EX-99.2 3 d492931dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

KB Financial Group Inc.

Separate Interim Financial Statements

June 30, 2023 and 2022

(Unaudited)



Report on Review of Condensed Separate Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and the Board of Directors of

KB Financial Group Inc.

Reviewed Financial Statements

We have reviewed the accompanying condensed separate interim financial statements of KB Financial Group Inc. (the “Company”). These condensed separate interim financial statements consist of the separate interim statement of financial position of the Company as of June 30, 2023 and the related separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2023, changes in equity and cash flows for the six-month period ended June 30, 2023, and material accounting policies and other selected explanatory notes, expressed in Korean Won.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and presentation of these condensed separate interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

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

Conclusion

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

 

1


Other Matters

The separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2022, changes in equity and cash flows for the six-month period ended on June 30, 2022, presented herein for comparative purposes, were reviewed by another auditor who expressed their review conclusion that nothing has come to their attention that causes them to believe the condensed separate interim financial statements do not present fairly, in all material respects, in accordance with Korean IFRS No. 1034 Interim Financial Reporting on August 16, 2022.

The separate statement of financial position as of December 31, 2022, and the separate statements of comprehensive income, changes in equity and cash flows for the year then ended, not presented herein, were audited by another auditor who expressed an unqualified opinion on those statements on March 7, 2023. The separate statement of financial position as of December 31, 2022, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as of December 31, 2022.

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

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

August 14, 2023

 

This report is effective as of August 14, 2023, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

 

 

2


KB Financial Group Inc.

Separate Interim Statements of Financial Position

June 30, 2023 and December 31, 2022

 

(In millions of Korean won)

 

     Notes      June 30, 2023
(Unaudited)
    December 31, 2022  

Assets

       

Cash and due from financial institutions

     4,5,6,22      W 1,202,390     W 351,056  

Financial assets at fair value through profit or loss

     4,5,7        1,548,931       1,522,314  

Loans measured at amortized cost

     4,5,8        522,326       522,326  

Investments in subsidiaries

     9        26,717,817       26,741,438  

Property and equipment

        2,627       3,552  

Intangible assets

        15,505       16,752  

Net defined benefit assets

     12        3,532       4,288  

Deferred income tax assets

     10        11,574       19,904  

Other assets

     4,5        669,530       1,272,197  
     

 

 

   

 

 

 

Total assets

      W 30,694,232     W 30,453,827  
     

 

 

   

 

 

 

Liabilities

       

Debentures

     4,5,11        4,169,434       4,956,949  

Current income tax liabilities

        463,881       926,573  

Other liabilities

     4,5        195,516       338,489  
     

 

 

   

 

 

 

Total liabilities

        4,828,831       6,222,011  
     

 

 

   

 

 

 

Equity

     13       

Share capital

        2,090,558       2,090,558  

Hybrid securities

        5,032,518       4,433,981  

Capital surplus

        14,754,747       14,754,747  

Accumulated other comprehensive loss

        (5,822     (5,847

Retained earnings

        4,859,237       3,794,565  

Treasury shares

        (865,837     (836,188
     

 

 

   

 

 

 

Total equity

        25,865,401       24,231,816  
     

 

 

   

 

 

 

Total liabilities and equity

      W 30,694,232     W 30,453,827  
     

 

 

   

 

 

 

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

 

3


KB Financial Group Inc.

Separate Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2023 and 2022

 

(In millions of Korean won, except per share amounts)

 

     Notes      2023
(Unaudited)
    2022
(Unaudited)
 
            Three months     Six months     Three months     Six months  

Interest income

      W 11,479     W 18,149     W 4,369     W 7,485  

Interest income from financial instruments at amortized cost

        10,800       16,351       3,710       6,165  

Interest income from financial instruments at fair value through profit or loss

        679       1,798       659       1,320  

Interest expense

        (24,859     (51,583     (26,734     (54,592
     

 

 

   

 

 

   

 

 

   

 

 

 

Net interest expense

     15        (13,380     (33,434     (22,365     (47,107
     

 

 

   

 

 

   

 

 

   

 

 

 

Fee and commission income

        409       781       356       1,159  

Fee and commission expense

        (3,498     (5,117     (3,724     (5,294
     

 

 

   

 

 

   

 

 

   

 

 

 

Net fee and commission expense

     16        (3,089     (4,336     (3,368     (4,135
     

 

 

   

 

 

   

 

 

   

 

 

 

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

     17        6,242       51,670       (16,435     (16,860
     

 

 

   

 

 

   

 

 

   

 

 

 

Net other operating income

     18        —         2,192,380       —         1,671,224  
     

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses

     19        (22,979     (45,881     (18,925     (41,646
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss) before provision for credit losses

        (33,206     2,160,399       (61,093     1,561,476  

Provision for credit losses

        (7     (7     (5     (2
     

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income (loss)

        (33,213     2,160,392       (61,098     1,561,474  

Net non-operating income (expenses)

        4,393       4,406       (339     (435
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) before income tax benefit

        (28,820     2,164,798       (61,437     1,561,039  

Income tax benefit

     20        2,370       (8,321     7,315       8,644  
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

        (26,450     2,156,477       (54,122     1,569,683  
     

 

 

   

 

 

   

 

 

   

 

 

 

Items that will not be reclassified to profit or loss:

           

Remeasurements of net defined benefit liabilities

        8       25       (169     (281
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss for the period, net of tax

        8       25       (169     (281
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the period

      W (26,442   W 2,156,502     W (54,291   W 1,569,402  
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share

     21           

Basic earnings (loss) per share

      W (194   W 5,354     W (212   W 3,897  

Diluted earnings (loss) per share

        (188     5,234       (206     3,811  

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

 

4


KB Financial Group Inc.

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2023 and 2022

 

(In millions of Korean won)

 

     Share
capital
     Hybrid
securities
     Capital
surplus
     Accumulated
other
comprehensive
income
    Retained
earnings
    Treasury
shares
    Total
equity
 

Balance as of January 1, 2022

   W 2,090,558      W 2,837,981      W 14,754,747      W (8,330   W 3,974,206     W (1,136,188   W 22,512,974  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                 

Profit for the period

     —          —          —          —         1,569,683       —         1,569,683  

Remeasurements of net defined benefit liabilities

     —          —          —          (281     —         —         (281
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —          —          —          (281     1,569,683       —         1,569,402  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with shareholders

                 

Annual dividends

     —          —          —          —         (853,299     —         (853,299

Quarterly dividends

     —          —          —          —         (194,817     —         (194,817

Retirement of treasury shares

     —          —          —          —         (150,000     150,000       —    

Issuance of hybrid securities

     —          1,097,301        —          —         —         —         1,097,301  

Dividends on hybrid securities

     —          —          —          —         (51,183     —         (51,183
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with shareholders

     —          1,097,301        —          —         (1,249,299     150,000       (1,998
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2022 (Unaudited)

   W 2,090,558      W 3,935,282      W 14,754,747      W (8,611   W 4,294,590     W (986,188   W 24,080,378  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of January 1, 2023

   W 2,090,558      W 4,433,981      W 14,754,747      W (5,847   W 3,794,565     W (836,188   W 24,231,816  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period

                 

Profit for the period

     —          —          —          —         2,156,478       —         2,156,478  

Remeasurements of net defined benefit liabilities

     —          —          —          25       —         —         25  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —          —          —          25       2,156,478       —         2,156,503  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with shareholders

                 

Annual dividends

     —          —          —          —         (564,970     —         (564,970

Quarterly dividends

     —          —          —          —         (195,967     —         (195,967

Acquisition of treasury shares

     —          —          —          —         —         (271,745     (271,745

Retirement of treasury shares

     —          —          —          —         (242,096     242,096       —    

Issuance of hybrid securities

     —          598,537        —          —         —         —         598,537  

Dividends on hybrid securities

     —          —          —          —         (88,773     —         (88,773
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with shareholders

     —          598,537        —          —         (1,091,806     (29,649     (522,918
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2023 (Unaudited)

   W 2,090,558      W 5,032,518      W 14,754,747      W (5,822   W 4,859,237     W (865,837   W 25,865,401  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

 

5


KB Financial Group Inc.

Separate Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2023 and 2022

 

(In millions of Korean won)

 

     Notes      2023
(Unaudited)
    2022
(Unaudited)
 

Cash flows from operating activities

       

Profit for the period

      W 2,156,477     W 1,569,683  
     

 

 

   

 

 

 

Adjustment for non-cash items

       

Depreciation and amortization expense

        2,717       2,838  

Reversal of provision for credit losses

        7       2  

Share-based payments

        2,886       1,689  

Net interest expense

        1,307       1,586  

Valuation losses (gains) on financial assets at fair value through profit or loss

        (25,814     31,754  

Disposal gains of subsidiaries

        (3,917     —    

Other expenses

        762       1,121  
     

 

 

   

 

 

 
        (22,052     38,990  
     

 

 

   

 

 

 

Changes in operating assets and liabilities

       

Due from financial institutions

        30,000       (30,000

Deferred income tax assets

        8,321       (8,644

Other assets

        (6,037     16,011  

Other liabilities

        815       (14,969
     

 

 

   

 

 

 
        33,099       (37,602
     

 

 

   

 

 

 

Net cash inflow from operating activities

        2,167,524       1,571,071  
     

 

 

   

 

 

 

Cash flows from investing activities

       

Acquisition of financial assets at fair value through profit or loss

        (300,000     (600,000

Disposal of financial assets at fair value through profit of loss

 

     300,000       —    

Disposal of subsidiaries

        27,539       —    

Acquisition of property and equipment

        (101     (1,390

Acquisition of intangible assets

        (140     (62

Disposal of intangible assets

        34       20  

Net decrease (increase) in guarantee deposits paid

        (80     (2,325

Other investing activities

        (349     (790
     

 

 

   

 

 

 

Net cash inflow (outflow) from investing activities

        26,903       (604,547
     

 

 

   

 

 

 

Cash flows from financing activities

       

Decrease in borrowings

        —         —    

Increase in debentures

        109       498,898  

Decrease in debentures

        (790,000     (730,000

Dividends paid to shareholders

        (760,937     (1,048,116

Redemption of principal elements of lease payments

        (284     (266

Acquisition of treasury shares

        (271,745     —    

Issuance of hybrid securities

        598,537       1,097,301  

Dividends paid on hybrid securities

        (88,773     (51,183
     

 

 

   

 

 

 

Net cash inflow (outflow) from financing activities

        (1,313,093     (233,366
     

 

 

   

 

 

 

Net increase in cash and cash equivalents

        881,334       733,158  

Cash and cash equivalents at the beginning of the period

     22        231,053       518,073  
     

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

     22      W 1,112,387     W 1,251,231  
     

 

 

   

 

 

 

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

 

6


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

1. The Company

KB Financial Group Inc. (the “Company”), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd., and the Company’s main business purpose is to control subsidiaries that engage in the financial business or subsidiaries closely related to the financial business through the stock ownership. The headquarter is located at 26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul. The Company’s share capital as of June 30, 2023, is W 2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, and KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed its name to KB Securities Co., Ltd. in January 2017. In August 2020, the Group acquired Prudential Life Insurance Company of Korea Ltd. which was classified as a subsidiary and the name was changed to KB Life Insurance Co., Ltd. in December 2022. Then in January 2023, it merged with another existing KB Life Insurance Co., Ltd. The Company sold 100% shares of KB Credit Information Co., Ltd. to KB Kookmin Card Co., Ltd. on June 30, 2023.

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

2. Basis of Preparation

2.1 Application of Korean IFRS

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

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

The preparation of separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Company’s accounting policies. The areas that require a more complex and higher level of judgment or areas that require significant assumptions and estimations are disclosed in Note 2.4.

The separate financial statements have been prepared in accordance with Korean IFRS No.1027 Separate Financial Statements.

 

7


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

2.1 Application of Korean IFRS (cont’d)

 

The Company’s condensed separate interim financial statements for the six-month period ended June 30, 2023, have been prepared in accordance with Korean IFRS No.1034 Interim Financial Reporting and contain less information than is required in annual separate financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Company since the end of the previous annual reporting period. These condensed separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of June 30, 2023.

2.1.1 The Company has applied the following new and amended standards for the first time for its annual reporting period commencing January 1, 2023.

 

   

Issuance of Korean IFRS No.1117 Insurance Contracts

Korean IFRS No.1117 Insurance Contracts replaced Korean IFRS No.1104 Insurance Contracts. This standard requires an entity to estimate future cash flows of an insurance contract and measure insurance liabilities using discount rates applied with assumptions and risks at the measurement date and recognize insurance revenue on an accrual basis including services (insurance coverage) provided to the policyholder by each annual reporting period. In addition, investment components (refunds due to termination and maturity) repaid to a policyholder even if an insured event does not occur, are excluded from insurance revenue. These amendments do not have a significant impact on the financial statements.

 

   

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

The amendments require an entity to define and disclose their material accounting policy information. IFRS Practice Statement 2 Making Materiality Judgements was amended to explain and demonstrate how to apply the concept of materiality. These amendments do not 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. These amendments do not 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. These amendments do not have a significant impact on the financial statements.

 

8


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

2.1.2 The following amended standards have been published that are not mandatory for June 30, 2023 reporting period and have not been adopted by the Company.

 

   

Amendments to Korean IFRS No.1001 Presentation of Financial Statements - Disclosure of gains 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. These amendments do not have a significant impact on the financial statements.

2.1.3 The following are the accounting standards that have been established or announced but have not yet been implemented, which the Group has not applied

 

   

Amendment of K-IFRS No.1001 “Presentation of Financial Statements” - Classification of Liabilities into Current and Non-Current

Liabilities are classified as current or non-current based on their substantive rights existing at the end of the reporting period, without considering the possibility of exercising the right to delay the payment or the management’s expectations. Also, if the transfer of equity instruments is included in the payment of liabilities, it is excluded if the option to pay with equity instruments is recognized separately from the liability in a compound financial instrument and meets the definition of equity instruments. This amendment will be applied to the financial statements for the accounting year beginning on or after January 1, 2024. The Company expects that this amendment will not have a significant impact on the financial statements.

2.2 Measurement Basis

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

2.3 Functional and Presentation Currency

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

2.4 Critical Accounting Estimates

The Company applies accounting policies and uses judgements, accounting estimates, and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses) in preparing the separate financial statements. Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment are different from the actual environment.

Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.

Uncertainties in estimates and assumptions with significant risks used in the preparation of the financial statements are the same as 2022 financial statements, except for the method of estimating income tax expense.

 

9


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

3. Material Accounting Policies

The material accounting policies and calculation methods applied in the preparation of these condensed separate interim financial statements are the same as those applied to the separate financial statements for the year ended December 31, 2022, except for the impact of changes due to adopting new and amended standards and interpretations described in Note 2.1 and below paragraph.

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

4. Financial Risk Management

4.1 Summary

4.1.1 Overview of financial risk management policy

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

This note regarding financial risk management provides information about the risks that the Company is exposed to and about its objectives, policies, risk assessment and management procedures, and capital management. Additional quantitative information is disclosed throughout the separate financial statements.

The Company’s risk management system focuses on efficiently supporting long-term strategy and management decisions of the Company by increasing risk transparency, preventing risk transfer between subsidiaries and preemptive response to rapidly changing financial environments. Credit risk, market risk, liquidity risk, operational risk, interest rate risk, insurance risk, credit concentration risk, strategy risk, and reputation risk are recognized as significant risks.

4.1.2 Risk management organization

4.1.2.1 Risk Management Committee

The Risk Management Committee, as the ultimate decision-making body, deals with risk-related issues, such as establishing risk management strategies in accordance with the strategic direction determined by the board of directors, determining the affordable level of risk appetite, reviewing the level of risk and the status of risk management activities, approving the application of risk management systems, methodologies, and major improvements, and establishing and approving risk management policies and procedures to timely recognize, measure, monitor, and control risks arising from various transactions by the Company and subsidiaries (the “Group”).

4.1.2.2 Risk Management Council

The Risk Management Council is responsible for consulting on matters delegated by the Risk Management Committee and requests for review by the Group Management Executive Committee, consulting on details of each subsidiary’s risk management policies and procedures, monitoring the Group’s risk management status, and establishing and implementing necessary measures.

 

10


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

4.1.2.3 Risk Management Department

The Risk Management Department performs the Company’s risk management detailed policies, procedures, and business processes, and is responsible for calculating the Group’s risk-weighted assets, monitoring and managing internal capital limits.

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of loss from the portfolio of assets held due to the counterparty’s default, breach of contract, and deterioration of credit quality. For risk management purposes, the Company considers default risk of individual borrowers.

4.2.2 Credit risk management

The Company measures the expected losses of assets subject to credit risk management and uses them as a management indicator.

4.2.3 Maximum exposure to credit risk

The Company’s maximum exposures to credit risk without consideration of collateral values in relation to financial instruments other than equity securities as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Due from financial institutions

   W 1,202,390      W 351,056  

Loans measured at amortized cost *

     522,326        522,326  

Loans measured at fair value through profit or loss

     45,751        343,525  

Other financial assets *

     58,216        44,841  
  

 

 

    

 

 

 
   W 1,828,683      W 1,261,748  
  

 

 

    

 

 

 

 

*

After netting of allowance

4.2.4 Credit risk of loans

The Company maintains allowances for loan losses associated with credit risk of loans to manage its credit risk.

The Company assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial asset at fair value through other comprehensive income. Financial assets at fair value through profit or loss are excluded. Expected credit losses are a probability-weighted estimate of possible credit losses occurring in a certain range by reflecting reasonable and supportable information that is reasonably available at the end of the reporting period without undue cost or effort, including information about past events, current conditions, and forecasts of future economic conditions. The Company measures the expected credit losses on loans classified as financial assets at amortized cost, by deducting allowances for credit losses. The expected credit losses of loans classified as financial assets at fair value through other comprehensive income are presented in other comprehensive income in the financial statements.

 

11


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

4.2.4 Credit risk of loans (cont’d)

 

Credit qualities of loans measured at amortized cost as of June 30, 2023 and December 31 2022, are classified as follows:

(In millions of Korean won)

 

     June 30, 2023  
     12-month
expected
credit losses
     Lifetime expected
credit losses
     Not applying
expected
credit losses
     Total  
     Non-impaired      Impaired  

Loans measured at amortized cost *

 

Corporate

 

Grade 1

   W 523,500      W —        W —        W —        W 523,500  

Grade 2

     —          —          —          —          —    

Grade 3

     —          —          —          —          —    

Grade 4

     —          —          —          —          —    

Grade 5

     —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 523,500      W —        W —        W —        W 523,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(In millions of Korean won)

 

     December 31, 2022  
     12-month
expected
credit losses
     Lifetime expected
credit losses
     Not applying
expected
credit losses
     Total  
     Non-impaired      Impaired  

Loans measured at amortized cost *

 

Corporate

 

Grade 1

   W 523,500      W —        W —        W —        W 523,500  

Grade 2

     —          —          —          —          —    

Grade 3

     —          —          —          —          —    

Grade 4

     —          —          —          —          —    

Grade 5

     —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 523,500      W —        W —        W —        W 523,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Before netting of allowance

Credit qualities of loans graded according to the probability of default as June 30, 2023 and December 31 2022, are as follows:

 

     Range of probability of default (%)

Grade 1

   0.0 ~ 1.0

Grade 2

   1.0 ~ 5.0

Grade 3

   5.0 ~ 15.0

Grade 4

   15.0 ~ 30.0

Grade 5

   30.0 ~

 

12


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

4.2.5 Credit risk of due from financial institutions

Credit qualities of due from financial institutions as of June 30, 2023 and December 31 2022, are as follows:

(In millions of Korean won)

 

     June 30, 2023  
     12-month
expected
credit losses
     Lifetime expected
credit losses
     Not applying
expected
credit losses
     Total  
     Non-impaired      Impaired  

Due from financial institutions measured at amortized cost

 

Grade 1

   W 1,202,390      W —        W —        W —        W 1,202,390  

Grade 2

     —          —          —          —          —    

Grade 3

     —          —          —          —          —    

Grade 4

     —          —          —          —          —    

Grade 5

     —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,202,390      W —        W —        W —        W 1,202,390  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(In millions of Korean won)

 

     December 31, 2022  
     12-month
expected
credit losses
     Lifetime expected
credit losses
     Not applying
expected
credit losses
     Total  
   Non-impaired      Impaired  

Due from financial institutions measured at amortized cost

 

Grade 1

   W 351,056      W —        W —        W —        W 351,056  

Grade 2

            —          —          —           

Grade 3

            —          —          —           

Grade 4

            —          —          —           

Grade 5

            —          —          —           
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W    351,056      W —        W —        W —        W    351,056  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

13


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

4.2.6 Credit risk concentration analysis

4.2.6.1 Classifications of corporate loans by industry as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Corporate loans *      %      Allowances      Carrying amount  

Financial institutions

   W 569,251        100.00      W (1,174    W 568,077  
(In millions of Korean won)    December 31, 2022  
     Corporate loans *      %      Allowances      Carrying amount  

Financial institutions

   W 867,025        100.00      W (1,174    W 865,851  

 

*

Amount includes loans measured at fair value through profit or loss and amortized cost.

4.2.6.2 Classifications of due from financial institutions by industry as of June 30, 2023 and December 31 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Amount      %      Allowances      Carrying amount  

Due from financial institutions measured at amortized cost

           

Financial institutions

   W 1,202,390        100.00      W —        W 1,202,390  
(In millions of Korean won)    December 31, 2022  
     Amount      %      Allowances      Carrying amount  

Due from financial institutions measured at amortized cost

           

Financial institutions

   W 351,056        100.00      W —        W 351,056  

 

14


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Company becomes insolvent due to the mismatch between the inflow and outflow of funds, unexpected cash outflows, or a risk of loss due to financing funds at a high interest rate 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 and liabilities and discloses in six categories such as on demand, less than one month, between one month to three months, between three months to one year, between one year to five years, and over five years.

4.3.2. Liquidity risk management

The liquidity risk is managed by risk management policies and liquidity risk management guidelines set forth in these policies that apply to all risk management policies and procedures that may arise throughout the overall business of the Company.

4.3.3. Analysis of remaining contractual maturity of financial liabilities

The cash flows disclosed in the maturity analysis are undiscounted contractual amounts including principal and future interest payments; as such, amounts in the table below do not match with those in the statements of financial position which are based on discounted cash flows. The future interest payments for floating-rate liabilities are calculated on the assumption that the current interest rate is the same until maturity.

Remaining contractual maturity of financial liabilities as of June 30, 2023 and December 31 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     On
Demand
     Up to
1 month
     1-3
months
     3-12
months
     1-5
years
     Over 5
years
     Total  

Financial liabilities

                    

Debentures

   W —        W 74,293      W 68,558      W 897,960      W 2,301,420      W 1,197,317      W 4,539,548  

Lease liabilities

     —          53        95        325        333        —          806  

Other financial liabilities

     —          10,553        —          11,640        —          —          22,193  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W   84,899      W   68,653      W 909,925      W 2,301,753      W 1,197,317      W 4,562,547  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
(In millions of Korean won)    December 31, 2022  
     On
Demand
     Up to
1 month
     1-3
months
     3-12
months
     1-5
years
     Over 5
years
     Total  

Financial liabilities

                    

Debentures

   W —        W 275,723      W 160,712      W 756,380      W 2,863,695      W 1,330,748      W 5,387,258  

Lease liabilities

     —          49        88        381        330        —          848  

Other financial liabilities

     —          1,620        —          —          —          —          1,620  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 277,392      W 160,800      W 756,761      W 2,864,025      W 1,330,748      W 5,389,726  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

15


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

4.4 Market Risk

4.4.1 Concept

Market risk refers to risks that can result in losses due to changes in market factors such as interest rate, stock price, and foreign exchange rate, etc. The Company manages the market risks by dividing them into those arising from the trading position and those arising from the non-trading position.

4.4.2 Trading position

In accordance with Financial Holding Companies Act, the Company’s main business is to control financial companies or companies closely related to the financial service. And the Company cannot perform any other business other than managing activities as a holding company, therefore there is no risk of trading position.

4.4.3 Non-trading position

Non-trading position refers to the part except trading position, and the main risk the Company is managing is interest rate risk.

4.4.3.1 Definition of interest rate risk

Interest rate risk refers to the risk of changes in the value (fair value) of the items in the statement of financial position due to changes in interest rate and the risk of changes in cash flows related to interest income and interest expense arising from investment and financing activities.

4.4.3.2 Observation method and management indicator on interest rate risk

The main objective of interest rate risk management is to protect the value changes from interest rate fluctuations. In addition to the Interest Rate Risk in the Banking Book (“IRRBB”) standard methodology required for disclosure, the Company applies the IRRBB methodology to measure and manage interest rate risk in a historical-simulation VaR method including interest rate volatility during the past financial crisis (FY2008-FY2009).

 

16


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

5. Financial Assets and Financial Liabilities

5.1 Classification and Fair Value of Financial Instruments

5.1.1 Carrying amount and fair value of financial assets and liabilities by category as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Carrying amount      Fair value  

Financial assets

     

Financial assets at fair value through profit or loss

     

Hybrid securities

   W 992,124      W 992,124  

Beneficiary certificates

     511,056        511,056  

Loans

     45,751        45,751  

Financial assets at amortized cost

     

Due from financial institutions

     1,202,390        1,202,390  

Loans

     522,326        522,326  

Other financial assets

     58,216        58,216  
  

 

 

    

 

 

 
   W 3,331,863      W 3,331,863  
  

 

 

    

 

 

 

Financial liabilities

     

Financial liabilities at amortized cost

     

Debentures

   W 4,169,434      W 3,918,534  

Other financial liabilities

     31,658        31,658  
  

 

 

    

 

 

 
   W  4,201,092      W  3,950,192  
  

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2022  
     Carrying amount      Fair value  

Financial assets

     

Financial assets at fair value through profit or loss

     

Hybrid securities

   W 874,171      W 874,171  

Beneficiary certificates

     304,618        304,618  

Loans

     343,525        343,525  

Financial assets at amortized cost

     

Due from financial institutions

     351,056        351,056  

Loans

     522,326        522,326  

Other financial assets

     44,841        44,841  
  

 

 

    

 

 

 
   W  2,440,537      W  2,440,537  
  

 

 

    

 

 

 

Financial liabilities

     

Financial liabilities at amortized cost

     

Debentures

   W 4,956,949      W 4,576,973  

Other financial liabilities

     13,331        13,331  
  

 

 

    

 

 

 
   W 4,970,280      W 4,590,304  
  

 

 

    

 

 

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company discloses the fair value of each class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is quoted price in an active market.

 

17


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

5.1.1 Carrying amount and fair value of financial assets and liabilities by category as of June 30, 2023 and December 31, 2022, are as follows: (cont’d)

 

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

 

Cash and due from financial institutions

   Fair value of cash is same as carrying amount. Carrying amount of demand deposit and settlement deposit is a reasonable approximation of fair value because these financial instruments do not have a fixed maturity and are receivable on demand. Fair value of general deposit is measured using Discounted Cash Flow (“DCF”) Model.
Securities    Fair value of financial instruments that are quoted in an active market is determined using the quoted prices. If there is no quoted price, fair value is determined using external professional valuation institutions. The institutions use one or more valuation techniques that are deemed appropriate considering the characteristics of the financial instruments among DCF Model, Imputed Market Value Model, Free Cash Flow to Equity Model, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method.
Derivatives    Fair value of exchange traded derivatives is determined using quoted price in an active market, and fair value of OTC derivatives is determined using valuation techniques. The Company uses internally developed valuation models that are widely used by market participants to determine fair value of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method (“FDM”), and the MonteCarlo Simulation or valuation results from independent external professional valuation institution.

Loans measured at amortized cost

   Fair value of loans is determined using DCF model discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate.
Borrowings    DCF model is used to determine the fair value of borrowings, but in the case of short-term maturity, carrying amount is a reasonable approximation of fair value.
Debentures    Fair value is determined by using valuation results of external professional valuation institutions, which are calculated using market inputs.

Other financial assets and other financial liabilities

   Carrying amount is a reasonable approximation of fair value because other financial assets and other financial liabilities are temporary accounts used for other various transactions and their maturities are relatively short or not defined.

 

18


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

5.1.2 Fair value hierarchy

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

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

 

Level 1:    The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2:    The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:    The fair values are based on unobservable inputs for the asset or liability.

The 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. 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.

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

Fair value hierarchy of financial assets at fair value in the statements of financial position as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Fair value hierarchy      Total  
     Level 1      Level 2      Level 3  

Financial assets

           

Financial assets at fair value through profit or loss:

           

Hybrid securities

   W —        W —        W 992,124      W 992,124  

Beneficiary certificates

     —          511,056        —          511,056  

Loans

     —          45,751        —          45,751  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 556,807      W 992,124      W 1,548,931  
  

 

 

    

 

 

    

 

 

    

 

 

 
(In millions of Korean won)    December 31, 2022  
     Fair value hierarchy      Total  
     Level 1      Level 2      Level 3  

Financial assets

           

Financial assets at fair value through profit or loss:

           

Hybrid securities

   W —        W —        W 874,171      W 874,171  

Beneficiary certificates

        304,618        —          304,618  

Loans

     —          343,525        —          343,525  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 648,143      W 874,171      W 1,522,314  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

19


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

5.1.2.1 Fair value hierarchy of financial assets and liabilities at fair value in the statements of financial position (cont’d)

 

Valuation techniques and inputs of financial assets and liabilities classified as Level 2 and measured at fair value in the statements of financial position as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Fair value      Valuation
techniques
     Inputs  

Financial assets

     

Financial assets at fair value through profit or loss:

 

     

Beneficiary certificates

   W 511,056        DCF model       


Interest rate,

Discount
rate, etc.

 

 
 

Loans

     45,751        DCF model       


Interest rate,

Discount
rate, etc.

 

 
 

  

 

 

       
   W 556,807        
  

 

 

       

 

(In millions of Korean won)    December 31, 2022  
     Fair value      Valuation
techniques
     Inputs  

Financial assets

     

Financial assets at fair value through profit or loss:

 

     

Beneficiary certificates

   W 304,618        DCF model       


Interest rate,

Discount
rate, etc.

 

 
 

Loans

     343,525        DCF model       


Interest rate,

Discount
rate, etc.

 

 
 

  

 

 

       
   W 648,143        
  

 

 

       

5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed

Fair value hierarchy of financial assets and liabilities whose fair value is disclosed as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Fair value hierarchy         
     Level 1      Level 2      Level 3      Total  

Financial assets

           

Cash and due from financial institutions 1

   W —        W 1,202,390      W —        W 1,202,390  

Loans measured at amortized cost 2

     —          —          522,326        522,326  

Other financial assets 3

     —          —          58,216        58,216  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 1,202,390      W 580,542      W 1,782,932  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Debentures

   W —        W 3,918,534      W —        W 3,918,534  

Other financial liabilities 3

     —          —          31,658        31,658  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 3,918,534      W 31,658      W 3,950,192  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

20


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed (cont’d)

 

(In millions of Korean won)    December 31, 2022  
     Fair value hierarchy         
     Level 1      Level 2      Level 3      Total  

Financial assets

           

Cash and due from financial institutions 1

   W —        W 351,056      W —        W 351,056  

Loans measured at amortized cost 2

     —          —          522,326        522,326  

Other financial assets 3

     —          —          44,841        44,841  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 351,056      W 567,167      W 918,223  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Debentures

   W —        W 4,576,973      W —        W 4,576,973  

Other financial liabilities 3

     —          —          13,331        13,331  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W —        W 4,576,973      W 13,331      W 4,590,304  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1 

For cash and due from financial institutions classified as level 2, carrying amount is a reasonable approximation of fair value.

2 

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

3 

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

Financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, valuation techniques and inputs are not disclosed.

Valuation techniques and inputs of financial assets and liabilities classified as Level 2, and whose fair value is disclosed as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    Fair value      Valuation
techniques
     Inputs  
     June 30,
2023
     December 31,
2022
 

Financial liabilities

           

Debentures

   W 3,918,534      W 4,576,973        DCF model        Discount rate  

5.2 Disclosure of Fair Value Hierarchy Level 3

5.2.1 Valuation policy and process of Level 3 fair value

The Company uses external, independent and qualified valuation service to determine the fair value of financial instruments at the end of every reporting period.

 

21


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

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

5.2.2.1 Changes in financial instruments classified as Level 3 of the fair value hierarchy for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  
     Financial assets at fair
value
through profit or loss
     Financial assets at fair
value
through profit or loss
 

Beginning

   W 874,171      W 389,606  

Total gains or losses:

     

- Profit or loss

     17,953        (25,523

- Other comprehensive income

     —          —    

Purchases

     100,000        300,000  

Sales

     —          —    

Issues

     —          —    

Settlements

     —          —    

Transfers into Level 3

     —          —    

Transfers out of Level 3

     —          —    
  

 

 

    

 

 

 

Ending

   W 992,124      W 664,083  
  

 

 

    

 

 

 

5.2.2.2 In relation to changes in financial instruments classified as Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and total gains or losses recognized in profit or loss from financial instruments held at the end of the reporting period for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  
     Gains on
financial
instruments
at fair value
through
profit or loss
     Other
operating
income
     Net
interest
income
     Losses on
financial
instruments
at fair value
through
profit or loss
    Other
operating
income
     Net
interest
income
 

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

   W 17,953      W —        W —        W (25,523   W —        W —    

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

     17,953        —          —          (25,523     —          —    

 

22


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

5.2.3 Sensitivity analysis of changes in unobservable inputs

5.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023
     Fair value   

Valuation
techniques

  

Inputs

  

Unobservable
inputs

   Range of
unobservable
inputs (%)
    

Relationship
of
unobservable
inputs to fair
value

Financial assets

              

Financial assets at fair value through profit or loss:

Hybrid securities

   W992,124   

Hull and White Model, MonteCarlo Simulation

  

Matrix YTM, Additional spread by grade, Risk spread of company, Valid credit rating, Disclosed information of securities, Estimated volatility of Interest rate

  

Discount rate

     4.95 ~ 6.87     

The lower the discount rate, the higher the fair value

        

Volatility of interest rate

     0.62     

The higher the volatility, the higher the fair value fluctuation

(In millions of Korean won)    December 31, 2022
     Fair value   

Valuation
techniques

  

Inputs

  

Unobservable
inputs

   Range of
unobservable
inputs (%)
    

Relationship
of
unobservable
inputs to fair
value

Financial assets

              

Financial assets at fair value through profit or loss:

Hybrid securities

   W874,171   

Hull and White Model, MonteCarlo Simulation

  

Matrix YTM, Additional spread by grade, Risk spread of company, Valid credit rating, Disclosed information of securities, Estimated volatility of Interest rate

  

Discount rate

     5.54 ~ 7.05     

The lower the discount rate, the higher the fair value

        

Volatility of interest rate

     0.64     

The higher the volatility, the higher the fair value fluctuation

 

23


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

5.2.3.2 Sensitivity analysis of changes in unobservable inputs

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

Results of the sensitivity analysis of changes in unobservable inputs as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Profit or loss      Other comprehensive
income or loss
 
     Favorable
changes
     Unfavorable
changes
     Favorable
changes
     Unfavorable
changes
 

Financial assets

           

Financial assets at fair value through profit or loss:

 

Hybrid securities *

   W 8,504      W (8,309    W —        W —    

 

*

The changes in fair value are calculated by increasing or decreasing discount rates (4.95% ~ 6.87%) by 1%p, which are principal unobservable input parameters.

 

(In millions of Korean won)    December 31, 2022  
     Profit or loss      Other comprehensive
income or loss
 
     Favorable
changes
     Unfavorable
changes
     Favorable
changes
     Unfavorable
changes
 

Financial assets

           

Financial assets at fair value through profit or loss:

 

Hybrid securities *

   W 10,460      W (10,199    W —        W —    

 

*

The changes in fair value are calculated by increasing or decreasing discount rates (5.54% ~ 7.05%) by 1%p, which are principal unobservable input parameters.

 

24


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

6. Due from Financial Institutions

6.1 Details of due from financial institutions as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)   

Financial Institution

  

Interest rate (%)

as of

June 30,

2023

   June 30,
2023
     December 31,
2022
 

Due from financial institutions in Korean won

   Due from banks   

Kookmin Bank

   0.00 ~ 3.00    W 1,112,390      W 231,056  
     

KB Savings Bank Co., Ltd.

   2.65 ~ 2.90      90,000        120,000  
           

 

 

    

 

 

 
            W 1,202,390      W 351,056  
           

 

 

    

 

 

 

6.2 Details of restricted due from financial institution as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    Financial Institution    June 30,
2023
     December 31,
2022
    

Reasons of restriction

Due from financial institutions in Korean won

   Kookmin
Bank
   W 3      W 3      Pledged as collateral for the overdraft account

7. Financial Assets at Fair Value through Profit or Loss

Details of financial assets at fair value through profit or loss as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Financial assets at fair value through profit or loss:

     

Hybrid securities

   W 992,124      W 874,171  

Beneficiary certificates

     511,056        304,618  

Loans

     45,751        343,525  
  

 

 

    

 

 

 
   W 1,548,931      W 1,522,314  
  

 

 

    

 

 

 

8. Loans Measured at Amortized Cost

8.1 Details of loans measured at amortized cost as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Loans measured at amortized cost

   W 523,500      W 523,500  

Less: Allowances for loan losses

     (1,174      (1,174
  

 

 

    

 

 

 
   W 522,326      W 522,326  
  

 

 

    

 

 

 

 

25


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

9. Investments in Subsidiaries

9.1 Details of subsidiaries as of June 30, 2023, are as follows:

 

Name of subsidiaries

  

Industry

  

Location

Kookmin Bank   

Banking and foreign exchange transaction

   Korea
KB Securities Co., Ltd.   

Financial investment

   Korea
KB Insurance Co., Ltd.   

Non-life insurance

   Korea
KB Kookmin Card Co., Ltd.   

Credit card and installment financial business

   Korea
KB Life Insurance Co., Ltd.   

Life insurance

   Korea
KB Asset Management Co., Ltd.   

Investment advisory and investment trust

   Korea
KB Capital Co., Ltd.   

Financial leasing

   Korea
KB Real Estate Trust Co., Ltd.   

Real estate trust management

   Korea
KB Savings Bank Co., Ltd.   

Savings banking

   Korea
KB Investment Co., Ltd.   

Capital investment

   Korea
KB Data System Co., Ltd.   

System software, development and supply

   Korea

9.2 Details of investments in subsidiaries as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won, except for shares)    As of June 30, 2023      Carrying amount  

Name of subsidiaries

   Number of issued
shares
     Ownership
(%)
     June 30,
2023
     December 31,
2022
 

Kookmin Bank

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

KB Securities Co., Ltd.

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

KB Insurance Co., Ltd.

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

KB Kookmin Card Co., Ltd.

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

KB Life Insurance Co., Ltd. (former Prudential Life Insurance Company of Korea Ltd.) *

     16,201,518        100.00        2,795,367        2,310,054  

KB Asset Management Co., Ltd.

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

KB Capital Co., Ltd.

     32,175,147        100.00        873,811        873,811  

KB Life Insurance Co., Ltd. *1

     —          —          —          485,314  

KB Real Estate Trust Co., Ltd.

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

KB Savings Bank Co., Ltd.

     8,001,912        100.00        176,813        176,813  

KB Investment Co., Ltd.

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

KB Data System Co., Ltd.

     800,000        100.00        6,334        6,334  

KB Credit Information Co., Ltd. *2

     —          —          —          23,620  
        

 

 

    

 

 

 
         W 26,717,817      W 26,741,438  
        

 

 

    

 

 

 

 

*1

KB Life Insurance Co., Ltd. (former Prudential Life Insurance Company of Korea Ltd.) merged with another existing KB Life Insurance Co., Ltd. on January 2, 2023, and issued 1,201,518 shares as the consideration.

*2

On June 30, 2023, the Company sold its 100% shares of KB Credit Information Co., Ltd. to KB Kookmin Card Co., Ltd. As of the date of disposal, the carrying amount of investments in KB Credit Information Co., Ltd. recorded by the Company was W23,620 million. The difference between the carrying amount and the consideration transferred (amounted W27,635 million), excluding disposal related costs, was recognized as gains on the disposal of investments in subsidiaries (amounted W3,917 million)

 

26


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

10. Deferred Income Tax Assets and Liabilities

10.1 Details of deferred income tax assets and liabilities as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Assets      Liabilities      Net amount  

Share-based payments

   W 3,756      W —        W 3,756  

Membership rights

     209        —          209  

Defined benefit obligation

     1,854        —          1,854  

Plan assets

     —          (2,228      (2,228

Short-term employee benefits

     773        —          773  

Losses on valuation of financial assets at fair value through profit or loss

     7,080        —          7,080  

Others

     2,569        (2,439      130  
  

 

 

    

 

 

    

 

 

 
     16,241        (4,667      11,574  
  

 

 

    

 

 

    

 

 

 

Offsetting of deferred tax assets and liabilities

     (4,667      4,667        —    
  

 

 

    

 

 

    

 

 

 
   W 11,574      W —        W 11,574  
  

 

 

    

 

 

    

 

 

 

 

(In millions of Korean won)    December 31, 2022  
     Assets      Liabilities      Net amount  

Share-based payments

   W 4,502      W —        W 4,502  

Membership rights

     210        —          210  

Defined benefit obligation

     3,226        —          3,226  

Plan assets

     —          (3,393      (3,393

Short-term employee benefits

     650        —          650  

Losses on valuation of financial assets at fair value through profit or loss

     14,795        —          14,795  

Others

     3,233        (3,319      (86
  

 

 

    

 

 

    

 

 

 
     26,616        (6,712      19,904  
  

 

 

    

 

 

    

 

 

 

Offsetting of deferred tax assets and liabilities

     (6,712      6,712        —    
  

 

 

    

 

 

    

 

 

 
   W 19,904      W —        W 19,904  
  

 

 

    

 

 

    

 

 

 

 

27


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

11. Debentures

11.1 Details of debentures as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    Issuance date      Maturity date      Interest rate (%)
as of

June 30, 2023
     June 30,
2023
     December 31,
2022
 

Unguaranteed debentures No.15-3

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

Unguaranteed debentures No.16-3

     May 27, 2016        May 27, 2023        —          —          150,000  

Unguaranteed debentures No.18-3

     Jul. 25, 2016        Jul. 25, 2026        1.69        80,000        80,000  

Unguaranteed debentures No.19-3

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

Unguaranteed debentures No.25-4

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

Unguaranteed debentures No.26-2

     Jun. 27, 2017        Jun. 27, 2024        2.34        200,000        200,000  

Unguaranteed debentures No.27

     Jul. 19, 2017        Jul. 19, 2024        2.41        100,000        100,000  

Unguaranteed debentures No.28-2

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

Unguaranteed debentures No.28-3

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

Unguaranteed debentures No.29-2

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

Unguaranteed debentures No.31-2

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

Unguaranteed debentures No.31-3

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

Unguaranteed debentures No.32-2

     Apr. 6, 2018        Apr. 6, 2023        —          —          80,000  

Unguaranteed debentures No.32-3

     Apr. 6, 2018        Apr. 6, 2028        2.86        20,000        20,000  

Unguaranteed debentures No.33-1

     Jun. 12, 2018        Jun. 12, 2023        —          —          100,000  

Unguaranteed debentures No.33-2

     Jun. 12, 2018        Jun. 12, 2028        2.92        30,000        30,000  

Unguaranteed debentures No.34-2

     Jul. 25, 2018        Jul. 25, 2023        2.65        70,000        70,000  

Unguaranteed debentures No.34-3

     Jul. 25, 2018        Jul. 25, 2025        2.71        20,000        20,000  

Unguaranteed debentures No.34-4

     Jul. 25, 2018        Jul. 25, 2028        2.76        20,000        20,000  

Unguaranteed debentures No.35

     Oct. 5, 2018        Oct. 5, 2023        2.52        120,000        120,000  

Unguaranteed debentures No.36-2

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

Unguaranteed debentures No.36-3

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

Unguaranteed debentures No.37-1

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

Unguaranteed debentures No.37-2

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

Unguaranteed debentures No.38-1

     Jun. 19, 2019        Jun. 19, 2026        1.73        80,000        80,000  

Unguaranteed debentures No.38-2

     Jun. 19, 2019        Jun. 19, 2029        1.77        120,000        120,000  

Unguaranteed debentures No.39-1

     Oct. 15, 2019        Oct. 15, 2024        1.60        80,000        80,000  

Unguaranteed debentures No.39-2

     Oct. 15, 2019        Oct. 15, 2029        1.67        40,000        40,000  

Unguaranteed debentures No.40-1

     Dec. 4, 2019        Dec. 4, 2024        1.76        70,000        70,000  

Unguaranteed debentures No.40-2

     Dec. 4, 2019        Dec. 4, 2029        1.87        30,000        30,000  

Unguaranteed debentures No.41-1

     Jan. 16, 2020        Jan. 16, 2023        —          —          110,000  

Unguaranteed debentures No.41-2

     Jan. 16, 2020        Jan. 16, 2025        1.74        100,000        100,000  

Unguaranteed debentures No.41-3

     Jan. 16, 2020        Jan. 16, 2030        1.88        40,000        40,000  

Subordinated debentures No.1-1

     Feb. 18, 2020        Feb. 18, 2030        2.21        370,000        370,000  

Subordinated debentures No.1-2

     Feb. 18, 2020        Feb. 18, 2035        2.26        30,000        30,000  

Unguaranteed debentures No.42-1

     May 13, 2020        May 13, 2025        1.59        130,000        130,000  

Unguaranteed debentures No.42-2

     May 13, 2020        May 13, 2030        1.78        70,000        70,000  

Unguaranteed debentures No.43-1

     Jun. 16, 2020        Jun. 16, 2023        —          —          50,000  

Unguaranteed debentures No.43-2

     Jun. 16, 2020        Jun. 16, 2025        1.44        110,000        110,000  

Unguaranteed debentures No.43-3

     Jun. 16, 2020        Jun. 16, 2030        1.63        50,000        50,000  

Exchangeable bonds No.1 *

     Jun. 30, 2020        Jun. 30, 2025        —          240,000        240,000  

Unguaranteed debentures No.44-2

     Aug. 11, 2020        Aug. 11, 2023        1.07        50,000        50,000  

Unguaranteed debentures No.44-3

     Aug. 11, 2020        Aug. 9, 2024        1.18        30,000        30,000  

 

28


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

11.1 Details of debentures as of June 30, 2023 and December 31, 2022, are as follows: (cont’d)

 

(In millions of Korean won)    Issuance date      Maturity date      Interest rate (%)
as of

June 30, 2023
     June 30,
2023
    December 31,
2022
 

Unguaranteed debentures No.44-4

     Aug. 11, 2020        Aug. 11, 2027        1.39      W 20,000     W 20,000  

Unguaranteed debentures No.45

     Nov. 23, 2020        Nov. 23, 2023        1.19        60,000       60,000  

Unguaranteed debentures No.46-1

     Jan. 14, 2021        Jan. 13, 2023        —          —         160,000  

Unguaranteed debentures No.46-2

     Jan. 14, 2021        Jan. 14, 2026        1.43        30,000       30,000  

Unguaranteed debentures No.46-3

     Jan. 14, 2021        Jan. 14, 2028        1.62        10,000       10,000  

Unguaranteed debentures No.46-4

     Jan. 14, 2021        Jan. 14, 2031        1.84        100,000       100,000  

Unguaranteed debentures No.47

     Feb. 24, 2021        Feb. 24, 2023        —          —         90,000  

Unguaranteed debentures No.48-1

     Jun. 16, 2022        Jun. 17, 2024        4.15        85,000       85,000  

Unguaranteed debentures No.48-2

     Jun. 16, 2022        Jun. 16, 2025        4.27        240,000       240,000  

Unguaranteed debentures No.48-3

     Jun. 16, 2022        Jun. 16, 2027        4.34        80,000       80,000  

Unguaranteed debentures No.48-4

     Jun. 16, 2022        Jun. 16, 2032        4.40        95,000       95,000  
           

 

 

   

 

 

 
           4,180,000       4,970,000  
        Less: Bond Discounts        (3,783     (4,616
        Less: adjustment on exchange right        (6,783     (8,435
     

 

 

   

 

 

 
            W 4,169,434     W 4,956,949  
           

 

 

   

 

 

 

 

*

Fair value of the liability component of exchangeable bonds is calculated by using market interest rate of bonds under the same conditions without the exchange right. The residual amount, after deducting liability component from the issuance amount, represents the value of exchange right and is recorded in equity. Shares to be exchanged are 5 million treasury shares of KB Financial Group Inc. with the exchange price of W48,000. Exercise period for exchange right is from the 60th day of the issuance date to 10 business days before the maturity date.

11.2 Maturities of debentures as of June 30, 2023 and December 31 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023  
     Up to
  3 months  
     3~6
  months  
     6~12
  months  
     1~3
  years  
     Over
  3 years  
             Total          

Debentures in Korean won

   W 120,000      W 180,000      W 655,000      W 1,570,000      W 1,655,000      W 4,180,000  

 

(In millions of Korean won)    December 31, 2022  
     Up to
  3 months  
     3~6
  months  
     6~12
  months  
     1~3
  years  
     Over
  3 years  
             Total          

Debentures in Korean won

   W 410,000      W 380,000      W 300,000      W 1,915,000      W 1,965,000      W 4,970,000  

 

29


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

11.3 Changes in debentures based on par value for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023  
     Beginning            Issue            Repayment      Ending  

Debentures in Korean won

   W 4,970,000      W —        W (790,000    W 4,180,000  

 

(In millions of Korean won)    2022  
     Beginning      Issue      Repayment      Ending  

Debentures in Korean won

   W 5,570,000      W 500,000      W (730,000    W 5,340,000  

12. Net Defined Benefit Liabilities(Assets)

12.1 Defined Benefit Plan

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

 

   

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

 

   

The Company assumes actuarial risk (that benefits will cost more than expected) and investment risk.

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

12.2 Details of the net defined benefit liabilities as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Present value of defined benefit obligation

   W 17,781      W 17,973  

Fair value of plan assets

     (21,313      (22,261
  

 

 

    

 

 

 

Net defined benefit liabilities (assets)

   W (3,532    W (4,288
  

 

 

    

 

 

 

12.3 Details of post-employment benefits recognized in profit or loss for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  

Current service cost

   W         908      W       1,152  

Net interest expense(income) on net defined benefit liabilities

     (111      (3
  

 

 

    

 

 

 

Post-employment benefits

   W 797      W 1,149  
  

 

 

    

 

 

 

 

(*)

The gains or losses related to the defined benefit pension plan is fully included in general administrative expenses.

 

30


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

13. Equity

13.1 Share Capital

13.1.1 Details of share capital as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Type of share

     Ordinary share        Ordinary share  

Number of authorized shares

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

Par value per share (In Korean won)

   W 5,000      W 5,000  

Number of issued shares

     403,511,072        408,897,068  

Share capital *

   W 2,090,558      W 2,090,558  

 

*

Due to the retirement of shares deducted through retained earnings, it is different from the total par value of the shares issued.

13.1.2 Changes in shares for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

                                                               
(In number of shares)                  2023                                   2022                 

Beginning

     389,634,335        389,634,335  

Increase

     —          —    

Decrease

     (5,385,996      —    
  

 

 

    

 

 

 

Ending

     384,248,339        389,634,335  
  

 

 

    

 

 

 

 

31


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

13.2 Hybrid Securities

Details of hybrid securities classified as equity as of June 30, 2023 and December 31, 2022, are as follows:

(In millions of Korean won)

 

Hybrid securities

  

Issuance date

  

Maturity

   Interest rate (%)
as of
June 30, 2023
     June 30,
2023
     December 31,
2022
 

The 1-1st

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

The 1-2nd

   May 2, 2019    Perpetual bond      3.44        49,881        49,881  

The 2-1st

   May 8, 2020    Perpetual bond      3.30        324,099        324,099  

The 2-2nd

   May 8, 2020    Perpetual bond      3.43        74,812        74,812  

The 3-1st

   Jul. 14, 2020    Perpetual bond      3.17        369,099        369,099  

The 3-2nd

   Jul. 14, 2020    Perpetual bond      3.38        29,922        29,922  

The 4-1st

   Oct. 20, 2020    Perpetual bond      3.00        433,918        433,918  

The 4-2nd

   Oct. 20, 2020    Perpetual bond      3.28        64,843        64,843  

The 5-1st

   Feb. 19, 2021    Perpetual bond      2.67        419,056        419,056  

The 5-2nd

   Feb. 19, 2021    Perpetual bond      2.87        59,862        59,862  

The 5-3rd

   Feb. 19, 2021    Perpetual bond      3.28        119,727        119,727  

The 6-1st

   May 28, 2021    Perpetual bond      3.20        165,563        165,563  

The 6-2nd

   May 28, 2021    Perpetual bond      3.60        109,708        109,708  

The 7-1st

   Oct. 8, 2021    Perpetual bond      3.57        208,453        208,453  

The 7-2nd

   Oct. 8, 2021    Perpetual bond      3.80        59,834        59,834  

The 8-1st

   Feb. 16, 2022    Perpetual bond      4.00        442,955        442,955  

The 8-2nd

   Feb. 16, 2022    Perpetual bond      4.30        155,626        155,626  

The 9-1st

   May 12, 2022    Perpetual bond      4.68        478,814        478,814  

The 9-2nd

   May 12, 2022    Perpetual bond      4.97        19,906        19,906  

The 10-1st

   Aug. 26, 2022    Perpetual bond      4.90        407,936        407,936  

The 10-2nd

   Aug. 26, 2022    Perpetual bond      5.15        70,819        70,819  

The 10-3rd

   Aug. 26, 2022    Perpetual bond      5.30        19,944        19,944  

The 11-1st

   Feb 3, 2023    Perpetual bond      4.90        548,666        —    

The 11-2nd

   Feb 3, 2023    Perpetual bond      5.03        49,871        —    
           

 

 

    

 

 

 
            W 5,032,518      W 4,433,981  
           

 

 

    

 

 

 

The above hybrid securities are early redeemable by the Company after 5 or 7or 10 years from the issuance date.

13.3 Capital Surplus

Details of capital surplus as of June 30, 2023 and December 31,2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Paid-in capital in excess of par value

   W 13,190,275      W 13,190,275  

Other capital surplus

     1,465,893        1,465,893  

Gains on sales of treasury shares

     86,646        86,646  

Consideration for exchange right of exchangeable bonds

     11,933        11,933  
  

 

 

    

 

 

 
   W 14,754,747      W 14,754,747  
  

 

 

    

 

 

 

 

32


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

13.4 Accumulated Other Comprehensive Income (Loss)

Details of accumulated other comprehensive income (loss) as of June 30, 2023 and December 31,2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Remeasurements of net defined benefit liabilities

   W (5,822    W (5,847

13.5 Retained Earnings

13.5.1 Details of retained earnings as of June 30, 2023 and December 31,2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Legal reserves

   W 1,007,685      W 839,235  

Voluntary reserves

     982,000        982,000  

Regulatory reserve for credit losses

     9,340        4,490  

Unappropriated retained earnings

     2,860,212        1,968,840  
  

 

 

    

 

 

 
   W 4,859,237      W 3,794,565  
  

 

 

    

 

 

 

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

13.5.2 Regulatory reserve for credit losses

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

13.5.2.1 Details of regulatory reserve for credit losses as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Amounts before appropriation

   W 9,340      W 4,490  

Amounts estimated to be appropriated (reversed)

     (4,514      4,850  
  

 

 

    

 

 

 
   W 4,826      W 9,340  
  

 

 

    

 

 

 

 

33


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

13.5.2.2 Regulatory reserve for credit losses estimated to be appropriated (reversed) and adjusted profit after provision (reversal) of regulatory reserve for credit losses for the three-month and six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won, except for per share amounts)    2023      2022  
   Three
months
     Six
months
     Three
months
     Six
months
 

Regulatory reserve for credit losses estimated to be appropriated (reversed)

   W (3,676    W (4,514    W (720    W 1,198  

Adjusted profit (loss) after provision (reversal) of regulatory reserve for credit losses 1,2

     (70,843      2,072,218        (82,052      1,517,302  

Adjusted basic earnings (loss) per share after provision (reversal) of regulatory reserve for credit losses 1

     (184      5,366        (211      3,894  

Adjusted diluted earnings (loss) per share after provision (reversal) of regulatory reserve for credit losses 1

     (179      5,246        (205      3,808  

 

1

Adjusted profit (loss) after provision (reversal) of regulatory reserve for credit losses is not based on Korean IFRS. It is calculated by reflecting provision (reversal) of regulatory reserve for credit losses before tax to the net profit for the period.

2

After deducting dividends on hybrid securities

13.6 Treasury Shares

Changes in treasury shares for the six-month periods ended June 30, 2023 and 2022, are as follows:

(In millions of Korean won and in number of shares)

 

     2023  
     Beginning      Acquisition      Retirement      Ending  

Number of treasury shares *

     19,262,733        5,385,996        (5,385,996      19,262,733  
  

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amount

   W 836,188      W 271,745      W (242,096    W 865,837  
  

 

 

    

 

 

    

 

 

    

 

 

 

(In millions of Korean won and in number of shares)

 

     2022  
     Beginning      Acquisition      Retirement      Ending  

Number of treasury shares *

     26,173,585        —          (3,455,426      22,718,159  
  

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amount

   W 1,136,188      W —        W (150,000    W 986,188  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

5 million treasury shares are deposited at the Korea Securities Depository for the exchange of exchangeable bonds.

14. Dividends

The annual dividends to the shareholders of the Company for the year ended December 31, 2022, amounting to W564,970 million (W1,450 per share) were declared at the annual general shareholders’ meeting on March 24, 2023 and paid in April 10, 2023. According to the resolution of the Board of Directors on April 27, 2023, the interim dividends per share of W510 (total dividends: W195,967 million) with dividend record date of March 31, 2023 were paid on May 11, 2023. Meanwhile, the annual dividends and interim dividends paid in 2022 were W853,299 million (W2,190 per share) and W584,452 million (W500 per share), respectively.

 

34


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

15. Net Interest Expense

Details of interest income, interest expense, and net interest expense for the three-month and six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  
     Three months      Six months      Three months      Six months  

Interest income

           

Due from financial institutions

   W 7,446      W 9,682      W 2,182      W 3,160  

Loans measured at amortized cost

     3,210        6,390        1,426        2,809  

Loans measured at fair value through profit or loss

     679        1,798        659        1,320  

Others

     144        279        102        196  
  

 

 

    

 

 

    

 

 

    

 

 

 
     11,479        18,149        4,369        7,485  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense

           

Debentures

     24,852        51,570        26,730        54,584  

Others

     7        13        4        8  
  

 

 

    

 

 

    

 

 

    

 

 

 
     24,859        51,583        26,734        54,592  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest expense

   W (13,380    W (33,434    W (22,365    W (47,107
  

 

 

    

 

 

    

 

 

    

 

 

 

16. Net Fee and Commission Expense

Details of fee and commission income, fee and commission expense, and net fee and commission expense for the three-month and six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  
     Three months      Six months      Three months      Six months  

Fee and commission income

           

Fees earned in Korean won

   W 409      W 781      W 356      W 1,159  
  

 

 

    

 

 

    

 

 

    

 

 

 

Fee and commission expense

           

Fees paid in Korean won

     3,498        4,957        3,724        5,154  

Fees paid in foreign currency

     —          160        —          140  
  

 

 

    

 

 

    

 

 

    

 

 

 
     3,498        5,117        3,724        5,294  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net fee and commission expense

   W       (3,089    W   (4,336    W   (3,368    W (4,135
  

 

 

    

 

 

    

 

 

    

 

 

 

 

35


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

17. Net Gains or Losses on Financial Instruments at Fair value through Profit or Loss

Net gains or losses on financial instruments at fair value through profit or loss include dividend income, gains or losses arising from changes in fair value, and gains or losses arising from sales and redemptions. Details of net gains or losses on financial assets at fair value through profit or loss for the three-month and six-month periods ended June, 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  
     Three months      Six months      Three months      Six months  

Gains on financial instruments at fair value through profit or loss

           

Dividend income from financial assets at fair value through profit or loss

   W 12,931      W 25,178      W 8,914      W 14,894  

Gains on valuation of financial assets at fair value through profit or loss

     (5,409      27,094        1,145        2,366  

Gains on disposal of financial assets at fair value through profit or loss

     —          678        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
     7,522        52,950        10,059        17,260  
  

 

 

    

 

 

    

 

 

    

 

 

 

Losses on financial instruments at fair value through profit or loss

           

Losses on valuation of financial assets at fair value through profit or loss

     1,280        1,280        26,494        34,120  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,280        1,280        26,494        34,120  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

   W 6,242      W 51,670      W (16,435    W (16,860
  

 

 

    

 

 

    

 

 

    

 

 

 

18. Net Other Operating Income and Expenses

Details of other operating income and expenses for the three-month and six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  
     Three months      Six months      Three months      Six months  

Other operating income

           

Dividend income from subsidiaries

   W —        W 2,192,380      W —        W 1,671,223  

Others

     —          —          —          1  
  

 

 

    

 

 

    

 

 

    

 

 

 
     —          2,192,380        —          1,671,224  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net other operating income

   W —        W 2,192,380      W —        W 1,671,224  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

36


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

19. General and Administrative Expenses

19.1 Details of general and administrative expenses for the three-month and six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  
     Three months      Six months      Three months      Six months  

Expenses related to employee

           

Employee benefits - salaries

   W 9,651      W 19,473      W 10,043      W 19,841  

Employee benefits - others

     1,336        2,259        1,108        2,154  

Post-employment benefits - defined benefit plans

     395        797        614        1,149  

Post-employment benefits - defined contribution plans

     —          1        —          (2

Share-based payments

     1,788        2,886        (1,476      1,689  
  

 

 

    

 

 

    

 

 

    

 

 

 
     13,170        25,416        10,289        24,831  
  

 

 

    

 

 

    

 

 

    

 

 

 

Depreciation and amortization

     1,271        2,717        1,475        2,838  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other general and administrative expenses

           

Travel

     537        749        166        196  

Communications

     244        571        244        554  

Tax and dues

     98        337        98        314  

Publication

     131        186        110        175  

Rental expense

     534        1,055        445        863  

Vehicle

     42        68        41        66  

Service fees

     4,173        9,023        3,649        7,071  

Advertising

     76        515        73        453  

Training

     447        724        255        333  

Others

     2,256        4,520        2,080        3,952  
  

 

 

    

 

 

    

 

 

    

 

 

 
     8,538        17,748        7,161        13,977  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 22,979      W 45,881      W 18,925      W 41,646  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

37


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

19.2 Share-based Payments

Share-based payments plan for executives and employees of the Company and its subsidiaries as of June 30, 2023, are as follows:

19.2.1 Stock grants linked to long-term performance

 

(In number of shares)   

Grant date

   Number of granted
shares 1
    

Vesting conditions 2

KB Financial Group Inc.

        

Series 28

   Nov. 21, 2020      68,135      Services fulfillment, market performance 3 35%, and non-market performance 5 65%

Series 30

   Apr. 1, 2021      3,070      Services fulfillment, market performance 3 30%, and non-market performance 4 70%

Series 33

   Jan. 1, 2022      57,464      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Series 34

   Feb. 1, 2022      654      Services fulfillment, market performance 3 30%, and non-market performance 4 70%

Series 35

   May 27, 2022      6,364      Services fulfillment, market performance 3 30%, and non-market performance 4 70%

Series 36

   Jan 1, 2023      83,561      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Deferred grant in 2015

        3,183      Satisfied

Deferred grant in 2016

        943      Satisfied

Deferred grant in 2018

        884      Satisfied

Deferred grant in 2020

        18,871      Satisfied

Deferred grant in 2021

        18,105      Satisfied

Deferred grant in 2022

        38,277      Satisfied
     

 

 

    
        299,511     
     

 

 

    

Kookmin Bank

        

Series 83

   Apr. 1, 2021      14,972      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Series 85

   Jan. 1, 2022      259,724     

Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Services fulfillment, market performance 3 30%, and EPS & Asset Quality 6 70%

Series 86

   Feb. 1, 2022      1,525      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Series 88

   Mar. 14, 2022      5,884      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Series 90

   Jul. 18, 2022      4,131      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Series 91

   Aug. 24, 2022      7,277      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Series 92

   Jan. 1, 2023      216,811      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

Series 93

   Apr. 1, 2023      13,422      Services fulfillment, market performance 3 0~30%, and non-market performance 4 70~100%

 

38


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

19.2.1 Stock grants linked to long-term performance (cont’d)

 

(In number of shares)   

Grant date

   Number of granted
shares 1
    

Vesting conditions 2

Deferred grant in 2016

        799      Satisfied

Deferred grant in 2017

        893      Satisfied

Deferred grant in 2018

        1,145      Satisfied

Deferred grant in 2020

        26,763      Satisfied

Deferred grant in 2021

        104,643      Satisfied

Deferred grant in 2022

        87,342      Satisfied

Deferred grant in 2023

        1,289      Satisfied
     

 

 

    
        746,620     
     

 

 

    

Other subsidiaries

        

Stock granted in 2010

        106     

Stock granted in 2011

        146     

Stock granted in 2012

        420     

Stock granted in 2013

        544     

Stock granted in 2014

        1,028     

Stock granted in 2015

        2,014     

Stock granted in 2016

        3,048     

Stock granted in 2017

        9,548      Services fulfillment,

Stock granted in 2018

        19,861      market performance 3 0~50%,

Stock granted in 2019

        23,788      and non-market performance 4 50~100%

Stock granted in 2020

        94,348     

Stock granted in 2021

        120,615     

Stock granted in 2022

        389,083     

Stock granted in 2023

        374,944     
     

 

 

    
        1,039,493     
     

 

 

    
        2,085,624     
     

 

 

    

 

1

Granted shares represent the total number of shares initially granted to executives and employees who have residual shares as of June 30, 2023 (Deferred grants are residual shares vested as of June 30, 2023).

2

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

3

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

4

Performance results of company and employee

5

EPS (Earnings Per Share), Asset Quality, HCROI (Human Capital Return on Investment), Profit from non-banking segments

6

EPS, Asset Quality

The stock grant linked to long-term performance is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual shares to be granted is determined in accordance with achievement of pre-set performance targets over the vesting period.

 

39


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

19.2.2 Stock grants linked to short-term performance

 

(In number of shares)    Estimated number of vested
shares *
    

Vesting

conditions

KB Financial Group Inc.

     

Stock granted in 2015

     2,097      Satisfied

Stock granted in 2016

     3,034      Satisfied

Stock granted in 2017

     306      Satisfied

Stock granted in 2018

     380      Satisfied

Stock granted in 2020

     12,336      Satisfied

Stock granted in 2021

     23,677      Satisfied

Stock granted in 2022

     45,115      Satisfied

Stock granted in 2023

     26,578      Proportional to service period

Kookmin Bank

     

Stock granted in 2015

     419      Satisfied

Stock granted in 2016

     2,135      Satisfied

Stock granted in 2017

     535      Satisfied

Stock granted in 2018

     739      Satisfied

Stock granted in 2020

     44,890      Satisfied

Stock granted in 2021

     86,235      Satisfied

Stock granted in 2022

     164,595      Satisfied

Stock granted in 2023

     74,281      Proportional to service period

Other subsidiaries

     

Stock granted in 2015

     4,048      Satisfied

Stock granted in 2016

     18,144      Satisfied

Stock granted in 2017

     35,359      Satisfied

Stock granted in 2018

     82,096      Satisfied

Stock granted in 2019

     91,957      Satisfied

Stock granted in 2020

     262,400      Satisfied

Stock granted in 2021

     464,576      Satisfied

Stock granted in 2022

     511,024      Satisfied

Stock granted in 2023

     171,784      Proportional to service period
  

 

 

    
     2,128,740     
  

 

 

    

 

*

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

Share-based payments arrangement for subsidiaries was transferred to the Company in 2010, and the related compensation cost paid to the executives and employees of subsidiaries is reimbursed by subsidiaries. The accrued expenses for share-based payments as of June 30, 2023 and December 31, 2022, are W154,984 million and W186,908 million, respectively, and the receivables to be reimbursed by subsidiaries for the compensation costs as of June 30, 2023 and December 31, 2022, are W140,756 million and W169,918 million, respectively. And compensation costs from share-based payments amounting to W2,886 million and W1,689 million were recognized for the six-month periods ended June 30, 2023 and 2022, respectively.

 

40


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

20. Income Tax Benefit (Expense)

Details of income tax benefit (expense) for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    2023      2022  

Income tax payable

   W —        W —    

Changes in deferred tax assets and liabilities

     

Origination and reversal of temporary differences

     (8,330      8,750  

Income tax recognized directly in equity

     

Remeasurements of net defined benefit liabilities

     9        (106
  

 

 

    

 

 

 

Income tax benefit (expense)

   W (8,321    W 8,644  
  

 

 

    

 

 

 

21. Earnings per Share

21.1 Basic Earnings per Share

Basic earnings per share is calculated from the earnings attributable to ordinary shares.

21.1.1 Weighted average number of ordinary shares outstanding

 

(In number of shares)    2023      2022  
     Three months      Six months      Three months      Six months  

Number of issued ordinary shares

     403,511,072        403,511,072        412,352,494        412,352,494  

Number of treasury shares *

     (19,262,733      (19,262,733      (22,718,159      (22,718,159
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average number of ordinary shares outstanding

     384,248,339        386,170,890        389,634,335        389,634,335  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Treasury stock retired during the six-month period ended June 30, 2022 were deducted from February 14, 2022.

21.1.2 Basic earnings per share

 

(In Korean won and in number of shares)    2023  
     Three months      Six months  

Profit (loss) for the period

   W (26,449,014,645    W 2,156,477,988,072  

Deduction: Dividends on hybrid securities

     (48,070,325,000      (88,774,400,000
  

 

 

    

 

 

 

Profit (loss) attributable to the ordinary equity holders (A)

     (74,519,339,645      2,067,703,588,072  

Weighted average number of ordinary shares outstanding (B)

     384,248,339        386,170,890  
  

 

 

    

 

 

 

Basic earnings (loss) per share (A/B)

   W (194    W 5,354  
  

 

 

    

 

 

 

 

(In Korean won and in number of shares)    2022  
     Three months      Six months  

Profit (loss) for the period

   W (54,121,779,560    W 1,569,682,848,806  

Deduction: Dividends on hybrid securities

     (28,650,200,000      (51,183,400,000
  

 

 

    

 

 

 

Profit (loss) attributable to the ordinary equity holders (A)

     (82,771,979,560      1,518,499,448,806  

Weighted average number of ordinary shares outstanding (B)

     389,634,335        389,634,335  
  

 

 

    

 

 

 

Basic earnings (loss) per share (A/B)

   W (212    W 3,897  
  

 

 

    

 

 

 

 

41


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

21.2 Diluted Earnings per Share

Diluted earnings per share is calculated through increasing the weighted average number of ordinary shares outstanding by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Company has dilutive potential ordinary shares such as stock grants and ordinary share exchange right of exchangeable bonds.

A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price for the year) based on the monetary value of stock grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the settlement of stock grants.

Exchangeable bonds are included in potential ordinary shares from the exercisable date of the exchange right, and interest expense after tax for the period is added to profit for diluted earnings per share.

21.2.1 Adjusted profit for diluted earnings per share

 

(In Korean won)    2023  
     Three months      Six months  

Profit (loss) attributable to the ordinary equity holders *

   W (74,519,339,645    W 2,067,703,588,072  

Adjustment:

     

Interest expense on exchangeable bonds

     611,283,413        1,215,849,425  
  

 

 

    

 

 

 

Adjusted profit (loss) for diluted earnings (loss) per share

   W (73,908,056,232    W 2,068,919,437,497  
  

 

 

    

 

 

 

 

(In Korean won)    2022  
     Three months      Six months  

Profit (loss) attributable to the ordinary equity holders *

   W (82,771,979,560    W 1,518,499,448,806  

Adjustment:

     

Interest expense on exchangeable bonds

     593,607,663        1,180,692,166  
  

 

 

    

 

 

 

Adjusted profit (loss) for diluted earnings (loss) per share

   W (82,178,371,897    W 1,519,680,140,972  
  

 

 

    

 

 

 

 

*

The amount is after deducting dividends on hybrid securities.

21.2.2 Weighted average number of ordinary shares outstanding for diluted earnings per share

 

(In number of shares)    2023      2022  
     Three months      Six months      Three months      Six months  

Weighted average number of ordinary shares outstanding

     384,248,339        386,170,890        389,634,335        389,634,335  

Adjustment:

           

Stock grants

     3,686,627        4,099,113        3,676,844        4,135,955  

Exchangeable bonds

     5,000,000        5,000,000        5,000,000        5,000,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted weighted average number of ordinary shares outstanding for diluted earnings (loss) per share

     392,934,966        395,270,003        398,311,179        398,770,290  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

42


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

21.2.3 Diluted earnings per share

 

(In Korean won and in number of shares)    2023  
     Three months      Six months  

Adjusted profit (loss) for diluted earnings (loss) per share

   W (73,908,056,232    W 2,068,919,437,497  

Adjusted weighted average number of ordinary shares outstanding for diluted earnings (loss) per share

     392,934,966        395,270,003  
  

 

 

    

 

 

 

Diluted earnings (loss) per share

   W (188    W 5,234  
  

 

 

    

 

 

 

 

(In Korean won and in number of shares)    2022  
     Three months      Six months  

Adjusted profit (loss) for diluted earnings (loss) per share

   W (82,178,371,897    W 1,519,680,140,972  

Adjusted weighted average number of ordinary shares outstanding for diluted earnings (loss) per share

     398,311,179        398,770,290  
  

 

 

    

 

 

 

Diluted earnings (loss) per share

   W (206    W 3,811  
  

 

 

    

 

 

 

22. Statement of Cash Flows

22.1 Details of cash and cash equivalents as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30,
2023
     December 31,
2022
 

Due from financial institutions

   W 1,202,390      W 351,056  

Deduction:

     

Restricted due from financial institutions

     (3      (3

Due from financial institutions with original maturities over three months

     (90,000      (120,000
  

 

 

    

 

 

 
     (90,003      (120,003
  

 

 

    

 

 

 
   W 1,112,387      W 231,053  
  

 

 

    

 

 

 

22.2 Significant non-cash transactions for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)            2023                      2022          

Changes in receivables and payables from consolidated tax return

   W 468,242      W 862,503  

Changes in receivables and payables related to stock grants

     (29,161      (36,732

 

43


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

22.3 Cash inflows and outflows from income tax, interest, and dividends for the six-month periods ended June 30, 2023 and 2022, are as follows:

 

(In millions of Korean won)    Activity    2023      2022  

Income tax paid

   Operating    W 4,197      W 2,263  

Interest received

   Operating      10,144        5,949  

Interest paid

   Operating      51,390        52,709  

Dividends received

   Operating      2,219,071        1,685,357  

Dividends paid

   Financing      849,711        1,099,299  

23. Contingent Liabilities and Commitments

23.1 Commitments made with financial institutions as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)    June 30, 2023      December 31, 2022  
     Amount of
commitments
     Amount
borrowed
     Amount of
commitments
     Amount
borrowed
 

General loan

   Hana Bank    W 200,000      W —        W 200,000      W —    

General loan

   Shinhan Bank      200,000        —          —          —    

General loan

   NongHyup Bank      300,000        —          —          —    

23.2 Other Matters (including litigation)

The Company has 1 pending lawsuit as a defendant with aggregate claims amount of W0.1 million, which arose in the normal course of the management activities, as of June 30, 2023.

 

44


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

24. Related Party Transactions

According to Korean IFRS No.1024, the Company includes subsidiaries and key management personnel (including family members) in the scope of related parties. The Company discloses balances (receivables and payables) and other amounts arising from transactions with related parties in the notes to the financial statements. Refer to Note 9 for details of subsidiaries. Key management personnel include the executives of the Company, their close family members, and the companies where the executives and/or their close family members have control or joint control.

24.1 Details of significant profit or loss arising from transactions with related parties for the six-month periods ended June 30, 2023 and 2022 are as follows:

 

(In millions of Korean won)                   

Subsidiaries

  

Profit or loss

   2023      2022  

Kookmin Bank

   Interest income    W 8,393      W 2,538  
   Fee and commission income      608        758  
   Net other operating income *1      1,346,582        1,031,167  
   General and administrative expenses      5,778        5,542  

KB Securities Co., Ltd.

   Interest expense      —          15  
   Fee and commission income      43        133  
  

Net losses on financial assets at fair

value through profit or loss

     19,588        (13,493
   Net other operating income *1      100,000        200,000  
   General and administrative expenses      172        434  

KB Insurance Co., Ltd.

   Fee and commission income      73        183  
   General and administrative expenses      875        970  
   Net other operating income *1      349,990        —    

KB Kookmin Card Co., Ltd.

   Fee and commission income      17        42  
   Net other operating income *1      200,008        250,056  
   General and administrative expenses      183        15  
   Net non-operating income *2      3,920        3  

KB Life Insurance Co., Ltd.

   Fee and commission income      23        32  
   Net other operating income *1      100,000        100,000  
   General and administrative expenses      567        350  

KB Asset Management Co., Ltd.

   Net other operating income *1      60,000        40,000  

KB Capital Co., Ltd

   Interest income      2,381        —    
   Fee and commission income      8        17  
   Net gains on financial assets at fair value through profit or loss      23,542        2,863  
   Provision for credit losses      3        —    

KB Life Insurance Co., Ltd.

   Fee and commission income      —          25  
   General and administrative expenses      —          139  

KB Real Estate Trust. Co., Ltd.

   Net other operating income *1      35,000        40,000  

 

45


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

24.1 Details of significant profit or loss arising from transactions with related parties for the six-month periods ended June 30, 2023 and 2022, are as follows: (cont’d)

 

(In millions of Korean won)                   

Subsidiaries

  

Profit or loss

   2023      2022  

KB Savings Bank Co., Ltd.

   Interest income    W 2,296      W 1,576  
   Fee and commission income      1        1  
   Net gains (losses) on financial assets at fair value through profit or loss      1,423        (6,529

KB Investment Co., Ltd.

   Interest income      3,848        2,809  
   Net other operating income *1      —          10,000  
   Provision (reversal) for credit losses      5        2  

KB Data Systems Co., Ltd.

   General and administrative expenses      1,440        1,232  
   Net other operating income *1      600        —    

Other related parties

  

Profit or loss

   2023      2022  

KB Credit Information Co., Ltd. *3

   Interest income    W 161      W —    
   Net other operating income *1      200        —    

 

*1 

Net other operating income includes dividend income from subsidiaries.

*2 

Includes W3,917 million of gains on disposal of investments in KB Credit Information Co., Ltd.

*3 

The Company sold the 100% shares of KB Credit Information Co., Ltd. to Kookmin Card Co., Ltd. on June 30, 2023.

24.2 Details of significant outstanding balances of receivables and payables arising from transactions with related parties as of June 30, 2023 and December 31, 2022, are as follows:

 

(In millions of Korean won)                   

Subsidiaries

  

Assets or liabilities

   June 30,
2023
     December 31,
2022
 

Kookmin Bank

   Cash and due from financial institutions    W 1,112,390      W 231,056  
   Other assets      360,247        828,505  
   Other liabilities      4,797        97  
   Property and equipment      117        357  

KB Securities Co., Ltd.

   Financial assets at fair value through profit or loss      509,982        401,732  
   Other assets      91,930        66,162  
   Other liabilities      251        116,503  

KB Insurance Co., Ltd.

   Other assets      17,647        111,433  
   Other liabilities      559        47  

KB Kookmin Card Co., Ltd.

   Other assets      69,092        88,968  
   Other liabilities      943        755  

KB Life Insurance Co., Ltd.

   Other assets      56,447        70,534  
   Other liabilities      630        67  

KB Asset Management Co., Ltd.

   Other assets      11,827        21,033  

 

46


KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

 

 

24.2 Details of significant outstanding balances of receivables and payables arising from transactions with related parties as of June 30, 2023 and December 31, 2022, are as follows: (cont’d)

 

(In millions of Korean won)                   

Subsidiaries

  

Assets or liabilities

   June 30,
2023
     December 31,
2022
 

KB Capital Co., Ltd.

   Financial assets at fair value through profit or loss    W 482,142      W 472,439  
   Loans measured at amortized cost (gross amount)      200,000        200,000  
   Allowances for credit losses      234        234  
   Other assets      32,979        52,941  

KB Life Insurance Co., Ltd.

   Other assets      —          4,655  
   Other liabilities      —          9,188  

KB Real Estate Trust Co., Ltd.

   Other assets      12,377        8,860  

KB Savings Bank Co., Ltd.

   Cash and due from financial institutions      90,000        120,000  
   Financial assets at fair value through profit or loss      45,750        43,524  
   Other assets      4,473        7,280  
   Other liabilities      86        67  

KB Investment Co., Ltd.

   Loans measured at amortized cost (gross amount)      310,000        310,000  
   Allowances for credit losses      924        924  
   Other assets      7,580        5,943  

KB Data Systems Co., Ltd.

   Intangible assets      331        1,716  
   Other assets      1,650        3,456