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 2023

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 2022

On March 7, 2023, KB Financial Group Inc. disclosed audit reports of KB Securities Co., Ltd. (“KB Securities”), its wholly-owned subsidiary, for fiscal year 2022 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, 2022 and 2021 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 2022.

Exhibit 99.2: An English-language translation of the Separate Audit Report of KB Securities for FY 2022.

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 7, 2023	By: /s/ Scott Y. H. Seo
	(Signature)
	Name: Scott Y. H. Seo
	Title: Senior Executive Vice President and Chief Finance Officer

Exhibit 99.1

KB SECURITIES CO., LTD.

and Subsidiaries

Consolidated Financial Statements

December 31, 2022 and 2021

(With Independent Auditors’ Report Thereon)

KB SECURITIES CO., LTD. and Subsidiaries

Index

December 31, 2022 and 2021

	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		9~143

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, 2022 and 2021, 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, 2022 and 2021, 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.

Other Matter

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.

1

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.

• 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.

2

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

March 7, 2023

This report is effective as of March 7, 2023, 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, 2022 and 2021

(in Korean won)	Notes	2022		2021
Assets
Cash and deposits	5,36,37,38		4,537,576,193,522		3,834,048,674,705
Financial assets at fair value through profit or loss	6,36,37,38		29,549,677,943,839		34,182,334,301,081
Derivative financial assets	7,36,37,38,39		1,724,310,257,882		817,518,307,305
Financial assets at fair value through other comprehensive income	8,36,37,38		4,800,554,237,532		3,839,877,806,177
Investments in associates	9		300,342,789,927		137,621,441,023
Financial assets measured at amortised cost	10,36,37,38,39		8,907,503,612,196		7,186,208,182,322
Property and equipment	11,40		270,030,366,596		210,755,849,488
Investment properties	12		560,420,145,484		1,147,746,979,871
Intangible assets	13		211,868,606,120		185,272,286,741
Current tax assets			9,152,521,243		4,948,083,454
Deferred tax assets	35		1,289,260,036		—
Other financial assets	14,36,37,38,39		2,687,932,513,517		3,661,821,844,639
Other assets	15		256,750,883,711		50,892,344,080
Disposal group classified as held for sale	47		—		171,749,315,076
Total assets			53,817,409,331,605		55,430,795,415,962
Liabilities
Deposit liabilities	16,36,37,38		6,799,233,076,405		8,391,075,182,612
Financial liabilities at fair value through profit or loss	6,36,37,38,39		12,171,579,477,522		11,986,846,570,347
Derivative financial liabilities	7,36,37,38,39		2,322,476,090,220		874,641,742,107
Borrowings	17,36,37,38,39		23,523,195,867,589		24,649,381,850,266
Current tax liabilities			4,654,028,924		2,196,195,146
Net defined benefit liabilities	18		55,507,137,949		55,619,888,673
Deferred tax liabilities	35		58,351,713,528		16,878,468,859
Provisions	19,48		150,965,405,944		106,123,390,303
Other financial liabilities	20,36,37,38,39,40		2,389,541,471,052		3,484,650,270,838
Other liabilities	21		473,114,503,977		427,826,239,552
Total liabilities			47,948,618,773,110		49,995,239,798,703
Equity
Share capital	22		1,493,102,120,000		1,493,102,120,000
Hybrid securities	23		506,130,312,000		—
Other paid-in capital	24		1,478,687,978,420		1,478,687,978,420
Retained earnings	25		2,038,449,776,857		2,247,970,109,154
Other components of equity	26		323,302,638,251		204,500,516,202
Other Comprehensive Income for the disposal group classified as held for sale	47		—		7,670,746,146
Equity attributable to shareholders of the Parent Company			5,839,672,825,528		5,431,931,469,922
Non-controlling interest			29,117,732,967		3,624,147,337
Total equity			5,868,790,558,495		5,435,555,617,259
Total liabilities and equity			53,817,409,331,605		55,430,795,415,962

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, 2022 and 2021

(in Korean won)	Notes	2022		2021
Operating income
Fee and commission income	27		939,703,781,530		1,144,248,378,743
Gain on valuation and disposal of financial instruments	28		10,675,519,816,357		5,550,641,843,434
Interest income	29		1,160,030,185,663		826,686,736,401
Interest income from financial instruments at FVTPL			543,218,721,819		402,414,577,880
Interest income in applying of effective interest rate			616,811,463,844		424,272,158,521
Gain on valuation and disposal of financial assets measured at amortised costs	30		8,462,529,335		7,839,928,487
Gain on foreign currency transactions	31		1,263,406,410,939		793,253,127,269
Other operating income	32		222,899,833,390		226,880,484,789
			14,270,022,557,214		8,549,550,499,123
Operating expenses
Fee and commission expense	27		194,467,365,522		186,868,006,666
Loss on valuation and disposal of financial instruments	28		11,053,322,410,655		5,581,543,512,545
Interest expense	29		618,109,328,244		268,260,223,608
Loss on valuation and disposal of financial assets measured at amortised costs	30		43,726,891,106		22,862,121,814
Loss on foreign currency transactions	31		1,265,719,846,490		744,492,109,236
Selling and administrative expenses	33		822,594,096,508		855,262,728,540
Other operating expenses	32		27,087,370,821		68,987,483,624
			14,025,027,309,346		7,728,276,186,033
Operating profit			244,995,247,868		821,274,313,090
Non-operating income	34		100,717,218,807		48,129,525,832
Non-operating expenses	34		83,385,613,616		51,360,194,503
Profit before income tax			262,326,853,059		818,043,644,419
Income tax expense	35		67,499,190,770		217,752,228,397
Profit for the year			194,827,662,289		600,291,416,022
Profit attributable to:
Shareholders of the Parent Company			193,697,356,041		600,439,340,042
Non-controlling interest			1,130,306,248		(147,924,020	)

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, 2022 and 2021

(in Korean won)	Notes		2022			2021
Profit for the year				194,827,662,289			600,291,416,022
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		8,26		27,415,825,649			27,779,973,437
Fair value changes on financial liabilities designated at fair value due to own credit risk		6,26		38,855,084,533			13,714,607,803
Remeasurements of the net defined benefit liabilities		18,26		2,738,991,283			(2,237,583,109	)
Revaluation of property and equipment		26		35,572,043,723			—
Items that may be subsequently reclassified to profit or loss
Net losses on valuation of debt instrument at fair value through other comprehensive income		8,26		(10,149,158,628	)		(17,213,330,222	)
Share of other comprehensive income(loss) of associates		9,26		(2,562,095,184	)		23,492,222
Gains(Losses) on hedge of net investments in foreign operations		7,26		(5,750,385,868	)		(13,082,538,140	)
Exchange difference on translation of foreign operations		26		24,454,947,631			25,060,921,541
Other comprehensive income for the year, net of tax				110,575,253,139			34,045,543,532
Total comprehensive income for the year				305,402,915,428			634,336,959,554
Total comprehensive income for the year attributable to:
Shareholders of the Parent Company				305,090,051,043			634,250,019,566
Non-controlling interest				312,864,385			86,939,988

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, 2022 and 2021

	Attributable to the Shareholder of the Parent Company
	Share Capital		Hybrid Securities		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, 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 income 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
Balance at January 1, 2022		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
Issuance of hybrid securities		—		506,130,312,000		—			—			—			—			506,130,312,000			—			506,130,312,000
Dividends of hybrid securities		—		—		—			(3,479,007,437	)		—			—			(3,479,007,437	)		—			(3,479,007,437	)
Dividends		—		—		—			(400,000,000,000	)		—			—			(400,000,000,000	)		—			(400,000,000,000	)
Changes in scope of consolidation		—		—		—			—			—			—			—			25,180,721,245			25,180,721,245
Revaluations of property and equipments		—		—		—			261,319,099			(261,319,099	)		—			—			—			—
Total comprehensive income
Profit for the year		—		—		—			193,697,356,041			—			—			193,697,356,041			1,130,306,248			194,827,662,289
Gains on equity instruments at fair value through other comprehensive income		—		—		—			—			17,266,667,021			—			17,266,667,021			—			17,266,667,021
Fair value changes on financial liabilities designated at fair value due to own credit risk		—		—		—			—			38,855,084,533			—			38,855,084,533			—			38,855,084,533
Share of other comprehensive income of associates		—		—		—			—			(2,562,095,184	)		—			(2,562,095,184	)		—			(2,562,095,184	)
Revaluation of property and equipment		—		—					—			35,572,043,723			—			35,572,043,723			—			35,572,043,723
Remeasurements of net defined benefit liabilities		—		—		—			—			2,738,991,283			—			2,738,991,283			—			2,738,991,283
Gains on hedge of net investments in foreign operations		—		—		—			—			(5,750,385,868	)		—			(5,750,385,868	)		—			(5,750,385,868	)
Exchange difference on translation of foreign operations		—		—		—			—			25,272,389,494			—			25,272,389,494			(817,441,863	)		24,454,947,631
Other
Disposal of disposal group classified as held for sale		—		—		—			—			7,670,746,146			(7,670,746,146	)		—			—			—
Balance at December 31, 2022		1,493,102,120,000		506,130,312,000		1,478,687,978,420			2,038,449,776,857			323,302,638,251			—			5,839,672,825,528			29,117,732,967			5,868,790,558,495

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, 2022 and 2021

(in Korean won)	Notes	2022			2021
Cash flows from operating activities
Cash generated from operating activities
Profit for the year			194,827,662,289			600,291,416,022
Adjustment for non-cash items	43		(572,686,798,061	)		(417,312,391,023	)
Changes in operating assets and liabilities	43		(1,834,957,050,037	)		(1,734,309,882,567	)
			(2,212,816,185,809	)		(1,551,330,857,568	)
Interest received			1,260,692,425,883			867,556,903,180
Interest paid			(562,087,561,759	)		(262,543,247,334	)
Dividends received			55,836,918,623			48,254,346,434
Income taxes paid			(204,765,128,344	)		(211,033,728,541	)
Net cash used in operating activities			(1,663,139,531,406	)		(1,109,096,583,829	)
Cash flows from investing activities
Decrease in long-term deposit held by bank			485,107,462,569			445,606,747,492
Acquisition of financial assets at fair value through other comprehensive income			(5,425,171,579,537	)		(4,678,422,757,635	)
Disposal of financial assets at fair value through other comprehensive income			4,476,887,646,352			4,731,871,208,238
Acquisition of investments of associates	9		(208,688,630,790	)		(238,418,796,834	)
Disposal of investment of associates	9		42,822,194,202			94,278,366,786
Net cash flows from the acquisition of subsidiaries	9		423,141,248,509			(4,020,649,275	)
Net cash flows from the disposal of subsidiaries	9		(23,627,667,983	)		—
Acquisition of property and equipment	11		(29,570,584,652	)		(23,586,057,672	)
Disposal of property and equipment	11		4,951,169,480			683,373,612
Acquisition of intangible assets	13		(44,984,648,728	)		(36,856,058,060	)
Disposal of intangible assets	13		1,019,665,000			2,086,788,000
Acquisition of investment properties	12		(1,604,544,643	)		—
Disposal of investment properties	12		568,221,998,917			58,071,100,474
Disposal of assets held for sale			180,716,585,190			—
Others			(21,285,090,533	)		(26,298,576,016	)
Net cash provided by investing activities			427,935,223,353			324,994,689,110
Cash flows from financing activities
Increase in borrowings	43		1,763,878,273,662			1,243,604,095,870
Increase(decrease) in guarantee deposit liabilities	43		497,469,282			(816,464,491	)
Dividends paid	25		(400,000,000,000	)		(200,000,000,000	)
Redemption of principal elements of lease payments	43		(30,267,166,265	)		(32,271,499,249	)
Issuance of hybrid securities	23		506,130,312,000			—
Dividends of hybrid securities	25		(3,437,500,000	)		—
Increase in share capital			—			3,218,525,903
Increase(decrease) in other liabilities	43		(28,794,866,335	)		23,956,770,027
Net cash provided by financing activities			1,808,006,522,344			1,037,691,428,060
Effect of exchange rate changes on cash and cash equivalents			(4,027,082,739	)		1,379,611,661
Net increase in cash and cash equivalents			568,775,131,552			254,969,145,002
Cash and cash equivalents at the beginning of the year	5		675,854,019,618			421,397,220,746
Cash and cash equivalents at the end of the year	5		1,244,629,151,170			676,366,365,748
Cash and cash equivalents from the disposal group classified as held for sale	47		—			512,346,130
Cash and cash equivalents in consolidated statement of financial position as at the end of the year	5		1,244,629,151,170			675,854,019,618

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, 2022 and 2021

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 97 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 W1,493,102 million as at December 31, 2022.

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, 2022, the Parent Company has 104 branch offices in Korea and one overseas branch office.

Details of the consolidated subsidiaries as at December 31, 2022 and 2021, are as follows:

	2022
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)
	PT. KB Valbury Sekuritas		65.00	Indonesia	December	Investment, advisory
	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
	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		98.51	Korea	December	Funds
	DAOL KTB Aircraft Private Investment Trust No.21-1		99.61	Korea	December	Funds
	Vestas General Private Real Estate Fund Investment Trust No. 38		54.92	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
	Hanwha US Equity Strategy Private Real Estate Fund 3		99.95	Korea	December	Funds
	GVA Europe Pre-IPO Private Investment Trust No.1		100.00	Korea	December	Funds
	LIFE Global Reits Pre-IPO General Private Investment Trust 1		99.50	Korea	December	Funds

9

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2022
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	KB KBSTAR US Short-Term IG Corporate Bond ETF		59.88	Korea	December	Funds
	Able Gwonseon 1st 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
	Songdo PFive 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Gimpo 1st 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
	Newstar Believe 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 Sky 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
	Able Gasan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able PT 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Plus 1st 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
	KB Osansegyo 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Mapo 2nd 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
	Able Beomeo-one Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Infra 2nd 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 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able MK 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Gimpo 4th Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	HD Value 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Powerplay 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Wonsi 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization

10

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2022
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	Able Dosan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Gimpopoongmoo Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Maseok 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	TW Seocho 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	TW Seocho 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Wave 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Lamdamine 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Next 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Dongil 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Shiny 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Enerbil 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	YSMC 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	HJ Galaxy 3rd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB SmartSchool 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Bighouse 7th Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Energy 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Gyeongsan Logis 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Stoke 2nd Corp 1		—	Korea	December	Asset-backed securitization
	KB Samyoung Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB Global Contents Private Investment Fund 1		27.27	Korea	December	Other financial
	Newstar Seongnam 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KPS Sihwa 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	KB NY 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	GDIC 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar NRB First Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Dongtan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Gimpo 5th Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Cassiopeia 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Banpo 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Banpo 2nd Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Able Gyeonggi Gwangju 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Newstar Byeongjeom 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Piggarden 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization
	Mangrove Feeder Fund		92.88	Cayman Islands	December	Funds

11

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2022
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
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
LB Ireland Private Real Estate Investment Trust 8	Beckett Acquisition Limited		100.00	Ireland	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
Vestas General 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
PT. KB Valbury Sekuritas	PT. Valbury Capital Management		79.00	Indonesia	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%.

	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 General 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 General 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
	Hanwha US Equity Strategy Private Real Estate Fund 3		99.95	Korea	December	Funds

12

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2021
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	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
	Intgreen 1st Inc. 1		—	Korea	December	Asset-backed securitization
	Able Gasan 1st Co., Ltd. 1		—	Korea	December	Asset-backed securitization

13

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2021
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
	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
	KB Illite 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
LB Ireland Private Real Estate Investment Trust 8	Beckett Acquisition Limited		100.00	Ireland	December	Real-estate Investment

14

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2021
Investor	Investee	Percentage of ownership (%)		Location	Date of financial statements	Industry
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 General 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%.

Summarized financial information of major subsidiaries as at and for the years ended December 31, 2022 and 2021, is as follows:

(in thousands of Korean won)	December 31, 2022				2022
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
KBFG Securities America Inc.		21,974,646		3,932,730		3,376,122		(541,989	)		667,213
KB Securities Hong Kong Ltd.		267,947,007		28,049,102		20,468,272		(2,268,070	)		13,435,805
KB Securities Vietnam Joint Stock Company		538,755,846		325,475,504		67,884,410		12,933,143			18,583,701
KB FINA Joint Stock Company		12,636,459		70,685		275,791		(2,614,764	)		(2,098,000	)
PT. KB Valbury Sekuritas		117,639,923		43,149,901		20,385,908		5,827,047			5,827,047
KB Star Galaxy Towers REIT 1		—		—		2,553,341		(10,206,009	)		(10,206,009	)
Star Galaxy S.Comm 1		—		—		—		(6,080,923	)		(6,080,923	)
Star Galaxy GP SRL 1		—		—		—		—			—
JB New Jersey Private Real Estate Fund 1		16,374,263		13,853		161,708		242,976			242,976
Heungkuk Global Highclass Private Real Estate Trust 23 1		—		—		2,839		(865,715	)		(865,715	)
DGB General Private Real Estate Investment Trust No.8 1		—		—		232,303		216,175			216,175
LB Irealand Private Real Estate Investment Trust 8		71,328,058		4,377,904		4,112,389		4,154,362			4,056,902
MS Sejong 4th Co., Ltd. 1		—		—		125,771		110,439			110,439
KB UK Center 1st Co., Ltd. 1		—		—		372,353		(1,149,601	)		(1,149,601	)
Mangrove Feeder Fund		76,109,836		63,422		951,672		(6,940,076	)		(1,459,706	)

15

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	December 31, 2022				2022
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Mangrove Master Fund		88,568,284		12,377,851		716,348		(6,874,702	)		(1,421,334	)
GH Real Estate I LP		26,871,702		908,269		—		(174,061	)		(1,887	)
Global Investment Opportunity Limited		219,427		—		5		(17,868	)		(2,232	)
Beckett Acquisition Limited		145,620,628		139,138,011		6,217,847		(1,688,563	)		(1,627,346	)
Able NJ DSM Investment REIT		19,268,400		135,044		51,041		106,020			1,343,942
ABLE NJ DSM LLC		36,612,465		34,955,598		3,800,646		415,725			500,080
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		21,573,206		717,884		2,571,773		686,191			686,191
DAOL KTB Aircraft Private Investment Trust No.21-1		29,336,296		1,070		2,605,931		2,575,751			2,575,751
KB Digital Innovation&growth New Technology Business Investment Fund		9,059,924		86,877		398,454		(133,573	)		(133,573	)
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		29,462,632		132,329		1,419,188		(4,169,037	)		(4,169,037	)
Able Gwonseon 1st Co., Ltd.		11,028,210		11,099,117		877,404		117,500			117,500
AJH 3rd Co., Ltd. 1		—		—		152,869		16,875			16,875
Paradise Yeongjong 2nd Co., Ltd.		19,335,720		20,595,641		834,653		17,276			17,276
Vestas General Private Real Estate Fund Investment Trust No. 38		196,545,423		1,274,568		22,929,571		11,624,590			12,931,030
Lumen International Developments		179,588,369		159,002,766		62		3,038,503			2,075,589
VREF Shaftesbury ScSp		388,861,652		246,797,825		18,142,889		3,035,342			(3,764,987	)
Alpha Spain Real Estate Private Investment Trust 1 1		—		—		6,369,232		(1,884,823	)		(1,884,823	)
Korea Investment US Amazon Logistics Private Real Estate Investment Trust NO. 1 1		—		—		167,264		(843,255	)		(843,255	)
GVA Europe Real Estate Investment Trust No.2 1		—		—		12,547,701		8,153,256			8,153,256
Newstar IP Co., Ltd.		50,393,072		51,300,282		3,338,966		(7,607,556	)		(7,607,556	)
Enewstay 1st Co., Ltd. 1		—		—		313,332		(13,149	)		(13,149	)
Newstar Panorama 1st Co., Ltd. 1		—		—		454,498		103,967			103,967
Newstar Papyrus Co., Ltd. 1		—		—		906,586		158,694			158,694
SJ Jongno 1st Co., Ltd. 1		—		—		50		4,370,130			4,370,130
KB Wise Star Real Estate Feeder Fund 2 1		—		—		360		328,331			328,331
KB Wise Star Jongno Tower Real Estate Master Fund 1		—		—		10,322,976		(979,221	)		(979,221	)
Newstar Ds 1st Co., Ltd 1		—		—		203,425		(168,254	)		(168,254	)
Newstar Ds 2nd Co., Ltd 1		—		—		2,290,393		(322,231	)		(322,231	)
JB Dry Street Private Fund 1		567,526		9,320		107,918		(100,405	)		(100,405	)
JB Australia108 Private Fund 1		390,395		3,652		74,309		(80,466	)		(80,466	)
JB Forge Private Fund 1		279,542		2,956		53,220		(50,479	)		(50,479	)
JB Hall Street Private Fund 1		528,967		3,391		100,727		(87,747	)		(87,747	)
JB Margaret Street Private Fund 1		149,507		706		28,448		(25,134	)		(25,134	)
LB UK Private Real Estate Investment Trust No.18 1		—		—		627,413		1,419,192			1,866,678
LB UK Private Real Estate Investment Trust No.19 1		—		—		340,636		449,754			592,235
Hillswood Finco Ltd. 1		—		—		690,408		690,089			207,470
Hillswood Holdings Ltd. 1		—		—		—		10,952			(13,302	)
Hillswood Holding Property Unit Trust 1		—		—		—		780,929			(253,550	)
Hillswood Property Unit Trust 1		—		—		3,231,826		695,416			1,268,691
Hanwha US Equity Strategy Private Real Estate Fund 3		3,326,142		98,615		5,657,760		6,112,708			13,952,708
PT. Valbury Capital Management		1,202,897		356,410		186,815		(727,509	)		(727,509	)
Able Gamsam 1st Co., Ltd. 1		—		—		1,477,943		(118,996	)		(118,996	)
Songdo PFive 2nd Co., Ltd.		116,595,449		115,764,831		6,851,381		(468,239	)		(468,239	)
Newstar Gimpo 1st Co., Ltd.		26,658,736		26,745,174		1,262,574		(22,685	)		(22,685	)
Able Gongpyeong 1st Co., Ltd.		15,400,321		15,369,078		714,177		(60,621	)		(60,621	)

16

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	December 31, 2022				2022
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Able Chowall 1st Co., Ltd.		16,538,631		16,547,285		1,268,946		206,774			206,774
FN Gasan 1st Co., Ltd.		3,632,778		3,481,433		255,378		153,254			153,254
Newstar Believe Co., Ltd.		6,159,745		6,456,631		230,276		(33,039	)		(33,039	)
Able Electronics 1st Co., Ltd. 1		—		—		1,057,606		128,001			128,001
KB Echo 1st Co., Ltd. 1		—		—		249,684		42,039			42,039
ABR Joongang2 1st Co., Ltd.		20,339,878		20,049,306		1,328,288		173,259			173,259
KB Tongyoung 1st Co., Ltd.		23,382,801		23,663,781		1,404,597		(36,954	)		(36,954	)
Able Sky 1st Co., Ltd.		30,992,071		30,786,965		2,036,676		667,791			667,791
Able Poongdong 1st Co., Ltd.		2,250,844		2,230,755		535,360		37,955			37,955
Able Sewoon Co., Ltd.		42,324,593		42,092,589		1,871,110		1,350,270			1,350,270
KB Infra 1st Co., Ltd. 1		—		—		495,506		303,769			303,769
Able Gasan 1st Co., Ltd.		56,261,340		56,469,935		2,248,974		(159,209	)		(159,209	)
Able PT 1st Co., Ltd.		5,357,328		5,672,357		410,380		(155,986	)		(155,986	)
JOSH Bujeon 1st Co., Ltd. 1		—		—		749,518		161,958			161,958
Newstar Plus 1st Co., Ltd.		16,425,333		16,155,277		946,049		(21,792	)		(21,792	)
KB MyeongJi 1st Co., Ltd.		14,845,247		14,747,007		1,133,331		51,334			51,334
Able Dangjin 1st Co., Ltd.		21,240,500		20,722,700		2,039,533		601,973			601,973
KB Osansegyo 2nd Co., Ltd.		8,331,040		8,332,477		367,678		18,856			18,856
Able Hyeongok Co., Ltd. 1		—		—		435,511		76,408			76,408
KB Mapo 2nd Co., Ltd.		9,660,645		10,558,924		600,086		(1,017,998	)		(1,017,998	)
GDIC 1st Co., Ltd. 1		—		—		687,659		113,676			113,676
Able Wonchang 1st Co., Ltd.		7,413,923		7,460,083		593,202		180,359			180,359
Zitaress 1st Co., Ltd.		30,459,310		30,637,401		2,481,796		554,295			554,295
KB PF 3rd Co., Ltd. 1		—		—		60,371		(16,590	)		(16,590	)
Able Beomeo-one Co., Ltd.		31,314,357		31,528,461		1,740,919		(149,114	)		(149,114	)
Able Yucheon 1st Co., Ltd. 1		—		—		1,189,618		70,338			70,338
KB Infra 2nd Co., Ltd.		25,913,932		25,600,000		3,554,664		2,449,424			2,449,424
KB Illite 1st. Co., Ltd. 1		—		—		62,662		42,928			42,928
Newstar Sina Co., Ltd.		26,169,067		26,777,858		3,461,385		(239,635	)		(239,635	)
KB Gold 1st Co., Ltd.		19,649,512		19,634,471		1,052,179		(24,389	)		(24,389	)
Inspire Gold 2nd Co., Ltd.		6,511,331		6,724,045		414,404		81,999			81,999
Able MK 1st Co., Ltd.		16,028,254		16,129,707		542,536		(62,319	)		(62,319	)
Yeoksam The Gallery KB 1st Co., Ltd. 1		—		—		247,250		107,440			107,440
Able Hagunri 2nd Co., Ltd. 1		—		—		219,746		(222,462	)		(222,462	)
Able Hagunri 1st Co., Ltd. 1		—		—		607,111		(461,916	)		(461,916	)
Newstar Gimpo 4th Co., Ltd.		7,454,744		7,463,615		1,563,374		(8,881	)		(8,881	)
Mobius 1st Co., Ltd. 1		—		—		3,492,403		(1,471,211	)		(1,471,211	)
Able Wonsi 1st Co., Ltd.		14,559,454		15,357,586		613,555		(798,134	)		(798,134	)
HD Value 1st Co., Ltd.		103,745,143		103,754,543		3,401,791		(9,410	)		(9,410	)
Able iFood Co., Ltd. 1		—		—		192,877		(67,044	)		(67,044	)
Powerplay 1st Co., Ltd.		936,550		648,510		315,472		288,040			288,040
Able Dosan 1st Co., Ltd.		30,776,101		30,561,669		3,121,893		214,432			214,432
Newstar Gimpopoongmoo Co., Ltd.		12,963,604		12,803,820		831,422		159,774			159,774
Able Eunhwasam 1st Co., Ltd. 1		—		—		95,517		(593,461	)		(593,461	)
Able Maseok 1st Co., Ltd.		37,001,664		37,302,631		1,797,458		(300,967	)		(300,967	)
TW Seocho 1st Co., Ltd.		127,729,286		127,959,304		7,129,984		(230,020	)		(230,020	)
TW Seocho 2nd Co., Ltd.		31,151,796		31,501,706		2,433,454		(349,911	)		(349,911	)
HJ Galaxy 2nd Co., Ltd. 1		—		—		4		(2,469,661	)		(2,469,661	)
HJ Galaxy 1st Co., Ltd. 1		—		—		4		(2,469,661	)		(2,469,661	)
Newstar Wave 1st Co., Ltd.		82,544,796		83,330,039		2,943,812		(785,244	)		(785,244	)
Lamdamine 1st Co., Ltd.		116,843,965		116,990,938		5,880,378		(146,983	)		(146,983	)
Able Cheongdam 1st Co., Ltd. 1		—		—		38,500		(1,535,710	)		(1,535,710	)
Able Next 1st Co., Ltd.		19,966,621		20,958,379		646,331		(991,759	)		(991,759	)
Able Dongil 1st Co., Ltd.		34,259,463		34,383,502		1,046,244		(124,039	)		(124,039	)
KB Infra 3rd Co., Ltd. 1		—		—		20,360,506		546,464			546,464

17

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	December 31, 2022				2022
Name of subsidiary	Assets		Liabilities		Operating profit		Profit (loss) for the year			Total comprehensive income(loss)
Newstar Shiny 1st Co., Ltd.		11,617,906		11,814,211		3,251,029		(196,305	)		(196,305	)
Newstar Enerbil 1st Co., Ltd.		100,745,544		100,928,150		4,195,532		(182,607	)		(182,607	)
YSMC 1st Co., Ltd.		48,024,951		48,917,200		485,395		(892,251	)		(892,251	)
HJ Galaxy 3rd Co., Ltd.		46,923,255		46,693,790		2,153,728		229,463			229,463
KB SmartSchool 1st Co., Ltd.		19,882,283		20,346,849		830,186		(464,567	)		(464,567	)
Bighouse 7th Co., Ltd.		128,038,169		129,023,438		5,469,280		(985,271	)		(985,271	)
Newstar Energy 1st Co., Ltd.		141,323,880		146,942,708		4,235,971		(5,618,829	)		(5,618,829	)
Gyeongsan Logis 1st Co., Ltd.		5,699,700		5,142,180		1,109,798		557,521			557,521
Stoke 2nd Corp		68,517,144		67,873,346		3,617,438		643,797			643,797
KB Samyoung Co., Ltd.		6,127,059		6,100,421		253,579		26,637			26,637
KB Global Contents Private Investment Fund		16,269,051		62,384		3,665		(293,332	)		(293,332	)
Able Sungsoo 1st Co., Ltd. 1		—		—		118,634		(307,677	)		(307,677	)
Newstar Seongnam 1st Co., Ltd.		19,861,686		19,568,965		1,269,626		292,711			292,711
KPS Sihwa 1st Co., Ltd.		111,513,923		107,944,392		8,827,790		3,569,530			3,569,530
KB Baegun 1st Co., Ltd. 1		—		—		91,672		(165,149	)		(165,149	)
KB NY 1st Co., Ltd.		89,697,004		91,404,086		2,057,296		(1,707,083	)		(1,707,083	)
GDIC 2nd Co., Ltd.		28,393,137		28,901,165		829,935		(508,029	)		(508,029	)
Newstar NRB First Co., Ltd.		23,379,924		25,188,216		959,720		(1,808,302	)		(1,808,302	)
Able Dongtan 1st Co., Ltd.		41,734,980		42,606,597		2,157,554		(871,617	)		(871,617	)
Galaxy properties SA 1		—		—		—		—			—
Newstar Gimpo 5th Co., Ltd.		738,430		2,219,448		3,306,120		(1,481,028	)		(1,481,028	)
Polar EH 1st Co., Ltd 1		—		—		—		—			—
Polar EH 2nd Co., Ltd 1		—		—		—		—			—
ABR Mareuk 1st Co., Ltd 1		—		—		—		—			—
Able Guwol 1st Co., Ltd. 1		—		—		—		—			—
Newstar Gimpo 2nd Co., Ltd. 1		—		—		—		—			—
Able Hyosung 1st Co., Ltd. 1		—		—		—		—			—
Intgreen 1st Inc. 1		—		—		—		—			—
Able Pocheon 1st Co., Ltd. 1		—		—		—		—			—
Newstar Seotan Co., Ltd. 1		—		—		—		—			—
Unbroken 1st Co., Ltd. 1		—		—		—		—			—
Able Yongdap 1st Co., Ltd. 1		—		—		—		—			—
Inspire Gold 1st Co., Ltd. 1		—		—		—		—			—
Y Three Ulsan Sinjeong 1st Co., Ltd. 1		—		—		—		—			—
498 Seventh KOR Holdco LP 1		—		—		—		—			—
498 Seventh KOR LLC 1		—		—		—		—			—
Multiasset PR Private Fund 4 1		—		—		—		—			—
GVA Europe Pre-IPO Private Investment Trust No.1		29,981,695		21,250		5,910		(39,555	)		(39,555	)
LIFE Global Reits Pre-IPO General Private Investment Trust 1		59,725,094		40,778		3,145		(85,683	)		(85,683	)
KB KBSTAR US Short-Term IG Corporate Bond ETF		79,748,964		32,248		1,469,729		(3,783,284	)		(3,783,284	)
Newstar Everyday 1st Co., Ltd. 1		—		—		93,622		(43,869	)		(43,869	)
Cassiopeia 1st Co., Ltd.		30,678,964		30,909,850		646,125		(230,886	)		(230,886	)
Able Banpo 1st Co., Ltd.		17,117,224		17,316,738		604,933		(199,514	)		(199,514	)
Able Banpo 2nd Co., Ltd.		10,852,267		11,029,704		289,383		(177,437	)		(177,437	)
Able Gyeonggi Gwangju 1st Co., Ltd.		41,299,147		41,679,524		917,840		(380,379	)		(380,379	)
Newstar Byeongjeom 1st Co., Ltd.		51,336,358		51,495,155		1,540,423		(158,806	)		(158,806	)
Piggarden 1st Co., Ltd.		51,230,153		51,542,651		134,894		(312,508	)		(312,508	)

¹  These companies are excluded from subsidiaries as at December 31, 2022.

18

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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 General 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
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 General 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	)

19

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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)
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	)
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

20

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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 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		—		—		—		—			—
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	)

21

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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)
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	)
KB Illite 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
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  These companies were excluded from subsidiaries as at December 31, 2021.

The details of changes in scope for consolidation for the year ended December 31, 2022, are as follows:

(a) Subsidiaries newly included in the consolidation

Name of entity	Reason
PT. KB Valbury Sekuritas	Gain of controlling power
Korea Investment US Amazon Logistics Private Real Estate Investment Trust NO. 1	Gain of controlling power
GVA Europe Real Estate Investment Trust No.2	Gain of controlling power
Able Hagunri 1st Co., Ltd.	Controlling ownership interest
Able Hagunri 2nd Co., Ltd.	Controlling ownership interest
Newstar Gimpo 4th Co., Ltd.	Controlling ownership interest
Mobius 1st Co., Ltd.	Controlling ownership interest
HD Value 1st Co., Ltd.	Controlling ownership interest
Able iFood Co., Ltd.	Controlling ownership interest
Powerplay 1st Co., Ltd.	Controlling ownership interest
Able Wonsi 1st Co., Ltd.	Controlling ownership interest
Able Dosan 1st Co., Ltd	Controlling ownership interest
Able Eunhwasam 1st Co., Ltd	Controlling ownership interest
Newstar Gimpopoongmoo Co., Ltd.	Controlling ownership interest
Able Maseok 1st Co., Ltd.	Controlling ownership interest
TW Seocho 1st Co., Ltd.	Controlling ownership interest
TW Seocho 2nd Co., Ltd.	Controlling ownership interest
HJ Galaxy 1st Co., Ltd.	Controlling ownership interest

22

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Name of entity	Reason
HJ Galaxy 2nd Co., Ltd.	Controlling ownership interest
Newstar Wave 1st Co., Ltd.	Controlling ownership interest
Lamdamine 1st Co., Ltd.	Controlling ownership interest
Able Cheongdam 1st Co., Ltd	Controlling ownership interest
PT. Valbury Capital Management	Gain of controlling power
KB Star Galaxy Towers REIT	Gain of controlling power
Star Galaxy GP SRL	Gain of controlling power
Star Galaxy S.Comm	Gain of controlling power
Able Next 1st Co., Ltd	Controlling ownership interest
Able Dongil 1st Co., Ltd	Controlling ownership interest
KB Infra 3rd Co., Ltd.	Controlling ownership interest
Newstar Shiny 1st Co., Ltd.	Controlling ownership interest
Newstar Enerbil 1st Co., Ltd.	Controlling ownership interest
YSMC 1st Co., Ltd.	Controlling ownership interest
HJ Galaxy 3rd Co., Ltd.	Controlling ownership interest
KB SmartSchool 1st Co., Ltd.	Controlling ownership interest
Bighouse 7th Co., Ltd.	Controlling ownership interest
Newstar Energy 1st Co., Ltd.	Controlling ownership interest
Gyeongsan Logis 1st Co., Ltd	Controlling ownership interest
Stoke 2nd Corp	Controlling ownership interest
KB Samyoung Co., Ltd.	Controlling ownership interest
KB Global Contents Private Investment Fund	Gain of controlling power
Able Sungsoo 1st Co., Ltd.	Controlling ownership interest
Newstar Seongnam 1st Co., Ltd.	Controlling ownership interest
KPS Sihwa 1st Co., Ltd.	Controlling ownership interest
KB Baegun 1st Co., Ltd.	Controlling ownership interest
KB NY 1st Co., Ltd.	Controlling ownership interest
GDIC 2nd Co., Ltd.	Controlling ownership interest
Newstar NRB First Co., Ltd.	Controlling ownership interest
Able Dongtan 1st Co., Ltd.	Controlling ownership interest
Galaxy properties SA	Gain of controlling power
Newstar Gimpo 5th Co., Ltd.	Controlling ownership interest
GVA Europe Pre-IPO Private Investment Trust No.1	Gain of controlling power
LIFE Global Reits Pre-IPO General Private Investment Trust 1	Gain of controlling power
KB KBSTAR US Short-Term IG Corporate Bond ETF	Gain of controlling power
Newstar Everyday 1st Co., Ltd.	Controlling ownership interest
Cassiopeia 1st Co., Ltd.	Controlling ownership interest
Able Banpo 1st Co., Ltd.	Controlling ownership interest
Able Banpo 2nd Co., Ltd.	Controlling ownership interest
Able Gyeonggi Gwangju 1st Co., Ltd.	Controlling ownership interest
Newstar Byeongjeom 1st Co., Ltd.	Controlling ownership interest
Piggarden 1st Co., Ltd.	Controlling ownership interest

(b) Subsidiaries excluded from the consolidation

Name of entity	Reason
Polar EH 1st Co., Ltd.	End of payment guarantee contract
Polar EH 2nd Co., Ltd.	End of payment guarantee contract
ABR Mareuk 1st Co., Ltd.	End of payment guarantee contract
Able Guwol 1st Co., Ltd.	End of payment guarantee contract
Newstar Gimpo 2nd Co., Ltd.	End of payment guarantee contract
Able Hyosung 1st Co., Ltd.	End of payment guarantee contract
Intgreen 1st Inc.	End of payment guarantee contract
Able Pocheon 1st Co., Ltd.	End of payment guarantee contract
Newstar Seotan Co., Ltd.	End of payment guarantee contract
Unbroken 1st Co., Ltd.	End of payment guarantee contract
Able Yongdap 1st Co., Ltd.	End of payment guarantee contract

23

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Name of entity	Reason
Inspire Gold 1st Co., Ltd.	End of payment guarantee contract
Y Three Ulsan Sinjeong 1st Co., Ltd.	End of payment guarantee contract
498 Seventh KOR Holdco LP	Disposal
498 Seventh KOR LLC	Disposal
Multiasset PR Private Fund 4	Disposal
Enewstay 1st Co., Ltd.	End of payment guarantee contract
Able Electronics 1st Co., Ltd.	End of payment guarantee contract
KB PF 3rd Co., Ltd.	End of payment guarantee contract
Able Cheongdam 1st Co., Ltd.	End of payment guarantee contract
Able Hagunri 2nd Co., Ltd.	End of payment guarantee contract
Newstar Panorama 1st Co., Ltd.	End of payment guarantee contract
Heungkuk Global Highclass Private Real Estate Trust 23	Disposal
Korea Investment US Amazon Logistics Private Real Estate Investment Trust NO. 1	Disposal
Able Eunhwasam 1st Co., Ltd	End of payment guarantee contract
MS Sejong 4th Co., Ltd.	End of payment guarantee contract
AJH 3rd Co., Ltd.	End of payment guarantee contract
Newstar Papyrus Co., Ltd.	End of payment guarantee contract
Able Hyeongok Co., Ltd.	End of payment guarantee contract
Mobius 1st Co., Ltd.	End of payment guarantee contract
Able iFood Co., Ltd.	End of payment guarantee contract
JOSH Bujeon 1st Co., Ltd.	End of payment guarantee contract
Able Hagunri 1st Co., Ltd.	End of payment guarantee contract
Yeoksam The Gallery KB 1st Co., Ltd.	End of payment guarantee contract
KB Echo 1st Co., Ltd.	End of payment guarantee contract
GDIC 1st Co., Ltd.	End of payment guarantee contract
Newstar Ds 1st Co., Ltd.	End of payment guarantee contract
KB Baegun 1st Co., Ltd.	End of payment guarantee contract
Able Yucheon 1st Co., Ltd.	End of payment guarantee contract
HJ Galaxy 1st Co., Ltd.	End of payment guarantee contract
HJ Galaxy 2nd Co., Ltd.	End of payment guarantee contract
KB Star Galaxy Towers REIT	Disposal
Star Galaxy GP SRL	Disposal
Star Galaxy S.Comm	Disposal
Galaxy properties SA	Disposal
GVA Europe Real Estate Investment Trust No.2	Disposal
DGB General Private Real Estate Investment Trust No.8	Disposal
LB UK Private Real Estate Investment Trust No.18	Disposal
LB UK Private Real Estate Investment Trust No.19	Disposal
Hillswood Finco Ltd.	Disposal
Hillswood Holdings Ltd.	Disposal
Hillswood Holding Property Unit Trust	Disposal
Hillswood Property Unit Trust	Disposal
Able Sungsoo 1st Co., Ltd.	End of payment guarantee contract
KB Wise Star Real Estate Feeder Fund 2	Disposal
KB Wise Star Jongno Tower Real Estate Master Fund	Disposal
KB Infra 1st Co., Ltd.	End of payment guarantee contract
Newstar Everyday 1st Co., Ltd.	End of payment guarantee contract
KB Illite 1st. Co., Ltd.	End of payment guarantee contract
SJ Jongno 1st Co., Ltd.	End of payment guarantee contract
Newstar Ds 2nd Co., Ltd	End of payment guarantee contract
Able Gamsam 1st Co., Ltd.	End of payment guarantee contract
Alpha Spain Real Estate Private Investment Trust 1	Disposal
KB UK Center 1st Co., Ltd.	End of payment guarantee contract
KB Infra 3rd Co., Ltd.	End of payment guarantee contract

24

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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 consolidated 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, 2022.

• 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. These amendments do not have a significant impact on the consolidated financial statements.

25

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

• 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. These amendments do not 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. 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, 2022 reporting periods and have not been early adopted by the Group.

• 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 reporting 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.1001 Presentation of Financial Statements – Accounting Policy Disclosure

The amendments require an entity to define and disclose their material accounting policy information. The amendments should be applied for annual reporting 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.1001 Presentation of Financial Statements— Disclosure of gain or losses on valuation of financial liabilities subject to exercise price adjustment conditions

The amendments require disclosures about gains or losses on valuation occurred for the reporting period (but are limited to those included in profit or loss) for the conversion options or warrants (or financial liabilities with warrants), if all or part of the financial instrument whose exercise price is adjusted due to the issuers’ stock price fluctuations, are classified as financial liabilities according to paragraph 11 of Korean IFRS No.1032 Financial Instruments: Presentation. The amendments should be applied for annual reporting 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, 2022 and 2021

• 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 reporting 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 reporting 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.

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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.

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

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

• 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 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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

2.7.1 Day 1 Profit and 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.

The fair value of derivatives for hedge is disclosed in note 37.

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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.

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KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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’

37

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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.

38

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

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.

39

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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 Business Combinations

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 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 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, 2022 consolidated financial statements of the Group was approved by the Board of Directors on March 6, 2023, which is subject to change with approval at the annual shareholder’s 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.

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.

40

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

41

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

(in thousands of Korean won)
	2022
	Operating income		Operating expense		Operating profit (loss)			Non-operating income(expense)			Income tax expense(income)			Profit(loss) for the year
Brokerage and wealth management		2,408,296,357		2,259,020,997		149,275,360			(19,539,482	)		3,876,679			125,859,199
Investment banking		1,002,087,699		868,341,524		133,746,175			70,922,603			(424,484	)		205,093,262
Trading		10,665,451,383		10,786,517,633		(121,066,250	)		2,688,303			—			(118,377,947	)
Others1		194,187,118		111,147,155		83,039,963			(36,739,819	)		64,046,996			(17,746,852	)
		14,270,022,557		14,025,027,309		244,995,248			17,331,605			67,499,191			194,827,662
1   All income tax expenses are allocated to the others segment, due to the difficulty of reasonable allocation.
(in thousands of Korean won)
	2021
	Operating income		Operating expense		Operating profit			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.

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.

42

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

4.3 Assets and liabilities of segments

Total assets and liabilities by each segment as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Total assets		Total liabilities
Brokerage and wealth management		8,033,999,999		6,815,076,741
Investment banking		4,906,240,013		2,289,794,909
Trading		24,196,618,231		18,931,136,515
Others		16,680,551,089		19,912,610,608
		53,817,409,332		47,948,618,773

	2021
(in thousands of Korean won)	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

4.4 Information on principal customers

No single customer contributed 10% or more to the Group’s revenue for the years ended December 31, 2022 and 2021.

5. Cash and Deposits

The details of cash and deposits as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Cash and cash equivalents
Cash on hand		14,217			173
Cash in foreign currency		120,717			—
Demand deposits		736,305,237			149,590,806
Checking deposit		12,052,931			2,000,976
Foreign currency deposits		365,559,515			504,695,901
Certificates of deposit		39,298,100			8,298,500
MMDA		86,530,578			9,712,212
Accommodation notes		4,747,856			1,555,452
		1,244,629,151			675,854,020
Deposits
Deposits for securities subscription		1,007,522			—
Reserve for claims of customers’ deposits		457,235,271			351,745,802
Guarantee deposits for securities lending and borrowing		120,336,120			95,528,832
Deposits for exchange-traded derivatives		1,139,399,469			821,697,818
Guarantee deposits for KSFC trading		2,513,154			2,114,517
Long-term deposits		602,713,044			1,088,255,761
Restricted due from financial institutes		42,500			39,000
Others		970,345,187			799,445,549
Allowances for credit losses of deposits		(645,224	)		(632,624	)
		3,292,947,043			3,158,194,655
		4,537,576,194			3,834,048,675

43

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Restricted deposits as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Deposits for securities subscription 1		1,007,522		—
Reserve for claims of customers’ deposits 2		457,235,271		351,745,802
Guarantee deposits for securities lending and borrowing 3		120,336,120		95,528,832
Deposits for exchange-traded derivatives 4		1,139,399,469		821,697,818
Guarantee deposits for KSFC trading 5		2,513,154		2,114,517
Long-term deposits 6		569,000,000		778,799,807
Restricted due from financial institutes 7		42,500		39,000
Others 8		970,345,187		799,445,549
		3,259,879,223		2,849,371,325

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, 2022 and 2021, are as follows:

	2022
	12-month expected credit losses		Lifetime expected credit losses
(in thousands of Korean won)			Non-Impaired		Impaired
Beginning		632,624		—		—
Provision		12,598		—		—
Others (foreign exchange and etc.)		2		—		—
		645,224		—		—

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

44

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

6. Financial Instruments at FVTPL

The details of financial instruments at FVTPL as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Financial Assets at FVTPL				Financial Liabilities at FVTPL
	2022		2021		2022		2021
Financial assets required to be mandatorily measured at FVTPL		29,549,677,944		34,182,334,301		2,082,979,265		2,825,922,918
Financial assets designated at FVTPL		—		—		10,088,600,213		9,160,923,652
		29,549,677,944		34,182,334,301		12,171,579,478		11,986,846,570

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Deposits
Reserve for claims of customers’ deposits (trust) 1		4,531,756,555		5,704,580,963
Equity instruments
Stocks		676,021,174		498,608,397
Debt instruments
Government and local government bonds		4,092,627,487		5,292,775,017
Special bonds		1,793,814,905		2,498,873,337
Corporate bonds		4,093,880,890		8,318,369,010
Corporate commercial papers		5,196,584,584		4,170,294,875
Asset-backed short-term bonds		2,345,571,118		1,490,591,859
Hybrid bond with security-like features		229,833,526		110,295,800
Investment in partnerships		440,156,234		334,361,963
Collective investment securities		3,563,298,865		2,846,352,569
Hybrid stock with bond-like features		148,375,859		134,027,729
Loans
Privately placed bonds		42,604,988		173,459,362
Loan receivables		1,884,215		1,907,034
Derivative linked securities
Equity-linked securities		31,899,039		41,493,507
Other derivative linked securities		331,528,412		139,326,096
Other OTC derivative combined contract		236,574,425		114,887,471
Securities in foreign currency
Stocks in foreign currency		42,399,169		14,529,061
Bonds in foreign currency		788,520,400		1,352,049,465
Investment in partnerships in foreign currency		43,983,023		25,840,354
Collective investment securities in foreign currency		229,349,884		260,551,771
Collective fund for default loss		82,667,524		73,273,475
Hybrid bonds		606,272,079		585,355,259
Exchange traded notes		73,589		529,927
		29,549,677,944		34,182,334,301

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.

45

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Details of securities sold which are classified as financial liabilities at FVTPL as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Equity Securities
Stocks		428,935,822		509,897,766
Collective investment securities		2,268,236		3,056,061
Debt Securities
Government and local government bonds		1,651,775,207		2,282,891,241
Special bonds		—		30,077,850
		2,082,979,265		2,825,922,918

The details of financial assets pledged as collateral as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Description	2022	2021	Security right holder
Financial assets at FVTPL	Guarantee deposits for lending and borrowing securities and bonds	7,063,541,100	9,294,924,447	Korea Securities Depository, etc.
	Margin required and guarantee deposits for derivatives trading	1,129,757,669	955,030,966	Korea Stock Exchange, etc.
	Guarantee deposits for clearing fund	1,458,725	1,653,330	Korea Securities Depository
	Guarantee deposits for reverse repurchase agreements	3,724,891,983	8,422,134,434	Customer, Institution
Financial assets at FVOCI	Guarantee deposits for lending and borrowing securities and bond	1,592,460,037	1,523,592,569	Korea Securities Depository, etc.
	Guarantee deposits for derivatives trading	136,701,325	—	Hana Securities Co., Ltd., etc.
	Guarantee deposits for reverse repurchase agreements	2,234,882,535	1,990,336,464	Customer, Institution
Other Financial Assets	Guarantee deposits for lending and borrowing securities and bonds	47,850,000	—	KSFC
		15,931,543,374	22,187,672,210

(*) As at December 31, 2022 and 2021, the accrued interests related to debt securities provided as collateral of W 228,578 million and W 279,423 million, respectively, are excluded.

The Group provides W 4,986,339 million and W 6,165,555 million of its borrowing securities held as collateral to KSFC and others as at December 31, 2022 and 2021, respectively.

As at December 31, 2022 and 2021, the fair values of collaterals sold or repledged as collateral regardless of default are as follows:

(in thousands of Korean won)	Securities
	2022		2021
Fair value of collateral held		771,983,450		488,172,002

46

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

6.2 Financial liabilities designated at FVTPL

The details of financial liabilities designated at FVTPL as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)
	2022		2021
Derivative linked securities
Equity-linked securities		6,804,836,388		6,252,543,366
Other derivative linked securities		1,636,774,811		1,972,278,390
Other OTC derivative combined contract		1,611,301,701		899,164,069
Exchange traded notes		35,687,313		36,937,827
		10,088,600,213		9,160,923,652

The differences between the contractual value to be paid at maturity and the carrying amount of financial liabilities at FVTPL as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Contractual value to be paid at maturity		9,973,339,575			8,957,601,834
Carrying amount		10,088,600,213			9,160,923,652
Differences		(115,260,638	)		(203,321,818	)

Accumulated changes in fair value of financial liabilities at FVTPL due to the change of credit risk as at December 31, 2022 and 2021, are as follows:

	Other comprehensive income recognized from changes of fair value due to the change of credit risk (before tax) 1
(in thousands of Korean won)	2022			2021
Beginning of the year		(3,070,045	)		15,846,655
Change of fair value		(52,822,291	)		(18,916,700	)
End of the year		(55,892,336	)		(3,070,045	)

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.

47

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

7. Derivatives and Hedge Accounting

Derivatives owned by the Group as at December 31, 2022 and 2021, are as follows:

	2022
	Assets				Liabilities
(in thousands of Korean won)	Hedging		Trading		Hedging		Trading		Unsettled amount
Exchange-traded derivatives
Interest rate:
Futures		—		765,348		—		256,477		2,343,711,058
Equity:
Futures		—		37,455,359		—		89,623,607		1,805,532,521
Purchase options		—		58,416,888		—		—		1,642,156,435
Written options				—				330,682,246		2,408,934,407
Currency:
Futures		—		36,107		—		2,364,335		363,267,744
Goods:
Futures		—		1,969,714		—		940,729		28,576,813
		—		98,643,416		—		423,867,394		8,592,178,978
OTC derivatives
Interest rate:
Forwards		—		699,505,103		—		585,959,569		9,274,000,000
Swaps		—		103,770,321		—		262,238,369		139,330,656,724
Options		—		8,032,470		—		8,906,536		830,000,000
Currency:
Forwards		—		242,992,102		11,193,570		162,136,418		9,375,928,575
Swaps		—		17,764,588		422,620		14,626,867		726,824,375
Options		—		21,446,632		—		438,473		595,631,000
Equity:
Swaps		—		377,840,090		—		492,274,693		6,649,734,899
Purchase options		—		107,414,599		—		—		1,446,151,498
Written options		—		—		—		28,591,489		1,747,432,558
Credit:
Swaps		—		32,859,630		—		17,468,307		3,006,113,907
Goods
Options		—		887,437		—		885,284		131,500,117
Others:
Swaps		—		13,153,870		—		313,466,501		909,001,211
		—		1,625,666,842		11,616,190		1,886,992,506		174,022,974,864
		—		1,724,310,258		11,616,190		2,310,859,900		182,615,153,842

48

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2021
	Assets				Liabilities
(in thousands of Korean won)	Hedging		Trading		Hedging		Trading		Unsettled amount
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

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Gain(loss) on the hedging instrument		(16,003,726	)		(18,044,880	)
Effective portion of changes in fair value of hedging (other comprehensive income)		(16,003,726	)		(18,044,880	)
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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Other comprehensive income		(16,003,726	)		(18,044,880	)
Reclassification form other comprehensive income to net income		8,429,967			—
Tax effect		1,823,373			4,962,342
Other comprehensive income-net of tax		(5,750,386	)		(13,082,538	)

49

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The average price condition for the nominal future cash flow related to hedge of net investments in foreign operations as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	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		79,875,690		1,071.00		—		1,312.78
2 year		27,498,060		—		1,465.26		—
3 year		—		—		—		—
Over 3 year		204,035,300		1,178.92		—		—
		311,409,050		1,152.84		1,465.26		1,312.78

(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

8. Financial Assets at FVOCI

The details of financial assets at FVOCI as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Equity instruments
Stocks 1		420,330,275		365,576,095
Investment in partnerships		1,200,000		1,200,000
Other		264,586,560		78,876,642
Debt instruments
Government and local government bonds		5,025,406		20,989,065
Special bonds		690,761,850		549,741,426
Corporate bonds		3,194,758,699		2,698,701,899
Securities in foreign currency
Debt instruments		222,182,668		123,213,103
Investment in partnerships		1,708,780		1,579,576
		4,800,554,238		3,839,877,806

¹ Equity investment on Korea Stock Exchange and other relative institutions

50

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Changes in gains and losses on valuation of financial assets at FVOCI (before tax) for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance			Valuation1			Disposal / Transfer			Ending balance
Stocks		318,760,788			54,754,180			—			373,514,968
Government and local government bonds		1,768			(194,598	)		(3,010	)		(195,840	)
Special bonds		(3,852,333	)		(746,312	)		1,944,438			(2,654,207	)
Corporate bonds		(14,256,566	)		(15,405,862	)		6,104,383			(23,558,045	)
Securities in foreign currency		(915,931	)		(5,390,112	)		141,511			(6,164,532	)
Other Securities in Won currency		(1,125,111	)		(21,775,311	)		—			(22,900,422	)
		298,612,615			11,241,985			8,187,322			318,041,922

¹  Provision for credit loss of debt instruments at FVOCI of W 2 million and reversal of provision for credit loss of debt instruments at FVOCI of W 477 million are excluded.

	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	)
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.

There are no equity investments at FVOCI derecognized for the year ended December 31, 2022.

The dividend income from equity investments at FVOCI for the years ended December 31, 2022 and 2021, are as follows;

	2022				2021
(in thousands of Korean won)	Derecognised		Held at the reporting period		Derecognised		Held at the reporting period
Equity investments at FVOCI
Non marketable securities		—		9,536,521		—		7,411,793
Other equity investments		—		8,493,303		—		2,668,697

The Group recognized provision for credit loss of debt instruments at FVOCI amount (before tax) to W 1,004 million and W 1,479 million, as at December 31, 2022 and 2021, respectively.

51

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

9. Investments in Associates

Investments in associates as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)				Percentage of ownership (%)		2022						2021
	Location	Industry	Closing month			Acquisition cost		Net asset amount		Book amount		Acquisition cost		Net asset amount		Book amount
Wise Asset Management Co., Ltd. 1	Korea	Asset Mgt.	—		33		4,629,876		—		—		4,629,876		—		—
KB Special Purpose Acquisition Company No.17 2	Korea	SPAC	—		—		—		—		—		500		955		955
KB Special Purpose Acquisition Company No.18 2	Korea	SPAC	—		—		—		—		—		1,000		1,955		1,955
KB Special Purpose Acquisition Company No.19 2	Korea	SPAC	—		—		—		—		—		1,000		1,906		1,906
KB Special Purpose Acquisition Company No.20 2	Korea	SPAC	—		—		—		—		—		1,000		1,913		1,913
KB Special Purpose Acquisition Company No.21 2	Korea	SPAC	November		0.13		10,000		20,053		20,053		—		—		—
KB Special Purpose Acquisition Company No.22 2	Korea	SPAC	November		0.19		10,000		19,767		19,767		—		—		—
KB Special Purpose Acquisition Company No.23 2	Korea	SPAC	November		0.08		5,000		10,060		10,060		—		—		—
KB Special Purpose Acquisition Company No.24 2	Korea	SPAC	November		1.67		25,000		57,197		57,197		—		—		—
KB New Paradigm Agriculture Venture Fund	Korea	Investment	December		25		2,100,000		2,976,845		2,976,845		2,725,000		2,940,867		2,940,867
KB KONEX Market Vitalization Fund	Korea	Investment	December		23.44		615,000		7,301,375		7,301,375		615,000		5,445,338		5,445,338
KB-KDBC New Technology Business Investment Fund	Korea	Investment	December		33.33		1,800,000		2,988,748		2,988,748		4,400,000		5,894,529		5,894,529
KBTS Technology Venture Private Equity Fund 2	Korea	Investment	December		16		2,784,000		3,941,180		3,941,180		4,080,000		4,808,098		4,808,098
KB-SJ Tourism Venture Fund 2	Korea	Investment	December		18.52		4,600,000		3,773,125		3,773,125		5,000,000		4,146,315		4,146,315
KB Shinjasanaubo Fund 2	Korea	Investment	December		14.67		1,804,000		1,810,764		1,810,764		1,936,000		1,897,195		1,897,195
UNION Media Commerce Fund	Korea	Investment	December		28.99		1,000,000		956,728		956,728		1,000,000		958,907		958,907
KB-Brain KOSDAQ Scale-Up Fund 2	Korea	Investment	December		15.96		4,950,000		6,675,432		6,675,432		9,750,000		11,125,821		11,125,821
KB SPROTT Renewable Private Equity Fund I 2	Korea	Investment	December		7.69		3,682,135		3,374,650		3,374,650		1,182,775		954,286		954,286

52

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

KB-Stonebridge Secondary Private Equity Fund 2	Korea	Investment	December	4.16	6,800,355	7,184,026	7,184,026	6,183,416	6,270,906	6,270,906
KB-SP Private Equity Fund IV 2	Korea	Investment	December	14.95	6,100,000	1,892,224	1,892,224	6,100,000	5,627,717	5,627,717
KB-UTC Inno-Tech Venture Fund 2	Korea	Investment	December	14.76	7,125,000	6,393,024	6,393,024	7,125,000	6,990,821	6,990,821
KB-NAU Special Situation Corporate Restructuring Private Equity Fund 2	Korea	Investment	December	6	5,003,207	6,276,963	6,276,963	6,696,000	7,626,992	7,626,992
Project Vanilla Co., Ltd.	Korea	System software development	—	—	—	—	—	2,450,000	525,344	525,344
December & Company Inc. 2	Korea	System software development	December	16.73	30,000,000	3,735,016	16,028,831	30,000,000	9,053,043	21,388,370
KB Material and Parts No. 1 PEF 2	Korea	Investment	December	14.47	3,400,000	3,320,637	3,320,637	3,400,000	3,342,698	3,342,698
KB Bio Private Equity Fund III Ltd.	Korea	Investment	—	—	—	—	—	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	6,219,107	6,219,107	7,000,000	6,820,331	6,820,331
KB-KTB Technology Venture Fund 2	Korea	Investment	December	18.18	6,000,000	5,806,248	5,806,248	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	15,779,019	15,779,019	15,000,000	14,967,033	14,967,033
KB Digital Platform Fund 2	Korea	Investment	December	16.67	9,500,000	9,055,919	9,055,919	4,500,000	4,499,746	4,499,746
KB-SOLIDUS Healthcare Investment Fund 2	Korea	Investment	December	4.9	1,100,000	1,036,176	1,036,176	100,000	100,000	100,000
G Payment Joint Stock Company	Vietnam	Electronic payment & settlement agency	December	43.84	9,028,760	2,916,905	9,282,131	9,028,760	3,174,609	9,350,182
498 Seventh Owners LLC 3	USA	Investment	—	—	—	—	—	166,851,037	—	—
KB-GeneN Medical Venture Fund 1	Korea	Investment	December	22.52	2,000,000	1,964,512	1,964,512	—	—	—
KB-BridgePole Venture Investment Fund 2	Korea	Investment	December	6.3	850,000	834,741	834,741	—	—	—
KB-Kyobo New Mobility Power Fund	Korea	Investment	December	28.57	3,000,000	2,826,264	2,826,264	—	—	—
DA-Friend Investment Fund II	Korea	Investment	December	27.06	987,633	948,652	948,652	—	—	—
Cornerstone Pentastone IV Fund	Korea	Investment	December	21.52	817,742	792,174	792,174	—	—	—
SKS-VLP Fund No.2	Korea	Investment	December	23.11	1,155,560	1,121,399	1,121,399	—	—	—
JS Private Equity Fund III	Korea	Investment	December	20.48	1,700,000	1,664,180	1,664,180	—	—	—
Mirae Asset Mobility Investment Fund I	Korea	Investment	December	22.99	2,000,000	1,979,241	1,979,241	—	—	—
KB-FT 1st Green Growth Investment Fund 2	Korea	Investment	December	10.34	2,000,000	1,969,650	1,969,650	—	—	—

53

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

THE CHAEUL FUND NO.1 (former SKS IB NEW M&T FUND NO.1)	Korea	Investment	December	31.25	1,000,000	989,491	989,491	-	-	-
POSITIVE Sobujang Venture Fund No.1	Korea	Investment	December	43.96	2,000,000	1,977,209	1,977,209	—	—	—
KB-NP Green ESG New Technology Venture Capital Fund 2	Korea	Investment	December	11.59	3,740,000	3,617,183	3,617,183	—	—	—
Hisstory 2022 Fintech Fund	Korea	Investment	December	34.78	2,000,000	1,980,701	1,980,701	—	—	—
PEBBLES-MW M.C.E New Technology Investment Fund 1st	Korea	Investment	December	23.26	2,000,000	1,981,813	1,981,813	—	—	—
KB Star REIT	Korea	Investment	December	26.94	134,772,782	136,323,142	136,323,142	—	—	—
KB Bio Private Equity Investment Fund IV	Korea	Investment	December	24.19	7,500,000	7,492,209	7,492,209	—	—	—
Nextrade Co., Ltd. 2	Korea	Investment	December	6.64	9,700,000	9,700,000	9,700,000	—	—	—
					222,046,568	281,683,749	300,342,790	311,756,364	119,110,541	137,621,441

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, 2022.

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

54

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Changes in investments in associates for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	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		955		—		—		(955	)		—		—		—			—
KB Special Purpose Acquisition Company No.18		1,955		—		—		(1,955	)		—		—		—			—
KB Special Purpose Acquisition Company No.19		1,906		—		—		(1,906	)		—		—		—			—
KB Special Purpose Acquisition Company No.20		1,913		—		—		(1,913	)		—		—		—			—
KB Special Purpose Acquisition Company No.21		—		10,000		—		(9,379	)		—		19,915		(483	)		20,053
KB Special Purpose Acquisition Company No.22		—		10,000		—		(7,909	)		—		19,361		(1,685	)		19,767
KB Special Purpose Acquisition Company No.23		—		5,000		—		(4,265	)		—		9,962		(637	)		10,060
KB Special Purpose Acquisition Company No.24		—		25,000		—		—			—		32,388		(191	)		57,197
KB New Paradigm Agriculture Venture Fund		2,940,867		—		—		(625,000	)		—		—		660,978			2,976,845
KB KONEX Market Vitalization Fund		5,445,338		—		—		—			—		—		1,856,037			7,301,375
KB-KDBC New Technology Business Investment Fund		5,894,529		—		—		(2,600,000	)		—		—		(305,781	)		2,988,748
KBTS Technology Venture Private Equity Fund		4,808,098		—		—		(1,296,000	)		—		—		429,082			3,941,180
KB-SJ Tourism Venture Fund		4,146,315		—		—		(400,000	)		—		—		26,810			3,773,125
KB Shinjasanaubo Fund		1,897,195		—		—		(132,000	)		—		—		45,569			1,810,764
UNION Media Commerce Fund		958,907		—		—		—			—		—		(2,179	)		956,728

55

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

KB-Brain KOSDAQ Scale-Up Fund	11,125,821	—	—		(4,800,000	)	—	—	349,611		6,675,432
KB SPROTT Renewable Private Equity Fund I	954,286	2,499,360	—		—		—	—	(78,996	)	3,374,650
KB-Stonebridge Secondary Private Equity Fund	6,270,906	1,248,439	(573,020	)	(631,500	)	—	—	869,201		7,184,026
KB-SP Private Equity Fund IV	5,627,717	—	—		—		—	—	(3,735,493	)	1,892,224
KB-UTC Inno-Tech Venture Fund	6,990,821	—	—		—		—	—	(597,797	)	6,393,024
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	7,626,992	660,000	—		(2,352,793	)	—	—	342,764		6,276,963
Project Vanilla Co., Ltd.	525,344	—	—		(525,344	)	—	—	—		—
December & Company Inc.	21,388,370	—	—		(49,239	)	—	42,904	(5,353,204	)	16,028,831
KB Material and Parts No. 1 PEF	3,342,698	—	(34,000	)	—		—	—	11,939		3,320,637
KB Bio Private Equity Fund III Ltd.	9,950,054	—	(6,027,919	)	(3,922,135	)	—	—	—		—
KB Global Commerce Private Equity Investment Fund	6,820,331	—	—		—		—	—	(601,224	)	6,219,107
KB-KTB Technology Venture Fund	1,983,162	4,000,000	—		—		—	—	(176,914	)	5,806,248
KB Bio Global Expansion Private Equity Fund No.1	14,967,033	—	—		—		—	—	811,986		15,779,019
KB Digital Platform Fund	4,499,746	5,000,000	—		—		—	—	(443,827	)	9,055,919
KB-SOLIDUS Healthcare Investment Fund	100,000	1,000,000	—		—		—	—	(63,824	)	1,036,176
G Payment Joint Stock Company	9,350,182	—	—		—		—	296,406	(364,457	)	9,282,131
KB-GeneN Medical Venture Fund 1	—	2,000,000	—		—		—	—	(35,488	)	1,964,512
KB-BridgePole Venture Investment Fund	—	850,000	—		—		—	—	(15,259	)	834,741
KB-Kyobo New Mobility Power Fund	—	3,000,000	—		—		—	—	(173,736	)	2,826,264
Apollo REIT PropCo LLC	—	19,968,049	—		(19,968,049	)	—	—	—		—

56

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

DA-Friend Investment Fund II 1	—	—	—		—		987,633	—		(38,981	)	948,652
Cornerstone Pentastone IV Fund 1	—	—	—		—		817,742	—		(25,568	)	792,174
SKS-VLP Fund No.2 1	—	—	—		—		1,155,560	—		(34,161	)	1,121,399
JS Private Equity Fund III	—	1,700,000	—		—		—	—		(35,820	)	1,664,180
Mirae Asset Mobility Investment Fund I	—	2,000,000	—		—		—	—		(20,759	)	1,979,241
KB-FT 1st Green Growth Investment Fund	—	2,000,000	—		—		—	—		(30,350	)	1,969,650
THE CHAEUL FUND NO.1 (former SKS IB NEW M&T FUND NO.1)	—	1,000,000	—		—		—	—		(10,509	)	989,491
POSITIVE Sobujang Venture Fund No.1	—	2,000,000	—		—		—	—		(22,791	)	1,977,209
Hisstory 2022 Fintech Fund	—	2,000,000	—		—		—	—		(19,299	)	1,980,701
PEBBLES-MW M.C.E New Technology Investment Fund 1st	—	2,000,000	—		—		—	—		(18,187	)	1,981,813
KB-NP Green ESG New Technology Venture Capital Fund	—	3,740,000	(89	)	—		—	—		(122,728	)	3,617,183
KB Star Galaxy REIT	—	134,772,782	—		—		—	(2,931,330	)	4,481,690		136,323,142
KB Bio Private Equity Investment Fund IV	—	7,500,000	—		—		—	—		(7,791	)	7,492,209
Nextrade Co., Ltd.	—	9,700,000	—		—		—	—		—		9,700,000
	137,621,441	208,688,630	(6,635,028	)	(37,330,342	)	2,960,935	(2,510,394	)	(2,452,452	)	300,342,790

¹ This investment is reclassified from financial assets measured at FVTPL for the year ended December 31, 2022.

(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 Fund III		93,893		—		(80,872	)		(13,021	)		—		—			—			—

57

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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
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

58

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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 investment was reclassified to financial assets measured at FVTPL due to the sales of some portion 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.

59

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Summarized financial information of the associates as at and for the years ended December 31, 2022 and 2021, are as follows:

	December 31, 2022						2022
(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.21		17,265,672		1,805,081		15,460,591		—		(104,191	)		(104,191	)
KB Special Purpose Acquisition Company No.22		12,020,318		1,701,873		10,318,445		—		(7,882	)		(7,882	)
KB Special Purpose Acquisition Company No.23		14,294,351		1,970,660		12,323,691		—		(4,383	)		(4,383	)
KB Special Purpose Acquisition Company No.24		9,999,746		6,567,905		3,431,841		—		(11,451	)		(11,451	)
KB New Paradigm Agriculture Venture Fund		12,305,600		398,220		11,907,380		3,882,008		2,643,913			2,643,913
KB KONEX Market Vitalization Fund		31,377,573		225,366		31,152,207		9,710,508		7,919,092			7,919,092
KB-KDBC New Technology Business Investment Fund		9,225,850		259,568		8,966,282		1,698,596		(917,341	)		(917,341	)
KBTS Technology Venture Private Equity Fund		30,347,103		5,714,728		24,632,375		1,042,936		2,681,763			2,681,763
KB-SJ Tourism Venture Fund		20,926,320		551,394		20,374,926		719,109		144,771			144,771
KB Shinjasanaubo Fund		12,499,930		153,811		12,346,119		658,870		310,696			310,696
UNION Media Commerce Fund		3,318,493		17,778		3,300,715		—		(7,518	)		(7,518	)
KB-Brain KOSDAQ Scale-Up Fund		42,537,663		704,909		41,832,754		11,851,369		2,190,892			2,190,892
KB SPROTT Renewable Private Equity Fund I		44,879,342		995,827		43,883,515		138		(1,026,947	)		(1,026,947	)
KB-Stonebridge Secondary Private Equity Fund		172,978,705		348,626		172,630,079		22,444,501		20,886,877			20,886,877
KB-SP Private Equity Fund IV		13,432,211		776,022		12,656,189		5,553		(24,984,937	)		(24,984,937	)
KB-UTC Inno-Tech Venture Fund		44,111,359		809,263		43,302,096		—		(4,049,078	)		(4,049,078	)
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		102,827,078		497,814		102,329,264		21,469,658		5,712,736			5,712,736
December & Company Inc.		35,601,450		13,270,926		22,330,524		868,117		(32,001,912	)		(32,001,912	)
KB Material and Parts No. 1 PEF		22,953,419		1,955		22,951,464		451,111		82,525			82,525
KB Global Commerce Private Equity Investment Fund		38,315,044		111,960		38,203,084		5,907		(3,693,236	)		(3,693,236	)
KB-KTB Technology Venture Fund		32,214,753		280,389		31,934,364		133,987		(973,025	)		(973,025	)
KB Bio Global Expansion Private Equity Fund No.1		40,079,295		105,781		39,973,514		2,465,319		2,057,031			2,057,031
KB Digital Platform Fund		55,090,257		754,741		54,335,516		263,891		(2,662,958	)		(2,662,958	)
KB-SOLIDUS Healthcare Investment Fund		21,483,037		345,040		21,137,997		13,907		(1,302,003	)		(1,302,003	)
G Payment Joint Stock Company		10,176,916		3,523,392		6,653,524		3,400,666		(831,333	)		(831,333	)
KB-GeneN Medical Venture Fund 1		8,770,415		47,983		8,722,432		1,299		(157,568	)		(157,568	)
KB-BridgePole Venture Investment Fund		13,330,305		72,656		13,257,649		4,162		(242,352	)		(242,352	)
KB-Kyobo New Mobility Power Fund		9,931,624		39,699		9,891,925		1,656		(608,075	)		(608,075	)
DA-Friend Investment Fund II		3,526,439		20,502		3,505,937		58		(144,063	)		(144,063	)
Cornerstone Pentastone IV Fund		3,704,358		23,170		3,681,188		250		(118,813	)		(118,813	)
SKS-VLP Fund No.2		4,855,380		2,219		4,853,161		566		(147,839	)		(147,839	)

60

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

JS Private Equity Fund III	8,125,609	495	8,125,114	388	(174,886	)	(174,886	)
Mirae Asset Mobility Investment Fund I	8,682,721	73,023	8,609,698	9,255	(90,302	)	(90,302	)
KB-FT 1st Green Growth Investment Fund	19,051,437	—	19,051,437	4,748	(293,563	)	(293,563	)
THE CHAEUL FUND NO.1 (former SKS IB NEW M&T FUND NO.1)	3,166,370	—	3,166,370	—	(33,630	)	(33,630	)
POSITIVE Sobujang Venture Fund No.1	4,521,087	22,937	4,498,150	639	(51,850	)	(51,850	)
KB-NP Green ESG New Technology Venture Capital Fund	31,837,965	637,590	31,200,375	18,534	(1,058,605	)	(1,058,605	)
Hisstory 2022 Fintech Fund	5,694,516	—	5,694,516	250	(55,484	)	(55,484	)
PEBBLES-MW M.C.E New Technology Investment Fund 1st	8,562,125	40,329	8,521,796	322	(78,204	)	(78,204	)
KB Star Galaxy REIT	1,098,631,387	588,956,071	509,675,316	25,232,718	16,637,141		16,637,141
KB Bio Private Equity Investment Fund IV	31,000,301	32,504	30,967,797	301	(32,202	)	(32,202	)
Nextrade Co., Ltd.	146,100,005	—	146,100,005	—	—		—

Summarized financial information of associates for which financial information is not available as at December 31, 2022 are excluded.

61

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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.

62

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The fair value of marketable Investments in associates as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	Market value		Carrying amount
KB Special Purpose Acquisition Company No.21		19,800		20,053
KB Special Purpose Acquisition Company No.22		19,850		19,767
KB Special Purpose Acquisition Company No.23		9,900		10,060
		49,550		49,880

(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

10. Loans Measured at Amortised Cost

The details of loans measured at amortised cost as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Total amount			Allowances			Book amount
Retails
Broker’s loans		3,001,361,497			(5,309,305	)		2,996,052,192
Loans to employees		11,975,968			—			11,975,968
Present value discount		(25,619	)		—			(25,619	)
		3,013,311,846			(5,309,305	)		3,008,002,541
Corporate
Broker’s loans		301,209,350			—			301,209,350
Securities purchased under repurchase agreements		730,100,000			—			730,100,000
Loans receivable		4,734,348,931			(52,232,538	)		4,682,116,393
Purchased loans		133,078,510			(3,538,136	)		129,540,374
Advances for customers		7,564,877			(7,564,877	)		—
Privately placed bonds		29,583,500			(299,446	)		29,284,054
Financial lease receivables		35,135,664			—			35,135,664
Net deferred origination fees and costs		(4,820,171	)		—			(4,820,171	)
Present value discount		(3,064,593	)		—			(3,064,593	)
		5,963,136,068			(63,634,997	)		5,899,501,071
		8,976,447,914			(68,944,302	)		8,907,503,612

63

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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

The changes in in book amount of loans measured at amortised cost for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	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		3,156,055,442			—		29,651		—		4,004,190,706			59,000,000			49,239,871			—
Transfer between stages
Transfer to lifetime expected credit Losses (Non-impaired)		—			—		—		—		(10,000,000	)		10,000,000			—			—
Transfer to lifetime expected credit Losses (Impaired)		—			—		—		—		(6,675,000	)		—			6,675,000			—
Write-off		—			—		—		—		—			—			(33,202,354	)		—
Sales		—			—		—		—		(722,881,522	)		—			—			—
Business Combination		9,444,665			—		—		—		21,064,759			—			—			—
Other changes (recover, etc.)		(157,497,567	)		—		5,279,655		—		2,629,080,340			(39,000,000	)		(4,355,732	)		—
Ending		3,008,002,540			—		5,309,306		—		5,914,779,283			30,000,000			18,356,785			—

64

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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			—
The changes in allowances for loan losses for the years ended December 31, 2022 and 2021, are as follows:
(in thousands of Korean won)	2022
	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		—		—		29,651		—		30,678,488			2,567,841			49,031,507			—
Transfer between stages
Transfer to lifetime expected credit Losses (Non-impaired)		—		—		—		—		(138,398	)		138,398			—			—
Transfer to lifetime expected credit Losses (Impaired)		—		—		—		—		(3,461,509	)		—			3,461,509			—
Write-off		—		—		—		—		—			—			(33,202,354	)		—
Provision (Reversal)		—		—		—		—		22,103,268			(653,201	)		805,841			—
Other transfer (changes in for FX rate, etc.)		—		—		5,279,655		—		(4,051,657	)		(296,654	)		(3,348,083	)		—
Ending 1		—		—		5,309,306		—		45,130,192			1,756,384			16,748,420			—

65

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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		—		—		29,651		—		30,678,488			2,567,841			49,031,507			—

Among the loans which have been written-off, the Group manages loans for which the claims against borrowers have not been lost due to reasons such as incomplete extinctive prescription pursuant to relevant laws and uncollected receivables after writing-off, as the written-off loans. As at December 31, 2022 and 2021, the balances of the written-off loans are W 9,218,967 thousand and W 4,600,194 thousand, respectively.

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, 2022, interest rate of the loan is differentiated from 4.9% to 9.8% 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, 2022, the interest rate of loans secured by securities is differentiated from Annual Percentage Rate (APR) 6.9% to 9.8% based on maturities, from APR 7.0% to 8.5% 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.

66

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation		Book amount
Land		28,242,445		—			83,580,757		111,823,202
Buildings		47,113,828		(20,377,779	)		—		26,736,049
Vehicles		1,127,506		(386,660	)		—		740,846
Furniture and equipment		178,606,269		(139,984,783	)		—		38,621,486
Others		56,604,592		(44,340,837	)		—		12,263,755
Right-of-use assets		146,262,689		(66,417,660	)		—		79,845,029
		457,957,329		(271,507,719	)		83,580,757		270,030,367

	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

The details of right-of-use assets as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Book amount
Buildings		137,398,425		(60,817,498	)		76,580,927
Vehicles		4,039,939		(1,781,351	)		2,258,588
Others		4,824,325		(3,818,811	)		1,005,514
		146,262,689		(66,417,660	)		79,845,029

	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

67

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The changes in property and equipment for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Re-valuation		Depreciation			Business Combination		Others 1			Ending balance
Land		65,029,822		—		(1,115,081	)		47,521,151		—			—		387,310			111,823,202
Buildings		23,398,034		—		(2,147,693	)		—		(1,422,159	)		7,011,613		(103,746	)		26,736,049
Vehicles		—		157,715		—			—		(89,681	)		556,513		116,299			740,846
Furniture and equipment		32,238,604		21,490,998		(5,231	)		—		(15,831,052	)		398,798		329,369			38,621,486
Others		13,389,322		6,364,691		(97,415	)		—		(7,405,465	)		—		12,622			12,263,755
Right-of-use assets		76,700,067		32,036,855		(3,497,264	)		—		(26,292,607	)		473,368		424,610			79,845,029
		210,755,849		60,050,259		(6,862,684	)		47,521,151		(51,040,964	)		8,440,292		1,166,464			270,030,367

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

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Others 1			Ending balance
2022 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.

68

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The changes in right-of-use assets for the year ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Business Combination		Others 1		Ending balance
Buildings		73,419,498		29,366,072		(3,080,026	)		(24,022,595	)		473,368		424,610		76,580,927
Vehicles		1,570,194		2,291,704		(414,827	)		(1,188,483	)		—		—		2,258,588
Others		1,710,375		379,080		(2,412	)		(1,081,529	)		—		—		1,005,514
		76,700,067		32,036,856		(3,497,265	)		(26,292,607	)		473,368		424,610		79,845,029

¹ Others consist of foreign exchange differences and others.

	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.

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 August 5, 2022. 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, 2022.

Classification of land that is measured at fair value by fair value hierarchy levels as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		111,823,202		111,823,202
	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		65,029,822		65,029,822

69

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Changes in land which is classified to Level 3 for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		65,029,822			65,263,726
Reclassification to property and equipment		642,447			491,317
Reclassification to investment properties		(255,137	)		(452,300	)
Disposal		(1,115,081	)		(272,921	)
Changes in fair-valuation		47,521,151			—
Ending balance		111,823,202			65,029,822

Book amounts of land under cost model as at December 31, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Under revaluation model		Under cost model		Under revaluation model		Under cost model
Land		111,823,202		28,242,445		65,029,822		29,301,991

Change in other comprehensive income related to the revaluation for the year ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance			Reclassification			Ending balance
Land		36,132,409			47,900,256			84,032,665
Income tax effects		(10,034,165	)		(12,332,245	)		(22,366,410	)
		26,098,244			35,568,011			61,666,255

	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

70

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

12. Investment Properties

The details of investment properties as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated impairment			Accumulated revaluation			Book amount
Land		329,642,021		—			(332,250	)		(477,509	)		328,832,262
Buildings		283,263,254		(46,476,719	)		—			(5,198,652	)		231,587,883
		612,905,275		(46,476,719	)		(332,250	)		(5,676,161	)		560,420,145

	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

The changes in investment properties for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Business Combination		Others 1			Ending balance
Land		756,126,554		—		(414,592,969	)		—			—		(12,701,323	)		328,832,262
Buildings		391,620,426		1,604,545		(153,057,197	)		(9,351,262	)		2,618,618		(1,847,247	)		231,587,883
		1,147,746,980		1,604,545		(567,650,166	)		(9,351,262	)		2,618,618		(14,548,570	)		560,420,145

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

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			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.

Details of income and expenditure on investment properties for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Rental income		41,378,496			59,289,744
Expenditure on operating investment properties		(18,058,162	)		(25,333,928	)
Expenditure on non-operating investment properties		(153,330	)		(153,330	)
		23,167,004			33,802,486

Details of fair value of investment properties as at December 31, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Book amount		Fair value		Book amount		Fair value
Land		328,832,262		325,981,165		756,126,554		797,881,841
Buildings		231,587,883		246,004,136		391,620,426		438,756,547
		560,420,145		571,985,301		1,147,746,980		1,236,638,388

71

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The fair values of investment properties as at December 31, 2022 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, 2022

Details of investment properties provided as collaterals as at December 31, 2022 and 2021 is as follows:

	2022
(in thousands of Korean won)	Secured amount		Secured party	Details
Land and buildings
		33,798,891	Signature Bank
		81,882,720	Landesbank Hessen-Thuringen Girozentrale	Collateralized borrowing
		236,788,850	LGIM COMMERCIAL LENDING LIMITED
	2021
(in thousands of Korean won)	Secured amount		Secured party	Details
Land and buildings
		32,364,150	Signature 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

Investment properties are provided as collaterals for rental deposits and lease hold right, which amounts to W 610,000 thousand and W 7,774,547 thousand as at December 31, 2022 and 2021, respectively.

72

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

13. Intangible Assets

The details of intangible assets as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated amortization			Accumulated impairment			Book amount
Goodwill		83,550,540		—			—			83,550,540
Development costs		186,869,610		(139,522,251	)		—			47,347,359
Software		120,472,571		(90,480,882	)		—			29,991,689
Memberships		37,847,587		(202,382	)		(9,960,904	)		27,684,301
Others		28,144,713		(4,036,797	)		(813,199	)		23,294,717
		456,885,021		(234,242,312	)		(10,774,103	)		211,868,606
	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

The changes in intangible assets for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition 1		Disposal			Amortization			Impairment 2			Reversal of Impairment 3		Others 4			Ending balance
Goodwill		72,422,758		10,712,158		—			—			—			—		415,624			83,550,540
Development costs		35,653,328		29,140,791		—			(17,446,759	)		—			—		(1	)		47,347,359
Software		26,255,476		14,098,002		—			(10,393,151	)		—			—		31,362			29,991,689
Memberships		27,646,008		1,745,855		(1,041,665	)		(36,662	)		(1,028,751	)		394,684		4,832			27,684,301
Others		23,294,717		—		—			—			—			—		—			23,294,717
		185,272,287		55,696,806		(1,041,665	)		(27,876,572	)		(1,028,751	)		394,684		451,817			211,868,606

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 as at December 31, 2022.

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 as at December 31, 2022.

⁴ Others consist of foreign exchange differences and others.

	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 as at December 31, 2021.

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 as at December 31, 2021.

⁴ Others consist of foreign exchange differences and others.

73

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

14. Other Financial Assets

The details of other financial assets as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Other receivables		2,237,040,540			3,195,524,965
Accrued income		203,371,150			175,194,245
Accrued interest on bonds		148,382,124			209,164,728
Guarantee deposits		68,149,689			67,903,379
Other		67,835,435			49,579,115
Provision for other financial assets		(36,846,424	)		(35,544,587	)
		2,687,932,514			3,661,821,845

15. Other Assets

The details of other assets as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Other receivables		116,417,805		84,740
Advance payments		47,713,016		26,351,186
Prepaid expenses		87,829,601		16,962,969
Prepaid value-added taxes		954,019		186,676
Others		3,836,443		7,306,773
		256,750,884		50,892,344

16. Deposit Liabilities

The details of deposit liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Customers’ deposits
Customers’ deposits for brokerage		5,049,354,662		6,640,427,057
Customers’ deposits for exchange-traded derivatives trading		759,156,922		590,669,251
Customers’ deposits for subscription		904,010		—
Customers’ deposits for savings		6,445,014		8,609,240
Customers’ deposits for repo		61,600		61,627
Customers’ deposits for the investor of collective investment securities		324,357,905		223,800,663
Others		48,641		48,729
		6,140,328,754		7,463,616,567
Guarantee deposits
Guarantee deposits in foreign currency		190,255,947		474,568,902
Guarantee deposits in won currency		468,648,375		452,889,714
		658,904,322		927,458,616
		6,799,233,076		8,391,075,183

74

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

17. Borrowings

The details of borrowings as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Call money		830,000,000			40,000,000
Borrowings:
Borrowing from banks		471,777,010			485,868,544
Borrowing from KSFC		1,244,222,242			1,093,096,057
Asset-backed short-term bonds		3,264,247,029			2,027,557,581
CP borrowings		1,920,000,000			—
Others		436,023,703			572,851,733
Securities sold under repurchase agreements		6,231,390,409			13,531,208,950
Short-term note issued		7,249,429,201			4,475,145,330
Debentures:
Debentures		1,879,536,000			2,428,734,874
Less: discount on debentures issued		(3,429,726	)		(5,081,219	)
		23,523,195,868			24,649,381,850

The details of call money as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Interest rate (%)		2022		2021
Samsung Asset Management Co., Ltd. and others		3.45~5.05		830,000,000		40,000,000

The details of borrowings as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)		Interest rate (%)		2022		2021
Borrowings from banks	Kookmin Bank and other		2.40~9.00		471,777,010		485,868,544
Borrowings from KSFC	KSFC		3.45~5.07		1,244,222,242		1,093,096,057
Asset-backed short-term bonds	SK Securities co., Ltd., and other		3.42~7.10		3,264,247,029		2,027,557,581
CP borrowings	Hana Securities Co., Ltd.		3.76~5.99		1,920,000,000		—
Others	NH Nonghyup Capital co., Ltd. and other		0.00~5.19		436,023,703		572,851,733
					7,336,269,984		4,179,373,915

The details of securities sold under repurchase agreements as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Interest rate (%)		2022		2021
Customers		0.11~4.60		4,181,390,409		6,973,309,166
Financial institution		3.30~4.30		2,050,000,000		6,557,899,784
				6,231,390,409		13,531,208,950

75

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The details of short-term note issued as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Interest rate (%)		2022		2021
Individual		0.25~5.60		4,650,359,585		1,724,366,358
Corporate		1.15~5.50		2,599,069,616		2,750,778,972
				7,249,429,201		4,475,145,330

The details of debentures as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Date issued		Maturity		Interest rate (%)		2022			2021
The 34-2nd unsecured public debenture		2018.03.09		2023.03.09		3.02		210,000,000			210,000,000
The 36-1st unsecured public debenture		2019.04.18		2022.04.18		—		—			250,000,000
The 36-2nd unsecured public debenture		2019.04.18		2024.04.18		2.09		250,000,000			250,000,000
The 37-1st unsecured public debenture		2019.06.14		2022.06.14		—		—			100,000,000
The 37-2nd unsecured public debenture		2019.06.14		2024.06.14		1.8		150,000,000			150,000,000
The 38-1st unsecured public debenture		2020.06.11		2022.06.10		—		—			170,000,000
The 38-2nd unsecured public debenture		2020.06.11		2023.06.09		1.54		130,000,000			130,000,000
The 39-1st unsecured public debenture		2021.03.04		2024.03.04		1.31		110,000,000			110,000,000
The 39-2nd unsecured public debenture		2021.03.04		2026.03.04		1.7		120,000,000			120,000,000
The 40-1st unsecured public debenture		2021.04.23		2024.04.23		1.53		300,000,000			300,000,000
The 40-2nd unsecured public debenture		2021.04.23		2026.04.23		1.94		200,000,000			200,000,000
The 1st unsecured privately placed bond 1		2019.05.27		2022.05.27		—		—			23,900,000
The 1st unsecured privately placed bond 1		2021.06.30		2022.05.31		—		—			23,000,000
The 1st unsecured privately placed bond 1		2021.09.07		2023.03.06		—		—			8,316,583
The 1st unsecured privately placed bond 1		2021.10.29		2023.03.06		—		—			4,158,291
The 1st unsecured privately placed bond 2		2022.06.14		2024.12.14		4.5		4,000,000			—
The 1st privately placed bond in foreign currency 3		2021.10.25		2024.10.25		2.35		25,346,000			23,710,000
The 21-1 public debenture in foreign currency 4		2021.11.01		2026.11.01		2.13		380,190,000			355,650,000
Less: Discount on debentures issued								(3,429,726	)		(5,081,219	)
								1,876,106,274			2,423,653,655

¹  This privately placed bond was excluded from the scope of consolidation.

²  This privately placed bond was issued by subsidiary named Able Seun Co., Ltd.

³  This privately placed bond was issued by subsidiary named Newstar Sina Co., Ltd.

⁴  The issuance price of this public debenture is US$ 300,000,000.

76

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The changes in borrowings for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		24,649,381,850			25,029,132,761
Increase(decrease) in call money		790,000,000			(250,000,000	)
Increase in borrowings from banks		(14,091,534	)		127,407,539
Increase(decrease) in borrowings from KSFC		151,126,185			(256,903,943	)
Increase in asset-backed short-term bond		1,236,689,448			185,692,613
Increase(decrease) in CP borrowings		1,920,000,000			(8,900,000	)
Decrease in other borrowings		(136,828,030	)		(48,314,756	)
Increase(decrease) in securities sold under repurchase agreements		(7,299,818,541	)		(1,473,306,802	)
Increase in short-term note issued		2,774,283,871			742,417,752
Increase in debentures		(547,547,381	)		602,156,686
Ending balance		23,523,195,868			24,649,381,850

18. Post-employment Benefits

18.1 Defined Benefit Plans

The details of defined benefit liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Present value of defined benefit obligations		67,937,239			70,914,622
Fair value of plan assets		(12,430,101	)		(15,294,733	)
Net defined benefit liabilities		55,507,138			55,619,889

The changes in the defined benefit obligation for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		70,914,622			72,288,500
Current service cost		22,206,320			18,145,235
Past service cost		2,910,303			1,315,190
Interest cost		1,151,821			780,607
Remeasurements
Actuarial gains and losses arising from changes in demographic assumptions		(6,811,193	)		20,113,645
Actuarial gains and losses arising from changes in financial assumptions		(13,735,991	)		(1,706,991	)
Actuarial gains and losses arising from experience adjustment		16,610,121			(15,407,457	)
Payments from plans		(8,301,323	)		(1,416,118	)
Payments from the Group		(19,507,349	)		(14,513,685	)
Transfer from related companies		2,438,159			1,823,363
Transfer to related companies		(370,486	)		(895,469	)
Settlement		(78,335	)		(5,301,320	)
Gain or loss on settlement		(1,871,249	)		(4,310,878	)
Effects from business combination and disposal of business		2,634,640			—
Other		(252,821	)		—
Ending balance		67,937,239			70,914,622

77

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The changes in the fair value of plan assets for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		(15,294,733	)		(18,652,077	)
Interest income		(178,723	)		(204,480	)
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		157,107			87,124
Contributions by employers		(3,347,403	)		(2,297,614	)
Payments from plans:
Benefits paid		8,301,323			1,416,119
Settlement		—			5,284,089
Transfer from related companies		(2,438,158	)		(1,823,363	)
Transfer to related companies		370,486			895,469
Ending balance		(12,430,101	)		(15,294,733	)

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, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Fair value		Composition(%)		Fair value		Composition(%)
Cash and deposits		8,853,577		71.23		9,539,927		62.37
Investment funds		3,576,524		28.77		2,327,801		15.22
Derivatives		—		—		3,427,005		22.41
		12,430,101		100.00		15,294,733		100.00

Key actuarial assumptions used as at December 31, 2022 and 2021, are as follows:

	2022	2021
Discount rate	DB(including special retirement by salaries peak plan) 5.1% Compensation promotion DC 5.0 %	DB(including special retirement by salaries peak plan) 2.5% Compensation promotion DC 2.3 %
Expected salary growth rate	DB : executives 0% DC: Promotion + Base up 2.3% Special retirement by salaries peak plan: 4.6%	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%)

78

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The sensitivity analysis for significant actuarial assumptions used to determine the present value of the defined benefit obligation as at December 31, 2022, 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	%		(1,609,503	)		1,705,619
Expected salary growth rate1		0.50	%		1,631,234			(1,544,704	)
Retirement rate		0.50	%		(1,238,827	)		1,303,693

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, 2022, 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		5,066,411		6,379,701		24,686,972		30,520,116		71,780,706		138,433,906

¹ Fixed pension benefits of W 14.1 billion under promotion compensation defined contribution plan is excluded.

The weighted average duration of the defined benefit obligations is 5.79 years.

Expected contribution to post-employment benefit plans for the year ending December 31, 2022 are W 1,241,430 thousand.

18.2 Defined Contribution Plans

The Group recognized the expenses of W 9,212,523 thousand and W 5,766,377 thousand for defined contribution plans for the years ended December 31, 2022 and 2021, respectively.

19. Provisions

The details of provisions as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Provisions for non-financial guarantees		1,456,106		1,680,410
Provisions for asset retirement obligation 1		8,802,261		7,997,559
Provisions for lawsuits		51,221,194		25,150,111
Provisions for the points		—		2,569,985
Provisions for others		89,485,845		68,725,325
		150,965,406		106,123,390

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

79

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The changes in provisions for non-financial guarantees for the years ended December 31, 2022 and 2021 are as follows,

	2022
(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		1,642,264			38,146		—
Provision for losses (Reversal of provision)		(418,773	)		194,212		—
Other transfer(foreign exchange and other)		257			—		—
Ending		1,223,748			232,358		—

	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		1,642,264			38,146		—

The changes in other provisions for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Provisions for asset retirement obligation			Provisions for lawsuits			Provisions for the points			Provisions for others			Total
Beginning		7,997,559			25,150,111			2,569,985			68,725,325			104,442,980
Contribution 1		1,026,723			25,165,908			2,451,694			33,991,287			62,635,612
		—			—			—			(4,038,034	)		(4,038,034	)
Use		(423,495	)		(1,229,477	)		(2,788,799	)		(7,058,081	)		(11,499,852	)
Amortization of discounts		201,474			—			—			—			201,474
Other 2		—			2,134,652			(2,232,880	)		(2,134,652	)		(2,232,880	)
Ending		8,802,261			51,221,194			—			89,485,845			149,509,300

¹ As the first-instance verdict of the relevant trial was announced after the reporting period, additional litigation provision liabilities were recognized as an adjusting event after the reporting period.

² As a lawsuit was filed during the year ended December 31, 2022, the estimated loss on the sale of funds related to Lime Asset Management was replaced to provisions for lawsuits.

80

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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.

20. Other Financial Liabilities

The details of other financial liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Other payables		1,974,490,601		3,048,066,867
Accrued expenses		106,815,440		49,457,140
Financial guarantee liabilities		2,026,739		2,213,138
Provisions for financial guarantee contracts		—		66,218
Leasehold deposits received		8,894,337		26,518,264
Non-controlling liabilities		164,222,254		228,717,913
Lease liabilities		125,593,239		127,992,813
Others		7,498,861		1,617,918
		2,389,541,471		3,484,650,271

The changes in liabilities of the provisions for financial guarantee contracts for the years ended December 31, 2022 and 2021 are as follows:

(in thousands of Korean won)	2022
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired		Impaired
Beginning		66,218			—		—
Reversal of provision		(66,218	)		—		—
Ending		—			—		—

(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		66,218		—		—
Ending		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.

81

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

21. Other Liabilities

The details of other liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Accounts payables		31,630		43,216,188
Accrued expenses		179,569,070		258,774,213
Accrued dividends		2,952,757		—
Advances from customers		7,048,181		4,832,377
Unearned revenue		215,363,367		74,881,733
Taxes withheld		44,787,661		34,664,311
Other long-term employee benefits		7,176,237		7,630,850
Others		16,185,601		3,826,568
		473,114,504		427,826,240

22. Share Capital

The details of share capital as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won except per share)	Authorized shares	Outstanding shares	Par value per share		2022		2021
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, 2022 and 2021.

23. Hybrid Securities

Details of hybrid security classified as equity as of December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Issuance date		Maturity		Interest rate (%)		2022		2021
Bond-type Hybrid Securities No.11		March 31, 2022		Permanent		4.30		208,010,752		—
Bond-type Hybrid Securities No.2		May 30, 2022		Permanent		4.80		48,170,780		—
Bond-type Hybrid Securities No.32		September 30, 2022		Permanent		5.50		249,948,780		—
								506,130,312		—

¹ As at December 31, 2022, among the hybrid securities issued by the Group, the balance held by KB Financial Group, a related party of the Group, is W200,000 million.

² As at December 31, 2022, among the hybrid securities issued by the Group, the balance held by KB Financial Group, a related party of the Group, is W230,000 million.

The Group may extend the maturity under the same conditions at the time of maturity of the above hybrid securities, and interest payment may be deferred if certain conditions are met. Above hybrid securities are early redeemable by the Group after 5 years from the issuance date and each interest payment date thereafter.

82

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

24. Other Paid-in Capital

The details of other paid-in capital as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
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			381,666,039
		1,478,687,978			1,478,687,978

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Beginning balance		1,478,687,978		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		1,478,687,978

25. Retained Earnings

The details of retained earnings as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Legal reserve
Earned surplus reserve 1		128,656,298			101,656,298
Reserve for liability to compensate for damages 2		500,000			500,000
Voluntary reserves		1,839,996,358			1,540,948,010
Regulatory reserve for credit losses 3		101,842,161			100,223,524
Unappropriated retained earnings		(32,545,040	)		504,642,277
		2,038,449,777			2,247,970,109

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		2,247,970,109			1,847,509,495
Profit for the year		193,697,356			600,439,340
Dividends		(400,000,000	)		(200,000,000	)
Dividends of hybrid securities		(3,479,007	)		—
Transfer to gain due to disposal of revaluation assets		261,319			21,274
Ending balance		2,038,449,777			2,247,970,109

83

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The amount of dividends and dividends per share for the years ended December 31, 2022 and 2021, are as follows:

2022

(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

669

200,000,000

Annual dividend

Ordinary share

298,620,424 shares

—

298,620,424 shares

669

200,000,000

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

Payout and dividend yield ratios as at December 31, 2022 and 2021, are as follows:

	2022						2021
	Ordinary share						Ordinary share
	Interim dividend			Annual dividend			Interim dividend			Annual dividend
Number of shares outstanding		298,620,424 shares			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			298,620,424 shares
Par value per share (in Korean won)		5,000			5,000			5,000			5,000
Payout ratio		13.39	%		6.69	%		4.68	%		13.39	%
Scheduled dividends (in thousands of Korean won)		200,000,000			100,000,000			70,000,000			200,000,000
Dividends per share (in Korean won)		669			334			234			669

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 (reversal of reserve) to be appropriated as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning		101,842,161			100,223,524
Amounts to be reserved (reversed)		(1,526,732	)		1,618,637
Ending		100,315,429			101,842,161

84

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The adjusted profit of the year after reflection of reversal (provision) of reserve for credit losses for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Profit for the year before reserve for credit loss		194,827,662		600,291,416
Amounts to be reversed (reserved)		1,526,732		(1,618,637	)
Adjusted profit after reversed (provision) of reserve for credit losses1		196,354,394		598,672,779

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.

26. Other Components of Equity

The details of other components of equity as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Changes in the fair value of financial assets at FVOCI		233,760,812			216,494,145
Share of other comprehensive income of associates		(2,571,874	)		(9,779	)
Revaluation surplus		62,060,360			26,749,635
Remeasurements of net defined benefit liabilities		(37,781,761	)		(40,520,752	)
Exchange differences on translation of foreign operations		45,820,903			12,877,767
Hedge of net investments in foreign operations		(19,066,669	)		(13,316,283	)
Gain or loss on financial liabilities designated at FVTPL due to the change of credit risk		41,080,867			2,225,783
		323,302,638			204,500,516

The changes in gain or loss on valuation of financial assets at FVOCI for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		216,494,145			205,927,502
Gain (loss) on valuation		11,241,986			17,339,966
Tax effect of gain (loss) on valuation 1		(39,698	)		(4,768,491	)
Transfer to gain due to disposal or impairment		8,187,321			(2,765,286	)
Tax effect of transfer 1		(2,122,942	)		760,454
Ending balance		233,760,812			216,494,145

¹ Including income tax effect (Note 35).

The changes in the Group’s share of other comprehensive income of associates for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		(9,779	)		(33,271	)
Changes of other comprehensive income of associates		(2,806,800	)		23,559
Tax effect 1		244,705			(67	)
Ending balance		(2,571,874	)		(9,779	)

¹ Including income tax effect (Note 35).

85

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The changes in gain on revaluation of property and equipment for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		26,749,635			26,770,909
Net valuation gain or loss by revaluation of property and equipment		47,900,256			—
Tax effect related to net valuation gain or loss for property. and equipment 1		(12,328,212	)		—
Transfer to retained earnings due to disposal of Property and equipment and others		(261,319	)		(21,274	)
Ending balance		62,060,360			26,749,635

¹ Including income tax effect (Note 35).

The changes in remeasurements of the net defined benefit liability for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		(40,520,752	)		(38,283,169	)
Changes due to valuation		3,779,955			(3,086,321	)
Tax effect 1		(1,040,964	)		848,738
Ending balance		(37,781,761	)		(40,520,752	)

¹ Including income tax effect (Note 35).

The changes in exchange differences on translation of foreign operations for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		12,877,767			(4,277,544	)
Change on foreign operations translation		33,272,037			28,632,701
Tax effect 1		(8,817,090	)		(3,571,779	)
Non-controlling interest		817,442			(234,864	)
Transferred to equity related to the disposal group classified as held for sale		7,670,747			(7,670,747	)
Ending balance		45,820,903			12,877,767

¹ Including income tax effect (Note 35).

The changes in gain or loss on valuation of hedge of net investments in foreign operations for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		(13,316,283	)		(233,745	)
Gain (loss) on net investment in a foreign operation hedge		(16,003,726	)		(18,044,880	)
Re-classification to net income due to the end of net investments in foreign operations		8,429,967			—
Tax effect 1		1,823,373			4,962,342
Ending balance		(19,066,669	)		(13,316,283	)

¹ Including income tax effect (Note 35).

86

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		2,225,783			(11,488,825	)
Changes		52,822,291			18,916,700
Tax effect 1		(13,967,207	)		(5,202,092	)
Ending balance		41,080,867			2,225,783

¹ Including income tax effect (Note 35).

27. Fee and Commission Income and Expense

The details of fee and commission income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Brokerage commissions		440,988,001		726,241,481
Underwriting commissions		158,574,302		123,079,958
Brokerage commissions on collective investment securities		19,850,174		28,155,111
Management fee on collective investment securities		126,162		—
Management fee on asset management		25,250,989		30,304,367
Commissions on merger and acquisition		129,236,138		130,301,073
Trust fees and commissions		17,996,232		14,581,037
Other commissions		147,681,784		91,585,352
		939,703,782		1,144,248,379

The details of fee and commission expense for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Trading commission		49,037,488		58,690,224
Advisory fees		1,664,749		1,967,202
Investment management delegation fees		3,537,986		4,709,857
Commission fees on group brand		15,661,129		18,483,104
Contributions to external institutions		8,093,205		7,593,876
Others		116,472,809		95,423,744
		194,467,366		186,868,007

28. 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Financial instruments at FVTPL		1,310,630,422		2,049,888,240		(739,257,818	)
Financial instruments designated at FVTPL		1,188,229,550		429,243,880		758,985,670
Derivative financial instruments		8,176,134,413		8,557,742,085		(381,607,672	)
Financial assets at FVOCI 1		525,431		16,448,206		(15,922,775	)
		10,675,519,816		11,053,322,411		(377,802,595	)

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

87

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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.

The details of gain or loss on valuation and disposal of financial instruments at FVTPL for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Financial assets at FVTPL		1,199,535,387		1,987,265,746		(787,730,359	)
Financial liabilities at FVTPL		111,095,035		62,622,494		48,472,541
		1,310,630,422		2,049,888,240		(739,257,818	)

	2021
(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	)

The details of gain or loss on valuation and disposal of financial instruments designated at FVTPL for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Financial liabilities designated at FVTPL
Derivatives-linked securities sold		914,565,927		359,592,452		554,973,475
Other OTC derivative-combined contract sold		244,528,092		52,797,971		191,730,121
Exchange traded notes sold		29,135,531		16,853,457		12,282,074
		1,188,229,550		429,243,880		758,985,670

	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	)

88

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The details of gain or loss on valuation and disposal of derivative financial instruments for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Interest rate		4,490,512,732		4,271,428,797		219,083,935
Currency		1,596,009,463		1,457,126,463		138,883,000
Stock		1,935,095,420		2,446,918,853		(511,823,433	)
Credit		38,991,621		31,943,503		7,048,118
Commodity		33,575,544		30,167,440		3,408,104
Others		81,949,633		320,157,029		(238,207,396	)
		8,176,134,413		8,557,742,085		(381,607,672	)

	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

The details of gain or loss on valuation and disposal of financial assets at FVOCI for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Debt instruments		525,431		16,448,206		(15,922,775	)

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

As at December 31, 2022, 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 W163.1 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, 2022, 4 lawsuits were 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.

89

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

29. Interest Income and Interest Expense

The details of interest income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Interest on financial assets at FVTPL
Interest on debt instruments at FVTPL		396,607,418		343,144,350
Interest on loans at FVTPL		4,189,123		6,773,305
Interest on commercial papers		142,422,181		52,496,923
		543,218,722		402,414,578
Interest on financial assets at FVOCI and financial assets measured at amortised cost
Interest on loans measured at amortised cost		9,409,656		10,374,554
Interest on debt instruments at FVOCI		76,499,887		47,099,927
Interest on broker’s loans		236,159,728		219,881,544
Interest on loans		225,699,957		112,290,556
Interest on deposits with KSFC		9,784,119		1,834,471
Interest on certificates of deposit		—		12,974
Interest on deposits with financial institution		26,600		5,560
Interest on bonds purchased under resale agreements		16,041,014		3,911,835
Gains on transactions of certificates of deposits		51,521		43,948
Interest on deposits		26,938,070		20,413,692
Interest on other receivables		1,006,504		2,013,585
Others 1		15,194,408		6,389,513
		616,811,464		424,272,159
		1,160,030,186		826,686,737

¹ Interest on lease receivables of \ 1,084 million and \ 1,616 million for the year ended December 31, 2022 and 2021, respectively, are included.

The details of interest expense for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Interest on borrowings		80,720,746		49,411,645
Fees for the proceeds from the sale of stocks loaned		830,841		958,563
Interest on customers’ deposits		32,433,283		7,096,195
Interest on bonds sold under repurchase agreements		171,398,994		91,025,829
Losses on transactions of certificates of deposit		76		619
Interest on call money		12,644,133		3,045,203
Interest on debentures		43,800,902		43,052,965
Interest on short-term note issued		163,134,122		43,200,628
Interest on asset-backed short-term bonds		107,825,509		26,576,586
Others 1		5,320,722		3,891,991
		618,109,328		268,260,224

¹ Interest on lease liabilities of \ 3,574 million and \ 2,953 million for the year ended December 31, 2022 and 2021, respectively, are included.

90

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

30. 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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Gain(Loss) on valuation of financial assets measured at amortised cost
Reversal(Provision) of allowance for credit losses of loans		(22,255,908	)		(16,414,879	)
Reversal(Provision) of allowance for credit losses of deposits		(12,598	)		105,374
Reversal(Provision) of allowance for credit losses of other financial assets		(6,901,629	)		(1,060,298	)
Gain(Loss) on disposal of financial assets measured at amortised cost
Gain(Loss) on disposal of loans measured at amortised cost		(6,094,227	)		2,347,609
		(35,264,362	)		(15,022,194	)

31. Gain or Loss on Foreign Currency Transactions

The details of gain on foreign currency transactions for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Gain on foreign currency transactions		1,159,670,794		710,365,102
Gain on foreign exchange translation		103,735,617		82,888,025
		1,263,406,411		793,253,127

The details of loss on foreign currency transactions for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Loss on foreign currency transactions		1,121,891,568		719,825,583
Loss on foreign exchange translation		143,828,278		24,666,526
		1,265,719,846		744,492,109

91

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

32. Other Operating Income and Other Operating Expenses

The details of other operating income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Dividend income		58,263,080		47,721,978
Distribution income		108,397,229		107,324,359
Reversal of provision for credit loss		866,708		552,679
Operating lease income		39,510,613		57,421,861
Others		15,862,203		13,859,608
		222,899,833		226,880,485

The details of other operating expenses for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Provision for credit loss		575,929		957,077
Others		26,511,442		68,030,407
		27,087,371		68,987,484

33. Selling and Administrative Expenses

(a) The details of selling and administrative expenses for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Labor Costs
Salaries		376,100,893			466,062,679
Post-employment benefits		33,430,995			21,492,051
Retirement bonus		22,686,894			619,728
Other long-term employee benefits		(454,613	)		2,415,192
Employee benefits		87,485,403			81,299,860
		519,249,572			571,889,510
Other selling and administrative expenses
Employee benefits		11,528,107			9,980,170
Sales promotion expenses		754,374			3,056,724
Computer system operation expenses		51,106,507			24,436,828
Management expenses for rent		19,660,703			20,908,033
Commissions		30,021,900			25,801,889
Research and development		495,341			247,420
Advertising expenses		27,793,451			28,470,056
Depreciation		51,040,964			43,477,698
Training expenses		3,043,596			1,546,429
Amortization expenses of intangible assets		27,876,572			22,397,762
Taxes and dues		27,825,717			34,863,679
Consignment fees		7,067,745			5,296,344
Others		45,129,548			62,890,187
		303,344,525			283,373,219
		822,594,097			855,262,729

92

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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, 2022, 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 1-19	2015-2-24		1,812		584	Service, vesting conditions : market 30%, non-market 70%
Series 1-21	2016-1-1		6,671		1,744	Service, vesting conditions : market 30%, non-market 70%
Series 1-22	2016-12-30		76,379		11,628	Service, vesting conditions : market 20%, non-market 80%
Series 1-23	2017-1-9		2,299		—	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		203	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		—	Service, vesting conditions : market 20%, non-market 80%
Series 1-28	2018-1-1		14,698		4,103	Service, vesting conditions : market 20%, non-market 80%
Series 1-29	2018-7-9		1,208		143	Service, vesting conditions : market 20%, non-market 80%
Series 1-30	2019-1-1		80,289		54,959	Service, vesting conditions : market 80%, non-market 20%
Series 1-30	2019-1-1		4,580		3,835	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		1,021	Service, vesting conditions : market 20%, non-market 80%
Series 1-33	2019-6-1		3,994		2,129	Service, vesting conditions : market 20%, non-market 80%
Series 1-34	2019-9-1		2,927		1,059	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		574	Service, vesting conditions : market 20%, non-market 80%
Series 1-37	2020-1-1		48,962		22,614	Service, vesting conditions : market 20%, non-market 80%
Series 1-38	2020-3-6		2,856		4,463	Service, vesting conditions : market 0%, non-market 100%
Series 1-39	2020-8-1		12,744		13,849	Service, vesting conditions : market 20%, non-market 80%

93

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Series 1-40	2021-1-1	98,808	127,009	Service, vesting conditions : market 80%, non-market 20%
Series 1-40	2021-1-1	5,675	5,675	Service, vesting conditions : market 0%, non-market 100%
Series 1-41	2021-3-4	3,591	4,786	Service, vesting conditions : market 20%, non-market 80%
Series 1-42	2021-3-15	5,190	4,671	Service, vesting conditions : market 20%, non-market 80%
Series 1-43	2021-5-27	604	298	Service, vesting conditions : market 20%, non-market 80%
Series 1-44	2021-6-1	2,904	3,460	Service, vesting conditions : market 20%, non-market 80%
Series 1-45	2021-8-1	2,276	1,615	Service, vesting conditions : market 20%, non-market 80%
Series 1-46	2021-9-1	3,201	3,376	Service, vesting conditions : market 20%, non-market 80%
Series 1-47	2022-1-1	54,170	29,010	Service, vesting conditions : market 20%, non-market 80%
Series 1-48	2022-2-17	1,926	838	Service, vesting conditions : market 20%, non-market 80%
Series 1-49	2022-3-6	928	928	Service, vesting conditions : market 0%, non-market 100%
Series 1-50	2022-5-9	2,839	920	Service, vesting conditions : market 20%, non-market 80%
Series 1-51	2022-8-1	4,683	2,053	Service, vesting conditions : market 20%, non-market 80%
Series 1-52	2022-8-16	4,029	760	Service, vesting conditions : market 20%, non-market 80%
		470,721	314,186

¹ The number of maximum payable shares per executive as at December 31, 2022.

94

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The details of share grants linked to short-term performance as at December 31, 2022, are as follows:

(In number of shares)	Grant date	Granted shares		Payable shares1		Vesting conditions2
Series 2-3	2016-1-1		6,844		2,392	Proportional to service period, vesting conditions satisfied
Series 2-4	2017-1-1		27,453		14,945	Proportional to service period, vesting conditions satisfied
Series 2-5	2018-1-1		70,959		26,407	Proportional to service period, vesting conditions satisfied
Series 2-6	2019-1-1		60,039		34,480	Proportional to service period, vesting conditions satisfied
Series 2-7	2020-1-1		68,689		53,929	Proportional to service period, vesting conditions satisfied
Series 2-8	2021-1-1		69,448		69,336	Proportional to service period, vesting conditions satisfied
Series 2-9	2022-1-1		98,396		98,396	Proportional to service period, vesting conditions satisfied
Series 3-3	2016-1-1		15,036		9,438	Proportional to service period, vesting conditions satisfied
Series 3-4	2017-1-1		12,112		7,767	Proportional to service period, vesting conditions satisfied
Series 3-5	2018-1-1		25,393		9,624	Proportional to service period, vesting conditions satisfied
Series 3-6	2019-1-1		44,696		26,378	Proportional to service period, vesting conditions satisfied
Series 3-7	2020-1-1		77,112		57,391	Proportional to service period, vesting conditions satisfied
Series 3-8	2021-1-1		91,948		91,948	Proportional to service period, vesting conditions satisfied
Series 4-1	2017-12-31		191,786		21,865	Proportional to service period, vesting conditions satisfied
Series 4-2	2019-12-31		273,097		92,959	Proportional to service period, vesting conditions satisfied
Series 4-3	2020-12-31		283,365		192,737	Proportional to service period, vesting conditions satisfied
Series 4-4	2021-12-31		294,834		294,834	Proportional to service period, vesting conditions satisfied
			1,711,207		1,104,826

¹ The number of maximum payable shares per executive as at December 31, 2022.

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, 2022, are as follows:

(In Korean won)	Risk free rate (%)	Fair value (Market performance condition)	Fair value (Non-market performance condition)
Series 1-1	3.777	—	44,859~46,663
Series 1-8	3.777	—	44,859~46,663
Series 1-10	3.777	—	44,859~46,663
Series 1-11	3.777	—	47,631~47,631
Series 1-13	3.777	—	44,859~47,631
Series 1-19	3.777	—	45,096~47,631
Series 1-21	3.777	—	43,157~50,973
Series 1-22	3.777	—	43,157~56,379
Series 1-23	3.777	—	45,096~56,379
Series 1-24	3.777	—	45,096~56,379
Series 1-25	3.777	—	45,096~56,379
Series 1-26	3.777	—	45,096~56,379
Series 1-27	3.777	—	45,096~56,379
Series 1-28	3.777	—	43,157~56,379

95

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(In Korean won)	Risk free rate (%)	Fair value (Market performance condition)	Fair value (Non-market performance condition)
Series 1-29	3.777	—	45,096~56,379
Series 1-30	3.777	—	43,157~56,379
Series 1-31	3.777	—	45,096~56,379
Series 1-32	3.777	—	41,548~44,859
Series 1-33	3.777	—	44,859~56,379
Series 1-34	3.777	—	44,859~50,973
Series 1-35	3.777	—	45,096~56,379
Series 1-36	3.777	—	44,859~50,973
Series 1-37	3.777	—	41,548~56,379
Series 1-38	3.777	43,157~50,973	43,157~46,663
Series 1-39	3.777	43,157~50,973	43,157~46,663
Series 1-40	3.777	40,757~48,322	43,157~50,973
Series 1-41	3.777	41,033~46,084	41,548~44,859
Series 1-42	3.777	39,520~44,386	41,548~44,859
Series 1-43	3.777	—	44,859~50,973
Series 1-44	3.777	39,458~44,316	41,548~44,859
Series 1-45	3.777	41,174~46,243	41,548~44,859
Series 1-46	3.777	40,609~45,608	41,548~44,859
Series 1-47	3.777	37,410~62,269	41,548~48,461
Series 1-48	3.777	35,287~39,615	39,958~43,157
Series 1-49	3.777	39,057~46,131	43,157~46,663
Series 1-50	3.777	37,824~42,464	39,958~43,157
Series 1-51	3.777	38,831~49,087	39,958~46,663
Series 1-52	3.777	38,040~42,706	39,958~43,157
Series 2-3	3.777	—	43,157~50,973
Series 2-4	3.777	—	43,157~56,379
Series 2-5	3.777	—	41,548~56,379
Series 2-6	3.777	—	41,548~56,379
Series 2-7	3.777	—	41,548~56,379
Series 2-8	3.777	—	41,548~57,941
Series 2-9	3.777	—	39,958~48,461
Series 3-3	3.777	—	43,157~50,973
Series 3-4	3.777	—	43,157~50,973
Series 3-5	3.777	—	43,157~56,379
Series 3-6	3.777	—	41,548~56,379
Series 3-7	3.777	—	41,548~56,379
Series 3-8	3.777	—	41,548~50,973
Series 4-1	3.777	—	45,096~56,379
Series 4-2	3.777	—	50,973~50,973
Series 4-3	3.777	—	46,663~50,973
Series 4-4	3.777	—	44,859~50,973

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 W 63,905,175 thousand and W 63,084,932 thousand are recorded as accrued expenses to KB Financial Group Inc. as at December 31, 2022 and 2021, respectively.

96

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

34. Non-operating Income and Non-operating Expenses

The details of non-operating income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Gain on disposal of property and equipment		1,499,486		170,470
Gain on disposal of investment properties		601,745		6,235,168
Gain on disposal of intangible assets		—		3,362
Reversal of impairment loss on intangible assets		394,684		2,630,059
Reversal of revaluation loss for property and equipment		72,800		—
Rent		6,280,529		7,012,044
Gain related to investments in associates		16,002,191		21,161,907
Gain on disposal of assets held for sale		8,967,270		—
Others		66,898,514		10,916,516
		100,717,219		48,129,526

The details of non-operating expenses for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Loss on disposal of property and equipment		292,841		184,710
Loss on disposal of investment properties		29,912		—
Depreciation of investment properties		468,531		487,447
Loss on disposal of intangible assets		22,000		40,656
Impairment loss on intangible assets		1,028,751		121,016
Revaluation loss for property and equipment		451,905		—
Donation		8,064,498		7,064,214
Loss related to investments in associates		12,962,791		6,678,563
Others		60,064,385		36,783,589
		83,385,614		51,360,195

35. Tax Expense and Deferred Tax

The details of income tax expense for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Current tax
Current tax on profits for the year		60,368,151			214,168,680
Adjustments in respect of prior years		(1,091,538	)		2,530,896
Deferred tax
Origination and reversal of temporary differences		41,473,246			11,962,477
Tax recognized directly in equity
Gain or loss on valuation for financial assets at FVOCI		(2,162,640	)		(4,008,037	)
Shares of other comprehensive income of associates		244,705			(67	)
Gain on revaluation of property and equipment		(12,328,212	)		—
Remeasurements of net defined benefit liabilities		(1,040,964	)		848,738
Foreign operations translation		(8,817,090	)		(3,571,779	)
Hedge of net investments in foreign operations		1,823,373			4,962,342
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(13,967,207	)		(5,202,092	)
Tax effect derived from group’s income tax system		2,997,367			(3,938,930	)
Income tax expense		67,499,191			217,752,228

Reconciliations of profit before tax and tax expense for the years ended December 31, 2022 and 2021, are as follows:

97

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022			2021
Profit before tax (A)		262,326,853			818,043,644
Tax based on statutory rate		63,021,098			214,600,002
Adjustments
Non-deductible expense		4,321,064			5,549,618
Non-taxable income		(3,968,641	)		(1,197,227	)
Changes in deferred tax assets (liabilities) that have not been recognized		(8,763,046	)		(14,833,564	)
Effect from tax reduction and credit		(201,610	)		(81,033	)
Adjustment in respect of prior years		(1,091,537	)		2,530,896
Tax effect from group’s income tax system		2,997,367			(3,938,930	)
Changes in tax rate		2,045,539			—
Others		9,138,957			15,122,466
Tax expense (B)		67,499,191			217,752,228
Effective tax rate (B/A)		25.73	%		26.62	%

The changes in deferred tax assets (liabilities) for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Provision for impairment		142,086			(5,167	)		—			136,919
Commissions income		4,622,730			3,180,864			—			7,803,594
Financial assets at FVOCI		(79,210,178	)		(4,561,632	)		(2,162,640	)		(85,934,450	)
Defined benefit obligation		19,501,520			(640,015	)		(1,040,964	)		17,820,541
Other long-term employee benefits		2,098,484			(196,781	)		—			1,901,703
Financial assets at FVTPL		55,244,765			139,967,430			—			195,212,195
Financial liabilities at FVTPL		(49,107,485	)		(244,071,368	)		(13,967,207	)		(307,146,060	)
Accrued expenses		75,757,563			(21,294,658	)		—			54,462,905
Dividends (specific overseas company)		10,545,651			(1,126,588	)		—			9,419,063
Accrued income		(22,988,746	)		(1,787,714	)		—			(24,776,460	)
Property and equipment		(9,782,627	)		75,168			(12,328,212	)		(22,035,671	)
Provisions for asset retirement obligation		2,199,329			133,270			—			2,332,599
Investments in associates and subsidiaries		1,747,824			(1,911,192	)		—			(163,368	)
Derivatives		(57,458,767	)		102,627,090			—			45,168,323
Loans		1,584,488			20,228			—			1,604,716
Intangible assets		(20,530,350	)		297,978			—			(20,232,372	)
Plan assets		(4,206,052	)		912,075			—			(3,293,977	)
Advance depreciation provision		(2,501,796	)		90,974			—			(2,410,822	)
Interest related to loan for construction		(64,951	)		6,099			—			(58,852	)
Others		40,214,857			11,912,773			—			52,127,630
Subtotal		(32,191,655	)		(16,371,166	)		(29,499,023	)		(78,061,844	)
Unrecognized deferred tax assets (liabilities) of the Parent Company		(3,604,707	)		(612,030	)		—			(4,216,737	)
Deferred tax assets (liabilities) of the Parent Company, net 1		(28,586,948	)		(15,759,136	)		(29,499,023	)		(73,845,107	)
Deferred tax assets of subsidiaries		—			1,289,260			—			1,289,260
Deferred tax liabilities of subsidiaries		(2,825,915	)		42,620			—			(2,783,295	)
Changes in deferred tax assets due to adjustment of consolidation		14,534,394			10,491,306			(6,749,012	)		18,276,688
Deferred tax assets of the Group		—			1,289,260			—			1,289,260
Deferred tax liabilities of the Group		(16,878,469	)		(5,225,210	)		(36,248,035	)		(58,351,714	)

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.

98

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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	)
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.

Temporary differences which were not recognized due to uncertainty of their realization as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Taxable temporary difference
Investments in subsidiaries		117,273,403		85,576,474
Intangible assets		58,888,990		58,888,990
Others		445,550		445,550
		176,607,943		144,911,014
Deductible temporary difference
Commission (local subsidiary)		7,512,805		7,512,805
Dividends (specific overseas company)		35,543,632		38,347,821
Investments in subsidiaries		20,188,708		18,755,689
Others		2,705,305		2,705,305
		65,950,450		67,321,620
		110,657,493		77,589,394

99

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Details of income taxes that are charged or credited directly to equity for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Recognized in other comprehensive income
Gain or loss on valuation for financial assets at FVOCI		(39,698	)		(4,768,491	)
Shares of other comprehensive income of associates		244,705			(67	)
Gains on revaluation of property and equipment		(12,328,212	)		—
Remeasurements of net defined benefit liabilities		(1,040,964	)		848,738
Foreign operations translation		(8,817,090	)		(3,571,779	)
Hedge of net investments in foreign operations		1,823,373			4,962,342
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(13,967,207	)		(5,202,092	)
Reclassified to profit or loss
Gain or loss on valuation for financial assets at FVOCI		(2,122,942	)		760,454
		(36,248,035	)		(6,970,895	)

36. 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, 2022 and 2021, are as follows:

	2022
(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		Totals
Financial Assets
Cash and deposits		—		4,537,576,194		—		4,537,576,194
Financial Assets at FVTPL		29,549,677,944		—		—		29,549,677,944
Derivatives		1,724,310,258		—		—		1,724,310,258
Equity instruments at FVOCI		—		—		687,825,614		687,825,614
Debt instruments at FVOCI		—		—		4,112,728,624		4,112,728,624
Loans measured at amortised cost		—		8,907,503,612		—		8,907,503,612
Other financial assets		—		2,687,932,514		—		2,687,932,514
		31,273,988,202		16,133,012,320		4,800,554,238		52,207,554,760

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2022
(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		—		10,088,600,213		—		—		10,088,600,213
Financial liabilities designated at FVTPL		2,082,979,265		—		—		—		2,082,979,265
Derivative financial liabilities		2,310,859,900		—				11,616,190		2,322,476,090
Deposit liabilities		—		—		6,799,233,076		—		6,799,233,076
Borrowings		—		—		23,523,195,868		—		23,523,195,868
Other financial liabilities		—		—		2,389,541,471		—		2,389,541,471
		4,393,839,165		10,088,600,213		32,711,970,415		11,616,190		47,206,025,983

	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		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

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

37. Financial Instruments

37.1 Fair Value of Financial Instruments by Class

Fair values of financial assets and financial liabilities as at December 31, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and deposits 2		4,537,576,194		4,537,576,194		3,834,048,675		3,834,048,675
Financial assets at FVTPL 1		29,549,677,944		29,549,677,944		34,182,334,301		34,182,334,301
Derivative financial assets 1		1,724,310,258		1,724,310,258		817,518,307		817,518,307
Financial assets at FVOCI		4,800,554,238		4,800,554,238		3,839,877,806		3,839,877,806
Loans measured at amortised cost		8,907,503,612		8,885,090,216		7,186,208,182		7,193,418,373
Other financial assets2		2,687,932,514		2,687,932,514		3,661,821,845		3,661,821,845
		52,207,554,760		52,185,141,364		53,521,809,116		53,529,019,307

	2022				2021
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial liabilities
Deposit liabilities 2		6,799,233,076		6,799,233,076		8,391,075,183		8,391,075,183
Financial liabilities at FVTPL		2,082,979,265		2,082,979,265		2,825,922,918		2,825,922,918
Financial liabilities designated at FVTPL1		10,088,600,213		10,088,600,213		9,160,923,652		9,160,923,652
Derivative financial liabilities1		2,322,476,090		2,322,476,090		874,641,742		874,641,742
Borrowings		23,523,195,868		23,460,054,713		24,649,381,850		24,636,652,379
Other financial liabilities2		2,389,541,471		2,389,541,471		3,484,650,271		3,484,650,271
		47,206,025,983		47,142,884,828		49,386,595,616		49,373,866,145

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.

37.2 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)

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at FVTPL – debt instruments 1		6,264,846,729		19,561,321,806		2,437,013,557		28,263,182,092
Financial assets at FVTPL - equity instruments		499,336,398		568,075,509		219,083,945		1,286,495,852
Derivative financial assets1		98,643,416		1,504,891,727		120,775,115		1,724,310,258
Financial assets at FVOCI		5,025,406		4,372,289,778		423,239,054		4,800,554,238
		6,867,851,949		26,006,578,820		3,200,111,671		36,074,542,440
Financial liabilities
Financial liabilities at FVTPL		2,082,979,265		—		—		2,082,979,265
Financial liabilities designated at FVTPL1		35,687,313		1,811,403,735		8,241,509,165		10,088,600,213
Derivative financial liabilities1		423,867,393		1,121,066,848		777,541,849		2,322,476,090
		2,542,533,971		2,932,470,583		9,019,051,014		14,494,055,568

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

	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.

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

37.3 Valuation techniques and inputs classified by Level 2

The details of the valuation techniques and inputs classified by Level 2 as at December 31, 2022 and 2021 are as follows:

(in thousands of Korean won)	2022	Valuation techniques	Inputs
Financial assets at FVTPL	20,129,397,315	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)	1,504,891,727	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
Financial assets at FVOCI	4,372,289,778	DCF Model	Discount rate, Interest rate and others
	26,006,578,820
Financial liabilities designated at FVTPL	1,811,403,735	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)	1,109,450,658	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)	11,616,190	DCF Model	Discount rate, exchange rate and others
	2,932,470,583

(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, 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, 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

104

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Financial liabilities designated at FVTPL	1,294,944,846	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)	490,871,710	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)	17,253,447	DCF Model	Discount rate, exchange rate and others
	1,803,070,003

37.4 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Beginning balance		1,899,337,278			368,355,671		41,344,748			(7,829,040,979	)
Total gains or losses
Profit or loss		(70,107,637	)		—		(666,119,493	)		563,317,417
Other comprehensive income		—			54,800,585		—			60,520,089
Purchases		1,182,931,242			82,798		23,525,783			—
Sales		(361,277,691	)		—		(59,177,496	)		—
Issues		—			—		(14,796,230	)		(5,222,820,340	)
Settlements		—			—		18,455,954			4,186,514,648
Transfer within levels 1		5,214,310			—		—			—
Ending balance		2,656,097,502			423,239,054		(656,766,734	)		(8,241,509,165	)

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

105

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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.

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, 2022 and 2021, are as follows:

	2022
(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		(84,556,890	)		—		(558,677,313	)		726,467,752
Other comprehensive income
Gain or loss on valuation of financial assets at FVOCI2		—			54,800,585		—			—
Changes in fair value of financial liabilities at FVTPL due to the change of credit risk2		—			—		—			56,580,809
		(84,556,890	)		54,800,585		(558,677,313	)		783,048,561

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.

	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.

106

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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

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

	2022
(in thousands of Korean won)	Type	Fair value		Valuation techniques	Inputs	Unobservable input	Range	Relevance
Financial assets at FVTPL	Equity-linked securities		10,127,847	DCF model, Closed Form, Monte Carlo	Price of underlying asset, interest rate,	Underlying asset volatility	0.22 ~ 0.25	Proportional
						Correlation	-0.37 ~ 0.73	Proportional
	Other derivative linked securities		162,897,287	Simulation, Hull and White,	discount rate, dividend ratio,	Underlying asset volatility	0.25 ~ 0.33	Proportional
				Black-Scholes Model, Net asset value, etc.	volatility of underlying assets, correlation of underlying assets,	Correlation	0.12 ~ 0.93	Proportional
	Other OTC derivative linked contract		231,308,457			Underlying asset volatility	0.19 ~ 0.36	Proportional
					volatility of interest rate, probability of default	Correlation	-0.60 ~ 0.76	Proportional
	Debt instruments		2,032,679,966			Underlying asset volatility	0.24 ~ 0.36	Proportional
	Equity instruments1		219,083,945			Discount rate	0.08 ~ 0.23	Inversely proportional
Derivative financial assets (trading)			120,775,115			Underlying asset volatility	0.10 ~ 0.59	Proportional
						Correlation	-0.60 ~ 0.93	Proportional
Financial assets at FVOCI	Equity instruments		423,239,054	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 ~ 0.13	Inversely proportional
			3,200,111,671
Financial liabilities designated at FVTPL	Equity-linked securities sold		6,726,257,399	DCF model, Closed Form, Monte Carlo	Price of underlying asset, interest rate, discount rate,	Underlying asset volatility	0.19 ~ 0.59	Proportional
						Correlation	-0.60 ~ 0.80	Proportional
	Derivatives linked securities sold		1,321,382,570	Simulation, Hull and White, Black-Scholes Model, Net asset	dividend ratio, volatility of underlying assets, correlation of	Underlying asset volatility	0.01 ~ 1.19	Proportional
						Correlation	-0.50 ~ 0.93	Proportional
	Other OTC derivatives linked contract sold1		193,869,196	value, etc.	underlying assets, volatility of interest rate, probability of	Underlying asset volatility	0.19 ~ 0.32	Proportional
					default	Correlation	-0.60 ~ 0.73	Proportional
Derivative financial liabilities (trading)			777,541,849			Underlying asset volatility	0.09 ~ 1.19	Proportional
						Correlation	-0.60 ~ 0.93	Proportional
			9,019,051,014

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

107

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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	Price of underlying asset, interest rate,	Underlying asset volatility	0.26 ~ 0.54	Proportional
						Correlation	0.08 ~ 0.90	Proportional
	Other OTC derivative linked contract		99,015,526	White, Black-Scholes Model, Net asset value, etc.	discount rate, dividend ratio, volatility of underlying assets,	Underlying asset volatility	0.16 ~ 0.26	Proportional
						Correlation	-0.60 ~ 0.77	Proportional
	Debt instruments		1,638,357,809		correlation of underlying assets,	Underlying asset volatility	0.14 ~ 0.30	Proportional
	Equity instruments1		132,895,981		volatility of interest rate, probability of	Discount rate	0.10 ~ 0.25	Inversely proportional
Derivative financial assets (trading)			209,808,660		default	Underlying asset volatility	0.03 ~ 0.81	Proportional
						Correlation	-0.60 ~ 0.90	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	Equity-linked securities sold		6,117,086,280	DCF model, Closed Form, Monte Carlo Simulation, Hull and	Price of underlying asset, interest rate, discount rate,	Underlying asset volatility	0.15 ~ 0.81	Proportional
FVTPL				White, Black-Scholes	dividend ratio,	Correlation	-0.60 ~ 0.88	Proportional
	Derivatives linked securities sold		1,567,907,416	Model, Net asset value, etc.	volatility of underlying assets, correlation of underlying assets,	Underlying asset volatility	0.01 ~ 0.81	Proportional
						Correlation	-0.48 ~ 0.90	Proportional
	Other OTC derivatives linked contract sold1		144,047,283		volatility of interest rate, probability of default	Underlying asset volatility	0.15 ~ 0.30	Proportional
						Correlation	-0.60 ~ 0.74	Proportional
Derivative financial liabilities (trading)			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.

(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, 2022 and 2021, are as follows.

	2022
	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		19,476,498		(16,155,942	)		—		—
Derivative financial assets 1		17,639,228		(18,599,459	)		—		—
Financial assets at FVOCI 2		—		—			31,718,711		(21,878,733	)
		37,115,726		(34,755,401	)		31,718,711		(21,878,733	)
Financial liabilities
Financial liabilities designated at FVTPL1		94,000,806		(97,663,062	)		—		—
Derivative financial liabilities 1		48,696,201		(46,355,477	)		—		—
		142,697,007		(144,018,539	)		—		—

108

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

	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.

(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)	2022			2021
Balances at the beginning of the year (A)		93,995,795			70,759,191
Incurred during the year (B)		111,326,521			176,475,408
Amounts recognized in profit or loss during the year (C)		(121,945,132	)		(153,238,804	)
Balances at the end of year (A+B+C)		83,377,184			93,995,795

109

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

37.5 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		8,885,090,216		8,885,090,216
Financial liabilities
Borrowings		—		—		23,460,054,713		23,460,054,713

¹ 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.

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		7,193,418,373		7,193,418,373
Financial liabilities
Borrowings		—		—		24,636,652,379		24,636,652,379

¹ 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.

(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.

37.6 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.

110

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

As at December 31, 2022 and 2021, relevant information about transferred financial assets which do not qualify for derecognition are as follows:

	2022
	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		3,728,769,734		52,098,066		2,234,882,535		—
Carrying amount of related liabilities		3,559,217,505		—		2,121,560,622		—

¹ Transferred debt instruments under repurchase agreements.

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

³ As at December 31, 2022, the accrued interests related to debt securities of W22,779 million is excluded.

	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.

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.

Details of carrying amounts of the underlying assets and the associated liabilities as of December 31, 2022 and 2021, are as follows:

(In thousands of Korean won)		2022		2021
Underlying assets	Financial assets at fair value through profit or loss		309,013,708		169,478,418
	Loans measured at amortized cost1		1,883,227,454		1,366,231,908
			2,192,241,162		1,535,710,326
Associated liabilities	Debentures		2,039,393,029		1,534,364,063

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

111

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

38. Financial Risk Management

38.1 Summary

38.1.1 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.

38.1.2 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 of 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.

38.1.3 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.

112

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

38.1.4 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.

38.2 Credit Risk

38.2.1 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.

38.2.2 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.

38.2.3 Maximum Exposure to Credit Risk

The maximum exposure of credit risk related to the off-balance as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Agreement to purchase the commercial papers 1		894,200,000		576,882,291
Guarantees and loan commitment		1,511,552,415		1,292,884,469
		2,405,752,415		1,869,766,760

¹  As at December 31, 2022 and 2021, asset-backed short-term bonds amounting to W 556,400 million and W 101,660 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.

113

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

38.2.4 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Individuals		3,013,311,847		33.57		(5,309,305	)		3,008,002,542
Corporations		5,963,136,067		66.43		(63,634,997	)		5,899,501,070
		8,976,447,914		100.00		(68,944,302	)		8,907,503,612

	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

The details of the Group’s loans measured at amortised cost by industry as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Financial service		3,286,456,276		36.61		(27,120,284	)		3,259,335,992
Manufacturing		467,421,330		5.21		(3,551,434	)		463,869,896
Service		1,314,159,811		14.64		(27,974,937	)		1,286,184,874
Others		895,098,650		9.97		(4,988,342	)		890,110,308
Individuals		3,013,311,847		33.57		(5,309,305	)		3,008,002,542
		8,976,447,914		100.00		(68,944,302	)		8,907,503,612

	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

(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, 2022 and 2021, are as follows:

114

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2022
(in thousands of Korean won)	Amount		Ratio (%)		Allowances			Carrying amount
Deposits measured at amortised cost
Banking and insurance		4,538,086,485		100.00		(645,224	)		4,537,441,261
		4,538,086,485		100.00		(645,224	)		4,537,441,261
Securities at FVTPL
Government and government funded institutions		10,302,987,449		36.51		—			10,302,987,449
Banking and insurance		9,839,206,275		34.87		—			9,839,206,275
Others		8,076,449,164		28.62		—			8,076,449,164
		28,218,642,888		100.00		—			28,218,642,888
Derivatives financial assets
Government and government funded institutions		1,596,038		0.09		—			1,596,038
Banking and insurance		1,690,445,757		98.04		—			1,690,445,757
Others		32,268,463		1.87		—			32,268,463
		1,724,310,258		100.00		—			1,724,310,258
Securities at FVOCI
Government and government funded institutions		449,958,939		10.94		—			449,958,939
Banking and insurance		2,493,923,434		60.64		—			2,493,923,434
Others		1,168,846,251		28.42		—			1,168,846,251
		4,112,728,624		100.00		—			4,112,728,624
		38,593,768,255				(645,224	)		38,953,123,031

	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

115

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

38.2.5 Credit Quality of Financial Assets

(a) Loans measured at amortised cost

Loans measured at amortised cost as at December 31, 2022 and 2021, are as follows:

	2022
(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
Loans measured at amortised cost 1
Corporates
Grade 1		2,201,520,418		—		—		—		—		2,201,520,418
Grade 2		3,627,589,800		—		—		—		—		3,627,589,800
Grade 3		48,465,895		30,000,000		—		—		—		78,465,895
Grade 4		37,203,171		—		—		—		—		37,203,171
Grade 5		—		—		18,356,784		—		—		18,356,784
		5,914,779,284		30,000,000		18,356,784		—		—		5,963,136,068
Retails
Grade 1		2,917,664,910		—		—		—		—		2,917,664,910
Grade 2		90,276,978		—		—		—		—		90,276,978
Grade 3		—		—		—		—		—		—
Grade 4		60,654		—		—		—		—		60,654
Grade 5		—		—		5,309,306		—		—		5,309,306
		3,008,002,542		—		5,309,306		—		—		3,013,311,848
Loans measured at FVTPL
Corporates
Grade 1		—		—		—		—		44,489,203		44,489,203
Grade 2		—		—		—		—		—		—
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		—		—		—		—		44,489,203		44,489,203
		8,922,781,826		30,000,000		23,666,090		—		44,489,203		9,020,937,119

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

116

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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
Loans 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
Loans measured at FVTPL
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

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, 2022 and 2021, are as follows:

	2022
(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		7,643,969		—		—		—		—		7,643,969
Real estate		290,470,326		—		208,363		—		—		290,678,689
Securities		6,366,812,101		—		—		—		—		6,366,812,101
		6,664,926,396		—		208,363		—		—		6,665,134,759

117

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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

(b) Securities (debt instruments)

Securities (debt instruments) that are exposed to credit risks as at December 31, 2022 and 2021, are as follows:

	2022
(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		3,262,409,959		—		—		—		—		3,262,409,959
Grade 2		836,531,848		—		—		—		—		836,531,848
Grade 3		13,786,817		—		—		—		—		13,786,817
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		4,112,728,624		—		—		—		—		4,112,728,624

¹  Before deduction of allowances

	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

118

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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

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, 2022 and 2021, are as follows:

	2022
(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		4,538,221,418		—		—		—		4,538,221,418
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		4,538,221,418		—		—		—		4,538,221,418

¹  Before deduction of allowances

	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

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

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(d) Commitments

The credit quality of commitments as at December 31, 2022 and 2021, are as follows:

	2022
(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		431,461,335		—		—		—		431,461,335
Grade 2		937,138,592		31,731,909		—		—		968,870,501
Grade 3		32,238,671		—		—		—		32,238,671
Grade 4		416,781,907		—		—		—		416,781,907
Grade 5		—		—		—		—		—
		1,817,620,505		31,731,909		—		—		1,849,352,414

	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

(e) Other receivables from securities transactions

Other receivables from securities transactions, which are classified as other financial assets, as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Other receivables related to proprietary trading		182,035,890		104,074,769
Other receivables related to brokerage Transactions		2,002,456,540		2,635,657,555

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.

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.

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

38.3 Liquidity Risk

38.3.1 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.

38.3.2 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 41.

38.3.3 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, 2022 and 2021, are as follows:

	2022
(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		2,082,979,265		—		—		—		—		—		2,082,979,265
Financial liabilities designated at FVTPL 1		10,088,600,213		—		—		—		—		—		10,088,600,213
Derivatives (trading) 2		2,310,859,900		—		—		—		—		—		2,310,859,900
Derivatives (hedge)		—		10,070,190		422,620		—		1,123,380		—		11,616,190
Deposit liabilities 3		6,799,233,076		—		—		—		—		—		6,799,233,076
Borrowings		7,771,843,528		6,482,377,184		3,141,089,345		4,570,503,698		1,780,651,651		19,855,119		23,766,320,525
Other financial liabilities		16,349,365		2,183,847,861		8,689,578		29,369,004		93,934,508		10,625,818		2,342,816,134
Guaranteed payments and commitment 4		1,849,352,415		—		—		—		—		—		1,849,352,415

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.

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	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

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.

38.4 Market Risk

38.4.1 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.

38.4.2 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 10days VaR. Historical simulation model is based on past changes of market variables without assuming a specific probability distribution.

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Average		Maximum		Minimum		December 31, 2022
Total VaR		35,197,541		60,205,109		18,655,089		20,195,624

	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

38.4.3 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.

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

(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 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.

38.4.4 Risk Management by Interest Rate 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 the end of June, 2023.

The carrying amount of financial instruments that have not been converted to an alternative indicator interest rate as of December 31, 2022 and 2021 are as follows:

(in thousands of Korean won)	2022		2021
	Exposure amount 1 USD LIBOR		Exposure amount 1 USD LIBOR
Measured at amortised cost
Loans		7,482,357		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.

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

38.5 Operational Risk

38.5.1 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.

38.5.2 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.

38.6 Capital Management

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, 2022 and 2021

39. 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.

	2022
(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		1,800,627,070		—		1,800,627,070		1,240,440,412		194,397,457		365,789,201
Securities purchased under reverse repurchase agreements		730,100,000		—		730,100,000		730,100,000		—		—
Other receivables 4		1,985,950,659		1,897,820,808		88,129,851		—		—		88,129,851
Other receivables (Payment and settlement)		26,385,142		26,385,142		—		—		—		—
		4,543,062,871		1,924,205,950		2,618,856,921		1,970,540,412		194,397,457		453,919,052
Financial liabilities
Derivatives liabilities, others 1		3,357,495,348		—		3,357,495,348		2,658,744,222		83,836,686		614,914,440
Securities sold under reverse resale agreements 2		6,231,390,409		—		6,231,390,409		6,231,390,409		—		—
Securities sold 3		2,082,979,265		—		2,082,979,265		2,082,979,265		—		—
Other payables 4		1,954,742,873		1,897,820,808		56,922,065		—		—		56,922,065
Other payables (Payment and settlement)		27,716,059		26,385,142		1,330,917		—		—		1,330,917
		13,654,323,954		1,924,205,950		11,730,118,004		10,973,113,896		83,836,686		673,167,422

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, 2022 and 2021

	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.

40. Lease

40.1 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, 2022 and 2021, are as follows;

(in thousands of Korean won)	2022		2021
Right-of-use assets 1
Buildings		76,580,927		73,419,498
Vehicles		2,258,588		1,570,194
Others		1,005,513		1,710,375
		79,845,028		76,700,067
Lease liabilities		125,593,239		127,992,813

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, 2022 and 2021

40.2 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, 2022 and 2021, are as follows

(in thousands of Korean won)	2022		2021
Depreciation of the right-of-use assets
Buildings		24,022,595		16,115,606
Vehicles		1,188,483		1,176,069
Others		1,081,530		1,281,970
		26,292,608		18,573,645
Interest income from lease receivables (included in financial income)		1,084,287		1,615,695
Interest expense to lease liabilities (included in financial cost)		3,573,738		2,953,182
Lease payment for leases for which the underlying asset is of low value (included in administrative expenses, not-include lease for short-term period)		1,141,427		986,405
Variable lease payments which are not included in the measurement of lease liabilities (included in administrative expenses)		126,576		256,363

The total cash outflows for leases in 2022 and 2021 are W 33,554 million and W 34,917 million, respectively.

40.3 As a Lessor : Financial Lease

As at December 31, 2022 and 2021, 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)	2022		2021
Total Investment on lease		35,135,664		41,127,430
Net Investment on lease		32,271,624		37,179,103
Present value of minimum lease payments		32,271,624		37,179,103
Unrealized interest income		2,864,040		3,948,327

40.4 As a Lessor : Operating Lease

As at December 31, 2022 and 2021, future minimum lease receipts expected under non-cancellable lease contracts are as follows:

(in thousands of Korean won)	2022		2021
Within 1 year		32,399,049		50,784,062
1 - 5 years		127,788,610		231,084,324
Over 5 years		170,691,730		272,652,305
		330,879,389		554,520,691

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Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

41. Contingent Liabilities and Commitments

As at December 31, 2022 and 2021, the Group is involved in pending lawsuits, are as follows:

	2022				2021
(in thousands of Korean won)	Number of lawsuits		Amount		Number of lawsuits		Amount
Defendant		33		202,977,447		21		176,352,560
Plaintiff		8		177,971,745		9		163,067,109

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, 2022 and 2021, are as follows:

		Credit line
(in thousands of Korean won)	Financial institution	2022		2021
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		600,000,000		700,000,000
Working capital loan (general)	KSFC		475,000,000		375,000,000
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		500,000,000		850,000,000
Securities underwriting financing	KSFC		1,710,000,000		1,500,000,000

The guarantees and various commitment as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Agreement to purchase commercial papers 1		337,800,000		576,882,291
Loan agreements		6,650,000		30,000,000
Credit line agreements		1,028,048,939		817,405,672
LOC and Investment commitments		476,853,476		445,478,798
		1,849,352,415		1,869,766,761

¹ According to the above arrangement, the Group holds the asset-backed short-term bonds amounting to W556,400 million and W101,660 million as at December 31, 2022 and 2021, respectively.

The Group has been provided with W10,731 million and W12,678 million in guarantees related to provisional attachment and others by Seoul Guarantee Insurance as at December 31, 2022 and 2021, respectively.

The securities in custody as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021		Valuation method
Trustor securities		200,379,840,702		155,890,031,762	Fair value
Saver securities		308,762,230		232,748,017	Fair value
Beneficiary securities		35,441,473,205		32,356,219,560	Standard selling price
		236,130,076,137		188,478,999,339

129

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

The Group, 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, intermediated W 326.5 billion of trusts and funds to the individuals and institutional investors. However, the local borrower’s breach of the contract makes the fund inoperable and there is a possibility of loss of principal.

As at December 31, 2022, three lawsuits were filed to the Group as a defendant. On February 7, 2023, in one case, the first-instance verdict of the trial ordering the payment of a total of W 29.8 billion and delayed interest thereon was announced, but there is a possibility that the conclusion is changed in the upper court, and the other two cases are still in the first instance. The Group has reflected in its financial statements the results of the first-instance verdict handed down on February 7, 2023, as an adjusting event after the reporting period, and has incorporated the related litigation provision liabilities into its consolidated financial statements as at December 31, 2022.

Meanwhile, the Group has filed a lawsuit against JB Asset Management Co., Ltd, the fund management company, for compensation, and the first trial is currently in progress.

42. Related Party Transactions

KB Financial Group Inc. owns 100% of ordinary shares of the KB Securities Co., Ltd. as at December 31, 2022 and 2021.

Significant balances, excluding loan and borrowing transactions, with related parties as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022				2021
	Receivables		Payables		Receivables		Payables
The Parent Company
KB Financial Group Inc.		116,502,545		66,137,149		84,740		106,320,356
Others
Kookmin Bank		76,123,515		154,551,304		65,935,574		56,100,555
KB Asset Management Co., Ltd.		1,479		32,643,821		1,747		32,815,772
KB Real Estate Trust Co., Ltd.		—		622		—		522
KB Investment Co., Ltd.		627,295		236		154,405		121
KB Credit Information Co., Ltd.		—		147		—		2,719
KB Data System Co., Ltd.		856,887		43,007		179,879		235,328
KB Life Insurance Co., Ltd.		685,561		381,241		790,282		380,519
KB Kookmin Card Co., Ltd.		50,551		7,572,851		142,366		7,390,861
KB Savings Bank Co., Ltd.		—		552		—		399
KB Capital Co., Ltd.		96,317		2,380,696		92,710		1,489,116
KB Insurance Co., Ltd		52,388,172		20,353,598		7,512,920		2,967,593
KB Life Insurance Co., Ltd. (former Prudential Life Insurance Co., Ltd.)1		329,563		651,994		378,566		717,402
KB Wisestar Private Real Estate Fund Investment Trust No. 1		7,292		—		7,811		59,551,609
Other funds		206,781		19,141,815		2,566,825		4,718,031

¹  Changed company name from Prudential Life Insurance Co., Ltd. to KB Life Insurance Co., Ltd. for the year ended December 31, 2022.

130

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Significant transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Revenue		Expenses		Revenue		Expenses
Associates
KB-Stonebridge Secondary Private Equity Fund		705,744		—		549,714		—
KB-SJ Tourism Venture Fund		209,347		—		278,571		—
KB-SP Private Equity Fund IV		210,945		—		388,931		—
KB Special Purpose Acquisition Company No.17 1		—		—		—		1,067,588
KB Special Purpose Acquisition Company No.18 1		—		—		5,886		—
KB Special Purpose Acquisition Company No.19 1		—		—		36,244		—
KB Special Purpose Acquisition Company No.20 1		—		—		67,917		—
KB Bio Private Equity Fund III Ltd. 1		4,034,553		—		323,836		—
K The fifteenth Real Estate Investment Trust 1		—		—		500,000		—
Keystone-Hyundai Sec. No.1 Private Equity Fund 1		—		—		42,637		—
KB-Brain KOSDAQ Scale-Up Fund		422,946		—		514,119		—
KB-KDBC New Technology Business Investment Fund		129,289		—		189,998		—
KBTS Technology Venture Private Equity Fund		185,355		—		285,290		—
KB-UTC Inno-Tech Venture Fund		449,015		—		471,466		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		561,064		—		1,198,196		—
KB SPROTT Renewable Private Equity Fund I		345,339		—		487,500		—
KB Material and Parts No. 1 PEF		352,500		—		352,500		—
KB-KTB Technology Venture Fund		599,726		—		—		—
KB-GeneN Medical Venture Fund 1		76,392		—		—		—
KB-BridgePole Venture Investment Fund		117,986		—		—		—
KB-Kyobo New Mobility Power Fund		68,825		—		—		—
KB Special Purpose Acquisition Company No.21		1,731,563		—		—		—
THE CHAEUL FUND NO.1 2		81,844		—		—		—
KB Special Purpose Acquisition Company No.22		1,157,075		—		—		—
KB-NP Green ESG New Technology Venture Capital Fund		435,147		—		—		—
KB Special Purpose Acquisition Company No.23		1,476,465		—		—		—
The Parent Company
KB Financial Group Inc.		484,732		20,241		689,158		15,168
Others
Kookmin Bank		187,822,727		274,544,619		114,540,036		117,174,822
KB Asset Management Co., Ltd.		9,069		1,679,427		9,821		1,108,009
KB Real Estate Trust Co., Ltd.		936		3,010		760		5
KB Investment Co., Ltd.		1,902,935		4		616,501		1
KB Credit Information Co., Ltd.		221		3		218		2,482
KB Data System Co., Ltd.		955		1,120,617		823		1,348,880
KB Life Insurance Co., Ltd.		113,129		37,855		322,568		327,902
KB Kookmin Card Co., Ltd.		68,448		561,990		111,626		679,936
KB savings bank Co., Ltd.		831		14		227		4,610

131

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2022				2021
(in thousands of Korean won)	Revenue		Expenses		Revenue		Expenses
KB Capital Co., Ltd.		305,322		41,981		344,413		478
KB Insurance Co., Ltd		68,091,902		67,731,685		889,407		5,459,994
KB Life Insurance Co., Ltd. (former Prudential Life Insurance Co., Ltd.) 3		644,336		1,004,150		614,560		747,319
KB Wisestar Private Real Estate Fund Investment Trust No. 1		—		8,719,917		10,297,783		—
Other funds		18,649,158		11,988,579		5,305,247		510,087
Retirement pension		771,613		—		598,028		—
The Group
Employees		344,870		—		321,649		—

¹  These companies are excluded from related parties during the year ended December 31, 2022 or 2021. The transaction amounts are up to the date of the exclusion.

²  Changed company name from SKS IB NEW M&T FUND NO.1 to THE CHAEUL FUND NO.1 for the year ended December 31, 2022.

³  Changed company name from Prudential Life Insurance Co., Ltd. to KB Life Insurance Co., Ltd. for the year ended December 31, 2022.

Significant loan and borrowing transactions with related parties for the years ended December 31, 2022 and 2021 are as follows:

	2022
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other		Ending balance
Associates
KB Special Purpose Acquisition Company No.171	Hybrid bond with securities-like features		999,500		—		(999,500	)		—		—
KB Special Purpose Acquisition Company No.181	Hybrid bond with securities-like features		3,058,774		—		(3,058,774	)		—		—
KB Special Purpose Acquisition Company No.191	Hybrid bond with securities-like features		2,090,861		—		(2,090,861	)		—		—
KB Special Purpose Acquisition Company No.201	Hybrid bond with securities-like features		3,135,222		—		—			—		3,135,222
KB Special Purpose Acquisition Company No.21	Hybrid bond with securities-like features		—		1,490,000		—			1,469,063		2,959,063
KB Special Purpose Acquisition Company No.22	Hybrid bond with securities-like features		—		990,000		—			982,075		1,972,075
KB Special Purpose Acquisition Company No.23	Hybrid bond with securities-like features		—		1,495,000		—			1,476,465		2,971,465
KB Special Purpose Acquisition Company No.24	Hybrid bond with securities-like features		—		6,975,000		—			—		6,975,000
Others
Kookmin Bank	Deposits 2		537,191,788		—		—			330,346,210		867,537,998

132

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

	2022
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other		Ending balance
	Borrowings		124,560,300		885,820,653		(868,303,453	)		—		142,077,500
The Group
Employees	Loans to employees		14,940,376		2,324,900		(5,624,383	)		—		11,640,893

¹ These companies are not related party as at December 31, 2022.

² Transactions such as settlement payments for business reasons and deposits that can be deposited and withdrawn at any time between related parties are disclosed in net amounts.

	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 1		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

¹ Transactions such as settlement payments for business reasons and deposits that can be deposited and withdrawn at any time between related parties are disclosed in net amounts.

Other transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

(In thousands of Korean won)	2022
	Contribution		Collection and others
Associates
KB Special Purpose Acquisition Company No.17 1		—		500
KB Special Purpose Acquisition Company No.18 1		—		1,000
KB Special Purpose Acquisition Company No.19 1		—		1,000
KB Special Purpose Acquisition Company No.20 1		—		1,000
KB Special Purpose Acquisition Company No.21		10,000		—
KB Special Purpose Acquisition Company No.22		10,000		—
KB Special Purpose Acquisition Company No.23		5,000		—
KB Special Purpose Acquisition Company No.24		25,000		—
KB New Paradigm Agriculture Venture Fund		—		625,000
KB-KDBC New Technology Business Investment Fund		—		2,600,000
KBTS Technology Venture Private Equity Fund		—		1,296,000
KB-SJ Tourism Venture Fund		—		400,000
KB Shinjasanaubo Fund		—		132,000
KB-Brain KOSDAQ Scale-Up Fund		—		4,800,000
KB SPROTT Renewable Private Equity Fund I		2,499,360		—
KB-Stonebridge Secondary Private Equity Fund		1,248,439		631,500
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		660,000		2,352,793

133

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Project Vanilla Co., Ltd. 1	—	525,344
KB Bio Private Equity Fund III Ltd. 1	—	10,000,000
KB-KTB Technology Venture Fund	4,000,000	—
KB Digital Platform Fund	5,000,000	—
KB-SOLIDUS Healthcare Investment Fund	1,000,000	—
KB-GeneN Medical Venture Fund 1	2,000,000	—
KB-BridgePole Venture Investment Fund	850,000	—
KB-Kyobo New Mobility Power Fund	3,000,000	—
JS Private Equity Fund III	1,700,000	—
Mirae Asset Mobility Investment Fund I	2,000,000	—
KB-FT 1st Green Growth Investment Fund	2,000,000	—
THE CHAEUL FUND NO.1 2	1,000,000	—
POSITIVE Sobujang Venture Fund No.1	2,000,000	—
KB-NP Green ESG New Technology Venture Capital Fund	3,740,000	—
Hisstory 2022 Fintech Fund	2,000,000	—
PEBBLES-MW M.C.E New Technology Investment Fund 1st	2,000,000	—
KB Star REIT	134,772,782	—
KB Bio Private Equity Investment Fund IV	7,500,000	—
Nextrade Co., Ltd.	9,700,000	—
Apollo REIT PropCo LLC 1	19,968,049	19,968,049
Others
Star-Lord General Investors Private Real Estate Investment Company No.10	20,000,000	—
KB NA Compass Energy Private Special Asset Fund 1	606,975	21,823,276
Meritz Private Real Estate Fund 9-2	1,486	5,306
KB Global Core Bond Securities Master Fund(Bond)	—	5,000,000
KB Global Platform Fund	3,200,000	2,460,000
KB Wisestar Private Real Estate Fund Investment Trust No. 1	—	1,749,177
KB KBSTAR 30-Years Treasurybond Enhanced ETF 1	—	691,351
KB Aircraft Loan Private Special Asset Fund Investment Trust No. 1	—	32,265,511
KB New Deal Innovation Fund	4,800,000	—
KB Development Blind General Private Real Estate Investment Trust No.2	3,240,000	—
KB Prime Digital Platform Fund	900,000	—
KB Secondary Plus Fund	1,180,000	—
Paramark KB Fund I	4,148,023	772,023
KB Scale-up Fund No.2	1,500,000	—
KB KBSTAR Nov 2023 Term Credit ETF	14,862,445	4,905,170

¹  These companies are not related party as at December 31, 2022.

²  Changed company name from SKS IB NEW M&T FUND NO.1 to THE CHAEUL FUND NO.1 for the year ended December 31, 2022.

(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		—

134

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

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.

Details of guarantees and assets pledged as collateral to related parties as at December 31, 2022 and 2021 are as follows:

(a) Guarantees

	Limit amount
(in thousands of Korean won)	Details		2022		2021
KB Star Galaxy Towers REIT		Funding replenishment agreement B		40,000,000		—

(b) Assets pledged as collateral

(in thousands of Korean won)	Details of assets pledged	2022				2021
		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		16,541,459		20,000,000		21,183,449		20,000,000
	Investment properties		—		—		481,945,657		11,967,467

As at December 31, 2022, the Group received securities amounting to W 62,000 million (2021 : W 54,000 million) as a collateral from Kookmin bank and the Group has W 140,000 million (2021 : W 140,000 million) of credit line such as loan agreement.

135

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Details of unused loan commitments provided to the related parties as at December 31, 2022 and 2021, are as follows:

(In thousands of Korean won)	Details	Amounts
		2022		2021
KBTS Technology Venture Private Equity Fund	Purchase agreements of securities		—		176,000
KB Wisestar Private Real Estate Fund Investment Trust No. 1	Purchase agreements of securities		19,000		19,000
KB SPROTT Renewable Private Equity Fund I	Purchase agreements of securities		—		3,817,225
KB-Stonebridge Secondary Private Equity Fund	Purchase agreements of securities		—		1,594,000
KB Global Platform Fund	Purchase agreements of securities		—		3,200,000
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		7,644,000		8,304,000
KB BMO senior loan private special asset fund	Purchase agreements of securities		19,497		18,239
KB-KTB Technology Venture Fund	Purchase agreements of securities		4,000,000		8,000,000
Paramark KB Fund I	Purchase agreements of securities		5,944,000		9,320,000
KB New Deal Innovation Fund	Purchase agreements of securities		3,200,000		8,000,000
KB-SOLIDUS Healthcare Investment Fund	Purchase agreements of securities		3,900,000		4,900,000
KB Digital Platform Fund	Purchase agreements of securities		40,500,000		45,500,000
KB Secondary Plus Fund	Purchase agreements of securities		1,181,000		—
KB Scale-up Fund No.2	Purchase agreements of securities		8,500,000		—
KB-NP Green ESG New Technology Venture Capital Fund	Purchase agreements of securities		16,260,000		—
KB Star Galaxy Towers REIT	Purchase agreements of securities		40,000,000		—
KB Prime Digital Platform Fund	Purchase agreements of securities		3,600,000		—

The Group received credit card commitment amounting to W 21,000 million(W 21,000 million as at December 31, 2021) from Kookmin Card Co., Ltd. as at December 31, 2022.

136

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Debt instruments purchased or sold via the Group by the related party for the years ended December 31, 2022 and 2021, are as follows.

	2022
(in thousands of Korean won)	Sale		Purchase 1
Kookmin Bank		7,341,903,732		3,791,777,742
KB Life Insurance Co., Ltd.		92,619,359		11,922,239
KB Insurance Co., Ltd		794,858,152		362,105,311
KB Life Insurance Co., Ltd. (former Prudential Life Insurance Co., Ltd.) 2		65,611,000		325,130,900
KB Kookmin Card Co., Ltd.		—		70,000,000
KB Capital Co., Ltd.		—		70,000,000

¹ Debt instruments issued by the related party and purchased by the Group are included.

²  Changed company name from Prudential Life Insurance Co., Ltd. to KB Life Insurance Co., Ltd. for the year ended December 31, 2022.

	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.

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, 2022 and 2021, are as follows.

(in thousands of Korean won)	2022		2021
Short-term salaries		19,619,299		9,493,422
Post-employment benefits		654,295		579,895
Share-based payment		10,499,614		16,001,106
		30,773,208		26,074,423

137

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

43. Supplemental Cash Flow Information

Adjustments for non-cash items of cash flows from operating activities for the years ended December 31, 2022 and 2021, are as follows.

(in thousands of Korean won)	2022			2021
Interest income		(1,160,030,186	)		(826,686,736	)
Interest expenses		618,109,328			268,260,224
Dividend income and distribution income		(58,263,080	)		(47,721,978	)
Tax expenses		67,499,191			217,752,228
Gains on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		(333,119,842	)		(269,490,685	)
Losses on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		831,544,707			418,287,034
Gains on valuation of financial assets (liabilities) designated at FVTPL		(1,034,347,105	)		(602,482,365	)
Losses on valuation of financial assets (liabilities) designated at FVTPL		101,117,268			170,830,700
Gains on valuation of derivative financial assets (liabilities)		(3,768,918,242	)		(1,520,100,781	)
Losses on valuation of derivative financial assets (liabilities)		3,949,042,388			1,675,607,385
Gains or losses on disposal of financial assets at FVOCI		16,397,562			10,811,918
Provision for allowances for loan losses		29,170,136			17,369,802
Depreciation		60,392,226			55,730,775
Amortization		27,876,572			22,397,762
Foreign currency translations		40,092,662			(58,221,499	)
Others		40,749,617			50,343,825
		(572,686,798	)		(417,312,391	)

Changes in operating assets and liabilities of cash flows for the years ended December 31, 2022 and 2021, are as follows.

(in thousands of Korean won)	2022			2021
Deposits in financial institutions		(591,602,391	)		(116,093,291	)
Financial assets required to be mandatorily measured at FVTPL		4,070,185,916			(741,184,122	)
Derivative financial instruments		376,528,219			(47,323,458	)
Loans measured at amortised cost		(2,277,528,256	)		(965,561,358	)
Other assets		861,810,325			3,159,131,548
Deposit liabilities		(1,627,275,300	)		690,719,218
Financial liabilities required to be mandatorily measured at FVTPL		(649,762,362	)		978,686,697
Financial liabilities designated at FVTPL		1,913,770,458			(185,467,288	)
Defined benefit obligation		(23,185,907	)		(16,828,530	)
Securities sold under repurchase agreements		(2,784,278,687	)		(1,240,816,274	)
Other liabilities		(1,103,619,065	)		(3,249,573,025	)
		(1,834,957,050	)		(1,734,309,883	)

138

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Changes in liabilities of cash flows from financing activities for the years ended December 31, 2022 and 2021, are as follows.

	2022
(in thousands of Korean won)	Borrowings			Debentures			Guarantee deposits			Lease liabilities			Others			Total
Beginning balance (net)		15,252,419,029			2,423,653,655			26,518,264			127,992,813			228,717,913			18,059,301,674
Cash Transactions		2,309,764,192			(545,885,919	)		498,469			(30,267,166	)		(28,794,866	)		1,705,313,710
Exchanges in foreign currency		(26,690	)		18,701,008			(33,330	)		(279,624	)		—			18,361,364
Changes in consolidation scope		454,724,863			—			29,956			141,239			—			454,896,058
Non-cash transactions		(551,182,209	)		(20,362,470	)		(18,118,022	)		28,005,978			(32,748,036	)		(594,404,760	)
Ending balance(net)		17,465,699,185			1,876,106,274			8,894,337			125,593,239			167,175,011			19,643,468,046

	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

44. 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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Increase due to gains on valuation of financial assets at FVOCI		19,904,095		13,976,607
Replacement of investments in associates and assets held for sale		—		169,424,284

139

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

45. 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

140

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

Details of the size of the interest in unconsolidated structured entities and the nature of risks related are as follows:

	2022
(in thousands of Korean won)	Asset-backed securitization		Investment fund		Others		Total
Total assets of unconsolidated structured entities		16,840,274,262		26,227,955,016		13,832,783,457		56,901,012,735
Assets recognized in the consolidated financial statements of the Group
Loans		344,336,080		—		1,223,588,027		1,567,924,107
Securities		3,547,286,127		1,714,215,712		3,958,500		5,265,460,339
Investments in associates		—		259,437,774		—		259,437,774
Other assets		1,169,590		—		1,315		1,170,905
		3,892,791,797		1,973,653,486		1,227,547,842		7,093,993,125
Liabilities recognized in the consolidated financial statements of the Group
Derivatives financial assets		697,664		2,102,146		—		2,799,810
Other liabilities		51,883,899		—		238,770		52,122,669
		52,581,563		2,102,146		238,770		54,922,479
Maximum exposure to loss
Holding assets		3,892,791,796		1,973,653,486		1,227,547,842		7,093,993,124
Payment guarantee and loan commitments		358,038,047		378,815,262		—		736,853,309
		4,250,829,843		2,352,468,748		1,227,547,842		7,830,846,433
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

	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 consolidated 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 consolidated 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

141

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

46. Business Combination

As of February 14, 2022, the Group acquired 65.0% shares in PT. KB Valbury Sekurita for W 57,222 million in cash and incorporated it as a subsidiary.

The main reason for the business combination is to diversify the global business by entering Indonesian capital market through takeover, and to strengthen competitiveness in the global sector through business with other overseas affiliates and maximization of operational synergies.

Accounting treatment for acquisition of shares related to this business combination is as follows:

(In thousands of Korean won)
Consideration transferred	57,221,996
Assets acquired
Cash and cash equivalents	39,924,724
Deposits	1,558,581
Financial assets at fair value through profit or loss	1,712,718
Loans measured at amortised cost	30,509,425
Property and equipment	8,440,290
Investment properties	2,618,619
Current tax assets	68,213
Deferred tax assets	726,818
Other financial assets	28,546,988
Other assets	165,379
	114,271,755
Liabilities assumed
Borrowings	14,286,341
Net defined benefit liabilities	2,634,640
Current tax liabilities	1,380,012
Other financial liabilities	24,497,141
Other liabilities	140,575
	42,938,709
Net assets at fair value as identifiable	71,333,046
Non-controlling interest	25,180,721
Goodwill	11,069,671

The Group reflected net income of PT. KB Valbury Sekuritas as of W 5,100 million after the acquisition date in the consolidated statement of comprehensive income. Net cash outflow related to this business combination was W 17,297 million.

142

KB SECURITIES CO., LTD. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

47. Disposal group classified as held for sale

The Parent Company had 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. During the previous year, the Group had entered into a share transfer agreement with JR No.28 Consignment Management Real Estate Investment Company and the sale process was completed in January 2022. As a result, the disposal group classified as held for sale is eliminated as at December 31, 2022.

As at December 31, 2022, There is no asset and liability classified as the disposal group classified as held for sale.

As of December 31, 2021, the main contents of the assets classified as the disposal group classified as held for sale were as follows, and there was 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 was no recognized impairment losses related to disposal groups classified as held for sale.

Other comprehensive incomes directly recognized relating to the disposal group classified as held for sale as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Accumulated exchange gains on foreign business transactions		—		7,670,746

48. Event after the reporting period

The Group intermediated a fund related to the apartment rental business for disabled people in Australia, but the fund was suspended due to the breach of contract by the local Australian borrower. In this regard, as at December 31, 2022, three lawsuits such as claims for recovery of unjust enrichment have been filed from institutional investors. Among three lawsuits, the first-instance verdict for the one case was announced on February 7, 2023, ordering the payment of the investment principal and delayed interest thereon. This is an adjusting event after the reporting period, and as at December 31, 2022, litigation provision liabilities for three litigation have been added to the consolidated financial statements. The specifics of the relevant litigation is described in Note 41.

143

Exhibit EX99.2

KB SECURITIES CO., LTD.

Separate Financial Statements

December 31, 2022 and 2021

(With Independent Auditors’ Report Thereon)

	Page(s)
Independent Auditors’ Report		1~2
Separate Financial Statements
Separate Statements of Financial Position		3
Separate Statements of Profit or Loss		4
Separate Statements of Comprehensive Income		5
Separate Statements of Changes in Equity		6
Separate Statements of Cash Flows		7
Notes to the Separate Financial Statements		8~134
Report on Independent Auditors’ Review of Internal Control over Financial Reporting		135
Report on the Effectiveness of the Internal Control over Financial Reporting		136

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, 2022 and 2021, 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, 2022 and 2021, 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.

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.

1

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.

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.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

March 7, 2023

This report is effective as of March 7, 2023, 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.

2

KB SECURITIES Co., Ltd.

Separate Statements of Financial Position

December 31, 2022 and 2021

(in Korean won)	Notes	2022		2021
Assets
Cash and deposits	5,36,37,38		4,028,288,407,282		3,345,119,599,713
Financial assets at fair value through profit or loss	6,36,37,38		28,995,718,417,735		33,833,764,375,768
Derivative financial assets	7,36,37,38,39		1,701,970,055,618		811,015,165,800
Financial assets at fair value through other comprehensive income	8,36,37,38		4,798,845,458,840		3,838,298,230,251
Investments in subsidiaries	9		962,256,250,447		1,031,745,305,199
Investments in associates	9		200,226,065,772		129,322,034,556
Financial assets measured at amortised cost	10,36,37,38,39		6,566,785,893,434		5,430,443,815,883
Property and equipment	11,40		253,806,249,717		205,420,354,106
Investment properties	12		14,659,854,297		17,754,977,445
Intangible assets	13		185,490,560,652		170,893,377,135
Other financial assets	14,36,37,38,39		2,698,990,294,779		3,724,896,077,146
Other assets	15		243,677,135,482		31,365,019,508
Total assets			50,650,714,644,055		52,570,038,332,510
Liabilities
Deposit liabilities	16,36,37,38		6,819,371,624,902		8,400,368,429,840
Financial liabilities at fair value through profit or loss	6,36,37,38,39		12,171,579,477,522		11,986,846,570,347
Derivative financial liabilities	7,36,37,38,39		2,318,063,711,035		836,699,401,537
Borrowings	17,36,37,38,39		20,575,667,240,927		21,994,629,818,393
Net defined benefit liabilities	18		54,817,226,956		55,619,888,673
Deferred tax liabilities	35		73,845,106,780		28,586,947,555
Provisions	19,45		150,934,451,093		106,098,065,531
Other financial liabilities	20,36,37,38,39,40		2,243,572,915,000		3,310,748,094,176
Other liabilities	21		427,324,355,976		402,286,997,863
Total liabilities			44,835,176,110,191		47,121,884,213,915
Equity
Share capital	22		1,493,102,120,000		1,493,102,120,000
Hybrid securities	23		506,130,312,000		—
Other paid-in capital	24		1,479,110,085,557		1,479,110,085,557
Retained earnings	25		2,038,072,084,071		2,270,994,816,373
Other components of equity	26		299,123,932,236		204,947,096,665
Total equity			5,815,538,533,864		5,448,154,118,595
Total liabilities and equity			50,650,714,644,055		52,570,038,332,510

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

3

KB SECURITIES Co., Ltd.

Separate Statements of Profit or Loss

Years Ended December 31, 2022 and 2021

(in Korean won)	Notes		2022		2021
Operating income
Fee and commission income		27		921,810,522,457		1,167,083,027,784
Gain on valuation and disposal of financial instruments		28		10,624,381,090,948		5,524,737,738,056
Interest income		29		1,013,459,676,836		737,552,790,032
Interest income from financial instruments at FVTPL				539,707,432,644		400,472,062,945
Interest income in applying of effective interest rate				473,752,244,192		337,080,727,087
Gain on valuation and disposal of financial assets measured at amortised costs		30		3,890,158,961		3,142,534,692
Gain on foreign currency transactions		31		1,256,489,183,394		777,874,300,249
Other operating income		32		156,781,049,046		150,533,956,215
				13,976,811,681,642		8,360,924,347,028
Operating expenses
Fee and commission expense		27		166,378,277,250		171,249,369,130
Loss on valuation and disposal of financial instruments		28		10,997,065,263,414		5,550,779,222,945
Interest expense		29		501,613,636,678		212,429,224,934
Loss on valuation and disposal of financial assets measured at amortised cost		30		14,818,638,031		7,008,606,947
Loss on foreign currency transactions		31		1,256,540,975,538		745,735,017,357
Selling and administrative expenses		33		769,850,286,492		821,513,424,479
Other operating expenses		32		53,748,010,547		45,721,673,439
				13,760,015,087,950		7,554,436,539,231
Operating profit				216,796,593,692		806,487,807,797
Non-operating income		34		93,582,812,809		58,834,512,565
Non-operating expenses		34		79,836,928,036		53,117,324,403
Profit before income tax				230,542,478,465		812,204,995,959
Income tax expense		35		60,247,522,429		214,559,285,270
Profit for the year				170,294,956,036		597,645,710,689

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

4

KB SECURITIES Co., Ltd.

Separate Statements of Comprehensive Income

Years Ended December 31, 2022 and 2021

(in Korean won)	Notes		2022			2021
Profit for the year				170,294,956,036			597,645,710,689
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		8,26		27,415,825,649			27,779,973,437
Fair value changes on financial liabilities designated at fair value due to own credit risk		6,26		38,855,084,533			13,714,607,803
Remeasurements of the net defined benefit liabilities		18,26		2,744,359,393			(2,237,583,109	)
Revaluation of property and equipment				35,572,043,723			—
Items that may be subsequently reclassified to profit or loss
Net losses on valuation of debt instrument at fair value through other comprehensive income		8,26		(10,149,158,628	)		(17,213,330,222	)
Other comprehensive income for the year, net of tax				94,438,154,670			22,043,667,909
Total comprehensive income for the year				264,733,110,706			619,689,378,598

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

5

KB SECURITIES Co., Ltd.

Separate Statements of Changes in Equity

Years Ended December 31, 2022 and 2021

					Other paid in capital
	Share Capital		Hybrid Securities		Share Premium		Other Equity		Retained Earnings			Other Components of Equity			Total Equity
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
Balance at January 1, 2022		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
Issuance of hybrid securities		—		506,130,312,000		—		—		—			—			506,130,312,000
Dividends of hybrid securities		—		—		—		—		(3,479,007,437	)		—			(3,479,007,437	)
Dividends		—		—		—		—		(400,000,000,000	)		—			(400,000,000,000	)
Revaluation of property and equipment		—		—		—		—		261,319,099			(261,319,099	)		—
Total comprehensive income
Profit for the year		—		—		—		—		170,294,956,036			—			170,294,956,036
Other comprehensive income		—		—		—		—		—			94,438,154,670			94,438,154,670
Balance at December 31, 2022		1,493,102,120,000		506,130,312,000		1,142,353,750,001		336,756,335,556		2,038,072,084,071			299,123,932,236			5,815,538,533,864

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

6

KB SECURITIES Co., Ltd.

Separate Statements of Cash Flows

Years Ended December 31, 2022 and 2021

(in Korean won)	Notes		2022			2021
Cash flows from operating activities
Cash generated from operating activities
Profit for the year				170,294,956,036			597,645,710,689
Adjustment for non-cash items		43		(547,044,387,464	)		(403,257,010,550	)
Changes in operating assets and liabilities		43		(382,676,653,008	)		(1,030,962,895,682	)
				(759,426,084,436	)		(836,574,195,543	)
Interest received				1,103,052,980,271			772,606,668,847
Interest paid				(448,730,584,509	)		(207,095,952,914	)
Dividends received				47,165,956,301			43,971,420,825
Income taxes paid				(204,006,008,899	)		(211,038,080,224	)
Net cash used in operating activities				(261,943,741,272	)		(438,130,139,009	)
Cash flows from investing activities
Decrease in long-term deposit held by bank				498,550,000,000			446,123,655,200
Acquisition of financial assets at fair value through other comprehensive income				(5,425,088,782,074	)		(4,678,242,030,749	)
Disposal of financial assets at fair value through other comprehensive income				4,476,887,646,352			4,731,871,208,238
Acquisition of investments of subsidiaries and associates		9		(488,146,088,553	)		(478,351,517,738	)
Disposal of investment of subsidiaries and associates		9		474,612,192,592			167,726,385,796
Acquisition of property and equipment		11		(22,279,332,929	)		(22,944,798,945	)
Disposal of property and equipment		11		2,763,680,568			683,373,612
Acquisition of intangible assets		13		(43,838,228,413	)		(36,580,886,688	)
Disposal of intangible assets		13		1,019,665,000			2,086,788,000
Disposal of investment properties		12		2,986,319,434			1,158,894,888
Others				(21,285,090,533	)		(26,298,576,016	)
Net cash provided by (used in) investing activities				(543,818,018,556	)		107,232,495,598
Cash flows from financing activities
Increase in borrowings		43		1,347,511,733,452			720,139,535,921
Decrease in guarantee deposit liabilities		43		518,525,155			(3,575,925,704	)
Dividends paid		25		(400,000,000,000	)		(200,000,000,000	)
Redemption of principal elements of lease payments		43		(30,122,914,297	)		(31,849,047,481	)
Issuance of hybrid securities		23		506,130,312,000			—
Dividends of hybrid securities		25		(3,437,500,000	)		—
Increase in other liabilities		43		2,911,250,000			—
Net cash provided by financing activities				1,423,511,406,310			484,714,562,736
Effect of exchange rate changes on cash and cash equivalents				(4,027,082,739	)		1,379,611,661
Net increase in cash and cash equivalents				613,722,563,743			155,196,530,986
Cash and cash equivalents at the beginning of the year		5		414,147,798,325			258,951,267,339
Cash and cash equivalents at the end of the year		5		1,027,870,362,068			414,147,798,325

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

7

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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 W 1,493,102 million as at December 31, 2022.

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, 2022, the Company has 104 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.

8

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022.

• 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. These amendments do not have a significant impact on the 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. These amendments do not have a significant impact on the 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. These amendments do not have a significant impact on the financial statements.

2.2.2 The following amended standards have been published that are not mandatory for December 31, 2022 reporting periods and have not been early adopted by the Company.

• 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 reporting 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 financial statements.

9

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

• 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. The amendments should be applied for annual reporting 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 financial statements.

• Amendments to Korean IFRS No.1001 Presentation of Financial Statements— Disclosure of gain or losses on valuation of financial liabilities subject to exercise price adjustment conditions

The amendments require disclosures about gains or losses on valuation occurred for the reporting period (but are limited to those included in profit or loss) for the conversion options or warrants (or financial liabilities with warrants), if all or part of the financial instrument whose exercise price is adjusted due to the issuers’ stock price fluctuations, are classified as financial liabilities according to paragraph 11 of Korean IFRS No.1032 Financial Instruments: Presentation. The amendments should be applied for annual reporting 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 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 reporting 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 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 reporting 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 financial statements.

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.

10

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

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.

11

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

(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.

12

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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

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).

13

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

• 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.

• 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.

14

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

15

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

2.7.1 Day 1 Profit and 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 37.

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.

16

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

17

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

18

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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’

19

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

20

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

21

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022 separate financial statements of the Company was approved by the Board of Directors on March 6, 2023, which is subject to change with approval at the annual shareholder’s 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.

22

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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 with 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.

23

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

(in thousands of Korean won)
	2022
	Operating income		Operating expense		Operating profit (loss)			Non-operating income (expense)			Income tax expense		Profit (loss) for the year
Brokerage and wealth management		2,319,349,482		2,179,648,293		139,701,189			(19,620,828	)		—		120,080,361
Investment banking		867,151,810		746,582,110		120,569,700			68,589,313			—		189,159,013
Trading		10,622,124,083		10,740,421,352		(118,297,269	)		1,375,474			—		(116,921,795	)
Others 1		168,186,307		93,363,333		74,822,974			(36,598,074	)		60,247,522		(22,022,622	)
		13,976,811,682		13,760,015,088		216,796,594			13,745,885			60,247,522		170,294,957
1   All income tax expenses are allocated to the others segment, due to the difficulty of reasonable allocation.
(in thousands of Korean won)
	2021
	Operating income		Operating expense		Operating profit			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			5,717,188			214,559,285		597,645,711

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.

24

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

4.3 Assets and liabilities of segments

Total assets and liabilities by each segment as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	Total assets		Total liabilities
Brokerage and wealth management		7,398,410,715		6,428,705,688
Investment banking		3,135,300,826		86,637,307
Trading		23,836,270,897		18,743,394,623
Others		16,280,732,206		19,576,438,492
		50,650,714,644		44,835,176,110

(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

4.4 Information on principal customers

No single customer contributed 10% or more to the Company’s revenue for the years ended December 31, 2022 and 2021.

25

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

5. Cash and Deposits

The details of cash and deposits as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Cash and cash equivalents
Cash on hand		14,096			105
Demand deposits		658,388,425			80,331,797
Checking deposit		12,051,431			2,000,976
Foreign currency deposits		268,540,580			325,866,088
MMDA		84,127,974			4,393,381
Accommodation notes		4,747,856			1,555,452
		1,027,870,362			414,147,799
Deposits
Deposits for securities subscription		1,007,522			—
Reserve for claims of customers’ deposits		456,165,726			351,745,802
Guarantee deposits for securities lending and borrowing		120,336,120			95,528,832
Deposits for exchange-traded derivatives		1,079,340,866			779,299,475
Guarantee deposits for KSFC trading		2,513,154			2,114,517
Long-term deposits		575,000,000			1,073,550,000
Restricted due from financial institutes		39,000			39,000
Others		766,660,854			629,326,773
Allowances for credit losses of deposits		(645,197	)		(632,598	)
		3,000,418,045			2,930,971,801
		4,028,288,407			3,345,119,600

Restricted deposits as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Deposits for securities subscription 1		1,007,522		—
Reserve for claims of customers’ deposits 2		456,165,726		351,745,802
Guarantee deposits for securities lending and borrowing 3		120,336,120		95,528,832
Deposits for exchange-traded derivatives 4		1,079,340,866		779,299,475
Guarantee deposits for KSFC trading 5		2,513,154		2,114,517
Long-term deposits 6		569,000,000		769,000,000
Restricted due from financial institutes 7		39,000		39,000
Others 8		766,660,854		629,326,773
		2,995,063,242		2,627,054,399

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.

26

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Changes in allowances for credit losses of deposits for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	12-month expected credit losses		Lifetime expected credit losses
			Non-Impaired		Impaired
Beginning		632,598		—		—
Provision		12,599		—		—
		645,197		—		—

(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			—		—

6. Financial Instruments at FVTPL

The details of financial instruments at FVTPL as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Financial Assets at FVTPL				Financial Liabilities at FVTPL
	2022		2021		2022		2021
Financial assets required to be mandatorily measured at FVTPL		28,995,718,418		33,833,764,376		2,082,979,265		2,825,922,918
Financial assets designated at FVTPL		—		—		10,088,600,213		9,160,923,652
		28,995,718,418		33,833,764,376		12,171,579,478		11,986,846,570

27

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Deposits
Reserve for claims of customers’ deposits (trust) 1		4,531,756,553		5,704,580,963
Equity instruments
Stocks		604,033,526		486,724,148
Debt instruments
Government and local government bonds		4,092,627,487		5,292,775,017
Special bonds		1,793,814,905		2,498,873,337
Corporate bonds		4,093,880,890		8,318,369,010
Corporate commercial papers		5,196,584,584		4,170,294,875
Asset-backed short-term bonds		2,406,246,303		1,490,591,859
Hybrid bond with security-like features		220,498,019		110,295,800
Investment in partnerships		440,156,234		334,361,963
Collective investment securities		3,311,063,660		2,732,256,417
Hybrid stock with bond-like features		120,388,757		107,562,502
Loans
Privately placed bonds		42,604,988		173,459,362
Derivative linked securities
Equity-linked securities		31,899,039		41,493,507
Other derivative linked securities		331,528,412		139,326,096
Other OTC derivative combined contract		236,574,425		114,887,470
Securities in foreign currency
Stocks in foreign currency		26,990,295		1,552,014
Bonds in foreign currency		621,320,119		1,245,665,576
Investments in partnerships in foreign currency		43,983,023		25,840,354
Collective investment securities in foreign currency		208,724,857		242,647,445
Collective fund for default loss		82,667,524		73,273,475
Hybrid bonds		558,301,229		528,403,259
Exchange traded notes		73,589		529,927
		28,995,718,418		33,833,764,376

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 \ 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.

Details of securities sold which are classified as financial liabilities at FVTPL as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Equity Securities
Stocks		428,935,822		509,897,766
Collective investment securities		2,268,236		3,056,061
Debt Securities
Government and local government bonds		1,651,775,207		2,282,891,241
Special bonds		—		30,077,850
		2,082,979,265		2,825,922,918

28

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Assets Pledged as Collateral

The details of financial assets pledged as collateral as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Description	2022		2021		Security right holder
Financial assets at FVTPL	Guarantee deposits for lending and borrowing securities and bonds		7,063,541,100		9,294,924,447	Korea Securities Depository, etc.
	Margin required and guarantee deposits for derivatives trading		1,129,757,669		955,030,966	Korea Stock Exchange, etc.
	Guarantee deposits for clearing fund		1,458,725		1,653,330	Korea Securities Depository
	Guarantee deposits for reverse repurchase agreements		3,724,891,983		8,422,134,434	Customer, Institution
Financial assets at FVOCI	Guarantee deposits for lending and borrowing securities and bond		1,592,460,037		1,523,592,569	Korea Securities Depository, etc.
	Guarantee deposits for derivatives trading		136,701,325		—	Hana Securities Co., Ltd., etc.
	Guarantee deposits for reverse repurchase agreements		2,234,882,535		1,990,336,464	Customer, Institution
Other financial assets	Guarantee deposits for lending and borrowing securities and bonds		47,850,000		—	KSFC
			15,931,543,374		22,187,672,210

(*) As at December 31, 2022 and 2021, the accrued interests related to debt securities provided as collateral of W 228,578 million and W 279,423 million, respectively, are excluded.

The Company provides W 4,986,339 million and W 6,165,555 million of its borrowing securities held as collateral to KSFC and others as at December 31, 2022 and 2021, respectively.

As at December 31, 2022 and 2021, the fair values of collaterals sold or repledged as collaterals regardless of default are as follows:

(in thousands of Korean won)	Securities
	2022		2021
Fair value of collateral held		771,983,450		488,172,002
Fair value of collaterals sold or re-provided as collateral		—		—
		771,983,450		488,172,002

6.2 Financial liabilities designated at FVTPL

The details of financial liabilities designated at FVTPL as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Financial liabilities designated at FVTPL
	2022		2021
Derivative linked securities
Equity-linked securities		6,804,836,388		6,252,543,366
Other derivative linked securities		1,636,774,811		1,972,278,390
Other OTC derivative combined contract		1,611,301,701		899,164,069
Exchange traded notes		35,687,313		36,937,827
		10,088,600,213		9,160,923,652

29

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The differences between the contractual value to be paid at maturity and the carrying amount of financial liabilities at FVTPL as at December 31, 2022 and 2021, are as follows :

(in thousands of Korean won)	2022			2021
Contractual value to be paid at maturity		9,973,339,575			8,957,601,834
Carrying amount		10,088,600,213			9,160,923,652
Differences		(115,260,638	)		(203,321,818	)

Accumulated changes in fair value of financial liabilities at FVTPL due to the change of credit risk as at December 31, 2022 and 2021, 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
	2022			2021
Beginning of the year		(3,070,045	)		15,846,655
Change of fair value		(52,822,291	)		(18,916,700	)
End of the year		(55,892,336	)		(3,070,045	)

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.

30

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

7. Derivatives and Hedge Accounting

Derivatives owned by the Company as at December 31, 2022 and 2021, are as follows:

	2022
	Assets				Liabilities
(in thousands of Korean won)	Hedging		Trading		Hedging		Trading		Unsettled amount
Exchange-traded derivatives
Interest rate:
Futures		—		577,939		—		256,477		2,310,773,337
Equity:
Futures		—		35,187,795		—		89,623,607		1,805,532,521
Purchase options		—		58,416,888		—		—		1,642,156,435
Written options		—		—		—		330,682,246		2,408,934,407
Currency:
Futures		—		36,107		—		1,116,502		272,274,527
Goods:
Futures		—		1,969,714		—		940,729		28,576,813
		—		96,188,443		—		422,619,561		8,468,248,040
OTC derivatives
Interest rate:
Forwards		—		699,505,103		—		585,959,569		9,274,000,000
Swaps		—		103,770,321		—		263,433,622		139,380,656,724
Options		—		8,032,470		—		8,906,536		830,000,000
Currency:
Forwards		—		230,688,984		10,070,190		162,136,418		9,184,163,903
Swaps		—		10,205,826		—		11,813,068		464,220,055
Options		—		21,446,632		—		438,473		595,631,000
Equity:
Swaps		—		377,816,741		—		492,274,693		6,591,918,841
Purchase options		—		107,414,599		—		—		1,446,151,498
Written options		—		—		—		28,591,489		1,747,432,558
Credit:
Swaps		—		32,859,630		—		17,468,307		3,006,113,907
Goods:
Options		—		887,437		—		885,284		131,500,117
Others:
Swaps		—		13,153,870		—		313,466,501		909,001,211
		—		1,605,781,613		10,070,190		1,885,373,960		173,560,789,814
		—		1,701,970,056		10,070,190		2,307,993,521		182,029,037,854

31

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	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		4,563,014,693
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

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Gain(loss) on the hedging instrument		(17,212,706	)		(6,366,340	)
Gain(loss) on the hedged item attributable to the hedged risk		17,212,706			6,366,340
		—			—

The average price condition for the nominal future cash flow related to hedge of net investments in foreign operations as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	The nominal amount of the hedging instrument		Average price condition (KRW/USD, Korean won)
1 year		65,012,490		1,071.00
2 year		—		—
3 year		—		—
Over 3 year		204,035,300		1,178.92
		269,047,790		1,152.84

32

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(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

The contents of fair value hedge as of December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Carrying amount (asset)		Accumulated fair value (asset)		Change of fair value for the year
Currency
Investment in subsidiaries		303,653,815		24,395,046		17,212,706

	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

8. Financial Assets at FVOCI

The details of financial assets at FVOCI as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Equity instruments
Stocks 1		420,330,275		365,576,095
Investment in partnerships		1,200,000		1,200,000
Other		264,586,560		78,876,642
Debt instruments
Government and local government bonds		5,025,406		20,989,065
Special bonds		690,761,850		549,741,426
Corporate bonds		3,194,758,700		2,698,701,899
Debt instruments in foreign currency		222,182,668		123,213,103
		4,798,845,459		3,838,298,230

¹  Equity investment on Korea Stock Exchange and other relative institutions.

33

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Changes in gains and losses on valuation of financial assets at FVOCI (before tax) for the year ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance			Valuation1			Disposal / transfer			Ending balance
Stocks		318,760,788			54,754,180			—			373,514,968
Government and local government bonds		1,768			(194,598	)		(3,010	)		(195,840	)
Special bonds		(3,852,333	)		(746,312	)		1,944,438			(2,654,207	)
Corporate bonds		(14,256,566	)		(15,405,862	)		6,104,383			(23,558,045	)
Securities in foreign currency		(915,931	)		(5,390,112	)		141,511			(6,164,532	)
Securities in won currency		(1,125,111	)		(21,775,311	)		—			(22,900,422	)
		298,612,615			11,241,985			8,187,322			318,041,922

¹  Provision for credit loss of debt instruments at FVOCI as W 2 million and reversal of provision for credit loss of debt instruments at FVOCI as W 477 million are excluded.

	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 W 598 million is excluded.

There are no equity investments at FVOCI derecognized for the year ended December 31, 2022.

The dividend income from equity investments at FVOCI for the years ended December 31, 2022 and 2021, are as follows;

(in thousands of Korean won)	2022				2021
	Derecognised		Held at the reporting period		Derecognised		Held at the reporting period
Equity investments at FVOCI
Non marketable securities		—		9,536,521		—		7,411,793
Other equity investments		—		8,493,303		—		2,668,697

The Company recognized provision for credit loss of debt instruments at FVOCI amount (before tax) to W 1,004 million and W 1,479 million, as at December 31, 2022 and 2021, respectively.

34

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

9. Investments in Subsidiaries and Associates

Investments in subsidiaries and associates as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	Location		Percent age of ownership(%)		Date of financial statements 5		Net Asset			Book amount		Main Business
Subsidiaries
KBFG Securities America Inc.		USA		100.00		December		18,041,916			17,259,715		Investment, advisory
KB Securities Hong Kong Ltd.		Hong Kong		100.00		December		239,897,905			232,643,725		Investment, advisory
KB Securities Vietnam Joint Stock Company		Vietnam		99.81		December		213,280,342			173,875,579		Investment, advisory
KB FINA Joint Stock Company		Vietnam		77.82		December		12,565,774			11,146,330		IT(Fintech)
PT. KB Valbury Sekuritas 2		Indonesia		65.00		December		74,490,022			57,221,997		Investment, advisory
KB Digital Innovation&growth New Technology Business Investment Fund1		Korea		20.00		December		8,973,047			2,000,000		Other financial
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund 1		Korea		42.86		December		29,330,303			15,000,000		Other financial
KB Global Contents Private Investment Fund 1, 2		Korea		27.27		December		16,206,667			4,500,000		Other financial
JB New Jersey Private Real Estate Fund 1		Korea		98.15		December		16,360,410			1,074,621		Funds
LB Irealand Private Real Estate Investment Trust 8		Korea		96.64		December		66,950,154			66,076,000		Funds
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		Korea		98.51		December		20,855,322			21,641,016		Funds
DAOL KTB Aircraft Private Investment Trust No.21-1		Korea		99.61		December		29,335,226			27,752,839		Funds
Vestas General Private Real Estate Fund Investment Trust No. 38		Korea		54.92		December		195,270,855			104,400,551		Funds
Mangrove Feeder Fund		Cayman Islands		92.88		December		76,046,414			71,010,090		Funds
GH Real Estate I LP		Guernsey		81.00		December		25,963,433			21,030,311		Investment
JB Dry Street Private Fund 1		Korea		100.00		December		558,206			974,200		Funds
JB Australia108 Private Fund 1		Korea		100.00		December		386,743			697,499		Funds
JB Forge Private Fund 1		Korea		100.00		December		276,586			499,062		Funds
JB Hall Street Private Fund 1		Korea		100.00		December		525,576			933,520		Funds
JB Margaret Street Private Fund 1		Korea		100.00		December		148,801			264,785		Funds
Hanwha US Equity Strategy Private Real Estate Fund 3		Korea		99.95		December		3,227,527			2,784,410		Funds
GVA Europe Pre-IPO Private Investment Trust No.1 2		Korea		66.70		December		29,960,445			20,000,000		Funds
LIFE Global Reits Pre-IPO General Private Investment Trust 1 2		Korea		99.50		December		59,684,316			59,470,000		Funds
KB KBSTAR US Short-Term IG Corporate Bond ETF 2		Korea		59.88		December		79,716,716			50,000,000		Funds
Able Gwonseon 1st Co., Ltd. 1		Korea		—		December		(70,907	)		—		Asset-backed securitization
Paradise Yeongjong 2nd Co., Ltd. 1		Korea		—		December		(1,259,921	)		—		Asset-backed securitization
Newstar IP Co., Ltd. 1		Korea		—		December		(907,210	)		—		Asset-backed securitization
Songdo PFive 2nd Co., Ltd. 1		Korea		—		December		830,618			—		Asset-backed securitization
Newstar Gimpo 1st Co., Ltd. 1		Korea		—		December		(86,438	)		—		Asset-backed securitization

35

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022
	Location	Percent age of ownership(%)	Date of financial statements 5	Net Asset			Book amount		Main Business
Able Gongpyeong 1st Co., Ltd. 1	Korea	—	December		31,243			—	Asset-backed securitization
Able Chowall 1st Co., Ltd. 1	Korea	—	December		(8,654	)		—	Asset-backed securitization
FN Gasan 1st Co., Ltd. 1	Korea	—	December		151,345			—	Asset-backed securitization
Newstar Believe Co., Ltd. 1	Korea	—	December		(296,886	)		—	Asset-backed securitization
ABR Joongang2 1st Co., Ltd. 1	Korea	—	December		290,572			—	Asset-backed securitization
KB Tongyoung 1st Co., Ltd. 1	Korea	—	December		(280,980	)		—	Asset-backed securitization
Able Sky 1st Co., Ltd. 1	Korea	—	December		205,106			—	Asset-backed securitization
Able Poongdong 1st Co., Ltd. 1	Korea	—	December		20,089			—	Asset-backed securitization
Able Sewoon Co., Ltd. 1	Korea	—	December		232,004			—	Asset-backed securitization
Able Gasan 1st Co., Ltd. 1	Korea	—	December		(208,595	)		—	Asset-backed securitization
Able PT 1st Co., Ltd. 1	Korea	—	December		(315,029	)		—	Asset-backed securitization
Newstar Plus 1st Co., Ltd. 1	Korea	—	December		270,056			—	Asset-backed securitization
KB MyeongJi 1st Co., Ltd. 1	Korea	—	December		98,240			—	Asset-backed securitization
Able Dangjin 1st Co., Ltd. 1	Korea	—	December		517,800			—	Asset-backed securitization
KB Osansegyo 2nd Co., Ltd. 1	Korea	—	December		(1,437	)		—	Asset-backed securitization
KB Mapo 2nd Co., Ltd. 1	Korea	—	December		(898,279	)		—	Asset-backed securitization
Able Wonchang 1st Co., Ltd. 1	Korea	—	December		(46,160	)		—	Asset-backed securitization
Zitaress 1st Co., Ltd. 1	Korea	—	December		(178,091	)		—	Asset-backed securitization
Able Beomeo-one Co., Ltd. 1	Korea	—	December		(214,104	)		—	Asset-backed securitization
KB Infra 2nd Co., Ltd. 1	Korea	—	December		313,932			—	Asset-backed securitization
Newstar Sina Co., Ltd. 1	Korea	—	December		(608,791	)		—	Asset-backed securitization
KB Gold 1st Co., Ltd. 1	Korea	—	December		15,041			—	Asset-backed securitization
Inspire Gold 2nd Co., Ltd. 1	Korea	—	December		(212,714	)		—	Asset-backed securitization
Able MK 1st Co., Ltd. 1	Korea	—	December		(101,453	)		—	Asset-backed securitization
Newstar Gimpo 4th Co., Ltd. 1, 2	Korea	—	December		(8,871	)		—	Asset-backed securitization
HD Value 1st Co., Ltd. 1, 2	Korea	—	December		(9,400	)		—	Asset-backed securitization
Powerplay 1st Co., Ltd. 1, 2	Korea	—	December		288,040			—	Asset-backed securitization
Able Wonsi 1st Co., Ltd. 1, 2	Korea	—	December		(798,132	)		—	Asset-backed securitization
Able Dosan 1st Co., Ltd 1, 2	Korea	—	December		214,432			—	Asset-backed securitization
Newstar Gimpopoongmoo Co., Ltd. 1, 2	Korea	—	December		159,784			—	Asset-backed securitization
Able Maseok 1st Co., Ltd. 1, 2	Korea	—	December		(300,967	)		—	Asset-backed securitization
TW Seocho 1st Co., Ltd. 1, 2	Korea	—	December		(230,018	)		—	Asset-backed securitization
TW Seocho 2nd Co., Ltd. 1, 2	Korea	—	December		(349,910	)		-	Asset-backed securitization
Newstar Wave 1st Co., Ltd. 1, 2	Korea	—	December		(785,243	)		—	Asset-backed securitization

36

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022
	Location		Percent age of ownership(%)	Date of financial statements 5	Net Asset			Book amount		Main Business
Lamdamine 1st Co., Ltd. 1, 2		Korea	—	December		(146,973	)		—		Asset-backed securitization
Able Next 1st Co., Ltd. 1, 2		Korea	—	December		(991,758	)		—		Asset-backed securitization
Able Dongil 1st Co., Ltd. 1, 2		Korea	—	December		(124,039	)		—		Asset-backed securitization
Newstar Shiny 1st Co., Ltd. 1, 2		Korea	—	December		(196,305	)		—		Asset-backed securitization
Newstar Enerbil 1st Co., Ltd. 1, 2		Korea	—	December		(182,606	)		—		Asset-backed securitization
YSMC 1st Co., Ltd. 1, 2		Korea	—	December		(892,249	)		—		Asset-backed securitization
HJ Galaxy 3rd Co., Ltd. 1, 2		Korea	—	December		229,465			—		Asset-backed securitization
KB SmartSchool 1st Co., Ltd. 1, 2		Korea	—	December		(464,566	)		—		Asset-backed securitization
Bighouse 7th Co., Ltd. 1, 2		Korea	—	December		(985,269	)		—		Asset-backed securitization
Newstar Energy 1st Co., Ltd. 1, 2		Korea	—	December		(5,618,828	)		—		Asset-backed securitization
Gyeongsan Logis 1st Co., Ltd. 1, 2		Korea	—	December		557,520			—		Asset-backed securitization
Stoke 2nd Corp 1, 2		Korea	—	December		643,798			—		Asset-backed securitization
KB Samyoung Co., Ltd. 1, 2		Korea	—	December		26,638			—		Asset-backed securitization
Newstar Seongnam 1st Co., Ltd. 1, 2		Korea	—	December		292,721			—		Asset-backed securitization
KPS Sihwa 1st Co., Ltd. 1, 2		Korea	—	December		3,569,531			—		Asset-backed securitization
KB NY 1st Co., Ltd. 1, 2		Korea	—	December		(1,707,082	)		—		Asset-backed securitization
GDIC 2nd Co., Ltd. 1, 2		Korea	—	December		(508,028	)		—		Asset-backed securitization
Newstar NRB First Co., Ltd. 1, 2		Korea	—	December		(1,808,292	)		—		Asset-backed securitization
Able Dongtan 1st Co., Ltd. 1, 2		Korea	—	December		(871,617	)		—		Asset-backed securitization
Newstar Gimpo 5th Co., Ltd. 1, 2		Korea	—	December		(1,481,018	)		—		Asset-backed securitization
Cassiopeia 1st Co., Ltd. 1, 2		Korea	—	December		(230,886	)		—		Asset-backed securitization
Able Banpo 1st Co., Ltd. 1, 2		Korea	—	December		(199,514	)		—		Asset-backed securitization
Able Banpo 2nd Co., Ltd. 1, 2		Korea	—	December		(177,437	)		—		Asset-backed securitization
Able Gyeonggi Gwangju 1st Co., Ltd. 1, 2		Korea	—	December		(380,377	)		—		Asset-backed securitization
Newstar Byeongjeom 1st Co., Ltd. 1, 2		Korea	—	December		(158,797	)		—		Asset-backed securitization
Piggarden 1st Co., Ltd. 1, 2		Korea	—	December		(312,498	)		—		Asset-backed securitization
									962,256,250
Associates
Wise Asset Management Co., Ltd. 3		Korea	33.00	—		—			—		Asset Mgt.
KB Special Purpose Acquisition Company No.21 4		Korea	0.13	November		20,053			10,000		SPAC
KB Special Purpose Acquisition Company No.22 4		Korea	0.19	November		19,767			10,000		SPAC
KB Special Purpose Acquisition Company No.23 4		Korea	0.08	November		10,060			5,000		SPAC
KB Special Purpose Acquisition Company No.24 4		Korea	1.67	November		57,197			25,000		SPAC

37

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022
	Location	Percent age of ownership(%)	Date of financial statements 5	Net Asset		Book amount		Main Business
KB New Paradigm Agriculture Venture Fund	Korea	25.00	December		2,976,845		2,100,000		Investment
KB KONEX Market Vitalization Fund	Korea	23.44	December		7,301,375		615,000		Investment
KB-KDBC New Technology Business Investment Fund	Korea	33.33	December		2,988,748		1,800,000		Investment
KBTS Technology Venture Private Equity Fund 4	Korea	16.00	December		3,941,180		2,784,000		Investment
KB-SJ Tourism Venture Fund 4	Korea	18.52	December		3,773,125		4,600,000		Investment
KB Shinjasanaubo Fund 4	Korea	14.67	December		1,810,764		1,804,000		Investment
UNION Media Commerce Fund	Korea	28.99	December		956,728		1,000,000		Investment
KB-Brain KOSDAQ Scale-Up Fund 4	Korea	15.96	December		6,675,432		4,950,000		Investment
KB SPROTT Renewable Private Equity Fund I 4	Korea	7.69	December		3,374,650		3,682,135		Investment
KB-Stonebridge Secondary Private Equity Fund 4	Korea	4.16	December		7,184,026		6,800,355		Investment
KB-SP Private Equity Fund IV 4	Korea	14.95	December		1,892,224		6,100,000		Investment
KB-UTC Inno-Tech Venture Fund 4	Korea	14.76	December		6,393,024		7,125,000		Investment
KB-NAU Special Situation Corporate Restructuring Private Equity Fund 4	Korea	6.00	December		6,276,963		5,003,207		Investment
December & Company Inc. 4	Korea	16.73	December		3,735,016		21,838,134		System software development
KB Material and Parts No. 1 PEF 4	Korea	14.47	December		3,320,638		3,400,000		Investment
KB Global Commerce Private Equity Investment Fund 4	Korea	16.28	December		6,219,107		7,000,000		Investment
KB-KTB Technology Venture Fund 4	Korea	18.18	December		5,806,248		6,000,000		Investment
KB Bio Global Expansion Private Equity Fund No.1	Korea	39.47	December		15,779,019		15,000,000		Investment
KB Digital Platform Fund 4	Korea	16.67	December		9,055,919		9,500,000		Investment
KB-SOLIDUS Healthcare Investment Fund 4	Korea	4.90	December		1,036,176		1,100,000		Investment
KB-GeneN Medical Venture Fund 1	Korea	22.52	December		1,964,512		2,000,000		Investment
KB-BridgePole Venture Investment Fund 4	Korea	6.30	December		834,741		850,000		Investment
KB-Kyobo New Mobility Power Fund	Korea	28.57	December		2,826,264		3,000,000		Investment
DA-Friend Investment Fund II	Korea	27.06	December		948,652		987,633		Investment
Cornerstone Pentastone IV Fund	Korea	21.52	December		792,174		817,742		Investment
SKS-VLP Fund No.2	Korea	23.11	December		1,121,400		1,155,560		Investment
JS Private Equity Fund III	Korea	20.48	December		1,664,180		1,700,000		Investment
Mirae Asset Mobility Investment Fund I	Korea	22.99	December		1,979,241		2,000,000		Investment
KB-FT 1st Green Growth Investment Fund 4	Korea	10.34	December		1,969,650		2,000,000		Investment
THE CHAEUL FUND NO.1(former SKS IB NEW M&T FUND NO.1)	Korea	31.25	December		989,491		1,000,000		Investment
POSITIVE Sobujang Venture Fund No.1	Korea	43.96	December		1,977,209		2,000,000		Investment
KB-NP Green ESG New Technology Venture Capital Fund 4	Korea	11.59	December		3,617,183		3,740,000		Investment
Hisstory 2022 Fintech Fund	Korea	34.78	December		1,980,701		2,000,000		Investment
PEBBLES-MW M.C.E New Technology Investment Fund 1st	Korea	23.26	December		1,981,813		2,000,000		Investment
KB Star REIT	Korea	26.94	December		136,323,142		45,523,300		Investment
KB Bio Private Equity Investment Fund IV	Korea	24.19	December		7,492,209		7,500,000		Investment
Nextrade Co., Ltd. 4	Korea	6.64	December		9,700,000		9,700,000		Investment
							200,226,066
							1,162,482,316

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.

38

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2021
	Location		Percent age 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 General 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 General 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

39

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2021
	Location	Percent age of ownership(%)	Date of financial statements 5	Net Asset			Book amount		Main Business
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
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

40

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2021
	Location		Percent age of ownership(%)	Date of financial statements 5	Net Asset			Book amount		Main Business
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
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
KB Illite 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

41

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2021
	Location	Percent age of ownership(%)	Date of financial statements 5	Net Asset		Book amount		Main Business
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
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.

Changes in investments in subsidiaries for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal		Impaired		Re-classification 1		Others		Ending balance
KBFG Securities America Inc.		17,259,715		—		—		—		—		—		17,259,715
KB Securities Hong Kong Ltd.		219,432,709		—		—		—		—		13,211,016		232,643,725
KB Securities Vietnam Joint Stock Company		173,875,579		—		—		—		—		—		173,875,579
KB FINA Joint Stock Company		11,146,330		—		—		—		—		—		11,146,330
PT. KB Valbury Sekuritas		—		57,221,997		—		—		—		—		57,221,997
KB Digital Innovation&growth New Technology Business Investment Fund		2,000,000		—		—		—		—		—		2,000,000
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		15,000,000		—		—		—		—		—		15,000,000
JB New Jersey Private Real Estate Fund 1		1,074,621		—		—		—		—		—		1,074,621

42

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired			Re-classification 1			Others		Ending balance
Heungkuk Global Highclass Private Real Estate Trust 23		1,903,215		—		(1,903,215	)		—			—			—		—
DGB General Private Real Estate Investment Trust No.8		6,967,178		—		(6,967,178	)		—			—			—		—
LB Irealand Private Real Estate Investment Trust 8		66,076,000		—		—			—			—			—		66,076,000
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		18,697,397		3,142,188		(198,569	)		—			—			—		21,641,016
KTB Aircraft Private Investment Trust No.21- 1		27,752,839		—		—			—			—			—		27,752,839
Vestas General Private Real Estate Fund Investment Trust No. 38		93,059,747		11,340,804		—			—			—			—		104,400,551
Mangrove Feeder Fund		67,008,400		—		—			—			—			4,001,690		71,010,090
GH Real Estate I LP		21,031,909		—		—			(1,598	)		—			—		21,030,311
JB Dry Street Private Fund 1		1,060,697		—		(86,497	)		—			—			—		974,200
JB Australia108 Private Fund 1		759,207		—		(61,708	)		—			—			—		697,499
JB Forge Private Fund 1		543,244		—		(44,182	)		—			—			—		499,062
JB Hall Street Private Fund 1		1,016,152		—		(82,632	)		—			—			—		933,520
JB Margaret Street Private Fund 1		288,186		—		(23,401	)		—			—			—		264,785
LB UK Private Real Estate Investment Trust No.18 1		34,500,000		—		(28,941,213	)		—			(5,558,787	)		—		—
Alpha Spain Real Estate Private Investment Trust 1		67,622,466		—		(67,622,466	)		—			—			—		—
Hanwha US Equity Strategy Private Real Estate Fund 3		183,669,714		—		(180,885,304	)		—			—			—		2,784,410
Korea Investment US Amazon Logistics Private Real Estate Investment Trust NO. 1 1		—		20,900,000		(20,800,000	)		—			(100,000	)		—		—
GVA Europe Real Estate Investment Trust No.2		—		95,000,000		(95,000,000	)		—			—			—		—
KB Global Contents Private Investment Fund		—		4,500,000		—			—			—			—		4,500,000
GVA Europe Pre-IPO Private Investment Trust No.1		—		20,000,000		—			—			—			—		20,000,000
LIFE Global Reits Pre- IPO General Private Investment Trust 1		—		59,470,000		—			—			—			—		59,470,000
KB KBSTAR US Short- Term IG Corporate Bond ETF		—		50,000,000		—			—			—			—		50,000,000
KB Wisestar Private Real Estate Fund Investment Trust No. 2 1		—		67,100,000		—			—			(67,100,000	)		—		—
		1,031,745,305		388,674,989		(402,616,365	)		(1,598	)		(72,758,787	)		17,212,706		962,256,250

¹ These instruments are reclassified to financial assets measured at FVTPL during the year ended December 31, 2022 .

43

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	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
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 General 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 General 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

44

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired			Others		Ending balance
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

Changes in investment in associates for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired		Re-classfification1		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 Special Purpose Acquisition Company No.21		—		10,000		—			—		—		10,000
KB Special Purpose Acquisition Company No.22		—		10,000		—			—		—		10,000
KB Special Purpose Acquisition Company No.23		—		5,000		—			—		—		5,000
KB Special Purpose Acquisition Company No.24		—		25,000		—			—		—		25,000
KB New Paradigm Agriculture Venture Fund		2,725,000		—		(625,000	)		—		—		2,100,000
KB KONEX Market Vitalization Fund		615,000		—		—			—		—		615,000
KB-KDBC New Technology Business Investment Fund		4,400,000		—		(2,600,000	)		—		—		1,800,000
KBTS Technology Venture Private Equity Fund		4,080,000		—		(1,296,000	)		—		—		2,784,000
KB-SJ Tourism Venture Fund		5,000,000		-		(400,000	)		-		-		4,600,000
KB Shinjasanaubo Fund		1,936,000		—		(132,000	)		—		—		1,804,000
UNION Media Commerce Fund		1,000,000		—		—			—		—		1,000,000
KB-Brain KOSDAQ Scale-Up Fund		9,750,000		—		(4,800,000	)		—		—		4,950,000
KB SPROTT Renewable Private Equity Fund I		1,182,775		2,499,360		—			—		—		3,682,135
KB-Stonebridge Secondary Private Equity Fund		6,183,416		1,248,439		(631,500	)		—		—		6,800,355
KB-SP Private Equity Fund IV		6,100,000		—		—			—		—		6,100,000

45

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

KB-UTC Inno-Tech Venture Fund	7,125,000	—	—		—		—	7,125,000
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	6,696,000	660,000	(2,352,793	)	—		—	5,003,207
Project Vanilla Co., Ltd.	525,344	—	(525,344	)	—		—	—
December & Company Inc.	30,000,000	—	—		(8,161,866	)	—	21,838,134
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	)	—		—	—
KB Global Commerce Private Equity Investment Fund	7,000,000	—	—		—		—	7,000,000
KB-KTB Technology Venture Fund	2,000,000	4,000,000	—		—		—	6,000,000
KB Bio Global Expansion Private Equity Fund No.1	15,000,000	—	—		—		—	15,000,000
KB Digital Platform Fund	4,500,000	5,000,000	—		—		—	9,500,000
KB-SOLIDUS Healthcare Investment Fund	100,000	1,000,000	—		—		—	1,100,000
KB-GeneN Medical Venture Fund 1	—	2,000,000	—		—		—	2,000,000
KB-BridgePole Venture Investment Fund	—	850,000	—		—		—	850,000
KB-Kyobo New Mobility Power Fund	—	3,000,000	—		—		—	3,000,000
DA-Friend Investment Fund II	—	—	—		—		987,633	987,633
Cornerstone Pentastone IV Fund	—	—	—		—		817,742	817,742
SKS-VLP Fund No.2	—	—	—		—		1,155,560	1,155,560
JS Private Equity Fund III	—	1,700,000	—		—		—	1,700,000
Mirae Asset Mobility Investment Fund I	—	2,000,000	—		—		—	2,000,000
KB-FT 1st Green Growth Investment Fund	—	2,000,000	—		—		—	2,000,000
THE CHAEUL FUND NO.1(former SKS IB NEW M&T FUND NO.1)	—	1,000,000	—		—		—	1,000,000
POSITIVE Sobujang Venture Fund No.1	—	2,000,000	—		—		—	2,000,000
KB-NP Green ESG New Technology Venture Capital Fund	—	3,740,000	—		—		—	3,740,000
Hisstory 2022 Fintech Fund	—	2,000,000	—		—		—	2,000,000
PEBBLES-MW M.C.E New Technology Investment Fund 1st	—	2,000,000	—		—		—	2,000,000
KB Star REIT	—	45,523,300	—		—		—	45,523,300
KB Bio Private Equity Investment Fund IV	—	7,500,000	—		—		—	7,500,000
Nextrade Co., Ltd.	-	9,700,000	-		-		-	9,700,000
	129,322,035	99,471,099	(23,366,137	)	(8,161,866	)	2,960,935	200,226,066

¹ These instruments are reclassified from financial assets measured at FVTPL for the year ended December 31, 2022 .

46

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	2021
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Impaired			Re-classfification1			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
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 These instruments are reclassified to financial assets measured at FVTPL for the year ended December 31, 2021 .

47

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

10. Loans Measured at Amortised Cost

The details of loans measured at amortised cost as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022									2021
	Total amount			Allowances			Book amount			Total amount			Allowances			Book amount
Retails
Broker’s loans		2,670,524,438			—			2,670,524,438			2,875,271,205			—			2,875,271,205
Loans to employees		11,821,078			—			11,821,078			15,067,486			—			15,067,486
Present value discount		(25,619	)		—			(25,619	)		(25,619	)		—			(25,619	)
		2,682,319,897			—			2,682,319,897			2,890,313,072			—			2,890,313,072
Corporate
Broker’s loans		277,741,537			—			277,741,537			270,439,064			—			270,439,064
Securities purchased under repurchase agreements		730,100,000			—			730,100,000			441,800,000			—			441,800,000
Loans receivable		2,789,966,306			(16,386,956	)		2,773,579,350			1,730,116,707			(12,919,579	)		1,717,197,128
Purchased loans		78,787,460			(3,193,805	)		75,593,655			98,535,846			(33,549,254	)		64,986,592
Advances for customers		7,564,877			(7,564,877	)		—			11,404,578			(11,404,578	)		—
Privately placed bonds		500,000			(299,446	)		200,554			14,375,767			(331,495	)		14,044,272
Financial lease receivables		35,135,664			—			35,135,664			41,127,430			—			41,127,430
Net deferred origination fees and costs		(4,820,171	)		—			(4,820,171	)		(5,314,862	)		—			(5,314,862	)
Present value discount		(3,064,593	)		—			(3,064,593	)		(4,148,880	)		—			(4,148,880	)
		3,911,911,080			(27,445,084	)		3,884,465,996			2,598,335,650			(58,204,906	)		2,540,130,744
		6,594,230,977			(27,445,084	)		6,566,785,893			5,488,648,722			(58,204,906	)		5,430,443,816

48

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The change in book amount of loan measured at amortised cost for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022
	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		2,890,313,073			—		—		2,549,095,780			—		49,239,870			—
Transfer between stages
Transfer to lifetime expected credit Losses (Impaired)		—			—		—		(6,675,000	)		—		6,675,000			—
Write-off		—			—		—		—			—		(33,202,354	)
Sale		—			—		—		(722,881,522	)		—		—			—
Other increase/decrease, net		(207,993,176	)		—		—		2,074,015,038			—		(4,355,732	)		—
Ending		2,682,319,897			—		—		3,893,554,296			—		18,356,784			—

(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			—

49

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The changes in allowances for loan losses for the years ended December 31, 2022 and 2021, are as follows:

(In thousands of Korean won)	2022
	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		9,173,399			—			49,031,507			—
Transfer between stages
Transfer to lifetime expected credit Losses (Impaired)		(3,461,509	)		—			3,461,509			—
Write-off		—			—			(33,202,354	)		—
Provision for loan losses		4,984,774			—			805,841			—
Other transfer		—			—			(3,348,083	)		—
Ending		10,696,664			—			16,748,420			—
(In thousands of Korean won)	2021
	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		9,173,399			—			49,031,507			—

Among the loans which have been written-off, the Company manages loans for which the claims against borrowers have not been lost due to reasons such as incomplete extinctive prescription pursuant to relevant laws and uncollected receivables after writing-off, as the written-off loans. As at December 31, 2022 and 2021, the balances of the written-off loans are W 9,218,967 thousand and W 4,600,194 thousand, respectively.

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, 2022, interest rate of the loan is differentiated from 4.9% to 9.8% 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, 2022, the interest rate of loans secured by securities is differentiated from Annual Percentage Rate(APR) 6.9% to 9.8% based on maturities, from APR 7.0% to 8.5% based on credit rating, and the loan with past due date is 9.9%

50

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation		Book amount
Land		28,242,445		—			83,580,757		111,823,202
Buildings		40,613,878		(18,705,038	)		—		21,908,840
Furniture and equipment		166,644,659		(134,101,041	)		—		32,543,618
Others		56,137,689		(43,986,992	)		—		12,150,697
Right-of-use assets		134,063,357		(58,683,464	)		—		75,379,893
		425,702,028		(255,476,535	)		83,580,757		253,806,250

	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

51

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The details of right-of-use assets as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Book amount
Buildings		125,426,370		(53,310,578	)		72,115,792
Vehicles		4,039,939		(1,781,351	)		2,258,588
Others		4,597,048		(3,591,535	)		1,005,513
		134,063,357		(58,683,464	)		75,379,893

	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

The changes in property and equipment for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Re-valuation		Others 1		Ending balance
Land		65,029,822		—		(1,115,081	)		—			47,521,151		387,310		111,823,202
Buildings		23,398,034		—		(543,148	)		(1,007,299	)		—		61,253		21,908,840
Furniture and equipment		31,344,696		15,914,642		(5,231	)		(14,710,489	)		—		—		32,543,618
Others		13,221,419		6,364,691		(97,415	)		(7,337,998	)		—		—		12,150,697
Right-of-use assets		72,426,383		30,479,675		(3,497,265	)		(24,028,900	)		—		—		75,379,893
		205,420,354		52,759,008		(5,258,140	)		(47,084,686	)		47,521,151		448,563		253,806,250

¹ Others consist of reclassification to investment properties and others.

	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.

52

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The changes in right-of-use assets for the year ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition		Disposal			Depreciation			Ending balance
Buildings		69,145,814		27,808,891		(3,080,026	)		(21,758,887	)		72,115,792
Vehicles		1,570,194		2,291,705		(414,828	)		(1,188,483	)		2,258,588
Others		1,710,375		379,079		(2,411	)		(1,081,530	)		1,005,513
		72,426,383		30,479,675		(3,497,265	)		(24,028,900	)		75,379,893

	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

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 August 5, 2022. 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, 2022.

Classification of land that is measured at fair value by fair value hierarchy levels as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		111,823,202		111,823,202
	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Land		—		—		65,029,822		65,029,822

Changes in land which is classified to Level 3 for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		65,029,822			65,263,726
Reclassification to property and equipment		642,447			491,317
Reclassification to investment properties		(255,137	)		(452,300	)
Disposal		(1,115,081	)		(272,921	)
Changes in fair-value		47,521,151			—
Ending balance		111,823,202			65,029,822

53

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Book amounts of land under cost model as at December 31, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Under revaluation model		Under cost model		Under revaluation model		Under cost model
Land		111,823,202		28,242,445		65,029,822		29,301,991

Changes in other comprehensive income related to the revaluation for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance			Re-classification			Ending balance
Land		36,132,407			47,900,256			84,032,663
Income tax effects		(10,034,165	)		(12,332,245	)		(22,366,410	)
After income tax		26,098,242			35,568,011			61,666,253

	2021
(in thousands of Korean won)	Beginning balance			Re-classification			Disposal, 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	)
After income tax		26,474,984			(355,466	)		(21,274	)		26,098,244

12. Investment Properties

The details of investment properties as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated revaluation			Book amount
Land		8,799,021		—			(332,251	)		8,466,770
Buildings		15,303,124		(9,110,040	)		—			6,193,084
		24,102,145		(9,110,040	)		(332,251	)		14,659,854

	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

54

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The changes in investment properties for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Disposal			Depreciation			Re-classification			Ending balance
Land		10,028,459		(1,174,378	)		—			(387,311	)		8,466,770
Buildings		7,726,518		(1,053,788	)		(418,394	)		(61,252	)		6,193,084
		17,754,977		(2,228,166	)		(418,394	)		(448,563	)		14,659,854
	2021
(in thousands of Korean won)	Beginning balance		Disposal			Depreciation			Re-classification			Ending balance
Land		10,528,899		(461,423	)		—			(39,017	)		10,028,459
Buildings		8,403,473		(450,604	)		(442,702	)		216,351			7,726,518
		18,932,372		(912,027	)		(442,702	)		177,334			17,754,977

Details of income and expenditure on investment properties for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Rental income		1,812,717			1,867,883
Expenditure on operating investment properties		(970,252	)		(808,657	)
Expenditure on non-operating investment properties		(32,508	)		(153,330	)
		809,957			905,896

Details of fair value of investment properties as at December 31, 2022 and 2021 are as follows:

	2022				2021
(in thousands of Korean won)	Book amount		Fair value		Book amount		Fair value
Land		8,466,770		47,402,527		10,028,459		26,789,618
Buildings		6,193,084		8,444,966		7,726,518		10,963,771
		14,659,854		55,847,493		17,754,977		37,753,389

The fair values of investment properties as at December 31, 2022 was evaluated by an independent appraiser, based on the evaluation result at August 5, 2022. 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, 2022.

Investment properties are provided as collaterals for rental deposits and lease hold right, which amount to W 610,000 thousand and W 938,000 thousand as at December 31, 2022 and 2021, respectively.

55

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

13. Intangible Assets

The details of intangible assets as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Acquisition cost		Accumulated amortization			Accumulated impairment			Book amount
Goodwill		58,888,990		—			—			58,888,990
Development costs		186,869,610		(139,522,251	)		—			47,347,359
Software		117,345,440		(89,018,725	)		—			28,326,715
Memberships		37,615,266		(115,840	)		(9,866,646	)		27,632,780
Others		23,294,717		—			—			23,294,717
		424,014,023		(228,656,816	)		(9,866,646	)		185,490,561

	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

The changes in intangible assets for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance		Acquisition 1		Disposal			Amortization			Impairment 2			Reversal of Impairment 3		Ending balance
Goodwill		58,888,990		—		—			—			—			—		58,888,990
Development costs		35,653,327		29,140,791		—			(17,446,759	)		—			—		47,347,359
Software		25,476,035		12,951,582		—			(10,100,902	)		—			—		28,326,715
Memberships		27,580,308		1,745,855		(1,041,665	)		(17,652	)		(1,028,751	)		394,684		27,632,780
Others		23,294,717		—		—			—			—			—		23,294,717
		170,893,377		43,838,228		(1,041,665	)		(27,565,313	)		(1,028,751	)		394,684		185,490,561

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 a impairment loss because the market price of the asset is lower than book amount as at December 31, 2022.

³ Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Company recognized a reversal of impairment loss because the market price of the asset is higher than book amount as at December 31, 2022.

	2021
(in thousands of Korean won)	Beginning balance		Acquisition 1		Disposal			Amortization			Impairment 2			Reversal of Impairment 3		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	)		(121,016	)		2,630,059		27,580,308
Others		23,294,717		—		—			—			—			—		23,294,717
		156,075,931		36,580,885		(2,124,080	)		(22,148,402	)		(121,016	)		2,630,059		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 a impairment loss because the market price of the asset is lower than book amount as at December 31, 2021.

³ Memberships are composed of condominium and golf memberships, which are intangible assets with indefinite useful lives. The Company recognized a reversal of impairment loss because the market price of the asset is higher than book amount as at December 31, 2021.

56

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

14. Other Financial Assets

The details of other financial assets as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Other receivables		2,262,695,642			3,271,464,715
Accrued income		190,160,953			163,484,093
Accrued interest on bonds		148,382,124			209,164,728
Guarantee deposits		67,571,758			67,557,208
Other		67,835,435			49,579,114
Provision for other financial assets		(37,655,617	)		(36,353,781	)
		2,698,990,295			3,724,896,077

15. Other Assets

The details of other assets as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Other receivables		116,417,803		84,740
Advance payments		47,263,896		23,376,946
Prepaid expenses		75,560,143		7,437,538
Prepaid value-added taxes		786,782		24,513
Others		3,648,511		441,283
		243,677,135		31,365,020

16. Deposit Liabilities

The details of deposit liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Customers’ deposits
Customers’ deposits for brokerage		5,049,354,662		6,640,427,057
Customers’ deposits for exchange-traded derivatives trading		779,295,471		599,962,498
Customers’ deposits for subscription		904,010		—
Customers’ deposits for savings		6,445,014		8,609,240
Customers’ deposits for repo		61,600		61,627
Customers’ deposits for the investor of collective investment securities		324,357,905		223,800,663
Others		48,641		48,729
		6,160,467,303		7,472,909,814
Guarantee deposits
Guarantee deposits in foreign currency		190,255,947		474,568,902
Guarantee deposits in won currency		468,648,375		452,889,714
		658,904,322		927,458,616
		6,819,371,625		8,400,368,430

57

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

17. Borrowings

The details of borrowings as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Call money		830,000,000			40,000,000
Borrowings:
Borrowing from banks		—			—
Borrowing from KSFC		1,244,222,242			1,093,096,057
Asset-backed short-term bonds		1,254,200,000			515,000,000
CP borrowings		1,920,000,000			—
Securities sold under repurchase agreements		6,231,390,409			13,531,208,950
Short-term note issued		7,249,429,201			4,475,145,330
Debentures:
Debentures		1,850,190,000			2,345,650,000
Less: discount on debentures issued		(3,764,611	)		(5,470,519	)
		20,575,667,241			21,994,629,818

The details of call money as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Interest rate (%)		2022		2021
Samsung Asset Management Co., Ltd. and others		3.42~5.05		830,000,000		40,000,000

The details of borrowings as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)		Interest rate (%)	2022		2021
Borrowings from KSFC	KSFC	3.45~5.07		1,244,222,242		1,093,096,057
Asset-backed short-term bonds	Hi Investment & Securities Co., Ltd. and others	3.42~5.81		1,254,200,000		515,000,000
CP borrowings	Hana Securities Co., Ltd. and others	3.76~5.99		1,920,000,000		—
				4,418,422,242		1,608,096,057

The details of securities sold under repurchase agreements as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Interest rate (%)	2022		2021
Customers	0.11~4.60		4,181,390,409		6,973,309,166
Financial institution	3.30~4.30		2,050,000,000		6,557,899,784
			6,231,390,409		13,531,208,950

The details of short-term note issued as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Interest rate (%)	2022		2021
Individual	0.25~5.60		4,650,359,585		1,724,366,358
Corporate	1.15~5.50		2,599,069,616		2,750,778,972
			7,249,429,201		4,475,145,330

58

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The details of debentures as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Date issued	Maturity	Interest rate (%)	2022			2021
The 34-2nd unsecured public debenture	2018.3.9	2023.3.9	3.02		210,000,000			210,000,000
The 36-1st unsecured public debenture	2019.4.18	2022.4.18	—		—			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	—		—			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	—		—			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			110,000,000
The 39-2nd unsecured public debenture	2021.3.4	2026.3.4	1.70		120,000,000			120,000,000
The 40-1st unsecured public debenture	2021.4.23	2024.4.23	1.53		300,000,000			300,000,000
The 40-2nd unsecured public debenture	2021.4.23	2026.4.23	1.94		200,000,000			200,000,000
The 21-1 public debenture in foreign currency 1	2021.11.1	2026.11.1	2.13		380,190,000			355,650,000
Less: Discount on debentures issued					(3,764,611	)		(5,470,519	)
					1,846,425,389			2,340,179,481

¹  The issuance price of this public debenture is US$ 300,000,000.

The changes in borrowings for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		21,994,629,818			22,507,306,458
Increase(decrease) in call money		790,000,000			(250,000,000	)
Increase(decrease) in borrowings from banks		—			(2,787,298	)
Increase(decrease) in borrowings from KSFC		151,126,185			(256,903,943	)
Increase in asset-backed short-term bonds		739,200,000			175,000,000
Increase in CP borrowings		1,920,000,000			—
Increase(decrease) in securities sold under repurchase agreements		(7,299,818,541	)		(1,462,985,663	)
Increase in short-term note issued		2,774,283,871			742,417,752
Increase in debentures		(493,754,092	)		542,582,512
Ending balance		20,575,667,241			21,994,629,818

59

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

18. Post-employment Benefits

18.1 Defined Benefit Plans

The details of defined benefit liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Present value of defined benefit obligations		67,247,328			70,914,622
Fair value of plan assets		(12,430,101	)		(15,294,733	)
Net defined benefit liabilities		54,817,227			55,619,889

The changes in the defined benefit obligation for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		70,914,622			72,288,500
Current service cost		21,836,961			18,145,235
Interest cost		1,151,821			780,607
Past service cost		2,910,304			1,315,190
Remeasurements:
Actuarial gains and losses arising from changes in demographic assumptions		(6,811,193	)		20,113,645
Actuarial gains and losses arising from changes in financial assumptions		(13,735,991	)		(1,706,991	)
Actuarial gains and losses arising from experience adjustments		16,604,753			(15,407,457	)
Payments from plans:		(8,301,323	)		(1,416,118	)
Payments from the Company		(17,440,714	)		(14,513,685	)
Transfer from related companies		2,438,158			1,823,363
Transfer to related companies		(370,486	)		(895,469	)
Settlement		(78,335	)		(5,301,320	)
Gain or loss on settlement		(1,871,249	)		(4,310,878	)
Ending balance		67,247,328			70,914,622

The changes in the fair value of plan assets for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		(15,294,733	)		(18,652,077	)
Interest income		(178,723	)		(204,480	)
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		157,107			87,124
Contributions by employers		(3,347,402	)		(2,297,614	)
Payments from plans:
Benefits paid		8,301,323			1,416,118
Settlement		—			5,284,090
Transfer from related companies		(2,438,159	)		(1,823,363	)
Transfer to related companies		370,486			895,469
Ending balance		(12,430,101	)		(15,294,733	)

60

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Fair value		Composition(%)		Fair value		Composition(%)
Cash and deposits		8,853,577		71.23		9,539,927		62.37
Investment funds		3,576,524		28.77		2,327,801		15.22
Derivatives		—		—		3,427,005		22.41
		12,430,101		100.00		15,294,733		100.00

Key actuarial assumptions used as at December 31, 2022 and 2021, are as follows:

	2022	2021
Discount rate	DB (including special retirement by salaries peak plan) 5.1%, Compensation promotion DC 5.0 %	DB (including special retirement by salaries peak plan) 2.5%, Compensation promotion DC 2.3 %
Expected salary growth rate	DB : executives 0% DC: Promotion + Base up: 2.3%, Special retirement by Salaries peak plan : 4.6%	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%)

The sensitivity analysis for significant actuarial assumptions used to determine the present value of the defined benefit obligation as at December 31, 2022, 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	%		(1,609,503	)		1,705,619
Expected salary growth rate1		0.50	%		1,631,234			(1,544,704	)
Retirement rate		0.50	%		(1,238,827	)		1,303,693

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, 2022, 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		5,066,411		6,379,701		24,686,972		30,520,116		71,780,706		138,433,906

¹ Fixed pension benefits of W 14.1 billion under promotion compensation defined contribution plan is excluded.

61

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The weighted average duration of the defined benefit obligations is 5.79 years.

Expected contribution to post-employment benefit plans for the year ending December 31, 2023 are W 1,241,430 thousand.

18.2 Defined Contribution Plans

The Company recognized the expenses of W 9,212,523 thousand and W 5,766,377 thousand for defined contribution plans for the years ended December 31, 2022 and 2021, respectively.

19. Provisions

The details of provisions as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Provisions for non-financial guarantees		1,456,106		1,680,410
Provisions for asset retirement obligation1		8,802,261		7,997,559
Provisions for lawsuits		51,221,194		25,150,111
Provisions for the points		—		2,569,985
Provisions for others		89,454,890		68,700,000
		150,934,451		106,098,065

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, 2022 and 2021 are as follows,

(in thousands of Korean won)	2022
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired		Impaired
Beginning		1,642,264			38,146		—
Provision for losses (Reversal of provision)		(418,773	)		194,211		—
Other transfer (foreign exchange and other)		258			—		—
Ending		1,223,749			232,357		—

(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		1,642,264			38,146		—

62

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The changes in other provisions for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Provisions for asset retirement obligation			Provisions for lawsuits			Provisions for the points			Provisions for others			Total
Beginning		7,997,559			25,150,111			2,569,985			68,700,000			104,417,655
Contribution 1		1,026,723			25,165,908			2,451,694			33,965,528			62,609,853
Reversal		—			—			—			(4,038,034	)		(4,038,034	)
Use		(423,495	)		(1,229,477	)		(2,788,799	)		(7,037,952	)		(11,479,723	)
Amortization of discounts		201,474			—			—			—			201,474
Other 2		—			2,134,652			(2,232,880	)		(2,134,652	)		(2,232,880	)
Ending		8,802,261			51,221,194			—			89,454,890			149,478,345

¹ As the first-instance verdict of relevant trial was announced after the reporting period, additional litigation provision liabilities were recognized as an adjusting event after the reporting period.

² As a lawsuit was filed during the year ended December 31, 2022, the estimated loss on the sale of funds related to Lime Asset Management was replaced to provisions for lawsuits.

	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.

63

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

20. Other Financial Liabilities

The details of other financial liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Other payables		1,944,408,865		3,037,222,814
Accrued expenses		94,964,650		40,961,608
Financial guarantee liabilities		57,125,511		97,766,009
Provisions for financial guarantee contracts		16,577,411		2,959,848
Leasehold deposits received		7,940,809		7,319,921
Lease liabilities		121,082,291		123,400,384
Other		1,473,378		1,117,510
		2,243,572,915		3,310,748,094

The changes in liabilities of the provisions for financial guarantee contracts for the years ended December 31, 2022 and 2021 are as follows:

(in thousands of Korean won)	2022
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses
			Non-impaired		Impaired
Beginning		1,772,389		1,187,459		—
Provision		13,212,104		405,459		—
Ending		14,984,493		1,592,918		—

(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		1,772,389		1,187,459			—

64

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

21. Other Liabilities

The details of other liabilities as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Account payables		31,630		43,216,188
Accrued expenses		179,569,071		258,774,213
Accrued dividends		2,952,757		—
Advances from customers		5,355,119		4,615,843
Unearned revenue		185,683,671		52,220,555
Taxes withheld		42,772,294		32,002,782
Other long-term employee benefits		7,176,237		7,630,850
Others		3,783,577		3,826,567
		427,324,356		402,286,998

22. Share Capital

The details of share capital as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won, except per share)	Authorized shares		Outstanding shares		Par value per share		2022		2021
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, 2022 and 2021.

23. Hybrid Securities

Details of hybrid security classified as equity as of December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Issuance date	Maturity		Interest rate (%)	2022		2021
Bond-type Hybrid Securities No.11	March 31, 2022		Permanent	4.30		208,010,752		—
Bond-type Hybrid Securities No.2	May 30, 2022		Permanent	4.80		48,170,780		—
Bond-type Hybrid Securities No.3 2	September 30, 2022		Permanent	5.50		249,948,780		—
						506,130,312		—

¹ As at December 31, 2022, among the hybrid securities issued by the Company, the balance held by KB Financial Group, a related party of the Company, is W 200,000 million.

² As at December 31, 2022, among the hybrid securities issued by the Company, the balance held by KB Financial Group, a related party of the Company, is W 230,000 million.

The Company may extend the maturity under the same conditions at the time of maturity of the above hybrid securities, and interest payment may be deferred if certain conditions are met. Above hybrid securities are early redeemable by the Company after 5 years from the issuance date and each interest payment date thereafter.

65

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

24. Other Paid-in Capital

The details of other paid-in capital as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
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, 2022 and 2021.

25. Retained Earnings

The details of retained earnings as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Legal reserve
Earned surplus reserve 1		128,656,298			101,656,298
Reserve for liability to compensate for damages 2		500,000			500,000
Voluntary reserves		1,839,996,357			1,540,948,010
Regulatory reserve for credit losses 3		101,842,161			100,223,524
Unappropriated retained earnings		(32,922,732	)		527,666,984
		2,038,072,084			2,270,994,816

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		2,270,994,816			1,873,327,832
Profit for the year		170,294,956			597,645,711
Dividends		(400,000,000	)		(200,000,000	)
Dividends of hybrid securities		(3,479,007	)		—
Transfer to gain due to disposal of revaluation assets		261,319			21,273
Ending balance		2,038,072,084			2,270,994,816

66

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The amount of dividends and dividends per share for the years ended December 31, 2022 and 2021, are as follows:

	2022
(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		669		200,000,000
Annual dividend	Ordinary share		298,620,424 shares		—		298,620,424 shares		669		200,000,000

	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

Appropriation of retained earnings for the years ended December 31, 2022 and 2021, consists of:

	2022					2021
(in thousands of Korean won)	(Expected date of appropriation: March 23, 2023)					(Date of appropriation: March 24, 2022)
Unappropriated retained earnings
Balance at the beginning of year		—					—
Changes of accounting policies		—					—
Interim dividend		(200,000,000	)				(70,000,000	)
Dividends of hybrid securities		(3,479,007	)				—
Transfer due to disposal of revaluation assets		261,319					21,274
Profit for the year		170,294,956		(32,922,732	)		597,645,711		527,666,985
Transfers such as discretionary reserves
Regulatory reserve for credit losses		1,526,732					—
Voluntary reserves		161,396,000		162,922,732			—		—
				130,000,000					527,666,985
Appropriation of retained earnings
Earned surplus reserve		30,000,000					27,000,000
Regulatory reserve for credit losses		—					1,618,637
Voluntary reserves		—					299,048,348
Dividends		100,000,000		130,000,000			200,000,000		527,666,985
(cash dividends per ordinary share: W 334 (6.69%) in 2022)
(cash dividends per ordinary share: W 669 (13.39%) in 2021)
Unappropriated retained earnings carried forward to subsequent year				—					—

67

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Payout and dividend yield ratios as at December 31, 2022 and 2021, are as follows:

	2022				2021
	Ordinary share				Ordinary share
	Interim dividend		Annual dividend		Interim dividend		Annual dividend
Number of shares outstanding		298,620,424 shares		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		298,620,424 shares
Par value per share (in Korean won)		5,000		5,000		5,000		5,000
Payout ratio		13.39%		6.69%		4.68%		13.39%
Scheduled dividends (in thousands of Korean won)		200,000,000		100,000,000		70,000,000		200,000,000
Dividends per share (in Korean won)		669		334		234		669

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.

The details of the regulatory reserve for credit losses (reversal of reserve) to be appropriated as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning		101,842,161			100,223,524
Amounts to be reserved (reversed)		(1,526,732	)		1,618,637
Ending		100,315,429			101,842,161

The adjusted profit of the year after reflection of reserve for credit losses for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Profit for the year before reserve for credit loss		170,294,956		597,645,711
Amounts to be reversed (reserved)		1,526,732		(1,618,637	)
Adjusted profit after reversal (provision) of reserve for credit losses1		171,821,688		596,027,074

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.

68

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

26. Other Components of Equity

The details of other components of equity as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Changes in the fair value of financial assets at FVOCI		233,760,812			216,494,145
Revaluation surplus		62,060,360			26,749,635
Remeasurements of net defined benefit liabilities		(37,778,107	)		(40,522,467	)
Gain or loss on financial liabilities designated at FVTPL due to the change of credit risk		41,080,867			2,225,784
		299,123,932			204,947,097

The changes in gain or loss on valuation of financial assets at FVOCI for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		216,494,145			205,927,502
Gain on valuation		11,241,986			17,339,966
Tax effect of gain (loss) on valuation 1		(39,698	)		(4,768,491	)
Transfer to gain (loss) due to disposal or impairment		8,187,321			(2,765,286	)
Tax effect of transfer 1		(2,122,942	)		760,454
Ending balance		233,760,812			216,494,145

¹ Including income tax effect (Note 35).

The changes in gain on revaluation of property and equipment for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		26,749,635			26,770,909
Net gains on revaluation of property and equipment		47,900,256			—
Tax effect of net gains on revaluation 1		(12,328,212	)		—
Transfer to retained earnings due to disposal of revaluation assets		(261,319	)		(21,274	)
Ending balance		62,060,360			26,749,635

¹ Including income tax effect (Note 35).

The changes in remeasurements of the net defined benefit liability for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		(40,522,467	)		(38,284,884	)
Changes during the year		3,785,324			(3,086,321	)
Tax effect 1		(1,040,964	)		848,738
Ending balance		(37,778,107	)		(40,522,467	)

¹ Including income tax effect (Note 35).

69

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Beginning balance		2,225,784			(11,488,824	)
Changes during the year		52,822,290			18,916,700
Tax effect 1		(13,967,207	)		(5,202,092	)
Ending balance		41,080,867			2,225,784

¹ Including income tax effect (Note 35).

27. Fee and Commission Income and Expense

The details of fee and commission income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Brokerage commissions		414,015,645		707,045,069
Underwriting commissions		167,839,908		128,888,234
Brokerage commissions on collective investment securities		19,850,174		28,155,111
Management fee on asset management		27,285,178		32,036,202
Commissions on merger and acquisition		130,161,016		134,615,127
Trust fees and commissions		17,996,232		14,581,037
Other commissions		144,662,369		121,762,248
		921,810,522		1,167,083,028

The details of fee and commission expense for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Trading commission		48,429,891		58,391,360
Advisory fees		1,664,749		1,967,202
Investment management delegation fees		239,715		183,377
Commission fees on group brand		15,634,928		18,459,525
Contributions to other institutions		8,093,205		7,593,876
Others		92,315,789		84,654,029
		166,378,277		171,249,369

70

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

28. 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Financial instruments at FVTPL		1,300,472,857		2,016,946,613		(716,473,756	)
Financial instruments designated at FVTPL		1,188,229,550		429,243,880		758,985,670
Derivative financial instruments		8,135,153,253		8,534,426,565		(399,273,312	)
Financial assets at FVOCI 1		525,431		16,448,205		(15,922,774	)
		10,624,381,091		10,997,065,263		(372,684,172	)

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

	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.

The details of gain or loss on valuation and disposal of financial instruments at FVTPL for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Financial assets at FVTPL		1,189,377,822		1,954,324,119		(764,946,297	)
Financial liabilities at FVTPL		111,095,035		62,622,494		48,472,541
		1,300,472,857		2,016,946,613		(716,473,756	)

	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	)

The details of gain or loss on valuation and disposal of financial instruments designated at FVTPL for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Financial liabilities designated at FVTPL
Derivatives-linked securities sold		914,565,927		359,592,452		554,973,475
Other OTC derivative-combined contract sold		244,528,092		52,797,971		191,730,121
Exchange traded notes sold		29,135,531		16,853,457		12,282,074
		1,188,229,550		429,243,880		758,985,670

71

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	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	)

The details of gain or loss on valuation and disposal of derivative financial instruments for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Interest rate		4,485,897,307		4,273,096,366		212,800,941
Currency		1,560,403,367		1,434,696,665		125,706,702
Stock		1,934,335,781		2,444,365,562		(510,029,781	)
Credit		38,991,621		31,943,503		7,048,118
Commodity		33,575,544		30,167,440		3,408,104
Others		81,949,633		320,157,029		(238,207,396	)
		8,135,153,253		8,534,426,565		(399,273,312	)

	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

The details of gain or loss on valuation and disposal of financial assets at FVOCI for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Gain		Loss		Net
Debt instruments		525,431		16,448,205		(15,922,774	)

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

72

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

As at December 31, 2022, 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 W 163.1 billion (nominal amount). Meanwhile, the Company sold W 68.1 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, 2022, 4 lawsuits were 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.

29. Interest Income and Interest Expense

The details of interest income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Interest on financial assets at FVTPL
Interest on debt instruments at FVTPL		393,096,129		341,201,835
Interest on loans at FVTPL		4,189,123		6,773,305
Interest on commercial papers		142,422,181		52,496,923
		539,707,433		400,472,063
Interest on financial assets at FVOCI and financial assets measured at amortised cost
Interest on loans measured at amortised cost		4,129,316		3,469,282
Interest on debt instruments at FVOCI		76,499,887		47,099,927
Interest on broker’s loans		199,259,024		204,101,340
Interest on loans		130,220,677		53,326,130
Interest on deposits with KSFC		9,784,119		1,834,470
Interest on certificates of deposit		—		12,974
Interest on deposits with financial institution		26,600		5,560
Interest on bonds purchased under resale agreements		16,034,415		3,909,987
Gains on transactions of certificates of deposits		51,521		43,948
Interest on deposits		21,546,272		14,874,588
Interest on other receivables		1,006,503		2,013,586
Others 1		15,193,910		6,388,935
		473,752,244		337,080,727
		1,013,459,677		737,552,790

¹ Interest on lease receivables of W 1,084 million and W 1,616 million for the year ended December 31, 2022 and 2021, respectively, are included.

73

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The details of interest expense for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Interest on borrowings		35,798,927		15,698,640
Interest on customers’ deposits		32,178,353		6,634,860
Interest on bonds sold under repurchase agreements		171,398,994		91,025,829
Losses on transactions of certificates of deposit		76		619
Interest on call money		12,644,133		3,045,203
Interest on debentures		41,716,419		41,745,311
Interest on short-term note issued		163,134,122		43,200,628
Interest on asset-backed short-term bonds		39,622,114		7,351,150
Fees for the proceeds from the sale of stocks loaned		2,466		1,191
Others 1		5,118,033		3,725,794
		501,613,637		212,429,225

¹ Interest on lease liabilities of W 3,373 million and W 2,787 million for the year ended December 31, 2022 and 2021, respectively, are included.

30. 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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Gain(Loss) on valuation of financial assets measured at amortised cost
Reversal(Provision) of allowance for credit losses of loans		(5,790,615	)		(4,314,871	)
Reversal(Provision) of allowance for credit losses of deposits		(12,598	)		106,947
Reversal(Provision) of allowance for credit losses of other financial assets		(1,484,417	)		(1,063,262	)
Gain(Loss) on disposal of financial assets measured at amortised cost
Gain(Loss) on disposal of loans measured at amortised cost		(3,640,849	)		1,405,114
		(10,928,479	)		(3,866,072	)

31. Gain or Loss on Foreign Currency Transactions

The details of gain on foreign currency transactions for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Gain on foreign currency transactions		1,151,952,824		692,728,817
Gain on foreign exchange translation		104,536,359		85,145,483
		1,256,489,183		777,874,300

The details of loss on foreign currency transactions for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Loss on foreign currency transactions		1,110,025,273		716,902,499
Loss on foreign exchange translation		146,515,703		28,832,518
		1,256,540,976		745,735,017

74

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

32. Other Operating Income and Other Operating Expenses

The details of other operating income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Dividend income		49,602,892		43,442,376
Distribution income		101,178,211		101,195,360
Reversal of provision for credit loss		2,597,680		2,758,899
Gains on disposal of general product		41,651		—
Others		3,360,615		3,137,321
		156,781,049		150,533,956

The details of other operating expenses for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Provision for credit losses		15,990,682		3,026,767
Others		37,757,329		42,694,906
		53,748,011		45,721,673

33. Selling and Administrative Expenses

(a) The details of selling and administrative expenses for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Labor costs
Salaries		350,121,189			449,001,959
Post-employment benefits		33,061,636			21,492,051
Retirement bonus		22,686,894			619,728
Other long-term employee benefits		(454,613	)		2,415,192
Employee benefits		84,596,564			80,461,703
		490,011,670			553,990,633
Other selling and administrative expenses
Employee benefits		11,490,947			9,980,170
Sales promotion expenses		754,374			3,056,724
Computer system operation expenses		50,881,343			24,436,828
Management expenses for rent		19,284,493			20,531,947
Commissions		23,560,103			24,093,066
Research and development		310,103			208,948
Advertising expenses		26,135,402			28,029,037
Depreciation		47,084,686			41,466,055
Training expenses		2,948,539			1,521,905
Amortization expenses of intangible assets		27,565,313			22,148,402
Taxes and dues		26,139,663			33,218,538
Consignment fees		5,792,592			4,536,892
Others		37,891,058			54,294,279
		279,838,616			267,522,791
		769,850,286			821,513,424

(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.

75

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The details of the share grants linked to long-term performance as at December 31, 2022, 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 1-19	2015-2-24		1,812		584	Service, vesting conditions : market 30%, non-market 70%
Series 1-21	2016-1-1		6,671		1,744	Service, vesting conditions : market 30%, non-market 70%
Series 1-22	2016-12-30		76,379		11,628	Service, vesting conditions : market 20%, non-market 80%
Series 1-23	2017-1-9		2,299		—	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		203	Service, vesting conditions : market 20%, non-market 80%
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		—	Service, vesting conditions : market 20%, non-market 80%
Series 1-28	2018-1-1		14,698		4,103	Service, vesting conditions : market 20%, non-market 80%
Series 1-29	2018-7-9		1,208		143	Service, vesting conditions : market 20%, non-market 80%
Series 1-30	2019-1-1		80,289		54,959	Service, vesting conditions : market 80%, non-market 20%
Series 1-30	2019-1-1		4,580		3,835	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		1,021	Service, vesting conditions : market 20%, non-market 80%
Series 1-33	2019-6-1		3,994		2,129	Service, vesting conditions : market 20%, non-market 80%
Series 1-34	2019-9-1		2,927		1,059	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		574	Service, vesting conditions : market 20%, non-market 80%
Series 1-37	2020-1-1		48,962		22,614	Service, vesting conditions : market 20%, non-market 80%
Series 1-38	2020-3-6		2,856		4,463	Service, vesting conditions : market 0%, non-market 100%
Series 1-39	2020-8-1		12,744		13,849	Service, vesting conditions : market 20%, non-market 80%
Series 1-40	2021-1-1		98,808		127,009	Service, vesting conditions : market 80%, non-market 20%
Series 1-40	2021-1-1		5,675		5,675	Service, vesting conditions : market 0%, non-market 100%
Series 1-41	2021-3-4		3,591		4,786	Service, vesting conditions : market 20%, non-market 80%
Series 1-42	2021-3-15		5,190		4,671	Service, vesting conditions : market 20%, non-market 80%
Series 1-43	2021-5-27		604		298	Service, vesting conditions : market 20%, non-market 80%
Series 1-44	2021-6-1		2,904		3,460	Service, vesting conditions : market 20%, non-market 80%
Series 1-45	2021-8-1		2,276		1,615	Service, vesting conditions : market 20%, non-market 80%
Series 1-46	2021-9-1		3,201		3,376	Service, vesting conditions : market 20%, non-market 80%
Series 1-47	2022-1-1		54,170		29,010	Service, vesting conditions : market 20%, non-market 80%
Series 1-48	2022-2-17		1,926		838	Service, vesting conditions : market 20%, non-market 80%
Series 1-49	2022-3-6		928		928	Service, vesting conditions : market 0%, non-market 100%
Series 1-50	2022-5-9		2,839		920	Service, vesting conditions : market 20%, non-market 80%
Series 1-51	2022-8-1		4,683		2,053	Service, vesting conditions : market 20%, non-market 80%
Series 1-52	2022-8-16		4,029		760	Service, vesting conditions : market 20%, non-market 80%
			470,721		314,186

¹ The number of maximum payable shares per executive as at December 31, 2022.

76

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The details of share grants linked to short-term performance as at December 31, 2022, are as follows:

(In number of shares)	Grant date	Granted shares		Payable shares1		Vesting conditions2
Series 2-3	2016-1-1		6,844		2,392	Proportional to service period, vesting conditions satisfied
Series 2-4	2017-1-1		27,453		14,945	Proportional to service period, vesting conditions satisfied
Series 2-5	2018-1-1		70,959		26,407	Proportional to service period, vesting conditions satisfied
Series 2-6	2019-1-1		60,039		34,480	Proportional to service period, vesting conditions satisfied
Series 2-7	2020-1-1		68,689		53,929	Proportional to service period, vesting conditions satisfied
Series 2-8	2021-1-1		69,448		69,336	Proportional to service period, vesting conditions satisfied
Series 2-9	2022-1-1		98,396		98,396	Proportional to service period, vesting conditions satisfied
Series 3-3	2016-1-1		15,036		9,438	Proportional to service period, vesting conditions satisfied
Series 3-4	2017-1-1		12,112		7,767	Proportional to service period, vesting conditions satisfied
Series 3-5	2018-1-1		25,393		9,624	Proportional to service period, vesting conditions satisfied
Series 3-6	2019-1-1		44,696		26,378	Proportional to service period, vesting conditions satisfied
Series 3-7	2020-1-1		77,112		57,391	Proportional to service period, vesting conditions satisfied
Series 3-8	2021-1-1		91,948		91,948	Proportional to service period, vesting conditions satisfied
Series 4-1	2017-12-31		191,786		21,865	Proportional to service period, vesting conditions satisfied
Series 4-2	2019-12-31		273,097		92,959	Proportional to service period, vesting conditions satisfied
Series 4-3	2020-12-31		283,365		192,737	Proportional to service period, vesting conditions satisfied
Series 4-4	2021-12-31		294,834		294,834	Proportional to service period, vesting conditions satisfied
			1,711,207		1,104,826

¹ The number of maximum payable shares per executive as at December 31, 2022.

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, 2022 and 2021

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, 2022, are as follows:

(In Korean won)	Risk free rate (%)	Fair value (Market performance condition)	Fair value (Non-market performance condition)
Series 1-1	3.777	-	44,859~46,663
Series 1-8	3.777	-	44,859~46,663
Series 1-10	3.777	-	44,859~46,663
Series 1-11	3.777	-	47,631~47,631
Series 1-13	3.777	-	44,859~47,631
Series 1-19	3.777	-	45,096~47,631
Series 1-21	3.777	-	43,157~50,973
Series 1-22	3.777	-	43,157~56,379
Series 1-23	3.777	-	45,096~56,379
Series 1-24	3.777	-	45,096~56,379
Series 1-25	3.777	-	45,096~56,379
Series 1-26	3.777	-	45,096~56,379
Series 1-27	3.777	-	45,096~56,379
Series 1-28	3.777	-	43,157~56,379
Series 1-29	3.777	-	45,096~56,379
Series 1-30	3.777	-	43,157~56,379
Series 1-31	3.777	-	45,096~56,379
Series 1-32	3.777	-	41,548~44,859
Series 1-33	3.777	-	44,859~56,379
Series 1-34	3.777	-	44,859~50,973
Series 1-35	3.777	-	45,096~56,379
Series 1-36	3.777	-	44,859~50,973
Series 1-37	3.777	-	41,548~56,379
Series 1-38	3.777	43,157~50,973	43,157~46,663
Series 1-39	3.777	43,157~50,973	43,157~46,663
Series 1-40	3.777	40,757~48,322	43,157~50,973
Series 1-41	3.777	41,033~46,084	41,548~44,859
Series 1-42	3.777	39,520~44,386	41,548~44,859
Series 1-43	3.777	-	44,859~50,973
Series 1-44	3.777	39,458~44,316	41,548~44,859
Series 1-45	3.777	41,174~46,243	41,548~44,859
Series 1-46	3.777	40,609~45,608	41,548~44,859
Series 1-47	3.777	37,410~62,269	41,548~48,461
Series 1-48	3.777	35,287~39,615	39,958~43,157
Series 1-49	3.777	39,057~46,131	43,157~46,663
Series 1-50	3.777	37,824~42,464	39,958~43,157
Series 1-51	3.777	38,831~49,087	39,958~46,663
Series 1-52	3.777	38,040~42,706	39,958~43,157
Series 2-3	3.777	-	43,157~50,973
Series 2-4	3.777	-	43,157~56,379
Series 2-5	3.777	-	41,548~56,379
Series 2-6	3.777	-	41,548~56,379
Series 2-7	3.777	-	41,548~56,379
Series 2-8	3.777	-	41,548~57,941
Series 2-9	3.777	-	39,958~48,461
Series 3-3	3.777	-	43,157~50,973
Series 3-4	3.777	-	43,157~50,973
Series 3-5	3.777	-	43,157~56,379
Series 3-6	3.777	-	41,548~56,379
Series 3-7	3.777	-	41,548~56,379
Series 3-8	3.777	-	41,548~50,973
Series 4-1	3.777	-	45,096~56,379
Series 4-2	3.777	-	50,973~50,973
Series 4-3	3.777	-	46,663~50,973
Series 4-4	3.777	-	44,859~50,973

78

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

In relation to the above share-based arrangements, the compensation cost amounting to W 63,905,175 thousand and W 63,084,932 thousand are recorded as accrued expenses to KB Financial Group Inc as at December 31, 2022 and 2021, respectively.

34. Non-operating Income and Non-operating Expenses

The details of non-operating income for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Gain on disposal of property and equipment		1,481,966		170,470
Gain on disposal of investment properties		601,745		246,867
Gain on disposal of intangible assets		—		3,362
Reversal of impairment loss on intangible assets		394,684		2,630,059
Reversal of loss on revaluation of property and equipment		72,800		—
Rent		5,968,469		7,012,044
Gain related to investments in subsidiaries and associates		78,025,598		46,242,488
Others		7,037,551		2,529,223
		93,582,813		58,834,513

The details of non-operating expenses for the years ended December 31, 2022 and 2021 are as follows:

(in thousands of Korean won)	2022		2021
Loss on disposal of property and equipment		292,841		184,710
Loss on disposal of investment properties		29,912		—
Depreciation of investment properties		418,394		442,702
Loss on disposal of intangible assets		22,000		40,656
Impairment loss on intangible assets		1,028,751		121,016
Loss on revaluation of property and equipment		451,905		—
Loss related to investments in subsidiaries and associates		10,726,299		11,701,543
Donation		8,023,559		7,014,314
Others		58,843,267		33,612,383
		79,836,928		53,117,324

79

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

35. Tax Expense and Deferred Tax

The details of income tax expense for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Current tax
Current tax on profits for the year		42,582,556			210,118,248
Adjustments in respect of prior years		(1,091,537	)		2,530,896
Deferred tax
Origination and reversal of temporary differences		45,258,160			14,210,462
Tax recognized directly in equity
Gain or loss on valuation for financial assets at FVOCI		(2,162,640	)		(4,008,037	)
Gain on revaluation of property and equipment		(12,328,212	)		—
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(13,967,207	)		(5,202,092	)
Remeasurements of net defined benefit liabilities		(1,040,964	)		848,738
Tax effect derived from group’s income tax system		2,997,367			(3,938,930	)
Income tax expense		60,247,522			214,559,285

Reconciliation of profit before tax and tax expense for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Profit before tax (A)		230,542,478			812,204,996
Tax based on statutory rate		55,329,280			212,994,374
Adjustments
Non-deductible expense		4,321,064			5,549,618
Non-taxable income		(3,968,641	)		(1,197,227	)
Changes in deferred tax assets (liabilities) that have not been recognized		(612,030	)		(300,531	)
Effect from tax reduction and credit		(201,610	)		(81,033	)
Adjustment in respect of prior years		(1,091,537	)		2,530,896
Tax effect from group’s income tax system		2,997,367			(3,938,930	)
Changes in tax rate		1,797,093			—
Others		1,676,536			(997,882	)
Tax expense (B)		60,247,522			214,559,285
Effective tax rate (B/A)		26.13	%		26.42	%

The changes in deferred tax assets (liabilities) for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Beginning balance			Profit (loss) for the year			Other comprehensive income			Ending balance
Provision for impairment		142,086			(5,167	)		—			136,919
Commissions income		4,622,730			3,180,864			—			7,803,594
Financial assets at FVOCI		(79,210,178	)		(4,561,632	)		(2,162,640	)		(85,934,450	)
Defined benefit obligation		19,501,521			(640,015	)		(1,040,964	)		17,820,542
Other long-term employee benefits		2,098,484			(196,781	)		—			1,901,703
Financial assets at FVTPL		55,244,765			139,967,430			—			195,212,195
Financial liabilities at FVTPL		(49,107,484	)		(244,071,368	)		(13,967,207	)		(307,146,059	)
Accrued expenses		75,757,563			(21,294,658	)		—			54,462,905
Dividends (specific overseas company)		10,545,651			(1,126,588	)		—			9,419,063

80

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Accrued income	(22,988,746	)	(1,787,714	)	—		(24,776,460	)
Property and equipment	(9,782,627	)	75,168		(12,328,212	)	(22,035,671	)
Provisions for asset retirement obligation	2,199,329		133,270		—		2,332,599
Investments in associates and subsidiaries	1,747,824		(1,911,192	)	—		(163,368	)
Derivatives	(57,458,767	)	102,627,090		—		45,168,323
Loans	1,584,488		20,228		—		1,604,716
Intangible assets	(20,530,350	)	297,978		—		(20,232,372	)
Plan assets	(4,206,052	)	912,075		—		(3,293,977	)
Advance depreciation provision	(2,501,796	)	90,974		—		(2,410,822	)
Interest related to loan for construction	(64,951	)	6,099		—		(58,852	)
Others	40,214,855		11,912,773		—		52,127,628
Subtotal	(32,191,655	)	(16,371,166	)	(29,499,023	)	(78,061,844	)
Unrecognized deferred tax assets (liabilities)	(3,604,707	)	(612,030	)	—		(4,216,737	)
Deferred tax assets (liabilities), net 1	(28,586,948	)	(15,759,136	)	(29,499,023	)	(73,845,107	)

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.

	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	)
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.

81

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Temporary differences which were not recognized due to uncertainty of their realization as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
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		7,512,805
Dividends (specific overseas company)		35,543,632		38,347,821
Investments in subsidiaries		15,476,124		15,476,124
Others		2,705,305		2,705,305
		61,237,866		64,042,055
		15,912,217		13,108,028

Details of income taxes that are charged or credited directly to equity for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022			2021
Recognized in other comprehensive income
Gain or loss on valuation for financial assets at FVOCI		(39,698	)		(4,768,491	)
Gain on revaluation of property and equipment		(12,328,212	)		—
Changes on the fair value of financial liabilities designated at FVTPL due to the change of credit risk		(13,967,207	)		(5,202,092	)
Remeasurements of net defined benefit liabilities		(1,040,964	)		848,738
Reclassified to profit or loss
Gain or loss on valuation for financial assets at FVOCI		(2,122,942	)		760,454
		(29,499,023	)		(8,361,391	)

82

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

36. 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, 2022 and 2021, are as follows:

	2022
(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		Totals
Financial Assets
Cash and deposits		—		—		4,028,288,407		4,028,288,407
Financial Assets at FVTPL		28,995,718,418		—		—		28,995,718,418
Derivatives		1,701,970,056		—		—		1,701,970,056
Equity instruments at FVOCI		—		686,116,835		—		686,116,835
Debt instruments at FVOCI		—		4,112,728,624		—		4,112,728,624
Loans measured at amortised cost		—		—		6,566,785,893		6,566,785,893
Other financial assets		—		—		2,698,990,295		2,698,990,295
		30,697,688,474		4,798,845,459		13,294,064,595		48,790,598,528

	2022
(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		2,082,979,265		—		—		—		2,082,979,265
Financial liabilities designated at FVTPL		—		10,088,600,213		—		—		10,088,600,213
Derivative financial liabilities		2,307,993,521		—		—		10,070,190		2,318,063,711
Deposit liabilities		—		—		6,819,371,625		—		6,819,371,625
Borrowings		—		—		20,575,667,241		—		20,575,667,241
Other financial liabilities		—		—		2,243,572,915		—		2,243,572,915
		4,390,972,786		10,088,600,213		29,638,611,781		10,070,190		44,128,254,970

83

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	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		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

84

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

37. Financial Instruments

37.1 Fair Value of Financial Instruments by Class

Fair values of financial assets and financial liabilities as at December 31, 2022 and 2021, are as follows:

	2022				2021
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and deposits 2		4,028,288,407		4,028,288,407		3,345,119,600		3,345,119,600
Financial assets at FVTPL 1		28,995,718,418		28,995,718,418		33,833,764,376		33,833,764,376
Derivative financial assets 1		1,701,970,056		1,701,970,056		811,015,166		811,015,166
Financial assets at FVOCI		4,798,845,459		4,798,845,459		3,838,298,230		3,838,298,230
Loans measured at amortised cost		6,566,785,893		6,544,314,422		5,430,443,816		5,438,252,442
Other financial assets 2		2,698,990,295		2,698,990,295		3,724,896,077		3,724,896,077
		48,790,598,528		48,768,127,057		50,983,537,265		50,991,345,891

	2022				2021
(in thousands of Korean won)	Carrying amount		Fair value		Carrying amount		Fair value
Financial liabilities
Deposit liabilities 2		6,819,371,625		6,819,371,625		8,400,368,430		8,400,368,430
Financial liabilities at FVTPL		2,082,979,265		2,082,979,265		2,825,922,918		2,825,922,918
Financial liabilities designated at FVTPL 1		10,088,600,213		10,088,600,213		9,160,923,652		9,160,923,652
Derivative financial liabilities 1		2,318,063,711		2,318,063,711		836,699,402		836,699,402
Borrowings		20,575,667,241		20,512,526,086		21,994,629,818		21,981,900,347
Other financial liabilities 2		2,243,572,915		2,243,572,915		3,310,748,094		3,310,748,094
		44,128,254,970		44,065,113,815		46,529,292,314		46,516,562,843

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.

37.2 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, 2022 and 2021

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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at FVTPL – debt instruments 1		6,259,722,865		19,448,292,474		2,136,574,599		27,844,589,938
Financial assets at FVTPL - equity instruments		481,362,503		520,104,659		149,661,318		1,151,128,480
Derivative financial assets 1		96,188,443		1,485,006,498		120,775,115		1,701,970,056
Financial assets at FVOCI		5,025,406		4,372,289,778		421,530,275		4,798,845,459
		6,842,299,217		25,825,693,409		2,828,541,307		35,496,533,933
Financial liabilities
Financial liabilities at FVTPL		2,082,979,265		—		—		2,082,979,265
Financial liabilities designated at FVTPL1		35,687,313		1,811,403,735		8,241,509,165		10,088,600,213
Derivative financial liabilities 1		422,619,560		1,117,902,302		777,541,849		2,318,063,711
		2,541,286,138		2,929,306,037		9,019,051,014		14,489,643,189

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

	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.

86

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

37.3 Valuation techniques and inputs classified by Level 2

The details of the valuation techniques and inputs classified by Level 2 as at December 31, 2022 and 2021 are as follows:

(in thousands of Korean won)	2022		Valuation techniques	Inputs
Financial assets at FVTPL		19,968,397,133	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)		1,485,006,498	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
Financial assets at FVOCI		4,372,289,778	DCF Model	Discount rate, Interest rate and others
		25,825,693,409
Financial liabilities designated at FVTPL		1,811,403,735	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)		1,107,832,112	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)		10,070,190	DCF Model	Discount rate, exchange rate and others
		2,929,306,037

The details of the valuation techniques and inputs classified by Level 2 as at December 31, 2022 and 2021 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
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

87

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

37.4 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Financial assets at FVTPL			Financial assets at FVOCI		Net derivatives			Financial liabilities designated at FVTPL
Beginning balance		1,728,987,322			366,776,095		41,344,748			(7,829,040,979	)
Total gains or losses
Profit or loss		(73,050,511	)		—		(666,119,493	)		563,317,417
Other comprehensive income		—			54,754,180		—			60,520,089
Purchases		898,515,700			—		23,525,783			—
Sales		(278,907,255	)		—		(59,177,496	)		—
Issues		—			—		(14,796,230	)		(5,222,820,340	)
Settlements		—			—		18,455,954			4,186,514,648
Transfer within levels 1		10,690,661			—		—			—
Ending balance		2,286,235,917			421,530,275		(656,766,734	)		(8,241,509,165	)

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, 2022 and 2021

	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.

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, 2022 and 2021, are as follows:

	2022
(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		(84,173,390	)		—		(558,677,313	)		726,467,752
Other comprehensive income
Gain or loss on valuation of financial assets at FVOCI 2		—			54,754,180		—			—
Changes in fair value of financial liabilities at FVTPL due to the change of credit risk 2		—			—		—			56,580,809
		(84,173,390	)		54,754,180		(558,677,313	)		783,048,561

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.

	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.

89

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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

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

	2022
(in thousands of Korean won)	Type	Fair value	Valuation techniques	Inputs	Unobservable input	Range	Relevance
Financial assets at FVTPL	Equity-linked securities	10,127,847	DCF model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White, 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	0.22 ~ 0.25	Proportional
					Correlation	-0.37 ~ 0.73	Proportional
	Other derivative linked securities	162,897,287			Underlying asset volatility	0.25 ~ 0.33	Proportional
					Correlation	0.12 ~ 0.93	Proportional
	Other OTC derivative linked contract	231,308,457			Underlying asset volatility	0.19 ~ 0.36	Proportional
					Correlation	-0.60 ~ 0.76	Proportional
	Debt instruments	1,732,241,008			Underlying asset volatility	0.24 ~ 0.36	Proportional
	Equity instruments	149,661,318			Discount rate	0.08 ~ 0.23	Inversely proportional
Derivative financial assets (trading)	1	120,775,115			Underlying asset volatility	0.10 ~ 0.59	Proportional
					Correlation	-0.60 ~ 0.93	Proportional
Financial assets at FVOCI	Equity instruments	421,530,275	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 ~ 0.13	Inversely proportional
		2,828,541,307
Financial liabilities designated at FVTPL	Equity-linked securities sold	6,726,257,399	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	0.19 ~ 0.59	Proportional
					Correlation	-0.60 ~ 0.80	Proportional
	Derivatives linked securities sold	1,321,382,570			Underlying asset volatility	0.01 ~ 1.19	Proportional
					Correlation	-0.50 ~ 0.93	Proportional
	Other OTC derivatives linked contract sold	193,869,196			Underlying asset volatility	0.19 ~ 0.32	Proportional
					Correlation	-0.60 ~ 0.73	Proportional
Derivative financial liabilities (trading)	1	777,541,849			Underlying asset volatility	0.09 ~ 1.19	Proportional
					Correlation	-0.60 ~ 0.93	Proportional
		9,019,051,014

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, 2022 and 2021

	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.

(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.

91

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows.

	2022
	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		15,315,917		(12,534,554	)		—		—
Derivative financial assets 1		17,639,228		(18,599,459	)		—		—
Financial assets at FVOCI 2		—		—			31,718,711		(21,878,733	)
		32,955,145		(31,134,013	)		31,718,711		(21,878,733	)
Financial liabilities
Financial liabilities designated at FVTPL1		94,000,806		(97,663,062	)		—		—
Derivative financial liabilities 1		48,696,201		(46,355,477	)		—		—
		142,697,007		(144,018,539	)		—		—

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.

	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.

(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.

92

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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)	2022			2021
Balances at the beginning of the year (A)		93,995,795			70,759,191
Incurred during the year (B)		111,326,521			176,475,408
Amounts recognized in profit or loss during the year (C)		(121,945,132	)		(153,238,804	)
Balances at the end of the year (A+B+C)		83,377,184			93,995,795

37.5 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		6,544,314,422		6,544,314,422
Financial liabilities
Borrowings		—		—		20,512,526,086		20,512,526,086

	2021
(in thousands of Korean won)	Level 1		Level 2		Level 3		Total
Financial assets
Loans measured at amortised cost		—		—		5,438,252,442		5,438,252,442
Financial liabilities
Borrowings		—		—		21,981,900,347		21,981,900,347

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.

(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.

93

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

37.6 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, 2022 and 2021, relevant information about transferred financial assets which do not qualify for derecognition are as follows:

	2022
	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		3,728,769,734		52,098,066		2,234,882,535		—
Carrying amount of related liabilities		3,559,217,505		—		2,121,560,622		—

¹ Transferred debt instruments under repurchase agreements.

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

³ As at December 31, 2022, the accrued interests related to debt securities of W 22,779 million is excluded.

	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 W 51,550 million is excluded.

94

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

38. Financial Risk Management

38.1 Summary

38.1.1 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.

38.1.2 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 of 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.

38.1.3 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, 2022 and 2021

38.1.4 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.

38.2 Credit Risk

38.2.1 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.

38.2.2 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.

38.2.3 Maximum Exposure to Credit Risk

The maximum exposure of credit risk related to the off-balance as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Agreement to purchase the commercial papers 1		894,200,000		576,882,291
Guarantees and loan commitment		3,852,917,005		3,103,785,725
		4,747,117,005		3,680,668,016

¹  As at December 31, 2022 and 2021, asset-backed short-term bonds amounting to W 556,400 million and W 101,660 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, 2022 and 2021

38.2.4 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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Individuals		2,682,319,898		40.68		—			2,682,319,898
Corporations		3,911,911,080		59.32		(27,445,085	)		3,884,465,995
		6,594,230,978		100.00		(27,445,085	)		6,566,785,893

	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

The details of the Company’s loans measured at amortised cost by industry as at December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Loans measured at amortised cost		Ratio (%)		Allowances			Carrying amount
Financial service		2,529,470,021		38.36		(17,794,904	)		2,511,675,117
Manufacturing		439,531,330		6.67		(1,607,909	)		437,923,422
Service		104,411,078		1.58		(3,723,201	)		100,687,876
Others		838,498,651		12.71		(4,319,070	)		834,179,580
Individuals		2,682,319,898		40.68		—			2,682,319,898
		6,594,230,978		100.00		(27,445,085	)		6,566,785,893

	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

97

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Amount		Ratio (%)		Allowances			Carrying amount
Deposits measured at amortized cost
Banking and insurance		4,028,919,508		100.00		(645,197	)		4,028,274,311
		4,028,919,508		100.00		(645,197	)		4,028,274,311
Securities at FVTPL
Government and government funded institutions		10,300,399,856		37.05		—			10,300,399,856
Banking and insurance		9,499,195,461		34.17		—			9,499,195,461
Others		8,002,389,633		28.78		—			8,002,389,633
		27,801,984,950		100.00		—			27,801,984,950
Derivatives financial assets
Government and government funded institutions		1,596,038		0.09		—			1,596,038
Banking and insurance		1,668,105,555		98.01		—			1,668,105,555
Others		32,268,463		1.90		—			32,268,463
		1,701,970,056		100.00		—			1,701,970,056
Securities at FVOCI
Government and government funded institutions		449,958,939		10.94		—			449,958,939
Banking and insurance		2,493,923,434		60.64		—			2,493,923,434
Others		1,168,846,251		28.42		—			1,168,846,251
		4,112,728,624		100.00		—			4,112,728,624
		37,645,603,138				(645,197	)		37,644,957,941

	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

98

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

38.2.5 Credit Quality of Financial Assets

(a) Loans measured at amortised cost

Loans measured at amortised cost as at December 31, 2022 and 2021, are as follows:

	2022
(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
Loans measured at amortised cost 1
Corporates
Grade 1		2,069,269,105		—		—		—		—		2,069,269,105
Grade 2		1,800,319,296		—		—		—		—		1,800,319,296
Grade 3		23,965,895		—		—		—		—		23,965,895
Grade 4		—		—		—		—		—		—
Grade 5		—		—		18,356,784		—		—		18,356,784
		3,893,554,296		—		18,356,784		—		—		3,911,911,080
Retails
Grade 1		2,591,983,265		—		—		—		—		2,591,983,265
Grade 2		90,275,978		—		—		—		—		90,275,978
Grade 3		—		—		—		—		—		—
Grade 4		60,654		—		—		—		—		60,654
Grade 5		—		—		—		—		—		—
		2,682,319,897		—		—		—		—		2,682,319,897
Loans measured at FVTPL
Corporates
Grade 1		—		—		—		—		42,604,988		42,604,988
Grade 2		—		—		—		—		—		—
Grade 3		—		—		—		—		—		—
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		—		—		—		—		42,604,988		42,604,988
		6,575,874,193		—		18,356,784		—		42,604,988		6,636,835,965

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

	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
Loans 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

99

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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
Loans measured at FVTPL
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

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, 2022 and 2021, are as follows:

	2022
(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		7,643,969		—		—		—		—		7,643,969
Real estate		44,692,385		—		208,363		—		—		44,900,748
Securities		5,722,045,070		—		—		—		—		5,722,045,070
		5,774,381,424		—		208,363		—		—		5,774,589,787

	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

100

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(b) Securities (debt instruments)

Securities (debt instruments) that are exposed to credit risks as at December 31, 2022 and 2021, are as follows:

	2022
	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		3,262,409,959		—		—		—		—		3,262,409,959
Grade 2		836,531,848		—		—		—		—		836,531,848
Grade 3		13,786,817		—		—		—		—		13,786,817
Grade 4		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—
		4,112,728,624		—		—		—		—		4,112,728,624

¹  Before deduction of allowances

	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		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		2,423,690,839		—		—		—		—		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

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

101

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(c) Deposits

The credit quality of deposits as at December 31, 2022 and 2021, are as follows:

	2022
(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		4,028,933,604		—		—		—		4,028,933,604
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		4,028,933,604		—		—		—		4,028,933,604

¹  Before deduction of allowances

	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		3,345,752,093		—		—		—		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

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, 2022 and 2021, are as follows:

	2022
(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		561,861,335		—		—		—		561,861,335
Grade 2		2,836,161,363		31,731,909		—		—		2,867,893,272
Grade 3		77,738,671		30,000,000		—		—		107,738,671
Grade 4		421,307,828		—		—		—		421,307,828
Grade 5		—		—		—		—		—
		3,897,069,196		61,731,909		—		—		3,958,801,105

102

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	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		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		—		—		—		—		—
		3,387,676,325		76,282,291		—		—		3,463,958,616

(e) Guarantees

The credit quality guarantees as at December 31, 2022 and 2021, are as follows:

	2022
(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
Guarantees
Grade 1		139,403,000		—		—		—		139,403,000
Grade 2		92,512,900		—		—		—		92,512,900
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		231,915,900		—		—		—		231,915,900

	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
Guarantees
Grade 1		139,403,000		—		—		—		139,403,000
Grade 2		92,512,900		—		—		—		92,512,900
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		231,915,900		—		—		—		231,915,900

103

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(f) Other receivables from securities transactions

Other receivables from securities transactions, which are classified as other financial assets, as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Other receivables related to proprietary trading		182,035,890		104,074,769
Other receivables related to brokerage Transactions		1,970,505,764		2,635,518,749

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.

38.3 Liquidity Risk

38.3.1 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.

38.3.2 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 41.

38.3.3 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.

104

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

The remaining contractual maturities of financial liabilities as at December 31, 2022 and 2021, are as follows:

	2022
(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		2,082,979,265		—		—		—		—		—		2,082,979,265
Financial liabilities designated at FVTPL 1		10,088,600,213		—		—		—		—		—		10,088,600,213
Derivatives (trading) 2		2,307,993,521		—		—		—		—		—		2,307,993,521
Derivatives (hedge)		—		10,070,190		—		—		—		—		10,070,190
Deposit liabilities 3		6,819,371,625		—		—		—		—		—		6,819,371,625
Borrowings		7,771,843,528		5,329,426,599		2,015,024,991		4,101,825,134		1,553,452,225		—		20,771,572,477
Other financial liabilities		16,349,365		2,032,090,684		8,545,723		28,456,303		91,630,986		8,755,567		2,185,828,628
Guaranteed payments and commitment 4		4,190,717,005		—		—		—		—		—		4,190,717,005

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.

105

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	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

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.

38.4 Market Risk

38.4.1 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.

38.4.2 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 10days VaR. Historical simulation model is based on past changes of market variables without assuming a specific probability distribution.

106

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Average		Maximum		Minimum		December 31, 2022
Total VaR		35,197,541		60,205,109		18,655,089		20,195,624

	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

38.4.3 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.

107

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(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.

38.4.4 Risk Management by Interest Rate 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 the end of June, 2023.

The carrying amount of financial instruments that have not been converted to an alternative indicator interest rate as of December 31, 2022 and 2021 are as follows:

(in thousands of Korean won)	2022		2021
	Exposure amount 1 USD LIBOR		Exposure amount 1 USD LIBOR
Measured at amortised cost
Loans		7,482,357		7,035,224
Measured at fair value
Financial assets at FVTPL(non-derivative)		5,014,503		4,694,580
Financial liabilities at FVTPL(derivative)		103,656,731		103,221,786

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

108

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

38.5 Operational Risk

38.5.1 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.

38.5.2 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.

38.6 Capital Management

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.

39. 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.

109

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	2022
(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		1,800,627,070		—		1,800,627,070		1,240,440,412		194,397,457		365,789,201
Securities purchased under reverse repurchase agreements		730,100,000		—		730,100,000		730,100,000		—		—
Other receivables 4		1,985,950,659		1,897,820,808		88,129,851		—		—		88,129,851
Other receivables (Payment and settlement)		26,385,142		26,385,142		—		—		—		—
		4,543,062,871		1,924,205,950		2,618,856,921		1,970,540,412		194,397,457		453,919,052
Financial liabilities
Derivatives liabilities, others 1		3,357,495,348		—		3,357,495,348		2,658,744,222		83,836,686		614,914,440
Securities sold under reverse resale agreements 2		6,231,390,409		—		6,231,390,409		6,231,390,409		—		—
Securities sold 3		2,082,979,265		—		2,082,979,265		2,082,979,265		—		—
Other payables 4		1,954,742,873		1,897,820,808		56,922,065		—		—		56,922,065
Other payables (Payment and settlement)		27,716,059		26,385,142		1,330,917		—		—		1,330,917
		13,654,323,954		1,924,205,950		11,730,118,004		10,973,113,896		83,836,686		673,167,422

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.

	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
		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

110

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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.

40. Lease

40.1 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, 2022 and 2021, are as follows;

(in thousands of Korean won)	2022		2021
Right-of-use assets 1
Buildings		72,115,792		69,145,814
Vehicles		2,258,588		1,570,194
Others		1,005,513		1,710,375
		75,379,893		72,426,383
Lease liabilities		121,082,291		123,400,384

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

40.2 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, 2022 and 2021, are as follows

(in thousands of Korean won)	2022		2021
Depreciation of the right-of-use assets
Buildings		21,758,887		14,623,072
Vehicles		1,188,483		1,176,069
Others		1,081,530		1,244,144
		24,028,900		17,043,285
Interest income from lease receivables (included in financial income)		1,084,287		1,615,695
Interest expense to lease liabilities (included in financial cost)		3,372,582		2,787,349
Lease payment for leases for which the underlying asset is of low value (included in administrative expenses, not-include lease for short-term period)		586,608		461,035
Variable lease payments which are not included in the measurement of lease liabilities (included in administrative expenses)		126,576		256,363

The total cash outflow for leases in 2022 and 2021 were W 30,835 million and W 32,911 million, respectively.

111

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

40.3 As a Lessor : Financial Lease

As at December 31, 2022 and 2021, 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)	2022		2021
Total Investment on lease		35,135,664		41,127,430
Net Investment on lease		32,271,624		37,179,103
Present value of minimum lease payments		32,271,624		37,179,103
Unrealized interest income		2,864,040		3,948,327

40.4 As a Lessor : Operating Lease

As at December 31, 2022 and 2021, future minimum lease receipts expected under non-cancellable lease contracts are as follows:

(in thousands of Korean won)	2022		2021
Within 1 year		1,294,822		934,595
1 - 5 years		1,824,240		1,044,287
		3,119,062		1,978,882

112

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

41. Contingent Liabilities and Commitments

As at December 31, 2022 and 2021, the Company is involved in pending lawsuits, are as follows:

	2022				2021
(in thousands of Korean won)	Number of lawsuits		Amount		Number of lawsuits		Amount
Defendant		33		202,977,447		21		176,352,560
Plaintiff		8		177,971,745		9		163,067,109

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, 2022 and 2021, are as follows:

		Credit line
(in thousands of Korean won)	Financial institution	2022		2021
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		600,000,000		700,000,000
Working capital loan (general)	KSFC		475,000,000		375,000,000
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		500,000,000		850,000,000
Securities underwriting financing	KSFC		1,710,000,000		1,500,000,000

The guarantees and various commitment as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Guarantees		231,915,900		216,709,400
Agreement to purchase commercial papers 1		337,800,000		576,882,291
Loan agreements		2,756,152,916		2,066,260,939
Credit line agreements		383,468,794		369,691,458
LOC and Investment commitments		481,379,395		451,123,929
		4,190,717,005		3,680,668,017

¹ According to the above arrangement, the Company holds the asset-backed short-term bonds amounting to W 556,400 million and W 101,660 million as at December 31, 2022 and 2021, respectively.

The Company has been provided with W 10,731 million and W 12,678 million in guarantees related to provisional attachment and others by Seoul Guarantee Insurance as at December 31, 2022 and 2021, respectively.

The securities in custody as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021		Valuation method
Trustor securities		200,379,840,702		155,890,031,762		Fair value
Saver securities		308,762,230		232,748,017		Fair value
Beneficiary securities		35,441,473,205		32,356,219,560		Standard selling price
		236,130,076,137		188,478,999,339

113

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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, intermediated W 326.5 billion of trusts and funds to the individuals and institutional investors. However, the local borrower’s breach of the contract makes the fund inoperable and there is a possibility of loss of principal.

As at December 31, 2022, three lawsuits were filed to the Company as a defendant. On February 7, 2023, in one case, the first-instance verdict of the trial ordering the payment of a total of W 29.8 billion and delayed interest thereon was announced, but there is a possibility that the conclusion is changed in the upper court, and the other two cases are still in the first instance. The Company has reflected in its financial statements the results of the first-instance verdict handed down on February 7, 2023, as an adjusting event after the reporting period, and has incorporated the related litigation provision liabilities into its financial statements as at December 31, 2022.

Meanwhile, the Company has filed a lawsuit against JB Asset Management Co., Ltd, the fund management company, for compensation, and the first trial is currently in progress.

114

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

42. Related Party Transactions

KB Financial Group Inc. owns 100% of ordinary shares of the Company as at December 31, 2022 and 2021.

Significant balances, excluding loan and borrowing transactions, with related parties as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022				2021
	Receivables		Payables		Receivables		Payables
Subsidiaries
KB Securities Hong Kong Ltd.		128,859		20,063,435		116,043		9,191,784
KB Securities Vietnam Joint Stock Company		355,493		306,736		223,957		211,286
KBFG Securities America Inc.		—		—		—		65,182
KB Digital Innovation&growth New Technology Business Investment Fund		86,877		—		—		—
LB UK Private Real Estate Investment Trust No.18 1		—		—		681,145		—
Newstar Gimpo 2nd Co., Ltd. 1		—		—		—		62,715
Newstar Gimpo 1st Co., Ltd.		—		100,382		—		96,924
Newstar Ds 2nd Co., Ltd. 1		—		—		269,941		1,003,862
Newstar Ds 1st Co., Ltd. 1		—		—		83,420		255,252
Newstar Believe Co., Ltd.		39,239		104,888		466,986		359,803
Newstar IP Co., Ltd.		142,423		1,232,259		755,420		497,107
Newstar Panorama 1st Co., Ltd. 1		—		—		1,134,376		366,669
Newstar Papyrus Co., Ltd. 1		—		—		407,947		338,790
Songdo Pfive 2nd Co., Ltd.		1,561,106		1,837,919		3,555,339		4,434,840
SJ Jongno 1st Co., Ltd. 1		—		—		8,243,220		3,937,376
Able Gamsam 1st Co., Ltd. 1		—		—		334,055		620,439
Able Gongpyeong 1st Co., Ltd.		—		37,269		344,337		468,315
Able Guwol 1st Co., Ltd. 1		—		—		—		256,796
Able Gwonseon 1st Co., Ltd.		—		72,039		1,442,002		1,441,021
Able Sky 1st Co., Ltd.		178,493		419,553		876,458		780,527
Able Electronics 1st Co., Ltd. 1		—		—		478,655		457,738
Able Chowall 1st Co., Ltd.		297,012		148,516		687,204		486,393
Able Hyosung 1st Co., Ltd. 1		—		—		190,304		104,078
ABR Mareuk 1st Co., Ltd. 1		—		—		563,465		531,447
ABR Joongang2 1st Co., Ltd.		973,961		871,561		944,229		981,400
AJH 3rd Co., Ltd. 1		—		—		51,476		126,089
FN Gasan 1st Co., Ltd.		8,959		11,240		322,267		177,657
MS Sejong 4th Co., Ltd. 1		—		—		23,346		373,287
Enewstay 1st Co., Ltd. 1		—		—		155,607		513,045
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		132,329		—		—		—
KB Echo 1st Co., Ltd. 1		—		—		254,131		348,804
KB UK Center 1st Co., Ltd. 1		—		—		276,178		290,164
KB Tongyoung 1st Co., Ltd.		1,573,548		1,182,207		2,077,937		2,019,405
Paradise Yeongjong 2nd Co., Ltd.		—		1,064,178		561,475		1,190,692
Polar EH 2nd Co., Ltd. 1		—		—		26,282		659,987
Polar EH 1st Co., Ltd. 1		—		—		118,174		523,443
Able Gasan 1st Co., Ltd.		942,568		765,441		1,752,359		1,912,318
Able Sewoon Co., Ltd.		—		236,568		2,247,203		1,100,094
Able Poongdong 1st Co., Ltd.		41,299		7,129		227,757		204,204

115

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022				2021
	Receivables		Payables		Receivables		Payables
Intgreen 1st Inc. 1		—		—		361,090		657,388
KB Infra 1st Co., Ltd. 1		—		—		35,629		—
JOSH Bujeon 1st Co., Ltd. 1		—		—		2,741,628		2,842,912
Newstar Seotan Co., Ltd. 1		—		—		2,128,162		2,084,203
Able PT 1st Co., Ltd.		269,733		69,926		1,533,501		1,325,275
Able Pocheon 1st Co., Ltd. 1		—		—		344,897		331,284
Unbroken 1st Co., Ltd. 1		—		—		2,091,222		2,069,669
Newstar Plus 1st Co., Ltd.		204,849		57,388		821,849		896,938
KB MyeongJi 1st Co., Ltd.		249,908		126,846		870,712		600,186
Able Dangjin 1st Co., Ltd.		308,792		489,479		419,907		484,391
Able Yongdap 1st Co., Ltd. 1		—		—		747,302		567,291
KB Osansegyo 2nd Co., Ltd.		13,619		26,613		312,312		324,406
Able Hyeongok Co., Ltd. 1		—		—		1,351,045		1,366,250
KB Mapo 2nd Co., Ltd.		513,806		692,206		789,051		592,990
GDIC 1st Co., Ltd. 1		—		—		564,261		553,590
Able Wonchang 1st Co., Ltd.		—		139,851		287,588		228,329
Able MK 1st Co., Ltd.		—		86,444		—		86,444
Zitaress 1st Co., Ltd.		350,376		190,269		10,432,660		10,386,012
KB PF 3rd Co., Ltd. 1		—		—		232,413		212,241
Able Beomeo-one Co., Ltd.		1,774,556		593,665		4,439,050		4,122,473
Able Yucheon 1st Co., Ltd. 1		—		—		16,351,249		15,733,748
KB Illite 1st. Co., Ltd.		—		—		6,447		13,840
Newstar Sina Co., Ltd.		968,887		365,100		150,298		337,985
KB Gold 1st Co., Ltd.		1,425,481		1,314,190		1,762,639		1,777,755
Inspire Gold 1st Co., Ltd. 1		—		—		9,475,071		9,295,817
Inspire Gold 2nd Co., Ltd.		87,364		97,896		6,709,834		6,579,288
Yeoksam The Gallery KB 1st Co., Ltd. 1		—		—		1,191,825		1,241,051
Y Three Ulsan Sinjeong 1st Co., Ltd. 1		—		—		6,868,874		6,964,366
KB Infra 2nd Co., Ltd.		—		86,206		—		143,103
Able Wonsi 1st Co., Ltd.		28,356		—		—		—
Newstar Gimpo 4th Co., Ltd.		195,536		44,559		—		—
HD Value 1st Co., Ltd.		8,207		41,955		—		—
Powerplay 1st Co., Ltd.		—		95,134		—		—
Able Dosan 1st Co., Ltd.		797,367		1,730,120		—		—
Newstar Gimpopoongmoo Co., Ltd.		23,067		127,710		—		—
Able Maseok 1st Co., Ltd.		914,974		699,255		—		—
TW Seocho 1st Co., Ltd.		8,481,141		7,285,270		—		—
TW Seocho 2nd Co., Ltd.		3,120,940		2,615,261		—		—
Newstar Wave 1st Co., Ltd.		892,590		401,058		—		—
Lamdamine 1st Co., Ltd.		7,126,903		5,759,844		—		—
Able Next 1st Co., Ltd.		827,518		1,117,387		—		—
Able Dongil 1st Co., Ltd.		71,754		112,893		—		—
Newstar Shiny 1st Co., Ltd.		232,119		9,973		—		—
Newstar Enerbil 1st Co., Ltd.		792,157		334,263		—		—
YSMC 1st Co., Ltd.		—		692,262		—		—
HJ Galaxy 3rd Co., Ltd.		—		644,713		—		—
KB SmartSchool 1st Co., Ltd.		56,670		630,594		—		—
Bighouse 7th Co., Ltd.		1,135,807		875,237		—		—
Newstar Energy 1st Co., Ltd.		7,067,734		5,753,079		—		—
Gyeongsan Logis 1st Co., Ltd.		1,491,642		1,164,147		—		—
Stoke 2nd Corp		1,803,511		1,496,159		—		—

116

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022				2021
	Receivables		Payables		Receivables		Payables
Newstar Seongnam 1st Co., Ltd.		1,174,561		1,101,968		—		—
KPS Sihwa 1st Co., Ltd.		1,495,490		3,769,617		—		—
GDIC 2nd Co., Ltd.		2,607,565		2,276,726		—		—
Newstar NRB First Co., Ltd.		2,247,029		3,541,817		—		—
Able Dongtan 1st Co., Ltd.		1,567,105		868,475		—		—
Newstar Gimpo 5th Co., Ltd.		5,742,118		5,678,498		—		—
Newstar Everyday 1st Co., Ltd.		45,122		67,630		—		—
Cassiopeia 1st Co., Ltd.		350,564		315,741		—		—
Able Banpo 1st Co., Ltd.		2,398,331		2,073,686		—		—
Able Banpo 2nd Co., Ltd.		1,012,399		898,385		—		—
Able Gyeonggi Gwangju 1st Co., Ltd.		2,577,770		2,363,805		—		—
Newstar Byeongjeom 1st Co., Ltd.		235,285		279,903		—		—
Piggarden 1st Co., Ltd.		872,566		837,709		—		—
KB Star Galaxy Towers REIT 1		—		3,095,031		—		—
KB NY 1st Co., Ltd.		—		1,286,629		—		—
KB Samyoung Co., Ltd.		—		19,894		—		—
Parent Company
KB Financial Group Inc.		116,502,544		66,137,150		84,740		106,320,356
Others
Kookmin Bank		76,140,288		149,443,176		65,935,575		55,188,817
KB Asset Management Co., Ltd.		1,479		652,430		1,747		824,381
KB Real Estate Trust Co., Ltd.		—		622		—		522
KB Investment Co., Ltd.		627,295		236		154,405		121
KB Credit Information Co., Ltd.		—		147		—		2,719
KB Data System Co., Ltd.		856,887		43,007		179,879		235,328
KB Life Insurance Co., Ltd.		685,561		112,050		790,282		380,519
KB Kookmin Card Co., Ltd.		50,551		6,675,546		142,366		7,390,861
KB Savings Bank Co., Ltd.		—		552		—		399
KB Capital Co., Ltd.		96,317		2,201,235		92,710		1,489,116
KB Insurance Co., Ltd		52,388,172		18,558,988		7,512,920		2,967,593
KB Life Insurance Co., Ltd. (former Prudential Life Insurance Co., Ltd.) 2		329,563		651,994		378,566		717,402
KB Wisestar Private Real Estate Fund Investment Trust No. 1		7,292		—		7,811		—
Other funds		190,008		9,242,907		2,566,825		4,718,031
LB UK Private Real Estate Investment Trust No.19		—		—		248,353		—

¹ These companies are not related parties as at December 31, 2022.

²  Changed company name from Prudential Life Insurance Co., Ltd. to KB Life Insurance Co., Ltd. for the year ended December 31, 2022.

117

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Significant transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022				2021
	Revenue		Expenses		Revenue		Expenses
Subsidiaries
DGB General Private Real Estate Investment Trust No.8 1		183,691		—		385,703		—
JB New Jersey Private Real Estate Fund 1		1,128,748		—		957,963		—
KB Securities Hong Kong Ltd.		162,192		381,682		323,789		346,720
KB Securities Vietnam Joint Stock Company		119,906		155,824		211,236		181,318
KBFG Securities America Inc.		—		2,363,899		—		1,109,996
KB Digital Innovation&growth New Technology Business Investment Fund		186,055		—		200,000		—
KTB Aircraft Private Investment Trust No.21-1		1,028,513		—		1,129,492		—
LB Irealand Private Real Estate Investment Trust 8		4,459,537		—		4,433,491		—
LB UK Private Real Estate Investment Trust No.18 1		988,420		—		3,460,949		—
Great GM 12th Co., Ltd. 1		—		—		64,336		—
Newstar Kumo 1st Co., Ltd. 1		—		—		237,989		—
Newstar Gimpo 2nd Co., Ltd. 1		—		—		763,924		—
Newstar Gimpo 1st Co., Ltd.		1,258,943		—		1,399,309		—
Newstar Daerim Co., Ltd. 1		—		—		—		1,083
Newstar Ds 2nd Co., Ltd. 1		2,024,271		210,617		1,582,784		—
Newstar Ds 1st Co., Ltd. 1		—		—		445,737		—
Newstar Believe Co., Ltd.		62,469		—		287,723		—
Newstar IP Co., Ltd.		462,504		1,667,569		1,225,374		1,346,831
Newstar SH Co., Ltd. 1		—		—		—		22,362
Newstar Wanee 1st Co., Ltd. 1		—		—		375,598		—
Newstar Janghyun Co., Ltd. 1		—		—		—		185
Newstar JY Co., Ltd. 1		—		—		50,934		—
Newstar Cheonwon Co., Ltd. 1		—		—		149,626		—
Newstar Chimsan 1st Co., Ltd. 1		—		—		—		21,654
Newstar Panorama 1st Co., Ltd. 1		—		—		1,466,077		458,175
Newstar Papyrus Co., Ltd. 1		—		120,109		2,856,637		—
Newstar Hakgok Co., Ltd. 1		—		—		133,620		—
Vestas General Private Real Estate Fund Investment Trust No. 38		4,740,671		—		4,634,891		—
Songdo Pseven 1st Co., Ltd. 1		—		—		476,916		—
Songdo Pfive 2nd Co., Ltd.		2,886,460		—		1,554,876		—
Alpha Spain Real Estate Private Investment Trust 1 1		—		—		2,376,306		—
SJ Jongno 1st Co., Ltd. 1		—		4,305,844		1,685,806		—
Able Gamsam 1st Co., Ltd. 1		518,988		—		1,478,542		—
Able Gorim 1st Co., Ltd. 1		—		—		199,781		—
Able Gongpyeong 1st Co., Ltd.		226,328		—		232,580		—
Able Guwol 1st Co., Ltd. 1		—		256,522		1,657,905		—
Able Gwonseon 1st Co., Ltd.		205,349		—		990,705		—
Able Dangsan Co., Ltd. 1		—		—		461,558		—
Able Daenong Co., Ltd. 1		—		—		648,944		—
Able Daepo 1st Co., Ltd. 1		—		—		44,715		—
Able Mojong 1st Co., Ltd. 1		—		—		295,153		—
Able Bukcheonan logis Co., Ltd. 1		—		—		872,802		—
Able Seoho 1st Co., Ltd. 1		—		—		176,409		—

118

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022				2021
	Revenue		Expenses		Revenue		Expenses
Able Sungnae 1st Co., Ltd. 1		—		—		42,500		—
Able Sky 1st Co., Ltd.		737,660		—		595,931		—
Able Ali 2nd Co., Ltd. 1		—		—		321,946		—
Able Yongin 1st Co., Ltd. 1		—		—		256,778		—
Able Unicity 4th Co., Ltd. 1		—		—		315,590		—
Able Eumsung 1st Co., Ltd. 1		—		—		348,135		—
Able Electronics 1st Co., Ltd. 1		—		—		1,712,184		—
Able Jinjeop 1st Co., Ltd. 1		—		—		39,062		—
Able Chowall 1st Co., Ltd.		273,416		—		860,596		—
Able Forsythia 1st Co., Ltd. 1		—		—		241,312		—
Able Hana Co., Ltd. 1		—		—		92,273		—
Able Hyosung 1st Co., Ltd. 1		—		64,009		2,762,765		—
ABR Mareuk 1st Co., Ltd. 1		—		—		198,279		—
ABR Sosa 1st Co., Ltd. 1		—		—		231,496		—
ABR Joongang2 1st Co., Ltd.		450,654		—		302,038		—
AJH 3rd Co., Ltd. 1		—		—		136,511		—
FN Gasan 1st Co., Ltd.		—		45,219		152,743		—
MS Sejong 4th Co., Ltd. 1		—		338,558		433,231		1,801,942
Enewstay 1st Co., Ltd. 1		—		—		1,212,559		—
KB Pre-IPO 2nd (TCB) New Technology Business Investment Fund		525,000		—		509,250		—
KB Asan Baebang 1st Co., Ltd. 1		—		—		203,171		—
KB Ansung 1st Co., Ltd. 1		—		—		1,333,952		—
KB Echo 1st Co., Ltd. 1		—		—		673,291		—
KB Osansaegyo Co., Ltd. 1		—		—		789,697		—
KB Wondong 1st Co., Ltd. 1		—		—		139,857		—
KB UK Center 1st Co., Ltd. 1		42,236		—		432,730		—
KB Icheon logistics 1st Co., Ltd. 1		—		—		1,183,260		—
KB Tongyoung 1st Co., Ltd.		774,946		—		716,845		—
KB PF 1st Co., Ltd. 1		—		—		5,016		56,558
KS Beta Co., Ltd. 1		—		—		196,180		—
Crescendo Muju Co., Ltd. 1		—		—		872,200		—
Paradise Yeongjong 2nd Co., Ltd.		553,827		—		520,352		—
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		683,981		—		1,171,319		—
Polar SQ 2nd Co., Ltd. 1		—		—		31,335		—
Polar SQ 1st Co., Ltd. 1		—		—		31,335		—
Polar EH 2nd Co., Ltd. 1		—		—		448,549		—
Polar EH 1st Co., Ltd. 1		—		—		504,769		—
Hangang Domestic Private Real Estate Fund No.14 1		—		—		1,573,959		—
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.		816,715		—		462,819		—
Able Sewoon Co., Ltd.		—		851,397		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.		87,336		—		784,073		—
Intgreen 1st Inc. 1		—		286,989		2,198,225		—
KB Daemyung 1st Co., Ltd.		—		—		—		331,246
KB Infra 1st Co., Ltd. 1		—		—		478,423		—

119

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022				2021
	Revenue		Expenses		Revenue		Expenses
Pinetridavil Co., Ltd. 1		—		—		148,109		—
JOSH Bujeon 1st Co., Ltd. 1		—		—		1,889,108		—
Newstar Seotan Co., Ltd. 1		—		—		435,687		—
Able PT 1st Co., Ltd.		219,020		—		241,590		—
Able Pocheon 1st Co., Ltd. 1		—		—		526,898		—
Able Hyangdong 1st Co., Ltd.1		—		—		353,553		—
Unbroken 1st Co., Ltd. 1		—		—		241,491		—
Newstar Plus 1st Co., Ltd.		419,000		—		1,650,919		—
KB MyeongJi 1st Co., Ltd.		551,227		—		470,527		—
Able Dangjin 1st Co., Ltd.		281,889		—		135,951		—
Able Yongdap 1st Co., Ltd. 1		—		—		198,537		—
Newstar Cold Co., Ltd. 1		—		—		588,135		—
Betares Co., Ltd. 1		—		—		26,730		—
KB Osansegyo 2nd Co., Ltd.		114,137		—		43,931		—
Able Hyeongok Co., Ltd. 1		—		—		179,795		—
KB Mapo 1st Co., Ltd. 1		—		—		100,000		—
KB Mapo 2nd Co., Ltd.		1,063,020		—		396,061		—
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. 1		—		30,425		218,392		—
Able Wonchang 1st Co., Ltd.		97,919		—		120,892		—
Pacific Bric Professional Investors’ Private Real Estate Fund #53 1		—		—		1,695,000		—
Able MK 1st Co., Ltd.		544,000		—		47,693		—
Zitaress 1st Co., Ltd.		182,213		—		820,602		—
KB PF 3rd Co., Ltd. 1		—		—		20,172		—
Able Beomeo-one Co., Ltd.		901,026		—		329,377		—
Able Yucheon 1st Co., Ltd. 1		—		606,346		865,337		—
KB Illite 1st. Co., Ltd.		—		8,502		8,502		—
Newstar Sina Co., Ltd.		845,729		—		488,215		—
KB Gold 1st Co., Ltd.		420,962		—		41,821		—
Inspire Gold 1st Co., Ltd. 1		—		—		245,720		—
Inspire Gold 2nd Co., Ltd.		380,715		—		180,437		—
Yeoksam The Gallery KB 1st Co., Ltd. 1		—		—		7,499		—
Y Three Ulsan Sinjeong 1st Co., Ltd. 1		—		—		14,663		—
KB Infra 2nd Co., Ltd.		—		56,897		143,103		—
Korea Investment US Amazon Logistics Private Real Estate Investment Trust NO. 1 1		915,909		—		—		—
GVA Europe Real Estate Investment Trust No.2 1		11,556,647		—		—		—
Able Wonsi 1st Co., Ltd.		427,808		—		—		—
Newstar Gimpo 4th Co., Ltd.		562,583		—		—		—
HD Value 1st Co., Ltd.		38,961		—		—		—
Powerplay 1st Co., Ltd.		94,635		—		—		—
Able Dosan 1st Co., Ltd		2,150,632		—		—		—
Newstar Gimpopoongmoo Co., Ltd.		98,484		—		—		—
Able Maseok 1st Co., Ltd.		875,143		—		—		—
TW Seocho 1st Co., Ltd.		2,116,788		—		—		—
TW Seocho 2nd Co., Ltd.		947,788		—		—		—
HJ Galaxy 2nd Co., Ltd. 1		1,414,000		—		—		—
HJ Galaxy 1st Co., Ltd. 1		1,414,000		—		—		—
Newstar Wave 1st Co., Ltd.		500,069		—		—		—

120

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022				2021
	Revenue		Expenses		Revenue		Expenses
Lamdamine 1st Co., Ltd.		1,773,725		—		—		—
Able Next 1st Co., Ltd.		1,470,156		—		—		—
KB Infra 3rd Co., Ltd. 1		630,000		—		—		—
Able Dongil 1st Co., Ltd.		185,822		—		—		—
Newstar Shiny 1st Co., Ltd.		271,718		—		—		—
Newstar Enerbil 1st Co., Ltd.		894,958		—		—		—
YSMC 1st Co., Ltd.		692,381		—		—		—
HJ Galaxy 3rd Co., Ltd.		653,388		—		—		—
KB SmartSchool 1st Co., Ltd.		682,688		—		—		—
Bighouse 7th Co., Ltd.		2,011,044		—		—		—
Newstar Energy 1st Co., Ltd.		1,328,287		—		—		—
Gyeongsan Logis 1st Co., Ltd.		424,225		—		—		—
Stoke 2nd Corp		934,351		—		—		—
Able Sungsoo 1st Co., Ltd. 1		66,571		—		—		—
Newstar Seongnam 1st Co., Ltd		199,312		—		—		—
KPS Sihwa 1st Co., Ltd.		3,652,496		—		—		—
GDIC 2nd Co., Ltd.		329,231		—		—		—
Newstar NRB First Co., Ltd.		2,014,826		—		—		—
Able Dongtan 1st Co., Ltd.		846,976		—		—		—
Newstar Gimpo 5th Co., Ltd.		3,488,327		—		—		—
Newstar Godeok 1st Co., Ltd.		—		105,971		—		—
Newstar Godeok 2nd Co., Ltd.		5,052		—		—		—
Newstar Everyday 1st Co., Ltd.		84,464		—		—		—
Cassiopeia 1st Co., Ltd.		69,238		—		—		—
Able Banpo 1st Co., Ltd.		324,645		—		—		—
Able Banpo 2nd Co., Ltd.		113,165		—		—		—
Able Gyeonggi Gwangju 1st Co., Ltd.		375,770		—		—		—
Newstar Byeongjeom 1st Co., Ltd.		137,383		—		—		—
Newstar Unity 1st Co., Ltd.		9,000		—		—		—
Piggarden 1st Co., Ltd.		39,857		—		—		—
KB Star Galaxy Towers REIT 1		7,484,969		—		—		—
KB NY 1st Co., Ltd.		1,286,629		—		—		—
KB Samyoung Co., Ltd.		19,894		—		—		—
Associates
KB Special Purpose Acquisition Company No.17 1		—		—		—		1,067,588
KB-KDBC New Technology Business Investment Fund		129,289		—		189,998		—
KBTS Technology Venture Private Equity Fund		185,355		—		285,290		—
KB-SJ Tourism Venture Fund		209,347		—		278,571		—
Keystone-Hyundai Sec. No.1 Private Equity Fund 1		—		—		42,637		—
KB-Brain KOSDAQ Scale-Up Fund		422,946		—		514,119		—
KB Special Purpose Acquisition Company No.18 1		—		—		5,886		—
KB SPROTT Renewable Private Equity Fund I		345,339		—		487,500		—
KB-Stonebridge Secondary Private Equity Fund		705,744		—		549,714		—
KB Special Purpose Acquisition Company No.19 1		—		—		36,244		—
KB Special Purpose Acquisition Company No.20 1		—		—		67,917		—
KB-UTC Inno-Tech Venture Fund		449,015		—		471,466		—
KB-SP Private Equity Fund IV		210,945		—		388,931		—

121

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	2022				2021
	Revenue		Expenses		Revenue		Expenses
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		561,064		—		1,198,196		—
KB Material and Parts No. 1 PEF		352,500		—		352,500		—
KB Bio Private Equity Fund III Ltd.		4,034,553		—		323,836		—
K The fifteenth Real Estate Investment Trust 1		—		—		500,000		—
KB-KTB Technology Venture Fund		599,726		—		—		—
KB-GeneN Medical Venture Fund 1		76,392		—		—		—
KB-BridgePole Venture Investment Fund		117,986		—		—		—
KB-Kyobo New Mobility Power Fund		68,825		—		—		—
KB Special Purpose Acquisition Company No.21		1,731,563		—		—		—
THE CHAEUL FUND NO.1 2		81,844		—		—		—
KB Special Purpose Acquisition Company No.22		1,157,075		—		—		—
KB-NP Green ESG New Technology Venture Capital Fund		435,147		—		—		—
KB Special Purpose Acquisition Company No.23		1,476,465		—		—		—
Parent Company
KB Financial Group Inc.		484,733		20,241		689,158		15,168
Others
Kookmin Bank		181,573,223		262,812,436		110,412,211		113,932,738
KB Asset Management Co., Ltd.		9,069		1,679,427		9,821		1,108,009
KB Real Estate Trust Co., Ltd.		936		3,010		760		5
KB Investment Co., Ltd.		1,902,935		4		616,501		1
KB Credit Information Co., Ltd.		221		3		218		2,482
KB Data System Co., Ltd.		955		1,120,617		823		1,348,880
KB Life Insurance Co., Ltd.		113,129		41,862		322,568		327,902
KB Kookmin Card Co., Ltd.		68,448		575,348		111,626		679,936
KB Savings Bank Co., Ltd.		831		14		227		4,610
KB Capital Co., Ltd.		305,322		44,652		344,413		478
KB Insurance Co., Ltd		68,091,902		67,758,399		889,407		5,459,994
KB Life Insurance Co., Ltd. (former Prudential Life Insurance Co., Ltd.) 3		644,336		1,004,150		614,560		747,319
KB Wisestar Private Real Estate Fund Investment Trust No. 1		2,018,435		—		7,255,541		—
Other funds		18,771,423		12,110,844		5,305,247		510,087
Retirement pension		771,613		—		598,028		—
LB UK Private Real Estate Investment Trust No.19		304,032		—		396,837		—
The Company
Employees		344,870		—		321,649		—

¹  These companies are excluded from related parties during the year ended December 31, 2022 or 2021. The transaction amounts are up to the date of the exclusion.

²  Changed company name from SKS IB NEW M&T FUND NO.1 to THE CHAEUL FUND NO.1 for the year ended December 31, 2022.

³  Changed company name from Prudential Life Insurance Co., Ltd. to KB Life Insurance Co., Ltd. for the year ended December 31, 2022.

122

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Significant loan and borrowing transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

	2022
(in thousands of Korean won)	Accounts	Beginning balance		Increase		Decrease			Other		Ending balance
Subsidiaries
Newstar Gimpo 1st Co., Ltd	Loans		52,471,330		—		(26,258,530	)		—		26,212,800
Able Gamsam 1st Co., Ltd. 1	Loans		22,949,233		—		(22,949,233	)		—		—
KB Echo 1st Co., Ltd. 1	Loans		14,974,275		—		(14,974,275	)		—		—
Newstar Gimpo 2nd Co., Ltd. 1	Loans		12,369,667		—		(12,369,667	)		—		—
KB Infra 1st Co., Ltd. 1	Loans		11,874,477		—		(11,874,477	)		—		—
Able MK 1st Co., Ltd.	Loans		15,902,044		—		(3,521	)		—		15,898,523
Newstar Panorama 1st Co., Ltd. 1	Loans		9,839,390		—		(9,839,390	)		—		—
Able Wonsi 1st Co., Ltd.	Loans		—		14,201,867		—			—		14,201,867
Newstar DS 2nd Co., Ltd. 1	Loans		—		800,000		(800,000	)		—		—
Associates
KB Special Purpose Acquisition Company No.17 1	Hybrid bond with securities-like features		999,500		—		(999,500	)		—		—
KB Special Purpose Acquisition Company No.18 1	Hybrid bond with securities-like features		3,058,774		—		(3,058,774	)		—		—
KB Special Purpose Acquisition Company No.19 1	Hybrid bond with securities-like features		2,090,861		—		(2,090,861	)		—		—
KB Special Purpose Acquisition Company No.20 1	Hybrid bond with securities-like features		3,135,222		—		—			—		3,135,222
KB Special Purpose Acquisition Company No.21	Hybrid bond with securities-like features		—		1,490,000		—			1,469,063		2,959,063
KB Special Purpose Acquisition Company No.22	Hybrid bond with securities-like features		—		990,000		—			982,075		1,972,075
KB Special Purpose Acquisition Company No.23	Hybrid bond with securities-like features				1,495,000		—			1,476,465		2,971,465
KB Special Purpose Acquisition Company No.24	Hybrid bond with securities-like features				6,975,000		—			—		6,975,000
Others
Kookmin Bank	Deposits 2		518,051,228		—		—			317,154,148		835,205,376
	Borrowings		—		868,303,453		(868,303,453	)		—		—
The Company
Employees	Loans to employees		14,940,376		2,324,900		(5,624,383	)				11,640,893

¹  These companies are not related parties as at December 31, 2022.

² Transactions such as settlement payments for business reasons and deposits that can be deposited and withdrawn at any time between related parties are disclosed in net amounts.

123

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

	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 2		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.

² Transactions such as settlement payments for business reasons and deposits that can be deposited and withdrawn at any time between related parties are disclosed in net amounts.

124

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Other transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

(In thousands of Korean won)	2022
	Contribution		Collection and others
Subsidiaries
KBFG Securities America Inc.		—		—
PT. KB Valbury Sekuritas		57,221,997		—
Heungkuk Global Highclass Private Real Estate Trust 23 1		—		1,903,215
DGB General Private Real Estate Investment Trust No.8 1		—		6,967,178
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15		3,142,188		198,569
Vestas General Private Real Estate Fund Investment Trust No. 38		11,340,804		—
JB Dry Street Private Fund 1		—		86,497
JB Australia108 Private Fund 1		—		61,708
JB Forge Private Fund 1		—		44,182
JB Hall Street Private Fund 1		—		82,632
JB Margaret Street Private Fund 1		—		23,401
LB UK Private Real Estate Investment Trust No.18 1		—		28,941,213
Alpha Spain Real Estate Private Investment Trust 1 1		—		67,622,466
Hanwha US Equity Strategy Private Real Estate Fund 3		—		180,885,304
Korea Investment US Amazon Logistics Private Real Estate Investment Trust NO. 1 1		20,900,000		20,800,000
GVA Europe Real Estate Investment Trust No.2 1		95,000,000		95,000,000
KB Global Contents Private Investment Fund		4,500,000		—
GVA Europe Pre-IPO Private Investment Trust No.1		20,000,000		—
LIFE Global Reits Pre-IPO General Private Investment Trust 1		59,470,000		—
KB KBSTAR US Short-Term IG Corporate Bond ETF		50,000,000		—
KB Wisestar Private Real Estate Fund Investment Trust No. 2 1		67,100,000		—
Associates
KB Special Purpose Acquisition Company No.17 1		—		500
KB Special Purpose Acquisition Company No.18 1		—		1,000
KB Special Purpose Acquisition Company No.19 1		—		1,000
KB Special Purpose Acquisition Company No.20 1		—		1,000
KB Special Purpose Acquisition Company No.21		10,000		—
KB Special Purpose Acquisition Company No.22		10,000		—
KB Special Purpose Acquisition Company No.23		5,000		—
KB Special Purpose Acquisition Company No.24		25,000		—
KB New Paradigm Agriculture Venture Fund		—		625,000
KB-KDBC New Technology Business Investment Fund		—		2,600,000
KBTS Technology Venture Private Equity Fund		—		1,296,000
KB-SJ Tourism Venture Fund		—		400,000
KB Shinjasanaubo Fund		—		132,000
KB-Brain KOSDAQ Scale-Up Fund		—		4,800,000
KB SPROTT Renewable Private Equity Fund I		2,499,360		—
KB-Stonebridge Secondary Private Equity Fund		1,248,439		631,500
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		660,000		2,352,793
Project Vanilla Co., Ltd. 1		—		525,344
KB Bio Private Equity Fund III Ltd. 1		—		10,000,000
KB-KTB Technology Venture Fund		4,000,000		—
KB Digital Platform Fund		5,000,000		—
KB-SOLIDUS Healthcare Investment Fund		1,000,000		—
KB-GeneN Medical Venture Fund 1		2,000,000		—
KB-BridgePole Venture Investment Fund		850,000		—
KB-Kyobo New Mobility Power Fund		3,000,000		—

125

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

JS Private Equity Fund III	1,700,000	—
Mirae Asset Mobility Investment Fund I	2,000,000	—
KB-FT 1st Green Growth Investment Fund	2,000,000	—
THE CHAEUL FUND NO.1 2	1,000,000	—
POSITIVE Sobujang Venture Fund No.1	2,000,000	—
KB-NP Green ESG New Technology Venture Capital Fund	3,740,000	—
Hisstory 2022 Fintech Fund	2,000,000	—
PEBBLES-MW M.C.E New Technology Investment Fund 1st	2,000,000	—
KB Star REIT	45,523,300	—
KB Bio Private Equity Investment Fund IV	7,500,000	—
Nextrade Co., Ltd.	9,700,000	—
Apollo REIT PropCo LLC 1	19,968,049	19,968,049
Others
Star-Lord General Investors Private Real Estate Investment Company No.10	20,000,000	—
KB NA Compass Energy Private Special Asset Fund 1	606,975	21,823,276
Meritz Private Real Estate Fund 9-2	1,486	5,306
KB Global Core Bond Securities Master Fund(Bond)	—	5,000,000
KB Global Platform Fund	3,200,000	2,460,000
KB Wisestar Private Real Estate Fund Investment Trust No. 1	—	1,749,177
KB KBSTAR 30-Years Treasurybond Enhanced ETF 1	—	691,351
KB Aircraft Loan Private Special Asset Fund Investment Trust No. 1	—	32,265,511
KB New Deal Innovation Fund	4,800,000	—
KB Development Blind General Private Real Estate Investment Trust No.2	3,240,000	—
KB Prime Digital Platform Fund	900,000	—
KB Secondary Plus Fund	1,180,000	—
Paramark KB Fund I	4,148,023	772,023
KB Scale-up Fund No.2	1,500,000	—
KB KBSTAR Nov 2023 Term Credit ETF	14,862,445	4,905,170

¹  No related party of the Company as at December 31, 2022.

²  Changed company name from SKS IB NEW M&T FUND NO.1 to THE CHAEUL FUND NO.1 for the year ended December 31, 2022.

(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 General 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

126

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

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  No related party of the Company as at December 31, 2021.

Details of payment guarantees and other similar contracts with related parties as at December 31, 2022 and 2021, are as follows:

(in thousands of Korean won)	Description	Amounts
		2022		2021
KB Securities Vietnam Joint Stock Company	Payment guarantees		92,512,900		86,304,400
KB Securities Hong Kong Ltd.	Payment guarantees		139,403,000		130,405,000
MS Sejong 4th Co., Ltd. 1	Loans purchase agreement		—		2,000,000
KB UK Center 1st Co., Ltd. 1	Replenishment of loan		—		12,600,000
AJH 3rd Co., Ltd. 1	Credit line		—		11,000,000
Paradise Yeongjong 2nd Co., Ltd.	Private placement bonds purchase agreement		20,000,000		20,000,000
Able Gwonseon 1st Co., Ltd.	Private placement bonds purchase agreement		11,000,000		35,000,000
Newstar IP Co., Ltd.	Private placement bonds purchase agreement		50,700,000		50,700,000

127

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	Description	Amounts
		2022		2021
Newstar Ds 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		15,000,000
Newstar Ds 2nd Co., Ltd. 1	Private placement bonds purchase agreement		—		37,000,000
Newstar Papyrus Co., Ltd. 1	Private placement bonds purchase agreement		—		24,200,000
SJ Jongno 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		68,200,000
Enewstay 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		25,600,000
Able Gamsam 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		17,000,000
Songdo PFive 2nd Co., Ltd.	Private placement bonds purchase agreement		92,607,000		121,821,000
Polar EH 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		2,411,809
Polar EH 2nd Co., Ltd. 1	Private placement bonds purchase agreement		—		12,391,709
Able Gongpyeong 1st Co., Ltd	Private placement bonds purchase agreement		20,000,000		20,000,000
Newstar Believe Co., Ltd.	Private placement bonds purchase agreement		7,500,000		7,500,000
Able Chowall 1st Co., Ltd.	Credit line		15,900,000		30,000,000
FN Gasan 1st Co., Ltd.	Private placement bonds purchase agreement		3,390,000		6,538,462
ABR Mareuk 1st Co., Ltd. 1	Credit line		—		10,300,000
ABR Joongang2 1st Co., Ltd.	Credit line		20,000,000		20,000,000
KB Echo 1st Co., Ltd 1	Credit line		—		30,000,000
KB Tongyoung 1st Co., Ltd.	Credit line		29,193,000		34,000,000
Able Electronics 1st Co., Ltd. 1	Credit line		—		70,000,000
Able Guwol 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		41,900,000
Able Hyosung 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		17,000,000
Able Sky 1st Co., Ltd.	Private placement bonds purchase agreement		30,000,000		30,000,000
Newstar Gimpo 2nd Co., Ltd. 1	Credit line		—		12,600,000
Intgreen 1st Inc. 1	Private placement bonds purchase agreement		—		47,500,000
Able Gasan 1st Co., Ltd.	Credit line		60,000,000		60,000,000
Able Sewoon Co., Ltd.	Private placement bonds purchase agreement		37,300,000		48,000,000
Able Poongdong 1st Co., Ltd.	Credit line		2,150,000		4,850,000
Zitaress 1st Co., Ltd.	Private placement bonds purchase agreement		30,000,000		120,000,000
KB PF 3rd Co., Ltd. 1	Private placement bonds purchase agreement		—		4,500,000
Able Beomeo-one Co., Ltd.	Private placement bonds purchase agreement		30,000,000		30,000,000
Able Yucheon 1st Co., Ltd. 1	Credit line		—		160,000,000
KB Infra 2nd Co., Ltd.	Private placement bonds purchase agreement		26,000,000		58,500,000
KB Illite 1st. Co.,Ltd. 1	Credit line		—		1,000,000
Newstar Sina Co., Ltd.	Private placement bonds in foreign currency purchase agreement		26,106,380		24,421,300
KB Gold 1st Co., Ltd.	Credit line		20,000,000		20,000,000
Inspire Gold 1st Co., Ltd. 1	Credit line		—		100,000,000
Inspire Gold 2nd Co., Ltd.	Credit line		7,000,000		50,000,000

128

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	Description	Amounts
		2022		2021
Yeoksam The Gallery KB 1st Co., Ltd.1	Credit line		—		25,000,000
Y Three Ulsan Sinjeong 1st Co., Ltd.1	Private placement bonds purchase agreement		—		59,000,000
Newstar Seotan Co., Ltd. 1	Credit line		—		63,000,000
Newstar Plus 1st Co., Ltd.	Private placement bonds purchase agreement		16,000,000		16,000,000
Unbroken 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		30,000,000
Able Dangjin 1st Co., Ltd.	Credit line		35,000,000		35,000,000
Able Yongdap 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		29,000,000
Able Wonchang 1st Co., Ltd.	Credit line		10,000,000		20,000,000
Able Pocheon 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		12,300,000
Able PT 1st Co., Ltd	Private placement bonds purchase agreement		5,000,000		5,000,000
Able Hyeongok Co., Ltd. 1	Credit line		—		60,000,000
JOSH Bujeon 1st Co., Ltd. 1	Credit line		—		90,000,000
GDIC 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		40,000,000
KB Mapo 2nd Co., Ltd.	Private placement bonds purchase agreement		10,000,000		10,000,000
KB MyeongJi 1st Co., Ltd.	Credit line		20,000,000		45,000,000
KB Osansegyo 2nd Co., Ltd.	Private placement bonds purchase agreement		8,026,650		8,626,660
Newstar Gimpo 4th Co., Ltd.	Private placement bonds purchase agreement		7,000,000		—
Newstar Gimpopoongmoo Co., Ltd.	Credit line		20,000,000		—
Newstar Wave 1st Co., Ltd.	Credit line		40,000,000		—
Lamdamine 1st Co., Ltd.	Credit line		118,000,000		—
Able Dosan 1st Co., Ltd.	Credit line		54,419,000		—
Able Maseok 1st Co., Ltd.	Credit line		50,000,000		—
HD Value 1st Co., Ltd.	Private placement bonds purchase agreement		3,000,000		—
HJ Galaxy 2nd Co., Ltd. 1	Private placement bonds purchase agreement		—		—
HJ Galaxy 1st Co., Ltd. 1	Private placement bonds purchase agreement		—		—
KB Star Galaxy Towers REIT	Funding replenishment agreement B		40,000,000		—
TW Seocho 2nd Co., Ltd.	Private placement bonds purchase agreement		30,000,000		—
TW Seocho 1st Co., Ltd.	Credit line		220,000,000		—
Powerplay 1st Co., Ltd.	Private placement bonds purchase agreement		15,000,000		—
Able Next 1st Co., Ltd.	Private placement bonds purchase agreement		21,000,000		—
KB Infra 3rd Co., Ltd. 1	Private placement bonds purchase agreement		—		—
Able Dongil 1st Co., Ltd.	Private placement bonds purchase agreement		34,000,000		—
Newstar Shiny 1st Co., Ltd.	Private placement bonds purchase agreement		10,000,000		—
Newstar Enerbil 1st Co., Ltd.	Private placement bonds purchase agreement		100,000,000		—
YSMC 1st Co., Ltd.	Private placement bonds purchase agreement		49,500,000		—
HJ Galaxy 3rd Co., Ltd.	Credit line		46,100,000		—
KB SmartSchool 1st Co., Ltd.	Private placement bonds purchase agreement		20,000,000		—

129

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

(in thousands of Korean won)	Description	Amounts
		2022		2021
Bighouse 7th Co., Ltd.	Credit line		138,000,000		—
Newstar Energy 1st Co., Ltd.	Private placement bonds purchase agreement		141,733,828		—
Gyeongsan Logis 1st Co., Ltd	Credit line		38,000,000		—
KB Samyoung Co., Ltd.	Private placement bonds purchase agreement		6,000,000		—
Stoke 2nd Corp	Credit line		73,000,000		—
Newstar Seongnam 1st Co., Ltd	Credit line		35,000,000		—
KPS Sihwa 1st Co., Ltd.	Private placement bonds purchase agreement		257,000,000		—
GDIC 2nd Co., Ltd.	Credit line		38,000,000		—
KB NY 1st Co., Ltd.	Private placement bonds purchase agreement		92,000,000		—
Newstar NRB First Co., Ltd.	Credit line		44,877,058		—
Able Dongtan 1st Co., Ltd.	Private placement bonds purchase agreement		40,000,000		—
Newstar Gimpo 5th Co., Ltd.	Private placement bonds purchase agreement		180,000,000		—
Cassiopeia 1st Co., Ltd.	Private placement bonds purchase agreement		30,000,000		—
Able Banpo 1st Co., Ltd.	Private placement bonds purchase agreement		15,000,000		—
Able Banpo 2nd Co., Ltd.	Private placement bonds purchase agreement		10,000,000		—
Able Gyeonggi Gwangju 1st Co., Ltd.	Private placement bonds purchase agreement		40,000,000		—
Newstar Byeongjeom 1st Co., Ltd.	Private placement bonds purchase agreement		40,000,000		—
Piggarden 1st Co., Ltd.	Private placement bonds purchase agreement		50,000,000		—

¹ No related party of the Company as at December 31, 2022.

As at December 31, 2022, the Company recognizes financial guarantee liability amounting to W 55,032 million (W 95,553 million in 2021) in conjunction with the above.

Details of assets pledged as collateral to related parties as at December 31, 2022 and 2021 is as follows:

(in thousands of Korean won)	Details of assets pledged	2022				2021
		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		16,541,459		20,000,000		21,183,449		20,000,000

As at December 31, 2022, the Company received securities amounting to W 62,000 million(W 54,000 million in 2021) as a collateral from Kookmin bank and the Company has W 140,000 million (W 140,000 million in 2021) of credit line such as loan agreement.

130

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Details of unused loan commitments provided to the related parties as at December 31, 2022 and 2021, are as follows:

		Amounts
(In thousands of Korean won)	Details	2022		2021
KB BMO senior loan private special asset fund	Purchase agreements of securities		19,497		18,239
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-KTB Technology Venture Fund	Purchase agreements of securities		4,000,000		8,000,000
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	Purchase agreements of securities		7,644,000		8,304,000
KB-SOLIDUS Healthcare Investment Fund	Purchase agreements of securities		3,900,000		4,900,000
KB Wisestar Private Real Estate Fund Investment Trust No. 1	Purchase agreements of securities		19,000		19,000
KB Global Platform Fund	Purchase agreements of securities		—		3,200,000
KB New Deal Innovation Fund	Purchase agreements of securities		3,200,000		8,000,000
KB Digital Platform Fund	Purchase agreements of securities		40,500,000		45,500,000
KB-Stonebridge Secondary Private Equity Fund	Purchase agreements of securities		—		1,594,000
Paramark KB Fund I	Purchase agreements of securities		5,944,000		9,320,000
Pacific US BlackRock Private Placement Real Estate Fund Investment Trust No. 15	Purchase agreements of securities		4,525,921		5,645,131
KB Prime Digital Platform Fund	Purchase agreements of securities		3,600,000		—
KBTS Technology Venture Private Equity Fund	Purchase agreements of securities		—		176,000
KB SPROTT Renewable Private Equity Fund I	Purchase agreements of securities		—		3,817,225
KB-NP Green ESG New Technology Venture Capital Fund	Purchase agreements of securities		16,260,000		—
KB Secondary Plus Fund	Purchase agreements of securities		1,181,000		—
KB Scale-up Fund No.2	Purchase agreements of securities		8,500,000		—

The Company received credit card commitment amounting to W 21,000 million(W 21,000 million in 2021) from Kookmin Card Co., Ltd. as at December 31, 2022.

131

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Debt instruments purchased or sold via the Company by the related party for the years ended December 31, 2022 and 2021, are as follows.

(in thousands of Korean won)	2022
	Sale		Purchase 1
Kookmin Bank		7,341,903,732		3,791,777,742
KB Life Insurance Co., Ltd.		92,619,359		11,922,239
KB Insurance Co., Ltd.		794,858,152		362,105,311
KB Life Insurance Co., Ltd. (former Prudential Life Insurance Co., Ltd.) 2		65,611,000		325,130,900
KB Kookmin Card Co., Ltd.		—		70,000,000
KB Capital Co., Ltd.		—		70,000,000

¹  Debt instruments issued by the related party and purchased by the Company for the year ended December31, 2022, are included.

²  Changed company name from Prudential Life Insurance Co., Ltd. to KB Life Insurance Co., Ltd. for the year ended December 31, 2022.

(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, 2022 and 2021, 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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Short-term salaries		19,619,299		9,493,422
Post-employment benefits		654,295		579,895
Share-based payment		10,499,614		16,001,106
		30,773,208		26,074,423

132

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

43. Supplemental Cash Flow Information

Adjustments for non-cash items of cash flows from operating activities for the years ended December 31, 2022 and 2021, consist of the following:

(in thousands of Korean won)	2022			2021
Interest income		(1,013,459,677	)		(737,552,790	)
Interest expenses		501,613,637			212,429,225
Dividend income and distribution income		(49,602,892	)		(43,442,376	)
Tax expenses		60,247,522			214,559,285
Gains on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		(328,703,135	)		(258,480,104	)
Losses on valuation of financial assets (liabilities) required to be mandatorily measured at FVTPL		806,205,848			409,884,788
Gains on valuation of financial assets (liabilities) designated at FVTPL		(1,034,347,105	)		(602,482,365	)
Losses on valuation of financial assets (liabilities) designated at FVTPL		101,117,268			170,830,700
Gains on valuation of derivative financial assets (liabilities)		(3,746,153,750	)		(1,522,684,712	)
Losses on valuation of derivative financial assets (liabilities)		3,948,207,231			1,657,639,495
Gains or losses on disposal of financial assets at FVOCI		16,397,562			10,811,918
Foreign currency translations		41,979,344			(56,312,965	)
Provision for allowances for loan losses		7,287,630			5,378,133
Gains on disposal of investments in associates and subsidiaries		(51,192,525	)		(12,324,064	)
Losses on disposal of investments in associates and subsidiaries		1,931,820			3,817,216
Impairment loss on investments in associates and subsidiaries		8,794,479			7,884,327
Depreciation		47,503,080			41,908,757
Reversal of loss on revaluation of property and equipment		(72,800	)		—
Loss on revaluation of property and equipment		451,905			—
Amortization		27,565,313			22,148,402
Others		107,184,858			72,730,119
		(547,044,387	)		(403,257,011	)

Changes in operating assets and liabilities of cash flows for the years ended December 31, 2022 and 2021, consist of the following:

(in thousands of Korean won)	2022			2021
Deposits in financial institutions		(544,320,532	)		(73,947,140	)
Financial assets required to be mandatorily measured at FVTPL		4,324,803,821			(632,998,030	)
Derivative financial instruments/liabilities (net)		384,354,248			(37,400,973	)
Loans measured at amortised cost		(1,148,722,781	)		(425,945,416	)
Other assets		978,081,409			3,122,483,949
Deposit liabilities		(1,623,120,095	)		699,427,267
Financial liabilities required to be mandatorily measured at FVTPL		(649,762,362	)		978,686,697
Financial liabilities designated at FVTPL		1,913,728,689			(185,467,288	)
Defined benefit obligation		(20,866,451	)		(16,828,530	)
Securities sold under repurchase agreements		(2,784,278,687	)		(1,240,816,274	)
Other liabilities		(1,212,573,912	)		(3,218,157,158	)
		(382,676,653	)		(1,030,962,896	)

133

KB SECURITIES Co., Ltd.

Notes to the Separate Financial Statements

December 31, 2022 and 2021

Changes in liabilities of cash flows from financing activities for the years ended December 31, 2022 and 2021, consist of the following:

	2022
(in thousands of Korean won)	Borrowings			Debentures			Guarantee deposits		Lease liabilities			Other liabilities		Total
Beginning balance (net)		12,681,141,171			2,340,179,481			7,319,921		123,400,384			—		15,152,040,957
Cash Transactions		1,867,511,733			(520,000,000	)		518,525		(30,122,914	)		2,911,250		1,320,818,594
Non-cash transactions		(801,461	)		26,245,908			102,363		27,804,821			41,507		53,393,138
Ending balance(net)		14,547,851,443			1,846,425,389			7,940,809		121,082,291			2,952,757		16,526,252,689

	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

44. 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, 2022 and 2021, are as follows:

(in thousands of Korean won)	2022		2021
Increase due to gains on valuation of financial assets at FVOCI		19,904,095		13,976,607

45. Event after the reporting period

The Company intermediated a fund related to the apartment rental business for disabled people in Australia, but the fund was suspended due to the breach of contract by the local Australian borrower. In this regard, as at December 31, 2022, three lawsuits such as claims for recovery of unjust enrichment have been filed from institutional investors. Among three lawsuits, the first-instance verdict for the one case was announced on February 7, 2023, ordering the payment of the investment principal and delayed interest thereon. This is an adjusting event after the reporting period, and as at December 31, 2022, litigation provision liabilities for three litigation have been added to the financial statements. The specifics of the relevant litigation is described in Note 41.

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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, 2022. 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, 2022, 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, 2022 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, 2022. We did not review the Company’s ICFR subsequent to December 31, 2022. 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, 2023

135

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, 2022.

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, 2022, 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.

March 3, 2023

Park, Jung Lim, Chief Executive Officer

Chang, Seung Ho, Internal Accounting Controller Officer

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