect (Note 34).

The changes in exchange differences on translation of foreign operations for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(4,277,544	)		12,763,167
Change on foreign operations translation		28,632,701			(19,357,148	)
Tax effect 1		(3,571,779	)		2,296,954
Non-controlling interest		(234,864	)		19,483
Transferred to equity related to the disposal group classified as held for sale		(7,670,747	)		—
Ending balance		12,877,767			(4,277,544	)

¹ Including income tax effect (Note 34).

The changes in gain or loss on valuation of hedge of net investments in foreign operations for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(233,745	)		(3,495,272	)
Gain (loss) on net investment in a foreign operation hedge		(18,044,880	)		4,498,658
Tax effect 1		4,962,342			(1,237,131	)
Ending balance		(13,316,283	)		(233,745	)

¹ Including income tax effect (Note 34).

The change in gain or loss on financial liabilities designated at FVTPL due to the change of credit risk for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(11,488,825	)		(20,320,972	)
Changes		18,916,700			12,182,272
Tax effect 1		(5,202,092	)		(3,350,125	)
Ending balance		2,225,783			(11,488,825	)

¹ Including income tax effect (Note 34).

85

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

26. Fee and Commission Income and Expense

The details of fee and commission income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Brokerage commissions		726,241,481		640,575,828
Underwriting commissions		123,079,958		102,456,540
Brokerage commissions on collective investment securities		28,155,111		19,308,105
Management fee on asset management		30,304,367		24,715,362
Commissions on merger and acquisition		130,301,073		105,380,888
Trust fees and commissions		14,581,037		13,817,303
Other commissions		91,585,352		80,142,237
		1,144,248,379		986,396,263

The details of fee and commission expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Trading commission		58,690,224		38,466,620
Advisory fees		1,967,202		1,063,507
Investment management delegation fees		4,709,857		3,946,720
Commission fees on group brand		18,483,104		14,760,009
Contributions to external institutions		7,593,876		4,169,119
Others		95,423,744		58,381,366
		186,868,007		120,787,341

27. Gain or Loss on Valuation and Disposal of Financial Instruments

The details of gain or loss on valuation and disposal of financial instruments for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Financial instruments at FVTPL		1,184,940,322		1,285,334,042		(100,393,720	)
Financial instruments designated at FVTPL		625,254,719		654,985,522		(29,730,803	)
Derivative financial instruments		3,735,932,974		3,625,300,129		110,632,845
Financial assets at FVOCI 1		4,513,829		15,923,820		(11,409,991	)
		5,550,641,844		5,581,543,513		(30,901,669	)

¹ Gain or loss on valuation of financial assets at FVOCI is excluded.

	2020
(in thousands of Korean won)	Gain		Loss		Net
Financial instruments at FVTPL		1,512,967,572		1,349,622,443		163,345,129
Financial instruments designated at FVTPL		664,122,831		1,144,335,895		(480,213,064	)
Derivative financial instruments		4,872,665,163		4,559,006,493		313,658,670
Financial assets at FVOCI 1		18,940,519		9,928,940		9,011,579
		7,068,696,085		7,062,893,771		5,802,314

¹ Gain or loss on valuation of financial assets at FVOCI is excluded.

86

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The details of gain or loss on valuation and disposal of financial instruments at FVTPL for the years ended December 31, 2021 and 2020, are as follows:

	2020
(in thousands of Korean won)	Gain		Loss		Net
Financial assets at FVTPL		1,114,176,966		1,205,418,377		(91,241,411	)
Financial liabilities at FVTPL		70,763,356		79,915,665		(9,152,309	)
		1,184,940,322		1,285,334,042		(100,393,720	)

	2020
(in thousands of Korean won)	Gain		Loss		Net
Financial assets at FVTPL		1,485,100,209		1,196,811,892		288,288,317
Financial liabilities at FVTPL		27,867,363		152,810,551		(124,943,188	)
		1,512,967,572		1,349,622,443		163,345,129

The details of gain or loss on valuation and disposal of financial instruments designated at FVTPL for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Financial liabilities designated at FVTPL
Derivatives-linked securities sold		573,754,517		567,589,577		6,164,940
Other OTC derivative-combined contract sold		45,436,321		80,650,312		(35,213,991	)
Exchange traded notes sold		6,063,881		6,745,633		(681,752	)
		625,254,719		654,985,522		(29,730,803	)

	2020
(in thousands of Korean won)	Gain		Loss		Net
Financial liabilities designated at FVTPL
Derivatives-linked securities sold		620,829,696		1,053,036,533		(432,206,837	)
Other OTC derivative-combined contract sold		43,060,556		90,962,806		(47,902,250	)
Exchange traded notes sold		232,579		336,556		(103,977	)
		664,122,831		1,144,335,895		(480,213,064	)

The details of gain or loss on valuation and disposal of derivative financial instruments for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Interest rate		1,324,856,948		1,264,386,603		60,470,345
Currency		637,974,651		572,974,001		65,000,650
Stock		1,586,645,505		1,585,944,032		701,473
Credit		20,146,569		13,981,328		6,165,241
Commodity		21,864,231		14,815,335		7,048,896
Others		144,445,070		173,198,830		(28,753,760	)
		3,735,932,974		3,625,300,129		110,632,845

87

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Gain		Loss		Net
Interest rate		1,043,073,702		1,029,164,157		13,909,545
Currency		757,686,111		686,550,449		71,135,662
Stock		2,798,447,605		2,549,161,031		249,286,574
Credit		28,505,874		19,213,472		9,292,402
Commodity		18,097,049		21,796,632		(3,699,583	)
Others		226,854,822		253,120,752		(26,265,930	)
		4,872,665,163		4,559,006,493		313,658,670

The details of gain or loss on valuation and disposal of financial assets at FVOCI for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Debt instruments		4,513,829		15,923,820		(11,409,991	)

	2020
(in thousands of Korean won)	Gain		Loss		Net
Debt instruments		18,940,519		9,928,940		9,011,579

As at December 31, 2021, the Group holds PIS(Portfolio Index Swap) in connection with Lime Tethys Qualified Investor Private Investment Trust No. 2 and Lime Pluto FI Qualified Investor Private Investment Trust D-1, which were prohibited to repurchase in the fourth quarter of 2019. The Group holds beneficiary certificates and TRS contracts of W191.5 billion (nominal amount). Meanwhile, the Group sold W68.1 billion in subsidiary funds of the fund.

On October 20, 2020, Lime Asset Management’s license as a fund manager was revoked by the Financial Supervisory Service’s sanctions review committee, and most of its redemption-suspended funds and normal funds will be transferred to Wellbridge Asset Management (the bridge management company) to continue collecting and distributing investments. It is difficult to predict whether and when the aforementioned redemption-suspended funds will be redeemed. As of December 31, 2021, one lawsuit was filed to the Group as a defendant and the Group recognizes provisions for lawsuits for the estimated losses due to the possibility of additional lawsuits being filed in the future.

88

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

28. Interest Income and Interest Expense

The details of interest income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Interest on financial assets at FVTPL
Interest on debt instruments at FVTPL		343,144,350		373,724,161
Interest on loans at FVTPL		6,773,305		5,023,676
Interest on commercial papers		52,496,923		51,606,560
		402,414,578		430,354,397
Interest on financial assets at FVOCI and financial assets measured at amortised cost
Interest on loans measured at amortised cost		10,374,554		12,151,079
Interest on debt instruments at FVOCI		47,099,927		45,258,834
Interest on broker’s loans		219,881,544		161,197,293
Interest on loans		112,290,556		119,279,327
Interest on deposits with KSFC		1,834,471		1,305,407
Interest on certificates of deposit		12,974		9,988
Interest on deposits with financial institution		5,560		50,233
Interest on bonds purchased under resale agreements		3,911,835		4,176,018
Gains on transactions of certificates of deposits		43,948		27,741
Interest on deposits		20,413,692		41,477,710
Interest on other receivables		2,013,585		1,805,224
Others 1		6,389,513		5,505,239
		424,272,158		392,244,093
		826,686,736		822,598,490

¹ Interest on lease receivables of W1,616 million and W1,734 million for the year ended December 31, 2021 and 2020, respectively, are included.

The details of interest expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Interest on borrowings		49,411,645		58,626,606
Fees for the proceeds from the sale of stocks loaned		958,563		980,562
Interest on customers’ deposits		7,096,195		8,197,163
Interest on bonds sold under repurchase agreements		91,025,829		113,243,309
Losses on transactions of certificates of deposit		619		35
Interest on call money		3,045,203		2,723,083
Interest on debentures		43,052,965		40,183,423
Interest on short-term note issued		43,200,628		45,855,164
Interest on asset-backed short-term bonds		26,576,586		32,661,703
Others 1		3,891,991		6,943,082
		268,260,224		309,414,130

¹ Interest on lease liabilities of W2,953 million and W3,786 million for the year ended December 31, 2021 and 2020, respectively, are included.

89

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

29. Gain or Loss on Valuation and Disposal of Financial Assets measured at Amortised Costs

The detail of gain or loss on valuation and disposal of financial assets measured at amortised cost for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Gain(Loss) on valuation of financial assets measured at amortised cost
Reversal(Provision) of allowance for credit losses of loans		(16,414,879	)		(5,196,478	)
Reversal(Provision) of allowance for credit losses of deposits		105,374			(84,398	)
Reversal(Provision) of allowance for credit losses of other financial assets		(1,060,298	)		(18,977,595	)
Gain(Loss) on disposal of financial assets measured at amortised cost
Gain(Loss) on disposal of loans measured at amortised cost		2,347,609			24,473,302
		(15,022,194	)		214,831

30. Gain or Loss on Foreign Currency Transactions

The details of gain on foreign currency transactions for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Gain on foreign currency transactions		710,365,102		879,264,020
Gain on foreign exchange translation		82,888,025		82,437,766
		793,253,127		961,701,786

The details of loss on foreign currency transactions for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Loss on foreign currency transactions		719,825,583		865,224,355
Loss on foreign exchange translation		24,666,526		227,712,217
		744,492,109		1,092,936,572

90

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

31. Other Operating Income and Other Operating Expenses

The details of other operating income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Dividend income		47,721,978		42,282,883
Distribution income		107,324,359		74,256,645
Reversal of provision for credit loss		552,679		1,365,305
Operating lease income		57,421,861		51,148,849
Others		13,859,608		18,166,794
		226,880,485		187,220,476

The details of other operating expenses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Provision for credit loss		957,077		558,764
Others		68,030,407		23,977,889
		68,987,484		24,536,653

32. Selling and Administrative Expenses

(a) The details of selling and administrative expenses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Labor Costs
Salaries		466,062,679		415,131,201
Post-employment benefits		21,492,051		22,806,980
Retirement bonus		619,728		24,047,419
Other long-term employee benefits		2,415,192		819,275
Employee benefits		81,299,860		65,608,727
		571,889,510		528,413,602
Other selling and administrative expenses
Employee benefits		9,980,170		9,031,346
Sales promotion expenses		3,056,724		1,625,149
Computer system operation expenses		24,436,828		20,470,731
Management expenses for rent		20,908,033		22,557,213
Commissions		25,801,889		48,211,754
Research and development		247,420		248,334
Advertising expenses		28,470,056		16,665,006
Depreciation		43,477,698		68,506,575
Training expenses		1,546,429		1,231,295
Amortization expenses of intangible assets		22,397,762		18,142,536
Taxes and dues		34,863,679		31,290,967
Consignment fees		5,296,344		2,304,118
Others		62,890,187		68,764,802
		283,373,219		309,049,826
		855,262,729		837,463,428

91

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(b) Stock Grant Agreement

The executives of the Group have stock grant agreement with KB Financial Group Inc, in which the Group settles the expense arising from the agreement with KB Financial Group Inc. The Group recognizes the expense in profit or loss as selling and administrative expenses.

The details of the share grants linked to long-term performance as at December 31, 2021, are as follows:

(In number of shares)	Grant date		Granted shares		Payable shares1		Vesting conditions
Series 1-1		2010-1-1		1,231		266	Service, vesting conditions : market 40%, non-market 60%
Series 1-8		2011-1-1		1,289		365	Service, vesting conditions : market 40%, non-market 60%
Series 1-10		2012-1-1		1,976		644	Service, vesting conditions : market 40%, non-market 60%
Series 1-11		2012-6-18		708		142	Service, vesting conditions : market 40%, non-market 60%
Series 1-13		2013-1-1		3,340		1,074	Service, vesting conditions : market 40%, non-market 60%
Series 1-16		2013-10-1		202		—	Service, vesting conditions : market 40%, non-market 60%
Series 1-19		2015-2-24		1,812		584	Service, vesting conditions : market 30%, non-market 70%
Series 1-21		2017-6-1		19,252		2,177	Service, vesting conditions : market 30%, non-market 70%
Series 1-22		2017-1-1		81,701		19,490	Service, vesting conditions : market 20%, non-market 80%
Series 1-23		2017-1-9		2,299		258	Service, vesting conditions : market 20%, non-market 80%
Series 1-24		2017-2-24		1,698		1,516	Service, vesting conditions : market 20%, non-market 80%
Series 1-25		2017-6-1		1,511		405	Service, vesting conditions : market 30%, non-market 70%
Series 1-26		2017-9-4		1,551		1,028	Service, vesting conditions : market 20%, non-market 80%
Series 1-27		2017-8-26		2,952		431	Service, vesting conditions : market 20%, non-market 80%
Series 1-28		2018-1-1		14,698		5,561	Service, vesting conditions : market 20%, non-market 80%
Series 1-29		2018-7-9		1,208		285	Service, vesting conditions : market 20%, non-market 80%
Series 1-30		2019-1-1		80,289		63,906	Service, vesting conditions : market 20%, non-market 80%
Series 1-30		2019-1-1		4,580		4,188	Service, vesting conditions : market 0%, non-market 100%
Series 1-31		2019-2-24		809		637	Service, vesting conditions : market 20%, non-market 80%
Series 1-32		2019-3-4		1,888		2,711	Service, vesting conditions : market 20%, non-market 80%
Series 1-33		2019-6-1		3,994		4,463	Service, vesting conditions : market 20%, non-market 80%
Series 1-34		2019-9-1		2,927		4,254	Service, vesting conditions : market 20%, non-market 80%
Series 1-35		2019-9-4		358		207	Service, vesting conditions : market 20%, non-market 80%
Series 1-36		2019-5-27		1,167		2,153	Service, vesting conditions : market 20%, non-market 80%
Series 1-37		2020-1-1		48,962		64,546	Service, vesting conditions : market 20%, non-market 80%
Series 1-38		2020-3-6		2,856		3,965	Service, vesting conditions : market 20%, non-market 80%
Series 1-39		2020-8-1		12,551		8,905	Service, vesting conditions : market 20%, non-market 80%
Series 1-40		2021-1-1		95,798		51,397	Service, vesting conditions : market 20%, non-market 80%
Series 1-40		2021-1-1		5,675		2,837	Service, vesting conditions : market 0%, non-market 100%
Series 1-41		2021-3-4		3,064		1,271	Service, vesting conditions : market 20%, non-market 80%
Series 1-42		2021-3-15		5,190		2,076	Service, vesting conditions : market 20%, non-market 80%
Series 1-43		2021-5-27		2,016		604	Service, vesting conditions : market 20%, non-market 80%
Series 1-44		2021-6-1		2,402		704	Service, vesting conditions : market 20%, non-market 80%
Series 1-45		2021-8-1		2,276		477	Service, vesting conditions : market 20%, non-market 80%
Series 1-46		2021-9-1		2,571		429	Service, vesting conditions : market 20%, non-market 80%
				416,801		253,956

¹ The number of maximum payable shares per executive as at December 31, 2021.

92

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The details of share grants linked to short-term performance as at December 31, 2021, are as follows:

(In number of shares)	Grant date		Granted shares		Payable shares1		Vesting conditions2
Series 2-3		2016-1-1		6,844		2,961	Proportional to service period, vesting conditions satisfied
Series 2-4		2017-1-1		63,142		18,118	Proportional to service period, vesting conditions satisfied
Series 2-5		2018-1-1		70,959		42,669	Proportional to service period, vesting conditions satisfied
Series 2-6		2019-1-1		60,039		47,664	Proportional to service period, vesting conditions satisfied
Series 2-7		2020-1-1		68,689		68,689	Proportional to service period, vesting conditions satisfied
Series 2-8		2021-1-1		80,573		80,573	Proportional to service period, vesting conditions satisfied
Series 3-3		2016-1-1		27,089		14,979	Proportional to service period, vesting conditions satisfied
Series 3-4		2017-1-1		11,355		4,918	Proportional to service period, vesting conditions satisfied
Series 3-5		2018-1-1		25,393		15,369	Proportional to service period, vesting conditions satisfied
Series 3-6		2019-1-1		44,696		35,864	Proportional to service period, vesting conditions satisfied
Series 3-7		2020-1-1		77,112		77,112	Proportional to service period, vesting conditions satisfied
Series 4-1		2017-12-31		328,028		81,867	Proportional to service period, vesting conditions satisfied
Series 4-2		2019-12-31		288,006		195,901	Proportional to service period, vesting conditions satisfied
Series 4-3		2020-12-31		296,950		296,950	Proportional to service period, vesting conditions satisfied
				1,448,875		983,634

¹ The number of maximum payable shares per executive as at December 31, 2021.

²  Number of vested shares is determined by performance and paid for a deferred payment schedule over 3 to 5 years.

Share grants are measured at fair value using the Monte Carlo Simulation Model and assumptions used in determining the fair value as at December 31, 2021, are as follows:

(In Korean won)	Risk free rate (%)	Fair value (Market performance condition)	Fair value (Non-market performance condition)
Series 1-1	1.349	—	51,523~53,308
Series 1-8	1.349	—	51,523~53,308
Series 1-10	1.349	—	51,523~53,308
Series 1-11	1.349	—	47,631~47,631
Series 1-13	1.349	—	47,631~53,308
Series 1-19	1.349	—	45,096~47,631
Series 1-21	1.349	—	45,096~56,379
Series 1-22	1.349	—	45,096~56,379
Series 1-23	1.349	—	56,379~56,379
Series 1-24	1.349	—	45,096~56,379
Series 1-25	1.349	—	53,308~56,379
Series 1-26	1.349	—	45,096~56,379
Series 1-27	1.349	—	56,379~56,379
Series 1-28	1.349	—	45,096~56,379
Series 1-29	1.349	—	53,308~56,379
Series 1-30	1.349	—	48,344~56,379
Series 1-31	1.349	—	45,096~56,379
Series 1-32	1.349	46,800~56,379	46,800~50,023
Series 1-33	1.349	45,096~56,379	50,023~56,379
Series 1-34	1.349	50,023~56,379	50,023~53,308
Series 1-35	1.349	45,096~56,379	45,096~56,379
Series 1-36	1.349	50,023~56,379	50,023~53,308
Series 1-37	1.349	45,096~56,379	50,023~56,379
Series 1-38	1.349	48,344~53,308	48,344~51,523
Series 1-39	1.349	48,344~53,308	48,344~51,523
Series 1-40	1.349	48,344~56,379	48,344~53,308
Series 1-41	1.349	46,800~51,523	46,800~50,023
Series 1-42	1.349	46,800~51,523	46,800~50,023
Series 1-43	1.349	46,800~51,523	46,800~50,023
Series 1-44	1.349	46,800~51,523	46,800~50,023
Series 1-45	1.349	46,800~51,523	46,800~50,023

93

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(In Korean won)	Risk free rate (%)		Fair value (Market performance condition)	Fair value (Non-market performance condition)
Series 1-46		1.349	46,800~51,523	46,800~50,023
Series 2-3		1.349	—	47,631~56,379
Series 2-4		1.349	—	45,096~56,379
Series 2-5		1.349	—	45,096~56,379
Series 2-6		1.349	—	45,096~56,379
Series 2-7		1.349	—	46,800~56,379
Series 2-8		1.349	—	46,800~54,649
Series 3-3		1.349	—	47,631~56,379
Series 3-4		1.349	—	45,096~56,379
Series 3-5		1.349	—	45,096~56,379
Series 3-6		1.349	—	45,096~56,379
Series 3-7		1.349	—	48,344~56,379
Series 4-1		1.349	—	45,096~56,379
Series 4-2		1.349	—	53,308~56,379
Series 4-3		1.349	—	51,523~56,379

The Group used the volatility of the stock price over the previous year as the expected volatility and used the dividend yield as the arithmetic mean of the dividend rate of one year before, two years before, and three years before the base year, in order to calculate fair value. Fair value is calculated based on risk free interest rate of 1 year-KTB rate.

In relation to the above share-based arrangements, the compensation cost amounting to W63,084,932 thousand and W41,106,115 thousand are recorded as accrued expenses to KB Financial Group Inc. as at December 31, 2021 and 2020, respectively.

33. Non-operating Income and Non-operating Expenses

The details of non-operating income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Gain on disposal of property and equipment		170,470		1,447,234
Gain on disposal of investment properties		6,235,168		46,812,798
Gain on disposal of intangible assets		3,362		—
Reversal of impairment loss on intangible assets		2,630,059		2,505,542
Rent		7,012,044		29,297,428
Gain on equity-method valuation		6,588,879		10,428,289
Gain on disposal of investments in associates		14,573,028		145,365
Gain on disposal of assets held for sale		—		3,974,736
Others		10,916,516		19,727,085
		48,129,526		114,338,477

The details of non-operating expenses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Loss on disposal of property and equipment		184,710		1,318,489
Loss on disposal of investment properties		—		2,322,292
Loss on disposal of intangible assets		40,656		—
Impairment loss on investment properties		—		5,285,373
Impairment loss on intangible assets		121,016		945,230
Donation		7,064,214		5,918,216
Loss on equity-method valuation		6,665,550		1,223,170
Loss on disposal of investments in associates		13,013		5,752,548
Others		37,271,036		77,133,126
		51,360,195		99,898,444

94

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

34. Tax Expense and Deferred Tax

The details of income tax expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Current tax
Current tax on profits for the year		214,168,680			142,111,772
Adjustments in respect of prior years		2,530,896			74,505
Deferred tax
Origination and reversal of temporary differences		11,962,477			27,382,242
Tax recognized directly in equity
Gain or loss on valuation for financial assets at FVOCI		(4,008,037	)		(12,763,196	)
Shares of other comprehensive income of associates		(67	)		52,685
Remeasurements of net defined benefit liabilities		848,738			1,815,183
Foreign operations translation		(3,571,779	)		2,296,954
Hedge of net investments in foreign operations		4,962,342			(1,237,131	)
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(5,202,092	)		(3,350,125	)
Tax effect derived from group’s income tax system		(3,938,930	)		2,901,818
Income tax expense		217,752,228			159,284,707

Reconciliations of profit before tax and tax expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Profit before tax (A)		818,043,644			593,236,070
Tax based on statutory rate		214,600,002			152,777,919
Adjustments
Non-deductible expense		5,549,618			3,527,812
Non-taxable income		(1,197,227	)		(440,064	)
Changes in deferred tax assets (liabilities) that have not been recognized		(14,833,564	)		2,843,032
Effect from tax reduction and credit		(81,033	)		(987,422	)
Adjustment in respect of prior years		2,530,896			74,505
Tax effect from group’s income tax system		(3,938,930	)		2,901,818
Others		15,122,466			(1,412,893	)
Tax expense (B)		217,752,228			159,284,707
Effective tax rate (B/A)		26.62	%		26.85	%

The changes in deferred tax assets (liabilities) for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Provision for impairment		142,086			—			—			142,086
Commissions income		5,354,729			(731,999	)		—			4,622,730
Financial assets at FVOCI		(77,700,924	)		2,498,783			(4,008,037	)		(79,210,178	)
Defined benefit obligation		19,879,337			(1,226,555	)		848,738			19,501,520
Other long-term employee benefits		1,637,421			461,063			—			2,098,484
Financial assets at FVTPL		(36,226,370	)		91,471,135			—			55,244,765
Financial liabilities at FVTPL		83,623,426			(127,528,819	)		(5,202,093	)		(49,107,485	)
Accrued expenses		68,421,675			7,335,888			—			75,757,563
Dividends (specific overseas company)		10,809,313			(263,662	)		—			10,545,651
Accrued income		(22,546,280	)		(442,466	)		—			(22,988,746	)
Property and equipment		(9,816,743	)		34,116			—			(9,782,627	)

95

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2021
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Provisions for asset retirement obligation		2,231,568			(32,239	)		—			2,199,329
Investments in associates and subsidiaries		(643,340	)		2,391,164			—			1,747,824
Derivatives		(70,377,421	)		12,918,654			—			(57,458,767	)
Loans		170,188			1,414,300			—			1,584,488
Intangible assets		(20,771,808	)		241,458			—			(20,530,350	)
Plan assets		(5,129,321	)		923,269			—			(4,206,052	)
Advance depreciation provision		(2,560,369	)		58,573			—			(2,501,796	)
Interest related to loan for construction		(68,829	)		3,878			—			(64,951	)
Others		35,891,000			4,323,857			—			40,214,857
Subtotal		(17,680,662	)		(6,149,602	)		(8,361,391	)		(32,191,655	)
Unrecognized deferred tax assets (liabilities) of the Parent Company		(3,304,176	)		(300,531	)		—			(3,604,707	)
Deferred tax assets (liabilities) of the Parent Company, net 1		(14,376,486	)		(5,849,071	)		(8,361,391	)		(28,586,948	)
Deferred tax assets of subsidiaries		—			—			—			—
Deferred tax liabilities of subsidiaries		(689,208	)		(2,136,707	)		—			(2,825,915	)
Changes in deferred tax assets due to adjustment of consolidation		10,149,702			2,994,197			1,390,495			14,534,394
Deferred tax assets of the Group		—			—			—			—
Deferred tax liabilities of the Group		(4,915,992	)		(4,991,581	)		(6,970,896	)		(16,878,469	)

¹ The income tax rates used in computing deferred tax assets (liabilities) are the expected average tax rate, which is applicable to the forecasted period when the temporary differences are reversed.

	2020
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Provision for impairment		142,086			—			—			142,086
Commissions income		8,486,003			(3,131,274	)		—			5,354,729
Financial assets at FVOCI		(64,842,702	)		(95,026	)		(12,763,196	)		(77,700,924	)
Defined benefit obligation		18,707,455			(643,300	)		1,815,183			19,879,338
Other long-term employee benefits		2,162,100			(524,679	)		—			1,637,421
Financial assets at FVTPL		(28,430,491	)		(7,795,879	)		—			(36,226,370	)
Financial liabilities at FVTPL		109,501,218			(22,527,667	)		(3,350,125	)		83,623,426
Accrued expenses		46,873,332			21,548,343			—			68,421,675
Dividends (specific overseas company)		7,410,295			3,399,017			—			10,809,312
Accrued income		(23,288,324	)		742,044			—			(22,546,280	)
Property and equipment		(9,673,829	)		(142,914	)		—			(9,816,743	)
Provisions for asset retirement obligation		1,590,101			641,467			—			2,231,568
Investments in associates and subsidiaries		(643,339	)		(1	)		—			(643,340	)
Derivatives		(72,386,577	)		2,009,156			—			(70,377,421	)
Loans		460,582			(290,394	)		—			170,188
Intangible assets		(19,232,365	)		(1,539,443	)		—			(20,771,808	)
Plan assets		(5,108,943	)		(20,378	)		—			(5,129,321	)
Advance depreciation provision		(3,538,376	)		978,007			—			(2,560,369	)
Interest related to loan for construction		(72,707	)		3,878			—			(68,829	)
Others		20,522,564			15,368,436			—			35,891,000
Subtotal		(11,361,917	)		7,979,393			(14,298,138	)		(17,680,662	)
Unrecognized deferred tax assets (liabilities) of the Parent Company		(6,746,563	)		3,442,387			—			(3,304,176	)
Deferred tax assets (liabilities) of the Parent Company, net 1		(4,615,354	)		4,537,006			(14,298,138	)		(14,376,486	)
Deferred tax assets of subsidiaries		810,460			(810,460	)		—			—
Deferred tax liabilities of subsidiaries		(730,015	)		40,807			—			(689,208	)
Changes in deferred tax assets due to adjustment of consolidation		27,001,159			(17,963,964	)		1,112,507			10,149,702
Deferred tax assets of the Group		22,466,250			(22,466,250	)		—			—
Deferred tax liabilities of the Group		—			8,269,639			(13,185,631	)		(4,915,992	)

96

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

¹ The income tax rates used in computing deferred tax assets (liabilities) are the expected average tax rate, which is applicable to the forecasted period when the temporary differences are reversed.

Temporary differences which were not recognized due to uncertainty of their realization as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Taxable temporary difference
Investments in subsidiaries		85,576,474		34,419,291
Intangible assets		58,888,990		58,888,990
Others		445,550		445,550
		144,911,014		93,753,831
Deductible temporary difference
Commission (local subsidiary)		7,512,805		7,646,875
Dividends (specific overseas company)		38,347,821		39,306,592
Investments in subsidiaries		18,755,689		20,445,899
Others		2,705,305		2,705,305
		67,321,620		70,104,671
		77,589,394		23,649,160

Details of income taxes that are charged or credited directly to equity for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Recognized in other comprehensive income
Gain or loss on valuation for financial assets at FVOCI		(4,768,491	)		(12,767,162	)
Shares of other comprehensive income of associates		(67	)		52,685
Remeasurements of net defined benefit liabilities		848,738			1,815,183
Foreign operations translation		(3,571,779	)		2,296,954
Hedge of net investments in foreign operations		4,962,342			(1,237,131	)
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(5,202,092	)		(3,350,125	)
Reclassified to profit or loss
Gain or loss on valuation for financial assets at FVOCI		760,454			3,966
		(6,970,895	)		(13,185,630	)

97

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

35. Carrying Amounts of Financial Instruments by Category

Financial assets and liabilities are measured at fair value or amortised cost. Measurement policies for each category of financial assets and financial liabilities are disclosed in Note 2, ‘Significant accounting policies’.

The carrying amounts of financial assets and liabilities by category as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Financial asset measured at fair value through profit or loss		Financial asset measured at amortised cost		Financial asset measured at fair value through other comprehensive income		Derivative asset (hedging)		Totals
Financial Assets
Cash and deposits		—		3,834,048,675		—		—		3,834,048,675
Financial Assets at FVTPL		34,182,334,301		—		—		—		34,182,334,301
Derivatives		817,518,307		—		—		—		817,518,307
Equity instruments at FVOCI		—		—		447,232,312		—		447,232,312
Debt instruments at FVOCI		—		—		3,392,645,494		—		3,392,645,494
Loans measured at amortised cost		—		7,186,208,182		—		—		7,186,208,182
Other financial assets		—		3,661,821,845		—		—		3,661,821,845
		34,999,852,608		14,682,078,702		3,839,877,806		—		53,521,809,116

	2021
(in thousands of Korean won)	Financial liabilities measured at fair value through profit or loss		Financial liabilities designated at fair value through profit or loss		Financial liabilities measured at amortised cost		Derivative liabilities (hedging)		Totals
Financial Liabilities
Financial liabilities at FVTPL		—		9,160,923,652		—		—		9,160,923,652
Financial liabilities designated at FVTPL		2,825,922,918		—		—		—		2,825,922,918
Derivative financial liabilities		857,388,295		—		—		17,253,447		874,641,742
Deposit liabilities		—		—		8,391,075,183		—		8,391,075,183
Borrowings		—		—		24,649,381,850		—		24,649,381,850
Other financial liabilities		—		—		3,484,650,271		—		3,484,650,271
		3,683,311,213		9,160,923,652		36,525,107,304		17,253,447		49,386,595,616

98

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Financial asset measured at fair value through profit or loss		Financial asset measured at amortised cost		Financial asset measured at fair value through other comprehensive income		Derivative asset (hedging)		Totals
Financial Assets
Cash and deposits		—		3,889,064,252		—		—		3,889,064,252
Financial Assets at FVTPL		33,415,470,014		—		—		—		33,415,470,014
Derivatives		927,608,267		—		—		1,082,173		928,690,440
Equity instruments at FVOCI		—		—		380,184,504		—		380,184,504
Debt instruments at FVOCI		—		—		3,524,854,340		—		3,524,854,340
Loans measured at amortised cost		—		6,644,454,998		—		—		6,644,454,998
Other financial assets		—		6,789,449,197		—		—		6,789,449,197
		34,343,078,281		17,322,968,447		3,905,038,844		1,082,173		55,572,167,745

	2020
(in thousands of Korean won)	Financial liabilities measured at fair value through profit or loss		Financial liabilities designated at fair value through profit or loss		Financial liabilities measured at amortised cost		Derivative liabilities (hedging)		Totals
Financial Liabilities
Financial liabilities at FVTPL		1,884,675,400		—		—		—		1,884,675,400
Financial liabilities designated at FVTPL		—		9,796,959,305		—		—		9,796,959,305
Derivative financial liabilities		861,927,424		—		—		1,404,580		863,332,004
Deposit liabilities		—		—		7,686,410,761		—		7,686,410,761
Borrowings		—		—		25,029,132,761		—		25,029,132,761
Other financial liabilities		—		—		6,704,330,326		—		6,704,330,326
		2,746,602,824		9,796,959,305		39,419,873,848		1,404,580		51,964,840,557

99

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

36. Financial Instruments

36.1 Fair Value of Financial Instruments by Class

Fair values of financial assets and financial liabilities as at December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and deposits2		3,834,048,675		3,834,048,675		3,889,064,252		3,889,064,252
Financial assets at FVTPL1		34,182,334,301		34,182,334,301		33,415,470,014		33,415,470,014
Derivative financial assets1		817,518,307		817,518,307		928,690,440		928,690,440
Financial assets at FVOCI		3,839,877,806		3,839,877,806		3,905,038,844		3,905,038,844
Loans measured at amortised cost		7,186,208,182		7,221,929,183		6,644,454,998		6,675,666,913
Other financial assets2		3,661,821,845		3,661,821,845		6,789,449,197		6,789,449,197
		53,521,809,116		53,557,530,117		55,572,167,745		55,603,379,660
	2021				2020
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial liabilities
Deposit liabilities 2		8,391,075,183		8,391,075,183		7,686,410,761		7,686,410,761
Financial liabilities at FVTPL		2,825,922,918		2,825,922,918		1,884,675,400		1,884,675,400
Financial liabilities designated at FVTPL1		9,160,923,652		9,160,923,652		9,796,959,305		9,796,959,305
Derivative financial liabilities1		874,641,742		874,641,742		863,332,004		863,332,004
Borrowings		24,649,381,850		24,636,652,379		25,029,132,761		25,057,060,478
Other financial liabilities2		3,484,650,271		3,484,650,271		6,704,330,326		6,704,330,326
		49,386,595,616		49,373,866,145		51,964,840,557		51,992,768,274

¹ Deferred transaction gain or losses are adjusted in the carrying amount.

² The fair value of cash and deposits, other financial assets, deposit liabilities and other financial liabilities with short maturity dates or uncertain maturity dates are presented at their book amounts.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For each class of financial assets and financial liabilities, the Group 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 a quoted price in an active market.

100

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

36.2 Fair Value Hierarchy

Financial instruments measured at fair value are categorized within the fair value hierarchy, and the defined levels are as follows:

Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2	Fair value using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, prices) or indirectly (that is, derived from prices)
Level 3	Fair value using inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

The inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The observable input is generally used to the Fair value measurement. However, if an observable input requires an adjustment using an unobservable input and that adjustment results in a significantly higher or lower fair value measurement, the resulting measurement would be categorized within Level 3 of the fair value hierarchy.

(a) Fair value hierarchy of financial instruments measured at fair value

The fair value hierarchy of financial assets and liabilities measured at fair value as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at FVTPL – debt instruments 1		7,098,545,069		24,218,855,218		1,766,441,297		33,083,841,584
Financial assets at FVTPL – equity instruments		380,241,477		585,355,259		132,895,981		1,098,492,717
Derivative financial assets1		68,654,003		539,055,644		209,808,660		817,518,307
Financial assets at FVOCI		20,989,065		3,450,533,070		368,355,671		3,839,877,806
		7,568,429,614		28,793,799,191		2,477,501,609		38,839,730,414
Financial liabilities
Financial liabilities at FVTPL		2,825,922,918		—		—		2,825,922,918
Financial liabilities designated at FVTPL1		36,937,827		1,294,944,846		7,829,040,979		9,160,923,652
Derivative financial liabilities1		198,052,673		508,125,157		168,463,912		874,641,742
		3,060,913,418		1,803,070,003		7,997,504,891		12,861,488,312

¹  Deferred transaction gain or losses are adjusted in the carrying amount.

	2020
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at FVTPL – debt instruments 1		8,404,024,034		21,807,348,428		2,099,180,097		32,310,552,559
Financial assets at FVTPL – equity instruments		551,124,012		409,244,614		144,548,829		1,104,917,455
Derivative financial assets1		74,688,984		412,225,861		441,775,595		928,690,440
Financial assets at FVOCI		110,134,550		3,485,076,696		309,827,598		3,905,038,844
		9,139,971,580		26,113,895,599		2,995,332,119		38,249,199,298
Financial liabilities
Financial liabilities at FVTPL		1,884,675,400		—		—		1,884,675,400
Financial liabilities designated at FVTPL1		1,039,843		581,635,249		9,214,284,213		9,796,959,305
Derivative financial liabilities1		197,707,371		530,690,359		134,934,274		863,332,004
		2,083,422,614		1,112,325,608		9,349,218,487		12,544,966,709

¹  Deferred transaction gain or losses are adjusted in the carrying amount.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

36.3 Valuation techniques and inputs classified by Level 2

The details of the valuation techniques and inputs classified by Level 2 as at December 31, 2021 and 2020 are as follows:

(in thousands of Korean won)	2021		Valuation techniques	Inputs
Financial assets at FVTPL		24,804,210,477	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Binomial Tree Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate and others
Derivative financial assets(trading)		539,055,644	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Binomial Tree Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility and others
Financial assets at FVOCI		3,450,533,070	DCF Model	Discount rate, Interest rate and others
		28,793,799,191
Financial liabilities designated at FVTPL		1,294,944,846	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Binomial Tree Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate
Derivative financial liabilities(trading)		490,871,710	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Binomial Tree Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility
Derivative financial liabilities(hedging)		17,253,447	DCF Model	Discount rate, exchange rate and others
		1,803,070,003

(in thousands of Korean won)	2020		Valuation techniques	Inputs
Financial assets at FVTPL		22,216,593,042	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate and others
Derivative financial assets(trading)		411,143,688	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility and others
Derivative financial assets(hedging)		1,082,173	DCF Model	Discount rate, exchange rate and others

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020		Valuation techniques	Inputs
Financial assets at FVOCI		3,485,076,696	DCF Model	Discount rate, Interest rate and others
		26,113,895,599
Financial liabilities designated at FVTPL		581,635,249	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate
Derivative financial liabilities(trading)		529,285,779	DCF Model, Closed form formula, Monte Carlo model, Black Scholes model, Hull and White Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility
Derivative financial liabilities(hedging)		1,404,580	DCF Model	Discount rate, exchange rate and others
		1,112,325,608

36.4 Level 3 of the Fair Value Hierarchy Disclosure

(a) Valuation Process for Fair Value Measurements Categorized Within Level 3 of the Fair Value Hierarchy

The fair value of financial instruments classified as Level 3 is determined by external valuation or self-valuation of the Group. Unobservable inputs are produced by the external appraiser or internal valuation system and the Group reviews the adequacy of inputs. The risk management council reviews the adequacy of the assessment methodology and valuation method of external appraiser and the internal valuation. The agenda of the risk management council is to be reported or approved by the risk committee.

(b) Changes in Recurring Fair Value Measurements Categories of the Fair Value hierarchy

The changes in financial instruments with level 3 fair value for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Beginning balance		2,243,728,926			309,827,598		306,841,321			(9,214,284,213	)
Total gains or losses
Profit or loss		(1,738,868	)		—		(66,664,335	)		63,081,409
Other comprehensive income		—			39,940,672		—			(5,445,079	)
Purchases		882,820,430			18,587,401		3,952,205			—
Sales		(1,227,448,847	)		—		(169,985,927	)		—
Issues		—			—		(32,516,161	)		(8,233,127,666	)
Settlements		—			—		—			9,560,734,570
Transfer within levels 1		1,975,637			—		(282,355	)		—
Ending balance		1,899,337,278			368,355,671		41,344,748			(7,829,040,979	)

¹  Transfer within levels are occurred due to the change in the availability of observable market data on the financial instruments.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Beginning balance		2,667,255,684			267,434,949		329,155,365			(11,244,938,670	)
Total gains or losses
Profit or loss		(106,516,650	)		—		362,132,730			(396,733,496	)
Other comprehensive income		—			42,263,399		—			(27,875,885	)
Purchases		1,567,224,182			129,250		1,341,781			—
Sales		(1,965,821,751	)		—		(328,337,107	)		—
Issues		—			—		(42,731,644	)		(9,333,419,908	)
Settlements		—			—		89,781			11,788,683,746
Transfer within levels 1		81,587,461			—		(14,809,585	)		—
Ending balance		2,243,728,926			309,827,598		306,841,321			(9,214,284,213	)

¹ Transfer within levels are occurred due to the change in the availability of observable market data on the financial instruments.

In relation to changes in level 3 fair value, total gains or losses related to the asset and liabilities held at the reporting date are included in the statements of comprehensive income for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Profit or loss
Gain or loss on valuation of financial instruments1		(27,667,310	)		—		(109,925,653	)		105,096,746
Other comprehensive income
Gain or loss on valuation of financial assets at FVOCI2		—			39,940,672		—			—
Changes in fair value of financial liabilities at FVTPL due to the change of credit risk2		—			—		—			6,607,886
		(27,667,310	)		39,940,672		(109,925,653	)		111,704,632

¹ Included in gain or loss on valuation and disposal of financial instruments on the statements of Profit or Loss.

² Included in other comprehensive income on the statements of comprehensive income.

	2020
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives		Financial liabilities designated at FVTPL
Profit or loss
Gain or loss on valuation of financial instruments1		(100,075,940	)		—		144,156,052		(105,534,507	)
Other comprehensive income
Gain or loss on valuation of financial assets at FVOCI2		—			42,263,399		—		—
Changes in fair value of financial liabilities at FVTPL due to the change of credit risk2		—			—		—		(9,346,158	)
		(100,075,940	)		42,263,399		144,156,052		(114,880,665	)

¹ Included in gain or loss on valuation and disposal of financial instruments on the statements of Profit or Loss.

² Included in other comprehensive income on the statements of comprehensive income.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(c) Valuation techniques and the Inputs classified by Level 3

Valuation techniques and inputs for level 3 financial instruments are as follows:

	2021
(in thousands of Korean won)	Type	Fair value		Valuation techniques	Inputs	Unobservable input	Range	Relevance
Financial assets at FVTPL	Other derivative linked securities		29,067,962	DCF model, Closed Form, Monte Carlo Simulation, Hull and White, Black-Scholes Model,Binomial Tree Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.26 ~ 0.54		Proportional
						Correlation	0.08 ~ 0.9		Proportional
	Other OTC derivative linked contract		99,015,526			Underlying asset volatility	0.16 ~ 0.26		Proportional
						Correlation	-0.6 ~ 0.77		Proportional
	Debt instruments		1,638,357,809			Underlying asset volatility	0.14 ~ 0.3		Proportional
	Equity instruments		132,895,981			Discount rate	0.1 ~ 0.25		Inversely proportional
Derivative financial assets (trading)	1		209,808,660			Underlying asset volatility	0.03 ~ 0.81		Proportional
						Correlation	-0.6 ~ 0.9		Proportional
Financial assets at FVOCI	Equity instruments		368,355,671	DCF model, Risk-adjusted discount rate model, IMV model and others	Growth rate, discount rate	Growth rate	0.01 ~ 0.01		Proportional
						Discount rate	0.11 ~ 0.15		Inversely proportional
			2,477,501,609
Financial liabilities designated at FVTPL	Equity-linked securities sold		6,117,086,280	DCF model, Closed Form, Monte Carlo Simulation, Hull and White, Black-Scholes Model, Binomial Tree Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.15 ~ 0.81		Proportional
						Correlation	-0.6 ~ 0.88		Proportional
	Derivatives linked securities sold		1,567,907,416			Underlying asset volatility	0.01 ~ 0.81		Proportional
						Correlation	-0.48 ~ 0.9		Proportional
	Other OTC derivatives linked contract sold		144,047,283			Underlying asset volatility	0.15 ~ 0.3		Proportional
						Correlation	-0.6 ~ 0.74		Proportional
Derivative financial liabilities (trading)	1		168,463,912			Underlying asset volatility	0.05 ~ 0.81		Proportional
						Correlation	-0.6 ~ 0.9		Proportional
			7,997,504,891

¹  Derivatives which derive their value from interest rate, stock price, foreign exchange rate, commodity price, credit rate and others are included.

105

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Type	Fair value		Valuation techniques	Inputs	Unobservable input	Range	Relevance
Financial assets at FVTPL	Equity-linked securities		39,294,908	DCF model, Closed Form, Monte Carlo Simulation, Hull and White, Black-Scholes Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.23 ~ 0.25		Proportional
						Correlation	-0.61 ~ 0.74		Proportional
	Other derivative linked securities		200,925,330			Underlying asset volatility	0.08 ~ 0.68		Proportional
						Correlation	0.00 ~ 0.89		Proportional
	Other OTC derivative linked contract		395,700,132			Underlying asset volatility	0.20 ~ 0.44		Proportional
						Correlation	-0.61 ~ 0.89		Proportional
	Debt instruments		1,463,259,727			Underlying asset volatility	0.16 ~ 0.48		Proportional
	Equity instruments		144,548,829			Discount rate	0.01 ~ 0.18		Inversely proportional
Derivative financial assets (trading)	1		441,775,595			Underlying asset volatility	0.05 ~ 0.72		Proportional
						Correlation	-0.61 ~ 0.91		Proportional
Financial assets at FVOCI	Equity instruments		309,827,598	DCF model, Risk-adjusted discount rate model, IMV model and others	Growth rate, discount rate	Growth rate	0.01 ~ 0.01		Proportional
						Discount rate	0.11 ~ 0.14		Inversely proportional
			2,995,332,119
Financial liabilities designated at FVTPL	Equity-linked securities sold		7,015,384,894	DCF model, Closed Form, Monte Carlo Simulation, Hull and White, Black-Scholes Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.20 ~ 0.72		Proportional
						Correlation	-0.61 ~ 0.89		Proportional
	Derivatives linked securities sold		1,615,390,797			Underlying asset volatility	0.01 ~ 0.68		Proportional
						Correlation	-0.50 ~ 0.91		Proportional
	Other OTC derivatives linked contract sold		583,508,522			Underlying asset volatility	0.20 ~ 0.54		Proportional
						Correlation	-0.61 ~ 0.89		Proportional
Derivative financial liabilities (trading)	1		134,934,274			Underlying asset volatility	0.20 ~ 0.68		Proportional
						Correlation	-0.61 ~ 0.91		Proportional
			9,349,218,487

¹  Derivatives which derive their value from interest rate, stock price, foreign exchange rate, commodity price, credit rate and others are included.

106

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(d) Sensitivity Analysis of Recurring Fair Value Measurements Categorized Within Level 3 of the Fair Value Hierarchy

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 inputs, using a statistical technique. When the fair value is affected by more than two inputs, the amounts represent the most favorable or most unfavorable.

The results of the sensitivity analysis for the effect on profit or loss from changes in inputs for each financial instrument as at December 31, 2021 and 2020, are as follows.

	2021
	Profit and loss					Other comprehensive income
(in thousands of Korean won)	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at FVTPL1		7,774,418		(6,273,350	)		—		—
Derivative financial assets 1		19,235,324		(19,935,240	)		—		—
Financial assets at FVOCI 2		—		—			26,761,121		(18,444,528	)
		27,009,742		(26,208,590	)		26,761,121		(18,444,528	)
Financial liabilities
Financial liabilities designated at FVTPL1		78,355,694		(82,796,956	)		—		—
Derivative financial liabilities 1		31,113,821		(29,105,058	)		—		—
		109,469,515		(111,902,014	)		—		—

¹ Measured by changes in fair value based on the increased or decreased unobservable volatility of underlying assets by 10% or unobservable input(growth rate and discount rate) by 1%.

² Measured by changes in fair value based on growth rate ((-)1~1%) and discount rate ((-)1~1%) that are unobservable inputs.

	2020
	Profit and loss					Other comprehensive income
(in thousands of Korean won)	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at FVTPL1		27,889,118		(4,125,669	)		—		—
Derivative financial assets 1		22,741,681		(24,980,628	)		—		—
Financial assets at FVOCI2		—		—			18,733,526		(12,585,448	)
		50,630,799		(29,106,297	)		18,733,526		(12,585,448	)
Financial liabilities
Financial liabilities designated at FVTPL1		46,859,961		(42,994,436	)		—		—
Derivative financial liabilities 1		7,251,984		(7,136,832	)		—		—
		54,111,945		(50,131,268	)		—		—

¹ Measured by changes in fair value based on the increased or decreased unobservable volatility of underlying assets by 10% or unobservable input(growth rate and discount rate) by 1%.

² Measured by changes in fair value based on growth rate ((-)1~1%) and discount rate ((-)1~1%) that are unobservable inputs.

107

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(e) Day 1 Profit and Loss

If the Group uses a valuation technique that uses data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is amortised by using the straight-line method over the life of the financial instruments. If the fair value of the financial instruments can be subsequently determined using observable market inputs, the remaining deferred amount is immediately recognized in profit or loss.

The aggregate difference yet to be recognized in profit or loss at the beginning and end of the year, and the changes in the balance of this difference, are as follows:

(in thousands of Korean won)	2021			2020
Balances at the beginning of the year (A)		70,759,191			51,580,418
Incurred during the year (B)		176,475,408			166,554,981
Amounts recognized in profit or loss during the year (C)		(153,238,804	)		(147,376,208	)
Balances at the end of year (A+B+C)		93,995,795			70,759,191

36.5 Fair value hierarchy of financial instruments which the fair value is disclosed

(a) The fair value hierarchy of financial assets and liabilities which the fair value is disclosed as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		7,221,929,183		7,221,929,183
Financial liabilities
Borrowings		—		—		24,636,652,379		24,636,652,379

	2020
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		6,675,666,913		6,675,666,913
Financial liabilities
Borrowings		—		—		25,057,060,478		25,057,060,478

Cash and deposits, other financial assets, deposit liabilities and other financial liabilities that are used book amount as a substitute for fair value because their maturities are relatively short or are not set, are not disclosed.

108

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(b) Valuation techniques and inputs

	Valuation technique and inputs
Cash and deposits	The fair value of cash is the same as the book amount. The book amount is used as a substitute value of fair value for the majority of deposits consisting of overnight deposits and deposits with variable interest rate.
Loans measured at amortised cost	The fair values are calculated by discount rate considering market interest rates and borrower’s credit risk on expected cash flows.
Deposit liabilities and borrowings	The book amount is used as a substitute value of fair value for demand deposit liabilities, bank overdrafts and call money. With regard to the other deposits and borrowings, the fair values are calculated by discount rate considering residual risks at market interest rates on contractual cash flows.
Other financial assets and liabilities	The book amount is used as a substitute value of fair value instead of applying DCF due to the relatively short-term or indefinite maturity. However, DCF method is applied for several long-term receivables or payables.

36.6 Derecognition of financial assets

The Group continues to recognize bonds sold under repurchase agreements and securities lending agreement, because the Group transferred the financial asset, but the assets does not meet the derecognition criteria. Due to the nature of transaction that bonds sold under repurchase agreements has repurchase condition with fixed price and securities lending agreement contains the retransfer back condition by the end of lending period, the Group has almost all risks and rewards related to the ownership of the financial assets.

As at December 31, 2021 and 2020, relevant information about transferred financial assets which do not qualify for derecognition are as follows:

	2021
	Financial assets at FVTPL				Financial assets at FVOCI
(in thousands of Korean won)	Debt instruments1,2, 3		Equity instruments2		Debt instruments1,3		Equity instruments
Carrying amount of transferred assets		8,452,138,400		253,040		1,990,336,464		—
Carrying amount of related liabilities		8,253,574,637		—		1,893,044,535		—

¹ Transferred debt instruments under repurchase agreements.

² Transferred equity instruments and debt instruments under securities lending agreements.

³ As at December 31, 2021, the accrued interests related to debt securities of W51,550 million is excluded.

	2020
	Financial assets at FVTPL				Financial assets at FVOCI
(in thousands of Korean won)	Debt instruments1,2		Equity instruments2		Debt instruments1,3		Equity instruments
Carrying amount of transferred assets		10,604,346,072		19,811,120		2,117,185,736		—
Carrying amount of related liabilities		10,060,689,620		—		2,012,167,226		—

¹ Transferred debt instruments under repurchase agreements.

² Transferred equity instruments and debt instruments under securities lending agreements.

³ As at December 31, 2020, the accrued interests related to debt securities of W88,474 million is excluded.

Meanwhile, the Group provided additional credit enhancements such as purchase agreements in addition to recourse limited to transferred assets to subsidiaries established for asset securitization purposes.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Details of carrying amounts of the underlying assets and the associated liabilities as of December 31, 2021 and 2020, are as follows:

(In thousands of Korean won)		2021		2020
Underlying assets	Financial assets at fair value through profit or loss		169,478,418		104,574,753
	Loans measured at amortized cost1		1,366,231,908		1,362,687,818
			1,535,710,326		1,467,262,571
Associated liabilities	Debentures		1,534,364,063		1,466,664,968

¹  The amounts disclosed in above table are before deduction of allowances.

110

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

37. Financial Risk Management

37.1 Summary

37.1.1 Overview of Financial Risk Management Policy

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

The note regarding financial risk management provides information about the risks that the Group is exposed to, including the objectives, policies and processes for assessing and managing the risks and net operating capital ratio management. Additional quantitative information is disclosed throughout these notes to financial statements.

The Group’s risk management system focuses on increasing transparency, developing the risk management environment, preventing transmission of risk to other related subsidiaries, and the preemptive response to risk due to rapid changes in the financial environment to support the Group’s long-term strategy and business decisions efficiently. Credit risk, liquidity risk, market risk, operational risk, and credit concentration risk are recognized as the Group’s key risks. These risks are measured and managed by quantifying regulatory capital and VaR (Value at Risk) using a statistical method.

37.1.2 Risk Management Organization

(a) Board of Directors

Board of Directors are the ultimate decision-making authority that appoint and dismiss risk management committee, establish and amend the risk management committee policies, establish the Group’s criteria for risk limit, decide on basic policy of risk management, and approve large-scale investments.

(b) Risk management committee

The risk management committee consists of more than three directors appointed by the Board of Directors (including more than a half of external director). The risk management committee executes the operations delegated by board of directors in accordance with risk management committee policy

(c) Risk management council

Risk management council consists members by appointing Company’s executives, including the director, who is responsible for risk management, compliance, planning/management. Also the organization is delegated by risk management committee to perform deliberation/resolution for major policies and matters related to the risk.

(d) Risk management department

Risk management department carries out practical tasks, required for risk management of the Group, such as supporting the risk management committee, reporting the Group’s risk level and computing net operating capital ratio.

37.1.3 Risk Management System

In order to establishing risk management structure, the Group built the total risk management system, ERMS (Enterprise Risk Management System), which is designed for reasonable price valuation against risks and the management of risk limitation to raise the soundness of assets and allocate resources efficiently. Moreover, the Group performs business with risk management basis in mainly by constructing RAPM (Risk Adjusted Performance Measure) and enlarging the portion of performance evaluation.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

37.1.4 Risk Management Strategy and Policy

As an allocation of risk capital and risk limit establishment process, the risk capital is allocated through resolution of risk management committee meetings, and the amount of risk capital is anticipated for each risk sector, business sector and department by reflecting annual management strategy and business plans.

37.2 Credit Risk

37.2.1 Overview of Credit Risk

The Group is exposed to certain level of credit risk and the credit risk is the risk of possible loss to portfolio due to counterparty’s credit event and breach of covenant. Credit risk exposure occurs in investment activities such as loans, debt instruments, derivative transactions, and non-trading accounts, or can exist in relating to off-balance accounts.

37.2.2 Credit Risk Management

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. If the trading department of the Group wants to deal with the counterparty that may cause the credit risk, the trading department submit product management plan and application in advance to get approval by the risk management council and the risk management committee. The deal is executed when the approval by the risk management council and the risk management committee is completed. Credit risk limit depends on 1) standard credit risk limit, 2) concentration limit on the same person and 3) credit rating and additional limit may be added by the trading department. In addition, credit VaR is measured in addition to the credit management listed above and credit VaR due to the internal model is operated by the credit manager measurement system of the risk metrics group. Limit management is performed on a daily basis and stress test is performed on a regular basis and in case of excess of the limit, trading department expedite the process with the procedure set by the risk management department.

37.2.3 Maximum Exposure to Credit Risk

The maximum exposure of credit risk related to the off-balance as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Agreement to purchase the commercial papers 1		576,882,291		797,960,000
Guarantees and loan commitment		1,292,884,469		1,107,797,432
		1,869,766,760		1,905,757,432

¹  As at December 31, 2021 and 2020, asset-backed short-term bonds amounting to W101,660 million and W237,940 million, respectively, held by the Group, are included.

The Group does not disclose financial assets (except above contracts) whose carrying amount represents the maximum exposure to credit risk.

112

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

37.2.4 Credit Risk Concentration Analysis

(a) Loans measured at amortised cost

Most of counterparties of loan transactions, before considering collaterals and other credit reinforcements, are concentrated in Korea. The ratios of loans to individuals and corporations and related allowances as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Individuals		3,156,085,093		43.42		(29,651	)		3,156,055,442
Corporations		4,112,430,576		56.58		(82,277,836	)		4,030,152,740
		7,268,515,669		100.00		(82,307,487	)		7,186,208,182

	2020
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Individuals		2,735,861,186		40.75		(26,029	)		2,735,835,157
Corporations		3,977,611,063		59.25		(68,991,222	)		3,908,619,841
		6,713,472,249		100.00		(69,017,251	)		6,644,454,998

The details of the Group’s loans measured at amortised cost by industry as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Financial service		1,571,228,558		21.62		(16,021,282	)		1,555,207,276
Manufacturing		462,775,654		6.37		(7,778,553	)		454,997,101
Service		1,404,940,209		19.33		(33,292,623	)		1,371,647,587
Others		673,486,155		9.27		(25,185,379	)		648,300,776
Individuals		3,156,085,093		43.41		(29,650	)		3,156,055,443
		7,268,515,669		100.00		(82,307,487	)		7,186,208,182

	2020
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Financial service		1,942,236,919		28.94		(16,500,361	)		1,925,736,558
Manufacturing		143,800,000		2.14		(4,509,634	)		139,290,366
Service		28,509,777		0.42		(5,034,033	)		23,475,744
Others		1,863,064,367		27.75		(42,947,194	)		1,820,117,173
Individuals		2,735,861,186		40.75		(26,029	)		2,735,835,157
		6,713,472,249		100.00		(69,017,251	)		6,644,454,998

113

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(b) Deposits, Securities (except equity instruments) and Derivatives

Most of deposits, securities (except equity instruments) and derivatives, before considering collaterals and other credit reinforcements, are concentrated in securities issued in Korea. The details of the Group’s securities (except equity instruments) by industry as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Amount		Ratio (%)		Allowances			Carrying amount
Deposits measured at amortised cost
Banking and insurance		3,834,681,126		100.00		(632,624	)		3,834,048,502
		3,834,681,126		100.00		(632,624	)		3,834,048,502
Securities at FVTPL
Government and government funded institutions		12,403,754,293		37.69		—			12,403,754,293
Banking and insurance		12,204,363,089		37.09		—			12,204,363,089
Others		8,300,357,806		25.22		—			8,300,357,806
		32,908,475,188		100.00		—			32,908,475,188
Derivatives financial assets
Banking and insurance		805,813,795		98.57		—			805,813,795
Others		11,704,512		1.43		—			11,704,512
		817,518,307		100.00		—			817,518,307
Securities at FVOCI
Government and government funded institutions		411,524,232		12.13		—			411,524,232
Banking and insurance		2,019,245,794		59.52		—			2,019,245,794
Others		961,875,467		28.35		—			961,875,467
		3,392,645,493		100.00		—			3,392,645,493
		40,953,320,114				(632,624	)		40,952,687,490

	2020
(in thousands of Korean won)	Amount		Ratio (%)		Allowances			Carrying amount
Deposits measured at amortised cost
Banking and insurance		3,889,803,773		100.00		(739,569	)		3,889,064,204
		3,889,803,773		100.00		(739,569	)		3,889,064,204
Securities at FVTPL
Government and government funded institutions		12,674,913,374		39.60		—			12,674,913,374
Banking and insurance		14,286,364,544		44.63		—			14,286,364,544
Others		5,048,675,316		15.77		—			5,048,675,316
		32,009,953,234		100.00		—			32,009,953,234
Derivatives financial assets
Banking and insurance		912,450,006		98.25		—			912,450,006
Others		16,240,434		1.75		—			16,240,434
		928,690,440		100.00		—			928,690,440
Securities at FVOCI
Government and government funded institutions		598,226,856		16.97		—			598,226,856
Banking and insurance		2,505,880,183		71.09		—			2,505,880,183
Others		420,747,301		11.94		—			420,747,301
		3,524,854,340		100.00		—			3,524,854,340
		40,353,301,787				(739,569	)		40,352,562,218

114

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

37.2.5 Credit Quality of Financial Assets

(a) Loans measured at amortised cost

Loans measured at amortised cost as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Financial assets measured at amortised cost 1
Corporates
Grade 1		1,642,413,537		—		—		—		—		1,642,413,537
Grade 2		2,315,042,944		37,000,000		—		—		—		2,352,042,944
Grade 3		9,775,000		20,000,000		—		—		—		29,775,000
Grade 4		36,959,224		2,000,000		—		—		—		38,959,224
Grade 5		—		—		49,239,870		—		—		49,239,870
		4,004,190,705		59,000,000		49,239,870		—		—		4,112,430,575
Retails
Grade 1		3,154,795,577		—		—		—		—		3,154,795,577
Grade 2		1,256,577		—		—		—		—		1,256,577
Grade 3		—		—		—		—		—		—
Grade 4		3,289		—		—		—		—		3,289
Grade 5		—		—		29,651		—		—		29,651
		3,156,055,443		—		29,651		—		—		3,156,085,094
Financial assets at FVTPL 1
Corporates
Grade 1		—		—		—		—		175,366,396		175,366,396
Grade 2		—		—		—		—		—		—
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		—		—		—		—		175,366,396		175,366,396
		7,160,246,148		59,000,000		49,269,521		—		175,366,396		7,443,882,065

¹  The amounts disclosed in above table are before deduction of allowances

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Financial assets measured at amortised cost 1
Corporates
Grade 1		2,279,442,923		—		—		—		—		2,279,442,923
Grade 2		1,527,290,208		44,010,482		—		—		—		1,571,300,690
Grade 3		—		30,714,286		—		—		—		30,714,286
Grade 4		36,846,337		—		—		—		—		36,846,337
Grade 5		—		10,000,000		49,306,827		—		—		59,306,827
		3,843,579,468		84,724,768		49,306,827		—		—		3,977,611,063

115

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Retails
Grade 1		2,734,672,298		—		—		—		—		2,734,672,298
Grade 2		1,132,874		—		—		—		—		1,132,874
Grade 3		—		—		—		—		—		—
Grade 4		29,984		—		—		—		—		29,984
Grade 5		—		—		26,029		—		—		26,029
		2,735,835,156		—		26,029		—		—		2,735,861,185
Financial assets at FVTPL 1
Corporates
Grade 1		—		—		—		—		213,860,869		213,860,869
Grade 2		—		—		—		—		—		—
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		—		—		—		—		213,860,869		213,860,869
		6,579,414,624		84,724,768		49,332,856		—		213,860,869		6,927,333,117

¹  The amounts disclosed in above table are before deduction of allowances

Ranges	Corporates	Retails
Grade 1	AAA ~ BBB+	1 ~ 5 grade
Grade 2	BBB ~ BB	6 ~ 8 grade
Grade 3	BB- ~ B	9 ~ 10 grade
Grade 4	B- ~ CCC	11 grade
Grade 5	Below CC	Below 12 grade

The effect of measured credit risk which released the credit risk due to enhancement of collateral and other credit supplements secured for loans as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Guarantee		6,774,307		—		—		—		—		6,774,307
Real estate		452,414,459		—		208,363		—		—		452,622,823
Securities		5,091,901,577		—		—		—		—		5,091,901,577
		5,551,090,343		—		208,363		—		—		5,551,298,706

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Guarantee		5,710,346		—		—		—		—		5,710,346
Real estate		291,280,762		—		208,363		—		—		291,489,125
Securities		4,462,145,872		7,163,824		—		—		—		4,469,309,696
		4,759,136,980		7,163,824		208,363		—		—		4,766,509,167

116

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(b) Securities (debt instruments)

Securities (debt instruments) that are exposed to credit risks as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Financial assets at FVOCI 1
Grade 1		2,423,690,840		—		—		—		—		2,423,690,840
Grade 2		955,435,698		—		—		—		—		955,435,698
Grade 3		13,518,956		—		—		—		—		13,518,956
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		3,392,645,494		—		—		—		—		3,392,645,494

¹  Before deduction of allowances

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Financial assets at FVOCI 1
Grade 1		2,780,821,858		—		—		—		—		2,780,821,858
Grade 2		744,032,482		—		—		—		—		744,032,482
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		3,524,854,340		—		—		—		—		3,524,854,340

¹  Before deduction of allowances

The Group’s standard for credit quality of securities (except equity investments) linked to credit rating presented by 3^rd party credit rating institutions is as follows.

	Domestic			Foreign
Credit Quality	KIS	NICE	FnPricing	S&P	Fitch-IBCA	Moody’s
Grade 1	AA0 to AAA	AA0 to AAA	AA0 to AAA	A- to AAA	A- to AAA	A3 to Aaa
Grade 2	A-To AA-	A- To AA-	A- To AA-	BBB- to BBB+	BBB- to BBB+	Baa3 to Baa1
Grade 3	BBB0 to BBB+	BBB0 to BBB+	BBB0 to BBB+	BB to BB+	BB to BB+	Ba2 to Ba1
Grade 4	BB0 to BBB-	BB0 to BBB-	BB0 to BBB-	B+ to BB-	B+ to BB-	B1 to Ba3
Grade 5	Below BB-	Below BB-	Below BB-	Below B	Below B	Below B2

117

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The classification of credit quality for debt instruments in Korean won is based on lowest credit rating among the one of three domestic credit rating institutions and the classification of credit quality for debt instruments in foreign currency is based on lowest credit rating among the one of three foreign credit rating institutions

(c) Deposits

The credit quality of deposits as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		Total
			Non-impaired		Impaired
Deposits measured at amortised cost 1
Grade 1		3,834,681,299		—		—		—		3,834,681,299
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		3,834,681,299		—		—		—		3,834,681,299

¹  Before deduction of allowances

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		Total
			Non-impaired		Impaired
Deposits measured at amortised cost 1
Grade 1		3,889,803,821		—		—		—		3,889,803,821
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		3,889,803,821		—		—		—		3,889,803,821

¹  Before deduction of allowances

The Group’s standard for credit quality of deposits is same as the one of debt securities.

118

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(d) Commitments

The credit quality of commitments as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		Total
			Non-impaired		Impaired
Guaranteed payment and commitment
Grade 1		612,916,750		17,282,291		—		—		630,199,041
Grade 2		820,660,660		—		—		—		820,660,660
Grade 3		24,706,778		—		—		—		24,706,778
Grade 4		394,200,281		—		—		—		394,200,281
Grade 5		—		—		—		—		—
		1,852,484,470		17,282,291		—		—		1,869,766,760

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		Total
			Non-impaired		Impaired
Guaranteed payment and commitment
Grade 1		898,413,262		—		—		—		898,413,262
Grade 2		639,631,119		—		—		—		639,631,119
Grade 3		—		—		—		—		—
Grade 4		367,713,051		—		—		—		367,713,051
Grade 5		—		—		—		—		—
		1,905,757,432		—		—		—		1,905,757,432

(e) Other receivables from securities transactions

Other receivables from securities transactions, which are classified as other financial assets, as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Other receivables related to proprietary trading		104,074,769		87,743,921
Other receivables related to brokerage Transactions		2,635,657,555		4,701,512,636

The Group recognizes receivables and payables between Korea Exchange (Clearing and Settlement Organization) and customers regarding securities brokerage transactions on the trade date. The Group is exposed to credit risks between the trade date and settlement date relating to investment brokerage business, which is standardized by related regulations (generally less than two business days from the trade date). As a central counterparty, Korea Exchange mitigates the payment default risk by managing collective fund for default loss, and the Group mitigates customer default risk through margin requirements system. Also, if the customers can not pay by the settlement date, the Group can collect the receivables through covering. Therefore, credit risk that the Group actually bears is linked to the price fluctuation risk of securities between the trade date and the settlement date.

119

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The Group recognizes assets and liabilities on trade date for regular-way transactions and is exposed to the market risk and credit risk between trade date and settlement date.

37.3 Liquidity Risk

37.3.1 Overview of Liquidity Risk

Liquidity risk is the risk of insolvency or loss due to a disparity between the inflow and outflow of funds, unexpected outflow of funds, and obtaining funds at a high price or disposing of securities at an unfavorable price due to lack of available funds. The Group manages its liquidity risk through analysis of the contractual maturity of all financial assets, liabilities and off-statement of financial position items such as commitments and financial guarantee contracts. The Group discloses them by maturity groups: Up to one month, between over one month and three months, between over three months and twelve months, between over one year and five years, and over five years.

37.3.2 Liquidity Risk Management Policy

The Group has established an appropriate liquidity risk management framework for the management of the Group’s short-, medium- and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities. Meanwhile, additional details of unused funding arrangement to reduce liquidity risk that the Group holds at its discretion are discussed in Note 40.

37.3.3 Analysis on Remaining Contractual Maturities of Financial Liabilities

Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and, thus, differ from the amount in the financial statements which are based on the present value of expected cash flows in some cases.

The remaining contractual maturities of financial liabilities as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	On demand		Up to one month		One to three months		Three to 12 months		12 months to five years		More than five years		Total
Financial liabilities
Financial liabilities at FVTPL		2,825,922,918		—		—		—		—		—		2,825,922,918
Financial liabilities designated at FVTPL 1		9,160,923,652		—		—		—		—		—		9,160,923,652
Derivatives (trading) 2		857,388,295		—		—		—		—		—		857,388,295
Derivatives (hedge)		—		9,122,400		—		7,215,920		915,127		—		17,253,447
Deposit liabilities 3		8,391,075,183		—		—		—		—		—		8,391,075,183
Borrowings		8,448,833,366		9,370,162,500		1,289,202,707		3,045,919,342		2,715,034,226		2,105,718		24,871,257,860
Other financial liabilities		3,376,026		3,324,090,215		4,941,525		22,583,280		87,055,423		26,482,744		3,468,529,213
Guaranteed payments and commitment 4		1,869,766,760		—		—		—		—		—		1,869,766,760

120

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

¹ Derivatives-linked securities as financial liabilities designated at FVTPL are classified as ‘on demand’ because derivatives-linked securities are subject to early settlement.

² Derivatives are classified as ‘on demand’ because contract maturity is not necessary in understanding the cash flow timing of the derivatives

³ Deposits that are contractually repayable on demand or on short notice are classified as ‘on demand’ category.

⁴ With respect to the guaranteed payments and commitments, the amounts included above, which the Group might pay the maximum amounts based on the contract, if the warrantee claims the entire amount of the guarantee, they are classified on the basis of the earliest period when those agreements may be executed.

	2020
(in thousands of Korean won)	On demand		Up to one month		One to three months		Three to 12 months		12 months to five years		More than five years		Total
Financial liabilities
Financial liabilities at FVTPL		1,884,675,400		—		—		—		—		—		1,884,675,400
Financial liabilities designated at FVTPL 1		9,796,959,305		—		—		—		—		—		9,796,959,305
Derivatives (trading) 2		861,927,424		—		—		—		—		—		861,927,424
Derivatives (hedge)		—		476,000		—		340,000		588,580		—		1,404,580
Deposit liabilities 3		7,686,410,761		—		—		—		—		—		7,686,410,761
Borrowings		9,286,392,035		9,662,335,504		2,305,396,387		1,782,066,817		2,087,735,547		1,381,869		25,125,308,159
Other financial liabilities		1,222,793		6,521,373,899		5,575,367		27,470,886		88,975,309		48,853,368		6,693,471,622
Guaranteed payments and commitment 4		1,905,757,432		—		—		—		—		—		1,905,757,432

¹ Derivatives-linked securities as financial liabilities designated at FVTPL are classified as ‘on demand’ because derivatives-linked securities are subject to early settlement.

² Derivatives are classified as ‘on demand’ because contract maturity is not necessary in understanding the cash flow timing of the derivatives

³ Deposits that are contractually repayable on demand or on short notice are classified as ‘on demand’ category.

⁴ With respect to the financial guarantee contracts and commitments, the amounts included above, which the Group might pay the maximum amounts based on the contract, if the warrantee claims the entire amount of the guarantee, they are classified on the basis of the earliest period when those agreements may be executed.

37.4 Market Risk

37.4.1 Overview of Market Risk

Market risk refers to the risk that the value of a position held by the Group may fluctuate due to price fluctuations of market factors such as stock, interest rates, foreign exchange rates, commodity and others.

Market risk is daily managed by establishing the limitations considering products’ natures such as position limitations, loss limitations, VaR limitations, sensitivity limitations (duration, delta, gamma, vega, others) and others. Relevant business procedures are processed by written regulations and guidelines.

37.4.2 Value at Risk (“VaR”)

The Exposure to market risk is measured by the Value at Risk (VaR). VaR is the potential loss that can occur in the holding position when the market price moves in an adverse direction within a given confidence level for a given holding period in the normal market.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Historical simulation model is used to calculate 10days VaR. Historical simulation model is based on past changes of market variables without assuming a specific probability distribution.

The Group uses the 10-day return of the past two-year time series of the asset risk factor and uses the 99% confidence level of the two-year time series of the portfolio. 10days VaR that is under 99% of confidence level that the Group uses reflects reported daily losses as VaR does not exceed with 99% chance.

The average, minimum and maximum amount of the Group’s VaR (99%, 10 days) as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Average		Maximum		Minimum		December 31, 2021
Total VaR		27,533,895		44,103,782		13,303,234		32,812,682

	2020
(in thousands of Korean won)	Average		Maximum		Minimum		December 31, 2020
Total VaR		32,857,032		66,620,975		9,114,539		28,978,719

37.4.3 Risk Management by Market Risk Factors

The Group’s market risk is comprised of interest rate risk, foreign exchange rate risk and stock price risk.

(a) Stock price risk

Stock price risk arises in the Group’s foreign currency stocks and Korean won stocks.

Hedging instruments of Equity Linked Security and Equity Linked Warrant comprise most of stock trading portfolio and certain security proprietary trading is composed of trading securities on the exchange, futures contracts maturing in a month or two, and others under the restriction of position limitation, sale at loss, loss limitation, and others. Marketable stocks among non-trading positions and stock beneficiary certificates are included in stock price risk and market VaR is computed.

Risk management council allocates position and loss limitations, and risk management department monitors asset management department’s possible breach of limitations and other special matters on a daily basis.

(b) Interest rate risk

Trading position interest rate risk usually arises from debt instruments denominated in Korean won. The Group’s trading strategy is to benefit from short-term movements in the prices of debt instruments arising from changes in interest rates.

The product prices of the Group’s trading accounts are disclosed daily. The risks related to trading accounts are managed by using market value based method such as market VaR and sensitivity analysis.

(c) Foreign exchange rate risk

Foreign exchange rate risk arises through ownership of assets and liabilities, denominated in currencies other than Korean won, from non-trading positions, or through foreign currency forward agreements, currency swaps and foreign currency trading securities.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The Group computes foreign currency position’s net position regularly to follow the Regulation on Financial Investment Business and reports to the supervisory body.

Also, the Group manages the risk for total position exposed to foreign exchange rate including non-trading position by using market price base method such as market VaR and sensitivity analysis.

37.4.4 Risk Management by Interest Risk Factors

The Group closely monitors markets and the outputs of the various industry working groups that manage the transition to the new interest rate indicator, including statements made by the IBOR regulator and various consultative councils related to the transition to alternative interest rates.

In response to these announcements, the Group established an IBOR-related response plan consisting of workflows such as risk management, accounting, tax, law, computerization, and customer management, and completed most of the conversions and replacements accordingly. The Chief Financial Officer (CFO) is responsible for the planning and progress management, and important matters are reported to the Board of Directors.

The purpose of the plan is to identify the impacts and risks associated with interest rate indicator reform within the business, and to prepare and implement an action plan to facilitate the transition to an alternative indicator interest rate. The Group aims to complete the response plan by 2022.

The carrying amount of financial instruments that have not been converted to an alternative indicator interest rate as of December 31, 2021 is as follows:

(in thousands of Korean won)	2021
	Exposure amount 1 USD LIBOR
Measured at amortised cost
Loans		7,035,224
Measured at fair value
Financial assets at FVTPL(non-derivative)		4,694,580
Financial liabilities at FVTPL(derivative)		103,221,786

¹ Financial instruments that will expire before conversion to an alternative indicator interest rate are excluded.

37.5 Operational Risk

37.5.1 Concept

The Group defines operational risk to the extent of financial risk and non-financial risks incurred by unreasonable or wrong internal process, labor, system and external incidents.

37.5.2 Operational Risk Management

The purpose of operational risk management is control activity through continuous improvement of internal controls, performing proactive preventive control, proliferation of culture of risk management by establishing internal control that could respond quickly against change of business environment. OMRS (Operational Risk Management System), supports performing overall risk management such as recognition of operational risk, evaluation and monitoring. Periodically, through RCSA (Risk Control Self Assessment), management of KRI (Key Risk Indicator), management of data loss and related preparation of countermeasures, it controls the risks in advance, as well as collecting data for future advanced management method.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

37.6 Capital Adequacy

Main purpose of the capital risk management of the Group is optimizing use of capital and sustaining healthy financial status in order to maximize shareholder value. The Group has performed capital risk management through estimating net capital ratio based on ‘Capital Market and Financial Investment Business Act’, enforced in February 2009.

Net capital ratio is the net capital minus the total risk amount divided by the essential equity to sustain per each business unit. [(Net capital – total risk amounts) / essential equity to sustain per each business unit]. This formula is calculated based on the financial statements amount.

The net capital is calculated by subtracting deductible items and including additional item from financial investor’s net asset (asset-liability) as at date. The deductible item refers any asset that is difficult to be converted into cash immediately such as property, plant and equipment. The adding item includes that any item that recorded as liability without redemption obligation, internal reserves against future losses, items that redeemable in kind and items that function of complemental capital.

Total amount of risk is quantification of all of possible losses from operation of business for financial investor. Quantified amounts of market risks by possible losses due to fluctuation of stock price; interest and exchange rates of the securities that the investment firms held; credit risk amounts from breach of contract by the counterparties and possible losses due to accidents, errors, illegal conduct, any other potential losses from deteriorated condition for operation.

According to the Financial Investment Act, the regulation requires that net capital ratio must be maintained above 100% for the appropriation of the capital and it is required to improve the management if the financial investment firm does not meet the regulation for the net capital ratio.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

38. Offsetting Financial Assets and Financial Liabilities

The Group enters into International Derivatives Swaps and Dealers Association (“ISDA”) master netting agreements or similar agreement with the Group’s derivative counterparties. The Group also enters into repurchase agreements and securities borrowing and lending agreements similar to the master netting agreement for derivatives. Master netting agreements provide protection in bankruptcy in certain circumstances and, where legally enforceable, enable receivables and payables with the same counterparty to be offset for accounting and risk management purposes.

	2021
(in thousands of Korean won)	Gross amount		Offset amount		Net amounts presented in the statement of financial position		Amounts not offset				Net amount
							Recognized financial instruments		Cash collateral
Financial assets
Derivatives assets, others 1		846,411,930		—		846,411,930		544,286,051		235,743,401		66,382,478
Securities purchased under reverse repurchase agreements		442,100,000		—		442,100,000		442,100,000		—		—
Other receivables 4		2,317,397,927		2,307,527,540		9,870,387		—		—		9,870,387
Other receivables (Payment and settlement)		105,464,571		99,790,621		5,673,950		—		—		5,673,950
Receivable unsettled spot exchange		237,030,000		—		237,030,000		237,030,000		—		—
		3,948,404,428		2,407,318,161		1,541,086,267		1,223,416,051		235,743,401		81,926,815
Financial liabilities
Derivatives liabilities, others 1		1,483,107,954		—		1,483,107,954		1,050,325,766		75,252,991		357,529,197
Securities sold under reverse resale agreements 2		13,531,208,950		—		13,531,208,950		13,531,208,950		—		—
Securities sold 3		2,825,922,918		—		2,825,922,918		2,825,922,918		—		—
Other payables 4		2,712,412,451		2,307,527,540		404,884,911		—		—		404,884,911
Other payables (Payment and settlement)		99,790,621		99,790,621		—		—		—		—
Payable unsettled spot exchange		237,100,000		—		237,100,000		237,100,000		—		—
		20,889,542,894		2,407,318,161		18,482,224,733		17,644,557,634		75,252,991		762,414,108

¹ Both of derivatives (trading) and derivatives (hedge) are included.

² Securities sold under reverse resale agreements to the customers is included.

³ Securities sold is from securities borrowing and lending agreement.

⁴ The offsetting amounts of bonds and debts arising from transactions occurring on the same day between the Korea Exchange and the Group in relation to the client’s consignment trading is included.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Gross amount		Offset amount		Net amounts presented in the statement of financial position		Amounts not offset				Net amount
							Recognized financial instruments		Cash collateral
Financial assets
Derivatives assets, others 1		1,259,053,735		—		1,259,053,735		759,398,483		263,290,353		236,364,899
Securities purchased under reverse repurchase agreements		706,600,000		—		706,600,000		706,600,000		—		—
Other receivables 4		4,540,785,835		4,455,151,627		85,634,208		—		—		85,634,208
Other receivables (Payment and settlement)		106,827,372		97,386,310		9,441,062		—		—		9,441,062
Receivable unsettled spot exchange		532,636,000		—		532,636,000		532,636,000		—		—
		7,145,902,942		4,552,537,937		2,593,365,005		1,998,634,483		263,290,353		331,440,169
Financial liabilities
Derivatives liabilities, others 1		1,178,486,493		—		1,178,486,493		952,770,129		77,324,124		148,392,240
Securities sold under reverse resale agreements 2		15,004,515,752		—		15,004,515,752		15,004,515,752		—		—
Securities sold 3		1,884,675,400		—		1,884,675,400		1,884,675,400		—		—
Other payables 4		4,742,166,256		4,455,151,627		287,014,629		—		—		287,014,629
Other payables (Payment and settlement)		97,386,310		97,386,310		—		—		—		—
Payable unsettled spot exchange		532,965,000		—		532,965,000		532,965,000		—		—
		23,440,195,211		4,552,537,937		18,887,657,274		18,374,926,281		77,324,124		435,406,869

¹ Both of derivatives (trading) and derivatives (hedge) are included.

² Securities sold under reverse resale agreements to the customers is included.

³ Securities sold is from securities borrowing and lending agreement.

⁴ The offsetting amounts of bonds and debts arising from transactions occurring on the same day between the Korea Exchange and the Group in relation to the client’s consignment trading is included.

39. Lease

39.1 The amounts recognized in the consolidated statement of financial position

The amounts related to lease recognized in the consolidated statement of financial position as at December 31, 2021 and 2020, are as follows;

(in thousands of Korean won)	2021		2020
Right-of-use assets 1
Buildings		73,419,498		85,892,473
Vehicles		1,570,194		1,345,887
Others		1,710,375		2,700,770
		76,700,067		89,939,130
Lease liabilities		127,992,813		148,849,442

¹ The amount is included in property and equipment in the consolidated statement of financial position.

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

39.2 The amounts recognized in the consolidated statement of profit or loss

The amounts related to lease recognized in the consolidated statement of profit or loss for the year ended December 31, 2021 and 2020, are as follows

(in thousands of Korean won)	2021		2020
Depreciation of the right-of-use assets
Buildings		16,115,606		21,374,850
Vehicles		1,176,069		1,223,018
Others		1,281,970		1,062,837
		18,573,645		23,660,705
Interest income from lease receivables (included in financial income)		1,615,695		1,733,996
Interest expense to lease liabilities (included in financial cost)		2,953,182		3,785,894
Lease payment for leases for which the underlying asset is of low value (included in administrative expenses, not-include lease for short-term period)		986,405		770,815
Variable lease payments which are not included in the measurement of lease liabilities (included in administrative expenses)		256,363		430,931

The total cash outflows for leases in 2021 and 2020 are W34,917 million and W27,335 million, respectively.

39.3 As a Lessor : Financial Lease

As at December 31, 2021 and 2020, total investment on financial lease and present value of minimum lease payments and unrealized interest income of financial lease are as follows:

(in thousands of Korean won)	2021		2020
Total Investment on lease		41,127,430		42,826,306
Net Investment on lease		37,179,103		38,190,239
Present value of minimum lease payments		37,179,103		38,190,239
Unrealized interest income		3,948,327		4,636,067

39.4 As a Lessor : Operating Lease

As at December 31, 2021 and 2020, future minimum lease receipts expected under non-cancellable lease contracts are as follows:

(in thousands of Korean won)	2021		2020
Within 1 year		50,784,062		31,399,384
1-5 years		231,084,324		196,308,371
Over 5 years		272,652,305		42,367,817
		554,520,691		270,075,572

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

40. Contingent Liabilities and Commitments

As at December 31, 2021 and 2020, the Group is involved in pending lawsuits, are as follows:

	2021				2020
(in thousands of Korean won)	Number of lawsuits		Amount		Number of lawsuits		Amount
Defendant		21		176,352,560		19		136,191,220
Plaintiff		9		163,067,109		8		36,820,672

The Group expects that these lawsuits do not have significant impact on the financial position.

The Group has entered into various agreements with financial institutions as at December 31, 2021 and 2020, are as follows:

		Credit line
(in thousands of Korean won)	Financial institution	2021		2020
Overdraft (including daily overdraft)	Kookmin Bank and others		530,000,000		530,000,000
General loan	Kookmin Bank		40,000,000		40,000,000
Securities underwriting loan	KSFC		700,000,000		700,000,000
Working capital loan (general)	KSFC		375,000,000		500,000,000
Note trading at a discount (general)	KSFC		300,000,000		300,000,000
Note trading at a discount (trust)	KSFC		Limit of subscription deposits		Limit of subscription deposits
Bond dealer’s loan (general)	KSFC		850,000,000		850,000,000
Securities underwriting financing	KSFC		1,500,000,000		1,500,000,000

The guarantees and various commitment as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Agreement to purchase commercial papers 1		576,882,291		797,960,000
Loan agreements		30,000,000		29,440,000
Credit line agreements		817,405,672		580,109,381
LOC and Investment commitments		445,478,798		498,248,051
		1,869,766,761		1,905,757,432

¹ According to the above arrangement, the Group holds the asset-backed short-term bonds amounting to W101,660 million and W237,940 million as at December 31, 2021 and 2020, respectively.

The Group has been provided with W12,678 million and W14,963 million in guarantees related to provisional attachment and others by Seoul Guarantee Insurance as at December 31, 2021 and 2020, respectively.

The securities in custody as at December 31, 2021 and 2020, are as follows:

(in millions of Korean won)	2021		2020		Valuation method
Trustor securities		155,890,031,762		131,197,874,623	Fair value
Saver securities		232,748,017		83,990,031	Fair value
Beneficiary securities		32,356,219,560		31,126,726,711	Standard selling price
	188,478,999,339		162,408,591,365

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

The Group, as a selling company of qualified investor private equity fund that aims to lend money to corporations (borrowers) investing in apartment rental business for disabled people in Australia, sold W326.5 billion of trusts and funds to the individuals and institutional investor. But the local borrower’s breach of the contract makes the fund inoperable and there is a possibility of loss of principal.

As of December 31, 2021, three lawsuits were filed to the Group as a defendant and there is a possibility that additional lawsuits may be filed in the future. The amount and the final result of this lawsuit is uncertain at this time.

The proliferation of COVID-19 has had a negative impact on the global economy, which has a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, which can negatively affect the profit generation capability of the Group as follows:

– There is a possibility of uncertainty about the credit risk of a borrower that could be affected by COVID-19.

– Uncertainty may arise about forward-looking macroeconomic information related to expected credit losses.

– Korean won may depreciate against major foreign currencies. This may result in an increase in principal and interest payments on liabilities denominated in foreign currencies, and losses on foreign exchanges transactions.

– A significant decrease in the fair value of the Group’s investment in an entity that could be affected by COVID-19 pandemic can occur.

Meanwhile, the Group is closely monitoring the impact of COVID-19 and the impact on expected credit losses is reflected on Note 10 Loans Measured at Amortised Cost, Note 19 Provisions and Note 20 Other financial liabilities.

41. Related Party Transactions

KB Financial Group Inc. owns 100% of ordinary shares of the KB Securities Co., Ltd. as at December 31, 2021 and 2020.

Significant balances, excluding loan and borrowing transactions, with related parties as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021				2020
	Receivables		Payables		Receivables		Payables
The Parent Company
KB Financial Group Inc.		84,740		106,320,356		—		86,571,112
Others
Kookmin Bank		65,935,574		56,100,555		47,262,861		27,333,878
KB Asset Management Co., Ltd.		1,747		32,815,772		963		32,746,601
KB Real Estate Trust Co., Ltd.		—		522		—		584
KB Investment Co., Ltd.		154,405		121		132,503		123
KB Credit Information Co., Ltd.		—		2,719		—		179
KB Data System Co., Ltd.		179,879		235,328		—		156,605
KB Life Insurance Co., Ltd.		790,282		380,519		729,487		308,663
KB Kookmin Card Co., Ltd.		142,366		7,390,861		72,083		6,001,449
KB Savings Bank Co., Ltd.		—		399		—		433
KB Capital Co., Ltd.		92,710		1,489,116		38,918		50,454,522
KB Insurance Co., Ltd		7,512,920		2,967,593		6,503,365		2,236,590
Prudential Life Insurance Co., Ltd.		378,566		717,402		5,974		412,907
KB Wisestar Private Real Estate Fund Investment Trust No. 1		7,811		59,551,609		3,000,596		61,882,516
Other funds		2,566,825		4,718,031		61,136,048		2,832,061

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Significant transactions with related parties for the years ended December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Revenue		Expenses		Revenue		Expenses
Associates
KB-Stonebridge Secondary Private Equity Fund		549,714		—		1,442,249		—
KB-SJ Tourism Venture Fund		278,571		—		337,500		—
KB-SP Private Equity Fund IV		388,931		—		479,967		—
KB Special Purpose Acquisition Company No.17		—		1,067,588		2,961		—
KB Special Purpose Acquisition Company No.18		5,886		—		66,423		—
KB Special Purpose Acquisition Company No.19		36,244		—		11,125		—
KB Special Purpose Acquisition Company No.20		67,917		—		1,778,305		—
KB Bio Private Equity Fund III Ltd.		323,836		—		—		—
KB Private Equity Fund III		—		—		462,951		—
K The fifteenth Real Estate Investment Trust 1		500,000		—		—		—
Keystone-Hyundai Sec. No.1 Private Equity Fund 1		42,637		—		114,835		—
KB-Brain KOSDAQ Scale-Up Fund		514,119		—		733,705		—
KB-KDBC Pre-IPO New Technology Business Investment Fund		189,998		—		300,000		—
KBTS Technology Venture Private Equity Fund		285,290		—		126,027		—
KB-UTC Inno-Tech Venture Fund		471,466		—		370,970		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		1,198,196		—		237,293		—
KB SPROTT Renewable Private Equity Fund I		487,500		—		487,836		—
KB New Paradigm Agriculture Venture Fund		—		—		225,000		—
KB Shinjasanaubo Fund		—		—		90,000		—
JR GLOBAL REIT 1		—		—		6,210,000		—
IGIS NO371 Professional Investors’ Real Estate Investment Company 1		—		—		200,000		—
Koreit Tower Real Estate Investment Trust Company 1		—		—		2,851,500		—
KB Material and Parts No. 1 PEF		352,500		—		62,774		—
The Parent Company
KB Financial Group Inc.		689,158		15,168		1,397,798		98
Others
Kookmin Bank		114,540,036		117,174,822		45,610,716		64,628,791
KB Asset Management Co., Ltd.		9,821		1,108,009		10,029		1,409,256
KB Real Estate Trust Co., Ltd.		760		5		778		10
KB Investment Co., Ltd.		616,501		1		497,016		2
KB Credit Information Co., Ltd.		218		2,482		246		662
KB Data System Co., Ltd.		823		1,348,880		1,013		1,079,974
KB Life Insurance Co., Ltd.		322,568		327,902		49,322		1,111,202
KB Kookmin Card Co., Ltd.		111,626		679,936		204,124		777,334
KB Savings Bank Co., Ltd.		227		4,610		7		7
KB Capital Co., Ltd.		344,413		478		752,271		2,359
KB Insurance Co., Ltd		889,407		5,459,994		241,525		2,389,441
Prudential Life Insurance Co., Ltd.		614,560		747,319		260,584		2,574

130

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Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2021				2020
(in thousands of Korean won)	Revenue		Expenses		Revenue		Expenses
KB Wisestar Private Real Estate Fund Investment Trust No. 1		10,297,783		—		364,208		1,907,319
Other Private Equity Funds		5,305,247		510,087		2,599,262		—
Retirement pension		598,028		—		529,780		—
The Group
Employees		321,649		—		408,651		—

¹  These companies are excluded from related parties during the year ended December 31, 2021 or 2020. The transaction amounts are up to the date of the exclusion.

Significant loan and borrowing transactions with related parties for the years ended December 31, 2021 and 2020 are as follows:

	2021
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other			Ending balance
Associates
KB Special Purpose Acquisition Company No.17	Hybrid bond with securities-like features		2,067,088		—		—			(1,067,588	)		999,500
KB Special Purpose Acquisition Company No.18	Hybrid bond with securities-like features		3,052,888		—		—			5,886			3,058,774
KB Special Purpose Acquisition Company No.19	Hybrid bond with securities-like features		2,054,617		—		—			36,244			2,090,861
KB Special Purpose Acquisition Company No.20	Hybrid bond with securities-like features		3,067,305		—		—			67,917			3,135,222
Others
Kookmin Bank	Deposits		466,390,869		—		—			70,800,919			537,191,788
	Borrowings		97,651,298		756,358,434		(729,449,432	)		—			124,560,300
The Group
Employees	Loans to employees		19,064,459		2,490,240		(6,614,323	)		—			14,940,376
	2020
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other			Ending balance
Associates
KB Special Purpose Acquisition Company No.17	Hybrid bond with securities-like features		2,064,127		—		—			2,961			2,067,088
KB Special Purpose Acquisition Company No.18	Hybrid bond with securities-like features		2,986,465		—		—			66,423			3,052,888
KB Special Purpose Acquisition Company No.19	Hybrid bond with securities-like features		2,043,492		—		—			11,125			2,054,617

131

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other		Ending balance
KB Special Purpose Acquisition Company No.20	Hybrid bond with securities-like features		1,499,000		—		—			1,568,305		3,067,305
Others
Kookmin Bank	Deposits		423,387,563		—		—			43,003,306		466,390,869
	Borrowings		64,995,500		1,005,167,532		(972,511,734	)		—		97,651,298
The Group
Employees	Loans to employees		23,130,910		1,415,150		(5,481,601	)		—		19,064,459

Transactions between related parties, such as deposit transaction arising from operating activities are not included in the above table as deposit and withdraw occurred frequently.

Other transactions with related parties for the years ended December 31, 2021 and 2020, are as follows:

(In thousands of Korean won)	2021
	Contribution		Collection and others
Associates
KB New Paradigm Agriculture Venture Fund		—		2,275,000
KB KONEX Market Vitalization Fund		—		5,550,000
KB-KDBC Pre-IPO New Technology Business Investment Fund		—		2,400,000
KBTS Technology Venture Private Equity Fund		880,000		1,536,000
KB-SJ Tourism Venture Fund		500,000		—
KB-Brain KOSDAQ Scale-Up Fund		3,750,000		4,050,000
KB-Stonebridge Secondary Private Equity Fund		3,788,000		1,692,584
KB-UTC Inno-Tech Venture Fund		1,695,000		375,000
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		3,846,000		—
KB Shinjasanaubo Fund		880,000		264,000
JR GLOBAL REIT 1		—		65,025,000
Keystone-Hyundai Sec. No.1 Private Equity Fund 1		—		1,925,000
K The fifteenth Real Estate Investment Trust 1		8,600,000		8,600,000
KB Private Equity Fund III 1		—		8
KB Bio Private Equity Fund III Ltd.		10,000,000		—
KB Global Commerce Private Equity Investment Fund		7,000,000		—
KB-KTB Technology Venture Fund		2,000,000		—
KB Bio Global Expansion Private Equity Fund No.1		15,000,000		—
KB Digital Platform Fund		4,500,000		—
KB-SOLIDUS Healthcare Investment Fund		100,000		—
Others
KB NA Compass Energy Private Special Asset Fund		1,513,600		2,056,553
Meritz Private Real Estate Fund 9-2		1,053		5,954
KB Global Core Bond Securities Master Fund(Bond)		—		15,000,000
KB Onkookmin TDF 2045 Fund		—		1,400,000
KB Global Platform Fund		5,400,000		—
KB Onkookmin Life Income RIF 20 Feeder Fund(FoFs)		—		2,500,000
KB Onkookmin Life Income RIF 40 Feeder Fund(FoFs)		—		2,500,000
KB BMO senior loan private special asset fund 2		4,477,004		—
KB Multi Alpha Plus Private Fund 1		10,000,000		—
KB KBSTAR 30-Years Treasurybond Enhanced ETF		6,311,671		5,806,617
KB Aircraft Loan Private Special Asset Fund Investment Trust No. 1		33,017,696		752,186
KB New Deal Innovation Fund		2,000,000		—
Paramark KB Fund I		680,000		—

¹  These companies are not related party as at December 31, 2021.

132

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

(In thousands of Korean won)	2020
	Contribution		Collection and others
Associates
KB IGen Private Equity Fund No 1 1		—		53
KB KONEX Market Vitalization Fund		—		1,335,000
KB-KDBC Pre-IPO New Technology Business Investment Fund		—		3,200,000
KBTS Technology Venture Private Equity Fund		640,000		1,568,000
KB-SJ Tourism Venture Fund		1,500,000		—
KB-Brain KOSDAQ Scale-Up Fund		3,000,000		1,200,000
KB SPROTT Renewable Private Equity Fund I		842,523		—
KB-Stonebridge Secondary Private Equity Fund		2,598,000		—
KB-UTC Inno-Tech Venture Fund		5,655,000		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		2,850,000		—
JR GLOBAL REIT		219,492,955		3,638,615
IGIS NO371 Professional Investors’ Real Estate Investment Company 1		10,000,000		10,000,000
Koreit Tower Real Estate Investment Trust Company 1		30,000,000		30,000,000
Project Vanilla Co., Ltd.		2,450,000		—
December & Company Inc.		30,000,000		—
KB Material and Parts No. 1 PEF		3,400,000		—
KB Private Equity Fund III		—		7,999,992
Others
KB AU Infigen Energy Private Special Asset Fund 1		—		23,331,552
KB BMO senior loan private special asset fund		19,352,404		—
KB NA Compass Energy Private Special Asset Fund		1,551,522		2,063,968
Meritz Private Real Estate Fund 9-2		2,336		—
KB Global Platform Fund		3,600,000		—
KB Wisestar Private Real Estate Fund Investment Trust No. 12 1		30,000,000		28,523,000

¹  These companies are not related party as at December 31, 2020.

Details of assets pledged as collateral to related parties as at December 31, 2021 and 2020 are as follows:

(in thousands of Korean won)	Details of assets pledged	2021				2020
		Carrying amount		Collateralized amount		Carrying amount		Collateralized amount
Kookmin Bank	Time deposits and others		173,000,000		167,000,000		173,000,000		167,000,000
	Bonds denominated in Korean won		21,183,449		20,000,000		23,384,069		20,000,000
	Investment properties		481,945,657		11,967,467		484,439,157		12,000,000

As at December 31, 2021, the Group received securities amounting to W54,000 million (2020 : W52,000 million) as a collateral from Kookmin bank and the Group has W140,000 million (2020 : W140,000 million) of credit line such as loan agreement.

133

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Details of unused loan commitments provided to the related parties as at December 31, 2021 and 2020, are as follows:

(In thousands of Korean won)	Details	Amounts
		2021		2020
KB Shinjasanaubo Fund	Purchase agreements of securities		—		880,000
KBTS Technology Venture Private Equity Fund	Purchase agreements of securities		176,000		1,056,000
KB Wisestar Private Real Estate Fund Investment Trust No. 1	Purchase agreements of securities		19,000		19,000
KB-SJ Tourism Venture Fund	Purchase agreements of securities		—		500,000
KB-Brain KOSDAQ Scale-Up Fund	Purchase agreements of securities		—		3,750,000
KB SPROTT Renewable Private Equity Fund I	Purchase agreements of securities		3,817,225		3,817,225
KB-Stonebridge Secondary Private Equity Fund	Purchase agreements of securities		1,594,000		5,382,000
KB Global Platform Fund	Purchase agreements of securities		3,200,000		8,600,000
KB-UTC Inno-Tech Venture Fund	Purchase agreements of securities		—		1,695,000
KB Global Infra Private Special Asset Fund No.5	Purchase agreements of securities		4,999,773		4,999,773
KB Global Infra Private Special Asset Fund No.6	Purchase agreements of securities		4,999,773		4,999,773
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	Purchase agreements of securities		8,304,000		12,150,000
KB BMO senior loan private special asset fund 2	Purchase agreements of securities		18,239		4,290,235
KB-KTB Inno-Tech Venture Fund	Purchase agreements of securities		8,000,000		—
Paramark KB Fund I	Purchase agreements of securities		9,320,000		—
KB New Deal Innovation Fund	Purchase agreements of securities		8,000,000		—
KB-SOLIDUS Healthcare Investment Fund	Purchase agreements of securities		4,900,000		—
KB Digital Platform Fund	Purchase agreements of securities		45,500,000		—

The Group received credit card commitment amounting to W21,000 million(W14,000 million as at December 31, 2020) from Kookmin Card Co., Ltd. as at December 31, 2021.

Debt instruments purchased or sold via the Group by the related party for the years ended December 31, 2021 and 2020, are as follows.

	2021
(in thousands of Korean won)	Sale		Purchase 1
Kookmin Bank		9,642,170,271		9,005,606,675
KB Life Insurance Co., Ltd.		272,656,940		88,646,788
KB Insurance Co., Ltd		853,998,306		446,196,491
KB Kookmin Card Co., Ltd.		—		40,000,000
KB Capital Co., Ltd.		—		130,000,000

¹ Debt instruments issued by the related party and purchased by the Group are included.

134

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Sale		Purchase 1
KB Financial Group Inc.		—		20,000,000
Kookmin Bank		14,312,409,201		14,548,227,447
KB Life Insurance Co., Ltd.		388,194,034		145,858,941
KB Insurance Co., Ltd		1,850,829,401		984,767,090
KB Kookmin Card Co., Ltd.		—		220,000,000
KB Capital Co., Ltd.		—		180,000,000

¹ Debt instruments issued by the related party and purchased by the Group are included.

The key management includes registered or unregistered directors, members of BOD, CFO, person in charge for internal audit and their compensation for the years ended December 31, 2021 and 2020, are as follows.

(in thousands of Korean won)	2021		2020
Short-term salaries		9,493,422		11,637,951
Post-employment benefits		579,895		578,651
Share-based payment		16,001,106		6,658,506
		26,074,423		18,875,108

135

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

42. Supplemental Cash Flow Information

Adjustments for non-cash items of cash flows from operating activities for the years ended December 31, 2021 and 2020, are as follows.

(in thousands of Korean won)	2021			2020
Interest income		(826,686,736	)		(822,598,490	)
Interest expenses		268,260,224			309,414,130
Dividend income and distribution income		(47,721,978	)		(42,282,883	)
Tax expenses		217,752,228			159,284,707
Gains on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		(269,490,685	)		(435,592,997	)
Losses on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		418,287,034			450,719,275
Gains on valuation of financial assets (liabilities) designated at FVTPL		(602,482,365	)		(631,983,229	)
Losses on valuation of financial assets (liabilities) designated at FVTPL		170,830,700			339,572,870
Gains on valuation of derivative financial assets (liabilities)		(1,520,100,781	)		(1,276,295,828	)
Losses on valuation of derivative financial assets (liabilities)		1,675,607,385			1,409,369,289
Gains or losses on disposal of financial assets at FVOCI		10,811,918			(9,379,901	)
Provision for allowances for loan losses		17,369,802			24,258,471
Depreciation		55,730,775			68,506,575
Amortization		22,397,762			18,142,536
Foreign currency translations		(58,221,499	)		145,274,452
Others		50,343,825			45,046,085
		(417,312,391	)		(248,544,938	)

Changes in operating assets and liabilities of cash flows for the years ended December 31, 2021 and 2020, are as follows.

(in thousands of Korean won)	2021			2020
Deposits in financial institutions		(116,093,291	)		(205,891,315	)
Financial assets required to be mandatorily measured at FVTPL		(741,184,122	)		(5,197,126,116	)
Derivative financial instruments		(47,323,458	)		(58,043,456	)
Loans measured at amortised cost		(965,561,358	)		(562,491,351	)
Other assets		3,159,131,548			(4,465,952,377	)
Deposit liabilities		690,719,218			3,361,720,558
Financial liabilities required to be mandatorily measured at FVTPL		978,686,697			(794,598,016	)
Financial liabilities designated at FVTPL		(185,467,288	)		(2,662,546,777	)
Defined benefit obligation		(16,828,530	)		(18,359,951	)
Securities sold under repurchase agreements		(1,240,816,274	)		1,741,806,861
Other liabilities		(3,249,573,025	)		4,283,217,537
		(1,734,309,883	)		(4,578,264,403	)

136

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Changes in liabilities of cash flows from financing activities for the years ended December 31, 2021 and 2020, are as follows.

	2021
(in thousands of Korean won)	Borrowings			Debentures			Guarantee deposits			Lease liabilities			Others		Total
Beginning balance (net)		14,996,548,684			1,821,496,969			27,209,689			148,849,442			195,601,085		17,189,705,869
Cash Transactions		643,655,553			599,948,542			(816,464	)		(32,260,777	)		23,956,770		1,234,483,624
Exchanges in foreign currency		48,656,448			4,886,332			11,969			(211,878	)		—		53,342,871
Changes in consolidation scope		(436,441,656	)		—			—			—			—		(436,441,656	)
Non-cash transactions		—			(2,678,188	)		113,070			11,616,026			9,160,058		18,210,966
Ending balance(net)		15,252,419,029			2,423,653,655			26,518,264			127,992,813			228,717,913		18,059,301,674

	2020
(in thousands of Korean won)	Borrowings			Debentures		Guarantee deposits			Lease liabilities			Others			Total
Beginning balance (net)		11,879,742,313			1,520,884,672		25,846,267			154,115,954			201,598,942			13,782,188,148
Cash Transactions		3,304,511,140			300,000,000		1,120,018			(25,090,408	)		8,321,432			3,588,862,182
Exchanges in foreign currency		(15,052,711	)		—		(11,930	)		—			—			(15,064,641	)
Changes in consolidation scope		(170,566,316	)		—		—			—			—			(170,566,316	)
Non-cash transactions		(2,085,742	)		612,297		255,334			19,823,896			(14,319,289	)		4,286,496
Ending balance(net)		14,996,548,684			1,821,496,969		27,209,689			148,849,442			195,601,085			17,189,705,869

43. Non-cash Transactions

Significant non-cash transactions from investing activities and financing activities which are not included in consolidated statements of cash flows for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Increase due to gains on valuation of financial assets at FVOCI		13,976,607		46,043,297
Replacement of equity method securities and assets held for sale		169,424,284		—

137

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

44. Interests in Unconsolidated Structured Entities

Information about interests in unconsolidated structured entities, which the Group does not have control over, including the nature, purpose and activities of the structured entity and how the structured entity is financed, are as follows:

Nature	Purpose	Activities	Method of financing
Asset-backed securitization	-   Early cash generation through transfer of securitization assets -   Fees earned as services to SPC, such as providing lines of credit and ABCP purchase commitments	-   Fulfillment of Asset-backed securitization plan -   Purchase and transfer of securitization assets -   Issuance and repayment of ABS and ABCP	-   Issuance of ABS and ABCP based on securitization assets
Project financing	-   Granting PF loans to SOC and real estate -   Granting loans to ships/ aircrafts SPC	-   Construction of SOC and real estate -   Building ships/ construction and purchase of aircrafts	-   Loan commitments through Credit Line, providing lines of credit and investment agreements
Trust	Management of financial trusts; -   Development trust -   General unspecified money trust -   Principal guaranteed trust	-   Development, management, and disposal of trusted real estate assets -   Payment of trust fees and allocation of trust profits.	-   Sales of financial trusts
Investment funds	-   Investment in beneficiary certificates -   Investment in PEF and partnerships	-   Management of fund assets -   Payment of fund fees and allocation of fund profits	-   Sales of beneficiary certificate instruments -   Investment of managing partners and limited partners

138

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

Details of the size of the interest in unconsolidated structured entities and the nature of risks related are as follows:

	2021
(in thousands of Korean won)	Asset-backed securitization		Investment fund		Others		Total
Total assets of unconsolidated structured entities		28,911,108,294		19,947,388,460		4,289,171,415		53,147,668,169
Assets recognized in the financial statements of the Group
Loans		398,657,425		—		463,524,918		862,182,343
Securities		3,613,761,414		1,482,094,992		4,995,000		5,100,851,406
Investments in associates		—		106,350,816		—		106,350,816
Derivatives financial assets		180,842		—		—		180,842
Other assets		11,226,387		—		107,631		11,334,018
		4,023,826,068		1,588,445,808		468,627,549		6,080,899,425
Liabilities recognized in the financial statements of the Group
Other liabilities		29,646,421		—		5,166,083		34,812,504
		29,646,421		—		5,166,083		34,812,504
Maximum exposure to loss
Holding assets		4,023,826,069		1,588,445,808		468,627,549		6,080,899,426
Payment guarantee and loan commitments		631,893,710		394,378,798		92,100,000		1,118,372,508
		4,655,719,779		1,982,824,606		560,727,549		7,199,271,934
The way that the maximum exposure to loss is determined		Amount of credit offerings and purchase agreement		Amount of investment commitment		Amount of investment commitment
	2020
(in thousands of Korean won)	Asset-backed securitization		Investment fund		Others		Total
Total assets of unconsolidated structured entities		20,154,310,007		18,772,547,034		2,749,664,202		41,676,521,243
Assets recognized in the financial statements of the Group
Loans		250,259,224		—		243,140,313		493,399,537
Securities		2,277,934,281		1,588,185,174		5,119,000		3,871,238,455
Investments in associates		—		69,677,945		—		69,677,945
Derivatives financial assets		1,426,347		—		—		1,426,347
Other assets		13,859,498		2,208,000		88,434		16,155,932
		2,543,479,350		1,660,071,119		248,347,747		4,451,898,216
Liabilities recognized in the financial statements of the Group
Other liabilities		11,768,841		—		965,705		12,734,546
		11,768,841		—		965,705		12,734,546
Maximum exposure to loss
Holding assets		2,543,479,349		1,660,071,119		248,347,747		4,451,898,215
Payment guarantee and loan commitments		844,140,000		297,748,051		87,600,000		1,229,488,051
		3,387,619,349		1,957,819,170		335,947,747		5,681,386,266
The way that the maximum exposure to loss is determined		Amount of credit offerings and purchase agreement		Amount of investment commitment		Amount of investment commitment

139

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

45. Disposal group classified as held for sale

The Parent Company has decided to sell all shares in 498 Seventh KOR Holdco LP owned by Hanwha US Equity Strategy Private Real Estate Fund 3, a consolidated subsidiary, and 498 Seventh KOR LLC. owned by 498 Seventh KOR Holdco LP. which is consolidated subsidiary.

Accordingly, as at December 31, 2021, the Group classified the assets of 498 Seventh KOR Holdco LP and 498 Seventh KOR LLC as the disposal group classified as held for sale, and the accumulated gains and losses from overseas operations were classified as other comprehensive income for the disposal group classified as held for sale. As at the reporting date, the Group has entered into a share transfer agreement with JR No.28 Consignment Management Real Estate Investment Company and is in the process of selling accordingly.

As of December 31, 2021, the main contents of the assets classified as the disposal group classified as held for sale are as follows, and there is no liability directly related to the disposal group classified as held for sale.

(in thousands of Korean won)	498 Seventh KOR Holdco LP.		498 Seventh KOR LLC.		Total
Disposal Group classified as held for sale
Cash and deposits		556,046		512,346		1,068,392
Investments in associates		—		169,424,284		169,424,284
Other assets		—		1,256,639		1,256,639
		556,046		171,193,269		171,749,315

As at December 31, 2021, there is no recognized impairment losses related to disposal groups classified as held for sale.

Other comprehensive income directly recognized relating to the disposal group classified as held for sale as at December 31, 2021, is as follows:

(in thousands of Korean won)	2021
Accumulated exchange gains on foreign business transactions		7,670,746

140

Exhibit 99.2

KB SECURITIES CO., LTD.

Separate Financial Statements

December 31, 2021 and 2020

(With Independent Auditors’ Report Thereon)

	Page(s)
Independent Auditors’ Report		1~3
Separate Financial Statements
Separate Statements of Financial Position		4
Separate Statements of Profit or Loss		5
Separate Statements of Comprehensive Income		6
Separate Statements of Changes in Equity		7
Separate Statements of Cash Flows		8
Notes to the Separate Financial Statements		9~133
Report on Independent Auditors’ Review of Internal Control over Financial Reporting		134
Report on the Effectiveness of the Internal Control over Financial Reporting		135

Independent Auditors’ Report

(Based on a report originally issued in Korean)

The Board of Directors and Stockholder

KB Securities Co., Ltd.:

Opinion

We have audited the separate financial statements of KB Securities Co., Ltd. (“the Company”), which comprise the separate statements of financial position as of December 31, 2021 and 2020, the separate statements of profit or loss, comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Company as of December 31, 2021 and 2020, and its separate financial performance and its cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

Basis for Opinion

We conducted our audit in accordance with Korean Standards on Auditing (“KSAs”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Separate Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the separate financial statements in Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

As a matter that does not affect our audit opinion, we draw attention to the following matter.

As described in note 40 to the separate financial statements, the proliferation of COVID-19 has had a negative impact on the global economy, which may have a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, and it could negatively affect the profit generation capability of the Company.

Other Matters

The procedures and practices utilized in the Republic of Korea to audit such separate financial statements may differ from those generally accepted and applied in other countries.

Responsibilities of Management and Those Charged with Governance for the Separate Financial Statements

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate financial statements.

As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used in the preparation of the separate financial statements and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

2

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in the internal controls that we identify during our audit.

KPMG Samjong Accounting Corp.

Seoul, Korea

March 7, 2022

This report is effective as of March 7, 2022, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

3

KB SECURITIES Co., Ltd.

Separate Statements of Financial Position

December 31, 2021 and 2020

(in Korean won)	Notes		2021		2020
Assets
Cash and deposits		5,35,36,37		3,345,119,599,713		3,545,084,661,134
Financial assets at fair value through profit or loss		6,35,36,37		33,833,764,375,768		33,177,803,060,180
Derivative financial assets		7,35,36,37,38		811,015,165,800		927,311,465,513
Financial assets at fair value through other comprehensive income		8,35,36,37		3,838,298,230,251		3,903,781,444,532
Investments in subsidiaries		9		1,031,745,305,199		687,086,237,981
Investments in associates		9		129,322,034,556		313,229,623,000
Financial assets measured at amortised cost		10,35,36,37,39		5,430,443,815,883		5,000,229,374,340
Property and equipment		11,39		205,420,354,106		220,311,308,814
Investment properties		12		17,754,977,445		18,932,372,093
Intangible assets		13		170,893,377,135		156,075,930,861
Other financial assets		14,35,36,38		3,724,896,077,146		6,837,524,263,018
Other assets		15		31,365,019,508		23,252,144,960
Total assets				52,570,038,332,510		54,810,621,886,426
Liabilities
Deposit liabilities		16,35,36,37		8,400,368,429,840		7,688,906,486,184
Financial liabilities at fair value through profit or loss		6,35,36,37,38		11,986,846,570,347		11,681,634,705,078
Derivative financial liabilities		7,35,36,37,38		836,699,401,537		850,189,391,138
Borrowings		17,35,36,37,38		21,994,629,818,393		22,507,306,458,038
Net defined benefit liabilities		18		55,619,888,673		53,636,423,458
Deferred tax liabilities		34		28,586,947,555		14,376,485,861
Provisions		19		106,098,065,531		82,870,710,240
Other financial liabilities		20,35,36,37,38,39		3,310,748,094,176		6,530,371,315,959
Other liabilities		21		402,286,997,863		372,865,170,473
Total liabilities				47,121,884,213,915		49,782,157,146,429
Equity
Share capital		22		1,493,102,120,000		1,493,102,120,000
Other paid-in capital		23		1,479,110,085,557		1,479,110,085,557
Retained earnings		24		2,270,994,816,373		1,873,327,831,871
Other components of equity		25		204,947,096,665		182,924,702,569
Total equity				5,448,154,118,595		5,028,464,739,997
Total liabilities and equity				52,570,038,332,510		54,810,621,886,426

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

4

KB SECURITIES Co., Ltd.

Separate Statements of Profit or Loss

Years Ended December 31, 2021 and 2020

(in Korean won)	Notes		2021		2020
Operating income
Fee and commission income		26		1,167,083,027,784		1,005,891,084,044
Gain on valuation and disposal of financial instruments		27		5,524,737,738,056		7,031,773,693,127
Interest income		28		737,552,790,032		728,642,092,656
Interest income from financial instruments at FVTPL				400,472,062,945		429,256,784,948
Interest income in applying of effective interest rate				337,080,727,087		299,385,307,708
Gain on valuation and disposal of financial assets measured at amortised costs		29		3,142,534,692		25,337,360,084
Gain on foreign currency transactions		30		777,874,300,249		955,596,304,920
Other operating income		31		150,533,956,215		124,163,080,594
				8,360,924,347,028		9,871,403,615,425
Operating expenses
Fee and commission expense		26		171,249,369,130		107,488,062,137
Loss on valuation and disposal of financial instruments		27		5,550,779,222,945		7,036,421,876,565
Interest expense		28		212,429,224,934		239,099,808,344
Loss on valuation and disposal of financial assets measured at amortised cost		29		7,008,606,947		20,868,762,364
Loss on foreign currency transactions		30		745,735,017,357		1,075,918,858,253
Selling and administrative expenses		32		821,513,424,479		776,903,849,502
Other operating expenses		31		45,721,673,439		26,369,565,374
				7,554,436,539,231		9,283,070,782,539
Operating profit				806,487,807,797		588,332,832,886
Non-operating income		33		58,834,512,565		69,624,088,017
Non-operating expenses		33		53,117,324,403		145,512,430,027
Profit before income tax				812,204,995,959		512,444,490,876
Income tax expense		34		214,559,285,270		138,176,141,273
Profit for the year				597,645,710,689		374,268,349,603

The above separate statements of profit or loss should be read in conjunction with the accompanying notes

5

KB SECURITIES Co., Ltd.

Separate Statements of Comprehensive Income

Years Ended December 31, 2021 and 2020

(in Korean won)	Notes		2021			2020
Profit for the year				597,645,710,689			374,268,349,603
Other comprehensive income(loss)
Items that will not be reclassified to profit or loss
Net gains on valuation of equity instruments at fair value through other comprehensive income		8,25		27,779,973,437			30,958,040,138
Fair value changes on financial liabilities designated at fair value due to own credit risk		6,25		13,714,607,803			8,832,146,927
Remeasurements of the net defined benefit liabilities		18,25		(2,237,583,109	)		(4,785,482,165	)
Items that may be subsequently reclassified to profit or loss
Net gains(losses) on valuation of debt instrument at fair value through other comprehensive income		8,25		(17,213,330,222	)		2,690,383,182
Other comprehensive income for the year, net of tax				22,043,667,909			37,695,088,082
Total comprehensive income for the year				619,689,378,598			411,963,437,685

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

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KB SECURITIES Co., Ltd.

Separate Statements of Changes in Equity.

Years Ended December 31, 2021 and 2020

			Other paid in capital
	Share Capital		Share Premium		Other Equity		Retained Earnings			Other Components of Equity			Total Equity
Balance at January 1, 2020		1,493,102,120,000		1,142,353,750,001		336,756,335,556		1,578,878,464,871			145,410,631,884			4,696,501,302,312
Dividends		—		—		—		(80,000,000,000	)		—			(80,000,000,000	)
Revaluation of property and equipment		—		—		—		181,017,397			(181,017,397	)		—
Total comprehensive income
Profit for the year		—		—		—		374,268,349,603			—			374,268,349,603
Other comprehensive income		—		—		—		—			37,695,088,082			37,695,088,082
Balance at December 31, 2020		1,493,102,120,000		1,142,353,750,001		336,756,335,556		1,873,327,831,871			182,924,702,569			5,028,464,739,997
Balance at January 1, 2021		1,493,102,120,000		1,142,353,750,001		336,756,335,556		1,873,327,831,871			182,924,702,569			5,028,464,739,997
Dividends		—		—		—		(200,000,000,000	)		—			(200,000,000,000	)
Revaluation of property and equipment		—		—		—		21,273,813			(21,273,813	)		—
Total comprehensive income
Profit for the year		—		—		—		597,645,710,689			—			597,645,710,689
Other comprehensive income		—		—		—		—			22,043,667,909			22,043,667,909
Balance at December 31, 2021		1,493,102,120,000		1,142,353,750,001		336,756,335,556		2,270,994,816,373			204,947,096,665			5,448,154,118,595

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

7

KB SECURITIES Co., Ltd.

Separate Statements of Cash Flows

Years Ended December 31, 2021 and 2020

(in Korean won)	Notes		2021			2020
Cash flows from operating activities
Cash generated from operating activities
Profit for the year				597,645,710,689			374,268,349,603
Adjustment for non-cash items		42		(403,257,010,550	)		(184,104,407,971	)
Changes in operating assets and liabilities		42		(1,030,962,895,682	)		(4,150,067,411,850	)
				(836,574,195,543	)		(3,959,903,470,218	)
Interest received				772,606,668,847			773,095,128,571
Interest paid				(207,095,952,914	)		(233,641,031,034	)
Dividends received				43,971,420,825			39,348,969,236
Income taxes paid				(211,038,080,224	)		(117,966,960,303	)
Net cash used in operating activities				(438,130,139,009	)		(3,499,067,363,748	)
Cash flows from investing activities
Decrease in long-term deposit held by bank				446,123,655,200			1,616,312,000,000
Acquisition of financial assets at fair value through other comprehensive income				(4,678,242,030,749	)		(7,177,559,967,771	)
Disposal of financial assets at fair value through other comprehensive income				4,731,871,208,238			5,913,177,631,905
Acquisition of investments of subsidiaries and associates		9		(478,351,517,738	)		(425,225,768,833	)
Disposal of investment of subsidiaries and associates		9		167,726,385,796			313,811,518,516
Acquisition of property and equipment		11		(22,944,798,945	)		(24,300,209,904	)
Disposal of property and equipment		11		683,373,612			4,023,409,090
Acquisition of intangible assets		13		(36,580,886,688	)		(26,588,064,786	)
Disposal of intangible assets		13		2,086,788,000			6,024,675,739
Disposal of investment properties		12		1,158,894,888			14,016,500,000
Others				(26,298,576,016	)		(458,672,754	)
Net cash provided by investing activities				107,232,495,598			213,233,051,202
Cash flows from financing activities
Increase in borrowings		42		720,139,535,921			3,501,960,424,540
Decrease in guarantee deposit liabilities		42		(3,575,925,704	)		(3,172,059,776	)
Dividends paid		24		(200,000,000,000	)		(80,000,000,000	)
Redemption of principal elements of lease payments				(31,849,047,481	)		(23,241,770,968	)
Net cash provided by financing activities				484,714,562,736			3,395,546,593,796
Effect of exchange rate changes on cash and cash equivalents				1,379,611,661			(491,340,927	)
Net increase in cash and cash equivalents				155,196,530,986			109,220,940,323
Cash and cash equivalents at the beginning of the year		5		258,951,267,339			149,730,327,016
Cash and cash equivalents at the end of the year		5		414,147,798,325			258,951,267,339

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

8

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

1. The Company

KB Securities Co., Ltd. (the “Company” or “KB Securities”, formerly, Hyundai Securities Co., Ltd.) was established on June 1, 1962, under the name of Kookil Securities Co., Ltd. On June 5, 1986, the Company changed its name to “Hyundai Securities Co., Ltd.”. After several capital increases, the share capital of the Company amounts to W1,493,102 million as at December 31, 2021.

The Company became a wholly owned subsidiary of KB Financial Group Inc. on October 19, 2016, through a comprehensive exchange of shares. At the end of the reporting period, KB Financial Group Inc. owns 100% of ordinary shares of the Company.

Meanwhile, the Company merged with KB Investment & Securities Co., Ltd. (the “KB Investment & Securities”) on December 30, 2016 as a surviving company and changed its name to KB Securities Co., Ltd. As at December 31, 2021, the Company has 108 branch offices in Korea and one overseas branch office.

2. Significant Accounting Policies

The principal accounting policies applied in the preparation of these separate financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of Preparation

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) 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 and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.

The separate financial statements have been prepared on the historical cost basis except for the following items:

– Certain financial assets and liabilities (including derivatives instruments), certain classes of property, plant and equipment and investment properties measured at fair value

– Assets held for sale measured at fair value less costs to sell, and

– Defined benefit plans

– Plan assets measured at fair value

The preparation of the separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgement 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 3.

9

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.2 Changes in Accounting Policy and Disclosures

2.2.1 New and amended standards adopted by the Company

The Company has applied the following amended standards for the first time for its annual reporting period commencing January 1, 2021.

- Amendments to Korean IFRS No. 1116 Leases – Practical expedient for COVID-19-Related Rent Exemption, Concessions, Suspension

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the COVID-19-related rent concession the same way it would account for the change applying this standard if the change were not a lease modification. These amendments do not have a significant impact on the separate financial statements.

- Amendments to Korean IFRS No. 1109 Financial Instruments, Korean IFRS No. 1039 Financial Instruments: Recognition and Measurement, Korean IFRS No. 1107 Financial Instruments: Disclosure, Korean IFRS No. 1104 Insurance Contracts and Korean IFRS No. 1116 Lease – Interest Rate Benchmark Reform

In relation to interest rate benchmark reform, the amendments provide a practical expedient allowing entities to change the effective interest rate instead of changing the carrying amount and apply hedge accounting without discontinuance although the interest rate benchmark is replaced in hedging relationship. These amendments do not have a significant impact on the separate financial statements.

2.2.2 The following amended standards have been published that are not mandatory for December 31, 2021 reporting periods and have not been early adopted by the Company.

- Amendments to Korean IFRS No. 1103 Business Combination – Reference to the Conceptual Framework

The amendments update a reference of definition of assets and liabilities to qualify for recognition in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korean IFRS No. 1037 Provisions, Contingent Liabilities and Contingent Assets, and Korean IFRS No. 2121 Levies. The amendments also confirm that contingent assets should not be recognized at the acquisition date. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

- Amendments to Korean IFRS No. 1016 Property, Plant and Equipment – Proceeds before intended use

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, as profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

10

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

- Amendments to Korean IFRS No. 1037 Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts: Cost of Fulfilling a Contract

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

- Amendments to Korean IFRS No. 1116 Leases - COVID-19-Related Rent Concessions, etc. beyond June 30, 2021

The application of the practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification, is extended to lease payments originally due on or before June 30, 2022. A lessee shall apply the practical expedient consistently to eligible contracts with similar characteristics and in similar circumstances. The amendments should be applied for annual periods beginning on or after April 1, 2021, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

- Amendments to Korean IFRS No.1001 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current

The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise the right to defer settlement of the liability or the management’s expectations thereof. Also, the settlement of liability includes the transfer of the entity’s own equity instruments; however, it would be excluded if an option to settle the liability by the transfer of the entity’s own equity instruments is recognized separately from the liability as an equity component of a compound financial instrument. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

- Amendments to Korean IFRS No.1001 Presentation of Financial Statements – Accounting Policy Disclosure

The amendments require an entity to define and disclose their material accounting policy information. IFRS Practice Statement 2 Making Materiality Judgements was amended to explain and demonstrate how to apply the concept of materiality. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

- Amendments to Korean IFRS No.1008 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates

The amendments introduce the definition of accounting estimates and clarify how to distinguish changes in accounting estimates from changes in accounting policies. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

- Amendments to Korean IFRS No.1012 Income Taxes – Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction

The amendments narrow the scope of the deferred tax recognition exemption so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

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KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.3 Foreign Currency Translation

(a) Functional and presentation currency

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

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges and qualifying effective portion of hedge of net investments in foreign operations, or are attributable to monetary part of the net investment in a foreign operation.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognized in other comprehensive income.

2.4 Investments in Associates and Subsidiaries

The Company has prepared the separate financial statements in accordance with Korean IFRS No.1027, Separate Financial Statements. Investments in associates and subsidiaries are recognized at cost. The Company recognizes dividend income from subsidiaries or associates in profit or loss when its right to receive dividend is established.

12

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.5 Recognition and Measurement of Financial Instruments

2.5.1 Classification

The Company classifies financial assets as follows.

- Those to be measured at fair value (through profit or loss or other comprehensive income)

- Those to be measured at amortised cost

The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. The Company reclassifies debt investments when, and only when its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Changes in fair value of non-designated equity investment are recognized in profit or loss.

2.5.2 Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

2.5.2.1 Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into one of the following three measurement categories:

(a) Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in ‘interest income’ using the effective interest rate method.

13

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(b) Fair value through other comprehensive income

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment loss (reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these financial assets is included in ‘interest income’ using the effective interest rate method. Foreign exchange gains and losses are presented in ‘gain or loss on foreign currency transaction’ and impairment losses are presented in ‘loss on valuation and disposal of financial instrument’.

(c) Fair value through profit or loss

Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit or loss within ‘gain or loss on valuation and disposal of financial instrument’ in the year in which it arises.

2.5.2.2 Equity instruments

The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividend income from such investments continue to be recognized in profit or loss when the right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘gain or loss on valuation and disposal of financial instrument’ in the statement of profit or loss. Impairment loss (reversal of impairment loss) on equity investments measured at fair value through other comprehensive income are not reported separately from other changes in fair value.

2.5.3 Impairment

The Company assesses on a forward-looking basis expected credit losses associated with its debt instruments carried at amortised cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial instrument. The Company measures expected credit losses 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.

The Company uses the following three measurement techniques in accordance with Korean IFRS:

- General approach: for financial assets and off-balance-sheet unused credit line that are not applied below two approaches

- Simplified approach: for receivables, contract assets and lease receivables

- Credit-impaired approach: for purchased or originated credit-impaired financial assets

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KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Different measurement approaches are applied depending on significant increase in credit risk. 12 month expected credit losses is recognized when credit risk has not significantly increased since initial recognition. A loss allowance at an amount equal to lifetime expected credit losses is recognized when credit risk has significantly increased since initial recognition. Lifetime is presumed to be a period to the contractual maturity date of a financial asset (the expected life of the financial asset).

The Company determines whether the credit risk has increased significantly since initial recognition using the following information. One or more of the following items is deemed significant increase in credit risk.

- More than 30 days past due;

- Decline in credit rating at period end by more than certain notches as compared to that at initial recognition;

- Decline in ratings below certain level in the early warning system;

Under simplified approach, the Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses. Under credit-impaired approach, the Company shall only recognize the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financial assets.

The Company generally deems one or more of the following items credit-impaired:

- 90 days or more past due;

- Legal proceedings related to collection;

- Refinancing;

- Corporate borrowers that are rated C or D;

- Debt restructuring.

2.5.3.1 Forward-looking information

The Company uses forward-looking information, when it determines whether the credit risk has increased significantly since initial recognition and measures expected credit losses.

The Company assumes the risk component has a certain correlation with the business cycle, and calculates the expected credit loss by reflecting the forward-looking information with macroeconomic variables on the measurement inputs.

Forward-looking information used in calculation of expected credit loss is derived after comprehensive consideration of a variety of factors including scenario in management planning, risk situation scenario for stress test, third party forecast, and others.

2.5.3.2 Measuring expected credit losses on financial assets at amortised cost

The amount of the loss on financial assets at amortised cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The Company estimates expected future cash flows for financial assets that are individually significant (individual assessment of impairment).

For financial assets that are not individually significant, the Company collectively estimates expected credit loss by grouping loans with homogeneous credit risk profile (collective assessment of impairment).

- Individual assessment of impairment

Individual assessment of impairment losses are calculated using management’s best estimate on present value of expected future cash flows. The Company uses all the available information including operating cash flow of the borrower and net realizable value of any collateral held.

15

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

- Collective assessment of impairment

Collective assessment of loss allowance involves historical loss experience along with incorporation of forward-looking information. Such process incorporates factors such as type of collateral, product and borrowers, credit rating, size of portfolio and recovery period and applies ‘probability of default’ (PD) on a company of assets and ‘loss given default’ (LGD) by type of recovery method. Also, the expected credit loss model involves certain assumption to determine input based on loss experience and forward-looking information. These models and assumptions are periodically reviewed to reduce gap between loss estimate and actual loss experience.

2.5.3.3 Measuring expected credit losses on financial assets at fair value through other comprehensive income

Measuring method of expected credit losses on financial assets at fair value through other comprehensive income is equal to the method of financial assets at amortised cost, except for loss allowances that are recognized as other comprehensive income. Amounts recognized in other comprehensive income for sale or repayment of financial assets at fair value through other comprehensive income are reclassified to profit or loss.

2.5.4 Recognition and Derecognition

Regular way purchases and sales of financial assets are recognized or derecognized on trade-date, the date on which the Company commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

If a transfer does not result in derecognition because the Company has retained substantially all the risks and rewards of ownership of the transferred asset, the Company continues to recognize the transferred asset in its entirety and recognizes a financial liability for the consideration received. The Company classified the financial liability as “borrowings” in the statement of financial position

The Company writes off the carrying amount and allowance of financial assets in its entirety or to a portion thereof when the principal and interest are determined to be no longer recoverable. In general, the Company considers write-off when it is determined that the debtor does not have sufficient resources or income to cover the principal and interest, and this write-off decision is made in accordance with internal regulations.

2.5.5 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statements of financial position where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

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KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.6 Financial Liabilities

2.6.1 Classification and Measurement

The Company’s financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading.

The Company classifies non-derivative financial liabilities, except for financial liabilities at fair value through profit or loss, financial guarantee contracts and financial liabilities that arise when a transfer of financial assets does not qualify for derecognition, as financial liabilities carried at amortised cost and present as ‘deposits liabilities’, ‘borrowings’, and ‘other financial liabilities’ in the statement of financial position.

2.6.2 Derecognition

Financial liabilities are removed from the statement of financial position when it is extinguished; for example, when the obligation specified in the contract is discharged or canceled or expired or when the terms of an existing financial liability are substantially modified. The difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

The Company’s financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading. Financial liabilities designated the financial liabilities at fair value through profit or loss is the structured financial liabilities contain of embedded derivatives issued by the Company.

The changes in fair value of financial liabilities at FVTPL due to the change of credit risk is recognized as other comprehensive income(instead of profit and loss) and this other comprehensive income can not be transferred to profit and loss in subsequent events.

2.7 Derivative Financial Instruments

The Company enters into numerous derivative financial instrument contracts such as stock options, stock swaps, interest rate swaps and others for trading purposes or sale and issue of derivative combined securities. These derivative financial instruments are presented as derivative financial instruments within the financial statements irrespective of transaction purpose and subsequent measurement requirement.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The changes of the fair value of derivatives financial instruments held for trading are recognized in profit or loss as ‘gain or loss on valuation and disposal of financial instrument’.

Fair value of derivative instrument traded in active market is a quoted price. In case of fair value of relatively simple derivative instruments such as options, interest rate or currency swaps and others is calculated using one or more valuation techniques like cash flow discount model, option pricing model which is based on observable data and appropriate considering the nature of objects.

Also, fair value of more complex derivative instrument is calculated using valuation techniques based on unobservable data in market is periodically reviewed and approved its accuracy.

17

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.7.1 Day 1 gain & loss

Accordance with Korean IFRS, if there is no available price from active market and if the Company uses a valuation technique that uses data using unobservable valuation parameters from market for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is amortised by using the straight line method over the life of the financial instruments.

2.7.2 Credit risk adjustments

In case of exchange-traded derivative instrument, credit risk is not reflected on the fair value because exchange-traded derivative instrument is traded in public exchange, and it is not available to identify certain counterparties. Fair value of OTC derivative instrument only reflects credit risk.

2.7.3 Hedge accounting

The accounting treatment of changes of fair value for the derivatives are varied as the character of hedging items and the purpose of hedging. The Company holds derivative contracts for the purpose of hedging the risk and the Company designates certain derivatives as hedging instruments to hedge the risk as follows.

(a) Fair value hedge : a hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized firm commitment

(b) Cash flow hedge : a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component of, a recognized asset or liability or a highly probable forecast transaction

(c) Hedge of net investments in foreign operations

On initial designation of the hedge, the Company formally documents the relationship between the hedging instrument(s) and hedged items, including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

The fair value of derivatives for hedge is disclosed in note 36.

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit or loss. The gain or loss from remeasuring the hedging instrument at fair value for a derivative hedging instrument and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item is fully amortised to profit or loss by the maturity of the financial instrument using the effective interest method.

The accounting treatments of hedge of net investments in foreign operations are similar to the one of cash flow hedge.

If hedging instruments qualify for a hedge of net investments in foreign operations, the effective portion of changes in fair value of hedging instrument is recognized in other comprehensive income or loss and the ineffective portion is recognized in profit or loss. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognized in other comprehensive income will be reclassified from other comprehensive income or loss to profit or loss as a reclassification adjustment on the disposal or partial disposal of the foreign operation.

18

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.8 Property and Equipment

All property and equipment except for land are recognized at its cost less any accumulated depreciation and any accumulated impairment losses. The cost of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Land is measured at fair value on the basis of the valuation performed by an independent valuer. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.

If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognized in other comprehensive income and the amount net of deferred tax is accumulated in equity under the heading of revaluation surplus after netting deferred tax. However, the increase is recognized in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognized in profit or loss. If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognized in profit or loss. However, the decrease is recognized in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognized in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. The revaluation surplus included in equity in respect of an item of property and equipment is transferred directly to retained earnings when the asset is derecognized.

Depreciation of all property and equipment, except for land, is calculated using the following method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows:

Property and equipment	Estimated useful lives	Depreciation method
Buildings	40 years	Straight-line method
Vehicles	4 years	Straight-line method
Furniture and equipment	4 years	Straight-line method
Other	4 years	Straight-line method
Right-of-use assets	1~10 years (initial date of the contract entered into ~ maturity date)	Straight-line method

The residual value, the useful life and the depreciation method applied to an asset are reviewed at least at each financial year-end and, if needed, the changes are accounted for as a change in an accounting estimate.

2.9 Investment Property

Property held to earn rentals or for capital appreciation or both is classified as investment property. Investment property is measured initially at its cost. After recognition as an asset, investment property is carried at cost less accumulated depreciation and impairment losses. Investment property, except for land, is depreciated using the straight-line method over their useful lives of 40 years.

19

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.10 Intangible Assets

Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets, except for goodwill, comprise software and membership rights, and are amortised using the straight-line method with no residual value over following estimated useful economic life since the asset is available for use. However, goodwill and membership rights are not amortised by considering their useful life as indefinite, because there is no expectable limit to period for use.

Intangible assets	Estimated useful lives	Amortization method
Development costs	4 years	Straight-line method
Software	4 years	Straight-line method

The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at the end of each financial year. The management reviews the useful life of intangible assets that is not being amortised each period to determine whether events and circumstances continue to support an indefinite useful life. If management judges that previous estimates should be adjusted, the change is accounted for as a change in an accounting estimate.

2.11 Impairment of Non-financial Assets

Goodwill or intangible assets with indefinite useful lives are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Non-financial assets, other than goodwill, that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

2.12 Lease

Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.

The Company should assess whether a contract is, or contains a lease at the date of the contract entered into and the initial application date under Korean IFRS No.1116. But the Company may elect not to reassess whether a contract is, or contains a lease for the contract entered into before the transition date by applying practical expedient permitted by Korean IFRS No.1116. The Company has gone through all the contract to assess whether the contract is, or contains, a lease at the contract entered into after the date of initial application.

A lessee is required to recognize a right-of-use assets (lease assets) representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Assets and liabilities arising from a lease are initially measured on a present value basis.

20

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Lease liabilities include the net present value of the following lease payments:

• Fixed payments (including in-substance fixed payments), less any lease incentives receivable

• Variable lease payment that are based on an index or a rate

• Amounts expected to be payable by the lessee under residual value guarantees

• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

• The amount of the initial measurement of lease liability

• Any lease payments made at or before the commencement date less any lease incentives received

• Any initial direct costs incurred by the lessee, and

• An estimate of restoration costs

However, short-term lease (lease that, at the commencement date, has a lease term of 12 months or less) and lease of low-value assets (For example, underlying leased asset under $ 5,000) are permitted to elect exceptional conditions.

The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term.

Related to sale and leaseback, the Company (seller-lessee) is required to applying the Korean IFRS No.1115 ‘Revenue from Contracts with Customers’ to determine whether the transfer of an asset is accounted for as a sale of that asset. However, the Company shall not reassess sale and leaseback transactions entered into before the date of initial application.

Large number of lease contracts held by the Company have extension option and termination option. These conditions are generally used for the maximizing the flexibility of lease operation in a view of managing the contracts. Extension option or termination option included in the lease contracts are generally owned by the Company, not lessor. The Company re-evaluated the lease term of the lease contracts by taking into account the contract type, operation plan for branch offices, and costs related to lease termination . As a result, no significant change in the existing lease term has occurred.

2.13 Provisions

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation and the increase in the provision due to passage of time is recognized as interest expense.

2.14 Financial Guarantee Contracts

Financial guarantees contracts provided by the Company are initially measured at fair value on the date the guarantee was given. Subsequent to initial recognition, the Company’s liabilities under such guarantees are measured at the higher of the amounts below and recognized as ‘other financial liabilities’:

• Loss allowance in accordance with Korean IFRS No.1109, ‘Financial Instruments’

• The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Korean IFRS No.1115, ‘Revenue from Contracts with Customers’

21

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.15 Revenue Recognition

The Company recognizes revenues in accordance with the following five-step revenue recognition standard (Korean IFRS No.1115 Revenue from Contracts with Customers).

• Step 1: Identify the contract with a customer.

• Step 2: Identify the performance obligations in the contract.

• Step 3: Determine the transaction price.

• Step 4: Allocate the transaction price to the performance obligations in the contract.

• Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

2.16 Employee Benefits

2.16.1 Retirement benefit liabilities: Defined benefit plans and Defined contribution plans

The Company has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The contributions are recognized as employee benefit expenses when an employee has rendered service. A defined benefit plan is a pension plan that is not a defined contribution plan.

Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds and that have terms to maturity approximating to the terms of the related pension obligation. The remeasurements of the net defined benefit liability are recognized in other comprehensive income.

If any plan amendments, curtailments, or settlements occur, past service costs or any gains or losses on settlement are recognized as profit or loss for the year.

2.16.2 Short-term employee benefits

Short-term employee benefits, which are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the service, are recognized in profit or loss at the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.

The expected cost of profit-sharing and bonus payments are recognized as liabilities when the Company has a present legal or constructive obligation to make such payments as a result of past events rendered by employees and a reliable estimate of the obligation can be made.

2.16.3 Share-based payment

The Company is under share-based payment arrangements that grant shares to the executives of the Company. When the arrangements are exercised, the Company provides share or cash equal to the monetary value of the share.

The Company measures the services acquired and the liability incurred at fair value, and the fair value is recognized as expense and accrued expenses over the vesting period. Until the liability is settled, the Company remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss as share-based payments.

22

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

2.17 Income Tax Expenses

Income tax expense comprises current income tax and deferred income tax and are recognized in profit or loss for the year, except to the extent that the tax arises from (a) a transaction or event which is recognized either in other comprehensive income or directly in equity and (b) a business combination.

2.17.1 Current income tax

Current income tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation or expenses that is not deductible in determining taxable profit (tax loss). Current income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The Company offsets current income tax assets and current income tax liabilities if, and only if, the Company (a) has a legally enforceable right to set off the recognized amounts and (b) intends to settle on a net basis.

2.17.2 Deferred income tax

Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax based of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit or loss.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference, will not reverse in the foreseeable future.

The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Company reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and deferred income tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Current income tax and deferred income tax are included in the calculation of income tax expense. Income taxes related to prior period are included in current income tax.

23

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Deferred income taxes, recognized directly in equity or arisen from business combination, are directly deducted from equity or goodwill.

2.18 Operating Segment Reporting

Operating segments are components of the Company, about which separate internal reporting information is evaluated regularly by the chief operating decision makers including board of directors in deciding how to allocate resources and to assess performance. Each segment is a strategic business unit that offers different products and services, and is managed separately because each business has different risks and opportunities, different technology required and marketing strategies.

Segment information includes the items which are directly attributable and reasonably allocated to the segment.

2.19 Other Receivables and Payables Related to Brokerage Transactions

Regarding customer brokerage transactions, the Company recognizes the receivable from and payable to the Korea Exchange (Clearing and settlement organization) and customers in total amounts, which the Company recognizes as other financial assets and other financial liabilities. The Company offsets the receivable and payable that arise between Korea Exchange and the Company within the same day, and that arise between a customer and the Company within the same day and through the same account.

2.20 Business Combinations

The acquisition method of accounting is used to account for business combinations by the Company. The consideration transferred is measured at the fair values of the assets transferred, and identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Company applies the book-value method to account for business combinations of entities under a common control. Identifiable assets acquired and liabilities assumed in a business combination are measured at their book values on the financial statements of the ultimate parent entity. In addition, the difference between the sum of book values of the assets and liabilities transferred and accumulated other comprehensive income; and the consideration paid is recognized as capital surplus.

2.21 Approval of Issuance of the Financial Statements

The issuance of the December 31, 2021 separate financial statements of the Company was approved by the Board of Directors on February 7, 2022, which is subject to change with approval at the annual shareholders’ meeting.

3. Critical Accounting Estimates and Assumptions

The preparation of financial statements requires the Company to make estimates and assumptions concerning the future. Management also needs to exercise judgement in applying the Company’s accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the related actual results, it can contain a significant risk of causing a material adjustment.

24

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. Additional information of significant judgment and assumptions of certain items are included in relevant notes.

3.1 Income taxes

The Company recorded, based on its best estimate, current taxes and deferred taxes that the Company will be liable in the future for the operating results at the end of the reporting period. However, the final tax outcome in the future may be different from the amounts that were initially recorded. Such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

If certain portion of the taxable income is not used for investments or increase in wages in accordance with the Special Taxation for Facilitation of Investment and Mutually-Beneficial Cooperation, the Company is liable to pay additional income tax calculated based on the tax law. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the tax law. As the Company’s income tax is dependent on the investments and increase in wages, there exists uncertainty with regard to measuring the final tax effects.

3.2 Fair value of financial instruments

The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors and assumptions in price determination and other risks.

As described in Note 2.5, ‘Recognition and Measurement of Financial Instruments’, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables.

3.3 Impairment of financial assets

In accordance of Korean IFRS No.1109, the provision for impairment for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation based on the Company’s past history, existing market conditions as well as forward-looking estimates at the end of each reporting period (Note 2.5).

3.4 Measurement of defined benefit obligation

The present value of the defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of the defined benefit liability. The Company determines the appropriate discount rate at the end of the reporting period. This is the interest rate that is used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit liability. In determining the appropriate discount rate, the Company considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the pension benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Other key assumptions for defined benefit liability are based in part on current market conditions.

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KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

4. Segment Information

4.1 Types of services from which each reportable segment derives its revenues

Management of the Company decides operating segment based on the information, which is to be reported to the chief executive officer, in order to allocate resources to the segment and evaluate performance of the segment. The Company’s operating segments consist of brokerage and wealth management, investment banking, trading and other business part.

In accordance with Korean IFRS No.1108, reporting segments of the Company by type of services categories are as follows:

Reporting segment	Main business activities
Brokerage and wealth management	Sales and services relating to wealth management and brokerage provided to individuals, corporations and institutional investors
Investment banking	Underwriting and advisory services related to bond issuance, structured finance, initial public offering, and mergers and acquisition
Trading	Trading of securities and derivatives, and proprietary trading
Others	Other services and support services

4.2 Revenue and income of segment reporting

Financial information by operating segment for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)
	2021
	Operating income		Operating expense		Operating profit (loss)		Non-operating income (expense)			Income tax expense		Profit (loss) for the year
Brokerage and wealth management		1,832,603,380		1,484,199,891		348,403,489		(4,106,356	)		—		344,297,133
Investment banking		602,707,271		349,138,340		253,568,931		36,865,936			—		290,434,867
Trading		5,761,831,766		5,667,551,744		94,280,022		(6,190,171	)		—		88,089,851
Others 1		163,781,930		53,546,564		110,235,366		(20,852,221	)		214,559,285		(125,176,140	)
		8,360,924,347		7,554,436,539		806,487,808		5,717,189			214,559,285		597,645,711

¹  All income tax expenses are allocated to the others segment, due to the difficulty of reasonable allocation.

(in thousands of Korean won)
	2020
	Operating income		Operating expense		Operating profit (loss)		Non-operating income (expense)			Income tax expense		Profit (loss) for the year
Brokerage and wealth management		1,953,706,559		1,648,534,865		305,171,694		(33,386,543	)		—		271,785,151
Investment banking		485,956,275		302,239,410		183,716,865		15,415,043			—		199,131,908
Trading		7,246,771,334		7,243,690,041		3,081,293		1,975,235			—		5,056,528
Others 1		184,969,447		88,606,467		96,362,980		(59,892,077	)		138,176,141		(101,705,238	)
		9,871,403,615		9,283,070,783		588,332,832		(75,888,342	)		138,176,141		374,268,349

¹  All income tax expenses are allocated to the others segment, due to the difficulty of reasonable allocation.

The above reported operating income is generated from external customers and inter-segment transactions, and expense includes expenses that can be directly attributed or reasonably allocated to each segment including internal interests. Segment profit represents the profit earned by each segment, reported to the chief executive officer to determine the allocation of resources and to measure the respective segments’ performance.

26

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

4.3 Assets and liabilities of segments

Total assets and liabilities by each segment as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Total assets		Total liabilities
Brokerage and wealth management		6,889,059,433		8,300,664,510
Investment banking		2,772,519,734		119,618,507
Trading		28,394,521,203		20,226,698,063
Others		14,513,937,963		18,474,903,134
		52,570,038,333		47,121,884,214

(in thousands of Korean won)	2020
	Total assets		Total liabilities
Brokerage and wealth management		6,742,807,975		7,255,062,020
Investment banking		2,419,223,330		91,865,803
Trading		31,173,002,697		22,605,867,322
Others		14,475,587,884		19,829,362,001
		54,810,621,886		49,782,157,146

4.4 Information on principal customers

No single customer contributed 10% or more to the Company’s revenue for the years ended December 31, 2021 and 2020.

27

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

5. Cash and Deposits

The details of cash and deposits as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Cash and cash equivalents
Cash on hand		105			18
Demand deposits		80,331,797			67,795,866
Checking deposit		2,000,976			3,055,338
Foreign currency deposits		325,866,088			60,047,240
MMDA		4,393,381			58,052,805
Accommodation notes		1,555,452			70,000,000
		414,147,799			258,951,267
Deposits
Deposits for securities subscription		—			18,677,943
Reserve for claims of customers’ deposits		351,745,802			177,071,379
Guarantee deposits for securities lending and borrowing		95,528,832			129,910,583
Deposits for exchange-traded derivatives		779,299,475			885,077,618
Guarantee deposits for KSFC trading		2,114,517			—
Long-term deposits		1,073,550,000			1,518,753,655
Restricted due from financial institutes		39,000			39,000
Others		629,326,773			557,342,761
Allowances for credit losses of deposits		(632,598	)		(739,545	)
		2,930,971,801			3,286,133,394
		3,345,119,600			3,545,084,661

Restricted deposits as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Deposits for securities subscription 1		—		18,677,943
Reserve for claims of customers’ deposits 2		351,745,802		177,071,379
Guarantee deposits for securities lending and borrowing 3		95,528,832		129,910,583
Deposits for exchange-traded derivatives 4		779,299,475		885,077,618
Guarantee deposits for KSFC trading 5		2,114,517		—
Long-term deposits 6		769,000,000		772,753,656
Restricted due from financial institutes 7		39,000		39,000
Others 8		629,326,773		557,342,761
		2,627,054,399		2,540,872,940

¹ Subscription deposits are subscription margin of investors and the Company that are separately deposited at Korea Securities Finance Corporation(KSFC) or other relevant financial institutions until due date for payment for the subscription of the newly issued or sold securities in accordance with the provisions of Article 4-44 of the Regulation on Financial Investment Business.

² The reserve for claims of customers’ deposits is deposited separately in a form of trust in KSFC to meet the demands of investors, such as return of deposit and others, in accordance with Article 74 of the Financial Investment Services and Capital Markets Act.

³ Deposited in Korea Securities Depository to guarantee for securities lending and borrowing.

⁴ The deposits for exchange-traded derivatives that the investors and the Company pay for foreign futures option trading to KEB Hana Bank and Forex Dealer Member.

⁵ In the case of an investor’s loan transaction, a certain portion of the price of securities sold is deposited at KSFC as margin.

⁶ Pledged deposits provided for securities lending and borrowing, repurchase agreements between institutions and retail payment through investment & securities companies are included.

⁷ Guarantee deposits for checking accounts

⁸ Deposits in foreign currency and others consist of the margin accounts for trading financial instruments in foreign markets and deposits to court.

28

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Changes in allowances for credit losses of deposits for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	12-month expected credit losses			Lifetime expected credit losses
				Non- Impaired		Impaired
Beginning		739,545			—		—
Reversal of provision		(106,947	)		—		—
		632,598			—		—

(in thousands of Korean won)	2020
	12-month expected credit losses		Lifetime expected credit losses
			Non- Impaired		Impaired
Beginning		654,194		—		—
Provision		85,351		—		—
		739,545		—		—

6. Financial Instruments at FVTPL

The details of financial instruments at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Financial Assets at FVTPL				Financial Liabilities at FVTPL
	2021		2020		2021		2020
Financial assets required to be mandatorily measured at FVTPL		33,833,764,376		33,177,803,060		2,825,922,918		1,884,675,400
Financial assets designated at FVTPL		—		—		9,160,923,652		9,796,959,305
		33,833,764,376		33,177,803,060		11,986,846,570		11,681,634,705

29

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

6.1 Financial assets required to be mandatorily measured at FVTPL

The details of financial assets required to be mandatorily measured at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Deposits
Reserve for claims of customers’ deposits (trust) 1		5,704,580,963		4,695,211,146
Equity instruments
Stocks		486,724,148		631,450,022
Debt instruments
Government and local government bonds		5,292,775,017		6,019,601,902
Special bonds		2,498,873,337		3,945,432,344
Corporate bonds		8,318,369,010		7,296,659,553
Corporate commercial papers		4,170,294,875		2,773,309,326
Asset-backed short-term bonds		1,490,591,859		995,938,332
Hybrid bond with security-like features		110,295,800		52,192,636
Investment in partnerships		334,361,963		169,159,281
Collective investment securities		2,732,256,417		3,118,517,971
Hybrid stock with bond-like features		107,562,502		54,698,881
Loans
Privately placed bonds		173,459,362		237,038,346
Derivative linked securities
Equity-linked securities		41,493,507		62,122,313
Other derivative linked securities		139,326,096		310,165,730
Other OTC derivative combined contract		114,887,470		422,455,749
Securities in foreign currency
Stocks in foreign currency		1,552,014		32,499
Bonds in foreign currency		1,245,665,576		1,503,689,166
Investments in partnerships in foreign currency		25,840,354		83,245,819
Collective investment securities in foreign currency		242,647,445		243,598,014
Collective fund for default loss		73,273,475		78,755,999
Hybrid bonds		528,403,259		394,160,283
Exchange traded notes		529,927		—
Other held for trading securities		—		90,367,748
	33,833,764,376		33,177,803,060

¹ The reserve for claims of customers’ deposits is restricted to use because this reserve is deposited separately in a form of trust in KSFC to meet the demands of investors, such as return of deposit and others, in accordance with Article 74 of the Financial Investment Services and Capital Markets Act. Among the reserve for claims of customers’ deposits deposited in a form of trust in KSFC, beneficiaries amount to W98,000 million are provided as a collateral for the payment to Kookmin Bank which is an agent bank of payment, in accordance with Article 72 Clause 3 of the Financial Investment Services and Capital Markets Act.

Details of securities sold which are classified as financial liabilities at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Equity Securities
Stocks		509,897,766		602,009,122
Collective investment securities		3,056,061		2,961,692
Debt Securities
Government and local government bonds		2,282,891,241		1,279,704,586
Special bonds		30,077,850		—
		2,825,922,918		1,884,675,400

30

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Assets Pledged as Collateral

The details of financial assets pledged as collateral as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Description	2021		2020		Security right holder
Financial assets at FVTPL	Guarantee deposits for lending and borrowing securities and bonds		9,294,924,447		6,956,737,812	Korea Securities Depository, etc.
	Margin required and guarantee deposits for derivatives trading		955,030,966		741,196,389	Korea Stock Exchange, etc.
	Guarantee deposits for clearing fund		1,653,330		1,736,116	Korea Securities Depository
	Guarantee deposits for reverse repurchase agreements		8,422,134,434		10,499,296,878	Customer, Institution
Financial assets at FVOCI	Guarantee deposits for lending and borrowing securities and bond		1,523,592,569		1,322,997,543	Korea Securities Depository, etc.
	Guarantee deposits for derivatives trading		—		59,098,805	Hana Financial Investment Co., Ltd., etc
	Guarantee deposits for reverse repurchase agreements		1,990,336,464		2,117,185,736	Customer, Institution
			22,187,672,210		21,698,249,279

(*) As at December 31, 2021 and 2020, the accrued interests related to debt securities provided as collateral of W279,423 million and W263,403 million, respectively, are excluded.

The Company provides W6,165,555 million and W4,680,816 million of its borrowing securities held as collateral to KSFC and others as at December 31, 2021 and 2020, respectively.

As at December 31, 2021 and 2020, the fair values of collaterals sold or repledged as collaterals regardless of default are as follows:

(in thousands of Korean won)	Securities
	2021		2020
Fair value of collateral held		488,172,002		762,396,545
Fair value of collaterals sold or re-provided as collateral		—		—
		488,172,002		762,396,545

6.2 Financial liabilities designated at FVTPL

The details of financial liabilities designated at FVTPL as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Financial liabilities designated at FVTPL
	2021		2020
Derivative linked securities
Equity-linked securities		6,252,543,366		7,210,237,105
Other derivative linked securities		1,972,278,390		1,979,326,585
Other OTC derivative combined contract		899,164,069		606,355,771
Exchange traded notes		36,937,827		1,039,844
		9,160,923,652		9,796,959,305

31

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The differences between the contractual value to be paid at maturity and the carrying amount of financial liabilities at FVTPL as at December 31, 2021 and 2020, are as follows :

(in thousands of Korean won)	2021			2020
Contractual value to be paid at maturity		8,957,601,834			9,583,186,260
Carrying amount		9,160,923,652			9,796,959,305
Differences		(203,321,818	)		(213,773,045	)

Accumulated changes in fair value of financial liabilities at FVTPL due to the change of credit risk as at December 31, 2021 and 2020, are as follows :

(in thousands of Korean won)	Other comprehensive income recognized from changes of fair value due to the change of credit risk (before tax) 1
	2021			2020
Beginning of the year		15,846,655			28,028,927
Change of fair value		(18,916,700	)		(12,182,272	)
End of the year		(3,070,045	)		15,846,655

¹ The Company assessed OCI based on the probability of default corresponding to the Company’s credit rating and loss given default. The amount is before tax.

32

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

7. Derivatives and Hedge Accounting

Derivatives owned by the Company as at December 31, 2021 and 2020, are as follows:

	2021
	Assets				Liabilities
(in thousands of Korean won)	Hedging		Trading		Hedging		Trading		Unsettled amount
Exchange-traded derivatives
Interest rate:
Futures		—		1,903,458		—		2,430,952		4,563,014,694
Equity:
Futures		—		14,338,186		—		6,147,764		1,585,281,541
Purchase options		—		51,905,242		—		—		1,412,231,541
Written options		—		—		—		188,099,589		2,423,244,090
Currency:
Futures		—		339,853		—		493,846		309,698,291
Goods:
Futures		—		42,891		—		81,769		6,370,216
		—		68,529,630		—		197,253,920		10,299,840,372
OTC derivatives
Interest rate:
Forwards		—		125,452,803		—		136,232,672		3,684,000,000
Swaps		—		54,554,193		—		77,612,686		135,992,175,725
Options		—		5,121,493		—		4,809,190		1,010,000,000
Currency:
Forwards		—		140,701,852		6,068,500		96,914,441		13,270,136,916
Swaps		—		8,270,011		—		7,273,776		368,698,598
Options		—		2,400,866		—		—		165,970,000
Equity:
Swaps		—		322,864,833		—		132,618,848		5,119,813,277
Purchase options		—		43,280,731		—		—		1,748,428,964
Written options		—		—		—		53,270,931		2,024,447,957
Credit:
Swaps		—		18,979,327		—		7,408,651		2,588,958,733
Others:
Swaps		—		20,859,427		—		117,235,787		1,601,240,180
		—		742,485,536		6,068,500		633,376,982		167,573,870,350
		—		811,015,166		6,068,500		830,630,902		177,873,710,722

	2020
	Assets				Liabilities
(in thousands of Korean won)	Hedging		Trading		Hedging		Trading		Unsettled amount
Exchange-traded derivatives
Interest rate:
Futures		—		43,180		—		1,729,172		3,085,079,165
Equity:
Futures		—		20,061,358		—		1,753,266		1,016,121,962
Purchase options		—		54,275,300		—		—		1,262,500,390
Written options		—		—		—		192,851,867		2,380,430,922
Currency:

33

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Futures	—	157,658	—	424,493	325,952,114
Goods:
Futures	—	151,488	—	81,382	11,609,428
	—	74,688,984	—	196,840,180	8,081,693,981
OTC derivatives
Interest rate:
Forwards	—	49,212,755	—	110,263,267	1,834,000,000
Swaps	—	139,689,297	—	101,353,277	121,256,702,400
Options	—	3,106,553	—	5,932,214	1,120,000,000
Currency:
Forwards	—	91,968,578	816,000	63,733,991	5,220,304,896
Swaps	—	7,747,128	—	10,918,058	309,119,523
Equity:
Swaps	—	423,014,423	—	123,242,355	5,370,303,155
Purchase options	—	81,438,447	—	—	1,389,645,515
Written options	—	—	—	82,429,795	1,441,274,230
Credit:
Swaps	—	19,395,007	—	9,700,485	3,015,782,400
Goods:
Swaps	—	267,562	—	991,466	13,923,100
Others:
Swaps	—	36,782,732	—	143,968,303	1,402,010,347
	—	852,622,482	816,000	652,533,211	142,373,065,566
	—	927,311,466	816,000	849,373,391	150,454,759,547

The Company entered into the derivative contracts and applied fair value hedge accounting for hedging foreign exchange risk of the investment in subsidiaries and others.

Gain or loss on fair value hedge for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Gain(loss) on the hedging instrument		(6,366,340	)		3,524,000
Gain(loss) on the hedged item attributable to the hedged risk		6,366,340			(3,524,000	)
		—			—

The average price condition for the nominal future cash flow related to hedge of net investments in foreign operations as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	The nominal amount of the hedging instrument		Average price condition (KRW/USD, Korean won)
1 year		62,831,500		1,071.00
2 year		—		—
3 year		—		—
Over 3 year		100,767,500		1,172.73
		163,599,000		1,133.66

34

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	The nominal amount of the hedging instrument		Average price condition (KRW/USD, Korean won)
1 year		52,224,000		1,071.00
		52,224,000		1,071.00

The contents of fair value hedge as of December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Carrying amount (asset)		Accumulated fair value (asset)		Change of fair value for the year
Currency
Investment in subsidiaries		286,441,109		7,182,340		6,366,340

	2020
(in thousands of Korean won)	Carrying amount (asset)		Accumulated fair value (asset)		Change of fair value for the year
Currency
Investment in subsidiaries		61,755,900		816,000		(3,524,000	)

8. Financial Assets at FVOCI

The details of financial assets at FVOCI as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Equity instruments
Stocks 1		365,576,095		307,370,199
Investment in partnerships		1,200,000		1,200,000
Other		78,876,642		70,356,906
Debt instruments
Government and local government bonds		20,989,065		105,141,465
Special bonds		549,741,426		735,513,757
Corporate bonds		2,698,701,899		2,508,024,161
Debt instruments in foreign currency		123,213,103		176,174,957
		3,838,298,230		3,903,781,445

¹  Equity investment on Korea Stock Exchange and other relative institutions.

Changes in gains and losses on valuation of financial assets at FVOCI (before tax) for the year ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance			Valuation1			Disposal / transfer			Ending balance
Stocks		278,961,566			39,799,222			—			318,760,788
Government and local government bonds		(44,428	)		1,768			44,428			1,768
Special bonds		107,785			(3,839,248	)		(120,870	)		(3,852,333	)
Corporate bonds		3,046,331			(16,055,846	)		(1,247,051	)		(14,256,566	)
Securities in foreign currency		1,609,775			(1,083,912	)		(1,441,794	)		(915,931	)
Securities in won currency		356,906			(1,482,017	)		—			(1,125,111	)
		284,037,935			17,339,967			(2,765,287	)		298,612,615

¹  Provision for credit loss of debt instruments at FVOCI as W598 million is excluded.

35

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Beginning balance			Valuation1			Disposal / transfer			Ending balance
Stocks		236,617,727			42,343,839			—			278,961,566
Government and local government bonds		(63,198	)		(44,428	)		63,198			(44,428	)
Special bonds		(74,744	)		107,785			74,744			107,785
Corporate bonds		629,978			2,342,739			73,614			3,046,331
Securities in foreign currency		516,553			1,319,203			(225,981	)		1,609,775
Securities in won currency		—			356,906			—			356,906
		237,626,316			46,426,044			(14,425	)		284,037,935

¹  Provision for credit loss of debt instruments at FVOCI of W368 million is excluded.

There are no equity investments at FVOCI derecognized for the year ended December 31, 2021.

The dividend income from equity investments at FVOCI for the years ended December 31, 2021 and 2020, are as follows;

(in thousands of Korean won)	2021				2020
	Derecognised		Held at the reporting period		Derecognised		Held at the reporting period
Equity investments at FVOCI
Non marketable securities		—		7,411,793		—		5,169,035
Other equity investments		—		2,668,697		—		2,023,154

The Company recognized provision for credit loss of debt instruments at FVOCI amount (before tax) to W1,479 million and W881 million, as at December 31, 2021 and 2020, respectively.

36

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

9. Investments in Subsidiaries and Associates

Investments in subsidiaries and associates as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Location		Percentage of ownership(%)		Date of financial statements 5		Net Asset			Book amount		Main Business
Subsidiaries
KBFG Securities America Inc.		USA		100.00		December		17,374,703			17,259,715		Investment, advisory
KB Securities Hong Kong Ltd.		Hong Kong		100.00		December		226,462,101			219,432,709		Investment, advisory
KB Securities Vietnam Joint Stock Company		Vietnam		99.81		December		194,696,641			173,875,579		Investment, advisory
KB FINA Joint Stock Company		Vietnam		77.82		December		14,663,774			11,146,330		IT(Fintech)
KB digital innovation & growth new technology business investment fund 1		Korea		20.00		December		9,106,621			2,000,000		Other financial
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund 1		Korea		42.86		December		33,499,341			15,000,000		Other financial
JB New Jersey Private Real Estate Fund 1		Korea		98.15		December		17,267,434			1,074,621		Funds
Heungkuk Global Highclass Private Real Estate Trust 23		Korea		100.00		December		2,334,312			1,903,215		Funds
DGB Qualified Investor Private Real Estate Investment Trust No.8		Korea		98.77		December		7,092,945			6,967,178		Funds
LB Ireland Private Real Estate Investment Trust 8		Korea		96.64		December		67,508,018			66,076,000		Funds
Pacific US Blackrock Private Placement Real Estate Fund No.15		Korea		99.50		December		17,710,890			18,697,397		Funds
KTB Aircraft Private Investment Trust No.21-1		Korea		99.61		December		27,791,975			27,752,839		Funds
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		Korea		54.84		December		171,044,364			93,059,747		Funds
Mangrove Feeder Fund		Cayman Islands		92.88		December		77,506,120			67,008,400		Funds
GH Real Estate I LP		Guernsey		81.00		December		25,965,320			21,031,909		Investment
JB Dry Street Private Fund1		Korea		100.00		December		801,028			1,060,697		Funds
JB Australia108 Private Fund1		Korea		100.00		December		565,966			759,207		Funds
JB Forge Private Fund1		Korea		100.00		December		397,635			543,244		Funds
JB Hall Street Private Fund1		Korea		100.00		December		749,327			1,016,152		Funds
JB Margaret Street Private Fund1		Korea		100.00		December		212,296			288,186		Funds
LB UK Private Real Estate Investment Trust No.18		Korea		96.78		December		32,429,491			34,500,000		Funds
Alpha Spain Real Estate Private Investment Trust 1		Korea		99.85		December		69,615,347			67,622,466		Funds
Hanwha US Equity Strategy Private Real Estate Fund 3 2		Korea		99.95		December		169,094,784			183,669,714		Funds
Ms Sejong 4th Co., Ltd. 1		Korea		—		December		(318,079	)		—		Asset-backed securitization
KB UK Center 1st Co.,Ltd. 1		Korea		—		December		512,231			—		Asset-backed securitization
Able Gwonseon 1st Co., Ltd. 1		Korea		—		December		(188,406	)		—		Asset-backed securitization
AJH 3rd Co., Ltd. 1		Korea		—		December		411,135			—		Asset-backed securitization
Paradise Yeongjong 2nd Co., Ltd. 1		Korea		—		December		(1,277,197	)		—		Asset-backed securitization
Newstar IP Co., Ltd. 1		Korea		—		December		6,700,346			—		Asset-backed securitization

37

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021
	Location		Percentage of ownership(%)		Date of financial statements 5		Net Asset			Book amount		Main Business
Enewstay 1st Co.,Ltd. 1		Korea		—		December		8,289,028			—		Asset-backed securitization
New star Panorama 1st Co., Ltd. 1		Korea		—		December		678,535			—		Asset-backed securitization
New star Papyrus Co., Ltd. 1		Korea		—		December		(513,513	)		—		Asset-backed securitization
SJ Jongno 1st Co., Ltd. 1		Korea		—		December		(3,004,440	)		—		Asset-backed securitization
Newstar Ds 1st Co,. Ltd 1		Korea		—		December		191,023			—		Asset-backed securitization
Newstar Ds 2nd Co,. Ltd 1		Korea		—		December		524,462			—		Asset-backed securitization
Able Gamsam 1st Co.,Ltd. 1		Korea		—		December		76,100			—		Asset-backed securitization
Songdo Pfive 2nd Co,. Ltd 1		Korea		—		December		1,298,857			—		Asset-backed securitization
Newstar Gimpo 1st Co,. Ltd 1		Korea		—		December		(63,753	)		—		Asset-backed securitization
Polar EH 1st Co., Ltd 1		Korea		—		December		567,650			—		Asset-backed securitization
Polar EH 2nd Co., Ltd 1		Korea		—		December		910,383			—		Asset-backed securitization
Able Gongpyeong 1st Co.,Ltd 1		Korea		—		December		91,865			—		Asset-backed securitization
Able Chowall 1st Co., Ltd. 1		Korea		—		December		(215,427	)		—		Asset-backed securitization
FN Gasan 1st Co., Ltd. 1		Korea		—		December		(1,908	)		—		Asset-backed securitization
ABR Mareuk 1st Co.,Ltd 1		Korea		—		December		(45,716	)		—		Asset-backed securitization
Newstar Believe Co., Ltd. 1		Korea		—		December		(263,848	)		—		Asset-backed securitization
Able Electronics 1st Co., Ltd. 1		Korea		—		December		174,974			—		Asset-backed securitization
KB Echo 1st Co,. Ltd 1		Korea		—		December		236,375			—		Asset-backed securitization
ABR Joongang2 1st Co.,Ltd 1		Korea		—		December		117,313			—		Asset-backed securitization
KB Tongyoung 1st Co,. Ltd 1		Korea		—		December		(244,026	)		—		Asset-backed securitization
Able Guwol 1st Co., Ltd. 1, 2		Korea		—		December		(160,458	)		—		Asset-backed securitization
Able Sky 1st Co., Ltd. 1, 2		Korea		—		December		(462,684	)		—		Asset-backed securitization
Newstar Gimpo 2nd Co.,Ltd. 1, 2		Korea		—		December		338,948			—		Asset-backed securitization
Able Hyosung 1st Co., Ltd. 1, 2		Korea		—		December		(114,657	)		—		Asset-backed securitization
Able Poongdong 1st Co., Ltd. 1, 2		Korea		—		December		(17,866	)		—		Asset-backed securitization
Able Sewoon Co., Ltd. 1, 2		Korea		—		December		(1,118,266	)		—		Asset-backed securitization
KB Infra 1st Co., Ltd. 1, 2		Korea		—		December		226,900			—		Asset-backed securitization
Intgreen 1st Inc. 1, 2		Korea		—		December		(660,735	)		—		Asset-backed securitization
Able Gasan 1st Co., Ltd. 1, 2		Korea		—		December		(49,387	)		—		Asset-backed securitization
Able Pocheon 1st Co., Ltd. 1, 2		Korea		—		December		46,094			—		Asset-backed securitization
Newstar Seotan Co.,Ltd. 1, 2		Korea		—		December		208,862			—		Asset-backed securitization
Able PT 1st Co., Ltd 1, 2		Korea		—		December		(159,043	)		—		Asset-backed securitization
Unbroken 1st co.ltd 1, 2		Korea		—		December		(454,809	)		—		Asset-backed securitization
JOSH Bujeon 1st Co.,Ltd. 1, 2		Korea		—		December		(590,290	)		—		Asset-backed securitization
Newstarplus1st Co.,Ltd. 1, 2		Korea		—		December		291,848			—		Asset-backed securitization
KB MyeongJi 1st Co.,Ltd. 1, 2		Korea		—		December		46,905			—		Asset-backed securitization
Able Dangjin 1st Co.,Ltd. 1, 2		Korea		—		December		(84,172	)		—		Asset-backed securitization
Able Yongdap 1st Co., Ltd. 1, 2		Korea		—		December		(72,070	)		—		Asset-backed securitization

38

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021
	Location		Percentage of ownership(%)		Date of financial statements 5		Net Asset			Book amount		Main Business
KB Osansegyo 2nd Co.,Ltd. 1, 2		Korea		—		December		(20,294	)		—		Asset-backed securitization
Able Hyeongok Co.,Ltd. 1, 2		Korea		—		December		(63,847	)		—		Asset-backed securitization
KB Mapo 2nd Co.,Ltd. 1, 2		Korea		—		December		119,719			—		Asset-backed securitization
GDIC 1st co.ltd 1, 2		Korea		—		December		(416,815	)		—		Asset-backed securitization
Able Wonchang 1st Co., Ltd. 1, 2		Korea		—		December		(226,519	)		—		Asset-backed securitization
Zitaress 1st Co., Ltd. 1, 2		Korea		—		December		(732,386	)		—		Asset-backed securitization
KB PF 3rd Co.,Ltd. 1, 2		Korea		—		December		(8,391	)		—		Asset-backed securitization
Able Beomeo-one Co., Ltd. 1, 2		Korea		—		December		(64,991	)		—		Asset-backed securitization
Able Yucheon 1st co.ltd 1, 2		Korea		—		December		(1,006,041	)		—		Asset-backed securitization
KB Infra 2nd Co., Ltd. 1, 2		Korea		—		December		(2,135,492	)		—		Asset-backed securitization
KBillite 1st Co.,Ltd. 1, 2		Korea		—		December		(37,591	)		—		Asset-backed securitization
Newstar Sina Co., Ltd. 1, 2		Korea		—		December		(369,157	)		—		Asset-backed securitization
KB Gold 1st Co.,Ltd. 1, 2		Korea		—		December		39,430			—		Asset-backed securitization
Inspire Gold 1st Co., Ltd. 1, 2		Korea		—		December		(641,000	)		—		Asset-backed securitization
Inspire Gold 2nd Co., Ltd. 1, 2		Korea		—		December		(294,713	)		—		Asset-backed securitization
Able MK 1st co.ltd 1, 2		Korea		—		December		(39,136	)		—		Asset-backed securitization
Yeoksam The Gallery KB 1st Co.,Ltd. 1, 2		Korea		—		December		(21,787	)		—		Asset-backed securitization
Y Three Ulsan Sinjeong 1st Co., Ltd. 1, 2		Korea		—		December		(274,134	)		—		Asset-backed securitization
											1,031,745,305
Associates
Wise Asset Management Co., Ltd. 3		Korea		33.00		—		—			—		Asset Mgt.
KB Special Purpose Acquisition Company No.17 4		Korea		0.01		November		10,432,587			500		SPAC
KB Special Purpose Acquisition Company No.18 4		Korea		0.01		November		15,292,628			1,000		SPAC
KB Special Purpose Acquisition Company No.19 4		Korea		0.02		November		8,197,372			1,000		SPAC
KB Special Purpose Acquisition Company No.20 4		Korea		0.02		November		12,438,883			1,000		SPAC
KB New Paradigm Agriculture Venture Fund		Korea		25.00		December		11,763,467			2,725,000		Investment
KB KONEX Market Vitalization Fund		Korea		23.44		December		23,233,115			615,000		Investment
KB-KDBC Pre-IPO New Technology Business Investment Fund		Korea		33.33		December		17,683,622			4,400,000		Investment
KBTS Technology Venture Private Equity Fund 4		Korea		16.00		December		30,050,612			4,080,000		Investment
KB-SJ Tourism Venture Fund 4		Korea		18.52		December		22,390,155			5,000,000		Investment
KB Shinjasanaubo Fund 4		Korea		14.67		December		12,935,423			1,936,000		Investment
UNION Media Commerce Fund		Korea		28.99		December		3,308,233			1,000,000		Investment
KB-Brain KOSDAQ Scale-Up Fund 4		Korea		15.96		December		69,721,862			9,750,000		Investment
KB SPROTT Renewable Private Equity Fund I 4		Korea		7.69		December		12,418,787			1,182,775		Investment
KB-Stonebridge Secondary Private Equity Fund 4		Korea		4.16		December		150,687,823			6,183,416		Investment
KB-SP Private Equity Fund IV 4		Korea		14.95		December		37,641,126			6,100,000		Investment
KB-UTC Inno-Tech Venture Fund 4		Korea		14.76		December		47,351,174			7,125,000		Investment
KB-NAU Special Situation Corporate Restructuring Private Equity Fund 4		Korea		6.00		December		127,116,527			6,696,000		Investment

39

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021
	Location		Percentage of ownership(%)		Date of financial statements 5		Net Asset		Book amount		Main Business
Project Vanilla Co., Ltd.		Korea		49.00		December		1,072,130		525,344		System software development
December & Company Inc. 4		Korea		16.78		December		53,943,247		30,000,000		System software development
KB Material and Parts No. 1 PEF 4		Korea		14.47		December		23,103,939		3,400,000		Investment
KB Bio Private Equity Fund III Ltd. 4		Korea		12.20		December		81,590,446		10,000,000		Investment
KB Global Commerce Private Equity Investment Fund 4		Korea		16.28		December		41,896,320		7,000,000		Investment
KB-KTB Technology Venture Fund 4		Korea		18.18		December		10,907,389		2,000,000		Investment
KB Bio Global Expansion Private Equity Fund No.1		Korea		39.47		December		37,916,484		15,000,000		Investment
KB Digital Platform Fund 4		Korea		16.67		December		26,998,474		4,500,000		Investment
KB-SOLIDUS Healthcare Investment Fund 4		Korea		4.90		December		2,040,000		100,000		Investment
										129,322,035
										1,161,067,340

¹ The Company has control over the special purpose entities (“SPEs”) and is exposed to variable returns. Accordingly, these SPEs are included as subsidiaries although the Company’s ownership is less than 50%.

² Newly established in 2021 and included as subsidiaries.

³ The Company recognized the entire book amount as a loss before the year ended December 31, 2020, as a big loss was expected. Disposal of securities are restricted due to stock lock-up requirements.

⁴ Although the ownership of the Company is less than 20%, these are included as associates, since the Company has a significant influence over investee’s policy and operations.

⁵ The date is the closing date of financial statements used for the purpose of assessment of net asset value.

(in thousands of Korean won)

2020

Location

Percentage of ownership(%)

Date of financial statements 5

Net Asset

Book amount

Main Business

Subsidiaries

KBFG Securities America Inc.

USA

100.00

December

16,275,324

17,259,715

Investment, advisory

KB Securities Hong Kong Ltd.

Hong Kong

100.00

December

115,103,364

117,143,369

Investment, advisory

KB Securities Vietnam Joint Stock Company

Vietnam

99.70

December

102,611,938

104,791,511

Investment, advisory

KB FINA Joint Stock Company2

Vietnam

100.00

December

10,880,100

11,146,330

IT(Fintech)

KB Digital Innovation & growth New Technology Business Investment Fund 1

Korea

20.00

December

6,780,607

1,500,000

Other financial

KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund11,2

Korea

42.86

December

8,724,002

3,750,000

Other financial

Hyundai Dynamic Mix Securities Feeder Investment Trust 1

Korea

100.00

December

4,329,053

5,559,136

Funds

Hyundai Kon-tiki Specialized Privately Placed Fund 1

Korea

82.06

December

456,804

476,406

Funds

JB New Jersey Private Real Estate Fund 1

Korea

98.15

December

16,876,511

1,074,621

Funds

Heungkuk Global Highclass Private Real Estate Trust 23

Korea

100.00

December

4,259,053

3,533,980

Funds

DGB Qualified Investor Private Real Estate Investment Trust No.8

Korea

98.77

December

7,464,049

7,327,638

Funds

40

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	Location	Percentage of ownership(%)		Date of financial statements 5	Net Asset			Book amount		Main Business
LB Ireland Private Real Estate Investment Trust 8	Korea		96.64	December		68,405,571			66,076,000	Funds
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15	Korea		99.50	December		14,984,856			15,371,600	Funds
KTB Aircraft Private Investment Trust No.21-1	Korea		99.61	December		27,144,014			27,752,839	Funds
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38	Korea		54.84	December		170,513,639			93,059,747	Funds
Aquila Global Real Assets Fund No.1 LP	Cayman Islands		99.96	December		(49,496	)		1	Funds
Mangrove Feeder Fund	Cayman Islands		100.00	December		61,781,339			61,755,900	Funds
GH Real Estate I LP 2	Guernsey		81.00	December		35,295,190			28,916,236	Investment
JB Dry Street Private Fund1	Korea		100.00	December		985,007			1,060,697	Funds
JB Australia108 Private Fund1	Korea		100.00	December		683,990			759,207	Funds
JB Forge Private Fund1	Korea		100.00	December		489,400			543,244	Funds
JB Hall Street Private Fund1	Korea		100.00	December		918,618			1,016,152	Funds
JB Margaret Street Private Fund1	Korea		100.00	December		260,362			288,186	Funds
LB UK Private Real Estate Investment Trust No.18	Korea		96.78	December		34,980,177			34,500,000	Funds
Alpha Spain Real Estate Private Investment Trust 1 2	Korea		99.85	December		64,901,293			64,323,723	Funds
Hangang Domestic Private Real Estate Fund No.14 2	Korea		99.45	December		16,844,043			18,100,000	Funds
MS Sejong 4th Co.,Ltd 1	Korea		—	December		(2,801,327	)		—	SPEs
Able Hana Co.,Ltd. 1	Korea		—	December		63,430			—	SPEs
KB UK Center 1st Co.,Ltd. 1	Korea		—	December		496,635			—	SPEs
AKB 1st Co.,Ltd. 1	Korea		—	December		1,189,972			—	SPEs
Crescendo Muju Co., Ltd. 1	Korea		—	December		(175,792	)		—	SPEs
Able Gwonseon 1st Co., Ltd. 1	Korea		—	December		(176,551	)		—	SPEs
Great GM 12th Co., Ltd. 1	Korea		—	December		(35,299	)		—	SPEs
AJH 3rd Co., Ltd. 1	Korea		—	December		26,442			—	SPEs
Able Youto 1st Co., Ltd. 1	Korea		—	December		(83,996	)		—	SPEs
Paradise Yeongjong 2nd Co., Ltd. 1	Korea		—	December		(1,373,970	)		—	SPEs
Newstar Hakgok Co., Ltd. 1	Korea		—	December		(48,095	)		—	SPEs
Songdo PSeven 1st Co., Ltd. 1	Korea		—	December		(103,997	)		—	SPEs
Newstar Janghyun Co., Ltd. 1	Korea		—	December		(89,992	)		—	SPEs
Newstar SH Co., Ltd. 1	Korea		—	December		(164,510	)		—	SPEs
Newstar IP Co., Ltd. 1	Korea		—	December		(1,202,140	)		—	SPEs
Newstar Daerim Co., Ltd. 1	Korea		—	December		15,825			—	SPEs
Enewstay 1st Co.,Ltd. 1	Korea		—	December		3,690,452			—	SPEs
Able Dangsan Co.,Ltd. 1	Korea		—	December		(7,615	)		—	SPEs
Newstar Panorama 1st Co., Ltd. 1	Korea		—	December		825,273			—	SPEs
Newstar Papyrus Co., Ltd. 1	Korea		—	December		(707,790	)		—	SPEs
SJ Jongno 1st Co., Ltd. 1	Korea		—	December		(2,551,803	)		—	SPEs
Newstar Cheonwon Co., Ltd 1	Korea		—	December		2,402			—	SPEs
Able KD 2nd Co., Ltd. 1	Korea		—	December		(15,751	)		—	SPEs
Newstar DS 1st Co., Ltd 1	Korea		—	December		143,709			—	SPEs
Newstar DS 2nd Co., Ltd 1	Korea		—	December		(349,851	)		—	SPEs
Able Yongin 1st Co.,Ltd 1	Korea		—	December		(69,641	)		—	SPEs
Newstar Wanee 1st Co., Ltd. 1	Korea		—	December		290,133			—	SPEs
Able Gamsam 1st Co.,Ltd. 1	Korea		—	December		(81,704	)		—	SPEs

41

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	Location		Percentage of ownership(%)		Date of financial statements 5		Net Asset			Book amount		Main Business
Songdo PFive 2nd Co., Ltd 1		Korea		—		December		1,447,781			—		SPEs
Able Sungnae 1st Co., Ltd. 1		Korea		—		December		(21,143	)		—		SPEs
Newstar Gimpo 1st Co., Ltd 1		Korea		—		December		429,840			—		SPEs
Able Ali 2nd Co., Ltd 1,2		Korea		—		December		147,496			—		SPEs
KB PF 1st Co., Ltd. 1,2		Korea		—		December		(14,552	)		—		SPEs
Able Daepo 1st Co., Ltd. 1,2		Korea		—		December		(26,767	)		—		SPEs
KB Ansung 1st Co., Ltd 1,2		Korea		—		December		(184,647	)		—		SPEs
Polar EH 1st Co., Ltd 1,2		Korea		—		December		598,204			—		SPEs
Polar EH 2nd Co., Ltd 1,2		Korea		—		December		616,420			—		SPEs
Polar SQ 1st Co., Ltd 1,2		Korea		—		December		(13,086	)		—		SPEs
Polar SQ 2nd Co., Ltd 1,2		Korea		—		December		(13,086	)		—		SPEs
Able Mojong 1st Co., Ltd 1,2		Korea		—		December		(212,790	)		—		SPEs
Able Sungsoo 1st Co., Ltd. 1,2		Korea		—		December		(117,471	)		—		SPEs
Able Daenong Co., Ltd. 1,2		Korea		—		December		(19,284	)		—		SPEs
Newstar Chimsan 1st Co., Ltd. 1,2		Korea		—		December		33,243			—		SPEs
Able Forsythia 1st Co., Ltd. 1,2		Korea		—		December		(19,796	)		—		SPEs
Able IFP 1st Co., Ltd. 1,2		Korea		—		December		(27,312	)		—		SPEs
Newstar JY Co., Ltd. 1,2		Korea		—		December		(3,411	)		—		SPEs
Able Gorim 1st Co., Ltd. 1,2		Korea		—		December		(42,375	)		—		SPEs
KB Asan Baebang 1st Co.,Ltd 1,2		Korea		—		December		(121,616	)		—		SPEs
KB Icheon logistics 1st Co.,Ltd 1,2		Korea		—		December		24,762			—		SPEs
Able Unicity 4th Co.,Ltd 1,2		Korea		—		December		(100,357	)		—		SPEs
Able Gongpyeong 1st Co.,Ltd 1,2		Korea		—		December		(8,758	)		—		SPEs
Hamilton Power First Co.,Ltd 1,2		Korea		—		December		(3,104,188	)		—		SPEs
Able Chowall 1st Co., Ltd. 1,2		Korea		—		December		155,851			—		SPEs
Startwithone Co., Ltd. 1,2		Korea		—		December		153,577			—		SPEs
Able Silver Co., Ltd. 1,2		Korea		—		December		(126,563	)		—		SPEs
KB Osansaegyo Co., Ltd 1,2		Korea		—		December		(263,702	)		—		SPEs
Hd Yongin 1st Co.,Ltd 1,2		Korea		—		December		26,950			—		SPEs
FN Gasan 1st Co., Ltd. 1,2		Korea		—		December		(25,259	)		—		SPEs
ABR Mareuk 1st Co.,Ltd 1,2		Korea		—		December		(12,125	)		—		SPEs
Newstarbelieve Co., Ltd. 1,2		Korea		—		December		(185,378	)		—		SPEs
Able Electronics 1st Co., Ltd. 1,2		Korea		—		December		(326,713	)		—		SPEs
KB Echo 1st Co., Ltd 1,2		Korea		—		December		137,114			—		SPEs
KB Wondong 1st Co., Ltd 1,2		Korea		—		December		(98,887	)		—		SPEs
Newstar Joongbong Co., Ltd. 1,2		Korea		—		December		(127,021	)		—		SPEs
Able Island 1st Co., Ltd 1,2		Korea		—		December		(63,256	)		—		SPEs
Able Gumi 1st Co., Ltd. 1,2		Korea		—		December		(262,735	)		—		SPEs
Able Gwangmyeong 2nd Co., Ltd 1,2		Korea		—		December		(240,669	)		—		SPEs
ABR Joongang2 1st Co., Ltd 1,2		Korea		—		December		83,944			—		SPEs
Able Bucheon Co., Ltd. 1,2		Korea		—		December		(62,638	)		—		SPEs
Newstar Kumo 1st Co., Ltd. 1,2		Korea		—		December		92,884			—		SPEs
KB Tongyoung 1st Co., Ltd 1,2		Korea		—		December		(169,493	)		—		SPEs
Able Seoho 1st Co., Ltd. 1,2		Korea		—		December		(178,061	)		—		SPEs
KS Beta Co., Ltd. 1,2		Korea		—		December		(174,437	)		—		SPEs
											687,086,238
Associates
Wise Asset Management Co., Ltd. 3		Korea		33.00		—		—			—		Asset Mgt.
KB Special Purpose Acquisition Company No.17 4		Korea		0.01		November		10,472,140			500		SPAC
KB Special Purpose Acquisition Company No.18 4		Korea		0.01		November		15,314,598			1,000		SPAC

42

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	Location		Percentage of ownership(%)		Date of financial statements 5		Net Asset		Book amount		Main Business
KB Special Purpose Acquisition Company No.19 4		Korea		0.02		November		8,231,403		1,000		SPAC
KB Special Purpose Acquisition Company No.20 4		Korea		0.02		November		12,424,141		1,000		SPAC
KB Private Equity Fund III 4		Korea		15.69		December		598,567		8		Investment
Keystone-Hyundai Sec. No.1 Private Equity Fund 4		Korea		4.49		December		46,724,863		1,925,000		Investment
KB New Paradigm Agriculture Venture Fund		Korea		25.00		December		19,688,050		5,000,000		Investment
KB KONEX Market Vitalization Fund		Korea		23.44		December		41,579,798		6,165,000		Investment
KB-KDBC Pre-IPO New Technology Business Investment Fund		Korea		33.33		December		24,062,566		6,800,000		Investment
KBTS Technology Venture Private Equity Fund 4		Korea		16.00		December		31,481,997		4,736,000		Investment
KB-SJ Tourism Venture Fund 4		Korea		18.52		December		22,321,005		4,500,000		Investment
KB Shinjasanaubo Fund 4		Korea		14.67		December		8,980,152		1,320,000		Investment
UNION Media Commerce Fund		Korea		28.99		December		3,311,351		1,000,000		Investment
KB-Brain KOSDAQ Scale-Up Fund 4		Korea		15.96		December		64,654,833		10,050,000		Investment
KB SPROTT Renewable Private Equity Fund I 4		Korea		7.69		December		13,399,139		1,182,775		Investment
KB-Stonebridge Secondary Private Equity Fund 4		Korea		4.16		December		114,215,736		4,088,000		Investment
KB-SP Private Equity Fund IV 4		Korea		14.95		December		39,795,283		6,100,000		Investment
KB-UTC Inno-Tech Venture Fund 4		Korea		14.76		December		38,378,487		5,805,000		Investment
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		Korea		6.00		December		46,757,358		2,850,000		Investment
JR GLOBAL REIT		Korea		26.07		September		816,145,640		215,854,340		Real estate Investment
Project Vanilla Co., Ltd.		Korea		49.00		December		4,312,633		2,450,000		System software development
December & Company Inc.		Korea		17.63		December		64,868,416		30,000,000		System software development
KB Material and Parts No. 1 PEF		Korea		14.47		December		23,296,494		3,400,000		Investment
										313,229,623
										1,000,315,861

¹ The Company has control over the special purpose entities (“SPEs”) and is exposed to variable returns. Accordingly, these SPEs are included as subsidiaries although the Company’s ownership is less than 50%.

² Newly established in 2020 and included as subsidiaries.

³ The Company recognized the entire book amount as a loss before the year ended December 31, 2020, as a big loss was expected. Disposal of securities are restricted due to stock lock-up requirements.

⁴ Although the ownership of the Company is less than 20%, these are included as associates, since the Company has a significant influence over investee’s policy and operations.

⁵ The date is the closing date of financial statements used for the purpose of assessment of net asset value.

Changes in investments in subsidiaries for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance	Acquisition		Disposal	Impaired		Others		Ending balance
KBFG Securities America Inc.	17,259,715		—	—		—		—	17,259,715
KB Securities Hong Kong Ltd.	117,143,369		101,175,500	—		—		1,113,840	219,432,709

43

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired			Others		Ending balance
KB Securities Vietnam Joint Stock Company		104,791,511		69,084,068		—			—			—		173,875,579
KB FINA Joint Stock Company		11,146,330		—		—			—			—		11,146,330
Hyundai Dynamic Mix Securities Feeder Investment Trust 1		5,559,136		—		(5,559,136	)		—			—		—
Hyundai Kon-tiki Specialized Privately Placed Fund 1		476,406		—		(476,406	)		—			—		—
JB New Jersey Private Real Estate Fund 1		1,074,621		—		—			—			—		1,074,621
Heungkuk Global Highclass Private Real Estate Trust 23		3,533,980		—		(1,630,765	)		—			—		1,903,215
DGB Qualified Investor Private Real Estate Investment Trust No.8		7,327,638		—		(360,460	)		—			—		6,967,178
LB Ireland Private Real Estate Investment Trust 8		66,076,000		—		—			—			—		66,076,000
Aquila Global Real Assets Fund No. 1 LP		1		—		(1	)		—			—		—
Mangrove Feeder Fund		61,755,900		—		—			—			5,252,500		67,008,400
GH Real Estate I LP		28,916,236		—		—			(7,884,327	)		—		21,031,909
KTB Aircraft Private Investment Trust No.21-1		27,752,839		—		—			—			—		27,752,839
Pacific US Blackrock Private Placement Real Estate Fund No.15		15,371,600		3,325,797		—			—			—		18,697,397
KB digital innovation & growth new technology business investment fund		1,500,000		500,000		—			—			—		2,000,000
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		3,750,000		11,250,000		—			—			—		15,000,000
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		93,059,747		—		—			—			—		93,059,747
JB Dry Street Private Fund1		1,060,697		—		—			—			—		1,060,697
JB Australia108 Private Fund1		759,207		—		—			—			—		759,207
JB Forge Private Fund1		543,244		—		—			—			—		543,244
JB Hall Street Private Fund1		1,016,152		—		—			—			—		1,016,152
JB Margaret Street Private Fund1		288,186		—		—			—			—		288,186
LB UK Private Real Estate Investment Trust No.18		34,500,000		—		—			—			—		34,500,000
Alpha Spain Real Estate Private Investment Trust 1		64,323,723		3,298,743		—			—			—		67,622,466
Hangang Domestic Private Real Estate Fund No.14		18,100,000		—		(18,100,000	)		—			—		—
Hanwha US Equity Strategy Private Real Estate Fund 3		—		183,678,409		(8,695	)		—			—		183,669,714
Pacific Bric Professional Investors’ Private Real Estate Fund No.53		—		43,500,000		(43,500,000	)		—			—		—
		687,086,238		415,812,517		(69,635,463	)		(7,884,327	)		6,366,340		1,031,745,305

44

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired			Re-classi fication1			Others			Ending balance
KBFG Securities America Inc.		17,259,715		—		—			—			—			—			17,259,715
KB Securities Hong Kong Ltd.		117,143,369		—		—			—			—			—			117,143,369
KB Securities Vietnam Joint Stock Company		104,791,511		—		—			—			—			—			104,791,511
KB FINA Joint Stock Company				11,146,330		—			—			—			—			11,146,330
Hyundai Smart Index Alpha Derivative Feeder Trust 1		10,916,734		—		(10,916,734	)		—			—			—			—
Hyundai Strong Korea Equity Trust 1		16,584,623		—		(16,584,623	)		—			—			—			—
Hyundai Kidzania Equity Feeder Trust 1		1,938,866		—		(1,938,866	)		—			—			—			—
Hyundai Value Plus Equity Feeder Trust 1		16,153,659		—		(16,153,659	)		—			—			—			—
Hyundai Dynamic Mix Securities Feeder Investment Trust 1		5,559,136		—		—			—			—			—			5,559,136
Hyundai Quant Long Short Securities Feeder Investment Trust 1		7,312,096		—		(7,312,096	)		—			—			—			—
Hyundai Kon-tiki Specialized Privately Placed Fund 1		476,406		—		—			—			—			—			476,406
Hyundai Strong-small Corporate Trust 1		18,735,093				(17,371,080	)		—			(1,364,013	)		—			—
Heungkuk Highclass Private Real Estate Trust 21		18,000,000		—		(18,000,000	)		—			—			—			—
JB New Jersey Private Real Estate Fund 1		17,967,753		—		—			(16,893,132	)		—			—			1,074,621
Heungkuk Global Highclass Private Real Estate Trust 23		142,118,613		—		(112,532,442	)		(26,052,191	)		—			—			3,533,980
DGB Qualified Investor Private Real Estate Investment Trust No.8		7,620,689		—		(293,051	)		—			—			—			7,327,638
LB Ireland Private Real Estate Investment Trust 8		66,076,000		—		—			—			—			—			66,076,000
Aquila Global Real Assets Fund No.1 LP		197,093		—		(197,092	)		—			—			—			1
Mangrove Feeder Fund		65,279,900		—		—			—			—			(3,524,000	)		61,755,900
GH Real Estate I LP		—		13,944,786		(2,706,732	)		—			17,678,182			—			28,916,236
KTB Aircraft Private Investment Trust No.21- 1		27,795,627		—		(42,788	)		—			—			—			27,752,839
Pacific US BlackRock Placement Private Real Estate Fund Investment Trust No. 15		15,371,600		—		—			—			—			—			15,371,600
KB Digital Innovation & growth New Technology Business Investment Fund		1,000,000		500,000		—			—			—			—			1,500,000

45

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired			Re-classi fication1			Others			Ending balance
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund11		—		3,750,000		—			—			—			—			3,750,000
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		93,059,747		—		—			—			—			—			93,059,747
Capstone US Private Investment Trust No.6		51,411,058		932,452		(52,343,510	)		—			—			—			—
JB Dry Street Private Fund 1		1,060,697		—		—			—			—			—			1,060,697
JB Australia108 Private Fund1		759,207		—		—			—			—			—			759,207
JB Forge Private Fund 1		543,244		—		—			—			—			—			543,244
JB Hall Street Private Fund 1		1,016,152		—		—			—			—			—			1,016,152
JB Margaret Street Private Fund 1		288,186		—		—			—			—			—			288,186
LB UK Private Real Estate Investment Trust No.18		35,646,230		—		(1,146,230	)		—			—			—			34,500,000
LB UK Private Real Estate Investment Trust No.19		11,349,904		—		(10,849,904	)		—			(500,000	)		—			—
Alpha Spain Real Estate Private Investment Trust 1		—		64,423,723		(100,000	)		—			—			—			64,323,723
Hangang Domestic Private Real Estate Fund No.14		—		18,100,000		—			—			—			—			18,100,000
		873,432,908		112,797,291		(268,488,807	)		(42,945,323	)		15,814,169			(3,524,000	)		687,086,238

¹ Reclassified to financial assets at FVTPL and reclassified from associates the during the year ended December 31, 2020.

Changes in investment in associates for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired		Re-classfi fication1		Ending balance
KB Special Purpose Acquisition Company No.17		500		—		—			—		—		500
KB Special Purpose Acquisition Company No.18		1,000		—		—			—		—		1,000
KB Special Purpose Acquisition Company No.19		1,000		—		—			—		—		1,000
KB Special Purpose Acquisition Company No.20		1,000		—		—			—		—		1,000
KB Private Equity Fund III		8		—		(8	)		—		—		—
Keystone-Hyundai Sec. No.1 Private Equity Fund		1,925,000		—		(1,925,000	)		—		—		—
KB New Paradigm Agriculture Venture Fund		5,000,000		—		(2,275,000	)		—		—		2,725,000
KB KONEX Market Vitalization Fund		6,165,000		—		(5,550,000	)		—		—		615,000
KB-KDBC Pre-IPO New Technology Business Investment Fund		6,800,000		—		(2,400,000	)		—		—		4,400,000

46

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

KBTS Technology Venture Private Equity Fund	4,736,000	880,000	(1,536,000	)	—		—		4,080,000
KB-SJ Tourism Venture Fund	4,500,000	500,000	—		—		—		5,000,000
KB Shinjasanaubo Fund	1,320,000	880,000	(264,000	)	—		—		1,936,000
UNION Media Commerce Fund	1,000,000	—	—		—		—		1,000,000
KB-Brain KOSDAQ Scale-Up Fund	10,050,000	3,750,000	(4,050,000	)	—		—		9,750,000
KB SPROTT Renewable Private Equity Fund I	1,182,775	—	—		—		—		1,182,775
KB-Stonebridge Secondary Private Equity Fund	4,088,000	3,788,000	(1,692,584	)	—		—		6,183,416
KB-SP Private Equity Fund IV	6,100,000	—	—		—		—		6,100,000
KB-UTC Inno-Tech Venture Fund	5,805,000	1,695,000	(375,000	)	—		—		7,125,000
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	2,850,000	3,846,000	—		—		—		6,696,000
JR GLOBAL REIT	215,854,340	—	(65,025,000	)	—		(150,829,340	)	—
Project Vanilla Co., Ltd.	2,450,000	—	—		(1,924,656	)	—		525,344
December & Company Inc.	30,000,000	—	—		—		—		30,000,000
KB Material and Parts No. 1 PEF	3,400,000	—	—		—		—		3,400,000
KB Bio Private Equity Fund III Ltd.	—	10,000,000	—		—		—		10,000,000
K The fifteenth Real Estate Investment Trust	—	8,600,000	(8,600,000	)	—		—		—
KB Global Commerce Private Equity Investment Fund	—	7,000,000	—		—		—		7,000,000
KB-KTB Technology Venture Fund	—	2,000,000	—		—		—		2,000,000
KB Bio Global Expansion Private Equity Fund No.1	—	15,000,000	—		—		—		15,000,000
KB Digital Platform Fund	—	4,500,000	—		—		—		4,500,000
KB-SOLIDUS Healthcare Investment Fund	—	100,000	—		—		—		100,000
	313,229,623	62,539,000	(93,692,592	)	(1,924,656	)	(150,829,340	)	129,322,035

¹ Reclassified to investments in subsidiaries

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Re-classfi fication1			Ending balance
KB Special Purpose Acquisition Company No.17		500		—		—			—			500
KB Special Purpose Acquisition Company No.18		1,000		—		—			—			1,000
KB Special Purpose Acquisition Company No.19		1,000		—		—			—			1,000
KB Special Purpose Acquisition Company No.20		1,000		—		—			—			1,000
KB Private Equity Fund 3		8,000,000		—		(7,999,992	)		—			8
Keystone-Hyundai Sec. No.1 Private Equity Fund		1,925,000		—		—			—			1,925,000
KB IGen Private Equity Fund No 1		53		—		(53	)		—			—
KB New Paradigm Agriculture Venture Fund		5,000,000		—		—			—			5,000,000
KB KONEX Market Vitalization Fund		7,500,000		—		(1,335,000	)		—			6,165,000
KB-KDBC Pre-IPO New Technology Business Investment Fund		10,000,000		—		(3,200,000	)		—			6,800,000
GH Real Estate I LP		17,678,182		—		—			(17,678,182	)		—
KBTS Technology Venture Private Equity Fund		5,664,000		640,000		(1,568,000	)		—			4,736,000

47

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

KB-SJ Tourism Venture Fund	3,000,000	1,500,000	—		—		4,500,000
KB Shinjasanaubo Fund	1,320,000	—	—		—		1,320,000
UNION Media Commerce Fund	1,000,000	—	—		—		1,000,000
KB-Brain KOSDAQ Scale-Up Fund	8,250,000	3,000,000	(1,200,000	)	—		10,050,000
KB SPROTT Renewable Private Equity Fund I	340,252	842,523	—		—		1,182,775
KB-Stonebridge Secondary Private Equity Fund	1,490,000	2,598,000	—		—		4,088,000
KB Private Equity Fund IV	6,100,000	—	—		—		6,100,000
KB-UTC Inno-Tech Venture Fund	150,000	5,655,000	—		—		5,805,000
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	—	2,850,000	—		—		2,850,000
JR GLOBAL REIT	—	219,492,955	(3,638,615	)	—		215,854,340
IGIS NO371 Professional Investors’ Real Estate Investment Company	—	10,000,000	(10,000,000	)	—		—
Koreit Tower Real Estate Investment Trust Company	—	30,000,000	(30,000,000	)	—		—
Project Vanilla Co., Ltd.	—	2,450,000	—		—		2,450,000
December & Company Inc.	—	30,000,000	—		—		30,000,000
KB Material and Parts No. 1 PEF	—	3,400,000	—		—		3,400,000
	77,420,987	312,428,478	(58,941,660	)	(17,678,182	)	313,229,623

¹ Reclassified to investments in subsidiaries

48

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

10. Loans Measured at Amortised Cost

The details of loans measured at amortised cost as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021												2020
	Total amount			Allowances			Book amount			Total amount			Allowances			Book amount
Retails
Broker’s loans		2,875,271,205			—			2,875,271,205			2,571,868,600			—			2,571,868,600
Loans to employees		15,067,486			—			15,067,486			19,185,817			—			19,185,817
Present value discount		(25,619	)		—			(25,619	)		(55,440	)		—			(55,440	)
		2,890,313,072			—			2,890,313,072			2,590,998,977			—			2,590,998,977
Corporate
Broker’s loans		270,439,064			—			270,439,064			388,915,360			—			388,915,360
Securities purchased under repurchase agreements		441,800,000			—			441,800,000			706,300,000			—			706,300,000
Loans receivable		1,730,116,707			(12,919,579	)		1,717,197,128			1,213,601,632			(8,544,721	)		1,205,056,911
Purchased loans		98,535,846			(33,549,254	)		64,986,592			89,997,962			(33,546,230	)		56,451,732
Advances for customers		11,404,578			(11,404,578	)		—			11,469,419			(11,469,419	)		—
Privately placed bonds		14,375,767			(331,495	)		14,044,272			15,624,645			(329,665	)		15,294,980
Financial lease receivables		41,127,430			—			41,127,430			42,826,306			—			42,826,306
Net deferred origination fees and costs		(5,314,862	)		—			(5,314,862	)		(752,772	)		—			(752,772	)
Present value discount		(4,148,880	)		—			(4,148,880	)		(4,862,120	)		—			(4,862,120	)
		2,598,335,650			(58,204,906	)		2,540,130,744			2,463,120,432			(53,890,035	)		2,409,230,397
		5,488,648,722			(58,204,906	)		5,430,443,816			5,054,119,409			(53,890,035	)		5,000,229,374

49

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The change in book amount of loan measured at amortised cost for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021
	Retails						Corporates
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses		The financial instruments applying credit loss model		The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying credit loss model
										Non- impaired			Impaired
Beginning		2,590,998,977		—		—		2,403,099,320			10,714,286			49,306,826			—
Transfer between stages		—		—		—		—			—			—			—
Sale		—		—		—		(137,590,000	)		—			—			—
Other increase /decrease, net		299,314,095		—		—		283,586,460			(10,714,286	)		(66,956	)		—
Ending		2,890,313,072		—		—		2,549,095,780			—			49,239,870			—

(in thousands of Korean won)	2020
	Retails						Corporates
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses		The financial instruments applying credit loss model		The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses					The financial instruments applying credit loss model
										Non- impaired		Impaired
Beginning		2,168,666,367		—		—		2,646,594,167			—		52,731,440			—
Transfer between stages
Transfer to lifetime expected credit losses (non-impaired)		—		—		—		(8,560,623	)		8,560,623		—			—
Other increase /decrease, net		422,332,610		—		—		(234,934,224	)		2,153,663		(3,424,614	)		—
Ending		2,590,998,977		—		—		2,403,099,320			10,714,286		49,306,826			—

50

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The changes in allowances for loan losses for the years ended December 31, 2021 and 2020, are as follows:

	2021
(In thousands of Korean won)	Corporates
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses						The financial instruments applying credit loss model
			Non-impaired			Impaired
Beginning		4,363,646		427,925			49,098,464			—
Transfer between stages		—		—			—			—
Provision(Reversal) for loan losses		4,809,753		(427,925	)		(66,957	)		—
Other transfer		—		—			—			—
Ending 1		9,173,399		—			49,031,507			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

	2020
(In thousands of Korean won)	Corporates
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses					The financial instruments applying credit loss model
				Non-impaired		Impaired
Beginning		4,753,237			—		49,407,092			—
Transfer between stages
Transfer to lifetime expected credit losses (Non-impaired)		(166,231	)		166,231		—			—
Transfer to lifetime expected credit losses (Impaired)		—			—		—			—
Provision(Reversal) for loan losses		(223,360	)		261,694		(102,582	)		—
Other transfer		—			—		(206,046	)		—
Ending 1		4,363,646			427,925		49,098,464			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

Broker’s loan

The Company provides loans for stock purchases with credit period of 180 days (can be extended for six times) for investors using margin transaction. As at December 31, 2020, interest rate of the loan is differentiated from 4.3% to 8.7% based on maturities, and overdue interest rate is 9.9%.

Also, as the Company operates loans secured by securities. At the initial transaction, in case of superior shares and common shares, the Company requires trading securities or cash as collateral, corresponding to 167% and 250% of the loan, respectively. Over 140% collateral of the loan is required. As at December 31, 2021, the interest rate of loans secured by securities is differentiated from Annual Percentage Rate(APR) 6.5% to 8.7% based on maturities, from APR 6.0% to 7.5% based on credit rating, and the loan with past due date is 9.9%

For margin loan to customers, trading securities or cash is required to be pledged corresponding to 140% of the loan. Because of this condition, the Company pledged securities as collateral which are purchased with margin to customer loan. If the value of the pledged securities do not reach to 140% of the loan, the Company requires additional cash or trading securities as collateral.

51

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Advances for Customers

Advances for customers consists of advanced payments on loss compensation and advanced payments for others.

Advanced payments on loss compensation are the monetary amount of claim for reimbursement, paid by the Company, if any losses from embezzlement and arbitrary trading are occurred.

Advanced payments for others consist of two types. The first type is the amount of recourse from paid Investor Protection Fund based on the previous Securities Exchange Act Article 69 Clause 2 or Clause 4. This recourse is driven by preferred payments to the securities company with reasonable reason for taking the preferred payments. The second type is the amount of recourse from Joint Compensation Fund based on Law relating to the Financial Investment Services and Capital Markets Act Article 323 Clause 14 and related Enforcement Decree Article 318 Clause 8. This recourse is driven by preferred payments to the securities company that occurred reasonable reasons for taking the preferred payments.

11. Property and Equipment

The details of property and equipment as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation		Book amount
Land		29,301,991		—			35,727,831		65,029,822
Buildings		42,017,785		(18,619,751	)		—		23,398,034
Furniture and equipment		151,136,006		(119,791,310	)		—		31,344,696
Others		51,441,331		(38,219,912	)		—		13,221,419
Right-of-use assets		111,255,336		(38,828,953	)		—		72,426,383
		385,152,449		(215,459,926	)		35,727,831		205,420,354

	2020
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation		Book amount
Land		29,151,086		—			36,112,640		65,263,726
Buildings		43,070,137		(18,153,577	)		—		24,916,560
Furniture and equipment		152,154,379		(123,294,422	)		—		28,859,957
Others		46,076,125		(29,769,479	)		—		16,306,646
Right-of-use assets		122,558,290		(37,593,870	)		—		84,964,420
		393,010,017		(208,811,348	)		36,112,640		220,311,309

52

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The details of right-of-use assets as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Book amount
Buildings		103,497,623		(34,351,809	)		69,145,814
Vehicles		3,528,320		(1,958,126	)		1,570,194
Others		4,229,393		(2,519,018	)		1,710,375
		111,255,336		(38,828,953	)		72,426,383

	2020
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Book amount
Buildings		114,723,736		(33,771,596	)		80,952,140
Vehicles		3,191,692		(1,845,805	)		1,345,887
Others		4,642,863		(1,976,470	)		2,666,393
		122,558,291		(37,593,871	)		84,964,420

The changes in property and equipment for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others 1			Ending balance
Land		65,263,726		—		(272,921	)		—			39,017			65,029,822
Buildings		24,916,560		—		(237,867	)		(1,064,308	)		(216,351	)		23,398,034
Furniture and equipment		28,859,957		16,456,695		(12,780	)		(13,959,176	)		—			31,344,696
Others		16,306,646		6,488,104		(174,045	)		(9,399,286	)		—			13,221,419
Right-of-use assets		84,964,420		10,037,472		(669,858	)		(17,043,285	)		(4,862,366	)		72,426,383
		220,311,309		32,982,271		(1,367,471	)		(41,466,055	)		(5,039,700	)		205,420,354

¹ Others consist of reclassification to investment properties and others.

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others 1		Ending balance
Land		67,586,839		—		(2,323,113	)		—			—		65,263,726
Buildings		27,411,583		—		(1,380,880	)		(1,114,143	)		—		24,916,560
Furniture and equipment		22,809,505		19,730,567		(50,890	)		(13,629,225	)		—		28,859,957
Others		21,080,313		4,569,643		(139,783	)		(9,203,527	)		—		16,306,646
Right-of-use assets		91,921,701		19,071,016		(4,463,382	)		(22,269,095	)		704,180		84,964,420
		230,809,941		43,371,226		(8,358,048	)		(46,215,990	)		704,180		220,311,309

¹ Others consist of reclassification to investment properties and others.

53

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The changes in right-of-use assets for the year ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others			Ending balance
Buildings		80,952,141		7,777,288		(98,178	)		(14,623,072	)		(4,862,365	)		69,145,814
Vehicles		1,345,888		1,729,628		(329,252	)		(1,176,069	)		(1	)		1,570,194
Others		2,666,391		530,556		(242,428	)		(1,244,144	)		—			1,710,375
		84,964,420		10,037,472		(669,858	)		(17,043,285	)		(4,862,366	)		72,426,383

	2020
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others		Ending balance
Buildings		88,801,287		15,286,324		(3,814,694	)		(20,024,957	)		704,180		80,952,140
Vehicles		2,146,652		1,058,592		(636,339	)		(1,223,018	)		—		1,345,887
Others		973,762		2,726,100		(12,349	)		(1,021,120	)		—		2,666,393
		91,921,701		19,071,016		(4,463,382	)		(22,269,095	)		704,180		84,964,420

The Company applies the revaluation model in relation to the measurement after the initial recognition of the land and the date of revaluation of the land was June 15, 2016. The Company used the assessed price provided by qualified appraiser for the revaluation of the land.

The land was measured using sales value of similar land, and the access condition, environment condition and other specific factors are considered when the value is adjusted. There is no change in the valuation technique for the year ended December 31, 2021.

Classification of land that is measured at fair value by fair value hierarchy levels as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		65,029,822		65,029,822

	2020
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		65,263,726		65,263,726

Changes in land which is classified to Level 3 for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		65,263,726			67,586,839
Reclassification to property and equipment		491,317			—
Reclassification to investment properties		(452,300	)		—
Disposal		(272,921	)		(2,323,113	)
Ending balance		65,029,822			65,263,726

54

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Book amounts of land under cost model as at December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Under revaluation model		Under cost model		Under revaluation model		Under cost model
Land		65,029,822		29,301,991		65,263,726		29,151,086

Changes in other comprehensive income related to the revaluation for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance			Re-classification			Disposal, others			Ending balance
Land		36,517,219			(355,466	)		(29,346	)		36,132,407
Income tax effects		(10,042,235	)		—			8,070			(10,034,165	)
After income tax		26,474,984			(355,466	)		(21,276	)		26,098,242

	2020
(in thousands of Korean won)	Beginning balance			Re-classification		Disposal, others			Ending balance
Land		36,597,759			—		(80,540	)		36,517,219
Income tax effects		(10,064,384	)		—		22,149			(10,042,235	)
After income tax		26,533,375			—		(58,391	)		26,474,984

12. Investment Properties

The details of investment properties as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation			Book amount
Land		10,088,388		—			(59,929	)		10,028,459
Buildings		17,264,002		(9,537,484	)		—			7,726,518
		27,352,390		(9,537,484	)		(59,929	)		17,754,977

	2020
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation			Book amount
Land		10,944,293		—			(415,394	)		10,528,899
Buildings		17,856,650		(9,453,177	)		—			8,403,473
		28,800,943		(9,453,177	)		(415,394	)		18,932,372

The changes in investment properties for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Disposal			Depreciation			Reclassi- fication			Ending balance
Land		10,528,899		(461,423	)		—			(39,017	)		10,028,459
Buildings		8,403,473		(450,605	)		(442,702	)		216,352			7,726,518
		18,932,372		(912,028	)		(442,702	)		177,335			17,754,977

55

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Beginning balance		Disposal			Depreciation			Reclassi- fication		Ending balance
Land		16,755,112		(6,226,213	)		—			—		10,528,899
Buildings		13,336,678		(4,393,948	)		(539,257	)		—		8,403,473
		30,091,790		(10,620,161	)		(539,257	)		—		18,932,372

Details of income and expenditure on investment properties for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Rental income		1,867,883			2,014,001
Expenditure on operating investment properties		(808,657	)		(869,792	)
Expenditure on non-operating investment properties		(153,330	)		(644,664	)
		905,896			499,545

Details of fair value of investment properties as at December 31, 2021 and 2020 are as follows:

	2021				2020
(in thousands of Korean won)	Book amount		Fair value		Book amount		Fair value
Land		10,028,459		26,789,618		10,528,899		29,062,499
Buildings		7,726,518		10,963,771		8,403,473		11,183,624
		17,754,977		37,753,389		18,932,372		40,246,123

The fair values of investment properties as at December 31, 2021 was evaluated by an independent appraiser, based on the evaluation result at June 15, 2016. The qualified appraiser is a member of the Korea Appraisers Association and has appropriate qualifications and experience in evaluating real estate in the location of investment properties. This evaluation was based on international evaluation standards and is based on the market price of similar real estate.

The fair values of investment properties are classified as Level 3 based upon the inputs, which are used in valuation method.

The fair value of investment property measured by using sales value of similar land is calculated by analyzing and comparing the sale prices of similar land, and also the access condition, environment condition and other specific factors for the purpose of estimation for fair value are considered. There is no significant change in the valuation technique for the year ended December 31, 2021.

Investment properties are provided as collaterals for rental deposits and lease hold right, which amount to W938,000 thousand and W938,000 thousand as at December 31, 2021 and 2020, respectively.

56

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

13. Intangible Assets

The details of intangible assets as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Acquisition cost		Accumulated amortization			Accumulated impairment			Book amount
Goodwill		58,888,990		—			—			58,888,990
Development costs		157,728,819		(122,075,492	)		—			35,653,327
Software		104,393,859		(78,917,824	)		—			25,476,035
Memberships		36,920,748		(98,188	)		(9,242,252	)		27,580,308
Others		23,294,717		—			—			23,294,717
		381,227,133		(201,091,504	)		(9,242,252	)		170,893,377

	2020
(in thousands of Korean won)	Acquisition cost		Accumulated amortization			Accumulated impairment			Book amount
Goodwill		58,888,990		—			—			58,888,990
Development costs		139,813,005		(107,636,686	)		—			32,176,319
Software		85,728,786		(71,225,878	)		—			14,502,908
Memberships		39,058,280		(80,537	)		(11,764,746	)		27,212,997
Others		23,294,717		—			—			23,294,717
		346,783,778		(178,943,101	)		(11,764,746	)		156,075,931

The changes in intangible assets for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance		Acquisition1		Disposal			Amortization			Reversal of impairment2		Ending balance
Goodwill		58,888,990		—		—			—			—		58,888,990
Development costs		32,176,319		17,915,813		—			(14,438,805	)		—		35,653,327
Software		14,502,908		18,665,072		—			(7,691,945	)		—		25,476,035
Memberships		27,212,997		—		(2,124,080	)		(17,652	)		2,509,043		27,580,308
Others		23,294,717		—		—			—			—		23,294,717
		156,075,931		36,580,885		(2,124,080	)		(22,148,402	)		2,509,043		170,893,377

¹ Advance payments and others transferred from other accounts are included.

² Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Company recognized an impairment loss because the market price of the asset is lower than book amount, and a reversal of impairment loss because the market price of the asset is higher than book amount.

	2020
(in thousands of Korean won)	Beginning balance		Acquisition1		Disposal			Amortization			Reversal of impairment2		Ending balance
Goodwill		58,888,990		—		—			—			—		58,888,990
Development costs		30,190,778		14,915,631		—			(12,930,090	)		—		32,176,319
Software		8,989,195		10,291,998		—			(4,778,285	)		—		14,502,908
Memberships		29,707,012		1,000,436		(5,810,193	)		(17,652	)		2,333,394		27,212,997
Others		22,914,717		380,000		—			—			—		23,294,717
		150,690,692		26,588,065		(5,810,193	)		(17,726,027	)		2,333,394		156,075,931

¹ Advance payments and others transferred from other accounts are included.

² Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Company recognized an impairment loss because the market price of the asset is lower than book amount, and a reversal of impairment loss because the market price of the asset is higher than book amount.

57

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

14. Other Financial Assets

The details of other financial assets as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Other receivables		3,271,464,715			6,435,380,660
Accrued income		163,484,093			156,065,592
Accrued interest on bonds		209,164,728			197,977,102
Guarantee deposits		67,557,208			71,344,145
Other		49,579,114			12,047,284
Provision for other financial assets		(36,353,781	)		(35,290,520	)
		3,724,896,077			6,837,524,263

15. Other Assets

The details of other assets as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Other receivables		84,740		—
Advance payments		23,376,946		15,041,110
Prepaid expenses		7,437,538		1,404,751
Prepaid value-added taxes		24,513		33,285
Others		441,283		6,772,999
		31,365,020		23,252,145

16. Deposit Liabilities

The details of deposit liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Customers’ deposits
Customers’ deposits for brokerage		6,640,427,057		5,780,352,166
Customers’ deposits for exchange-traded derivatives trading		599,962,498		824,929,195
Customers’ deposits for subscription		—		208,200
Customers’ deposits for savings		8,609,240		8,324,850
Customers’ deposits for repo		61,627		61,678
Customers’ deposits for the investor of collective investment securities		223,800,663		169,740,311
Others		48,729		48,031
		7,472,909,814		6,783,664,431
Guarantee deposits
Guarantee deposits in foreign currency		474,568,902		300,472,860
Guarantee deposits in won currency		452,889,714		604,769,195
		927,458,616		905,242,055
		8,400,368,430		7,688,906,486

58

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

17. Borrowings

The details of borrowings as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Call money		40,000,000			290,000,000
Borrowings:
Borrowing from banks		—			2,787,298
Borrowing from KSFC		1,093,096,057			1,350,000,000
Asset-backed short-term bonds		515,000,000			340,000,000
Securities sold under repurchase agreements		13,531,208,950			14,994,194,613
Short-term note issued		4,475,145,330			3,732,727,578
Debentures:
Debentures		2,345,650,000			1,800,000,000
Less: discount on debentures issued		(5,470,519	)		(2,403,031	)
		21,994,629,818			22,507,306,458

The details of call money as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Interest rate (%)		2021		2020
Korea Investment Management Co,Ltd. and others		1.52		40,000,000		290,000,000

The details of borrowings as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)		Interest rate (%)		2021		2020
Borrowings from banks	—		—		—		2,787,298
Borrowings from KSFC	KSFC		1.37~1.55		1,093,096,057		1,350,000,000
Asset-backed short-term bonds	BNK Securities Co., Ltd. and other		1.52~2.51		515,000,000		340,000,000
					1,608,096,057		1,692,787,298

The details of securities sold under repurchase agreements as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Interest rate (%)		2021		2020
Customers		0.00~3.00		6,973,309,166		8,211,087,108
Financial institution		0.38~3.50		6,557,899,784		6,783,107,505
				13,531,208,950		14,994,194,613

The details of short-term note issued as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Interest rate (%)		2021		2020
Individual		0.25~4.00		1,724,366,358		1,194,332,495
Corporate		0.40~2.10		2,750,778,972		2,538,395,083
				4,475,145,330		3,732,727,578

59

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The details of debentures as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Date issued		Maturity		Interest rate (%)		2021			2020
The 34-1st unsecured public debenture		2018.3.9		2021.3.9		—		—			290,000,000
The 34-2nd unsecured public debenture		2018.3.9		2023.3.9		3.02		210,000,000			210,000,000
The 35th unsecured public debenture		2018.6.12		2021.6.11		—		—			250,000,000
The 36-1st unsecured public debenture		2019.4.18		2022.4.18		2.00		250,000,000			250,000,000
The 36-2nd unsecured public debenture		2019.4.18		2024.4.18		2.09		250,000,000			250,000,000
The 37-1st unsecured public debenture		2019.6.14		2022.6.14		1.74		100,000,000			100,000,000
The 37-2nd unsecured public debenture		2019.6.14		2024.6.14		1.80		150,000,000			150,000,000
The 38-1st unsecured public debenture		2020.6.11		2022.6.10		1.45		170,000,000			170,000,000
The 38-2nd unsecured public debenture		2020.6.11		2023.6.9		1.54		130,000,000			130,000,000
The 39-1st unsecured public debenture		2021.3.4		2024.3.4		1.31		110,000,000			—
The 39-2nd unsecured public debenture		2021.3.4		2026.3.4		1.70		120,000,000			—
The 40-1st unsecured public debenture		2021.4.23		2024.4.23		1.53		300,000,000			—
The 40-2nd unsecured public debenture		2021.4.23		2026.4.23		1.94		200,000,000			—
The 21-1 public debenture in foreign currency		2021.11.1		2026.11.1		2.13		355,650,000			—
Less: Discount on debentures issued								(5,470,519	)		(2,403,031	)
								2,340,179,481			1,797,596,969

The changes in borrowings for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		22,507,306,458			17,271,460,024
Increase(decrease) in call money		(250,000,000	)		125,000,000
Increase(decrease) in borrowings from banks		(2,787,298	)		2,787,298
Increase(decrease) in borrowings from KSFC		(256,903,943	)		180,000,000
Increase in asset-backed short-term bonds		175,000,000			180,000,000
Increase(decrease) in securities sold under repurchase agreements		(1,462,985,663	)		2,819,584,137
Increase in short-term note issued		742,417,752			1,627,862,702
Increase in debentures		542,582,512			300,612,297
Ending balance		21,994,629,818			22,507,306,458

60

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

18. Post-employment Benefits

18.1 Defined Benefit Plans

The details of defined benefit liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Present value of defined benefit obligations		70,914,622			72,288,500
Fair value of plan assets		(15,294,733	)		(18,652,077	)
Net defined benefit liabilities		55,619,889			53,636,423

The changes in the defined benefit obligation for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		72,288,500			68,027,108
Current service cost		18,145,235			15,359,347
Interest cost		780,607			907,330
Past service cost		1,315,190			—
Remeasurements:
Actuarial gains and losses arising from changes in demographic assumptions		20,113,645			—
Actuarial gains and losses arising from changes in financial assumptions		(1,706,991	)		3,756,997
Actuarial gains and losses arising from experience adjustments		(15,407,457	)		2,786,630
Payments from plans:		(1,416,118	)		(2,014,834	)
Payments from the Company		(14,513,685	)		(15,773,057	)
Transfer from related companies		1,823,363			414,573
Transfer to related companies		(895,469	)		(1,175,594	)
Settlement		(5,301,320	)		—
Gain or loss on settlement		(4,310,878	)		—
Ending balance		70,914,622			72,288,500

The changes in the fair value of plan assets for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(18,652,077	)		(18,577,975	)
Interest income		(204,480	)		(320,100	)
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		87,124			57,038
Contributions by employers		(2,297,614	)		(2,586,895	)
Payments from plans:
Benefits paid		1,416,118			2,014,834
Settlement		5,284,090			—
Transfer from related companies		(1,823,363	)		(414,573	)
Transfer to related companies		895,469			1,175,594
Ending balance		(15,294,733	)		(18,652,077	)

61

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Plan assets are composed of the detail assets that have no quoted price in active market. The details of plan assets as at December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Fair value		Composition(%)		Fair value		Composition(%)
Cash and deposits		9,539,927		62.37		15,199,118		81.49
Investment funds		2,327,801		15.22		1,523,310		8.16
Derivatives		3,427,005		22.41		1,929,649		10.35
		15,294,733		100.00		18,652,077		100.00

Key actuarial assumptions used as at December 31, 2021 and 2020, are as follows:

	2021	2020
Discount rate	DB (Special retirement by salaries peak plan) 2.5%, Compensation promotion DC 2.3 %	DB 1.2~1.7 % Special retirement by salaries peak plan 1.8% Compensation promotion DC 1.2 %
Expected salary growth rate	DB : executives 0% DC: Promotion + Base up (December 31, 2021 : 2.3%, After December 31, 2022 : 2.0%) Special retirement by salaries peak plan : January 1st, 2022 : 4.6%(2.3% + Promotion added 2.3%) After January 1st, 2023 : 4.3% (2.0% + Promotion added 2.3%)	DB : executives 0% DC: Promotion + Base up (December 31, 2020 : 2%, After December 31, 2021 : 1.7%) Special retirement by salaries peak plan : January 1st, 2021 : 4.36%(2.0% + Promotion added 2.36%) After January 1st, 2022 : 4.06% (1.7% + Promotion added 2.36%) DB : January 1st, 2021 : 4.36% , after January 1st, 2022 : 4.06%

The sensitivity analysis for significant actuarial assumptions used to determine the present value of the defined benefit obligation as at December 31, 2021, are as follows:

	Effect on the present value of defined benefit obligation
(in thousands of Korean won)	Changes in assumption			Increase			Decrease
Discount rate		0.50	%		(1,786,004	)		1,891,348
Expected salary growth rate1		0.50	%		1,705,749			(1,617,655	)
Retirement rate		0.50	%		(1,164,586	)		1,217,894

¹ The sensitivity analysis for the expected salary growth rate is limited to special retirement by salaries peak plan and DB.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. The sensitivity of the present value of the defined benefit obligation to changes in actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations.

The methods and assumptions used in preparing the sensitivity analyses did not change compared to the previous period.

62

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The effect of defined benefit plan on future cash inflows

Expected maturity analysis of undiscounted pension benefits as at December 31, 2021, is as follows:

(in thousands of Korean won)	Less than 1 year 1		Between 1 and 2 years		Between 2 and 5 years		Between 5 and 10 years		Over 10 years		Total
Pension benefits1		11,764,609		4,827,786		27,486,101		36,239,221		65,558,364		145,876,081

¹ Fixed pension benefits of W12.4 billion under promotion compensation defined contribution plan is excluded.

The weighted average duration of the defined benefit obligations is 5.7 years.

Expected contribution to post-employment benefit plans for the year ending December 31, 2022 are W1,187 million.

18.2 Defined Contribution Plans

The Company recognized the expenses of W5,766,377 thousand and W6,860,403 thousand for defined contribution plans for the years ended December 31, 2021 and 2020, respectively.

19. Provisions

The details of provisions as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Provisions for non-financial guarantees		1,680,410		1,342,023
Provisions for asset retirement obligation1		7,997,559		8,114,793
Provisions for lawsuits		25,150,112		10,643,375
Provisions for the points		2,569,985		2,205,019
Provisions for others		68,700,000		60,565,500
		106,098,066		82,870,710

¹ The Company recognized the provision for asset retirement obligation in connection with the leased asset for the expenditures expected to recover the asset.

The changes in provisions for non-financial guarantees for the years ended December 31, 2021 and 2020 are as follows,

(in thousands of Korean won)	2021
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired		Impaired
Beginning		1,342,023			—		—
Transfer between stages
Transfer to lifetime expected credit losses (non-impaired)		(23,238	)		23,238		—
Provision for losses (Reversal of provision)		323,273			14,908		—
Other transfer (foreign exchange and other)		206			—		—
Ending 1		1,642,264			38,146		—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

63

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired			Impaired
Beginning		1,078,479			425,126			—
Provision for losses (Reversal of provision)		269,859			(425,126	)		—
Other transfer (foreign exchange and other)		(6,315	)		—			—
Ending 1		1,342,023			—			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

The changes in other provisions for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Provisions for asset retirement obligation			Provisions for lawsuits			Provisions for the points			Provisions for others			Total
Beginning		8,114,793			10,643,375			2,205,019			60,565,500			81,528,687
Contribution		57,684			8,892			4,520,637			36,700,000			41,287,213
Use		(304,037	)		(206,240	)		(4,155,671	)		(13,861,416	)		(18,527,364	)
Amortization of discounts		129,119			—			—			—			129,119
Other 1		—			14,704,084			—			(14,704,084	)		—
Ending		7,997,559			25,150,111			2,569,985			68,700,000			104,417,655

¹ As a lawsuit was filed during the year ended December 31, 2021, the estimated loss on the sale of funds related to Lime Asset Management was replaced to provisions for lawsuits.

	2020
(in thousands of Korean won)	Provisions for asset retirement obligation			Provisions for lawsuits			Provisions for the points			Provisions for others		Total
Beginning		5,782,187			10,531,027			1,530,704			—		17,843,918
Contribution		2,671,746			197,348			4,109,548			60,565,500		67,544,142
Reversal		—			(85,000	)		(24,373	)		—		(109,373	)
Use		(458,673	)		—			(3,410,860	)		—		(3,869,533	)
Amortization of discounts		119,533			—			—			—		119,533
Ending		8,114,793			10,643,375			2,205,019			60,565,500		81,528,687

64

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

20. Other Financial Liabilities

The details of other financial liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Other payables		3,037,222,814		6,255,743,686
Accrued expenses		40,961,608		31,785,255
Financial guarantee liabilities		97,766,009		83,046,025
Provisions for financial guarantee contracts		2,959,848		3,030,159
Leasehold deposits received		7,319,921		10,782,775
Lease liabilities		123,400,384		143,799,238
Other		1,117,510		2,184,178
		3,310,748,094		6,530,371,316

The changes in liabilities of the provisions for financial guarantee contracts for the years ended December 31, 2021 and 2020 are as follows:

(in thousands of Korean won)	2021
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses
			Non-impaired			Impaired
Beginning		443,598		2,586,561			—
Provision for losses (Reversal of provision)		1,328,791		(1,399,102	)		—
Ending 1		1,772,389		1,187,459			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

(in thousands of Korean won)	2020
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired			Impaired
Beginning		1,222,531			6,361,116			—
Provision for losses (Reversal of provision)		(778,933	)		(3,774,555	)		—
Ending 1		443,598			2,586,561			—

¹ The impact of COVID-19 is reflected in the future economy outlook, and the financial effect of the impact related COVID-19 is not material.

65

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

21. Other Liabilities

The details of other liabilities as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Account payables		43,216,188		45,459,314
Accrued expenses		258,774,213		249,449,785
Advances from customers		4,615,843		3,722,498
Unearned revenue		52,220,555		32,042,212
Taxes withheld		32,002,782		29,374,619
Other long-term employee benefits		7,630,850		5,954,258
Others		3,826,567		6,862,484
		402,286,998		372,865,170

22. Share Capital

The details of share capital as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won, except per share)	Authorized shares		Outstanding shares		Par value per share		2021		2020
Ordinary share		1,000,000,000 shares		298,620,424 shares		5,000 won		1,493,102,120		1,493,102,120

There are no changes in ordinary shares for the years ended December 31, 2021 and 2020.

23. Other Paid-in Capital

The details of other paid-in capital as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Share premium 1		1,142,353,750			1,142,353,750
Gains and losses on sale of treasury share		(45,331,811	)		(45,331,811	)
Other equity 2		382,088,147			382,088,147
		1,479,110,086			1,479,110,086

¹ Share premium was previously paid from stock issuance and new stock issuance due to merger and can only be used for capitalization and deficit recovery.

² Other equity arose from the paid-in capital increase of preferred share and gains on merger.

There are no changes in other paid-in capital for the years ended December 31, 2021 and 2020.

66

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

24. Retained Earnings

The details of retained earnings as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Legal reserve
Earned surplus reserve 1		101,656,298		88,656,298
Reserve for liability to compensate for damages 2		500,000		500,000
Voluntary reserves		1,540,948,010		1,310,663,602
Regulatory reserve for credit losses 3		100,223,524		99,058,565
Unappropriated retained earnings		527,666,984		374,449,367
		2,270,994,816		1,873,327,832

¹ The Commercial Act of the Republic of Korea requires the Company to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued share capital. The reserve is not available for the payment of cash dividends, but may be transferred to share capital or used to reduce accumulated deficit.

² The Company provides reserve for loss on electronic financial transactions to make reparation for the damage in process of the electronic transfers or operations. Also, the Company provides reserve to compensate for inflicted damage on a credit information subject when violating the Credit Information Use and Protection Act.

³ The Company accumulates allowances for possible loan losses in accordance with Korean IFRS and reserve for possible loan losses as much as the amount below the provision of allowances according to minimum accumulation ratio required by Financial Supervisory Service.

Changes in retained earnings for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		1,873,327,832			1,578,878,465
Profit for the year		597,645,711			374,268,350
Dividends		(200,000,000	)		(80,000,000	)
Transfer to gain due to disposal of revaluation assets		21,273			181,017
Ending balance		2,270,994,816			1,873,327,832

The amount of dividends and dividends per share for the years ended December 31, 2021 and 2020, are as follows:

2021

(in Korean won and number of shares)

Type of share

Number of shares outstanding

Number of treasury shares

Number of dividend shares

Dividend per share

Total dividend (In thousands of Korean won)

Interim dividend

Ordinary share

298,620,424 shares

—

298,620,424 shares

234

70,000,000

Annual dividend

Ordinary share

298,620,424 shares

—

298,620,424 shares

435

130,000,000

2020

(in Korean won and number of shares)

Type of share

Number of shares outstanding

Number of treasury shares

Number of dividend shares

Dividend per share

Total dividend (In thousands of Korean won)

Annual dividend

Ordinary share

298,620,424 shares

—

298,620,424 shares

267

80,000,000

67

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Appropriation of retained earnings for the years ended December 31, 2021 and 2020, consists of:

	2021				2020
(in thousands of Korean won)	(Expected date of appropriation: March 24, 2022)				(Date of appropriation: March 24, 2021)
Unappropriated retained earnings
Balance at the beginning of year		—				—
Changes of accounting policies		—				—
Interim dividend		(70,000,000	)			—
Transfer to gain due to disposal of revaluation assets		21,274				181,017
Profit for the year		597,645,711		527,666,985		374,268,350	374,449,367
Transfer from appropriated retained earnings
Regulatory reserve for credit losses		—		—		—	—
Appropriation of retained earnings
Earned surplus reserve		27,000,000				13,000,000
Regulatory reserve for credit losses		1,618,637				1,164,959
Voluntary reserves		299,048,348				230,284,408
Dividends		200,000,000		527,666,985		130,000,000	374,449,367
(cash dividends per ordinary share: W669 (13.39%) in 2021)
(cash dividends per ordinary share: W435 (8.71%) in 2020)
Unappropriated retained earnings carried forward to subsequent year				—			—

Payout and dividend yield ratios as at December 31, 2021 and 2020, are as follows:

	2021						2020
	Ordinary share						Ordinary share
	Interim dividend			Annual dividend			Annual dividend
Number of shares outstanding		298,620,424 shares			298,620,424 shares			298,620,424 shares
Number of treasury shares		—			—			—
Number of dividend shares		298,620,424 shares			298,620,424 shares			298,620,424 shares
Par value per share (in Korean won)		5,000			5,000			5,000
Payout ratio		4.68	%		13.40	%		8.71	%
Scheduled dividends (in thousands of Korean won)		70,000,000			200,000,000			130,000,000
Dividends per share (in Korean won)		234			670			435

The Company accumulates allowances for possible loan losses in accordance with Korean IFRS and reserve for possible loan losses as much as the amount below the provision of allowances according to minimum accumulation ratio required by Regulation on Supervision of Financial Investment.

Regulatory reserve for credit losses, a type of voluntary reserve for retained earnings, reverses the exceeding amount if the beginning balance of the reserve exceeds the ending balance at the closing date. Regulatory reserve for credit losses is generally recognized after unappropriated deficit is disposed.

68

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The details of the regulatory reserve for credit losses to be appropriated as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Beginning		100,223,524		99,058,565
Amounts to be reserved		1,618,637		1,164,959
Ending		101,842,161		100,223,524

The adjusted profit of the year after reflection of reserve for credit losses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Profit for the year before reserve for credit loss		597,645,711			374,268,350
Amounts to be reserved		(1,618,637	)		(1,164,959	)
Adjusted profit after reversal (provision) of reserve for credit losses1		596,027,074			373,103,391

¹ Reserve for credit loss is announced by Article 3 Clause 8 of the Regulation on Financial Investment Business. Adjusted profit after reserve for credit losses is not based on Korean IFRS and is calculated on the assumption that provision or reversal of reserve for credit losses before tax is adjusted to the profit.

25. Other Components of Equity

The details of other components of equity as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Changes in the fair value of financial assets at FVOCI		216,494,145			205,927,502
Revaluation surplus		26,749,635			26,770,909
Remeasurements of net defined benefit liabilities		(40,522,467	)		(38,284,884	)
Gain or loss on financial liabilities designated at FVTPL due to the change of credit risk		2,225,784			(11,488,824	)
		204,947,097			182,924,703

The changes in gain or loss on valuation of financial assets at FVOCI for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		205,927,502			172,279,079
Gain on valuation		17,339,966			46,426,044
Tax effect of gain (loss) on valuation 1		(4,768,491	)		(12,767,162	)
Transfer to gain (loss) due to disposal or impairment		(2,765,286	)		(14,425	)
Tax effect of transfer 1		760,454			3,966
Ending balance		216,494,145			205,927,502

¹ Including income tax effect (Note 34).

69

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The changes in gain on revaluation of property and equipment for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		26,770,909			26,951,926
Transfer to retained earnings due to disposal of revaluation assets		(21,274	)		(181,017	)
Ending balance		26,749,635			26,770,909

The changes in remeasurements of the net defined benefit liability for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(38,284,884	)		(33,499,401	)
Changes during the year		(3,086,321	)		(6,600,665	)
Tax effect 1		848,738			1,815,183
Ending balance		(40,522,467	)		(38,284,883	)

¹ Including income tax effect (Note 34).

The change in gain or loss on financial liabilities designated at FVTPL due to the change of credit risk for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Beginning balance		(11,488,824	)		(20,320,972	)
Changes during the year		18,916,700			12,182,272
Tax effect 1		(5,202,092	)		(3,350,124	)
Ending balance		2,225,784			(11,488,824	)

¹ Including income tax effect (Note 34).

70

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

26. Fee and Commission Income and Expense

The details of fee and commission income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Brokerage commissions		707,045,069		633,639,605
Underwriting commissions		128,888,234		103,322,206
Brokerage commissions on collective investment securities		28,155,111		19,308,105
Management fee on asset management		32,036,202		25,343,004
Commissions on merger and acquisition		134,615,127		107,449,257
Trust fees and commissions		14,581,037		13,817,303
Other commissions		121,762,248		103,011,604
		1,167,083,028		1,005,891,084

The details of fee and commission expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Trading commission		58,391,360		38,358,651
Advisory fees		1,967,202		1,063,507
Investment management delegation fees		183,377		193,824
Commission fees on group brand		18,459,525		14,743,067
Contributions to other institutions		7,593,876		4,169,119
Others		84,654,029		48,959,894
		171,249,369		107,488,062

71

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

27. Gain or Loss on Valuation and Disposal of Financial Instruments

The details of gain or loss on valuation and disposal of financial instruments for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Financial instruments at FVTPL		1,162,211,517		1,275,824,696		(113,613,179	)
Financial instruments designated at FVTPL		625,254,719		654,985,522		(29,730,803	)
Derivative financial instruments		3,732,757,673		3,604,045,185		128,712,488
Financial assets at FVOCI 1		4,513,829		15,923,820		(11,409,991	)
		5,524,737,738		5,550,779,223		(26,041,485	)

¹ Gain or loss on valuation of financial assets at FVOCI is excluded.

	2020
(in thousands of Korean won)	Gain		Loss		Net
Financial instruments at FVTPL		1,487,948,915		1,337,925,897		150,023,018
Financial instruments designated at FVTPL		664,122,831		1,144,335,895		(480,213,064	)
Derivative financial instruments		4,860,761,428		4,544,231,144		316,530,284
Financial assets at FVOCI 1		18,940,519		9,928,941		9,011,578
		7,031,773,693		7,036,421,877		(4,648,184	)

¹ Gain or loss on valuation of financial assets at FVOCI is excluded.

The details of gain or loss on valuation and disposal of financial instruments at FVTPL for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Financial assets at FVTPL		1,091,448,161		1,195,909,031		(104,460,870	)
Financial liabilities at FVTPL		70,763,356		79,915,665		(9,152,309	)
		1,162,211,517		1,275,824,696		(113,613,179	)

	2020
(in thousands of Korean won)	Gain		Loss		Net
Financial assets at FVTPL		1,460,081,551		1,185,115,347		274,966,204
Financial liabilities at FVTPL		27,867,364		152,810,550		(124,943,186	)
		1,487,948,915		1,337,925,897		150,023,018

The details of gain or loss on valuation and disposal of financial instruments designated at FVTPL for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Financial liabilities designated at FVTPL
Derivatives-linked securities sold		573,754,517		567,589,577		6,164,940
Other OTC derivative-combined contract sold		45,436,321		80,650,312		(35,213,991	)
Exchange traded notes sold		6,063,881		6,745,633		(681,752	)
		625,254,719		654,985,522		(29,730,803	)

72

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Gain		Loss		Net
Financial liabilities designated at FVTPL
Derivatives-linked securities sold		620,829,697		1,053,036,533		(432,206,836	)
Other OTC derivative-combined contract sold		43,060,556		90,962,806		(47,902,250	)
Exchange traded notes sold		232,578		336,556		(103,978	)
		664,122,831		1,144,335,895		(480,213,064	)

The details of gain or loss on valuation and disposal of derivative financial instruments for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Interest rate		1,324,289,219		1,263,279,444		61,009,775
Currency		636,273,231		553,099,242		83,173,989
Stock		1,585,739,354		1,585,671,006		68,348
Credit		20,146,569		13,981,328		6,165,241
Commodity		21,864,231		14,815,335		7,048,896
Others		144,445,069		173,198,830		(28,753,761	)
		3,732,757,673		3,604,045,185		128,712,488

	2020
(in thousands of Korean won)	Gain		Loss		Net
Interest rate		1,043,911,650		1,025,588,460		18,323,190
Currency		754,318,173		679,958,317		74,359,856
Stock		2,789,073,860		2,544,553,512		244,520,348
Credit		28,505,874		19,213,472		9,292,402
Commodity		18,097,049		21,796,632		(3,699,583	)
Others		226,854,822		253,120,751		(26,265,929	)
		4,860,761,428		4,544,231,144		316,530,284

The details of gain or loss on valuation and disposal of financial assets at FVOCI for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Gain		Loss		Net
Debt instruments		4,513,829		15,923,820		(11,409,991	)

	2020
(in thousands of Korean won)	Gain		Loss		Net
Debt instruments		18,940,519		9,928,940		9,011,579

As at December 31, 2021, the Company holds PIS(Portfolio Index Swap) in connection with Lime Tethys Qualified Investor Private Investment Trust No. 2 and Lime Pluto FI Qualified Investor Private Investment Trust D-1, which were prohibited to repurchase in the fourth quarter of 2019. The Company holds beneficiary certificates and TRS contracts of W191.5 billion (nominal amount). Meanwhile, the Company sold W68.1 billion in subsidiary funds of the fund.

73

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

On October 20, 2020, Lime Asset Management’s license as a fund manager was revoked by the Financial Supervisory Service’s sanctions review committee, and most of its redemption-suspended funds and normal funds will be transferred to Wellbridge Asset Management (the bridge management company) to continue collecting and distributing investments. It is difficult to predict whether and when the aforementioned redemption-suspended funds will be redeemed. As of December 31, 2021, one lawsuit was filed to the Company as a defendant and the Company recognizes provisions for lawsuits for the estimated losses due to the possibility of additional lawsuits being filed in the future.

28. Interest Income and Interest Expense

The details of interest income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Interest on financial assets at FVTPL
Interest on debt instruments at FVTPL		341,201,835		372,012,851
Interest on loans at FVTPL		6,773,305		5,637,374
Interest on commercial papers		52,496,923		51,606,560
		400,472,063		429,256,785
Interest on financial assets at FVOCI and financial assets measured at amortised cost
Interest on loans measured at amortised cost		3,469,282		3,129,997
Interest on debt instruments at FVOCI		47,099,927		45,258,834
Interest on broker’s loans		204,101,340		151,123,816
Interest on loans		53,326,130		57,804,610
Interest on deposits with KSFC		1,834,470		1,305,407
Interest on certificates of deposit		12,974		9,988
Interest on deposits with financial institution		5,560		10,173
Interest on bonds purchased under resale agreements		3,909,987		4,175,639
Gains on transactions of certificates of deposits		43,948		27,741
Interest on deposits		14,874,588		30,225,100
Interest on other receivables		2,013,586		1,805,224
Others 1		6,388,935		4,508,779
		337,080,727		299,385,308
		737,552,790		728,642,093

¹ Interest on lease receivables of W1,616 million and W1,734 million for the year ended December 31, 2021 and 2020, respectively, are included.

The details of interest expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Interest on borrowings		15,698,640		18,307,616
Interest on customers’ deposits		6,634,860		7,605,230
Interest on bonds sold under repurchase agreements		91,025,829		113,243,309
Losses on transactions of certificates of deposit		619		35
Interest on call money		3,045,203		2,723,083
Interest on debentures		41,745,311		39,682,637
Interest on short-term note issued		43,200,628		45,714,150
Interest on asset-backed short-term bonds		7,351,150		5,025,090
Fees for the proceeds from the sale of stocks loaned		1,191		—
Others 1		3,725,794		6,798,658
		212,429,225		239,099,808

¹ Interest on lease liabilities of W2,787 million and W3,676 million for the year ended December 31, 2021 and 2020, respectively, are included.

74

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

29. Gain or Loss on Valuation and Disposal of Financial Assets measured at Amortised Costs

The details of gain or loss on valuation and disposal of financial assets measured at amortised cost for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Gain(Loss) on valuation of financial assets measured at amortised cost
Reversal(Provision) of allowance for credit losses of loans		(4,314,871	)		64,247
Reversal(Provision) of allowance for credit losses of deposits		106,947			(85,351	)
Reversal(Provision) of allowance for credit losses of other financial assets		(1,063,262	)		(18,977,595	)
Gain(Loss) on disposal of financial assets measured at amortised cost
Gain(Loss) on disposal of loans measured at amortised cost		1,405,114			23,467,297
		(3,866,072	)		4,468,598

30. Gain or Loss on Foreign Currency Transactions

The details of gain on foreign currency transactions for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Gain on foreign currency transactions		692,728,817		870,162,329
Gain on foreign exchange translation		85,145,483		85,433,976
		777,874,300		955,596,305

The details of loss on foreign currency transactions for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Loss on foreign currency transactions		716,902,499		852,233,021
Loss on foreign exchange translation		28,832,518		223,685,837
		745,735,017		1,075,918,858

31. Other Operating Income and Other Operating Expenses

The details of other operating income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Dividend income		43,442,376		39,104,346
Distribution income		101,195,360		77,205,128
Reversal of provision for credit loss		2,758,899		6,639,991
Others		3,137,321		1,213,616
		150,533,956		124,163,081

The details of other operating expenses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Provision for credit losses		3,026,767		1,931,236
Others		42,694,906		24,438,329
		45,721,673		26,369,565

75

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

32. Selling and Administrative Expenses

(a) The details of selling and administrative expenses for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Labor costs
Salaries		449,001,959		405,677,156
Post-employment benefits		21,492,051		22,806,980
Retirement bonus		619,728		24,047,419
Other long-term employee benefits		2,415,192		819,275
Employee benefits		80,461,703		64,268,964
		553,990,633		517,619,794
Other selling and administrative expenses
Employee benefits		9,980,170		9,031,346
Sales promotion expenses		3,056,724		1,625,149
Computer system operation expenses		24,436,828		20,470,731
Management expenses for rent		20,531,947		22,373,130
Commissions		24,093,066		36,776,858
Research and development		208,948		145,547
Advertising expenses		28,029,037		16,463,910
Depreciation		41,466,055		46,755,247
Training expenses		1,521,905		1,229,924
Amortization expenses of intangible assets		22,148,402		17,726,028
Taxes and dues		33,218,538		29,586,838
Consignment fees		4,536,892		1,759,286
Others		54,294,279		55,340,062
		267,522,791		259,284,056
		821,513,424		776,903,850

(b) Stock Grant Agreement

The executives of the Company have stock grant agreement with KB Financial Group Inc., in which the Company settles the expense arising from the agreement with KB Financial Group Inc. The Company recognizes the expense in profit or loss as selling and administrative expenses.

The details of the share grants linked to long-term performance as at December 31, 2021, are as follows:

(In number of shares)	Grant date	Granted shares		Payable shares1		Vesting conditions
Series 1-1	2010-1-1		1,231		266	Service, vesting conditions : market 40%, non-market 60%
Series 1-8	2011-1-1		1,289		365	Service, vesting conditions : market 40%, non-market 60%
Series 1-10	2012-1-1		1,976		644	Service, vesting conditions : market 40%, non-market 60%
Series 1-11	2012-6-18		708		142	Service, vesting conditions : market 40%, non-market 60%
Series 1-13	2013-1-1		3,340		1,074	Service, vesting conditions : market 40%, non-market 60%
Series 1-16	2013-10-1		202		—	Service, vesting conditions : market 40%, non-market 60%
Series 1-19	2015-2-24		1,812		584	Service, vesting conditions : market 30%, non-market 70%
Series 1-21	2017-6-1		19,252		2,177	Service, vesting conditions : market 30%, non-market 70%
Series 1-22	2017-1-1		81,701		19,490	Service, vesting conditions : market 20%, non-market 80%
Series 1-23	2017-1-9		2,299		258	Service, vesting conditions : market 20%, non-market 80%
Series 1-24	2017-2-24		1,698		1,516	Service, vesting conditions : market 20%, non-market 80%
Series 1-25	2017-6-1		1,511		405	Service, vesting conditions : market 30%, non-market 70%
Series 1-26	2017-9-4		1,551		1,028	Service, vesting conditions : market 20%, non-market 80%
Series 1-27	2017-8-26		2,952		431	Service, vesting conditions : market 20%, non-market 80%
Series 1-28	2018-1-1		14,698		5,561	Service, vesting conditions : market 20%, non-market 80%

76

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(In number of shares)	Grant date	Granted shares		Payable shares1		Vesting conditions
Series 1-29	2018-7-9		1,208		285	Service, vesting conditions : market 20%, non-market 80%
Series 1-30	2019-1-1		80,289		63,906	Service, vesting conditions : market 20%, non-market 80%
Series 1-30	2019-1-1		4,580		4,188	Service, vesting conditions : market 0%, non-market 100%
Series 1-31	2019-2-24		809		637	Service, vesting conditions : market 20%, non-market 80%
Series 1-32	2019-3-4		1,888		2,711	Service, vesting conditions : market 20%, non-market 80%
Series 1-33	2019-6-1		3,994		4,463	Service, vesting conditions : market 20%, non-market 80%
Series 1-34	2019-9-1		2,927		4,254	Service, vesting conditions : market 20%, non-market 80%
Series 1-35	2019-9-4		358		207	Service, vesting conditions : market 20%, non-market 80%
Series 1-36	2019-5-27		1,167		2,153	Service, vesting conditions : market 20%, non-market 80%
Series 1-37	2020-1-1		48,962		64,546	Service, vesting conditions : market 20%, non-market 80%
Series 1-38	2020-3-6		2,856		3,965	Service, vesting conditions : market 20%, non-market 80%
Series 1-39	2020-8-1		12,551		8,905	Service, vesting conditions : market 20%, non-market 80%
Series 1-40	2021-1-1		95,798		51,397	Service, vesting conditions : market 20%, non-market 80%
Series 1-40	2021-1-1		5,675		2,837	Service, vesting conditions : market 0%, non-market 100%
Series 1-41	2021-3-4		3,064		1,271	Service, vesting conditions : market 20%, non-market 80%
Series 1-42	2021-3-15		5,190		2,076	Service, vesting conditions : market 20%, non-market 80%
Series 1-43	2021-5-27		2,016		604	Service, vesting conditions : market 20%, non-market 80%
Series 1-44	2021-6-1		2,402		704	Service, vesting conditions : market 20%, non-market 80%
Series 1-45	2021-8-1		2,276		477	Service, vesting conditions : market 20%, non-market 80%
Series 1-46	2021-9-1		2,571		429	Service, vesting conditions : market 20%, non-market 80%
			416,801		253,956

¹ The number of maximum payable shares per executive as at December 31, 2021.

The details of share grants linked to short-term performance as at December 31, 2021, are as follows:

(In number of shares)	Grant date	Granted shares		Payable shares1		Vesting conditions2
Series 2-3	2016-1-1		6,844		2,961	Proportional to service period, vesting conditions satisfied
Series 2-4	2017-1-1		63,142		18,118	Proportional to service period, vesting conditions satisfied
Series 2-5	2018-1-1		70,959		42,669	Proportional to service period, vesting conditions satisfied
Series 2-6	2019-1-1		60,039		47,664	Proportional to service period, vesting conditions satisfied
Series 2-7	2020-1-1		68,689		68,689	Proportional to service period, vesting conditions satisfied
Series 2-8	2021-1-1		80,573		80,573	Proportional to service period, vesting conditions satisfied
Series 3-3	2016-1-1		27,089		14,979	Proportional to service period, vesting conditions satisfied
Series 3-4	2017-1-1		11,355		4,918	Proportional to service period, vesting conditions satisfied
Series 3-5	2018-1-1		25,393		15,369	Proportional to service period, vesting conditions satisfied
Series 3-6	2019-1-1		44,696		35,864	Proportional to service period, vesting conditions satisfied
Series 3-7	2020-1-1		77,112		77,112	Proportional to service period, vesting conditions satisfied
Series 4-1	2017-12-31		328,028		81,867	Proportional to service period, vesting conditions satisfied
Series 4-2	2019-12-31		288,006		195,901	Proportional to service period, vesting conditions satisfied
Series 4-3	2020-12-31		296,950		296,950	Proportional to service period, vesting conditions satisfied
			1,448,875		983,634

¹ The number of maximum payable shares per executive as at December 31, 2021.

²  Number of vested shares is determined by performance and paid for a deferred payment schedule over 3 to 5 years.

77

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Share grants are measured at fair value using the Monte Carlo Simulation Model and assumptions used in determining the fair value as at December 31, 2021, are as follows:

(In Korean won)	Risk free rate (%)		Fair value (Market performance condition)	Fair value (Non-market performance condition)
Series 1-1		1.349	—	51,523~53,308
Series 1-8		1.349	—	51,523~53,308
Series 1-10		1.349	—	51,523~53,308
Series 1-11		1.349	—	47,631~47,631
Series 1-13		1.349	—	47,631~53,308
Series 1-16		1.349	—	—
Series 1-19		1.349	—	45,096~47,631
Series 1-21		1.349	—	45,096~56,379
Series 1-22		1.349	—	45,096~56,379
Series 1-23		1.349	—	56,379~56,379
Series 1-24		1.349	—	45,096~56,379
Series 1-25		1.349	—	53,308~56,379
Series 1-26		1.349	—	45,096~56,379
Series 1-27		1.349	—	56,379~56,379
Series 1-28		1.349	—	45,096~56,379
Series 1-29		1.349	—	53,308~56,379
Series 1-30		1.349	—	48,344~56,379
Series 1-31		1.349	—	45,096~56,379
Series 1-32		1.349	46,800~56,379	46,800~50,023
Series 1-33		1.349	45,096~56,379	50,023~56,379
Series 1-34		1.349	50,023~56,379	50,023~53,308
Series 1-35		1.349	45,096~56,379	45,096~56,379
Series 1-36		1.349	50,023~56,379	50,023~53,308
Series 1-37		1.349	45,096~56,379	50,023~56,379
Series 1-38		1.349	48,344~53,308	48,344~51,523
Series 1-39		1.349	48,344~53,308	48,344~51,523
Series 1-40		1.349	48,344~56,379	48,344~53,308
Series 1-41		1.349	46,800~51,523	46,800~50,023
Series 1-42		1.349	46,800~51,523	46,800~50,023
Series 1-43		1.349	46,800~51,523	46,800~50,023
Series 1-44		1.349	46,800~51,523	46,800~50,023
Series 1-45		1.349	46,800~51,523	46,800~50,023
Series 1-46		1.349	46,800~51,523	46,800~50,023
Series 2-3		1.349	—	47,631~56,379
Series 2-4		1.349	—	45,096~56,379
Series 2-5		1.349	—	45,096~56,379
Series 2-6		1.349	—	45,096~56,379
Series 2-7		1.349	—	46,800~56,379
Series 2-8		1.349	—	46,800~54,649
Series 3-3		1.349	—	47,631~56,379
Series 3-4		1.349	—	45,096~56,379
Series 3-5		1.349	—	45,096~56,379
Series 3-6		1.349	—	45,096~56,379
Series 3-7		1.349	—	48,344~56,379
Series 4-1		1.349	—	45,096~56,379
Series 4-2		1.349	—	53,308~56,379
Series 4-3		1.349	—	51,523~56,379

The Company used the volatility of the stock price over the previous year as the expected volatility and used the dividend yield as the arithmetic mean of the dividend rate of one year before, two years before, and three years before the base year, in order to calculate fair value. Fair value is calculated based on risk free interest rate of 1 year-KTB rate.

78

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

In relation to the above share-based arrangements, the compensation cost amounting to W63,084,932 thousand and W41,106,115 thousand are recorded as accrued expenses to KB Financial Group Inc as at December 31, 2021 and 2020, respectively.

33. Non-operating Income and Non-operating Expenses

The details of non-operating income for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Gain on disposal of property and equipment		170,470		1,447,234
Gain on disposal of investment properties		246,867		5,718,631
Gain on disposal of intangible assets		3,362		301,779
Reversal of impairment loss on intangible assets		2,630,059		2,505,542
Rent		7,012,044		9,668,495
Gain on restoration		304,037		83,082
Gain related to investments in subsidiaries and associates		46,242,488		47,869,843
Others		2,225,186		2,029,482
		58,834,513		69,624,088

The details of non-operating expenses for the years ended December 31, 2021 and 2020 are as follows:

(in thousands of Korean won)	2021		2020
Loss on disposal of property and equipment		184,710		1,318,489
Loss on disposal of investment properties		—		2,322,292
Depreciation of investment properties		442,702		—
Loss on disposal of intangible assets		40,656		87,296
Impairment loss on intangible assets		121,016		172,148
Loss related to investments in subsidiaries and associates		11,701,543		69,001,405
Donation		7,014,314		5,918,216
Loss on restoration		—		1,690,797
Others		33,612,383		65,001,787
		53,117,324		145,512,430

79

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

34. Tax Expense and Deferred Tax

The details of income tax expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Current tax
Current tax on profits for the year		210,118,248			139,736,824
Adjustments in respect of prior years		2,530,896			74,505
Deferred tax
Origination and reversal of temporary differences		14,210,462			9,761,132
Tax recognized directly in equity
Gain or loss on valuation for financial assets at FVOCI		(4,008,037	)		(12,763,196	)
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(5,202,093	)		(3,350,125	)
Remeasurements of net defined benefit liabilities		848,738			1,815,183
Tax effect derived from group’s income tax system		(3,938,929	)		2,901,818
Income tax expense		214,559,285			138,176,141

Reconciliation of profit before tax and tax expense for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Profit before tax (A)		812,204,996			512,444,491
Tax based on statutory rate		212,994,374			130,558,795
Adjustments
Non-deductible expense		5,549,618			3,527,812
Non-taxable income		(1,197,227	)		(440,064	)
Changes in deferred tax assets (liabilities) that have not been recognized		(300,531	)		3,442,387
Effect from tax reduction and credit		(81,033	)		(987,422	)
Adjustment in respect of prior years		2,530,896			74,505
Tax effect from group’s income tax system		(3,938,930	)		2,901,818
Others		(997,882	)		(901,690	)
Tax expense (B)		214,559,285			138,176,141
Effective tax rate (B/A)		26.42	%		26.96	%

The changes in deferred tax assets (liabilities) for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Provision for impairment		142,086			—			—			142,086
Commissions income		5,354,729			(731,999	)		—			4,622,730
Financial assets at FVOCI		(77,700,924	)		2,498,784			(4,008,037	)		(79,210,177	)
Defined benefit obligation		19,879,337			(1,226,555	)		848,739			19,501,521
Other long-term employee benefits		1,637,421			461,063			—			2,098,484
Financial assets at FVTPL		(36,226,370	)		91,471,135			—			55,244,765
Financial liabilities at FVTPL		83,623,427			(127,528,819	)		(5,202,093	)		(49,107,485	)
Accrued expenses		68,421,675			7,335,888			—			75,757,563
Dividends (specific overseas company)		10,809,313			(263,662	)		—			10,545,651
Accrued income		(22,546,280	)		(442,466	)		—			(22,988,746	)

80

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2021
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Property and equipment		(9,816,743	)		34,116			—			(9,782,627	)
Provisions for asset retirement obligation		2,231,568			(32,239	)		—			2,199,329
Investments in associates and subsidiaries		(643,340	)		2,391,164			—			1,747,824
Derivatives		(70,377,421	)		12,918,654			—			(57,458,767	)
Loans		170,188			1,414,300			—			1,584,488
Intangible assets		(20,771,808	)		241,458			—			(20,530,350	)
Plan assets		(5,129,321	)		923,269			—			(4,206,052	)
Advance depreciation provision		(2,560,369	)		58,573			—			(2,501,796	)
Interest related to loan for construction		(68,829	)		3,878			—			(64,951	)
Others		35,890,999			4,323,856			—			40,214,855
Subtotal		(17,680,662	)		(6,149,602	)		(8,361,391	)		(32,191,655	)
Unrecognized deferred tax assets (liabilities)		(3,304,176	)		(300,531	)		—			(3,604,707	)
Deferred tax assets (liabilities), net 1		(14,376,486	)		(5,849,071	)		(8,361,391	)		(28,586,948	)

¹  The income tax rates used in computing deferred tax assets (liabilities) are the expected average tax rate, which is applicable to the forecasted period when the temporary differences are reversed.

	2020
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Provision for impairment		142,086			—			—			142,086
Commissions income		8,486,003			(3,131,274	)		—			5,354,729
Financial assets at FVOCI		(64,842,702	)		(95,026	)		(12,763,196	)		(77,700,924	)
Defined benefit obligation		18,707,455			(643,300	)		1,815,183			19,879,338
Other long-term employee benefits		2,162,100			(524,679	)		—			1,637,421
Financial assets at FVTPL		(28,430,491	)		(7,795,879	)		—			(36,226,370	)
Financial liabilities at FVTPL		109,501,218			(22,527,667	)		(3,350,125	)		83,623,426
Accrued expenses		46,873,332			21,548,343			—			68,421,675
Dividends (specific overseas company)		7,410,295			3,399,017			—			10,809,312
Accrued income		(23,288,324	)		742,044			—			(22,546,280	)
Property and equipment		(9,673,829	)		(142,914	)		—			(9,816,743	)
Provisions for asset retirement obligation		1,590,101			641,467			—			2,231,568
Investments in associates and subsidiaries		(643,339	)		(1	)		—			(643,340	)
Derivatives		(72,386,577	)		2,009,156			—			(70,377,421	)
Loans		460,582			(290,394	)		—			170,188
Intangible assets		(19,232,365	)		(1,539,443	)		—			(20,771,808	)
Plan assets		(5,108,943	)		(20,378	)		—			(5,129,321	)
Advance depreciation provision		(3,538,376	)		978,007			—			(2,560,369	)
Interest related to loan for construction		(72,707	)		3,878			—			(68,829	)
Others		20,522,564			15,368,436			—			35,891,000
Subtotal		(11,361,917	)		7,979,393			(14,298,138	)		(17,680,662	)
Unrecognized deferred tax assets (liabilities)		(6,746,563	)		3,442,387			—			(3,304,176	)
Deferred tax assets (liabilities), net 1		(4,615,354	)		4,537,006			(14,298,138	)		(14,376,486	)

¹  The income tax rates used in computing deferred tax assets (liabilities) are the expected average tax rate, which is applicable to the forecasted period when the temporary differences are reversed.

81

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Temporary differences which were not recognized due to uncertainty of their realization as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Taxable temporary difference
Investments in subsidiaries		17,815,543		17,815,543
Intangible assets		58,888,990		58,888,990
Others		445,550		445,550
		77,150,083		77,150,083
Deductible temporary difference
Commission (local subsidiary)		7,512,805		7,646,875
Dividends (specific overseas company)		38,347,821		39,306,592
Investments in subsidiaries		15,476,124		15,476,124
Others		2,705,305		2,705,305
		64,042,055		65,134,896
		13,108,028		12,015,187

Details of income taxes that are charged or credited directly to equity for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021			2020
Recognized in other comprehensive income
Gain or loss on valuation for financial assets at FVOCI		(4,768,491	)		(12,767,162	)
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(5,202,093	)		(3,350,125	)
Remeasurements of net defined benefit liabilities		848,738			1,815,183
Reclassified to profit or loss
Gain or loss on valuation for financial assets at FVOCI		760,454			3,966
		(8,361,392	)		(14,298,138	)

82

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

35. Carrying Amounts of Financial Instruments by Category

Financial assets and liabilities are measured at fair value or amortised cost. Measurement policies for each category of financial assets and financial liabilities are disclosed in Note 2, ‘Significant accounting policies’.

The carrying amounts of financial assets and liabilities by category as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Financial asset measured at fair value through profit or loss		Financial asset measured at fair value through Other Comprehensive income		Financial asset measured at amortised cost		Derivative asset (hedging)		Totals
Financial Assets
Cash and deposits		—		—		3,345,119,600		—		3,345,119,600
Financial Assets at FVTPL		33,833,764,376		—		—		—		33,833,764,376
Derivatives		811,015,166		—		—		—		811,015,166
Equity instruments at FVOCI		—		445,652,737		—		—		445,652,737
Debt instruments at FVOCI		—		3,392,645,493		—		—		3,392,645,493
Loans measured at amortised cost		—		—		5,430,443,816		—		5,430,443,816
Other financial assets		—		—		3,724,896,077		—		3,724,896,077
		34,644,779,542		3,838,298,230		12,500,459,493		—		50,983,537,265

	2021
(in thousands of Korean won)	Financial liabilities measured at fair value through profit or loss		Financial liabilities designated at fair value through profit or loss		Financial liabilities measured at amortised cost		Derivative liabilities (hedging)		Totals
Financial Liabilities
Financial liabilities at FVTPL		2,825,922,918		—		—		—		2,825,922,918
Financial liabilities designated at FVTPL		—		9,160,923,652		—		—		9,160,923,652
Derivative financial liabilities		830,630,902		—		—		6,068,500		836,699,402
Deposit liabilities		—		—		8,400,368,430		—		8,400,368,430
Borrowings		—		—		21,994,629,818		—		21,994,629,818
Other financial liabilities		—		—		3,310,748,094		—		3,310,748,094
		3,656,553,820		9,160,923,652		33,705,746,342		6,068,500		46,529,292,314

83

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Financial asset measured at fair value through profit or loss		Financial asset measured at fair value through Other Comprehensive income		Financial asset measured at amortised cost		Derivative asset (hedging)		Totals
Financial Assets
Cash and deposits		—		—		3,545,084,661		—		3,545,084,661
Financial Assets at FVTPL		33,177,803,060		—		—		—		33,177,803,060
Derivatives		927,311,466		—		—		—		927,311,466
Equity instruments at FVOCI		—		378,927,105		—		—		378,927,105
Debt instruments at FVOCI		—		3,524,854,340		—		—		3,524,854,340
Loans measured at amortised cost		—		—		5,000,229,374		—		5,000,229,374
Other financial assets		—		—		6,837,524,263		—		6,837,524,263
		34,105,114,526		3,903,781,445		15,382,838,298		—		53,391,734,269
	2020
(in thousands of Korean won)	Financial liabilities measured at fair value through profit or loss		Financial liabilities designated at fair value through profit or loss		Financial liabilities measured at amortised cost		Derivative liabilities (hedging)		Totals
Financial Liabilities
Financial liabilities at FVTPL		1,884,675,400		—		—		—		1,884,675,400
Financial liabilities designated at FVTPL		—		9,796,959,305		—		—		9,796,959,305
Derivative financial liabilities		849,373,391		—		—		816,000		850,189,391
Deposit liabilities		—		—		7,688,906,486		—		7,688,906,486
Borrowings		—		—		22,507,306,458		—		22,507,306,458
Other financial liabilities		—		—		6,530,371,316		—		6,530,371,316
		2,734,048,791		9,796,959,305		36,726,584,260		816,000		49,258,408,356

84

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

36. Financial Instruments

36.1 Fair Value of Financial Instruments by Class

Fair values of financial assets and financial liabilities as at December 31, 2021 and 2020, are as follows:

	2021				2020
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and deposits 2		3,345,119,600		3,345,119,600		3,545,084,661		3,545,084,661
Financial assets at FVTPL 1		33,833,764,376		33,833,764,376		33,177,803,060		33,177,803,060
Derivative financial assets 1		811,015,166		811,015,166		927,311,466		927,311,466
Financial assets at FVOCI		3,838,298,230		3,838,298,230		3,903,781,445		3,903,781,445
Loans measured at amortised cost		5,430,443,816		5,442,192,266		5,000,229,374		5,021,146,461
Other financial assets 2		3,724,896,077		3,724,896,077		6,837,524,263		6,837,524,263
		50,983,537,265		50,995,285,715		53,391,734,269		53,412,651,356

	2021				2020
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial liabilities
Deposit liabilities 2		8,400,368,430		8,400,368,430		7,688,906,486		7,688,906,486
Financial liabilities at FVTPL		2,825,922,918		2,825,922,918		1,884,675,400		1,884,675,400
Financial liabilities designated at FVTPL 1		9,160,923,652		9,160,923,652		9,796,959,305		9,796,959,305
Derivative financial liabilities 1		836,699,402		836,699,402		850,189,391		850,189,391
Borrowings		21,994,629,818		21,981,900,347		22,507,306,458		22,535,234,176
Other financial liabilities 2		3,310,748,094		3,310,748,094		6,530,371,316		6,530,371,316
		46,529,292,314		46,516,562,843		49,258,408,356		49,286,336,074

¹  Deferred transaction gain or losses are adjusted in the carrying amount.

² The fair value of cash and deposits, other financial assets, deposit liabilities and other financial liabilities with short maturity dates or uncertain maturity dates are presented at their book amounts.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 a quoted price in an active market.

36.2 Fair Value Hierarchy

Financial instruments measured at fair value are categorized within the fair value hierarchy, and the defined levels are as follows:

Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2	Fair value using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, prices) or indirectly (that is, derived from prices)
Level 3	Fair value using inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

85

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The observable input is generally used to the Fair value measurement. However, if an observable input requires an adjustment using an unobservable input and that adjustment results in a significantly higher or lower fair value measurement, the resulting measurement would be categorized within Level 3 of the fair value hierarchy.

(a) Fair value hierarchy of financial instruments measured at fair value

The fair value hierarchy of financial assets and liabilities measured at fair value as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at FVTPL – debt instruments 1		7,098,545,069		24,110,564,296		1,607,975,591		32,817,084,956
Financial assets at FVTPL – equity instruments		367,264,430		528,403,259		121,011,731		1,016,679,420
Derivative financial assets 1		68,529,631		532,676,875		209,808,660		811,015,166
Financial assets at FVOCI		20,989,065		3,450,533,070		366,776,095		3,838,298,230
		7,555,328,195		28,622,177,500		2,305,572,077		38,483,077,772
Financial liabilities
Financial liabilities at FVTPL		2,825,922,918		—		—		2,825,922,918
Financial liabilities designated at FVTPL1		36,937,827		1,294,944,846		7,829,040,979		9,160,923,652
Derivative financial liabilities 1		197,253,920		470,981,570		168,463,912		836,699,402
		3,060,114,665		1,765,926,416		7,997,504,891		12,823,545,972

¹  Deferred transaction gain or losses are adjusted in the carrying amount.

	2020
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at FVTPL – debt instruments 1		8,401,883,047		21,745,480,089		2,004,797,120		32,152,160,256
Financial assets at FVTPL – equity instruments		537,383,392		394,160,283		94,099,129		1,025,642,804
Derivative financial assets 1		74,688,984		411,129,242		441,493,240		927,311,466
Financial assets at FVOCI		110,134,549		3,485,076,697		308,570,199		3,903,781,445
		9,124,089,972		26,035,846,311		2,848,959,688		38,008,895,971
Financial liabilities
Financial liabilities at FVTPL		1,884,675,400		—		—		1,884,675,400
Financial liabilities designated at FVTPL1		1,039,843		581,635,249		9,214,284,213		9,796,959,305
Derivative financial liabilities 1		196,840,180		518,414,937		134,934,274		850,189,391
		2,082,555,423		1,100,050,186		9,349,218,487		12,531,824,096

¹  Deferred transaction gain or losses are adjusted in the carrying amount.

86

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

36.3 Valuation techniques and inputs classified by Level 2

The details of the valuation techniques and inputs classified by Level 2 as at December 31, 2021 and 2020 are as follows:

(in thousands of Korean won)	2021		Valuation techniques	Inputs
Financial assets at FVTPL		24,638,967,555	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate and others
Derivative financial assets(trading)		532,676,875	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility and others
Derivative financial assets(hedging)		—	DCF Model	Discount rate, exchange rate and others
Financial assets at FVOCI		3,450,533,070	DCF Model	Discount rate, Interest rate and others
		28,622,177,500
Financial liabilities designated at FVTPL		1,294,944,846	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate
Derivative financial liabilities(trading)		464,913,070	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility
Derivative financial liabilities(hedging)		6,068,500	DCF Model	Discount rate, exchange rate and others
		1,765,926,416

(in thousands of Korean won)	2020		Valuation techniques	Inputs
Financial assets at FVTPL		22,139,640,372	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate and others
Derivative financial assets(trading)		411,129,242	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility and others
Derivative financial assets(hedging)		—	DCF Model	Discount rate, exchange rate and others
Financial assets at FVOCI		3,485,076,696	DCF Model	Discount rate, Interest rate and others
		26,035,846,310

87

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2020		Valuation techniques	Inputs
Financial liabilities designated at FVTPL		581,635,249	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Price of underlying asset, interest rate, dividend rate, volatility, discount rate
Derivative financial liabilities(trading)		517,598,937	DCF Model, Closed form formula, Monte Carlo Simulation, Black Scholes model, Hull and White Model, Net asset value and others	Interest rate, price of underlying asset, exchange rate, credit spread, discount rate, volatility
Derivative financial liabilities(hedging)		816,000	DCF Model	Discount rate, exchange rate and others
		1,100,050,186

36.4 Level 3 of the Fair Value Hierarchy Disclosure

(a) Valuation Process for Fair Value Measurements Categorized Within Level 3 of the Fair Value Hierarchy

The fair value of financial instruments classified as Level 3 is determined by external valuation or self-valuation of the Company. Unobservable inputs are produced by the external appraiser or internal valuation system and the Company reviews the adequacy of inputs. The risk management council reviews the adequacy of the assessment methodology and valuation method of external appraiser and the internal valuation. The agenda of the risk management council is to be reported or approved by the risk committee.

(b) Changes in Recurring Fair Value Measurements Categories of the Fair Value hierarchy

The changes in financial instruments with level 3 fair value for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Beginning balance		2,098,896,249			308,570,199		306,558,966			(9,214,284,213	)
Total gains or losses
Profit or loss		(1,512,188	)		—		(66,664,335	)		63,081,409
Other comprehensive income		—			39,799,222		—			(5,445,079	)
Purchases		774,782,753			18,406,674		3,952,205			—
Sales		(1,195,604,829	)		—		(169,985,927	)		—
Issues		—			—		(32,516,161	)		(8,233,127,666	)
Settlements		—			—		—			9,560,734,570
Transfer within levels 1		52,425,337			—		—			—
Ending balance		1,728,987,322			366,776,095		41,344,748			(7,829,040,979	)

¹ Transfer within levels are occurred due to the change in the availability of observable market data on the financial instruments.

88

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Beginning balance		2,429,084,894			266,226,360		328,302,659			(11,244,938,670	)
Total gains or losses
Profit or loss		(111,888,232	)		—		353,403,860			(396,733,496	)
Other comprehensive income		—			42,343,839		—			(27,875,885	)
Purchases		1,548,937,125			—		1,341,781			—
Sales		(1,848,824,999	)		—		(319,037,886	)		—
Issues		—			—		(42,731,644	)		(9,333,419,908	)
Settlements		—			—		89,781			11,788,683,746
Transfer within levels 1		81,587,461			—		(14,809,585	)		—
Ending balance		2,098,896,249			308,570,199		306,558,966			(9,214,284,213	)

¹ Transfer within levels are occurred due to the change in the availability of observable market data on the financial instruments.

In relation to changes in level 3 fair value, total gains or losses related to the asset and liabilities held at the reporting date are included in the statements of comprehensive income for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Profit or loss
Gain or loss on valuation of financial instruments 1		(26,217,164	)		—		(109,925,653	)		105,096,746
Other comprehensive income
Gain or loss on valuation of financial assets at FVOCI 2		—			39,799,222		—			—
Changes in fair value of financial liabilities at FVTPL due to the change of credit risk 2		—			—		—			6,607,886
		(26,217,164	)		39,799,222		(109,925,653	)		111,704,632

¹ Included in gain or loss on valuation and disposal of financial instruments on the statements of Profit or Loss.

² Included in other comprehensive income on the statements of comprehensive income.

	2020
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives		Financial liabilities designated at FVTPL
Profit or loss
Gain or loss on valuation of financial instruments 1		(100,098,423	)		—		143,661,081		(105,534,507	)
Other comprehensive income
Gain or loss on valuation of financial assets at FVOCI 2		—			42,343,839		—		—
Changes in fair value of financial liabilities at FVTPL due to the change of credit risk 2		—			—		—		(9,346,158	)
		(100,098,423	)		42,343,839		143,661,081		(114,880,665	)

¹ Included in gain or loss on valuation and disposal of financial instruments on the statements of Profit or Loss.

² Included in other comprehensive income on the statements of comprehensive income.

89

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(c) Valuation techniques and the Inputs classified by Level 3

Valuation techniques and inputs for level 3 financial instruments are as follows:

	2021
(in thousands of Korean won)	Type	Fair value		Valuation techniques	Inputs	Unobservable input	Range	Relevance
Financial assets at FVTPL	Other derivative linked securities		29,067,962	DCF model, Closed Form, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.26 ~ 0.54		Proportional
						Correlation	0.08 ~ 0.90		Proportional
	Other OTC derivative linked contract		99,015,526			Underlying asset volatility	0.16 ~ 0.26		Proportional
						Correlation	-0.60 ~ 0.77		Proportional
	Debt instruments		1,479,892,103			Underlying asset volatility	0.14 ~ 0.30		Proportional
	Equity instruments		121,011,731			Discount rate	0.10 ~ 0.17		Inversely proportional
Derivative financial assets (trading)	1		209,808,660			Underlying asset volatility	0.03 ~ 0.81		Proportional
						Correlation	-0.60 ~ 0.90		Proportional
Financial assets at FVOCI	Equity instruments		366,776,095	DCF model, Risk-adjusted discount rate model, IMV model and others	Growth rate, discount rate	Growth rate	0.01 ~ 0.01		Proportional
						Discount rate	0.11 ~ 0.15		Inversely proportional
			2,305,572,077
Financial liabilities designated at FVTPL	Equity-linked securities sold		6,117,086,280	DCF model, Closed Form, FDM, Monte Carlo Simulation, Hull and White, Black-Scholes Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.15 ~ 0.81		Proportional
						Correlation	-0.60 ~ 0.88		Proportional
	Derivatives linked securities sold		1,567,907,416			Underlying asset volatility	0.01 ~ 0.81		Proportional
						Correlation	-0.48 ~ 0.90		Proportional
	Other OTC derivatives linked contract sold		144,047,283			Underlying asset volatility	0.15 ~ 0.30		Proportional
						Correlation	-0.60 ~ 0.74		Proportional
Derivative financial liabilities (trading)	1		168,463,912			Underlying asset volatility	0.05 ~ 0.81		Proportional
						Correlation	-0.60 ~ 0.90		Proportional
			7,997,504,891

¹ Derivatives which derive their value from interest rate, stock price, foreign exchange rate, commodity price, credit rate and others are included.

90

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Type	Fair value		Valuation techniques	Inputs	Unobservable input	Range	Relevance
Financial assets at FVTPL	Equity-linked securities		39,294,908	DCF model, Closed Form, FDM, Monte Carlo Simulation, Hull and White, Black-Scholes Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.23~0.25		Proportional
						Correlation	-0.61~0.74		Proportional
	Other derivative linked securities		200,925,330			Underlying asset volatility	0.08~0.68		Proportional
						Correlation	0.00~0.89		Proportional
	Other OTC derivative linked contract		395,700,132			Underlying asset volatility	0.20~0.44		Proportional
						Correlation	-0.61~0.89		Proportional
	Debt instruments		1,368,876,750			Underlying asset volatility	0.16~0.48		Proportional
	Equity instruments		94,099,129			Discount rate	0.08~0.18		Inversely proportional
Derivative financial assets (trading)	1		441,493,240			Underlying asset volatility	0.05~0.72		Proportional
						Correlation	-0.61~0.91		Proportional
Financial assets at FVOCI	Equity instruments		308,570,199	DCF model, Risk-adjusted discount rate model, IMV model and others	Growth rate, discount rate	Growth rate	0.01~0.01		Proportional
						Discount rate	0.11~0.14		Inversely proportional
			2,848,959,688
Financial liabilities designated at FVTPL	Equity-linked securities sold		7,015,384,894	DCF model, Closed Form, FDM, Monte Carlo Simulation, Hull and White, Black-Scholes Model, Net asset value, etc	Price of underlying asset, interest rate, discount rate, dividend ratio, volatility of underlying assets, correlation of underlying assets , volatility of interest rate, probability of default	Underlying asset volatility	0.20~0.72		Proportional
						Correlation	-0.61~0.89		Proportional
	Derivatives linked securities sold		1,615,390,797			Underlying asset volatility	0.01~0.68		Proportional
						Correlation	-0.50~0.91		Proportional
	Other OTC derivatives linked contract sold		583,508,522			Underlying asset volatility	0.20~0.54		Proportional
						Correlation	-0.61~0.89		Proportional
Derivative financial liabilities (trading)	1		134,934,274			Underlying asset volatility	0.20~0.68		Proportional
						Correlation	-0.61~0.91		Proportional
			9,349,218,487

¹ Derivatives which derive their value from interest rate, stock price, foreign exchange rate, commodity price, credit rate and others are included.

91

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(d) Sensitivity Analysis of Recurring Fair Value Measurements Categorized Within Level 3 of the Fair Value Hierarchy

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 inputs, using a statistical technique. When the fair value is affected by more than two inputs, the amounts represent the most favorable or most unfavorable.

The results of the sensitivity analysis for the effect on profit or loss from changes in inputs for each financial instrument as at December 31, 2021 and 2020, are as follows.

	2021
	Profit and loss					Other comprehensive income
(in thousands of Korean won)	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at FVTPL1		7,078,832		(5,695,295	)		—		—
Derivative financial assets 1		19,235,324		(19,935,240	)		—		—
Financial assets at FVOCI 2		—		—			26,761,121		(18,444,528	)
		26,314,156		(25,630,535	)		26,761,121		(18,444,528	)
Financial liabilities
Financial liabilities designated at FVTPL1		78,355,694		(82,796,956	)		—		—
Derivative financial liabilities 1		31,113,821		(29,105,058	)		—		—
		109,469,515		(111,902,014	)		—		—

¹ Measured by changes in fair value based on the increased or decreased unobservable volatility of underlying assets by 10% or unobservable input(growth rate and discount rate) by 1%.

² Measured by changes in fair value based on growth rate ((-)1~1%) and discount rate ((-)1~1%) that are unobservable inputs.

	2020
	Profit and loss					Other comprehensive income
(in thousands of Korean won)	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at FVTPL1		16,995,137		(14,399,489	)		—		—
Derivative financial assets 1		22,741,681		(24,980,628	)		—		—
Financial assets at FVOCI 2		—		—			18,733,526		(12,585,448	)
		39,736,818		(39,380,117	)		18,733,526		(12,585,448	)
Financial liabilities
Financial liabilities designated at FVTPL1		46,859,961		(42,994,436	)		—		—
Derivative financial liabilities 1		7,251,984		(7,136,832	)		—		—
		54,111,945		(50,131,268	)		—		—

¹ Measured by changes in fair value based on the increased or decreased unobservable volatility of underlying assets by 10% or unobservable input(growth rate and discount rate) by 1%.

² Measured by changes in fair value based on growth rate ((-)1~1%) and discount rate ((-)1~1%) that are unobservable inputs.

92

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(e) Day 1 Profit and Loss

If the Company uses a valuation technique that uses data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is amortised by using the straight-line method over the life of the financial instruments. If the fair value of the financial instruments can be subsequently determined using observable market inputs, the remaining deferred amount is immediately recognized in profit or loss.

The aggregate difference yet to be recognized in profit or loss at the beginning and end of the year, and the changes in the balance of this difference, are as follows:

(in thousands of Korean won)	2021			2020
Balances at the beginning of the year (A)		70,759,191			51,580,418
Incurred during the year (B)		176,475,408			166,554,981
Amounts recognized in profit or loss during the year (C)		(153,238,804	)		(147,376,208	)
Balances at the end of the year (A+B+C)		93,995,795			70,759,191

36.5 Fair value hierarchy of financial instruments which the fair value is disclosed

(a) The fair value hierarchy of financial assets and liabilities which the fair value is disclosed as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		5,442,192,266		5,442,192,266
Financial liabilities
Borrowings		—		—		21,981,900,347		21,981,900,347

	2020
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		5,021,146,461		5,021,146,461
Financial liabilities
Borrowings		—		—		22,535,234,176		22,535,234,176

Cash and deposits, other financial assets, deposit liabilities and other financial liabilities that are used book amount as a substitute for fair value because their maturities are relatively short or are not set, are not disclosed.

93

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(b) Valuation techniques and inputs

	Valuation technique and inputs
Cash and deposits	The fair value of cash is the same as the book amount. The book amount is used as a substitute value of fair value for the majority of deposits consisting of overnight deposits and deposits with variable interest rate.
Loans measured at amortised cost	The fair values are calculated by discount rate considering market interest rates and borrower’s credit risk on expected cash flows.
Deposit liabilities and borrowings	The book amount is used as a substitute value of fair value for demand deposit liabilities, bank overdrafts and call money. With regard to the other deposits and borrowings, the fair values are calculated by discount rate considering residual risks at market interest rates on contractual cash flows.
Other financial assets and liabilities	The book amount is used as a substitute value of fair value instead of applying DCF due to the relatively short-term or indefinite maturity. However, DCF method is applied for several long-term receivables or payables.

36.6 Derecognition of financial assets

The Company continues to recognize bonds sold under repurchase agreements and securities lending agreement, because the Company transferred the financial asset, but the assets does not meet the derecognition criteria. Due to the nature of transaction that bonds sold under repurchase agreements has repurchase condition with fixed price and securities lending agreement contains the retransfer back condition by the end of lending period, the Company has almost all risks and rewards related to the ownership of the financial assets.

As at December 31, 2021 and 2020, relevant information about transferred financial assets which do not qualify for derecognition are as follows:

	2021
	Financial assets at FVTPL				Financial assets at FVOCI
(in thousands of Korean won)	Debt instruments1,2,3		Equity instruments2		Debt instruments1,3		Equity instruments
Carrying amount of transferred assets		8,452,138,400		253,040		1,990,336,464		—
Carrying amount of related liabilities		8,253,574,637		—		1,893,044,535		—

¹ Transferred debt instruments under repurchase agreements.

² Transferred equity instruments and debt instruments under securities lending agreements.

³ As at December 31, 2021, the accrued interests related to debt securities of W51,550 million is excluded.

	2020
	Financial assets at FVTPL				Financial assets at FVOCI
(in thousands of Korean won)	Debt instruments1,2,3		Equity instruments2		Debt instruments1,3		Equity instruments
Carrying amount of transferred assets		10,593,466,072		19,811,120		2,117,185,736		—
Carrying amount of related liabilities		10,050,368,480		—		2,012,167,226		—

¹ Transferred debt instruments under repurchase agreements.

² Transferred equity instruments and debt instruments under securities lending agreements.

³ As at December 31, 2020, the accrued interests related to debt securities of W88,474 million is excluded.

94

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

37. Financial Risk Management

37.1 Summary

37.1.1 Overview of Financial Risk Management Policy

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

The note regarding financial risk management provides information about the risks that the Company is exposed to, including the objectives, policies and processes for assessing and managing the risks and net operating capital ratio management. Additional quantitative information is disclosed throughout these notes to financial statements.

The Company’s risk management system focuses on increasing transparency, developing the risk management environment, preventing transmission of risk to other related subsidiaries, 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, liquidity risk, market risk, operational risk, and credit concentration risk are recognized as the Company’s key risks. These risks are measured and managed by quantifying regulatory capital and VaR (Value at Risk) using a statistical method.

37.1.2 Risk Management Organization

(a) Board of Directors

Board of Directors are the ultimate decision-making authority that appoint and dismiss risk management committee, establish and amend the risk management committee policies, establish the Company’s criteria for risk limit, decide on basic policy of risk management, and approve large-scale investments.

(b) Risk management committee

The risk management committee consists of more than three directors appointed by the Board of Directors (including more than a half of external director). The risk management committee executes the operations delegated by board of directors in accordance with risk management committee policy

(c) Risk management council

Risk management council consists members by appointing Company’s executives, including the director, who is responsible for risk management, compliance, planning/management. Also the organization is delegated by risk management committee to perform deliberation/resolution for major policies and matters related to the risk.

(d) Risk management department

Risk management department carries out practical tasks, required for risk management of the Company, such as supporting the risk management committee, reporting the Company’s risk level and computing net operating capital ratio.

37.1.3 Risk Management System

In order to establishing risk management structure, the Company built the total risk management system, ERMS (Enterprise Risk Management System), which is designed for reasonable price valuation against risks and the management of risk limitation to raise the soundness of assets and allocate resources efficiently. Moreover, the Company performs business with risk management basis in mainly by constructing RAPM (Risk Adjusted Performance Measure) and enlarging the portion of performance evaluation.

95

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

37.1.4 Risk Management Strategy and Policy

As an allocation of risk capital and risk limit establishment process, the risk capital is allocated through resolution of risk management committee meetings, and the amount of risk capital is anticipated for each risk sector, business sector and department by reflecting annual management strategy and business plans.

37.2 Credit Risk

37.2.1 Overview of Credit Risk

The Company is exposed to certain level of credit risk and the credit risk is the risk of possible loss to portfolio due to counterparty’s credit event and breach of covenant. Credit risk exposure occurs in investment activities such as loans, debt instruments, derivative transactions, and non-trading accounts, or can exist in relating to off-balance accounts.

37.2.2 Credit Risk Management

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. If the trading department of the Company wants to deal with the counterparty that may cause the credit risk, the trading department submit product management plan and application in advance to get approval by the risk management council and the risk management committee. The deal is executed when the approval by the risk management council and the risk management committee is completed. Credit risk limit depends on 1) standard credit risk limit, 2) concentration limit on the same person and 3) credit rating and additional limit may be added by the trading department. In addition, credit VaR is measured in addition to the credit management listed above and credit VaR due to the internal model is operated by the credit manager measurement system of the risk metrics group. Limit management is performed on a daily basis and stress test is performed on a regular basis and in case of excess of the limit, trading department expedite the process with the procedure set by the risk management department.

37.2.3 Maximum Exposure to Credit Risk

The maximum exposure of credit risk related to the off-balance as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Agreement to purchase the commercial papers 1		576,882,291		797,960,000
Guarantees and loan commitment		3,103,785,725		2,916,898,021
		3,680,668,016		3,714,858,021

¹ As at December 31, 2021 and 2020, asset-backed short-term bonds amounting to W101,660 million and W237,940 million, respectively, held by the Company, are included

The Company does not disclose financial assets (except above contracts) whose carrying amount represents the maximum exposure to credit risk.

96

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

37.2.4 Credit Risk Concentration Analysis

(a) Loans measured at amortised cost

Most of counterparties of loan transactions, before considering collaterals and other credit reinforcements, are concentrated in Korea. The ratios of loans to individuals and corporations and related allowances as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Individuals		2,890,313,072		52.66		—			2,890,313,072
Corporations		2,598,335,650		47.34		(58,204,906	)		2,540,130,744
		5,488,648,722		100.00		(58,204,906	)		5,430,443,816

	2020
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Individuals		2,590,998,976		51.27		—			2,590,998,976
Corporations		2,463,120,433		48.73		(53,890,035	)		2,409,230,398
		5,054,119,409		100.00		(53,890,035	)		5,000,229,374

The details of the Company’s loans measured at amortised cost by industry as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Financial service		1,461,183,943		26.62		(14,964,413	)		1,446,219,530
Manufacturing		432,375,654		7.88		(7,704,189	)		424,671,465
Service		119,472,377		2.18		(10,785,553	)		108,686,824
Others		585,303,675		10.66		(24,750,751	)		560,552,924
Individuals		2,890,313,073		52.66		—			2,890,313,073
		5,488,648,722		100.00		(58,204,906	)		5,430,443,816

	2020
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Financial service		1,752,052,054		34.67		(15,767,429	)		1,736,284,625
Manufacturing		77,000,000		1.52		(4,179,161	)		72,820,839
Service		28,509,777		0.56		(5,034,033	)		23,475,744
Others		605,558,601		11.98		(28,909,412	)		576,649,189
Individuals		2,590,998,977		51.27		—			2,590,998,977
		5,054,119,409		100.00		(53,890,035	)		5,000,229,374

97

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(b) Deposits, Securities (except equity instruments) and Derivatives

Most of deposits, securities (except equity instruments) and derivatives, before considering collaterals and other credit reinforcements, are concentrated in securities issued in Korea. The details of the Company’s securities (except equity instruments) by industry as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Amount		Ratio (%)		Allowances			Carrying amount
Deposits measured at amortized cost
Banking and insurance		3,345,752,093		100.00		(632,598	)		3,345,119,495
		3,345,752,093		100.00		(632,598	)		3,345,119,495
Securities at FVTPL
Government and government funded institutions		12,403,754,293		38.00		—			12,403,754,293
Banking and insurance		12,012,432,506		36.80		—			12,012,432,506
Others		8,227,438,794		25.20		—			8,227,438,794
		32,643,625,593		100.00		—			32,643,625,593
Derivatives financial assets
Banking and insurance		798,108,024		98.41		—			798,108,024
Others		12,907,141		1.59		—			12,907,141
		811,015,165		100.00		—			811,015,165
Securities at FVOCI
Government and government funded institutions		411,524,232		12.13		—			411,524,232
Banking and insurance		2,019,245,794		59.52		—			2,019,245,794
Others		961,875,467		28.35		—			961,875,467
		3,392,645,493		100.00		—			3,392,645,493
		40,193,038,344				(632,598	)		40,192,405,746

	2020
(in thousands of Korean won)	Amount		Ratio (%)		Allowances			Carrying amount
Deposits measured at amortized cost
Banking and insurance		3,545,824,188		100.00		(739,545	)		3,545,084,643
		3,545,824,188		100.00		(739,545	)		3,545,084,643
Securities at FVTPL
Government and government funded institutions		12,674,913,374		39.71		—			12,674,913,374
Banking and insurance		14,197,481,479		44.49		—			14,197,481,479
Others		5,042,194,845		15.80		—			5,042,194,845
		31,914,589,698		100.00		—			31,914,589,698
Derivatives financial assets
Banking and insurance		909,477,726		98.08		—			909,477,726
Others		17,833,740		1.92		—			17,833,740
		927,311,466		100.00		—			927,311,466
Securities at FVOCI
Government and government funded institutions		598,226,856		16.97		—			598,226,856
Banking and insurance		2,505,880,183		71.09		—			2,505,880,183
Others		420,747,301		11.94		—			420,747,301
		3,524,854,340		100.00		—			3,524,854,340
		39,912,579,692				(739,545	)		39,911,840,147

98

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

37.2.5 Credit Quality of Financial Assets

(a) Loans measured at amortised cost

Loans measured at amortised cost as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Financial assets measured at amortised cost 1
Corporates
Grade 1		1,268,085,960		—		—		—		—		1,268,085,960
Grade 2		1,271,234,819		—		—		—		—		1,271,234,819
Grade 3		9,775,000		—		—		—		—		9,775,000
Grade 4		—		—		—		—		—		—
Grade 5		—		—		49,239,870		—		—		49,239,870
		2,549,095,779		—		49,239,870		—		—		2,598,335,649
Retails
Grade 1		2,889,053,207		—		—		—		—		2,889,053,207
Grade 2		1,256,577		—		—		—		—		1,256,577
Grade 3		—		—		—		—		—		—
Grade 4		3,289		—		—		—		—		3,289
Grade 5		—		—		—		—		—		—
		2,890,313,073		—		—		—		—		2,890,313,073
Financial assets at FVTPL 1
Corporates
Grade 1		—		—		—		—		173,459,362		173,459,362
Grade 2		—		—		—		—		—		—
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
	—		—		—		—		173,459,362		173,459,362
		5,439,408,852		—		49,239,870		—		173,459,362		5,662,108,084

¹ The amounts disclosed in above table are before deduction of allowances

99

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Financial assets measured at amortised cost 1
Corporates
Grade 1		1,764,516,431		—		—		—		—		1,764,516,431
Grade 2		638,582,889		—		—		—		—		638,582,889
Grade 3		—		10,714,286		—		—		—		10,714,286
Grade 4		—		—		—		—		—		—
Grade 5		—		—		49,306,827		—		—		49,306,827
		2,403,099,320		10,714,286		49,306,827		—		—		2,463,120,433
Retails
Grade 1		2,589,836,118		—		—		—		—		2,589,836,118
Grade 2		1,132,874		—		—		—		—		1,132,874
Grade 3		—		—		—		—		—		—
Grade 4		29,984		—		—		—		—		29,984
Grade 5		—		—		—		—		—		—
		2,590,998,976		—		—		—		—		2,590,998,976
Financial assets at FVTPL 1
Corporates
Grade 1		—		—		—		—		237,038,346		237,038,346
Grade 2		—		—		—		—		—		—
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		—		—		—		—		237,038,346		237,038,346
		4,994,098,296		10,714,286		49,306,827		—		237,038,346		5,291,157,755

¹  The amounts disclosed in above table are before deduction of allowances

Ranges	Corporates	Retails
Grade 1	AAA ~ BBB+	1 ~ 5 grade
Grade 2	BBB ~ BB	6 ~ 8 grade
Grade 3	BB- ~ B	9 ~ 10 grade
Grade 4	B- ~ CCC	11 grade
Grade 5	Below CC	Below 12 grade

100

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The effect of measured credit risk which released the credit risk due to enhancement of collateral and other credit supplements secured for loans as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Guarantee		6,774,307		—		—		—		—		6,774,307
Real estate		69,433,769		—		208,363		—		—		69,642,132
Securities		4,810,419,571		—		—		—		—		4,810,419,571
		4,886,627,647		—		208,363		—		—		4,886,836,010

	2020
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Guarantee		5,710,346		—		—		—		—		5,710,346
Real estate		26,707,351		—		208,363		—		—		26,915,714
Securities		4,292,037,958		7,163,824		—		—		—		4,299,201,782
		4,324,455,655		7,163,824		208,363		—		—		4,331,827,842

(b) Securities (debt instruments)

Securities (debt instruments) that are exposed to credit risks as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments not applying expected credit loss model		Total
			Non-impaired		Impaired
Financial assets at FVOCI 1
Grade 1		2,423,690,839		—		—		—		—		2,423,690,839
Grade 2		955,435,698		—		—		—		—		955,435,698
Grade 3		13,518,956		—		—		—		—		13,518,956
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		3,392,645,493		—		—		—		—		3,392,645,493

¹  Before deduction of allowances

101

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		The financial instruments not applying expected credit loss model		Total
(in thousands of Korean won)			Non-impaired		Impaired
Financial assets at FVOCI 1
Grade 1		2,780,821,858		—		—		—		—		2,780,821,858
Grade 2		744,032,481		—		—		—		—		744,032,481
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		3,524,854,339		—		—		—		—		3,524,854,339

¹  Before deduction of allowances

The Company’s standard for credit quality of securities (except equity investments) linked to credit rating presented by 3^rd party credit rating institutions is as follows.

	Domestic			Foreign
Credit Quality	KIS	NICE	FnPricing	S&P	Fitch-IBCA	Moody’s
Grade 1	AA0 to AAA	AA0 to AAA	AA0 to AAA	A- to AAA	A- to AAA	A3 to Aaa
Grade 2	A-To AA-	A- To AA-	A- To AA-	BBB- to BBB+	BBB- to BBB+	Baa3 to Baa1
Grade 3	BBB0 to BBB+	BBB0 to BBB+	BBB0 to BBB+	BB to BB+	BB to BB+	Ba2 to Ba1
Grade 4	BB0 to BBB-	BB0 to BBB-	BB0 to BBB-	B+ to BB-	B+ to BB-	B1 to Ba3
Grade 5	Below BB-	Below BB-	Below BB-	Below B	Below B	Below B2

The classification of credit quality for debt instruments in Korean won is based on lowest credit rating among the one of three domestic credit rating institutions and the classification of credit quality for debt instruments in foreign currency is based on lowest credit rating among the one of three foreign credit rating institutions

(c) Deposits

The credit quality of deposits as at December 31, 2021 and 2020, are as follows:

	2021
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		Total
(in thousands of Korean won)			Non-impaired		Impaired
Deposits measured at amortised cost 1
Grade 1		3,345,752,093		—		—		—		3,345,752,093
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		3,345,752,093		—		—		—		3,345,752,093

¹  Before deduction of allowances

102

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying credit loss model		Total
(in thousands of Korean won)			Non-impaired		Impaired
Deposits measured at amortised cost 1
Grade 1		3,545,824,188		—		—		—		3,545,824,188
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		3,545,824,188		—		—		—		3,545,824,188

¹ Before deduction of allowances

The Company’s standard for credit quality of deposits is same as the one of debt securities.

(d) Commitments

The credit quality of commitments as at December 31, 2021 and 2020, are as follows:

	2021
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		Total
(in thousands of Korean won)			Non-impaired		Impaired
Guaranteed payment and commitment
Grade 1		926,934,250		17,282,291		—		—		944,216,541
Grade 2		1,967,989,885		37,000,000		—		—		2,004,989,885
Grade 3		92,906,778		20,000,000		—		—		112,906,778
Grade 4		399,845,412		2,000,000		—		—		401,845,412
Grade 5		—		—		—		—		—
		3,387,676,326		76,282,291		—		—		3,463,958,616

	2020
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		Total
(in thousands of Korean won)			Non-impaired		Impaired
Guaranteed payment and commitment
Grade 1		1,456,914,261		—		—		—		1,456,914,261
Grade 2		1,534,678,438		37,000,000		—		—		1,571,678,438
Grade 3		68,200,000		20,000,000		—		—		88,200,000
Grade 4		389,178,922		—		—		—		389,178,922
Grade 5		—		10,000,000		—		—		10,000,000
		3,448,971,621		67,000,000		—		—		3,515,971,621

103

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(e) Guarantees

The credit quality guarantees as at December 31, 2021 and 2020, are as follows:

	2021
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		Total
(in thousands of Korean won)			Non-impaired		Impaired
Guarantees
Grade 1		130,405,000		—		—		—		130,405,000
Grade 2		86,304,400		—		—		—		86,304,400
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		216,709,400		—		—		—		216,709,400

	2020
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				The financial instruments applying Credit loss model		Total
(in thousands of Korean won)			Non-impaired		Impaired
Guarantees
Grade 1		119,680,000		—		—		—		119,680,000
Grade 2		79,206,400		—		—		—		79,206,400
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		198,886,400		—		—		—		198,886,400

(f) Other receivables from securities transactions

Other receivables from securities transactions, which are classified as other financial assets, as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Other receivables related to proprietary trading		104,074,769		85,919,611
Other receivables related to brokerage Transactions		2,635,518,749		4,701,472,630

The Company recognizes receivables and payables between Korea Exchange (Clearing and Settlement Organization) and customers regarding securities brokerage transactions on the trade date. The Company is exposed to credit risks between the trade date and settlement date relating to investment brokerage business, which is standardized by related regulations (generally less than two business days from the trade date). As a central counterparty, Korea Exchange mitigates the payment default risk by managing collective fund for default loss, and the Company mitigates customer default risk through margin requirements system. Also, if the customers can not pay by the settlement date, the Company can collect the receivables through covering. Therefore, credit risk that the Company actually bears is linked to the price fluctuation risk of securities between the trade date and the settlement date.

The Company recognizes assets and liabilities on trade date for regular-way transactions, is exposed to the market risk and credit risk between trade date and settlement date.

104

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

37.3 Liquidity Risk

37.3.1 Overview of Liquidity Risk

Liquidity risk is the risk of insolvency or loss due to a disparity between the inflow and outflow of funds, unexpected outflow of funds, and obtaining funds at a high price or disposing of securities at an unfavorable price due to lack of available funds. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets, liabilities and off-statement of financial position items such as commitments and financial guarantee contracts. The Company discloses them by maturity groups: Up to one month, between over one month and three months, between over three months and twelve months, between over one year and five years, and over five years.

37.3.2 Liquidity Risk Management Policy

The Company has established an appropriate liquidity risk management framework for the management of the Company’s short-, medium- and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities. Meanwhile, additional details of unused funding arrangement to reduce liquidity risk that the Company holds at its discretion are discussed in Note 40.

37.3.3 Analysis on Remaining Contractual Maturities of Financial Liabilities

Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and, thus, differ from the amount in the financial statements which are based on the present value of expected cash flows in some cases.

The remaining contractual maturities of financial liabilities as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	On demand		Up to one month		One to three months		Three to 12 months		12 months to five years		More than five years		Total
Financial liabilities
Financial liabilities at FVTPL		2,825,922,918		—		—		—		—		—		2,825,922,918
Financial liabilities designated at FVTPL 1		9,160,923,652		—		—		—		—		—		9,160,923,652
Derivatives (trading) 2		830,630,902		—		—		—		—		—		830,630,902
Derivatives (hedge)		—		1,282,400		—		4,786,100		—		—		6,068,500
Deposit liabilities 3		8,400,368,430		—		—		—		—		—		8,400,368,430
Borrowings		8,448,833,366		8,200,567,373		714,468,357		2,889,324,557		1,898,833,225		—		22,152,026,878
Other financial liabilities		3,376,026		3,155,100,167		4,794,188		21,830,469		84,928,706		24,348,958		3,294,378,514
Guaranteed payments and commitment 4		3,680,668,016		—		—		—		—		—		3,680,668,016

105

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	On demand		Up to one month		One to three months		Three to 12 months		12 months to five years		More than five years		Total
Financial liabilities
Financial liabilities at FVTPL		1,884,675,400		—		—		—		—		—		1,884,675,400
Financial liabilities designated at FVTPL 1		9,796,959,305		—		—		—		—		—		9,796,959,305
Derivatives (trading) 2		849,373,391		—		—		—		—		—		849,373,391
Derivatives (hedge)		—		476,000		—		340,000		—		—		816,000
Deposit liabilities 3		7,688,906,486		—		—		—		—		—		7,688,906,486
Borrowings		9,286,392,035		8,937,785,754		1,404,532,426		1,679,431,441		1,295,340,200		—		22,603,481,856
Other financial liabilities		1,222,793		6,352,409,239		5,401,556		26,490,496		86,765,098		46,602,371		6,518,891,553
Guaranteed payments and commitment 4		3,714,858,021		—		—		—		—		—		3,714,858,021

¹ Derivatives-linked securities as financial liabilities designated at FVTPL are classified as ‘on demand’ because derivatives-linked securities are subject to early settlement.

² Derivatives are classified as ‘on demand’ because contract maturity is not necessary in understanding the cash flow timing of the derivatives

³ Deposits that are contractually repayable on demand or on short notice are classified as ‘on demand’ category.

⁴ With respect to the guaranteed payments and commitments, the amounts included above, which the Company might pay the maximum amounts based on the contract, if the warrantee claims the entire amount of the guarantee, they are classified on the basis of the earliest period when those agreements may be executed.

37.4 Market Risk

37.4.1 Overview of Market Risk

Market risk refers to the risk that the value of a position held by the Company may fluctuate due to price fluctuations of market factors such as stock, interest rates, foreign exchange rates, commodity and others.

Market risk is daily managed by establishing the limitations considering products’ natures such as position limitations, loss limitations, VaR limitations, sensitivity limitations (duration, delta, gamma, vega, others) and others. Relevant business procedures are processed by written regulations and guidelines.

106

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

37.4.2 Value at Risk (“VaR”)

The Exposure to market risk is measured by the Value at Risk (VaR). VaR is the potential loss that can occur in the holding position when the market price moves in an adverse direction within a given confidence level for a given holding period in the normal market.

Historical simulation model is used to calculate 10 days VaR. Historical simulation model is based on past changes of market variables without assuming a specific probability distribution.

The Company uses the 10-day return of the past two-year time series of the asset risk factor and uses the 99% confidence level of the two-year time series of the portfolio. 10days VaR that is under 99% of confidence level that the Company uses reflects reported daily losses as VaR does not exceed with 99% chance.

The average, minimum and maximum amount of the Company’s VaR (99%, 10 days) as at December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Average		Maximum		Minimum		December 31, 2021
Total VaR		27,533,895		44,103,782		13,303,234		32,812,682

	2020
(in thousands of Korean won)	Average		Maximum		Minimum		December 31, 2020
Total VaR		32,857,032		66,620,975		9,114,539		28,978,719

107

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

37.4.3 Risk Management by Market Risk Factors

The Company’s market risk is comprised of interest rate risk, foreign exchange rate risk and stock price risk.

(a) Stock price risk

Stock price risk arises in the Company’s foreign currency stocks and Korean won stocks.

Hedging instruments of Equity Linked Security and Equity Linked Warrant comprise most of stock trading portfolio and certain security proprietary trading is composed of trading securities on the exchange, futures contracts maturing in a month or two, and others under the restriction of position limitation, sale at loss, loss limitation, and others. Marketable stocks among non-trading positions and stock beneficiary certificates are included in stock price risk and market VaR is computed.

Risk management council allocates position and loss limitations, and risk management department monitors asset management department’s possible breach of limitations and other special matters on a daily basis.

(b) Interest rate risk

Trading position interest rate risk usually arises from debt instruments denominated in Korean won. The Company’s trading strategy is to benefit from short-term movements in the prices of debt instruments arising from changes in interest rates.

The product prices of the Company’s trading accounts are disclosed daily. The risks related to trading accounts are managed by using market value based method such as market VaR and sensitivity analysis.

(c) Foreign exchange rate risk

Foreign exchange rate risk arises through ownership of assets and liabilities, denominated in currencies other than Korean won, from non-trading positions, or through foreign currency forward agreements, currency swaps and foreign currency trading securities.

The Company computes foreign currency position’s net position regularly to follow the Regulation on Financial Investment Business and reports to the supervisory body.

Also, the Company manages the risk for total position exposed to foreign exchange rate including non-trading position by using market price base method such as market VaR and sensitivity analysis.

37.4.4 Risk Management by Interest Risk Factors

The Company closely monitors markets and the outputs of the various industry working groups that manage the transition to the new interest rate indicator, including statements made by the IBOR regulator and various consultative councils related to the transition to alternative interest rates.

In response to these announcements, the Company established an IBOR-related response plan consisting of workflows such as risk management, accounting, tax, law, computerization, and customer management, and completed most of the conversions and replacements accordingly. The Chief Financial Officer (CFO) is responsible for the planning and progress management, and important matters are reported to the Board of Directors.

The purpose of the plan is to identify the impacts and risks associated with interest rate indicator reform within the business, and to prepare and implement an action plan to facilitate the transition to an alternative indicator interest rate. The Company aims to complete the response plan by 2022.

108

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The carrying amount of financial instruments that have not been converted to an alternative indicator interest rate as of December 31, 2021 is as follows:

(in thousands of Korean won)	2021
	Exposure amount 1 USD LIBOR
Measured at amortized cost
Loans		7,035,224
Measured at fair value
Financial assets at FVTPL (non-derivative)		4,694,580
Financial liabilities at FVTPL (derivative)		103,221,786

¹ Financial instruments that will expire before conversion to an alternative indicator interest rate are excluded.

37.5 Operational Risk

37.5.1 Concept

The Company defines operational risk to the extent of financial risk and non-financial risks incurred by unreasonable or wrong internal process, labor, system and external incidents.

37.5.2 Operational Risk Management

The purpose of operational risk management is control activity through continuous improvement of internal controls, performing proactive preventive control, proliferation of culture of risk management by establishing internal control that could respond quickly against change of business environment. OMRS (Operational Risk Management System), supports performing overall risk management such as recognition of operational risk, evaluation and monitoring. Periodically, through RCSA (Risk Control Self Assessment), management of KRI (Key Risk Indicator), management of data loss and related preparation of countermeasures, it controls the risks in advance, as well as collecting data for future advanced management method.

37.6 Capital Adequacy

Main purpose of the capital risk management of the Company is optimizing use of capital and sustaining healthy financial status in order to maximize shareholder value. The Company has performed capital risk management through estimating net capital ratio based on ‘Capital Market and Financial Investment Business Act’, enforced in February 2009.

Net capital ratio is the net capital minus the total risk amount divided by the essential equity to sustain per each business unit. [(Net capital – total risk amounts) / essential equity to sustain per each business unit]. This formula is calculated based on the financial statements amount.

The net capital is calculated by subtracting deductible items and including additional item from financial investor’s net asset (asset-liability) as at date. The deductible item refers any asset that is difficult to be converted into cash immediately such as property, plant and equipment. The adding item includes that any item that recorded as liability without redemption obligation, internal reserves against future losses, items that redeemable in kind and items that function of complemental capital.

Total amount of risk is quantification of all of possible losses from operation of business for financial investor. Quantified amounts of market risks by possible losses due to fluctuation of stock price; interest and exchange rates of the securities that the investment firms held; credit risk amounts from breach of contract by the counterparties and possible losses due to accidents, errors, illegal conduct, any other potential losses from deteriorated condition for operation.

According to the Financial Investment Act, the regulation requires that net capital ratio must be maintained above 100% for the appropriation of the capital and it is required to improve the management if the financial investment firm does not meet the regulation for the net capital ratio.

109

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

38. Offsetting Financial Assets and Financial Liabilities

The Company enters into International Derivatives Swaps and Dealers Association (“ISDA”) master netting agreements or similar agreement with the Company’s derivative counterparties. The Company also enters into repurchase agreements and securities borrowing and lending agreements similar to the master netting agreement for derivatives. Master netting agreements provide protection in bankruptcy in certain circumstances and, where legally enforceable, enable receivables and payables with the same counterparty to be offset for accounting and risk management purposes.

	2021
(in thousands of Korean won)	Gross amount		Offset amount		Net amounts presented in the statement of financial position		Amounts not offset				Net amount
							Recognized financial instruments		Cash collateral
Financial assets
Derivatives assets, others 1		846,411,930		—		846,411,930		544,286,051		235,743,401		66,382,478
Securities purchased under reverse repurchase agreements		441,800,000		—		441,800,000		441,800,000		—		—
Other receivables 4		2,317,397,927		2,307,527,540		9,870,387		—		—		9,870,387
Other receivables (Payment and settlement)		105,464,571		99,790,621		5,673,950		—		—		5,673,950
Receivable unsettled spot exchange		237,030,000		—		237,030,000		237,030,000		—		—
		3,948,104,428		2,407,318,161		1,540,786,267		1,223,116,051		235,743,401		81,926,815
Financial liabilities
Derivatives liabilities, others 1		1,483,107,954		—		1,483,107,954		1,050,325,766		75,252,991		357,529,197
Securities sold under reverse resale agreements 2		13,531,208,950		—		13,531,208,950		13,531,208,950		—		—
Securities sold 3		2,825,922,918		—		2,825,922,918		2,825,922,918		—		—
Other payables 4		2,712,412,451		2,307,527,540		404,884,911		—		—		404,884,911
Other payables (Payment and settlement)		99,790,621		99,790,621		—		—		—		—
Payable unsettled spot exchange		237,100,000		—		237,100,000		237,100,000		—		—
		20,889,542,894		2,407,318,161		18,482,224,733		17,644,557,634		75,252,991		762,414,108

¹ Both of derivatives (trading) and derivatives (hedge) are included.

² Securities sold under reverse resale agreements to the customers is included.

³ Securities sold is from securities borrowing and lending agreement.

⁴ The offsetting amounts of bonds and debts arising from transactions occurring on the same day between the Korea Exchange and the Company in relation to the client’s consignment trading is included.

	2020
(in thousands of Korean won)	Gross amount		Offset amount		Net amounts presented in the statement of financial position		Amounts not offset				Net amount
							Recognized financial instruments		Cash collateral
Financial assets
Derivatives assets, others 1		1,259,053,735		—		1,259,053,735		759,398,483		263,290,353		236,364,899
Securities purchased under reverse repurchase agreements		706,300,000		—		706,300,000		706,300,000		—		—
Other receivables 4		4,540,785,835		4,455,151,627		85,634,208		—		—		85,634,208
Other receivables (Payment and settlement)		106,827,372		97,386,310		9,441,062		—		—		9,441,062

110

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Gross amount		Offset amount		Net amounts presented in the statement of financial position		Amounts not offset				Net amount
							Recognized financial instruments		Cash collateral
Receivable unsettled spot exchange		532,636,000		—		532,636,000		532,636,000		—		—
		7,145,602,942		4,552,537,937		2,593,065,005		1,998,334,483		263,290,353		331,440,169
Financial liabilities
Derivatives liabilities, others 1		1,178,486,493		—		1,178,486,493		952,770,129		77,324,124		148,392,240
Securities sold under reverse resale agreements 2		14,994,194,613		—		14,994,194,613		14,994,194,613		—		—
Securities sold 3		1,884,675,400		—		1,884,675,400		1,884,675,400		—		—
Other payables 4		4,742,166,256		4,455,151,627		287,014,629		—		—		287,014,629
Other payables (Payment and settlement)		97,386,310		97,386,310		—		—		—		—
Payable unsettled spot exchange		532,965,000		—		532,965,000		532,965,000		—		—
		23,429,874,072		4,552,537,937		18,877,336,135		18,364,605,142		77,324,124		435,406,869

¹ Both of derivatives (trading) and derivatives (hedge) are included.

² Securities sold under reverse resale agreements to the customers is included.

³ Securities sold is from securities borrowing and lending agreement.

⁴ The offsetting amounts of bonds and debts arising from transactions occurring on the same day between the Korea Exchange and the Company in relation to the client’s consignment trading is included.

39. Lease

39.1 The amounts recognized in the separate statement of financial position

The amounts related to lease recognized in the separate statement of financial position as at December 31, 2021 and 2020, are as follows;

(in thousands of Korean won)	2021		2020
Right-of-use assets 1
Buildings		69,145,814		80,952,140
Vehicles		1,570,194		1,345,887
Others		1,710,375		2,666,393
		72,426,383		84,964,420
Lease liabilities		123,400,384		143,799,238

¹ The amount is included in property and equipment in the separate statement of financial position.

111

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

39.2 The amounts recognized in the separate statement of profit or loss

The amounts related to lease recognized in the separate statement of profit or loss for the year ended December 31, 2021 and 2020, are as follows

(in thousands of Korean won)	2021		2020
Depreciation of the right-of-use assets
Buildings		14,623,072		20,024,957
Vehicles		1,176,069		1,223,018
Others		1,244,144		1,021,120
		17,043,285		22,269,095
Interest income from lease receivables (included in financial income)		1,615,695		1,733,996
Interest expense to lease liabilities (included in financial cost)		2,787,349		3,675,842
Lease payment for leases for which the underlying asset is of low value (included in administrative expenses, not-include lease for short-term period)		461,035		586,732
Variable lease payments which are not included in the measurement of lease liabilities (included in administrative expenses)		256,363		430,931

The total cash outflow for leases in 2021 and 2020 were W32,911 million and W25,884 million, respectively.

39.3 As a Lessor : Financial Lease

As at December 31, 2021 and 2020, total investment on financial lease and present value of minimum lease payments and unrealized interest income of financial lease are as follows:

(in thousands of Korean won)	2021		2020
Total Investment on lease		41,127,430		42,826,306
Net Investment on lease		37,179,103		38,190,239
Present value of minimum lease payments		37,179,103		38,190,239
Unrealized interest income		3,948,327		4,636,067

39.4 As a Lessor : Operating Lease

As at December 31, 2021 and 2020, future minimum lease receipts expected under non-cancellable lease contracts are as follows:

(in thousands of Korean won)	2021		2020
Within 1 year		934,595		885,682
1 - 5 years		1,044,287		687,579
Over 5 years		—		—
		1,978,882		1,573,261

112

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

40. Contingent Liabilities and Commitments

As at December 31, 2021 and 2020, the Company is involved in pending lawsuits, are as follows:

	2021				2020
(in thousands of Korean won)	Number of lawsuits		Amount		Number of lawsuits		Amount
Defendant		21		176,352,560		19		136,191,220
Plaintiff		9		163,067,109		8		36,820,672

The Company expects that these lawsuits do not have significant impact on the financial position.

The Company has entered into various agreements with financial institutions as at December 31, 2021 and 2020, are as follows:

		Credit line
(in thousands of Korean won)	Financial institution	2021		2020
Overdraft (including daily overdraft)	Kookmin Bank and others		530,000,000		530,000,000
General loan	Kookmin Bank		40,000,000		40,000,000
Securities underwriting loan	KSFC		700,000,000		700,000,000
Working capital loan (general)	KSFC		375,000,000		500,000,000
Note trading at a discount (general)	KSFC		300,000,000		300,000,000
Note trading at a discount (trust)	KSFC		Limit of subscription deposits		Limit of subscription deposits
Bond dealer’s loan (general)	KSFC		850,000,000		850,000,000
Securities underwriting financing	KSFC		1,500,000,000		1,500,000,000

The guarantees and various commitment as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Guarantees		216,709,400		198,886,400
Agreement to purchase commercial papers 1		576,882,291		797,960,000
Loan agreements		2,066,260,939		1,908,020,000
Credit line agreements		369,691,458		238,277,699
LOC and Investment commitments		451,123,929		571,713,922
		3,680,668,017		3,714,858,021

¹ According to the above arrangement, the Company holds the asset-backed short-term bonds amounting to W101,660 million and W237,940 million as at December 31, 2021 and 2020, respectively.

The Company has been provided with W12,678 million and W14,963 million in guarantees related to provisional attachment and others by Seoul Guarantee Insurance as at December 31, 2021 and 2020, respectively.

The securities in custody as at December 31, 2021 and 2020, are as follows:

(in millions of Korean won)	2021		2020		Valuation method
Trustor securities		155,890,031,762		131,197,874,623	Fair value
Saver securities		232,748,017		83,990,031	Fair value
Beneficiary securities		32,356,219,560		31,126,726,711	Standard selling price
		188,478,999,339		162,408,591,365

113

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

The Company, as a selling company of qualitied investor private equity fund that aims to lend money to corporations (borrowers) investing in apartment rental business for disabled people in Australia, sold W326.5 billion of trusts and funds to the individuals and institutional investor. But the local borrower’s breach of the contract makes the fund inoperable and there is a possibility of loss of principal.

As of December 31, 2021, three lawsuits were filed to the Company as a defendant and there is a possibility that additional lawsuits may be filed in the future. The amount and the final result of this lawsuit is uncertain at this time.

The proliferation of COVID-19 has had a negative impact on the global economy, which has a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, which can negatively affect the profit generation capability of the Company as follows:

• There is a possibility of uncertainty about the credit risk of a borrower that could be affected by COVID-19.

• Uncertainty may arise about forward-looking macroeconomic information related to expected credit losses.

• Korean won may depreciate against major foreign currencies. This may result in an increase in principal and interest payments on liabilities denominated in foreign currencies, and losses on foreign exchanges transactions.

• A significant decrease in the fair value of the Company’s investment in an entity that could be affected by COVID-19 pandemic can occur.

Meanwhile, the Company is closely monitoring the impact of COVID-19 and the impact on expected credit losses is reflected on Note 10 Loans Measured at Amortised Cost, Note 19 Provisions and Note 20 Other financial liabilities.

114

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

41. Related Party Transactions

KB Financial Group Inc. owns 100% of ordinary shares of the Company as at December 31, 2021 and 2020.

Significant balances, excluding loan and borrowing transactions, with related parties as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021				2020
	Receivables		Payables		Receivables		Payables
Subsidiaries
KB Securities Hong Kong Ltd.		116,043		9,191,784		151,871		2,693,161
KB Securities Vietnam Joint Stock Company		223,957		211,286		293,089		171,513
KBFG Securities America Inc.		—		65,182		—		52,000
LB UK Private Real Estate Investment Trust No.18		681,145		—		—		498,744
Great GM 12th Co., Ltd. 1		—		—		141,656		174,149
Newstar Kumo 1st Co., Ltd. 1		—		—		224,082		236,383
Newstar Gimpo 2nd Co.,Ltd.		—		62,715		—		—
Newstar Gimpo 1st Co,. Ltd		—		96,924		—		415,075
Newstar Daerim Co., Ltd. 1		—		—		—		1,082
Newstar Ds 2nd Co,. Ltd		269,941		1,003,862		810,421		1,736,682
Newstar Ds 1st Co,. Ltd		83,420		255,252		252,882		565,939
Newstar Believe Co., Ltd.		466,986		359,803		1,425,610		1,484,119
Newstar I.P Co., Ltd.		755,420		497,107		3,757,352		2,238,433
Newstar S.H Co., Ltd. 1		—		—		64,627		164,511
Newstar Wanee 1st Co,. Ltd. 1		—		—		120,717		383,628
Newstar Janghyun Co., Ltd 1		—		—		188,710		107,621
Newstar JY Co,. Ltd. 1		—		—		436,812		470,116
Newstar Joongbong Co., Ltd. 1		—		—		2,678,675		2,577,313
Newstar Cheonwon Co., Ltd 1		—		—		134,142		186,769
Newstar Chimsan 1st Co,. Ltd. 1		—		—		—		21,653
New star Panorama 1st Co., Ltd.		1,134,376		366,669		220,380		80,793
New star Papyrus Co., Ltd.		407,947		338,790		930,038		2,453,575
New Star Hakgok Co., Ltd. 1		—		—		120,956		189,632
Songdo P Seven The 1st Co., Ltd. 1		—		—		402,643		560,714
Songdo P-five 2nd Co,. Ltd		3,555,339		4,434,840		5,158,140		5,981,333
Startwithone Co., Ltd. 1		—		—		886,014		795,172
SJ Jongno 1st Co., Ltd.		8,243,220		3,937,376		10,067,356		7,447,319
Able Gamsam 1st Co.,Ltd.		334,055		620,439		756,628		916,732
Able Gorim 1st Co., Ltd. 1		—		—		1,230,607		968,548
Able Gongpyeong 1st Co.,Ltd		344,337		468,315		535,757		628,612
Able Gwangmyeong 2nd Co,. Ltd 1		—		—		1,416,592		1,388,197
Able Gumi 1st Co., Ltd. 1		—		—		1,791,491		1,747,624
Able Guwol 1st Co., Ltd.		—		256,796		—		—
Ablegwonseon 1ST Co., Ltd.		1,442,002		1,441,021		2,328,732		2,391,001
Able Dangsan Co.,Ltd. 1		—		—		407,607		540,056
Able Daenong Co,. Ltd. 1		—		—		552,834		421,540
Able Daepo 1st Co,. Ltd. 1		—		—		27,093		67,902
Able Mojong 1st Co,. Ltd 1		—		—		2,137,205		2,155,929
Able Bucheon Co,. Ltd. 1		—		—		3,784,206		3,941,963
Able Seoho 1st Co., Ltd. 1		—		—		2,012,101		1,994,756
Able Sungnae 1st Co., Ltd. 1		—		—		543,295		540,950

115

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021				2020
	Receivables		Payables		Receivables		Payables
Able Sungsoo 1st Co,. Ltd. 1		—		—		107,664		307,625
Able Sky 1st Co., Ltd.		876,458		780,527		—		—
Able Silver Co,. Ltd. 1		—		—		676,453		597,644
Able IFP 1st Co,. Ltd. 1		—		—		194,558		208,154
Able Island 1st Co,. Ltd 1		—		—		1,970,210		2,087,241
Able Ali 2nd Co., Ltd 1		—		—		441,365		648,366
Able YongIn 1st Co.,Ltd 1		—		—		323,801		409,386
Able Unicity 4th Co.,Ltd 1		—		—		249,328		393,247
Able Youto 1st co., Ltd. 1		—		—		274,302		319,696
Able Electronics 1st Co., Ltd.		478,655		457,738		3,026,423		2,600,139
Able Chowall 1st Co., Ltd.		687,204		486,393		2,435,467		2,618,415
Able KD 2nd Co., Ltd 1		—		—		—		35,854
Able Forsythia 1st Co., Ltd. 1		—		—		548,638		625,310
Able Hana Co., Ltd. 1		—		—		455,528		104,643
Able Hyosung 1st Co., Ltd.		190,304		104,078		—		—
ABR Mareuk 1st Co.,Ltd		563,465		531,447		800,478		740,017
ABR Joongang2 1st Co.,Ltd		944,229		981,400		1,221,622		1,203,295
AJH 3rd Co., Ltd.		51,476		126,089		220,638		235,762
HD Yongin 1st Co.,Ltd 1		—		—		4,805,225		4,467,044
AKB 1st Co.,Ltd. 1		—		—		—		1,955
FN Gasan 1st Co., Ltd.		322,267		177,657		725,446		576,608
MS Sejong 4th Co., Ltd.		23,346		373,287		668,856		2,901,865
Enewstay 1st Co.,Ltd.		155,607		513,045		283,112		770,158
KB Asan Baebang 1st Co.,Ltd 1		—		—		1,130,300		1,208,559
KB Ansung 1st Co., Ltd 1		—		—		791,958		1,573,493
KB Echo 1st Co,. Ltd		254,131		348,804		397,561		612,887
KB Osansaegyo Co,. Ltd 1		—		—		1,209,238		1,507,180
KB Wondong 1st Co,. Ltd 1		—		—		1,839,694		1,842,478
KBUK Center 1st Co.,Ltd.		276,178		290,164		810,773		782,505
KB Icheon logistics 1st Co.,Ltd 1		—		—		278,131		705,547
KB Tongyoung 1st Co,. Ltd		2,077,937		2,019,405		2,676,885		2,830,474
KB PF 1st Co., Ltd. 1		—		—		—		61,574
KS Beta Co,. Ltd. 1		—		—		721,092		749,130
Crescendo Muju Co., Ltd. 1		—		—		904,408		1,166,714
Paradise Yeongjong 2nd Co., Ltd.		561,475		1,190,692		875,853		1,315,976
Polar SQ 2nd Co., Ltd 1		—		—		158,628		159,733
Polar SQ 1st Co., Ltd 1		—		—		158,628		159,733
Polar EH 2nd Co., Ltd		26,282		659,987		593,376		987,727
Polar EH 1st Co., Ltd		118,174		523,443		855,925		1,232,060
Hamilton Power First Co.,Ltd 1		—		—		426,894		736,636
Able Gasan 1st Co., Ltd.		1,752,359		1,912,318		—		—
Able Sewoon Co., Ltd.		2,247,203		1,100,094		—		—
Able Poongdong 1st Co., Ltd.		227,757		204,204		—		—
Intgreen 1st Inc.		361,090		657,388		—		—
KB Infra 1st Co., Ltd.		35,629		—		—		—
JOSH Bujeon 1st Co.,Ltd.		2,741,628		2,842,912		—		—
Newstar Seotan Co.,Ltd.		2,128,162		2,084,203		—		—
Able PT 1st Co., Ltd		1,533,501		1,325,275		—		—
Able Pocheon 1st Co., Ltd.		344,897		331,284		—		—
Unbroken 1st co.ltd		2,091,222		2,069,669		—		—
Newstarplus1st Co.,Ltd.		821,849		896,938		—		—
KB MyeongJi 1st Co.,Ltd.		870,712		600,186		—		—
Able Dangjin 1st Co.,Ltd.		419,907		484,391		—		—

116

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021				2020
	Receivables		Payables		Receivables		Payables
Able Yongdap 1st Co., Ltd.		747,302		567,291		—		—
KB Osansegyo 2nd Co.,Ltd.		312,312		324,406		—		—
Able Hyeongok Co.,Ltd.		1,351,045		1,366,250		—		—
KB Mapo 2nd Co.,Ltd.		789,051		592,990		—		—
GDIC 1st co.ltd		564,261		553,590		—		—
Able Wonchang 1st Co., Ltd.		287,588		228,329		—		—
Able MK 1st co.ltd		—		86,444		—		—
Zitaress 1st Co., Ltd.		10,432,660		10,386,012		—		—
KB PF 3rd Co.,Ltd.		232,413		212,241		—		—
Able Beomeo-one Co., Ltd.		4,439,050		4,122,473		—		—
Able UC 1st co.ltd		16,351,249		15,733,748		—		—
KBillite 1st Co.,Ltd.		6,447		13,840		—		—
Newstar Sina Co., Ltd.		150,298		337,985		—		—
KB Gold 1st Co.,Ltd.		1,762,639		1,777,755		—		—
Inspire Gold 1st Co., Ltd.		9,475,071		9,295,817		—		—
Inspire Gold 2nd Co., Ltd.		6,709,834		6,579,288		—		—
Yeoksam The Gallery KB 1st Co.,Ltd.		1,191,825		1,241,051		—		—
Y Three Ulsan Sinjeong 1st Co., Ltd.		6,868,874		6,964,366		—		—
KB Infra 2nd Co., Ltd.		—		143,103		—		—
Others
KB Financial Group Inc.		84,740		106,320,356		—		86,571,112
Kookmin Bank		65,935,575		55,188,817		44,816,309		18,322,076
KB Asset Management Co., Ltd.		1,747		824,381		963		631
KB Real Estate Trust Co., Ltd.		—		522		—		584
KB Investment Co., Ltd.		154,405		121		—		123
KB Credit Information Co., Ltd.		—		2,719		—		179
KB Data System Co., Ltd.		179,879		235,328		—		156,605
KB Life Insurance Co., Ltd.		790,282		380,519		729,487		108,318
KB Kookmin Card Co., Ltd.		142,366		7,390,861		72,083		5,333,632
KB Savings Bank Co., Ltd.		—		399		—		433
KB Capital Co., Ltd.		92,710		1,489,116		38,918		50,320,958
KB Insurance Co., Ltd		7,512,920		2,967,593		6,503,365		429,615
Prudential Life Insurance Co., Ltd.		378,566		717,402		5,974		412,907
KB Wise Star Private Real Estate Feeder Fund 1st.		7,811		—		3,000,596		—
Other funds		2,566,825		4,718,031		61,136,048		2,832,061
LB UK Private Real Estate Investment Trust No.19 2		248,353		—		—		116,363

¹ These companies are not related parties as at December 31, 2021.

² These companies are excluded from the subsidiaries because of disposal of some portion of equity for the year ended December 31, 2020.

117

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Significant transactions with related parties for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021				2020
	Revenue		Expenses		Revenue		Expenses
Subsidiaries
Aquila Global Real Assets Fund No. 1 LP 1		—		—		375,884		—
DGB Qualified Investor Private Real Estate Investment Trust No.8		385,703		—		403,565		—
JB New Jersey Private Real Estate Fund 1		957,963		—		1,386,887		—
KB Securities Hong Kong Ltd.		323,789		346,720		152,320		305,295
KB Securities Vietnam Joint Stock Company		211,236		181,318		191,378		40,843
KBFG Securities America Inc.		—		1,109,996		—		686,727
KB digital innovation & growth new technology business investment fund		200,000		—		100,546		—
KTB Aircraft Private Investment Trust No.21-1		1,129,492		—		1,564,466		—
LB Ireland Private Real Estate Investment Trust 8		4,433,491		—		4,430,718		—
LB UK Private Real Estate Investment Trust No.18		3,460,949		—		1,877,262		187,849
Gaehwasanyeokgaebal1st Co., Ltd. 1		—		—		182,524		—
Goseong Hills 1st Co., Ltd 1		—		—		1,210,398		—
Great GM 12th Co., Ltd. 1		64,336		—		442,563		—
Newstar Goeun 1st Co., Ltd 1		—		—		357,820		—
Newstar Kumo 1st Co., Ltd. 1		237,989		—		23,517		—
Newstar Gimpo 2nd Co.,Ltd.		763,924		—		—		—
Newstar Gimpo 1st Co,. Ltd		1,399,309		—		1,772,642		—
Newstar Daedeok Co., Ltd. 1		—		—		17,034		—
Newstar Daerim Co., Ltd. 1		—		1,083		—		1,082
Newstar Ds 2nd Co,. Ltd		1,582,784		—		714,535		—
Newstar Ds 1st Co,. Ltd		445,737		—		233,784		—
Newstar Believe Co., Ltd.		287,723		—		101,068		—
Newstar IP Co., Ltd.		1,225,374		1,346,831		1,581,355		—
Newstar SH Co., Ltd. 1		—		22,362		827,061		22,362
Newstar SM No.1 Co., Ltd. 1		—		—		150,442		—
Newstar FE Co., Ltd. 1		—		—		205,136		—
Newstar Yeonje 2nd Co,. Ltd. 1		—		—		458		—
Newstar Yeonje 1st Co,. Ltd. 1		—		—		2,825		—
Newstar Yaecheon Co., Ltd. 1		—		—		1,649		—
Newstar Wanee 2nd Co,. Ltd. 1		—		—		24,244		—
Newstar Wanee 1st Co,. Ltd. 1		375,598		—		254,652		—
Newstar ENE Co., Ltd. 1		—		—		201,800		—
Newstar EJ Co,. Ltd. 1		—		—		8,633		—
Newstar Janghyun Co., Ltd 1		—		185		279,529		—
Newstar JY Co,. Ltd. 1		50,934		—		261,080		—
Newstar Joongboo Corporation 1		—		—		361,359		—
Newstar Jije Co,. Ltd. 1		—		—		133,451		—
Newstar Cheonwon Co., Ltd 1		149,626		—		100,363		—
Newstar Chimsan 1st Co,. Ltd. 1		—		21,654		1,000		21,653
New star Panorama 1st Co., Ltd.		1,466,077		458,175		2,542,558		1,190,169
New star Papyrus Co., Ltd.		2,856,637		—		1,002,885		1,303,632
New Star Hakgok Co., Ltd. 1		133,620		—		171,297		—
Dongtan 1st Co., Ltd. 1		—		—		34,328		—
Multiasset PR Private Fund 3 1		—		—		488,000		—

118

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021				2020
	Revenue		Expenses		Revenue		Expenses
Multiasset PR Private Fund 4		—		—		602,000		—
Vestas Qualified Investors’ Private Real Estate Fund Investment Trust No. 38		4,634,891		—		4,613,927		—
Songdo P Seven The 1st Co., Ltd. 1		476,916		—		701,055		—
Songdo P-five 2nd Co,. Ltd		1,554,876		—		1,026,672		—
Startwithone Co., Ltd. 1		—		—		101,842		—
Alpha Spain Real Estate Private Investment Trust 1		2,376,306		—		3,576,153		—
SJ Dream 1st Co.,Ltd 1		—		—		277,108		—
SJ Jongno 1st Co., Ltd.		1,685,806		—		2,179,296		—
Able Gamsam 1st Co.,Ltd.		1,478,542		—		1,325,523		37,943
Able Kangil 1st Co,. Ltd 1		—		—		125,387		—
Able Gorim 1st Co., Ltd. 1		199,781		—		320,874		—
Able Gongpyeong 1st Co.,Ltd		232,580		—		108,566		—
Able Guwol 1st Co., Ltd.		1,657,905		—		—		—
Able Gwonseon 1ST Co., Ltd.		990,705		—		1,224,820		—
Able Namyangju Co.,Ltd. 1		—		—		317,552		—
Able Dangsan Co.,Ltd. 1		461,558		—		569,068		—
Able Daenong Co,. Ltd. 1		648,944		—		531,054		—
Able Daejang Co., Ltd. 1		—		—		469,260		—
Able Daepo 2nd Co,. Ltd. 1		—		—		74,582		—
Able Daepo 1st Co,. Ltd. 1		44,715		—		158,952		—
Able Mojong 1st Co,. Ltd 1		295,153		—		519,467		—
Able Balgok Co,. Ltd. 1		—		—		10,282		—
Able Bukcheonan logis Co,. Ltd. 1		872,802		—		—		—
Able BS 1st Co,. Ltd. 1		—		—		57,835		—
Able Samgi 1		—		—		1,385,645		845,047
Able Seoho 1st Co., Ltd. 1		176,409		—		17,345		—
Able Sungnae 1st Co., Ltd. 1		42,500		—		186,168		—
Able Sungsoo 1st Co,. Ltd. 1		—		—		207,805		—
Able Sky 1st Co., Ltd.		595,931		—		—		—
Able Silver Co,. Ltd. 1		—		—		135,809		—
Able IFP 1st Co,. Ltd. 1		—		—		896,047		—
Able Ali 2nd Co., Ltd 1		321,946		—		287,880		—
Able Sp Co.,Ltd. 1		—		—		113,510		—
Able NS Co., Ltd. 1		—		—		581,905		—
Able YongIn 1st Co.,Ltd 1		256,778		—		228,041		—
Able Unicity 4th Co.,Ltd 1		315,590		—		364,732		—
Able Youto 1st co., Ltd. 1		—		—		355,441		—
Able Eumsung 1st Co., Ltd. 1		348,135		—		—		—
Able Electronics 1st Co., Ltd.		1,712,184		—		440,284		—
Able GD 1st Co.,Ltd 1		—		—		109,518		—
Able Jinjeop 1st Co., Ltd. 1		39,062		—		—		—
Able Chowall 1st Co., Ltd.		860,596		—		463,859		—
Able KD 2nd Co., Ltd 1		—		—		1,235,959		—
Able Parkway 2nd Co., Ltd 1		—		—		359,310		—
Able Forsythia 1st Co., Ltd. 1		241,312		—		161,305		—
Able Hana Co., Ltd. 1		92,273		—		882,191		20,080
Able Hakwoono Co., Ltd 1		—		—		43,973		—
Able Hyosung 1st Co., Ltd.		2,762,765		—		—		—
ABR Mareuk 1st Co.,Ltd		198,279		—		68,569		—
ABR Sosa 1st Co., Ltd. 1		231,496		—		—		—
ABR Joongang2 1st Co.,Ltd		302,038		—		19,584		—
AJH 3rd Co., Ltd.		136,511		—		328,713		—

119

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021				2020
	Revenue		Expenses		Revenue		Expenses
AJH 2nd Co., Ltd. 1		—		—		182,675		—
HD Yongin 1st Co.,Ltd 1		—		—		453,181		—
AKB 1st Co.,Ltd. 1		—		—		622,652		102,725
APDC Co., Ltd. 1		—		—		362,166		—
FN Gasan 1st Co., Ltd.		152,743		—		180,544		—
MS Sejong 4th Co., Ltd.		433,231		1,801,942		523,398		642,062
Young3Southgate Co.,Ltd. 1		—		—		292,211		—
YJS Ilsan Co., Ltd. 1		—		—		274,900		—
Enewstay 1st Co.,Ltd.		1,212,559		—		580,837		—
JK Banpo 1st Co., Ltd. 1		—		—		485,599		—
Capstone US Professional Investment Private Fund No.6 1		—		—		3,898,889		—
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		509,250		—		25,820		—
KB Southgate Co.,Ltd. 1		—		—		277,637		—
KB Asan Baebang 2nd Co.,Ltd 1		—		—		103,129		—
KB Asan Baebang 1st Co.,Ltd 1		203,171		—		228,863		—
KB Ansung 1st Co., Ltd 1		1,333,952		—		322,271		—
KB Echo 1st Co,. Ltd		673,291		—		122,351		24,910
KB Yeoncheon Co., Ltd. 1		—		—		92,780		—
KB Osansaegyo Co,. Ltd 1		789,697		—		562,416		—
KB Wondong 1st Co,. Ltd 1		139,857		—		99,086		—
KBUK Center 1st Co.,Ltd.		432,730		—		368,239		—
KB Icheon logistics 1st Co.,Ltd 1		1,183,260		—		173,389		—
KB Tongyoung 1st Co,. Ltd		716,845		—		33,151		—
KB Park 1st Co.,Ltd. 1		—		—		734,767		—
KB PF 1st Co., Ltd. 1		5,016		56,558		82,984		56,558
KS Beta Co,. Ltd. 1		196,180		—		2,569		—
Crescendo Muju Co., Ltd. 1		872,200		—		715,820		—
Truefriendwondi 3rd Co,. Ltd 1		—		—		1,101,045		—
TS 3rd Co,. Ltd 1		—		—		45,496		—
Paradise Yeongjong 2nd Co., Ltd.		520,352		—		328,857		446,061
First Jongno 1st Co.,Ltd 1		—		—		402,841		—
Pacific US Blackrock Private Placement Real Estate Fund No.15		1,171,319		—		957,699		—
Polar SQ 2nd Co., Ltd 1		31,335		—		753,296		—
Polar SQ 1st Co., Ltd 1		31,335		—		753,296		—
Polar EH 2nd Co., Ltd		448,549		—		576,561		—
Polar EH 1st Co., Ltd		504,769		—		577,053		—
Hangang Domestic Private Real Estate Fund No.14 1		1,573,959		—		2,016,390		—
Hamilton Power First Co.,Ltd 1		—		—		2,502,814		515,183
Heungkuk Global Highclass Private Real Estate Trust 23		—		—		9,830,000		—
Heungkuk Highclass Private Real Estate Trust 21 1		—		—		1,000,000		—
Newstar Sinchun 1st Co., Ltd. 1		540,917		—		—		—
Songam Park Development Co.,Ltd. 1		746,940		—		—		—
SJ Sejong Co., Ltd.		69,000		—		—		—
Able Gasan 1st Co., Ltd.		462,819		—		—		—
Able Sewoon Co., Ltd.		2,591,808		—		—		—
Able Ansan Logistics 1st Co., Ltd. 1		147,843		—		—		—
Able Udong 1st Co., Ltd. 1		53,535		—		—		—
Able KJ 1st Co., Ltd.		15,000		—		—		—
Able Poongdong 1st Co., Ltd.		784,073		—		—		—

120

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021				2020
	Revenue		Expenses		Revenue		Expenses
Intgreen 1st Inc.		2,198,225		—		—		—
KB Daemyung 1st Co., Ltd.		—		331,246		—		—
KB Infra 1st Co., Ltd.		478,423		—		—		—
Pinetridavil Co., Ltd. 1		148,109		—		—		—
JOSH Bujeon 1st Co.,Ltd.		1,889,108		—		—		—
Newstar Seotan Co.,Ltd.		435,687		—		—		—
Able PT 1st Co., Ltd		241,590		—		—		—
Able Pocheon 1st Co., Ltd.		526,898		—		—		—
Able HD 1st co.ltd 1		353,553		—		—		—
Unbroken 1st co.ltd		241,491		—		—		—
Newstarplus1st Co.,Ltd.		1,650,919		—		—		—
KB MyeongJi 1st Co.,Ltd.		470,527		—		—		—
Able Dangjin 1st Co.,Ltd.		135,951		—		—		—
Able Yongdap 1st Co., Ltd.		198,537		—		—		—
Newstar Cold Co., Ltd. 1		588,135		—		—		—
Betares Co., Ltd. 1		26,730		—		—		—
KB Osansegyo 2nd Co.,Ltd.		43,931		—		—		—
Able Hyeongok Co.,Ltd.		179,795		—		—		—
KB Mapo 1st Co.,Ltd.		100,000		—		—		—
KB Mapo 2nd Co.,Ltd.		396,061		—		—		—
Newstar Joongbong Co., Ltd. 1		—		—		102,361		—
Able Gwangmyeong 2nd Co,. Ltd 1		—		—		143,767		—
Able Gumi 1st Co., Ltd. 1		—		—		130,953		—
Able Bucheon Co,. Ltd. 1		—		—		56,942		—
Able Island 1st Co,. Ltd 1		—		—		75,816		—
Hyundai Dynamic Mix Securities Feeder Investment Trust 1 1		1,607,304		—		—		—
Hanwha US Equity Strategy Private Real Estate Fund 3		7,648,350		—		—		—
GDIC 1st co.ltd		218,392		—		—		—
Able Wonchang 1st Co., Ltd.		120,892		—		—		—
Pacific Bric Professional Investors’ Private Real Estate Fund #53 1		1,695,000		—		—		—
Able MK 1st co.ltd		47,693		—		—		—
Zitaress 1st Co., Ltd.		820,602		—		—		—
KB PF 3rd Co.,Ltd.		20,172		—		—		—
Able Beomeo-one Co., Ltd.		329,377		—		—		—
Able UC 1st co.ltd		865,337		—		—		—
KBillite 1st Co.,Ltd.		8,502		—		—		—
Newstar Sina Co., Ltd.		488,215		—		—		—
KB Gold 1st Co.,Ltd.		41,821		—		—		—
Inspire Gold 1st Co., Ltd.		245,720		—		—		—
Inspire Gold 2nd Co., Ltd.		180,437		—		—		—
Yeoksam The Gallery KB 1st Co.,Ltd.		7,499		—		—		—
Y Three Ulsan Sinjeong 1st Co., Ltd.		14,663		—		—		—
KB Infra 2nd Co., Ltd.		143,103		—		—		—
Associates
KB Special Purpose Acquisition Company No.17		—		1,067,588		2,961		—
KB-KDBC Pre-IPO New Technology Business Investment Fund		189,998		—		300,000		—
KBTS Technology Venture Private Equity Fund		285,290		—		126,027		—
KB-SJ Tourism Venture Fund		278,571		—		337,500		—
KB Private Equity Fund III		—		—		462,951		—

121

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	2021				2020
	Revenue		Expenses		Revenue		Expenses
Keystone-Hyundai Sec. No.1 Private Equity Fund		42,637		—		114,835		—
KB-Brain KOSDAQ Scale-Up Fund		514,119		—		733,705		—
KB Special Purpose Acquisition Company No.18		5,886		—		66,423		—
KB SPROTT Renewable Private Equity Fund I		487,500		—		487,836		—
KB-Stonebridge Secondary Private Equity Fund		549,714		—		1,442,249		—
KB Special Purpose Acquisition Company No.19		36,244		—		11,125		—
KB Special Purpose Acquisition Company No.20		67,917		—		1,778,305		—
KB-UTC Inno-Tech Venture Fund		471,466		—		370,970		—
KB-SP Private Equity Fund IV		388,931		—		479,967		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		1,198,196		—		237,293		—
KB New Paradigm Agriculture Venture Fund		—		—		225,000		—
KB Shinjasanaubo Fund		—		—		90,000		—
JR GLOBAL REIT		—		—		6,210,000		—
IGIG NO371 Professional Investors’ Real Estate Investment Company 1		—		—		200,000		—
Koreit Tower Real Estate Investment Trust Company 1		—		—		2,851,500		—
KB Material and Parts No. 1 PEF		352,500		—		62,774		—
KB Bio Private Equity Fund III Ltd.		323,836		—		—		—
K The fifteenth Real Estate Investment Trust 1		500,000		—		—		—
Others
KB Financial Group Inc.		689,158		15,168		1,067,798		98
Kookmin Bank		110,412,211		113,932,738		43,997,058		57,284,860
KB Asset Management Co., Ltd.		9,821		1,108,009		10,029		1,437
KB Real Estate Trust Co., Ltd.		760		5		778		10
KB Investment Co., Ltd.		616,501		1		182,016		2
KB Credit Information Co., Ltd.		218		2,482		246		662
KB Data System Co., Ltd.		823		1,348,880		1,013		1,079,974
KB Life Insurance Co., Ltd.		322,568		327,902		49,322		1,111,202
KB Kookmin Card Co., Ltd.		111,626		679,936		204,124		777,334
KB Savings Bank Co., Ltd.		227		4,610		7		7
KB Capital Co., Ltd.		344,413		478		89,856		2,359
KB Insurance Co., Ltd		889,407		5,459,994		241,525		2,389,441
Prudential Life Insurance Co., Ltd.		614,560		747,319		260,584		2,574
KB Wise Star Private Real Estate Feeder Fund 1st.		7,255,541		—		364,208		1,907,319
Other funds		5,305,247		510,087		2,599,262		—
Retirement pension		598,028		—		529,780		—
LB UK Private Real Estate Investment Trust No.19 2		396,837		—		69,187		68,905
The Company
Employees		321,649		—		408,651		—

¹ These companies are not related parties as at December 31, 2021.

² These companies are excluded from the subsidiaries because of disposal of some portion of equity for the year ended December 31, 2020.

122

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Significant loan and borrowing transactions with related parties for the years ended December 31, 2021 and 2020, are as follows:

	2021
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other			Ending balance
Subsidiaries
Newstar Panorama 1st Co., Ltd.	Loans		9,845,711		—		(6,321	)		—			9,839,390
Newstar Gimpo 1st Co,. Ltd	Loans		33,527,243		—		(3,700,384	)		—			29,826,859
Newstar Gimpo 2nd Co.,Ltd.	Loans		—		12,369,667		—			—			12,369,667
Able Gamsam 1st Co.,Ltd.	Loans		22,962,057		—		(12,824	)		—			22,949,233
Able KD 2nd Co., Ltd 1	Loans		4,592,411		—		(4,592,411	)		—			—
KB Echo 1st Co,. Ltd	Loans		15,075,090		—		(100,815	)		—			14,974,275
Hamilton Power First Co.,Ltd 1	Loans		28,956,749		—		(28,956,749	)		—			—
KB Infra 1st Co., Ltd.	Loans		—		11,874,477		—			—			11,874,477
Able MK 1st co.ltd	Loans		—		15,902,044		—			—			15,902,044
Associates
KB Special Purpose Acquisition Company No.17	Hybrid bond with securities-like features		2,067,088		—		—			(1,067,588	)		999,500
KB Special Purpose Acquisition Company No.18	Hybrid bond with securities-like features		3,052,888		—		—			5,886			3,058,774
KB Special Purpose Acquisition Company No.19	Hybrid bond with securities-like features		2,054,617		—		—			36,244			2,090,861
KB Special Purpose Acquisition Company No.20	Hybrid bond with securities-like features		3,067,305		—		—			67,917			3,135,222
Others
Kookmin Bank	Deposits		425,062,348		—		—			92,988,880			518,051,228
	Borrowings		2,787,298		726,662,134		(729,449,432	)		—			—
The Company
Employees	Loans to employees		19,064,459		2,490,240		(6,614,323	)		—			14,940,376

¹ These companies are not related parties as at December 31, 2021.

123

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

	2020
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other			Ending balance
Subsidiaries
AKB 1st Co.,Ltd.	Loans at FVTPL		25,120,050		—		—			(102,725	)		25,017,325
Newstar Gangneung 1st Co., Ltd. 1	Loans		113,670,222		—		(113,670,222	)		—			—
Able KD 2nd Co., Ltd.	Loans		29,949,550		—		—			(25,357,139	)		4,592,411
KB Yeoncheon Co., Ltd. 1	Loans		6,588,901		—		(6,588,901	)		—			—
Newstar Panorama 1st Co., Ltd.	Loans		44,703,021		—		—			(34,857,310	)		9,845,711
Newstar Goeun 1st Co., Ltd 1	Loans		29,868,389		—		(29,868,389	)		—			—
Newstar Gimpo 1st Co., Ltd	Loans		68,883,966		—		—			(35,356,723	)		33,527,243
Newstar Haenam 1st Co., Ltd. 1	Loans		39,601,732		—		(39,601,732	)		—			—
Hamilton Power First Co.,Ltd	Loans		—		28,956,749		—			—			28,956,749
Able Gamsam 1st Co.,Ltd.	Loans		—		22,962,057		—			—			22,962,057
KB Echo 1st Co., Ltd	Loans		—		15,075,090		—			—			15,075,090
Associates
KB Special Purpose Acquisition Company No.17	Hybrid bond with securities-like features		2,064,127		—		—			2,961			2,067,088
KB Special Purpose Acquisition Company No.18	Hybrid bond with securities-like features		2,986,465		—		—			66,423			3,052,888
KB Special Purpose Acquisition Company No.19	Hybrid bond with securities-like features		2,043,492		—		—			11,125			2,054,617
KB Special Purpose Acquisition Company No.20	Hybrid bond with securities-like features		1,499,000		—		—			1,568,305			3,067,305
Others
Kookmin Bank	Deposits		215,482,730		—		—			209,579,618			425,062,348
	Borrowings		—		1,005,167,532		(1,002,380,234	)		—			2,787,298
The Company
Employees	Loans to employees		23,130,910		1,415,150		(5,481,601	)		—			19,064,459

¹ These companies are not related parties as at December 31, 2020.

Transactions between related parties, such as deposit transaction arising from operating activities are not included in the above table as deposit and withdraw occurred frequently.

124

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Other transactions with related parties for the years ended December 31, 2021 and 2020, are as follows:

(In thousands of Korean won)	2021
	Contribution		Collection and others
Subsidiaries
KB Securities Hong Kong Ltd.		101,175,500		—
KB Securities Vietnam Joint Stock Company		69,084,068		—
Aquila Global Real Assets Fund No. 1 LP 1		—		1
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		11,250,000		—
Pacific US Blackrock Private Placement Real Estate Fund No.15		3,325,797		—
DGB Qualified Investor Private Real Estate Investment Trust No.8		—		360,460
Hyundai Dynamic Mix Securities Feeder Investment Trust 1 1		—		5,559,136
KB digital innovation & growth new technology business investment fund		500,000		—
Alpha Spain Real Estate Private Investment Trust 1		3,298,743		—
Hangang Domestic Private Real Estate Fund No.14 1		—		18,100,000
Heungkuk Global Highclass Private Real Estate Trust 23		—		1,630,765
Hanwha US Equity Strategy Private Real Estate Fund 3		183,678,409		8,695
Hyundai Kon-tiki Specialized Privately Placed Fund 1 1		—		476,406
Pacific Bric Professional Investors’ Private Real Estate Fund No.53 1		43,500,000		43,500,000
Associates
KB New Paradigm Agriculture Venture Fund		—		2,275,000
KB KONEX Market Vitalization Fund		—		5,550,000
KB-KDBC Pre-IPO New Technology Business Investment Fund		—		2,400,000
KBTS Technology Venture Private Equity Fund		880,000		1,536,000
KB-SJ Tourism Venture Fund		500,000		—
KB-Brain KOSDAQ Scale-Up Fund		3,750,000		4,050,000
KB-Stonebridge Secondary Private Equity Fund		3,788,000		1,692,584
KB-UTC Inno-Tech Venture Fund		1,695,000		375,000
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		3,846,000		—
KB Shinjasanaubo Fund		880,000		264,000
JR GLOBAL REIT 1		—		65,025,000
Keystone-Hyundai Sec. No.1 Private Equity Fund 1		—		1,925,000
K The fifteenth Real Estate Investment Trust 1		8,600,000		8,600,000
KB Private Equity Fund III 1		—		8
KB Bio Private Equity Fund III Ltd.		10,000,000		—
KB Global Commerce Private Equity Investment Fund		7,000,000		—
KB-KTB Technology Venture Fund		2,000,000		—
KB Bio Global Expansion Private Equity Fund No.1		15,000,000		—
KB Digital Platform Fund		4,500,000		—
KB-SOLIDUS Healthcare Investment Fund		100,000		—
Others
KB NA COMPASS ENERGY PRIVATE SPECIAL ASSET FUND		1,513,600		2,056,553
Meritz Private Real Estate Fund 9-2		1,053		5,954
KB Global Core Bond Securities Master Fund(Bond)		—		15,000,000
KB Onkookmin TDF 2045 Fund		—		1,400,000
KB Global Platform Fund		5,400,000		—
KB Onkookmin Life Income RIF 20 Feeder Fund(FoFs)		—		2,500,000
KB Onkookmin Life Income RIF 40 Feeder Fund(FoFs)		—		2,500,000
KB BMO senior loan private special asset fund 2		4,477,004		—
KB Multi Alpha Plus Private Fund 1		10,000,000		—
KB KBSTAR 30-Years Treasurybond Enhanced ETF		6,311,671		5,806,617

125

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(In thousands of Korean won)	2021
	Contribution		Collection and others
KB Aircraft Loan Private Special Asset Fund Investment Trust No. 1		33,017,696		752,186
KB New Deal Innovation Fund		2,000,000		—
Paramark KB Fund I		680,000		—

¹ No related party of the Company as at December 31, 2021.

(In thousands of Korean won)	2020
	Contribution		Collection and others
Subsidiaries
KB FINA Joint Stock Company		11,146,330		—
Aquila Global Real Assets Fund No.1 LP		—		197,092
GH Real Estate I LP		13,944,786		2,706,732
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		3,750,000		—
Hyundai Smart Index Alpha Derivative Feeder Trust 1 1		—		10,382,785
Hyundai Strong Korea Equity Trust 1 1		—		2,976,264
Hyundai Kidzania Equity Feeder Trust 1 1		—		361,855
Hyundai Value Plus Equity Feeder Trust 1 1		—		1,822,420
Hyundai Quant Long Short Securities Feeder Investment Trust 1 1		—		7,116,562
Hyundai Strong-small Corporate Trust 1 1		—		1,006,516
Heungkuk Highclass Private Real Estate Trust 21 1		—		20,679,999
DGB Qualified Investor Private Real Estate Investment Trust No.8		—		293,050
KTB Aircraft Private Investment Trust No.21-1		—		40,608
KB Digital Innovation&growth New Technology Business Investment Fund		500,000		—
Capstone US Private Investment Trust No.6		932,452		50,397,818
LB Ireland Private Real Estate Investment Trust 18		—		1,146,231
Alpha Spain Real Estate Private Investment Trust 1		64,423,723		100,000
Hangang Domestic Private Real Estate Fund No.14		18,100,000		100,000
Heungkuk Global Highclass Private Real Estate Trust 23		—		107,000,000
Associates
KB IGen Private Equity Fund No 1 1		—		53
KB KONEX Market Vitalization Fund		—		1,335,000
KB-KDBC Pre-IPO New Technology Business Investment Fund		—		3,200,000
KBTS Technology Venture Private Equity Fund		640,000		1,568,000
KB-SJ Tourism Venture Fund		1,500,000		—
KB-Brain KOSDAQ Scale-Up Fund		3,000,000		1,200,000
KB SPROTT Renewable Private Equity Fund I		842,523		—
KB-Stonebridge Secondary Private Equity Fund		2,598,000		—
KB-UTC Inno-Tech Venture Fund		5,655,000		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		2,850,000		—
JR GLOBAL REIT		219,492,955		3,638,615
IGIS NO371 Professional Investors’ Real Estate Investment Company 1		10,000,000		10,000,000
Koreit Tower Real Estate Investment Trust Company 1		30,000,000		30,000,000
Project Vanilla Co., Ltd.		2,450,000		—
December & Company Inc.		30,000,000		—
KB Material and Parts No. 1 PEF		3,400,000		—
KB Private Equity Fund III		—		7,999,992
Others
KB AU Infigen Energy Private Special Asset Fund 1		—		23,331,552
KB BMO senior loan private special asset fund		19,352,404		—
KB NA Compass Energy Private Special Asset Fund		1,551,522		2,063,968
Meritz Private Real Estate Fund 9-2		2,336		—

126

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(In thousands of Korean won)	2020
	Contribution		Collection and others
KB Global Platform Fund		3,600,000		—
KB Wisestar Private Real Estate Fund Investment Trust No. 12 1		30,000,000		28,523,000
LB Ireland Private Real Estate Investment Trust 19 1		—		10,849,905

¹ No related party of the Company as at December 31, 2020.

Details of payment guarantees and other similar contracts with related parties as at December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	Description	Amounts
		2021		2020
KB Securities Vietnam Joint Stock Company	Payment guarantees		86,304,400		79,206,400
KB Securities HongKong Ltd.	Payment guarantees		130,405,000		119,680,000
Able Hana Co., Ltd. 1	Private placement bonds purchase agreement		—		16,500,000
Ms Sejong 4th Co., Ltd.	Loans purchase agreement		2,000,000		10,000,000
KBUK Center 1st Co.,Ltd.	Replenishment of loan		12,600,000		10,500,000
Crescendo Muju Co., Ltd. 1	Private placement bonds purchase agreement		—		20,000,000
Great GM 12th Co., Ltd. 1	Private placement bonds purchase agreement		—		13,010,000
AJH 3rd Co., Ltd.	Private placement bonds purchase agreement		11,000,000		11,000,000
Able Youto 1st co., Ltd. 1	Private placement bonds purchase agreement		—		10,000,000
Paradise Yeongjong 2nd Co., Ltd.	Private placement bonds purchase agreement		20,000,000		20,000,000
Newstar Hakgok Co., Ltd. 1	Private placement bonds purchase agreement		—		7,800,000
Songdo P Seven The 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		35,880,000
Newstar Janghyun Co., Ltd 1	Private placement bonds purchase agreement		—		4,800,000
Ablegwonseon 1ST Co., Ltd.	Private placement bonds purchase agreement		35,000,000		35,000,000
Newstar SH Co., Ltd. 1	Private placement bonds purchase agreement		—		30,000,000
Newstar IP Co., Ltd.	Private placement bonds purchase agreement		50,700,000		50,700,000
Newstar Daerim Co., Ltd. 1	Private placement bonds purchase agreement		—		500,000
Newstar Ds 1st Co,. Ltd	Private placement bonds purchase agreement		15,000,000		15,000,000
Newstar Ds 2nd Co,. Ltd	Private placement bonds purchase agreement		37,000,000		37,000,000
Newstar Papyrus Co., Ltd.	Private placement bonds purchase agreement		24,200,000		24,200,000
Able Dangsan Co.,Ltd. 1	Private placement bonds purchase agreement		—		21,500,000
SJ Jongno 1st Co., Ltd.	Private placement bonds purchase agreement		68,200,000		68,200,000
Enewstay 1st Co.,Ltd.	Private placement bonds purchase agreement		25,600,000		25,600,000
Newstar Cheonwon Co., Ltd 1	Private placement bonds purchase agreement		—		8,600,000
Able YongIn 1st Co.,Ltd 1	Private placement bonds purchase agreement		—		10,000,000
Newstar Gimpo 1st Co,. Ltd	Credit line		—		2,700,000
Newstar Wanee 1st Co,. Ltd. 1	Private placement bonds purchase agreement		—		8,900,000

127

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	Description	Amounts
		2021		2020
Able Gamsam 1st Co.,Ltd.	Private placement bonds purchase agreement		17,000,000		17,000,000
Able Sungnae 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		8,650,000
Songdo Pfive 2nd Co,. Ltd	Private placement bonds purchase agreement		121,821,000		123,000,000
Polar EH 1st Co., Ltd	Private placement bonds purchase agreement		2,411,809		29,900,000
Polar EH 2nd Co., Ltd	Private placement bonds purchase agreement		12,391,709		29,900,000
Polar SQ 1st Co., Ltd 1	Private placement bonds purchase agreement		—		30,000,000
Polar SQ 2nd Co., Ltd 1	Private placement bonds purchase agreement		—		30,000,000
Able Ali 2nd Co., Ltd 1	Private placement bonds purchase agreement		—		20,000,000
Able Daepo 1st Co,. Ltd. 1	Private placement bonds purchase agreement		—		1,200,000
Able Sungsoo 1st Co,. Ltd. 1	Private placement bonds purchase agreement		—		22,440,000
KB Ansung 1st Co., Ltd 1	Private placement bonds purchase agreement		—		55,000,000
KB PF 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		2,500,000
Able Mojong 1st Co,. Ltd 1	Private placement bonds purchase agreement		—		49,000,000
Newstar Chimsan 1st Co,. Ltd. 1	Private placement bonds purchase agreement		—		10,000,000
Newstar JY Co,. Ltd. 1	Private placement bonds purchase agreement		—		17,500,000
Able Unicity 4th Co.,Ltd 1	Private placement bonds purchase agreement		—		20,000,000
Able Gongpyeong 1st Co.,Ltd	Private placement bonds purchase agreement		20,000,000		20,000,000
KB Asan Baebang 1st Co.,Ltd 1	Private placement bonds purchase agreement		—		20,000,000
KB Icheon logistics 1st Co.,Ltd 1	Private placement bonds purchase agreement		—		46,000,000
Able Daenong Co,. Ltd. 1	Private placement bonds purchase agreement		—		22,000,000
Able Forsythia 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		23,000,000
Able IFP 1st Co,. Ltd. 1	Private placement bonds purchase agreement		—		4,000,000
Able Gorim 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		20,000,000
HD Yongin 1st Co.,Ltd 1	Private placement bonds purchase agreement		—		60,000,000
Startwithone Co., Ltd. 1	Private placement bonds purchase agreement		—		30,000,000
Newstar Believe Co., Ltd.	Private placement bonds purchase agreement		7,500,000		17,500,000
Able Chowall 1st Co., Ltd.	Credit line		30,000,000		30,000,000
FN Gasan 1st Co., Ltd.	Private placement bonds purchase agreement		6,538,462		20,000,000
ABR Mareuk 1st Co.,Ltd	Credit line		10,300,000		10,300,000
KB Osansaegyo Co,. Ltd 1	Credit line		—		57,000,000
Able Silver Co,. Ltd. 1	Credit line		—		8,000,000
Newstar Joongbong Co., Ltd. 1	Private placement bonds purchase agreement		—		30,000,000

128

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	Description	Amounts
		2021		2020
ABR Joongang2 1st Co.,Ltd	Credit line		20,000,000		20,000,000
Newstar Kumo 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		2,500,000
Able Gumi 1st Co., Ltd. 1	Credit line		—		60,000,000
Able Seoho 1st Co., Ltd. 1	Credit line		—		35,000,000
Able Island 1st Co,. Ltd 1	Private placement bonds purchase agreement		—		34,000,000
Able Gwangmyeong 2nd Co,. Ltd 1	Credit line		—		60,000,000
KB Echo 1st Co,. Ltd	Credit line		30,000,000		30,000,000
KB Wondong 1st Co,. Ltd 1	Credit line		—		70,000,000
KB Tongyoung 1st Co,. Ltd	Credit line		34,000,000		44,000,000
Able Bucheon Co,. Ltd. 1	Credit line		—		40,000,000
Able Electronics 1st Co., Ltd.	Credit line		70,000,000		70,000,000
KS Beta Co,. Ltd. 1	Credit line		—		45,000,000
Newstar Seotan Co.,Ltd.	Credit line		63,000,000		—
Newstar Plus1st Co.,Ltd.	Private placement bonds purchase agreement		16,000,000		—
Unbroken 1st co.ltd	Private placement bonds purchase agreement		30,000,000		—
Able Dangjin 1st Co.,Ltd.	Credit line		35,000,000		—
Able Yongdap 1st Co., Ltd.	Private placement bonds purchase agreement		29,000,000		—
Able Wonchang 1st Co., Ltd.	Credit line		20,000,000		—
Able Pocheon 1st Co., Ltd.	Private placement bonds purchase agreement		12,300,000		—
Able PT 1st Co., Ltd	Private placement bonds purchase agreement		5,000,000		—
Able Hyeongok Co.,Ltd.	Credit line		60,000,000		—
JOSH Bujeon 1st Co.,Ltd.	Credit line		90,000,000		—
GDIC 1st co.ltd	Private placement bonds purchase agreement		40,000,000		—
KB Mapo 2nd Co.,Ltd.	Private placement bonds purchase agreement		10,000,000		—
KB MyeongJi 1st Co.,Ltd.	Credit line		45,000,000		—
KB Osansegyo 2nd Co.,Ltd.	Private placement bonds purchase agreement		8,626,660		—
Able Guwol 1st Co., Ltd.	Private placement bonds purchase agreement		41,900,000		—
Able Hyosung 1st Co., Ltd.	Private placement bonds purchase agreement		17,000,000		—
Able Sky 1st Co., Ltd.	Private placement bonds purchase agreement		30,000,000		—
Newstar Gimpo 2nd Co.,Ltd.	Credit line		12,600,000		—
Intgreen 1st Inc.	Private placement bonds purchase agreement		47,500,000		—
Able Gasan 1st Co., Ltd.	Credit line		60,000,000		—
Able Sewoon Co., Ltd.	Private placement bonds purchase agreement		48,000,000		—
Able Poongdong 1st Co., Ltd.	Credit line		4,850,000		—
Zitaress 1st Co., Ltd.	Private placement bonds purchase agreement		120,000,000		—
KB PF 3rd Co.,Ltd.	Private placement bonds purchase agreement		4,500,000		—
Able Beomeo-one Co., Ltd.	Private placement bonds purchase agreement		30,000,000		—
Able UC 1st co.ltd	Credit line		160,000,000		—
KB Infra 2nd Co., Ltd.	Private placement bonds purchase agreement		58,500,000		—

129

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(in thousands of Korean won)	Description	Amounts
		2021		2020
KBillite 1st Co.,Ltd.	Credit line		1,000,000		—
Newstar Sina Co., Ltd.	Private placement bonds in foreign currency purchase agreement		24,421,300		—
KB Gold 1st Co.,Ltd.	Credit line		20,000,000		—
Inspire Gold 1st Co., Ltd.	Credit line		100,000,000		—
Inspire Gold 2nd Co., Ltd.	Credit line		50,000,000		—
Yeoksam The Gallery KB 1st Co.,Ltd.	Credit line		25,000,000		—
Y Three Ulsan Sinjeong 1st Co., Ltd.	Private placement bonds purchase agreement		59,000,000		—

¹ No related party of the Company as at December 31, 2021.

As at December 31, 2021, the Company recognizes financial guarantee liability amounting to W95,553 million (W79,578 million in 2020) in conjunction with the above.

Details of assets pledged as collateral to related parties as at December 31, 2021 and 2020 are as follows:

(in thousands of Korean won)	Details of assets pledged	2021				2020
		Carrying amount		Collateralized amount		Carrying amount		Collateralized amount
Kookmin Bank	Time deposits and others		173,000,000		167,000,000		173,000,000		167,000,000
	Bonds denominated in Korean won		21,183,449		20,000,000		23,384,069		20,000,000

As at December 31, 2021, the Company received securities amounting to W54,000 million (W52,000 million in 2020) as a collateral from Kookmin bank and the Company has W140,000 million (W140,000 million in 2020) of credit line such as loan agreement.

Details of unused loan commitments provided to the related parties as at December 31, 2021 and 2020, are as follows:

(In thousands of Korean won)	Details	Amounts
		2021		2020
KB Shinjasanaubo Fund	Purchase agreements of securities		—		880,000
KBTS Technology Venture Private Equity Fund	Purchase agreements of securities		176,000		1,056,000
KB Wise Star Private Real Estate Feeder Fund 1st	Purchase agreements of securities		19,000		19,000
KB-SJ Tourism Venture Fund	Purchase agreements of securities		—		500,000
KB-Brain KOSDAQ Scale-Up Fund	Purchase agreements of securities		—		3,750,000
KB SPROTT Renewable Private Equity Fund I	Purchase agreements of securities		3,817,225		3,817,225
KB-Stonebridge Secondary Private Equity Fund	Purchase agreements of securities		1,594,000		5,382,000
KB Global Platform Fund	Purchase agreements of securities		3,200,000		8,600,000
KB-UTC Inno-Tech Venture Fund	Purchase agreements of securities		—		1,695,000
KB Global Infra Private Special Asset Fund No.5	Purchase agreements of securities		4,999,773		4,999,773
KB Global Infra Private Special Asset Fund No.6	Purchase agreements of securities		4,999,773		4,999,773

130

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

(In thousands of Korean won)	Details	Amounts
		2021		2020
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	Purchase agreements of securities		8,304,000		12,150,000
KB BMO senior loan private special asset fund 2	Purchase agreements of securities		18,239		4,290,235
KB New Deal Innovation Fund	Purchase agreements of securities		8,000,000		—
KB Digital Platform Fund	Purchase agreements of securities		45,500,000		—
KB-SOLIDUS Healthcare Investment Fund	Purchase agreements of securities		4,900,000		—
Paramark KB Fund I	Purchase agreements of securities		9,320,000		—
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15	Purchase agreements of securities		5,645,131		—
KB-KTB Technology Venture Fund	Purchase agreements of securities		8,000,000		—

The Company received credit card commitment amounting to W21,000 million(W14,000 million in 2020) from Kookmin Card Co.,Ltd. as at December 31, 2021.

Debt instruments purchased or sold via the Company by the related party for the years ended December 31, 2021 and 2020, are as follows.

(in thousands of Korean won)	2021
	Sale		Purchase 1
Kookmin Bank		9,642,170,271		9,005,606,675
KB Life Insurance Co., Ltd.		272,656,940		88,646,788
KB Insurance Co., Ltd		853,998,306		446,196,491
KB Kookmin Card Co., Ltd.		—		40,000,000
KB Capital Co., Ltd.		—		130,000,000

¹ Debt instruments issued by the related party and purchased by the Company for the year ended December31, 2021, are included.

(in thousands of Korean won)	2020
	Sale		Purchase 1
KB Financial Group Inc.		—		20,000,000
Kookmin Bank		14,312,409,201		14,548,227,447
KB Life Insurance Co., Ltd.		388,194,034		145,858,941
KB Insurance Co., Ltd		1,850,829,401		984,767,090
KB Kookmin Card Co., Ltd.		—		220,000,000
KB Capital Co., Ltd.		—		180,000,000

¹  Debt instruments issued by the related party and purchased by the Company for the year ended December31, 2020, are included.

The key management includes registered or unregistered directors, members of BOD, CFO, person in charge for internal audit and their compensation for the years ended December 31, 2021 and 2020, is as follows:

(in thousands of Korean won)	2021		2020
Short-term salaries		9,493,422		11,637,951
Post-employment benefits		579,895		578,651
Share-based payment		16,001,106		6,658,506
		26,074,423		18,875,108

131

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

42. Supplemental Cash Flow Information

Adjustments for non-cash items of cash flows from operating activities for the years ended December 31, 2021 and 2020, consist of the following:

(in thousands of Korean won)	2021			2020
Interest income		(737,552,790	)		(728,642,093	)
Interest expenses		212,429,225			239,099,808
Dividend income and distribution income		(43,442,376	)		(39,104,346	)
Tax expenses		214,559,285			138,176,141
Gains on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		(258,480,104	)		(429,533,160	)
Losses on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		409,884,788			442,764,856
Gains on valuation of financial assets (liabilities) designated at FVTPL		(602,482,365	)		(631,983,229	)
Losses on valuation of financial assets (liabilities) designated at FVTPL		170,830,700			339,572,870
Gains on valuation of derivative financial assets (liabilities)		(1,522,684,712	)		(1,270,915,293	)
Losses on valuation of derivative financial assets (liabilities)		1,657,639,495			1,403,355,352
Gains or losses on disposal of financial assets at FVOCI		10,811,918			(9,379,901	)
Foreign currency translations		(56,312,965	)		138,251,861
Provision for allowances for loan losses		5,378,133			18,913,348
Gains on disposal of investments in associates and subsidiaries		(12,324,064	)		(11,793,641	)
Losses on disposal of investments in associates and subsidiaries		3,817,216			26,056,081
Impairment loss on investments in associates and subsidiaries		7,884,327			42,945,323
Depreciation		41,908,757			46,755,247
Amortization		22,148,402			17,726,028
Others		72,730,119			83,630,340
		(403,257,011	)		(184,104,408	)

Changes in operating assets and liabilities of cash flows for the years ended December 31, 2021 and 2020, consist of the following:

(in thousands of Korean won)	2021			2020
Deposits in financial institutions		(73,947,140	)		(136,267,872	)
Financial assets required to be mandatorily measured at FVTPL		(632,998,030	)		(5,283,547,060	)
Derivative financial instruments/liabilities (net)		(37,400,973	)		(58,540,806	)
Loans measured at amortised cost		(425,945,416	)		(187,115,298	)
Other assets		3,122,483,949			(4,476,264,985	)
Deposit liabilities		699,427,267			3,360,215,715
Financial liabilities required to be mandatorily measured at FVTPL		978,686,697			(794,598,016	)
Financial liabilities designated at FVTPL		(185,467,288	)		(2,662,546,777	)
Defined benefit obligation		(16,828,530	)		(18,359,951	)
Securities sold under repurchase agreements		(1,240,816,274	)		1,741,806,861
Other liabilities		(3,218,157,158	)		4,365,150,777
		(1,030,962,896	)		(4,150,067,412	)

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KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2021 and 2020

Changes in liabilities of cash flows from financing activities for the years ended December 31, 2021 and 2020, consist of the following:

	2021
(in thousands of Korean won)	Borrowings		Debentures		Guarantee deposits			Lease liabilities			Total
Beginning balance (net)		12,498,622,381		1,797,596,969		10,782,775			143,799,238			14,450,801,363
Cash Transactions		181,842,566		538,296,970		(3,575,926	)		(31,849,047	)		684,714,563
Non-cash transactions		676,224		4,285,542		113,072			11,450,193			16,525,031
Ending balance(net)		12,681,141,171		2,340,179,481		7,319,921			123,400,384			15,152,040,957

	2020
(in thousands of Korean won)	Borrowings			Debentures		Guarantee deposits			Lease liabilities			Total
Beginning balance (net)		9,298,438,121			1,496,984,672		13,699,502			152,465,425			10,961,587,720
Cash Transactions		3,201,960,425			300,000,000		(3,172,060	)		(23,241,771	)		3,475,546,594
Non-cash transactions		(1,776,165	)		612,297		255,333			14,575,584			13,667,049
Ending balance(net)		12,498,622,381			1,797,596,969		10,782,775			143,799,238			14,450,801,363

43. Non-cash Transactions

Significant non-cash transactions from investing activities and financing activities which are not included in separate statements of cash flows for the years ended December 31, 2021 and 2020, are as follows:

(in thousands of Korean won)	2021		2020
Increase due to gains on valuation of financial assets at FVOCI		13,976,607		46,043,297

133

Independent Auditors’ Review Report on Internal Control over Financial Reporting

(Based on a report originally issued in Korean)

To the Chief Executive Officer of

KB Securities Co., Ltd.:

We have reviewed the accompanying management’s report on the effectiveness of Internal Control over Financial Reporting (“ICFR”) of KB Securities Co., Ltd. (“the Company”) as of December 31, 2021. The Company’s management is responsible for designing and maintaining effective ICFR and for its assessment of the effectiveness of the ICFR. Our responsibility is to review management’s assessment and issue a report based on our review. In the accompanying report of management’s assessment of the ICFR, the Company’s management stated: “Based on the assessment results, Chief Executive Officer and ICFR Officer believe that the Company’s ICFR, as at December 31, 2021, is designed and operated effectively, in all material respects, in conformity with ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’.”

We conducted our review in accordance with the ICFR Review Standards, issued by the Korean Institute of Certified Public Accountants. Those Standards require that we plan and perform the review to obtain assurance of a level less than that of an audit as to whether the management’s report on the effectiveness of ICFR is free of material misstatement. Our review consists principally of obtaining an understanding of the Company’s ICFR, inquiries of the Company personnel about the details of the report, and tracing to related documents we considered necessary in the circumstances.

A company’s ICFR is a system to monitor and operate those policies and procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Korean International Financial Reporting Standards. Because of its inherent limitations, however, ICFR may not prevent or detect a material misstatement of the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our review, nothing has come to our attention that the management’s report on the effectiveness of ICFR as of December 31, 2021 is not prepared, in all material respects, in accordance with ‘Best Practice Guideline of Internal Control over Financial Reporting’.

Our review is based on the Company’s ICFR as of December 31, 2021. We did not review the Company’s ICFR subsequent to December 31, 2021. This report has been prepared for Korean regulatory purposes, pursuant to the Act on External Audit of Stock Companies, Etc. and may not be appropriate for other purposes or for other users.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

March 7, 2022

134

Report on the Effectiveness of Internal Control over Financial Reporting

(English Translation of a Report Originally Issued in Korean)

To the Shareholders, Board of Directors and Audit Committee of

KB Securities Co., Ltd.

We, as the Chief Executive Officer (“CEO”) and the Internal Control over Financial Reporting (“ICFR”) Officer of KB Securities Co., Ltd. (the “Company”), assessed the effectiveness of the design and operation of the Company’s Internal Control over Financial Reporting for the year ended December 31, 2021.

The Company’s management, including ourselves, is responsible for designing and operating ICFR. We assessed the design and operating effectiveness of ICFR in the prevention and detection of an error or fraud which may cause material misstatements in the preparation and disclosure of reliable financial statements.

We designed and operated ICFR in accordance with ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’ established by the Operating Committee of Internal Control over Financial Reporting in Korea (the “ICFR Committee”). And we conducted an evaluation of ICFR based on ‘Best Practice Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting’ established by the ICFR Committee.

Based on the assessment results, we believe that the Company’s ICFR, as at December 31, 2021, is designed and operated effectively, in all material respects, in conformity with ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’.

We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statement which cause material misunderstandings, and we have reviewed and verified this report with sufficient due care.

February 17, 2022

Park, Jung Lim, Chief Executive Officer

Han, Jeong Ho, Internal Accounting Controller Officer

135